The
Conservatioif
Fight
mim THEODORE ROOSEmr TO 1/
THE TEHHESSEE YALLEY AUTHORITY
By Judson King i^^
Public Affairs Press Washington^ D. C.
"Here is history, authentic history, of a cru-
cial period in American life and politics that has
all the challenge and charm of drama, written
by a leading actor in the drama. Here is the
intimate story, by a participant, of how TVA . . .
came into being.
"Judson King knew all the actors in the
mighty TVA drama which started with the con-
servation movement in Teddy Roosevelt's
day. . . His interest in popular government led
him ultimately to the directorship of the Na-
tional Popular Government League, established
under the leadership of George Norris and Gif-
ford Pinchot. One of the earliest interests of
the League was establishment of initiative and
referendum in each of the states.
"Deeply concerned with popular control of
America's natural resources, Judson King saw
the potentialities for abundant, cheap hydro-
electric power, combined with flood control, to
serve citizens free from exploitation. The waste
of waters of our swift rivers rushing to the sea
without passing through turbines to generate
low-cost electricity for our people — power un-
used in this age of science — was unendurable to
him. Every fibre within him rebelled against
such injustice to the public interest, whether it
expressed itself in unsavory political practice,
locally or nationally, or in some form of restric-
tive monopoly.
"In this book, Judson King brings back to life
for a new generation many episodes in the con-
servation movement and the fight for TVA, in-
cluding the Federal Trade Commission inquiry
into the nefarious practices of the private utili-
ties which brought reforms in the 1930's. . .
He pays his respects to the Corps of Army En-
gineers, too, and tells us the story of their op-
position to the high dam development which
became the core of cheap electric power. . . .
"More than a history of the birth pains of
TVA, important as that is, this book is a his-
tory of a free people's fight to maintain control
of one of their own natural resources, the waters
of a great river system, to assure themselves and
their posterity a better life.
"Built by one generation, TVA and the con-
servation principles it represents must be cher-
ished and preserved by another. Judson King
has shown the way." — Benton J. Stong in the
Foreword.
PUBLIC AFFAIRS PRESS
Washington, D. C.
$6.00
From the collection of the
^ m
0 Prepnger
V Jjibrary
p
San Francisco, California
2006
Digitized by the Internet Archive
in 2006 with funding from
IVIicrosoft Corporation
http://www.archive.org/details/conservationfighOOkingrich
The Conservation Figlit
A recent photograph of Judson King
Tne Conservation Fi^nt
FROM THEODORE ROOSEVELT TO THE
TENNESSEE VALLEY AUTHORITY
By JUDSON KING
With an Introduction by Clyde Ellis
AND A Foreword by Benton J. Stong
Public Affairs Press, Washington, D. C.
TO MY WIFE, BERTHA HALE KING,
without whose aid in many ways this
book could not have been written.
Published by the Public Affairs Press
419 New Jersey Avenue, S.E., Washington 3, D. C.
Printed in the United States of America
Library of Congress Catalog Card No. 59-10226
Copyright, 1959, by Bertha Hale King,
FOREWORD
Here is history, authentic history, of a crucial period in American
life and politics that has all the challenge and charm of drama, written
by a leading actor in the drama. Here is the intimate story, by a par-
ticipant, of how TV A, acclaimed throughout the civilized world came
into being as a product of the conservation movement.
Judson King knew all the actors in the mighty TVA drama which
started with the conservation movement in Teddy Roosevelfs day.
The greatest star, of course, was Senator George Norris of Nebraska.
He fought on every front, held the line in the Senate though it bulged
badly at times, rallied his forces constantly, overcame vetoes by Presi-
dents Coolidge and Hoover; fought on and on to victory, which came
when the Great Depression weakened the opposition and President
Franklin D. Roosevelt was enabled to put the final stamp of approval
on this magnificent enterprise. Throughout this long and titanic
struggle to save the waters of the great Tennessee River, Judson King
fought staunchly at the side of Senator Norris.
For many years, Judson and his wife. Bertha Hale King, drove by
Senator Norris* home on critical days, took him to his office and then
proceeded to their own office in downtown Washington, often
taking the Senator home again in the evening. The strategy and many
of the specific steps in the long fight to keep Muscle Shoals for the
people and for full development of the Tennessee River basin were
planned during these trips. Judson has been described as "the man
who passed the ammunition' '* which Norris and many of his colleagues
fired in the long struggle. There are glimpses of Judson's personal
participation in the fight in this book. But they are only glimpses.
Actually, he was a daily participant whose concentration, energy and
zeal attracted and inspired others to be active in his great cause.
Judson was bom in Waterford, Pennsylvania in 1872 and was left
an orphan at 6 years of age. He was placed on a farm to be reared,
leaving at age 17 to seek an education. After attending a sectarian
school in his home state, he went to the University of Michigan. He
founded the Denison ( Texas ) Morning Sun in 1902. Three years later
he went to Toledo, Ohio, to work with the vigorous reform Mayor
"Golden Rule" Jones and his successor. Brand Whitlock, the famed
lawyer-novelist-reformer and noted wartime ambassador to Belgium.
Judson King's interest in popular government led him to make sev-
▼i FOREWORD
eral trips abroad and ultimately to the directorship of the National
Popular Government League, estabhshed by "The Committee of Fifty"
in 1913 under the leadership of George Norris and GifiFord Pinchot.
One of the earliest interests of the League was establishment of initia-
tive and referendum in each of the states. Judson and his wife
traveled throughout the nation in their car studying the status, past
use and usefulness of "I & R" to assure government responsive to and
controlled by the wishes of the people.
Deeply concerned with popular control of Americas natural re-
sources, Judson King saw the potentiaHties for abundant, cheap hydro-
electric power, combined with flood control, to serve citizens free from
exploitation. The waste of waters of our swift rivers rushing to the
sea without passing through turbines to generate low-cost electricity
for our people — ^power unused in this age of science — ^was unendurable
to him. Every fibre within him rebelled against such injustice to the
public interest, whether it expressed itself in unsavory political prac-
tice, locally or nationally, or in some form of restrictive monopoly.
A distinguished economist and teacher, Dr. Horace Gray of the
University of Illinois, said of Judson King:
"Viewed from the vantage point of this giddy, superficial, nihilistic
modem age, Judson was cast in an ancient and heroic mould. He was
a giant among pigmies, a lion set down among rabbits, an honest man
among knaves, a just man in a world of greed, cruelty, and cynical
injustice, an idealist in an age of gross materiahsm, a lover of man and
nature as against all who would destroy both, a prophet among the
deaf and blind, a true democrat confronting a world which pays lip
service to democracy but secretly craves and worships power. When
I recall his sterling qualities of mind and character, I unavoidably
liken him to the saints and heroes of olden times whose memory and
deeds we honor because they taught us by example what we ourselves
might be if we only dared be great.
"Judson was the last of a notable company of social planners and
reformers who in his generation strove to create the liberal, democratic
society of our national dreams. His successes leave us a rich heritage;
his failures challenge us to greater effort. One is tempted to say, *We
shall not see his like again'; but we dare not say this lest future gen-
erations condemn us as cowards and weaklings. We must produce
new Judson Kings in this country if we are to survive as a free people.
This will be difficult, for men of such grace and character are indeed
rare, but with the memory of his achievement before us it will not be
impossible. That, I trust, will be his earthly immortality."
THE CONSERVATION FIGHT vU
In this book, Judson King brings back to life for a new generation
many episodes in the conservation movement and the fight for TVA,
including the Federal Trade Commission inquiry into the nefarious
practices of the private utilities which brought reforms in the 1930's.
He reviews the bold attempt by the private utilities to 'iDrainwash**
American youth and its teachers, from grade school through our col-
leges and universities, naming professors who were secretly subsidized
by private utilities. We learn here of a part the author himself played
in this exposure, and of how quickly leading college professors, care-
fully indoctrinated by private utility propaganda, ran to cover follow-
ing his face-to-face attack. He pays his respects to the Corps of Army
Engineers, too, and tells us the story of their opposition to the high
dam development which became the core of cheap electric power.
This work is timely and valuable because the public memory is
short. An attempt was made recently to scuttle TVA by trying to drive
through the discredited Dixon- Yates contract. This was a private
utility-inspired effort, through another hostile Administration, to undo
twenty-five years of constructive achievement and ultimately to destroy
TVA. The agency is still being harassed by obstruction of its efforts
to expand its power faciHties to meet the Valley's needs. Judson King
has, in this book, extended his services to his clientele beyond his own
Iffe span by leaving them a refresher course on the great significance
of TVA, the opposition to it, and the continuing need to defend it.
Judson King never needed his courage and concentration more than
in the final years of his Hfe when he fought against time and illness
to complete this book. Carefully conserving his strength, he stayed
in bed until noon each day, dictating notes and manuscript to Mrs.
King and her sister, Mable H. Barnes. After lunch and a nap, he would
revise and edit until late in the night.
In the end, Judson King won. Two weeks before his death on July
4, 1958, in his eighty-sixth year, he laid down his pen and said: *'This
completes the last chapter. I shall write no more."
More than a history of the birth pains of TVA, important as that is,
this book is a history of a free people's fight to maintain control of one
of their own natural resources, the waters of a great river system, to
assure themselves and their posterity a better Iffe.
Built by one generation, TVA and the conservation principles it
represents must be cherished and preserved by another. Judson King
has shown the way.
Benton J. Stong
Washington, D. C.
INTRODUCTION
**What Is Past Is Prologue" reads the inscription on a statue in front
of the National Archives building in our nation s capital. Thus it
emphasizes the present and the future.
This book is a significant study of the long struggle, stretching over
nearly two generations, to secure our country's precious navigable
water resources — ^which are Federal property under the Constitution —
and to establish water power poHcies which protect the pubhc's in-
terests. It is significant because that struggle, in principle and in
practice, is continuing today and probably will continue for decades,
with the same selfish arguments for private-profit exploitation of our
rivers and the same self -justification for a "public be damned** attitude
toward the American people as a whole.
It is a significant study, too, because we are now in the genesis of
another struggle over a new kind of pubhc resource — atomic energy
for peaceful uses, brought about only because the Federal govern-
ment has created and the taxpayers have paid for this vast new re-
source.
Moreover, this book is of great significance to us who are interested
in seeing that rural people and their cooperatively organized non-
profit rural electric systems and rural power districts are properly
permitted to share in the use of hydro and atomic power developed
at the lowest possible cost.* To us, nothing could demonstrate that
the *Tast is Prologue" better than a ruling of the Comptroller General
of the United States in this year of 1958. For that ruling is merely
a reiteration of the arguments of the special interests which have
continuously opposed a rural electrification program for the United
States throughout the 23 years of its existence, and which have actively
opposed TVA and all other Federal hydro-electric power development
over a still longer period.
The investor-speculator owned and controlled power monopolies
argue simply that, regardless of the publics needs, it is "socialistic**
and "unconstitutional** for government to participate in any way in
* TVA and the other Federal hydro-electric power projects do not retail elec-
tricity but sell it wholesale to rural electric cooperatives, public power districts,
municipally owned electric systems, large power consuming industries, commercial
power companies and state and Federal agencies.
vui
THE CONSERVATION FIGHT ix
the electric power industry, so long as anyone from that industry has
any desire to exercise his monopolistic "rights" — and regardless of the
cost to the public. They apply this as well to the rural electrification
program as to Federal wholesale power development. Indeed they
have fairly well succeeded in propagandizing the man on the street
into believing that the profit pubHc service companies are free enter-
prise and that the non-profit electric co-ops are not, whereas just the
opposite is true.t
In this study, the argument that government cannot legally convert
the energy of its falHng water into electric energy takes a variety of
forms. In the beginning, the fledghng electric industries resisted the
idea that the Federal government should have any jurisdiction over
the conversion of navigable river water power into electric power.
Regardless of the waste and uneconomical use of our water resources,
they insisted that the riparian rights of the owners of property adjoin-
ing our water resources were paramount to any public interests in
those resources.
And today, the profit segment of the electric power industry main-
tains that atomic energy, as a source of power, should be left to com-
mercial power companies, despite the billions the American tax-
payers have invested in research and development of this new re-
source, and despite the fact that some 20% of power generation,
transmission and distribution business is carried on by pubHc and
cooperative agencies. They have just about had their way during the
t While monopolies in general have been declared by the Sherman Anti-Trust
Act and by other laws to be un-American and illegal, the electric power monopo-
lies have been legalized on the ground that they are "natural" monopolies, that
to permit them to compete along the same streets would be a wasteful nuisance,
and on the ground that since they perform an essential public service they are
in eflFect agencies of the state endowed with certain powers of state such as
eminent domain and the right to occupy the streets and public roads— and on the
further assumption that they can be effectively regulated.
As Dr. Herman Trachsel says bluntly in his book Public Utility Regulation:
"When dealing with the problems of public utility regulation it is essential to
recognize the fundamental difference between a public utility and a private busi-
ness. The public character of the business conducted by the utilities and the
privileges under which they operate combine to emphasize the fact that such
business might well be performed by the state itself. Those engaged in furnishing
public utility services might well be considered as agents performing a function
for the state."
Cooperatives, on the other hand, are held to be but an extension of the indi-
vidual members; hence an instrument of free enterprise.
X INTRODUCTION
13 years since the end of World War II, but their approach has failed.
We are faced with the danger that use of our atomic resources will be
delayed for decades, as was comprehensive development of our water
power resources, because of the same selfish motives. Already, Russia
and England are far ahead of the U.S. in atomic power development.
We are also hearing today an echoing cry that a new "partnership"
concept provides the answer in developing millions of kilowatts
of rich, low cost hydro-electric resources remaining untapped in
our rivers. This "partnership" idea is nothing but a discredited, thread-
bare scheme concocted by the opponents of TVA and other Federal
power developments, as Mr. King reveals in this book.
TVA is an important landmark in the struggle of the American
people to prevent exploitation and waste of their God-given water
resources. It still is admired all over the world as a symbol of the
public benefits which can be realized from wisely comprehensive
development of our rivers. It is a model which may prove to be the
salvation of underdeveloped countries in the Free World orbit, which
are the easiest targets for aggressive Communism. While President
Eisenhower has openly referred to TVA as "creeping socialism," his
Administration has sponsored and underwritten the idea for other
countries. But, as this study shows, pubhc education and courageous
leadership — and a long time of it — are needed to bring this about,
even in the most democratic of nations.
I can think of no greater tragedy than for the United States to
turn over TVA to the private power interests, which are still propa-
gandizing for that reactionary step just as they unsuccessfully propa-
gandized the American public for a generation to give them the Mus-
cle Shoals site whose development became the first unit of the TVA
system. This is what those who control the profit segment of the
electric power industry sought to do through the process of the now-
discredited Dixon-Yates Deal. This would be evidence to the world
that America and its people are truly the victims of monopolistic in-
terests hell-bent to return the world to the days of feudahsm. It would
be a last step toward complete private power monopoly, the antithesis
of the hopes and aspirations which we have held up as our economic
strength to unfortunate peoples of other lands.
At home, TVA exists as a living, dynamic symbol of government,
responsive to needs of its local people, providing an economic stimulus
to people, industry, and labor and for their homes. Its power facilities
are completely paid for, and more, by the power users. (Over half
of TVA's wholesale power is purchased by Federal defense agencies. )
THE CONSERVATION FIGHT xi
If there has ever been a real "partnership" between government and
the people, it has been the organization and accomplishments of TVA.
For the first time in the history of Federal legislation, Congress ac-
cepted in TVA the unity of nature and developed all the resources of
a great river basin for the benfit of all the people. Besides vastly in-
creasing the availability and lowering the cost of electric power for
both private and pubhc use, it has provided navigational achievements,
flood control, fertilizer development and soil conservation, recreation
and wildlife management. But the most important contribution of
TVA to the nation is the electric rate yardstick it set up. The irrefu-
table fact is that the American consumer has been protected more by
the example of TVA's rates than he has by various forms of utiHty
regulation which have been attempted. TVA is the most influential
single factor in keeping power monopoly rates within tolerable
limits, largely because the Federal Power Commission and the state
regulatory commission controls generally have failed. Indeed, it
could have been predicted they would fail, because of the great scope
and complexity of power monopolies, and the fact that "An ounce
of competition can be worth a pound of regulation."
Of course, privately owned pubHc service electric power interests
hate TVA because it provides this yardstick — a form of institutional
competition by example — against which the people in all the states
can measure excessive rates, standards of service, and monopolistic
practices. TVA stands as a perpetual challenge to ingenuity and good
management of the utilities. It is an argument that cannot be an-
swered, and consequently they would destroy it. They have not
ceased the attacks they began when Muscle Shoals was first recognized
as a valuable power site, and they will never cease their attacks. This
generation and the next must stand mobilized and alert, not only to
preserve TVA and REA and all that they symbolize, but also to con-
tinue comprehensive, economic use of its resources.
This cannot be done by defensive action alone, for the profit power
companies operate cost-plus and therefore have everything to gain
and nothing to lose in their persistent war of attrition. Instead, the
friends of the Federal wholesale and rural electrification programs
must move to reform the privately owned electric power monopoly,
which generates and distributes about 80% of the country's power
supply. Suggested steps in this direction would include abolishing
all holding companies (principally devices for circumventing the anti-
trust laws and avoiding effective regulation); making all major trans-
mission lines common carriers, Kke the pipelines; and prohibiting the
xU INTRODUCTION
public service electric companies from taxing the ratepayers for the
fabulous funds they spend on propaganda-type advertising, front
organization contributions, lobbying and poHtical campaigns.
The estimated average flood control benefits of TVA alone now
amount to $ll-million annually. Since completion of Norris Dam,
29 floods occurred which, if unregulated, would have reached flood
stage at Chattanooga, Tennessee, for instance. All were reduced or
completely controlled. This included the major 1957 flood in January
and February, during which the damages averted by TVA at Chat-
tanooga alone totalled $120-milhon. Yet, the operation of TVA for
the comprehensive purposes, which include flood control, would be
subordinated to the exploitation of power alone, if it were turned over
to the privately owned utilities.
For 25 years now, TVA and the people of that region have engaged
in a job of demonstration. New types of fertilization have been de-
veloped at Muscle Shoals and farmers all over the country have dem-
onstrated their use in actual farming operations. Every process and
every invention developed by TVA has been made available to the
private fertihzer industry as well as to agricultural experts and to or-
ganizations of farmers. As a result of new ideas developed in TVA,
farmers all over the United States are getting more and better plant
food at lower cost in every ton of fertiHzer they buy today, and the
soil's fertility is enhanced for the future. Farmers all over the world
are benefiting more and more by the examples.
But what of the future if TVA is divided piece-meal, as the profit-
type power companies want it? All the American people would be
the victims.
These non-power features of TVA operations, of course, are not
the real target of TVA*s critics. It is the role of TVA as a wholesale
power supplier, and as a yardstick for other suppliers, that is the real
target. But that is only part of the target. The whole is the Federal
government's participation in hydro-electric resource development
everywhere. TVA power created a new era in the seven-state region
of the Tennessee Valley. It provided fertile ground for new industries
and improvement. It has made possible the extension of economic
electric service to homes, farms, and rural establishments on an un-
rivaled scale. It supplies wholesale power to the 51 electric coopera-
tives in the seven-state TVA area — ^to more than 500,000 rural families.
The average home use of electricity in the TVA area reached 7,084
kwh annually in 1958. The national average for home use of elec-
tricity over die same period was approximately 3,260 kwh, less than
THE CONSERVATION FIGHT xiU
half the amount TVA residents could aJBFord, despite the fact that their
income per capita is still below the national average. On the basis of
recent published forecasts, the customers of the nation's electric in-
dustry do not expect to reach the present level of use in the TVA
region until about 1968.
The same picture exists in the Pacific Northwest, where the public
can afford to use much more electricity because of the Bonneville power
system, and the Northwest power pool — an example of how private and
public power can integrate and mutually prosper together.
Another of the favorite targets of the detractors of TVA is taxes.
"Make TVA pay state and local taxes" was one of the early power
company battle cries. Yet, as a member of the House of Representa-
tives I sat in shocked amazement when the opponents of TVA voted
"No" and the friends voted "Aye" on the bill to do just that. They did
not want to make TVA more acceptable. The bill passed and now
the payments in lieu of taxes made by TVA to local governments
amount to 5% of gross sales of power, excluding sales made to Federal
agencies. Although pubhc utilities and other business groups often
charge that TVA fails to carry a fair tax weight, TVA is — and has been
for years — the largest single taxpayer in the state of Tennessee. In
1959 it will make payments of almost $14 million to the 7 states, 137
counties, and countless municipalities in the TVA area.
If there is any difference in taxation between Federal enterprises,
such as TVA, and private power, it lies principally in the profits the
private utiHties extract from the consumers. For it is the consumer,
not the utility, who pays for the extraordinary right of the utility to
have a monopoly in serving the public for profits.
Also, for 23 years the profit power interests screamed that Congress
should stop appropriating what were in effect loan funds for TVA's
normal vertical expansion; that TVA should do its own financing. Yet
when a TVA self -financing bill that had passed the Senate was about
to be voted out of the House Public Works Committee in 1958 an un-
precedented number of power company presidents from all over the
United States and their big business allies appeared against it.
If for nothing else, however, the rural people of all America are
indebted to the men and women whose deeds are recalled in the pages
of this book for the cooperative rural electrification program. Co-
operative rural electrification, was bom in the back of a httle store in
Corinth, Mississippi. There the local citizenry, cooperating with TVA
officials and inspired by TVA's example of partnership with the people,
launched cooperative rural electrification on a wide scale.
xiv INTRODUCTION
Thus TVA inaugurated the first program of lending funds to co-
operatively organized groups for the purpose of extending the dis-
tribution of electric service into rural areas not considered sufficiently
profitable by profit-motivated utiHties. It was not until a year later
that President Roosevelt established REA by executive order, and
not until a year after that that Congress passed the REA Act. From
that TVA genesis sprang the great cooperative rural electrification
program now serving 15-milhon people — men, women, and children —
from over a million miles of fines which these people own themselves.
The leaders of the rural and municipally owned electric power
systems may appreciate more than most other groups the tremendous
struggles recounted in these pages. For they faced the same struggle,
the same foes, the same arguments. And they are helping to carry
on the struggle, for the success of their consumer-owned electric power
enterprises has created the same hate that TVA is shown by the same
monopofistic foes. Small though they may be, power companies are
just as anxious to take them over, as they did TVA, and are attempting
it.
This book is a valuable historical docmnent which no one interested
in the cause should be without. Only Jud could have written it.
Clyde Ellis
Executive Director of the
National Rviral Electric Cooperative Association
PREFACE
Several years ago the late Dr. Robert M. Hunter, professor of law
at Ohio State University, brought to my study a professor of utility
economics in one of our great eastern universities, who joined him in
urging me to write this book. They said in substance:
"Several books have been pubHshed describing the physical struc-
ture of TVA or deahng with the problems of management involved,
but there is no volume in existence which gives any adequate or reaHs-
tic history of the long conflict which resulted in its creation.
**As teachers we are in need of such a volume succinctly covering
the high points for our own use and for oiu: students. The source ma-
terial is in thousands of documents, or in no documents at all. You
are the man to write this history because you had an active part in
making it, know many things not in the record, and can bring it alive.
We hope you will undertake it."
The idea was not new. I had often needed such a volume myself.
But the power "conflict" was far older than the public or even many
authors seemed to know. My own active acquaintance with the aims
and political tactics of the electric and gas industries had begun in
1905 as editor of the official organ of the "independent" poHtical move-
ment in Toledo, Ohio, and member of the administration of Mayor
Brand Whitlock.
In 1921 the fight over the disposition of the government nitrate
project at Muscle Shoals came to a showdown. The National Popular
Government League, of which I was managing director, was one of
the first to support Senator Norris and the group he led in the fight
for public ownership and operation, a fight which continued 12 years
until the TVA Act was passed. Ever since many officers and leaders
of farm, labor and other hberal organizations, members of Congress,
federal and state administrators, investigators, newsmen, authors,
thesis writers, and others, had come to my office in search of informa-
tion they could not find elsewhere on the subject. Often I could help
them, often not.
Yes, such a volume was needed, but I hesitated because I would
have to steal time from other duties and work at it intermittently.
However, the undertaking lured me and with encouragement from
several others I began. At the start I was fully determined to keep
myself out of the story, but friends insisted that I include incidents
XV
XVi PREFACE
of my own part in the warfare. Finally I yielded and I trust readers
will find such incidents worthy of inclusion.
Since the purpose of a preface is to clear the readers' minds for
what is to follow, permit me to point out a few basic considerations.
First, the basic concepts coordinated in TVA were developed by
conservationists prior to 1909. To get a comprehensive background
we must go back to 1897 when the first bill to utilize Muscle Shoals
for power production by a private company was introduced in Con-
gress. The scientists and statesmen who founded the conservation
movement were deeply concerned with the welfare of their own and
future generations. They challenged laissez faire and advocated fed-
eral control, supplemented by state control. They sought to halt the
frightful waste of all natural resources and thwart private monopoly
in their utilization. They proposed to nail down in perpetual national
ownership all sites in navigable river systems which had not already
passed to private enterprise, usually as free gifts. They proposed to
develop river systems from source to mouth by unified multi-purpose
projects, managed by independent commissions.
President Theodore Roosevelt launched the conservation movement
as a major political issue a half century ago. Yet, in 1958, when the
centennial of his birth and his famous White House Conference of
1908 are being celebrated, a propaganda campaign of immense magni-
tude is afoot to stand our people on their intellectual heads and lead
them to believe that TVAs are un-American, of "alien" vintage, un-
businesslike, socially immoral, and even atheistic.
The second basic point to keep in mind is that comprehensive unified
projects like TVA are necessarily national not merely local enterprises;
that since they include navigation, flood control, and many other things
besides hydroelectric power, and embrace several states they are, like
all river and harbor improvements, devoted to the general welfare,
and like them are financed by all taxpayers from the Atlantic to the
Pacific. Only the electric power divisions must be self-sustaining and
paid for by the sale of the power they produce. It is amortized invest-
ment, not "spending." All TVA dams carry the inscription: "Built
for the People of the United States."
The third fundamental fact which even statesmen ignore is that
water runs down hill. Hence, wee rivulets make tributaries which
feed rivers, which become the architects of valleys and create nature's
engineering units for multi-purpose mastery of water in utter disregard
of municipal, county and state boundary lines.
THE CONSERVATION FIGHT xvii
The fourth fundamental is that private operators of public utilities
are not engaged in "free enterprise," although they insist they are.
They operate under franchises granted by government; they are
legally simply agents or hired hands performing a public service.
When it is realized that they usually get monopoly rights and are
guaranteed a minimum return or profit, neither of which "free" busi-
ness men enjoy, the absurdity of spokesmen for billion-dollar utility
corporations asking comer grocery men if they want the government
to compete with them becomes apparent.
There is also a serious international aspect to the eflFort to undermine
TVA and REA. To gain friends and maintain American leadership
in world aflFairs we are spending bilUons of dollars of public and
private funds to convince foreign peoples — ^in Asia and Africa especially
— that our economy is a way of life to emulate. Several countries,
following our example, are constructing or planning TVAs to bolster
their economies and improve the lot of the common people, including
dirt-cheap electricity for the home and farm as well as the factory;
and in some cases with our financial aid!
What is the effect upon the confidence of these millions and their
governments in our democratic pretensions when they witness the
spectacle of our federal government openly and secretly teaming up
with selfish private interests to undercut and destroy projects they
so much admire and desire?
In writing this book I have been more and more impressed with the
bi-partisan, or more truly, the non-partisan character of the conserva-
tion movement and its results. In vain may party platforms or orators
claim exclusive credit. Analysis of the votes in Congress reveals that
the progressives in neither the Republican party nor Democratic party
could, as a rule, have succeeded without the votes of progressives in
the other.
When I began this final paragraph I made a list of those to whom I
was indebted for supplying data, correcting mistakes, making fruitful
suggestions and other assistance. When the number passed 30 I
stopped. It included historians, political and social scientists, mem-
bers of Congress, engineers, attorneys, farm and labor leaders, experts
of the TVA staff, newsmen, men and women in government and in
private life. To select a few would be unfair so I make grateful ac-
knowledgment to them all without attempt to use names.
JuDSON King
Washington, D. C.
ACKNOWLEDGMENTS
The effort and support of many loyal friends of Judson King are
reflected in this posthumous work. The group includes Paul Todd,
president, and several hundred supporters of the National Popular
Government League; Gordon Clapp, former Chairman of TVA;
Dr. Harry Curtis, former director of TVA; Wilson Ragsdale of Senator
James E. Murray's staff; John M. Carmody, an early administrator of
REA; Dr. Horace Gray of the University of Illinois; John Robertson
and his wife. Hazel Norris Robertson; Dr. James C. Bonbright of
Columbia University; Marion Hedges of the Brotherhood of Electrical
Workers; Benton MacKaye, writer and conservationist, and others
consulted while this book was being prepared for publication.
Since Judson's death, the editing, proofing, indexing and similar
work have been performed by Benton Stong, Darel McConkey, Dor-
othy S. Curtis, Clay Cochran, George Taylor, and Jean Torgerson, who
have given liberally of their time and efforts.
Special appreciation is due M. B. Schnapper of Public Affairs Press
for his patience, his unfailing co-operation and assistance in all the
steps between manuscript and book.
Bertha Hale King
Takoma Park, Maryland
XVUl
CONTENTS
I The First Muscle Shoals Power Bill 1
II The Second Muscle Shoals Bill 4
III Water Power as a National Issue 10
IV Private Enterprise Partnership 34
V Hetch Hetchy and Municipal Power 40
VI The Federal Water Power Act of 1920 45
VII War and Water Power 59
VIII Building the Muscle Shoals Plants 75
IX Progress Under Wilson 86
X Reaction Under Harding 93
XI Henry Ford Arrives 98
XII Henry Ford Departs 115
XIII The Underwood-CooHdge Coahtion 123
XIV Strength of the Power Companies 142
XV The Chemical Barrage 158
XVI The Norris Bills and PubHc Opinion 166
XVII Congress Turns to Public Operation 173
XVIII Politics and Water Power 179
XIX Hoover's Honeymoon Days 188
XX Federal Power Commission Battles 211
XXI The Norris Compromise Bill 234
XXII The Presidential Campaign of 1932 251
XXIII Passage of the T.V.A. Act 267
XXIV Retrospect and Prospect 277
References 297
Index 305
xix
CHAPTER I
THE FIRST MUSCLE SHOALS POWER BILL
Shortly after the inauguration of William McKinley in 1897 a group
of Alabama business men residing in Florence, SheflBeld, and Tuscum-
bia organized the Muscle Shoals Power Company and applied to Con-
gress for permission to construct a lateral canal and hydroelectric
power plant at that point on the Tennessee River. Acting in accord
with the customary practices of their time, they envisioned a profitable
business venture and no trouble. They Httle realized that their request
would spark a dramatic controversy over federal versus state jurisdic-
tion of the latent water power in the nation s navigable rivers, a con-
troversy that would continue for 60 years and remain unsettled. Their
scheme was approved by Congress and the President, as will presently
appear, but let us first take a glance at the stage-setting of the drama.
The geologic dip that gave birth to world-famous Niagara Falls
is only 21 feet higher than the one creating the nationally famous
Muscle Shoals on the Tennessee. Both were serious obstacles to the
early explorers and settlers of colonial times for whom navigable rivers
provided the best and sometimes the only practical means of inland
transportation. Niagara's direct plunge of 155 feet, a miracle of
nature, afforded at least some compensation for the interruption of
navigation when the tourist trade became a commercial asset. No
such advantage was provided by the Tennessee. There the river boil-
ed over rocks and shoals for 37 miles before it reached its lower level
where boats, rafts, and barges could proceed in safety.
Along the banks of the Tennessee River, for the 382-mile stretch
between Tuscumbia in Alabama and Knoxville in Tennessee, there
was a string of towns and the city of Chattanooga, all in need of water
transportation. By 1826 steam boats were running regularly from
New Orleans up the Mississippi, the Ohio, and the Tennessee for 260
miles to the town of Florence, where they were forced to stop at the
foot of the shoals. It takes but little imagination to understand what
a fearful liability these shoalswere to the economic development of
that great region in the heart of the Southland.
The federal government was slow to act. In 1824 President Monroe's
Secretary of War, John C. Calhoun, urged action on the grounds that
Muscle Shoals was one of the nation's most serious obstacles to navi-
Z THE CONSERVATION FIGHT
gation. In 1828, during the administration of John Quincy Adams,
a strong advocate of internal improvements, the government made a
survey for a canal around the shoals and gave 400,000 acres of land
to the state of Alabama. The sale of the land would defray the cost
of constructing the canal. The amount realized was not enough, and
neither Alabama nor the other states affected could supply the defic-
iency. A canal of a sort was built around Big Muscle Shoals, but this
was of little worth since there were dangerous rapids both above and
below. In 1838 the enterprise was abandoned.
A generation passed with nothing done. The situation was some-
what relieved by the arrival of railroads. However, river navigation
was still desired. The Civil War suspended any activity. In 1871 the
federal government again took up the task. A canal capable of accom-
modating small boats of five-foot draft was built around the shoals,
but it was not completed until 1890. The waterway thus provided
soon proved inadequate. By the end of the century the Tennessee
Valley with an area larger than Iowa was still handicapped by lack
of adequate inland navigation. Eight years more were to elapse before
men of greater daring were to propose high cross river dams, with locks
for navigation and generators to produce power. Meantime efforts
to build small powerplants went forward.
General Wheelers Bill. In 1898 Representative Joseph Wheeler of
Alabama, an ex-Confederate general who owned an estate on the
Tennessee, introduced a bill (H. R. 9335) granting the newly formed
Muscle Shoals Power Company the right to construct and operate
canals and powerhouses on the south side of the river. The measure
was necessary because an 1890 law prohibited the construction of any
dam on a navigable stream without a special act of Congress and
approval by the Secretary of War. The 1890 law assumed that dams
might interfere with navigation over which the federal government
had unquestioned jurisdiction.
After General Wheeler retired from Congress to enter the Spanish-
American War, Representative John H. Bankhead of Alabama took
charge of the measure. It was referred to the Rivers and Harbors Com-
mittee of which Bankhead was a member and Theodore E. Burton,
Ohio Republican, was chairman. Here began the long national policy
struggle between federal and state jurisdiction over water power.
Burton reported the bill favorably but with two amendments which
stated: "Strike out, in lines 9 and 10, the words 'that are and always
have been unsuitable and unused for the purposes of navigation' and
add after hue 5, page 2, the words 'and the Secretary of War is authori-
THE FIRST MUSCLE SHOALS POWER BH^L 3
zed and directed to fix reasonable charges for the use of said power /'
Both changes involved jurisdiction. The original phrasing would
have deftly ended federal control of power by assuming that "navi-
gable waters" did not include those portions of rivers containing shoals,
falls, and rapids which in their natural state prevented the free pass-
age of vessels. That contention was for many years asserted by the
private power interests. The inserted sentence authorizing the Sec-
retary of War to fix charges was a positive assumption of national
sovereignty over water power.
Objectionable as these Burton amendments were to Bankhead, a
vigorous states rights Democrat and veteran of the Civil War, he ap-
parently accepted them in order to get the bill enacted. In the brief
floor debate that followed he assured the House that charges would
be levied "in case any compensation is required and just.""" That
mild hint of resistance from the states righters was soon to change
into the defiant statement, "The United States has nothing to sell.'*
However, the bill, with only minor Senate amendments, was passed
and signed by President McKinley on March 3, 1899.
Burton and Bankhead were strong personalities. This was their
initial skirmish in the conflict over national water-power policy. We
shall find them as leaders of the contending forces for many years
in the House and later in the Senate. Significantly, Burton's advanced
position was taken five years before President Theodore Roosevelt's
first water-power veto and three years before T. R. began endorsing
conservation principles.
CHAPTER n
THE SECOND MUSCLE SHOALS BILL
The promoters of the first attempt to develop water power at Muscle
Shoals did not initiate construction although Congress extended their
authority for four years. The reason given was that investors were
repelled by the provision that the government charge for the use of
the water. Theirs was a useful argument against federal control, but
a more hkely reason is that they were doubtful of the feasibiHty of
hydroelectric undertakings.
Despite this first failure, interest in the project continued, and in
1902 William Richardson, General Wheeler's successor as Congress-
man from the Muscle Shoals district, introduced a bill (H. R. 14051)
permitting N. F. Thompson and associates to erect a dam and con-
struct power stations at Muscle Shoals. The Senate's counterpart
was introduced by Senator John T. Morgan of Alabama. The bills
proposed essentially the same privileges given earlier to the Muscle
Shoals Power Company.
In the House the measure, as amended to provide charges, passed
easily on June 3, 1902, but the Senate bill was reported adversely.
However, in the following session the Senate passed the Richardson
measure on February 18, 1903, without question or debate, and on
March 3rd, to everyone's surprise, the bill received an unexpected
veto from President Theodore Roosevelt. This veto was the first in-
dication that the energetic young President's ideas on water power
differed from those of the conservative McKinley who had readily
signed a similar bill.
President Roosevelt's First Water Power Veto. Both the veto mess-
sage and subsequent House action were important. It was Roosevelt's
first endorsement of conservationist principles governing the utiliza-
tion of water power which within a decade were to become poHtical
issues of national concern. The House debate was the first in Con-
gress on the subject.
After the usual preliminaries, T. R.*s veto message stated the reasons
for his action: "The recent development of the application of water
power to the production of electricity available for use at considerable
distances has revealed an element of substantial value in streams which
the Government is or is not liable to be called upon to improve for
THE SECOND MUSCLE SHOALS BILL 5
purposes of navigation, and this value, in my judgment, should be
properly utilized to defray the cost of the improvement/* ^
High voltage transmission lines built at that time extended as far as
100 miles. A bill pending in Congress to give the Keokuk damsite
on the Mississippi River to a private company reflected the increasing
interest in hydroelectric projects. There was no suggestion about how
the public interest in a "water-fall of great value" was to be protected
but the veto message urged that "the entire subject of granting pri-
vileges of the kind referred to in this bill should be considered in a
comprehensive way and that a general policy appropriate to the new
considerations caused by the advance in electrical science should be
adopted."
Angered by the veto of his bill, Congressman Richardson expressed
strong dissent. To prove the President in the wrong he read into the
Congressional Record sl letter from the Army Chief of Engineers,
General G. I. Gillespie, approving the measure. "Why," Richardson
exclaimed, "the President of the United States should be induced or
persuaded to disapprove a local bill of this character to which the
Chief of Engineers of the United States Army says there is no objec-
tion whatever I cannot understand. I am surprised."*
Richardson spoke in good faith. He and most of official Washing-
ton failed to recognize that a new era was dawning. But Representa-
tive Burton had more insight. He evidently had been doing a good
deal of thinking since his approval of the first Muscle Shoals bill
three years before. In a forceful rejoinder he said: "The veto of the
President is right ... it is aimed at a vicious practice . . . you cannot
say this is a mere local measure. Such a bill as this fixes a precedent
for the use of water power in every navigable stream in the United
States ... by which the Government after making expensive public
works in rivers, constructing locks and dams or otherwise, absolutely
barters away for nothing that which is of greater value than the cost
of the works themselves [it throws] the door wide open for favori-
tism and monopoly."
The bill was returned to the Committee on Interstate and Foreign
Commerce. It was killed by a roll call vote of 200 to 64; 80 abstained
from voting. *
The Third Muscle Shoals Bill. Congressman Richardson continued
his efforts, but getting the consent of Congress to "a little local bill,"
as he termed it, came to naught. The value of the privileges sought
was beginning to be appreciated, and the growing number of applica-
tions for them from different sections of the country was requiring
e THE CONSERVATION FIGHT
much attention from Congressional committees. According to Repre-
sentative William C. Adamson of Georgia, "Almost every day and
every week someone is discussing the subject and seeking permission
to construct dams for the improvement of water power." *
The General Dam Act of 1906. On February 28, 1905, a full-dress
House debate was held on H. R. 19029, a bill sponsored by Representa-
tive James R. Mann of Illinois which "sought to provide for permitting
private enterprise to construct dams in navigable streams." The mea-
sure laid down general conditions governing all such grants. If and
when the Army Chief of Engineers and the Secretary of War found the
plans and specifications complied with the conditions, Congress could
pass a simple resolution authorizing the applicant to proceed. The
chief condition was that the power projects should not interfere with
navigation. The right of appeal was reserved, but no time hmit was
placed on the grants, and the vital question of "charges" was not
mentioned.
Richardson opposed passage of the bill. He held that the rights of
the states were being invaded and that the riparian owners would have
their property rights in power destroyed by the severe conditions
imposed. "We do not endeavor to infringe upon the power of the
state," Mann replied. Congressman William P. Hepburn of Iowa, an
outstanding Republican and chairman of the committee that had
approved the bill, declared: "It is solely in the interest of saving the
time of the House." Richardson s final retort was that the probable
effect "is to throw all of these valuable franchises or privileges into
the hands and absolutely under the control of the federal government"
as well as to frighten investors and prevent the development of Muscle
Shoals. He again endorsed the policies recommended by the Army
Chief of Engineers (this time General Alexander Mackenzie) which
he read into the Congressional Record. ^ The bill failed to pass but
was reintroduced by Mann at the next session of Congress, as H. R.
8428. It was passed and approved on June 25, 1906. A feeble but
important step forward, it became known as the General Dam Act
of 1906. Four years later, during the Taft administration, the Act
was slightly improved under Mann's guidance.'
Taft on Jurisdiction. The question of jurisdiction was becoming
more acute. The Roosevelt veto had assumed federal control over
water power in navigable streams, a legal doctrine disputed by the
electrical industry from the beginning. Promoters were trying to
interest capital in the Muscle Shoals enterprise, but investors were
apprehensive since policies were not determined. Seeking advice.
THE SECOND MUSCLE SHOALS BILL 7
the Senate addressed a resolution of inquiry to Secretary of War
William Howard Taft, previously an eminent lawyer and jurist. The
resolution, approved January 24, 1905, requested certain information
about the Muscle Shoals canal, asked Tafts opinion whether a com-
mission should be created to make full inquiry, especially as to the
disposition that should be made of the water power furnished by the
shoals of the Tennessee River, and what legislation, if any, "Congress
should provide for the proper adjustment and regulation of the rights
of the United States and the State of Alabama and also (the rights)
of the riparian proprietors and the owners of islands in the Tennessee
River at these localities." '
Why the Senate did not address its inquiry to the Attorney General
of the United States is not clear. The resolution put the Secretary of
War in an embarrassing position. Although he did not favor federal
control, President Roosevelt did. An open rift with his chief was not
politic. Taft resolved the difficulty by handing the resolution to the
Army Engineers. A forthright and positive reply to the Senate was
v^itten by Major H. C. Newcomer, district engineer at Chattanooga,
and approved by Chief Engineer General Alexander Mackenzie. "I
have no suggestion to offer of any work to be undertaken by a com-
mission," Major Newcomer stated, *T am not aware that the United
States has any right or interest in the water power that can be devel-
oped at Muscle Shoals aside from its control over the water fall for
purposes of navigation and its ownership of the canal properties."
Taft forwarded the document, without comment, to the Senate. ®
A Time for "Sedate Consideration". Agreeing with the Army Engine-
ers on jurisdiction but desiring more information. Senator John T.
Morgan of Alabama acted swiftly. A resolution adopted on March 2,
1905, resulted in appointment of Senators Morgan, Edward W.
Carmack of Tennessee and Lee S. Overman of North Carolina as a
select committee to examine the problem of navigation on the Tennes-
see, "taking into consideration the Taft report."
The committee sat during the summer recess. On December 14,
1905, it presented a surprise report to the first session of the 59th Con-
gress. It recommended a definite poHcy for the disposition of the
nation's water powers and set a value upon those at Muscle Shoals:
'We have reached the point of time in which the sedate consideration
of the value of water power must prevail. It is already among the
greatest actual reinforcements of the money resources of the Govern-
ment aside from taxation in the improvement of the navigation of all
8 THE CONSERVATION FIGHT
our mountain water courses. This new departure has come to stay and
it is a great step in our progress."
Though this statement seemed to agree with the doctrine urged by
Burton and expressed in the Roosevelt veto message, there was actual-
ly a sharp difference. The committee went along on the theory that
it was both lawful and expedient for private enterprise to build both
dams and locks; in return private utihties were to receive "perpetual
rights" to the water power to be developed under state regulation.
To this the progressives disagreed. The estimated cash value of the
power at the Shoals, approximately $2,996,250 a year, demonstrated
why private capital should be interested.
Long Distance Transmission Arrives. Another factor, overlooked
by the Senators, was coming into play. The factor was long distance
transmission, which would greatly increase the value of Muscle Shoals
and all other damsities. Long distance transmission ushered in the
electrical age as we know it. A summary of its development throws
considerable light on the economic forces behind the furor which
was to engulf the country's water power policy.
After more than a century of experiment and invention, Thomas
A. Edison built his Pearl Street station in New York City in 1882.
Electrical service from a central station was made available to large
municipalities. Stanley's alternating current transformer of 1886 made
it possible to step up voltages and transmit current for much longer
distances. Tesla's polyphase motor or 1888 provided smooth continu-
ous power. In 1902 the U. S. Census Bureau reported that in the five-
year period between 1886 and 1890 central station service was strictly
limited but that a few stations embraced in their operations whole
counties and even larger districts.'
By 1906 a private company in California was boasting that its 232-
mile transmission hue was the longest in the world; and in that year
Ontario's public system of hydroelectric power was planning a 250-
mile line from Niagara Falls to Windsor, a city opposite Detroit. In
1909 Percy H. Thomas, a distinguished pioneer in electrical transmis-
sion, announced formulas for the calculation of high tension lines up
to 700 miles; 300 miles was regarded as technically and commercially
feasible at that time.
The advent of long distance transmission revolutionized the electri-
cal industry technically and financially, plunged it deep into national
politics, and brought water power into sharp competition with coal,
oil and gas in the generation of electricity. Worthless falls and shoals
THE SECOND MUSCLE SHOALS BILL 9
in rivers remote from commercial centers possessed a million-dollar
potential that led to a veritable gold rush to obtain ownership.
The pressure on Congress became severe. Prior to 1901 only 13
grants had been made on minor hydro power sites. In the next five
years 17 grants were made, including the great Keokuk site on the
Mississippi. In 1906 and 1907 came a flood of bills proposing more
outright gifts to private companies. Forty were passed and approved
by President Roosevelt. Others were pending.
Enter Worthington and Washburn. In addition to scientific improve-
ments in the electrical field the age of the Big Dam had also arrived.
Colonel J. W. Worthington of Sheffield, Alabama, dreamed of great
cross-river dams and locks that would make Muscle Shoals navigable
and develop power. In New York City Frank S. Washburn, president
of the nascent American Cyanamid Company, needed a source of
very low-cost electricity to expand his business. The two got together,
organized the Muscle Shoals Hydro-electric Power Company and
applied to Congress in 1906 for a permit to harness the Shoals in con-
formity with modem engineering concepts.
It was the misfortune of Messrs. Worthington and Washburn that
other men of consequence had radically different ideas regarding the
policy to be followed in exploiting the nations natural resources.
These men were soon to inaugurate the "conservation movement" as
a powerful factor in politics and government. Three years later con-
servation became a political issue of the first magnitude, centering
on whether the public interest should take precedence over private
interests in hydroelectric development.
The contest over Muscle Shoals was waged for ten years until
World War I settled the matter in 1916 in a manner which neither
side anticipated. The efforts of Worthington and Washburn and their
allies are dealt with in Chapter IV. However, attention must now
be given to the conservationists since their movement has profoundly
affected power policy.
CHAPTER m
WATER POWER AS A NATIONAL ISSUE
The conservation movement stands in history as the greatest achieve-
ment of Theodore Roosevelt's administration.
In his autobiography T. R. records that immediately after he return-
ed to Washington following the assassination of McKinley in 1901
he was visited by Gifford Pinchot, chief of the Forestry Bureau since
1898, and Frederick Newell, hydrauHc engineer in the Geological
Survey. Pinchot laid before him the appalling situation facing the
nation as a result of the rapid destruction and waste of forests and the
inadequacies of existing laws to cope with the situation. Newell
talked of water resources, storage dams, and why the government
should undertake reclamation of arid lands. Roosevelt requested
Pinchot and Newell to prepare material to use in his first message to
Congress. This message of December 3, 1901, laid the foundation
for the development of irrigation and forestry during the next seven
and a half years. "The forests and water problems are perhaps the
most vital internal problems of the United States," Roosevelt declared
in no uncertain terms.
Here we have the real start of the conservation movement. To
T. R. to think was to act. His attitude in this connection was soon
applied not only to natural resources but also to the pubHc services
and industries based on them.
The Pioneers. T. R. has given generous credit to the men who
instructed him and inspired his drastic departure from traditional
pubhc policy. Their statesmanship marked an era in American his-
tory. The dynamic leader of the group was GiflFord Pinchot. A Yale
graduate who had traveled abroad and studied European forestry
systems, he was the first professional forester in the United States.
He knew what forests meant to modern civilization as did Overton
Price, close personal friend and associate in the Forest Service. Under
the Act of 1905, ancient conservation practices were revolutionized
and the Forest Service of the Department of Agriculture set up with
Pinchot as chief.
In the Geological Survey was another man aware of the importance
of the "new attitude"— Dr. W. J. McGee, an eminent geologist with
a profound knowledge of water, soil erosion, and other conservation
10
WATER POWER AS A NATIONAL ISSUE 11
matters — who knew the relation of these subjects to forestry, and to
permanent national prosperity and stability. Both Pinchot and
Roosevelt considered McGee "the scientific brain" of the early con-
servation movement. It is characteristic of careless American thinking
that a public servant of McGee's caliber and invaluable service is
often forgotten.
There was George W. Woodruff, associate law officer of the Forest
Service, later assistant attorney general of the Interior Department
and still later a federal judge. He supplied the "legal brians" for
the new movement. Working with Woodruff was former Yale law
librarian Philip P. Wells who later became chief law officer of the
Forest Service. Another Yale man. Attorney Herbert Knox Smith,
at first deputy and later Commissioner of the Bureau of Corporations
in the Department of Commerce and Labor, suppHed official informa-
tion on power company mergers at a time when the companies were
insisting there were no water power monopolies in the making.
In Congress there were two outstanding House members who joined
the crusade. One, a Democrat, Francis G. Newlands of Nevada, an
attorney and businessman, had been fighting for state and federal
irrigation laws since 1893. He sponsored the Reclamation Act ( 1902 )
recommended in T. R.'s first message to Congress. Later, as Senator,
he became the leader for unified multipurpose river development
throughout the nation.
The other was Theodore E. Burton, Republican of Ohio, another
lawyer whom we have already found crossing swords with Congress-
men John H. Bankhead and William Richardson of Alabama over
water power jurisdiction in navigable streams. Burton was a vigorous
foe of monopoly; Corporations and the State, a book he published in
1911, warned against control of politics and government by the trusts.
These were some of the principal men in whose minds the conser-
vation idea had its origin. They were not academic theorists; they
were practical administrators and experienced law makers. To be
sure, long before them were other men of vision: Carl Schurz, Sec-
retary of Interior in the 1870s: Professor Nathaniel S. Shaler, Harvard
geologist; and mineralogist Charles Richard Van Hise, President of
Wisconsin University. They had sounded warnings against waste
in their time but to no avail.
The Start. The conservation movement began vdth forestry. Though
the nation was pleased to assume that its timber supply was "inex-
haustible,'* Pinchofs survey showed the demand for lumber to have
been so tremendous during the nineteeth century that the nation's
12 THE CONSERVATION FIGHT
forests would be exhausted within two or three generations if it con-
tinued. After that what? Moreover, the survey showed that an
enormous percentage of timber was still being wasted through faulty
logging and by great forest fires. No adequate system of fire preven-
tion had been provided. No system of reforestation such as existed
in European countries had been taught to our landowners. Our
resources of coal, oil, gas and other minerals were being depleted.
The result was hasty and heedless exploitation for immediate profits
with no thought of the public or the future.
A great proportion of the nation's natural resources had passed
into private hands in a legal enough fashion. No moral censure
could be directed against an owner using his property for his personal
gain in accordance with the mores of the time. But there were thou-
sands of cases in which great tracts of land and the mineral and forest
resources that went with the land had been fraudulently acquired,
especially by great railroad and other corporations. The practice
was still going on.
Closely involved was the related problem of river water. Most
people were surprised that water was a natural resources in need of
conservation. Pinchot put it this way: **The relation between forests
and rivers is like that between father and son. No forests, no rivers.*'
And, **A river is a unit from its mouth to its source." ^ Rivers meant
inland navigation, irrigation, domestic and commercial water supply,
flood and erosion control, and hydroelectric power — all intensely
practical political issues.
Within the forest reserves were many power sites made valuable
by long distance transmission. As custodian, Gifford Pinchot came
into contact with power companies, mining and lumber concerns,
and other interests seeking possession of these sites and rights of way
for transmission hues, practically as gifts as had been the custom. In
this way he and his group were confronted with the electric power
situation. The conservationists noted that water power was the only
remaining great resource still largely in pubhc possession, and they
proposed to keep it there. The power industry was young but evi-
dently destined to be a giant. Mergers had already begun; the way
had been paved for ultimate control by monopoly. Prospect of the
fight ahead gave zest to the conservationists' efforts. The increase
in the number and size of trusts since the creation of the Standard
Oil Company in the 1870's despite the Anti-trust Act of 1890, was
profoundly disturbing to the country. The growth of the trusts had
WATER POWER AS A NATIONAL ISSUE 13
become a major political issue against which all parties were inveigh-
ing in the campaign platforms.
Conservation scientists concerned with reforestation, or how to
prevent a billion tons of fertile soil from being washed into the Gulf
of Mexico every year, and with the best engineering methods of river
control, suddenly found themselves confronted with a political prob-
lem. Pinchot acknowledged that Dr. McGee had awakened him to
the danger to conservation from that quarter. Capitalists would exert
pohtical pressure and make short shrift of government measures that
got in their way. Conservationists were dubbed socialist dreamers,
obstructionists, impractical theorists. They retorted: "If America
is transferred into an industrial and financial feudalism, poHtical demo-
cracy will be destroyed."
While American businessmen in general were not concerned with
such abstruse matters as forestry and soil preservation, there was
one aspect of river development in which they were greatly interested
—inland navigation. Many of them were at war with the raihoad
chiefs over high rates and regional discrimination. This conflict
treated a timely issue that gave the conservationists their chance.
The Inland Waterways Commission. On March 14, 1907, President
Roosevelt created the Inland Waterways Commission, explaining
that "Numerous commercial organizations of the Mississippi Valley
have presented petitions asking that I appoint a commission to prepare
and report a comprehensive plan for the improvement and control
of the river systems of the United States."*
Businessmen undoubtedly expected more and higher levees for flood
control and more and deeper channels for navigation. But T. R.'s
directive went much further. This directive was "the first formal step"
in applying the conservation idea that had originated in the Forest
Bureau. * After noting that control had been spotty and devoted
to isolated individual purposes, the President announced that "the
time has come for merging local projects and uses of the inland waters
in a comprehensive plan designed for the benefit of the whole country.
Such a plan should consider and include all the uses to which streams
may be put and co-ordinate the points of views of all users of water."
Getting more specific, he continued: "Any plan for utilizing our
inland waterways should consider floods and their control by forests
and other means; the protection of bottom lands from injury by over-
flow and uplands from loss by soil-wash; the physics of sediment-
charged waters and physical or other ways of purifying them; the
construction of dams and locks, not only to facihtate navigation but
14 THE CONSERVATION FIGHT
to control the character and movement of the waters; and should
look to the full use and control of our running waters and the complete
utilization of our waterways for the benefit of our people as a whole."
And then came a paragraph that challenged the very foundation
of laissez faire control and announced the necessity for a new national
policy: "It is not possible properly to frame so large a plan as this
for the control of our rivers without taking into account the orderly
development of other natural resources. Therefore, I ask that the
Inland Waterways Commission shall consider the relation of the
streams to the use of all the great permanent natural resources and
their conservation for the making and maintenance of prosperous
homes." That this statement was not a mere pohtical flourish is indi-
cated by the concluding sentence and supported by subsequent action.
"The reports of the commission should include both a general state-
ment of the problem and recommendations as to the manner and
means of attacking it."* The conservationists were keenly aware of
the powerful opposition these proposals would arouse. Roosevelt
afterward conmiented on "the incredible bitterness with which the
great crooked special interests fought the new policy." He appointed
a commission of nine, seven members of which were originators of
and crusaders for the conservation movement. ^
Less than a year later, on February 3, 1908, the commission made a
preliminary report, supported by a mass of scientific data. It found
that "a comprehensive system of waterways" must include not only
navigation and flood control but "all other uses of water or the benefits
to be derived from their control." In respect to water power it de-
clared: "In the light of recent progress in electrical application, it
is clear that over wide areas the appropriation of water power offers
an imequaled opportunity for monopolistic control of industries.
Wherever water is now or will hereafter become the chief source of
power, the monopoHzation of electricity produced from running
streams involves monopoly of powers for the transportation of freight
and passengers, for manufacturing, and for supplying light, heat, and
other domestic, agricultural and municipal necessities, to such an extent
that unless regulated it will entail monopolistic control of the daily life
of our people to an unprecedented degree. There is here presented an
urgent need for prompt and vigorous action by State and Federal
governments."
The new national water policy was proposed in these words: *We
recommend that hereafter any plans for the use of inland waterways
in connection with interstate commerce shall regard the streams of
WATER POWER AS A NATIONAL ISSUE 15
the country as an asset of the people, shall take full account of the
conservation of all resources connected with running waters and shall
look to the protection of these resources from monopoly and to their
administration in the interests of the people."
The President had asked for suggestions as to the manner and means
of attacking the problem. The answer was bold and clearcut: Con-
gress should enact legislation empowering the federal government
to take the lead and to act on development proposals. Congress
should also enlist the cooperation of states and municipalities and
provide these requisites: "expert framing of a definite policy; cer-
tainty of continuity and coordination of plan and work; expert initia-
tive in the choice of projects in accordance with terms of cooperation
and the widest opportunity for applying modem business methods." °
All of these requisites, significantly, were incorporated in the corporate
form of organization under which the Tennessee Valley Authority
operates today.
Finally the commission recommended that the President be authori-
zed to appoint and organize, with the advice and consent of the
Senate, a National Waterways Conmiission to bring into coordination
the Corps of Engineers of the Army, the Bureau of Soils, the Forest
Service, the Bureau of Corporations, and other branches of the pubHc
service whose work related to inland waterways. "^
All nine members of the commission signed the report with the
exception of General Alexander Mackenzie, Chief of Army Engineers,
who filed a dissenting supplementary report. In diplomatic language
he objected to the inclusion of related subjects not "clearly and neces-
sarily associated with the subject of channel improvement" and to
the creation of a permanent waterways commission. Regarding the
latter he stated: "I believe a recommendation for so radical departure
in the methods of planning and executing the improvement of water-
ways is at least premature [because] all work proposed for the per-
manent commission can be equally well provided for by the existing
agencies of the Government." By "existing agencies," he meant, of
course, the Army Engineers and the Reclamation Service. *
Senator Newlands signed the report and also submitted a supple-
mentary report aimed at General Mackenzie and the States Righters:
"I concur in the report of the Commission, but desire to emphasize
my belief that it is of the highest importance that in dealing with
subjects relating to the respective powers, rights and interests of the
nation, states, municipalities, corporations and individuals, large
powers and a comparatively free hand should be given to an adminis-
16 THE CONSERVATION FIGHT
trative body of experts in the full development of projects, lest the
complexity of the transactions, the time necessary to secure congres-
sional approval, and difference of view as to purpose or method, may
result in indecision and delay, the worst enemies of effective deve-
lopment.
"An ample fund should be provided, to be reinforced from time
to time either by legislative appropriation or by bond issue, and the
administrative board or commission should be given the power, not
only to instigate projects, but also, when determined to be feasible,
to enter, with the approval of the President, upon their immediate
execution; but the power should be limited so as to prevent such
administrative body from entering into any contract unless there are
suflBcient unappropriated moneys in the fund to meet the cost thereof.
"Unless some method of construction and development, insuring
prompt decision and execution and continuous work by a body of
experts is adopted, I fear that the best of projects may be wrecked
in the shoals and quicksands of legislation." '
The report is of great historical importance. Herein were first
clearly drawn the battle lines around which contending forces have
fought for a half century. The issues were ( 1 ) national versus local
or regional advantage, (2) public welfare versus private monopoly,
(3) comprehensive and multipurpose versus single and piecemeal
development, (4) scientific versus pohtical pork-barrel planning,
(5) federal versus state jurisdiction, and (6) modem unified regional
management versus conflicting controls by old bureaus.
In preparing its report the commission had traveled widely, accom-
panied by a corps of scientific experts headed by the commission's
secretary. Dr. W. J. McGee. Newspaper publicity reached its peak in
October 1908, when the party, traveling on a government steamer
with President Roosevelt as its guest, made an inspection trip on the
lower Mississippi. In his speech at Memphis T. R. announced his
intention to call a governors' conference on conservation.
While the commission in its report spoke definitely of water power
as an "intrinsically permanent asset which should be utilized for the
benefit of the people," and warned against private monopoly which,
"unless regulated will entail monopolization of control of the daily
lives of our people to an unprecedented degree," yet nothing specific
was offered as a remedy. Three months later, however, the President
himself became specific.
The Rainy River Veto. In April 1908 Congress passed, with the
approval of Army Chief of Engineers General Mackenzie, a bill ex-
WATER POWER AS A NATIONAL ISSUE 17
tending for the fourth time a grant to the Rainy River Improvement
Company to construct a power dam on the Rainy River, an inter-
national stream in northern Minnesota. Although ten years had
elapsed since its original enactment, nothing had been done. Roosevelt
vetoed the measure in a message to Congress which put the power
policy of the conservationists in concrete form and began a new era
in water power legislation. The governing principles and specific
recommendations were stated at the conclusion of the message as
follows :
"The present policy pursued in making these grants is unwise in
giving away the property of the people in the flowing waters to in-
dividuals or organizations practically unknown, and granting in per-
petuity these valuable privileges in advance of the formulation of
definite plans as to their use. In some cases the grantees apparently
have little or no financial or other abihty to utilize the gift and have
sought it merely because it could be had for the asking.
*ln place of the present haphazard policy of permanently alienating
valuable public property we should substitute a definite policy along
the following lines:
"First, there should be a limited or carefully guarded grant in the
nature of an option or opportunity afforded within reasonable time for
development of plans and for execution of the project.
"Second, such a grant of concession should be accomplished in the
act making the grant a provision expressly making it the duty of the
designated ofiicial to annul the grant if the work is not begun or
plans are not carried out in accordance with the authority granted.
"Third, it should also be the duty of some designated oflBcial to
see to it that in approving the plans the maximum development of the
navigation and power is assured, or at least that in making the plans
these may not be so developed as to interfere with the better utiliza-
tion of the water or complete development of the power.
"Fourth, there should be a license fee or charge which, though
small or nominal at the outset, can in the future be adjusted so as to
secure a control in the interest of the public.
"Fifth, provision should be made for the termination of the grant
or privilege at a definite time, leaving to future generations the power
or authority to renew or extend the concession in accordance with
the conditions which may prevail at that time."^"
Nothing Short of a Crime. To men who sincerely believed that the
latent power in a waterfall was the personal property of whoever own-
ed the adjoining land, under state sovereignty, Roosevelt's ideas ap-
18 THE CONSERVATION FIGHT
peared not only legally absurd but socially immoral. Their position
was forcefully stated by Captain William Patrick Lay, founder and
president of the Alabama Power Company, a man of great energy and
foresight, whose dream of industrial empire included the harnessing
of the rivers of Alabama with a great dam at Muscle Shoals as the
capstone of his hyroelectric generating system. In trenchant English
this water power pioneer struck at the ideology of the "self-styled
conservationists," "taxationists," and "would be bureaucrats" in a
fashion that clearly reveals the attitude of utility executives of his
day. OflBcial Washington and a majority of the Congress shared
his views. He stated:
"The fundamental principles underlying our form of government,
holding sacred private property, private rights and privileges, have
weathered the storm of ages. Why are we now called on to abandon
those safe-and-sound moorings, follow off after false Gods and branch
out into untried fields of theory?
"We must insist that, on the sanctity of private property, our con-
stitution and laws, more than all else, depends our proper future pro-
gress.
"The water powers, in their undeveloped state, along the rivers of
this country belong to the riparian owners, under the sovereignty of
the states, subject, of course, to the prior rights of navigation and
navigation only. This is a property right, the protection of which is
guaranteed by the constitution of the United States and those of the
several states . . . The most unfortunate feature in connection with
this move, however, is the fact that a goodly number of people advo-
cating these confiscatory measures are officials of government who are
oath-bound to support the constitution and the laws of the land. It
is bad enough for a citizen to advocate such measures, but for an
official of government, who is still resting under the obligation of
his oath of office, to do so is almost beyond comprehension. From
the standpoint of consistency, for an official of government to advocate
such confiscatory measures right in the face of the constitution, might
very properly be considered as nothing short of a crime.*' "
But industrial promoters of Captain Lay's type, like most Americans,
were unaware that the stark individualism dear to the pioneer had
passed and that an era of social conscience and social responsibility
had begun. The conservationists understood this; they inaugurated
a vigorous campaign of education appealing to the people over the
heads of the standpatters in business and government. No popular
movement in our history has been handled so dramatically or with
WATER POWER AS A NATIONAL ISSUE 19
greater success than the one that implanted the novel idea of con-
servation of resources in the minds of the American people. Most
reforms start humbly and grow from the bottom up; this one filtered
from the top down.
The White House Conference of 1908. The White House Con-
ference of Governors on Conservation was held May 13-15, 1908. It
was the first assembly of governors ever held, but not of governors
only. Besides the President and 38 governors, the official photograph
shows members of the cabinet, the Supreme Court, several members
of Congress and four specially invited guests: John Mitchell, president
of the United Mine Workers; James H. Hill, president of the Great
Northern Railroad; William Jennings Bryan and Andrew Carnegie.
Also present were representatives of 68 national organizations and
48 distinguished scientists and administrators.
In the President's opening address every major note sounded in the
report of the Waterways Commission was reemphasized, and in addi-
tion the importance of conservation to national defense was under-
scored. The general principles of conservation were approved by
unanimous vote. Appointment of state conservation commissions and
a federal conservation commission to work in harmony was urged.
In respect to water power the conference recommended "the enact-
ment of laws looking to the conservation of water resources to the
end that navigable and source streams may be brought under complete
control and fully utilized for every purpose, [and] . . . that the waters
should be so conserved and used as to . . . develop power in the in-
terests of the people . . . and that monoply should not be tolerated." "
Under such auspices it was easy for anyone to laud conservation
in general, but just how and by whom it was to be applied was another
matter. In the background was the burning states rights issue and
much hostility to federal control. On that touchy and highly explosive
subject the resolutions committee was wary. The federal and state
governments were urged to cooperate within their respective jurisdic-
tions without mention of priority or what the limits might be.
Only a few speakers discussed water power. Governor Charles
Evans Hughes of New York, who was battling to prevent the Morgans
and DuPonts from capturing the St. Lawrence and other water power
sites in his state, was by far the most specific: "They [the sites]
should be preserved and held for the benefit of all the people and
should not be surrendered to private interests. It would be difficult
to exaggerate the advantages which may ultimately accrue from
20 THE CONSERVATION FIGHT
these great reservoirs of power if the common right is duly safe-
guarded." "
Few of the governors approved federal control. Governor Braxton
Bragg Comer of Alabama was pointed in his demand for state juris-
diction: "Outside the navigation easement we believe in the ripar-
ian owner. Whatever there is in the power of these waterways be-
longs to us, and if the Federal Government proposes to take hold of
this power and sell or rent the franchise, we beHeve it will be danger-
ous to tinker with the sacred rights of state sovereignty." When
Comer concluded. President Roosevelt roguishly remarked: "We
are greatly indebted to Governor Comer for his speech against cen-
tralization. Governor, I do not understand that you object to the
national government appropriating money to clear out the Muscle
Shoals?" Laughter and applause followed this sally; no reply was
made by the governor. "
There was ample reason for reticence or divided opinion on the
part of the governors both as to practical politics and constitutional
interpretation. The power companies were already potent and poH-
tically active. It was then an undecided question whether the federal
government actually had jurisdiction over water power as claimed
by the conservationists. The Supreme Court had not spoken, and
there was room for honest argument.
Governor Joseph W. Folk of Missouri tackled the dilemma head on.
He was eager to preserve the rights of the states, but he told the
conference that "the states must obtain the consent of the federal
government before anything can be done by the states to improve the
waterways and since that consent has to be obtained, the federal
government is in fact the owner, if not in theory, at least practically
speaking." He went further, saying he thought it the duty of the
federal government to improve the waterways. Referring to the
Missouri river, he said, "This river as well as all other navigable
waterways belongs, I believe, to the federal government." He added,
"The Newlands bill ought to pass Congress." It is of interest in our
time to recall that the bill introduced by Senator Francis Newlands
a few days before the 1908 conference provided for multipurpose
development from source to mouth of American rivers under a unified
management. '^
It was one of the conference's special guests, William Jennings
Bryan, who put a definite finger on the reason why states rights had
again become a national issue, 40 years after the Civil War. In his
formal address, he said: "There is no twilight zone between the
WATER POWER AS A NATIONAL ISSUE 21
nation and the state in which exploiting interests can take lefuge
from both. [Great applause.] My observation is that most— not all,
but most — of the contentions over the line between nation and state
are traceable to predatory corporations which are trying to shield
themselves from deserved punishment or endeavoring to prevent
needed restraining legislation.'* "
The sessions of the conference came off successfully under the skill-
ful guidance of its general secretary, Thomas R. Shipp, ably assisted
by the alert Dr. McGee. The conference received much pubHcity,
and millions of Americans added a new word — conservation — to their
vocabularies. President James B. Angell of Michigan University ap-
proved the work of the conference with these words: "I am sure this
will stand upon the record as a great historical event." His prophecy
proved sound.
The Joint Conservation Conference. With this auspicious beginning
the campaign for conservation went forward with remarkable speed.
Three weeks after the White House conference the President, on
June 8, 1908, created a commission to make the first survey of the
natural resources of the nation. While the survey was under way a
conference was held in Washington with President-Elect William
Howard Taft as chairman. It was attended by the governors of 20
states, representatives of 22 newly created state conservation com-
missions and of 60 national organizations. The states rights issue
was raised by Governor Comer's appointment of Capt. W. P. Lay,
of the Alabama Power Company, to represent the conservation com-
mission of Alabama. The Captain approved "proper conservation"
and recommended in a 74-page paper that the government "act in
conjunction with private capital in the development of water in terms
equitable to the government and to the riparian owners of the water
power rights" — the partnership idea.
Captain Lay's resolution was not approved but one offered by Sena-
tor Francis G. Newlands was endorsed unanimously: "We urge the
prompt adoption of the broad plan recommended by the Inland Water-
ways Commission for waterway development under an executive board
or commission appointed by and acting under the direction of the
President of the United States."
First Survey of Natural Resources. President Roosevelt's commis-
sion to make a survey of natural resources was set up in four sections
with members of Congress as chairmen of the various sections. All
were conservatives save Representative Burton. The executive com-
mittee headed by Gifford Pinchot and composed largely of the sec-
22 THE CONSERVATION FIGHT
retaries of the four sections, all liberals, did the actual work. Handi-
capped by lack of an appropriation, Pinchot, with orders from
Roosevelt, commandeered scientists in various government bureaus,
secured volunteer help from civilian sources and in six months, work-
ing under great pressure, produced the first inventory of the country's
resources and the only one for years to come. When the President
sent the National Conservation Comission's report to Congress on
January 22, 1909, as a basis for legislation, he described it as "one of
the most fundamental documents ever laid before the American
people.*' "
The James River Veto. On January 15, 1909, T. R. shocked Congress
and the utility world again by vetoing a bill authorizing William H.
Standish to build a power dam on the James River in Stone County,
Missouri. The doctrine laid down in the Rainy River veto of the
previous April was reaflSrmed and expanded in still more forceful
words. He found the bill did not protect the pubHc interest and in
eflEect read Congress a lecture on its responsibilities. "When the
public welfare is involved," T. R. declared, "Congress should resolve
any reasonable doubt as to its legislative power in favor of the public
and against the seekers for a special privilege . . . The people of the
country are threatened by monopoly far more powerful . . . because
in closer touch with their domestic life than anything known to experi-
ence . . . the great corporations are acting with foresight, singleness
of purpose and vigor to control the water powers of the country. They
pay no attention to State boundaries and are not interested in the
constitutional law affecting navigable streams except as it affords
what has aptly been called *a twilight zone' where they may find a
convenient refuge from any regulation whatever by the public, whether
through the national or the state governments." T. R. concluded his
veto with these words: "I esteem it my duty to use every endeavor
to prevent the growing monopoly, the most threatening that has ever
appeared, from being fastened upon the people of this nation." "
The campaign continued. On February 18, 1909, the North Ameri-
can Conservation Congress was held at the White House. Delegates
came from Canada, Newfoundland, Mexico, and the United States.
After five days a declaration of principles was adopted urging con-
servation of resources and condemning waste. It recommended "ex-
clusive ownership and control" of all waterways, urged that no rights
to the use of water power in streams be granted in perpetuity, and
proposed that leases and grants be made for a definite period but "no
longer than is required for reasonable safety of investment." More
WATER POWER AS A NATIONAL ISSUE 23
over, strict regulation of rates was demanded ''to the end that undue
profit or extortion may be prevented." ^^
While the North American congress was still in session, Roosevelt
invited 45 nations to participate in a world conservation congress at
the Hague. However, the project was dropped after he left the White
House. ''
Shortly before Roosevelt was to leave oflBce he ordered Garfield and
Pinchot to prepare a hst of important water power sites which he
might vdthdraw from entry before March 4, 1909. This was done.
As a result a million and a half acres and 16 western rivers were with-
in the public domain in 1909. These withdrawals were not made to
prevent development of water power or impede lumbering, mining,
or agricultural settlement indefinitely, but to hold possession until
Congress enacted laws protecting the people's rights in their national
properties. If the incoming President should cancel the withdrawals
or Congress remain inactive, the responsibility would be theirs.
Roosevelt had done his best. It was his last official act to protect the
nation's natural resources.
Congress Resists and Taft Retreats. We have already noted the
hostility of corporate enterprise to the conservation policies. They
battled with indescribable bitterness and with great effect. A few
members of Congress took an active part in the conservation movement,
but most of the leaders in both parties and a controlling majority in
Congress definitely opposed the "socialistic" performances of Roosevelt
and his "Tennis Cabinet." The conservation program was too sharp
a break with current practices; besides it was pohtically unwise and
even perilous for many members. It had to be stopped despite its
popularity. Opposition had been shown by the passage of grants that
ignored the Rainy River veto principles, and now resistance took the
familiar form of denying appropriations.
On August 10, 1908, Roosevelt created a Country Life Commission
with Dr. L. H. Bailey, dean of the College of Agriculture at Cornell
University as chairman. The commission's report in the following
January revealed many sensational facts about living conditions and
income on American farms. When Roosevelt asked Congress for
$25,000 to correlate and publish the mass of material collected by
the commission, his request was refused. To President-elect WiUiam
Howard Taft this refusal was notice of open revolt in Congress."^
During the presidential campaign and before the inauguration, the
"Old Guard" of the Republican Party began to exert pressure upon
Taft. They had had enough of the Square Deal; they wanted a
24 THE CONSERVATION FIGHT
return to the old order of things. As to forestry, mineral rights, and
water power, Pinchot's policies had been ideahstic, impractical, and
a hindrance to industrial progress. Conservation might be good, but
let's be reasonable.
The kindly William Howard Taft, who detested controversy, was
forced to choose between mihtant conservation and a rupture within
his party. He took the middle road, but the hour was too late for
such strategy. The resultant split between the reactionary and in-
surgent wings of the "Grand Old Party" caused one of the most bitter
and spectacular feuds in our political history, leading to the formation
of the Progressive or "Bull Moose" party, the defeat of Taft, and the
election of Woodrow Wilson in 1912.
President Taft was neither a traitor to nor full-fledged leader for
effective federal power policies. Roosevelt's methods were not his.
By nature a jurist with an innate reverence for written law, he was
quite honest in his belief that Roosevelt was wrong in holding as he
did in the James River veto, that the Chief Executive in case of doubt
over legislative powers should resolve the doubt in the public interest,
as against special privilege. For Taft the power had to be speci-
fically stated, and better still, be upheld by the courts no matter what
the practical emergency might be.
As president-elect, Taft had asked Congress to continue and finance
the National Conservation Commission, but as President he did not
renew the request. On August 5, 1909, at the end of the special ses-
sion of Congress called immediately after his inauguration, he signed
a bill authorizing a power company to build a dam on the Savannah
River in South Carolina. It contained the provisions that had caused
Roosevelt to veto the Rainy and James river legislation. Representa-
tive James R. Mann of Illinois told the House in effect that he had
talked with the President and the bill would not be vetoed since
Taft did not feel Congress had the constitutional right to levy charges
based on ownership of waters. ^
Roosevelt had urged a revision of the defective General Dam Act of
1906. Knowing that he would veto any bill that did not establish
federal jurisdiction and levy charges for use of waters. Congress had
done nothing. On April 11, 1910, however, Representative James R.
Mann, chairman of the House Interstate and Foreign Commerce Com-
mittee, reported a bill to amend the Dam Act of which he was the
principal architect. The Mann bill was at once denounced by the
conservationists as an abortive compromise, somewhat better than
the original act, but ineffective in the most important particulars.
WATER POWER AS A NATIONAL ISSUE 25
Charges for use of water were provided but they were not based on
the principles of regulation and the right of the government to control
power. There were other grave weaknesses, but the bill passed with-
out roll call and Taft signed it on June 23 without protest.
On January 7, 1910, for reasons to be discussed later, he had dis-
missed Chief Forester Gifford Pinchot, the country's outstanding
advocate of water power regulation, and appointed Dr. Henry Graves
of Yale, noted conservationist, as Pinchot's successor. As expected,
Taft also canceled many of Roosevelt's precipitate withdrawals of
land to protect water power sites. Doubting that T. R. had legal
authority to make these withdrawals, Taft asked Congress for specific
authority and received it. The Reclamation Bureau and other agencies
were ordered to reexamine all withdrawals. Speaking at the second
National Conservation Congress in the following September, Taft
declared that Roosevelt had "hastily withdrawn," on the recommen-
dation of the Reclamation Service, about four million acres in 29 river
basins in 9 states. Taft went on to announce the withdrawal of
3,475,442 acres "because they did not contain power sites." Protec-
tion had gone forward, however, and under Taft's guidance 1,456,899
acres, covering all the power sites included in the first withdrawals,
and many more, on 135 rivers in 11 states, were withdrawn. "The
disposition of these power sites," Taft explained, "involves one of the
most difficult questions presented in carrying out practical conserva-
tion."
It was a tense atmosphere in which the Second National Conserva-
tion Congress was held in St. Paul, September 5-8, 1910. The "termi-
nated" Gifford Pinchot was present, and the Congressional investiga-
tion of the Ballinger-Pinchot controversy in which President Taft had
fared badly had only recently reached a conclusion. Ex-President
Roosevelt, back from a lion hunt, was to speak the day after Taft
delivered his address. The whole nation was anticipating a feud
between the two men over conservation issues. States righters and
nationalists were present in force and the mild applause following
President Taft's speech was as nothing compared with the ovation
given the redoubtable "Teddy" when he reviewed the whole conser-
vation fight, declared for vigorous leadership and in effect rejected
Taft's course of action. He castigated Representative James A.
Tawney of Minnesota with whom Taft was collaborating; and he did
not omit from his remarks the agents of the power companies posing
as disinterested citizens at such congresses. As to states rights,
Roosevelt declared: "The essential question is not one of hairsplitting
26 THE CONSERVATION FIGHT
technicalities. It is not really a question of state against nation. It
is really a question of the special corporate interests against the pubUc
interest of the people." Hence, he was for federal control because it
would be more effective. ""
While "insurgent" RepubHcans and Democrats made considerable
trouble, the power interests and their conservative friends in the feder-
al Congress held their own very well during the Taft administration
until August 12, 1912, when they received a shock. On that day the
President vetoed a bill by Senator John Bankhead and Representative
Oscar Underwood granting the Alabama Power Company the right
to construct a dam across the Coosa River in that state. His grounds
were that no provision was made for charges ("a fatal defect in the
biir.) The veto was a complete reversal of the President's former
position. ^
Later Taft explained to Bankhead that he had a "Bull Moose" Sec-
retary of War, Henry L. Stimson, who had written the veto message
and that while he personally had not changed his views he could not
afford to have a row in his official family ( Stimson was again Secretary
of War during World War II under Franldin D. Roosevelt). Taffs
defection was a heartbreaking disappointment to the conservation
group. They were not crackpots as charged by the opposition; rather
they were experienced men of high personal attainments with an
esprit de corps not to be matched for a generation. They had expected
James R. Garfield to be reappointed Secretary of the Interior. Instead,
Taft selected Richard A. Ballinger, a corporation attorney of Seattle
and pronounced conservative. Eight months later, Pinchot informed
Taft in detail of Ballinger s activities, declaring him to be "the most
effective opponent of conservation policies we have yet had."
As the weeks passed their gloom increased. Taft was taking counsel
from such reactionaries as Senator Nelson W. Aldrich and Representa-
tives Cannon and Tawney. He was openly hostile to Dolliver, Clapp,
Burton, and LaFollette of his own party. The final blow had come
when Pinchot was dismissed in the midst of his conflict with Ballinger
over the Secretary's approval of the Cunningham "claims" to Alaskan
coal lands. Pinchot held the claims fraudulent, only to have the Presi-
dent support Ballinger. That famous episode cannot be reviewed
here except to recall that the immediate cause of removal was publi-
cation of Pinchot's revealing letter to Senator Jonathan P. Dolliver
of Iowa, criticizing the conduct of the administration. The letter was,
of course, a breach of discipline, and the President was technically
right in terminating Pinchot's service.
WATER POWER AS A NATIONAL ISSUE 27
The importance for this narrative is that *'G. P.," as Pinchot was
known, deHberately sacrificed his position rather than condone by his
silence the betrayal of a chief executive's pledge to support vitally
important policies. WiUiam Kent, a wealthy Republican Congressman
from Calif orina, expressed the sentiments of the Hberals of that time:
"Pinchot was dismissed because he obviously saw no other course
than to court dismissal . . . When the trees are gone and the lack
of lumber and fuel is acute, it will be recalled that Pinchot knew
that the trees could be used without being annihilated and that he
cared for posterity although posterity had done no more for him
than for the lumbermen who waste and bum many times the timber
they save and use . . . President Taft has slipped and slid into a
place where he had to break with the Roosevelt policies and the
Roosevelt men. Not this vital break but the tottering unsureness of his
steps and his inability to realize the sinister nature of his surround-
ings are the things to regret and to criticise/' ^
Conservationists Organize for Battle. Soon after Taft's inauguration
in 1909 the pioneer conservationists, aware that their movement no
longer had a dependable leader in the White House, formed two
organizations to carry on their crusade. The first of these, the National
Conservation Association, was organized at Cambridge, Massachusetts,
on July 29, with Charles W. Eliot, the head of Harvard University,
as president. Gifford Pinchot became the president the next year
and remained the intermittent president and active leader of the
association until it was disbanded after the passage of the Federal
Water Power Act of 1920. Throughout the struggle to obtain pass-
age of the act the association refused to compromise and fought for
the basic principles laid down at the beginning. Thomas R. Shipp,
who had been the able secretary of the White House Conference of
Governors, was chosen as executive secretary. Later, Harry Slattery
became secretary; he held the position until it was discontinued.
The second organization, styled the National Conservation Congress,
was formed at Seattle on August 26, 1909, a month after the first. It
was announced as "the logical outcome" of the White House Con-
ference of Governors. B. N. Baker, a progressive business man from
Maryland, was elected president and Thomas R. Shipp executive
secretary. The Congress differed sharply from the Association in
several important respects. Governors, mayors, chambers of commerce,
and other business concerns as well as national and state associations
were authorized to appoint delegates. The result was that states
righters appeared in increasing numbers for the first five congresses
28 THE CONSERVATION FIGHT
and that their proposals, plainly dictated by private interests, were
rejected. But in 1916 representatives of water power and lumber
companies gained control and not only endorsed the Shields and
Myers bills backed by the power companies but rejected the Pinchot-
Roosevelt forestry policies. Pinchot and Charles L. Pack, president
of the American Forestry Association, promptly repudiated the resolu-
tions. Public disfavor followed, and no more congresses were ever
held. Because of the speakers' prominence and the spectacular con-
flicts engendered by the power trust delegates, the Congress received
tremendous newspaper publicity and from 1909 to 1916 was the most
influential factor in educating the nation's citizens to the true character
of the conservation controversy and the means employed to disrupt
the movement. For that reason a brief summary of the six annual
meetings is in order.
Water Power at the Congresses. The most violent conflicts came
not over conservation of forests, soil, and minerals, as might have been
expected, but over water power. The reason is clear. Only an esti-
mated 10 percent of the nation's potential hydroelectric energy had
passed to private ownership. The conservationists were determined
that the remaining 90 percent should be retained by the federal govern-
ment. Here was a prize worth not millions but billions. The con-
servationists believed that only the federal government was strong
enough to protect the national welfare.
Power company executives were determined that if they could
not acquire ownership of power sites they would secure leases in
perpetuity or as nearly as possible, with little real regulation either
by the states or the national government. Their political friends bat-
tled for these objectives under the banner of states rights, a strategy
clearly revealed at the first conservation congress in Seattle. Governor
Marion E. Hay of Washington had appointed ex-federal Judge C.
H. Hanford to represent his state. Hanford was placed on the resolu-
tions committee where he refused to approve the majority report
endorsing joint federal and state control. He proposed to put all
control under the states. In a heated speech he dubbed danger from
private power monopoly as a 'iDOgyman", provoking a caustic rejoin-
der from Governor George C. Pardee of California and Hanford lost
out."
The Second Congress. A year later, at the St. Paul meeting, Gov-
ernor Hay charged that the 'left-wing" conservationists were blocking
development of western resources. "Instead of calm, dispassionate,
logical discussions of the subject,," he complained, "we hear and read
WATER POWER AS A NATIONAL ISSUE 29
on every hand exaggerated statements, misrepresentations, false accu-
sations, dire prophecy and passionate appeals to prejudice, avarice
and lawlessness . . . property (water power) is just as much ours as
is the jacknife in our pockets." This amazing fling at the Pinchot-
Roosevelt forces, alluded to as "faddists, dreamers and enthusiasts,"
concluded with the statement that "The address made here this morn-
ing by President Taft is in Une with the western idea of conservation
as I understand it."
The attack was too vitrolic for Governor Walter R. Stubbs of Kansas,
who was presiding over the session. He sharply denied that the
Pinchot-Roosevelt faction was holding up the west to benefit the East:
"I say to you that it is the great electric power organizations and comb-
inations— it centers dovm to five or six fellows who are trying to mono-
polize all the power sites in the United States! That's what is the
matter now; and those fellows think if they could get the whole thing
in the hands of state legislatures they could dicker and trade with
them."
The date of the Congress was September 5, 1910. President Taft's
address in defense of his stewardship brought close attention, mild
applause, and general approval but when he touched on "water power
sites," he met with constrained silence. After stating the case between
federal and state control he sidestepped the real issue: "I do not
express an opinion upon the controversy thus made or a preference
as to the two methods of treating water power sites," adding that he
would "submit the matter to Congress with all the arguments.""
Excitement over Taffs surrender of leadership and the tilt between
Governors Hay and Stubbs was mild comparied with the tumult of
enthusiasm which greeted ex-President Theodore Roosevelt on Septem-
ber 6; Teddy was deeply resentful over Taft's retreat on conservation.
The St. Paul audience and the nation expected him to speak his mind;
he did not disappoint them. His address started the warfare that
led to the organization of the Progressive or "Bull Moose" party and
Taft's subsequent defeat. ^
Roosevelt reviewed the history of the conservation movement since
the White House Conference of 1908. He pointed out that a national
conservation commission had been appointed to carry out the con-
ference program and that Taft had acquiesced in killing it. This
thrust threw the audience into an uproar. Coming to the power issue,
"the most important," Roosevelt declared, in obvious scorn of Taft's
straddling, "It is not a question of hair-splitting legal technicalities"
or "of state against nation .... It is really a question of special corp-
30 THE CONSERVATION FIGHT
orate interests against the popular interests of the people .... It's a
comical fact that the most zealous upholders of states rights are big
business men who live in other states, principally in the East. The
most effective weapon is federal laws and the federal executive. That
is why I so strongly oppose the demand to turn these matters over to
the states''
The oflBcial texts show Taft got ''applause/' Roosevelt got "great
applause," "tumultuous applause" and "continued cheering." Emotion
so expressed indicated that history was in the making. The editor
of the influential agricultural journal, Wallace's Farmer and Iowa
Homestead, Henry C. Wallace, was president of the third conservation
congress, held at Kansas City, September 25-27, 1911. The meeting
was devoted principally to soil conservation, but other subjects were
included. The distinguished guests included Taft and William
Jennings Bryan, thus preserving the nonpartisan character of the
gathering. Judge Ben B. Lindsay, of Denver, founder of the juvenile
court system, spoke on child life; Herbert Quick, novelist and farm
editor, discussed railroads and the farmers; and Senator Robert L.
Owen of Oklahoma urged support for his bill to create a national health
department. There was conflict over hydroelectric power, and Mr.
Bryan, aware of the pressure from the states righters, paid his respects
to their real purpose, thus: "My observation is that you very seldom
have a conflict between State and Nation unless some private interest
is attempting to ignore the rights of both State and Nation. Back
of this controversy . . . you will find the interests of the predatory
corporations." ^
The Fourth Congress. The Fourth Conservation Congress was held
at Indianapolis, October 1-4, 1912, in the midst of the presidential
campaign. It was highlighted by speeches from the opposing candi-
dates. Governor Woodrow Wilson, the Democratic nominee, eloqu-
quently praised the conservation movement. President Taft assured the
Congress in a message sent from Washington that his interest in con-
servation had "not diminished in the slightest." Both candidates, how-
ever, avoided mention of how conservation was to be accomplished.
Two Rooseveltian Square Dealers from Taft's ofiicial family were
more definite.
Secretary of War Henry L. Stimson in a brief review of national
power policy observed that "we have but recently passed from an era
of exploitation to an era of conservation." He followed with a power-
ful argument "to show from these facts that the jurisdiction of the
Federal Government over navigation must necessarily include juris-
WATER POWER AS A NATIONAL ISSUE 31
diction over water power as an incident of navigation/' a legal position
that the United States Supreme Court sustained 28 years later in
the New River case. Stimson specified steps taken under the Taft
administration to prevent looting of water power resources, emphasiz-
ing that the right of the federal government to regulate services and
to make charges when granting water power permits had been assert-
ed. He cited the Coosa River veto as evidence. The Secretary was
representing Taft at this meeting and generously gave him full credit
for the forward steps although, as we have seen, it was Stimson who
only five weeks before had induced Taft to reverse his former position
and veto the Coosa River bill.
Still more militant was the new Chief Forester, Henry Graves, who
charged that the lumber interests, once openly opposed to conserva-
tion and the national forestry policy, were currently "professing allegi-
ance to the conservation principle even while attempting to break it
down." He warned that a rider proposed for the Department of Agri-
culture's appropriations would turn over to the states the management
of land and natural resources of every kind. Although the rider was
thrown out on a point of order it received a surprisingly large amount
of support in Congress. Graves also pointed out that "the object of
the whole states rights movement as it aflfects the national forests is
to transfer to private owners for speculative or monopolistic purposes
public resources of enormous value." The same went for water power
hence — "The problem of water control is no less a national duty."""
A speech by "Uncle Henry" Wallace, as he was introduced by lum-
berman J. B. White, president of the fourth congress, significantly
indicated the influence of the two conservation bodies on the federal
Congress and public opinion; it also revealed the growing dissension
within the conservation camp itself. Wallace declared that the water
power bills containing "concealed jokers" which failed to pass or were
vetoed would have succeeded "had it not been for the white light
thrown upon the problem by the second [St.Paul] National Conser-
vation Congress." Evidently Wallace believed that the Congresses
strengthened the arm of Secretary Stimson. Of the permanent eflFects
of these efforts, Wallace said: "The historian of the future alone will
be able to measure the beneficial results of the fierce conflicts between
those who would despoil these resources [forest and water power]
for private gain and those who would conserve them for future genera-
tions. We can, however, see some of the results in the change in the
policy of our National Administration . . .""^
The astute managers of the congresses were aware that opinions
32 THE CONSERVATION FIGHT
voiced by famous speakers who could command headlines was one
thing and that impartial evidence was another. Hence a number of
experts were invited to the conventions. A noteworthy paper on water
power conservation was read by W. C. Mendenhall, later to become
chief of the Geological Survey. He pointed out that although the
conservation movement seemed to rise suddenly in 1908, scientists
and investigators, in and out of government, had during the preceding
20 years been methodically assembling the facts that made the move-
ment possible. One of the scientists. Dr. McGee, had died of cancer
a few days previously.
The Fifth Congress. The mounting disagreement in evidence at
the Indianapolis conference brought about a spectacular conflict in the
fifth conservation congress held November 1913, in Washington, D.C.
Wilson had been elected President on a strong conservation platform
after endorsing the cause at Indianapolis. A radical administration
bill was expected to be presented to the Democratic Congress. The
investment and utility world was apprehensive. If not defeated out-
right the bill must be rendered as harmless as possible. The position
of the power companies was voiced to the conservationists by the
former chief hydrographer of the Geological Survey, M. O. Leighton,
who knew more than anyone about the location and value of power
sites. Leighton, who claimed to be a "sensible" conservationist, had
resigned his government position and set up as a consulting engineer.
He assured the delegates that the water power industry was in a "state
of stagnation." He was for proper regulation **but why rub it in?"
This argument was endlessly repeated in the federal Congress. For
many years thereafter Leighton represented the private utilities.
There was a large attendance at the fifth Congress. Since 1908,
gubernatoral enthusiasm had slackened, but a large number of states
rights men were in attendance. The sessions were lively. The report
of the resolutions committee (one member from each state chosen by
the state delegation) favored state control, indeterminate permits
instead of 50-year leases. The report was cloudy on the tolls issue.
During the hectic debate that followed it was charged that the regu-
lations committee and the congress itself had been stacked with power
trust men. In the midst of the uproar Harry Slattery, secretary of the
National Conservation Association which had 169 delegates out of a
total membership of 603, took the platform and read names from a
long list of utility officials, attorneys, and employees who were in
attendance as delegates by appointment of governors. This move
temporarily stunned and pacified the meeting. A stalemate existed
WATER POWER AS A NATIONAL ISSUE 33
until the final session when Gifford Pinchot sprang a surprise resolu-
tion reaffirming the principles of the original conservationists and
declared it to be "the solemn judgment of the fifth conservation con-
gress that hereafter no water power now owned or controlled by the
pubHc should be sold, granted or given away in perpetuity, or in any
manner removed from public ownership, which alone can give sound
basis of assured and permanent control in the interest of the people/'
More bedlam ensued, with uncomplimentary and unparhamentary
language on all sides. Senator Bankhead of Alabama led the opposi-
tion to the resolution. Congressman Burnett of Alabama, with an eye
on Muscle Shoals prospects, said: "This wonderful stage ... is a set-
ting of 'Ex-es' — Ex-Secretary of War, Ex-Secretary of the Interior, and
another Ex-Secretary of the Interior, and an Ex-Forester. Why? Be-
cause the people would have arisen in their might and have scorned
the meeting we had yesterday of the 'Ex-es' that so adorned this rost-
rum. It may be possible, my friends, that the Pie Brigade is here in
such numbers as to vote down what is right, but gentlemen, from that
body we expect to appeal to the people of the country." So it went,
but the resolution was adopted, 317 to 96, and the congress finally
adjourned. ^
CHAPTER IV
PRIVATE ENTERPRISE PARTNERSHIP
Having reviewed the rise and widespread acceptance of the idea
that the general welfare should have priority over private interests
in the utilization of natural resources, it is easier to understand why
private enterprise failed to capture Muscle Shoals in the 1906-1916
period.
The Muscle Shoals Hydro-Electric Power Company in 1906 had
proposed to make the shoals navigable by construction of great cross-
river dams at which electric power might also be generated — a sound
modern engineering concept. Also, the federal government was asked
to "cooperate" or to go into "partnership'' ( this word was used in the
proposal) with a private company in developing the site because it
was too huge and costly for private capital to undertake. It was
argued, as we shall see, that hydroelectric development of the area
was not a local but a national undertaking, that it would set "an
example" for other developments. Fifty years later the American
people were being asked by the Eisenhower Administration to embrace
the partnership idea as a new policy. Why the policy was long ago
rejected will appear as this story unfolds.
Washburn and Worthington Prime Movers. The president of the
Muscle Shoals Hydro-Electric Power Company was, as noted, Frank
S. Washburn, a brilliant consulting engineer who was also president
of the American Cyanamid Company. The first vice president was
Colonel J. W. Worthington, of Sheffield, Alabama, a practical busi-
nessman whose neighbors laughed at his "dream" of harnessing the
shoals with cross -river dams and making a great industrial center of
the region.
Washburn's "cyanamid process" of making nitrates required vast
amounts of cheap electricity. Unable to pay the rates charged by
private companies in the United States, he built a plant on the Canadian
side of the Niagara River where he was able to buy low-cost power
from the pubhcly owned system of Ontario. Back in 1906, however,
he was seeking cheap power in his home country. His need coincided
with Worthington s dream. Hence a new company was formed. Six
years later it was taken over by the Alabama Power Company, which
desired the shoals as a unit in its superpower system.
34
PRIVATE ENTERPRISE PARTNERSHIP 35
The Initial Partnership Plan. With Theodore Roosevelt in the White
House, Theodore Burton still chairman of the House Rivers and Har-
bors Committee, and the conservation movement near the boiling
point, the proposition advanced by the promoters of the Muscle Shoals
Hydro-Electric Power company evinced considerable courage. They
proposed to construct three double-purpose dams (flood control was
not then thought of) at the Shoals; the cost would be borne by the
government and the company. The primary purpose was to be navi-
gation paid for by the government. Incidentally, though, the com-
pany would be granted exclusive use of the water for power production
in perpetuity!
On January 18, 1907, a bill to this effect was introduced by Repre-
sentative William Richardson of Alabama, whose bills for lateral
dams had failed. The bill (H. R. 24543) was referred to the Rivers
and Harbors Committee,
The Rossell Board. Secretary of War William H. Taft took a hand
and on March 19, 1907, at the request of Chief of Engineers General
Alexander Mackenzie, appointed a special board of army engineers
to examine the proposal; the board consisted of Colonel WilHam T.
Rossell, chairman; Colonel Dan G. Kingman, Major C. S. Rich, and
two others. At its first meeting at Chattanooga, Washburn presented
the case for the Muscle Shoals Hydro-Electric Power Company. After
a brief outline of plans and costs he came to the question of policy
involved in the partnership idea and "the proper sphere of Govern-
ment in such matters."^ The federal government should promote
navigation only, he held. The states should authorize riparian owners
to develop power.
Charles H. Baker, vice president of the company, dealt with costs,
set at $20,198,000. The government's "equitable share" would be
$5,683,200 to pay for the locks and one-half the cost of three 40-foot
dams. The company's share would be the electrical equipment and
half the cost of the dams, $14,515,600, which, he continued, "is all our
camel's back can bear." The project was too big for private financing
alone.
The Rossell Board Rejects and is Sustained. The Rossell Board
reported on March 12, 1908, but the report was sent back for more
details and then referred to the regular Rivers and Harbors Board,
which approved Colonel Rossell's findings. Finally, on January 22,
1909, Chairman Theodore Burton of the House Rivers and Harbors
Committee received from the Army Chief of Engineers, now General
W. L. Marshall, the information he sought. In simi, the Engineers
36 THE CONSERVATION FIGHT
found that ( 1 ) since hollow buttress type of dams could not be trusted
to withstand a major flood concrete dams were needed; (2) the plans
were not complete, and cost estimates were not satisfactory: the
government would have to build and finance a fourth dam below
Florence to cost $1,000,000; an adequate and safe project would cost
$29,552,600 or more; (3) the poHcy of assisting a private company
was "entirely new,'* the Engineers Corps positively refused to express
an opinion. It was for "Congress alone" to decide. They added,
however: "In general, any partnership relation between the United
States and a private corporation is necessarily to be closely scrutinized,
as the results in the past have been that the Government, as a party
to such agreements, has usually suffered thereby." ^
The report of the Army Engineers was a severe blow to Washburn
and Worthington. Rejection of engineering plans was bad enough
but refusal to take sides on the partnership idea was worse. Endorse-
ment by the Army of the partnership policy was needed to impress
Congress and the public.
The promoters steadily pursued their objective, however, and by
the summer of 1911 their prospects brightened, both politically and
financially. Taft was then President. The troublesome Mr. Burton
had been elected Senator. The Democrats controlled Congress as
a result of the 1910 election and Representative S. M. Sparkman of
Florida, who favored the project, had become chairman of the all-
important House Rivers and Harbors Committee. The company's
financial status was strengthened when it was taken over by the
Alabama Power Company. In May of 1912 Alabama Power Company
came under the control of the Alabama Traction, Light and Power
Company, Ltd., a Canadian concern heavily financed from London.
James Mitchell became president and the three companies were soon
tied by interlocking directorates. The British connection was kept
secret.
The Kingman-Langfitt Special Board Approves. Meantime another
special board, with Col. Dan C. Kingman as chairman, had been
appointed to make further studies. This second special board settled
down to work at Nashville, Tennessee, in friendly cooperation with
the engineers of the companies. On February 24, 1912, Representative
Sparkman's committee sent Kingman a startling directive, superseding
all previous ones. Kingman was instructed to prepare two compre-
hensive plans and costs for utilization of "all the water power that
can be developed" at Muscle Shoals with navigation. One plan pro-
posed construction by the government in association with a private
PRIVATE ENTERPRISE PARTNERSHIP 37
company. Kingman's board would advertise for bids. The second
plan proposed construction and operation by the government, indepen-
dent of private companies.
Chairman Sparkman had to wait two years and three months before
receiving his report, on May 18, 1914. This report — ^famous in its
day as "No. 20" is a confusing document. * It contained a new super-
ior plan for harnessing the shoals, but the special board, now headed
by Colonel Langfitt, rejected it. The new proposal had been reviewed
by the regular Rivers and Harbors Board (Col. W. M. Black, chair-
man) and in turn by Chief of Engineers General Kingman, now
Army Chief of Engineers. All but one of the Engineers approved
the new plan.
The Army Engineers' Plan. In cooperation with the Muscle Shoals
Hydro-Electric Power Company, which would develop power, the
Government was to construct four concrete dams to provide naviga-
tion over the shoals and get a 100-year lease. The total cost for dams,
locks, and substructures on which to erect power stations was estimated
at $18,701,000 to be advanced by the Government. Of this, $8,575,000
would be allocated to navigation. The company would repay the
reanaining $10,126,000 by an ingenious method. When Dam No. 2
(now Wilson Dam) was completed, the Government would receive
$3,000,000 in cash. A sinking fund would then be created into which
the company would make annual payments, which, with compound in-
terest paid at 3 percent, would liquidate the remaining $7,126,000 in 99
years. After 100 years the government could buy back the company's
power properties at fair value. In addition to amortization of the
government loan, the company would pay $.35 per horsepower for
use of the water, but not until 200,000 horsepower had been used.
Two significant omissions are noticeable. Sparkman had asked for
an estimate of the value of the power and the cost to the government
of an independent project with no partnerships. He received neither.
The historical importance of "Report No. 20" justifies these details.
From 1902 to 1909 the Army Engineers had remained neutral and
declined to discuss questions of policy. Not so General Kingman.
His report was virtually a brief for the company's bid. Since that
time the Army Engineers Corps has supported private enterprise.
There was, as noted, one exception to No. 20. Col. C. S. Rich filed
a minority opinion, stating that, if the latent power of the Shoals were
sold to "consumers" by the Government, it would yield an annual
return of $1,285,000, equal to a 3 percent return on an investment of
$42,810,000, as against the $18 million requested.
38 THE CONSERVATION FIGHT
Pressure on Congress. At long last the Muscle Shoals Company
and the Alabama Power Company had secured the endorsement of
the Army Engineers. Next needed was approval by Congress and
public opinion. They acted with vigor. Colonel Worthington was
a leader in the Tennessee River Improvement Association, an organi-
zation of businessmen devoted to improved navigation. Its members
promptly were sent copies of Report No. 20. A rally was held at
Decatur, Alabama, on December 3, 1941. Nine states were represent-
ed. Congress was memorialized immediately to appropriate the $18
million. Nine days later Chairman Sparkman's committee held a
hearing in Washington attended by a large delegation from the associa-
tion. Governors, senators, and congressmen were present. All spea-
kers emphasized the great need for navigation, touched lightly on the
subject of power, and cited Report No. 20 as conclusive proof that
the next rivers and harbors bill should include the Muscle Shoals pro-
ject. The keynote speaker at this meeting was Claudius H. Huston,
a Chattanooga businessman. *
The Sparkman Committee Declines. The Sparkman committee was
wary. Three months before, in September, 1914, its regular Rivers
and Harbors bill for fiscal 1915 (H.R. 13811), had met v^th a humi-
liating defeat in the Senate. In a floor debate lasting several days,
Burton, Kenyon, Norris, LaFollette and others charged that the Demo-
crats had resurrected the 'pork barreF and that many items were a
sheer waste of money. In evident reference to General Kingman's
attitude and Report No. 20, Burton declared, "One of the worst fea-
tures of the situation is that the Engineer Corps had lost that conser-
vatism and care which at one time possessed them." A scandal
threatened. The bill carrying $53 million was killed. In its place
Congress appropriated $20,000,000 to be spent by the Secretary of
War on projects recommended by the Army Chief of Engineers. **
The hydroelectric project met the same fate in 1915 when Represent-
atives Irvine L. Lenroot and James A. Frear of Wisconsin attacked
Army Engineer Chief Kingman for flouting Congress and demanded
investigation of the lobby behind the Muscle Shoals bill. Nothing
happened. '
The Final Effort, 1916. Worthington, Washburn, and president of
the Alabama Power Company, James Mitchell, were determined men.
In May 1916 a great * ox roast" was held at Muscle Shoals. Special
trains carrying governors, editors, and notables with all expenses paid
included one from Washington transporting members of Congress.
Their charge that the company footed the bill was not denied.
PRIVATE ENTERPRISE PARTNERSHIP 39
The following month the Army Engineers made another and more
complete report, which was sent to the Speaker of the House by Sec-
retary of War Newton D. Baker. In it General W. M. Black, who
had succeeded Kingman, corroborated the previous reports and
stated that it was "advisable for the United States to take this oppor-
tunity of entering into an arrangement with the Muscle Shoals Hydro-
Electric Power Company." ^ This new report of the Army Engineers
was shelved. The pleas of its backers were disregarded. No bill to
put it into effect was introduced in Congress. There were three
reasons. Several weeks before the report was filed. President Wilson
had approved the National Defense Act of 1916. Section 124 of the
act authorized the selection of a water power site for the production
of air-nitrates needed in explosives. Wilson later chose Muscle Shoals
as the site, starting another major conflict (recounted in Chapter VIII).
The second reason was the great public versus private power debate,
which since the days of Teddy Roosevelt had run concurrently with
the Muscle Shoals issue. Congress and the nation were becoming
educated on the value and importance of water power. The third
reason was distrust. Supporters claimed that the primary purpose
of the shoals project was "to aid navigation." Electric power and
fertilizer for farmers were merely secondary benefits. But after Con-
gress and the country had analyzed the plan, it gained reputation as
a "power trust grab." Thus, the partnership idea was laid to rest
in 1916 not to be seriously resurrected until the Eisenhower Admini-
stration again proposed it, 40 years later.
CHAPTER V
HETCH HETCHY AND MUNICIPAL POWER
The conservation movement endorsed two statutes enacted during
the Wilson administration which had major effects on national water
power policy. The statutes were the Hetch Hetchy Act of 1913 and
the Federal Water Power Act of 1920.
Public approval of conservation principles was reflected in all party
platforms of the 1912 presidential campaign. The three parties endor-
sed conservation. In the bid for votes they all carried strong endorse-
ments and condemned waste and monopoly. President Taft's failure
to champion conservation measures was a principal cause of the crea-
tion of the Progressive or "Bull Moose'' party that supported the candi-
dacy of ex-President Theodore Roosevelt with conservation as a major
issue. The equally progressive Democratic candidate, Governor
Woodrow Wilson, of New Jersey, also advocated conservation. The
Democrats won not only the presidential election but also, for the
first time in 20 years, control of both houses of Congress. The con-
servation banner thus passed from T. R.'s hands into the more sedate
hands of the former president of Princeton University, whose out-
spoken liberalism was of recent vintage. Wilson's stated position on
these issues was in line with the views of William Jennings Bryan,
who supported his nomination, and who at the White House con-
ference in 1908 had rejected the doctrine of states rights in respect of
water power control.
The prospect of conservation victories was not promising. Just as
President Theodore Roosevelt had been thwarted by conservation
Republicans who abandoned their historic advocacy of a strong central
government and embraced states rights in regard to water power cont-
rol, so now Woodrow Wilson was confronted by a Senate majority
composed of states rights Democrats and Republicans who saw eye
to eye with the private power interests. Their opposition successfully
blocked the passage of a water power act until the final year of his
administration.
The House of Representatives on the other hand had a progressive
majority composed of liberal Democrats and Republicans and outright
independents plus 16 members elected by the new Progressive party-
all devoted to conservation. President Wilson's own cabinet was
40
KETCH HETCHY AND MUNICIPAL POWER 41
divided: Secretary of State William Jennings Bryan, Secretary of
Interior Franklin K. Lane, Secretary of the Treasury William G.
McAdoo, Secretary of Navy Josephus Daniels, Secretary of Labor
William S. Wilson were proconservationist. Secretary of War Lindley
M. Garrison, Secretary of Agriculture David F. Houston, Secretary
of Commerce William C. Redfield, Attorney General T. C. McReynolds
and Postmaster General Albert S. Burleson were lukewarm or hostile.
The electrical industry had by 1913 nominally ceased opposition
to regulation by state commissions and acceded to federal control
over navigation though still denying the jurisdiction of the federal
government over water power in navigable streams. Veteran conser-
vationists wondered how much the new President actually knew about
the methods of effective control. Could he, under pressure from
influential blocs or leaders in his own party, be misled into approving
a bill containing ruinous "jokers"? Would he accept information and
counsel from disinterested, informed leaders outside his party? That
question was important since it was evident that nothing worthwhile
could be accomplished without courageous leadership on his part.
As it turned out, Wilson though uninformed was eager to receive and
act on accurate information. To that virtue the nation owes the
considerable advances made during his administration. His most
influential friend and adviser on the subject was Representative
William Kent, of Kentfield, CaHfornia. Kent was an independent
Republican, a wealthy business man, Yale graduate, and one of the
best informed and active men in the conservation movement. Soon
after the 1912 election Kent had a long conference with the President-
elect on water power. The friendly working relationship thus estab-
lished had important results in subsequent legislation.
Congress was called into special session on April 7, 1913, one month
after the inauguration, to consider tariff reform and currency legis-
lation which resulted in the passage of the Underwood Tariff Act
and the Federal Reserve Act. But the water power issue was also
urgent. All eyes were watching to see what kind of measure would
be sponsored to establish a national leasing system for development
of water power sites by private enterprise. Congressional leaders
were approaching the question with great caution. A test case came
much earher than anticipated. On the first day of the session Con-
gressman John E. Raker, Democrat of California, introduced a bill
granting to the city of San Francisco the right to develop a reservoir
site in the Hetch Hetchy Valley of Yosemite National Park. The pro-
ject would not only supplant a private water company then serving
42 THE CONSERVATION FIGHT
San Francisco but would in addition authorize a municipally owned
hydroelectric power system/ Beyond that, the reservoir would
prevent destructive floods and also furnish irrigation families in the
San Joaquin Valley with both water and electric service. All this
was possible by the construction of a great 175-mile aqueduct start-
ing at a reservoir dam 3,600 feet above sea level. It would carry
pure mountain water requiring no filtration or chemical treatment
down to the cities in the valley and would generate 150,000 horse-
power of electric energy on the way. The bill was H.R. 112, later
H.R. 7207, an emergency measure. San Francisco had asked Congress
to approve this permit for nine years and was becoming angry at being
thwarted by the political influence of private utilities. A test case
for the conservationists, the bill was the first one specifically applying
multipurpose principles to river development.
Still more challenging. Representative William Kent, who had
lost faith in regulatory commissions, inserted in the bill Section 6
which required the city to distribute the electric power to the ul-
timate consumers, and expressly forbidding the city to dispose of
it wholesale to any individual or private utility. The penalty would
be forfeiture of the grant. ^
This provision made "Hetch Hetchy" a national issue. It meant
competition between a public agency and the Pacific Gas and Elec-
tric Company, serving San Francisco and much of northern Califor-
nia. The electrical industry from coast to coast naturally opposed
the setting of such a precedent, both on practical grounds and as
deciding the question of the constitutional right of Congress to im-
pose such a condition. It is of interest to note in passing that Con-
gressman George W. Norris, of Nebraska, who had just been elected
to the Senate, made his first fight for public power in connection with
the Hetch Hetchy bill.
The power interests hiding behind well-meaning nature lovers
launched a nationwide campaign to defeat the Raker bill. Thousands
of letters and resolutions rained upon Congress from women's clubs,
universities, and "Save Hetch Hetchy Clubs," mostly officered by men
and women of the highest character but who had been deceived.
The most influential slogan was "Save the Yosemite National Park
from Destruction." The charge of destroying the 1,125 square mile
park was ridiculous. Hetch Hetchy was a wonderful but inacces-
sible gorge through which flowed the Tuolumne River. It was un-
endurable to humans for aU but about two months in the autumn.
It was buried under 40 feet of snow in the winter and affected by
HETCH HETCHY AND MUNICIPAL POWER 43
extreme heat and a scourge of mosquitos in spring and summer. The
site was 30 miles from the famous Yosemite Valley. A high mountain
ridge divided them. * The reservoir v^ould cover four square miles.
The area of the park was 1,125 square miles. The reservoir lake
would actually beautify, not impair, this swamp-hke area.
While it is true that several nature lovers of great prominence
such as naturalist John Muir and the author Robert Underwood
Johnson opposed the bill, from disinterested motives, it was obvious
that the private utilities instigated and financed the general onslaught.
Such a charge made on the floor in both House and Senate by Senator
Norris, Congressman Raker, and others, was not disproved. The
Izaak Walton League was prominent in opposition. The discussion
of beauty consumed much of the debate and on that ground many
members voted against the bill. An influential offset to this argimaent
was that Mr. Kent, as great a nature lover as any, had demonstrated
his interest in conserving the beauties of nature by purchasing out-
right and presenting to California the celebrated redwood forest,
know as Muir Woods, to save this marvel of nature from the lum-
bermen's axe. *
The House opposition was led by Mondell of Wyoming, Willis
of Ohio, and Madden of Illinois, aU prominent in the effort made in
the twenties to turn Muscle Shoals over to private interests. They
insisted that San Francisco had three other equally good sources of
water supply, that irrigation farms would be destroyed and that part
of the San Joaquin Valley would revert to desert, and that the
government had no control over water power. Scott Ferris, chair-
man of the Public Lands Committee, reported the bill. Kent, Raker,
and Kahn demonstrated from engineering and financial data that
Hetch Hetchy was by far the best and cheapest source of water
supply for the city and that the beauty of the great park would be
unimpaired.
In a week-long Senate deliberation these arguments were repeated,
with Key Pittman of Nevada leading the proponents and Reed Smoot
of Utah heading the opposition. The debate was enlivened by a
pitched battle over constitutionality, with Borah of Idaho assailing
and Norris and Walsh of Montana defending. Borah's position is
of interest because of his prominence as a national poHtical figure
for the next 30 years. He held that the government should turn the
project over to the state of California and let it be developed by the
city of San Francisco. Believing in outright public ownership of
all monopolies, he said: "I am in favor of absolute pubhc ownership.
44 THE CONSERVATION FIGHT
The leasing system is a delusion so far as our natural resources are
concerned — the lurking rendezvous of incompetent service to the
pubHc and corruption. The idea that is now gaining ground in some
quarters that we can regulate and control combination and mono-
polies left in private hands will bring no rehef to the people. The
Republic may be in some instances strong enough to destroy mono-
poly, but it will never be strong enough to regulate it and control it
.... Wherever private gain has ceased to be under the law of com-
petition the business must then come under public ownership, where
private gain will be ehminated, whether it is a railroad or a coal mine.
Some will say this is State Sociahsm, and so far as it is, and to the
extent it is, I am for State Socialism. Names have no terror for me.
I am for results."*
The most influential Senate speech was made by George W. Norris,
who gave the history of California power company opposition to the
measure. The bill passed the House in September 1913 and in the
Senate three months later. In his autobiography, Fighting Liberal,
Senator Norris devotes a whole chapter to the struggle. "Hetch
Hetchy," he writes, "is worthy of examination on the hght it sheds
on the exact character of the fight that has been in progress for
years.'*" He referred to the power company tactic of camouflaging
their attacks upon public projects behind other issues such as wild-
life preservation, states rights or, in those days, "sociahsm."
Long after William Kent wrote: "[The Hetch Hetchy bill] was
signed by President Wilson with a tribute to the conservationist who
had explained the situation, and had much to do with Wilson's subse-
quent position on the necessity of government control of power
grants and led more than anything else to the passage of the Federal
Water Act seven years later." ** San Francisco flouted Section 6 and
sold Hetch Hetchy power to the private utihty. Successive admini-
strations failed to enforce the contract until Secretary of Interior
Harold Ickes took the matter to court in 1938 and won. This is
cited to illustrate the influence of private enterprise in municipal,
state, and national governments.
VI
THE FEDERAL WATER POWER ACT OF 1920
In reviewing federal water power legislation preceding 1926, Prof.
Jerome G. Kerwin observed that "at the outset no one was exactly-
certain where the new Wilson administration stood on the water
power question."^ President Wilson was committed to conservation
but was hampered by states rights Democrats who rejected these
doctrines as "socialistic." San Francisco's emergency need for domes-
tic water had brought early action on the Hetch Hetchy bill, but
there remained the weightier question of control over potential power
in the navigable waters of the country. Geographically and legally,
two distinct categories were involved: power sites within the public
domain, principally in the western states, and sites outside the pubhc
domain. The latter, involving such great rivers as the Colorado,
St. Lawrence, Columbia, and the Tennessee, were more controver-
sial.
The battle was joined in Congress in 1914 and continued through
the First World War until 1920. Party lines were crossed, recrossed,
and forgotten. The House was pro-conservation over the six-year
period; the Senate was opposed. Many bills were introduced and
hundreds of amendments oflFered. Endless hearings and debates
were had, some colorful and heated. The issue was economic. At
stake were property rights worth billions of dollars. But more time
was spent on constitutionality than on any other phase. After three
years of wrangling the two houses were deadlocked, and had it not
been for the decisive intervention of President Wilson in 1917 his
administration would doubtless have ended with no action whatever.
The Adamson Bill. The conflict opened in 1914 with the introduc-
tion on June 24 of the Adamson bill as an amendment to the General
Dam Acts of 1906 and 1910 governing leases on sites outside the public
domain. The author of the measure, William C. Adamson of Georgia,
a conservative Democrat, was chairman of the House Interstate and
Foreign Commerce Committee. According to Adamson and Demo-
cratic House floor leader Underwood, the bill had Wilson s approval.
A swift reading confirmed conservationist fears. Their "must" pro-
visions were either omitted or made innocuous. Congress was to
authorize permits without charges for use of the waters. The issue
45
46 THE CONSERVATION FIGHT
of jurisdiction was unsettled. The measure provided state regulation
with federal intervention only as recommended by the Secretary of
War. It authorized 50-year leases but "recapture at fair value'' was
made so difficult as to be tantamount to a permanent lease.
Adamson opened debate on June 30, 1914. He reviewed previous
legislation, urged the necessity of a law that would induce capital to
invest, and declared that his bill would speed needed development
and protect the public interest. Then discussion was suspended for
nearly three weeks.
William Kent Intervenes. Three days after the measure was intro-
duced, Congressman William Kent of California wrote President Wil-
son: "I feel sure you are not aware of what the bill contains ... I consi-
der the Adamson bill the worst piece of legislation that has come before
the House ... its passage will be considered the most radically anti-
conservation act that could possibly be committed." He pointed out
that the proposed legislation would not only turn control over to the
War Department, which had favored private rather than public inter-
est, but would repeal existing dam legislation including the protecting
features. Almost immediately the President responded: "Thank you
sincerely for your letter ... I am very much concerned that nothing
such as you fear should happen and your letter made me fear that I
had not given the bill as careful study as I should have given it, or
rather that I had not had the necessary information in mind when I
read it.'' ^
Wilson assured Kent that he would hold conferences at once and
attempt to clear up the matter. As a result, Adamson on July 20 pro-
duced a remodeled bill that met some of the objections but not all.
Two days earlier debate had been resumed with Lenroot of Wisconsin
leading the attack. He emphasized that Adamson's committee in pre-
paring the bill had heard only two witnesses. Col. J. W. Worthington
of the Alabama Power Company and the Muscle Shoals Hydro-Electric
Power Company, and Col. Hugh Cooper, leader of the private
Keokuk Dam project on the Mississippi.
After several intense floor debates led by Lenroot, Kent, Stevens
of New Hampshire, Rainey of Illinois, Murdock of Kansas, and Lind-
bergh of Minnesota, the bill was amended to a fairly good conservation
measure. The changes were stoutly opposed by Adamson, Under-
wood, Smith of Minnesota, and Mondell of Wyoming. A crucial test
came when Sherley of Kentucky, a Democrat, proposed an amendment
to fix charges for use of the waters. It was overwhelmingly adop-
ted on August 4 by a vote of 191 to 47, with 188 not voting. The
THE FEDERAL WATER POWER ACT OF 1920 47
power interests which supported the bill at the start now turned vio-
lently against it. Adamson himself voted nay.
The Ferris Bill. A week later the Ferris bill proposing to lease
sites within the pubHc domain was brought up in the House. Ferris
and a majority of the members of the PubHc Lands Committee of which
he was chairman were as radical as Adamson and his committee were
conservative. The Ferris bill contained the standard safeguards, and
had the hearty support of the conservationists. It had been prepared
with great care after extensive hearings attended by authorities Kke
former Secretaries of Interior Garfield and Fisher, and by many repre-
sentatives of the private utilities.
Mondell of Wyoming conducted the debate in opposition; Raker,
Murdock of Kansas and Cooper of Wisconsin appeared for the defense.
The arguments were familiar. One point, however, merits attention.
Representative James W. Good of Iowa, Repubhcan, favored per-
petual leases. He later opposed the completion of Wilson Dam at
Muscle Shoals and still later, as Secretary of War in Harding's admini-
stration became the first chairman of the Federal Power Commission.
The Ferris bill passed the House on August 24, 1914, and a substitute
by Mondell was rejected by a roll call vote of 47 to 160, with 213
not voting.
In the Senate the two House bills ran into a stone wall. The re-
modeled Adamson bill was sent to Senator Shields' Committee on
Commerce, where, without hearings, the entire text was deleted and
language more to the liking of the power companies was substituted.
This promptly became known as the Shields Bill.
The Ferris bill was referred to the Public Lands Committee chaired
by Democratic Senator Myers of Montana. Senators Reed Smoot and
George Nprris were members. Myers held extensive hearings. Testi-
fying were such prominent conservationists as Gifford Pinchot, then
president of the National Conservation Association, O. C. Merrill,
chief engineer of the Forest Service, and former Secretary of Interior
Fisher. In opposition appeared the such powerful utility figures as
Sidney Z. Mitchell, president of the Electric Bond and Share Company,
John D. Ryan of New York, president of the Montana Power Company,
and John H. Finney, Washington representative of the Aluminum
Company of America. * Following the example of Senator Shields,
Myers substituted his own text in the Ferris bill. The new Myers
bill was commended by power company lobbyists and writers as a
"practical" piece of statesmanship. Neither the Myers bill nor the
48 THE CONSERVATION FIGHT
Shields bill came to a vote before the 63rd Congress expired March 4,
1915, with nothing done about water power.
1916 — Momentous Year. The year 1916 is momentous in the history
of power policy. The 1914 elections kept the Democrats in control
of both houses of Congress. Preparedness for war forced the admini-
stration to take action on water power; a low-cost source was needed
if there was to be large-scale production of air-nitrates for munitions.
The power source — ^would it be public or private? The largest business
lobby in that era descended on Washington, with curious results. The
House reversed its stand, voting for private manufacture of the ni-
trates. The Senate reversed its position, deciding that the govemment
would go into production. The history of such legislation is set out
in the following chapter on war and water power, but meantime our
attention centers on Senate approval of the Shields General Leasing
bill (S.3331), reintroduced on January 16, 1916, and reported for
passage by the Senate Commerce Committee without hearings.
"Judge" Shields was a Tennessee Democrat, devoted to private
enterprise, who opposed government in business as illegal and im-
moral. A former Judge of the Tennessee Supreme Court, he had
convictions on the limits of federal operation. His bill provided for
50-year leases to be made by the Secretary of War, no charge for use
of public waters, recapture provisions so complicated as to insure
perpetual leases, no effective regulation, and no preference clause.
Should the govemment build a power plant, any surplus current be-
yond its own needs must be sold at the switchboard to private com-
panies. All this had the warm approval of private utilities and the
states rights advocates.
In behalf of his proposals Senator Shields argued: "In this case
[power outside the public domain] the United States has no proprie-
tary interest. It has nothing to rent, nothing to lease, nothing to sell.'*
Urging speedy development as a war measure, he continued:
"Those two objects, the improvement of navigation with private
capital and the development of water power, go together. The in-
vestment of private capital for the public purpose of improving navi-
gation cannot be obtained without the concurrent development of
private property.
"I am informed that there is now an urgent demand for 4,000,000
horsepower of hydroelectric power for manufacturing purposes re-
quiring cheaper power than that generated by steam and that adequate
capital is now waiting and ready to be invested for its production
THE FEDERAL WATER POWER ACT OF 1920 49
when our prohibitory laws are amended or repealed, so as to allow
it to as provided by the provisions of this bill/'
Speaking on the necessity of cheap hydroelectric power for the
manufacture of atmospheric nitrogen *'to provide for the farmers a
larger and cheaper supply of fertilizer" and "to supply us with nitric
acid for the manufacture of high explosives for military purposes,"
Shields made specific mention of the offer of the Muscle Shoals Hydro-
Electric Power Company of Messrs. Washbiun and Worthington ap-
proved by the Army Engineers. * He paid his respects to "some im-
practical people calling themselves conservationists" for preventing
legislation that would make all these good things possible. The im-
practical people remained unmoved. Senator Walsh of Montana
denounced anything that savored of perpetual franchises: "Who will
dare to say that fifty years hence it will not be the common conviction
of our people that municipal ownership is the true solution of furnish-
ing water, light, heat and power to the denizens of our cities and of
transportation within them? . . . Who shall say that fifty years hence
states, counties, cities, irrigation districts may not be eager to secure
many of the sites we now propose to pass into private ownership? . . .
Let us so write this bill that fifty years hence they [the people] may
have another chance." "^
Senator Thomas of Colorado was more direct. He pointed out that
there was no place for competition in the electric industry. Discus-
sing the fear of water power monopoly, he stated that the merging
companies "yielded to an inevitable law of commercial gravitation."
As to the power monopoly "it is here," he said, "it has been here; it
is going to stay here; and every additional water power plant will
sooner or later, legislation to the contrary notwithstanding, take its
place within the fold. It is inevitable ... I have had the conviction
for ten years, and that conviction is growing with every day of my
life, that the one thing to do is to recognize the existence of this mono-
poly and let the states in their respective jurisdictions, take it over.
If they are not big enough to control it, let the Government of the
United States do it. I believe that when a monopoly exists and cannot
be overcome it should be made a public and not a private monopoly.
That to my mind is the only solution of the problem, and that it is
coming I make no doubt." •
It was repeatedly charged and denied that the water power lobby
was attempting to secure enactment of the bill while the nation was
distracted by the fear of war. All liberalizing amendments were
rejected by an average vote of 40 to 20, party lines forgotten. In a
50 THE CONSERVATION FIGHT
final despairing speech Senator James A. Reed of Missouri declared:
"I believed that the great potential force that batters and hammers
this bill forward is after all that element which exists always and
everywhere, which demands that capital shall have whatever capital
wants, and that there is a force which exerts itself constantly . . . the
bill proposes, in eflFect, to grant perpetual franchises to corporations
that will enable them for all time to control the water power of this
country." '
The bill passed the Senate on March 8, 1916, and went to the House.
In the conference committee representing both chambers a deadlock
developed and the 64th Congress died March 3, 1917, with the water
power problem unsettled.
President Wilson, preoccupied with war and the 1916 presidential
campaign, paid little attention to conservation issues. However, dur-
ing the hectic Senate debate on the Shields measure Wilson responded
to a letter from William Kent, who was opposing the bill. The Presi-
dent wrote: "I agree with you that it is better to let the water power
run to waste than to settle the question of the use of it in the wrong
way. I am watching the progress of legislation with a great deal of
anxiety.'*^
President Wilson Intervenes. The 65th Congress was called in spec-
ial session and on April 6, 1917, declared war on Germany. Three
days later Shields again introduced his water power bill. It aroused
all the old animosities. Senate progressives, knowing the House would
reject the bill, declined to debate at length and passed the measure
December 14 by the a significant vote of 48 to 18. Another hopeless
deadlock was in prospect.
By this time we were in the midst of World War I. President
Wilson, irritated over five years of futile congressional dissension and
feeling it imperative to end the controversy, took a personal hand.
At the suggestion of Congressman Kent, Wilson called a White House
conference soon after the Christmas holidays in 1917. Some 25 mem-
bers of such House committees as Rules, Interstate and Foreign Com-
merce, Public Lands and Agriculture attended. Wilson proposed
a bill covering the disposition of power on all navigable rivers in and
out of the public domain. Representative Lenroot suggested that a
special water power committee be appointed from among the four
committees to which all water bills, including the Shoals bill, would
be referred. The chairmen present agreed to seek the support of
their full committees. They succeeded and on January 9 the House
created a special committee. "
THE FEDERAL WATER POWER ACT OF 1920 51
A week later Speaker Bennett "Champ** Clark appointed a commit-
tee of 18 headed by Thetus W. Sims, Democrat of Tennessee, of the
Interstate and Foreign Commerce Committee. The special committee
was fairly well balanced between conservatives and hberals, but the
presence of such veterans as Ferris, Raker, Lenroot, Haugen and Esch
gave conservationists an edge. There was one conspicuous omission
in the setup. The Rivers and Harbors Committee, which had been
handling the Muscle Shoals project, was not represented. The chair-
man, John H. Small of North Carolina, bitterly protested this in-
justice and was told by Congressman Sims that the Chief Executive
himself was responsible. Perhaps the reason for the exclusion was
that the committee had always supported the private utiHties and the
Army Engineers. "^^
The Wilson Bill. President Wilson had now become better acquain-
ted with the water power problem so the policy provisions in the bill
he handed to Chairman Pou at the White House conference merit
close attention. The draft had been prepared under the auspices
of Secretaries Newton D. Baker (War), Franklin K. Lane (Interior),
and David F. Houston (Agriculture) Baker became Secretary of
War when his predecessor, Garrison, resigned, partly in protest against
the water power doctrines of the conservationists. As mayor of Cleve-
land, Baker, an outstanding hberal, had sponsored the famous *'Three
Cent" municipal electric light plant and had strongly supported muni-
cipal ownership in addresses before national civic organizations. Lane,
of San Francisco, was a liberal committed to conservation principles.
Houston, although a conservative, was mildly progressive along those
Hues.
The actual drafting of the administration bill had been done by
O. C. Merrill, chief engineer of the Forest Service, FeHx Frankfurter,
Harvard Law School, then on war duty in Washington, and Lathrop
Brown, an ex-congressman from New York City. ' The bill was intro-
duced by Raker of California, and hearings lasted from March 18 to
May 15. Inquiry was made concerning specific situations on the St.
Lawrence, Columbia, Colorado, Connecticut, and Tennessee rivers
as well as bills to govern the development of all rivers. The electrical
industry was represented by leading executives — E. K. Hall, of Elec-
tric Bond and Share Company; Calvert Townley, of Westinghouse,
and lesser officials and lobbyists from aU sections of the country. The
public side was presented by the three cabinet oflScials who had pro-
duced the bill. Sir Adam Beck, chairman of the Hydro-electric Power
Commission of Ontario, was invited to appear. He related the history
52 THE CONSERVATION FIGHT
and accomplishments of that immense pubhcly owned and operated
superpower system, then in its eighth year of operation.
Terms of the Administration Bill. President Wilson s bill was con-
siderably amended by the committee, but it squarely established
federal jurisdiction over hydroelectric power in the navigable waters
of the United States. It stipulated that leases could be made either
to private or pubHc bodies for terms not to exceed fifty years. States,
political divisions, and municipahties were given preference in case
of a conflict between private and public appHcants over a given site.
A federal power commission, consisting of the Secretaries of War,
Interior and Agriculture, was created to administer the leasing system.
The newly erected commission was empowered to levy reasonable
charges for use of water. A recapture clause was included which
caused acrimonious debate as to its effectiveness. The bill also
contained a remarkable provision empowering the federal govern-
ment, on recommendation of the commission, to develop water power
sites on its own initiative. Chairman Sims in his introductory speech
emphasized this aspect. "This bill," he pointed out, "provides for un-
limited development and operation of water power projects by the
United States Government . . . those who believe in Federal Govern-
ment ownership and operation of water power projects will find what
they believe is provided for not only in principle but to some extent in
detail in this bill."
The bill was reported on June 28, 1918, debated intermittently and
passed by the House September 5 by a vote of 231 to 23; 174 did not
vote. ""
Turning to the perennial claim of the power companies voiced by
former Republican Speaker "Uncle Joe" Cannon, that the country's
hydroelectric power would not be developed except on attractive
terms to investors and promoters, Sims flung back this contemptuous
rejoinder: "I am not wearing out my life here to try to provide a
general law that is simply to attract accumulated capital, especially
.... when it is within the power of the Government of the United
States to develop every one of these powers on its own account, at
its own expense, and sell the power at cost, like the Hydroelectric
Commission does in Canada." "^
It was foregone that this radical House substitute for the Shields
bill, fabricated by the White House, would receive a cold reception in
the Senate. Senator Shields himself was ill but Fletcher of Florida
at once moved that the Senate disagree without debate and call for a
conference on the subject with the House. Despite heated objection
THE FEDERAL WATER POWER ACT OF 1920 53
by Senator Cummins of Iowa and others, the joint conference was
ordered, but not before Borah of Idaho, outdistancing Chairman Sims,
had demanded outright pubHc ownership and operation.
Borah For Public Ownership. Borah's speech went beyond both
the Shields bill and the House bill, which were primarily leasing
measures. But the incident indicated the growing divergence between
the right and left wings of the conservation movement. Radical as
the House bill appeared to a large majority of the Senate, it did not
satisfy Borah, who was against the leasing system altogether. He
reminded the Senate that during the discussion of the Hetch Hetchy
bill five years before he had said, "I am in favor of absolute public
ownership [of both water power and coal.] The leasing system is
a delusion, so far as our natural resources are concerned." He insisted
that power production was by necessity a monopoly and hence should
be a public monopoly, pointing out that five holding concerns domi-
nated the industry to such an extent that independent companies
would have small chance to succeed in the business. He quoted
extensively from Sir Adam Beck's testimony before the House special
committee and commended Ontario Hydro as an example worth fol-
lowing. Questioned and challenged, this philippic was an exciting
example of give and take. Borah argued the general superiority of
public over private operation, citing the fact that in Ontario the ave-
rage domestic cost was then only 2.5 cents per kilowatt hour compared
with the United States average of 8.1 cents. Wholesale industrial
power on the Ontario side of the Niagara cost $8 per horsepower
compared with $18 on the United States side. Householders of On-
tario alone were saving $2,280,000 annually. Far from being insolvent,
the Ontario system had large reserves. Within 30 years the munici-
palities would be out of debt.
Borah made an appeal still applicable to the West today. Citing
the vast undeveloped water powers of the northwestern states, he
said "It is the richest heritage that nature's God ever dedicated to a
people ... I feel therefore I can render no greater service to the
people of that great northwestern empire than to help keep this her-
itage wholly and exclusively for the people as a whole . . . free from
speculation and from private manipulation and gain. If we under
public ownership can sell power for half what it costs under private
ownership nothing is more calculated to bring people to settle our
lands, to build homes and schools and manufactories, enrich our
communities and enlarge our payrolls . . . cheap power wiU help do
for us what it has helped to do for Canada; that is, it will bring invest-
54 THE CONSERVATION FIGHT
ment and business and enterprise. I repeat, there is no domestic
question of such vital and lasting concern to us." "
The bill was sent to conference on September 23 where it was to
remain for jive long months. A glance at the Senate conferees appoint-
ed by Vice President Marshall explains this long delay, notwithstand-
ing President Wilson's demand for speedy action. They were Senators
Shields, Bankhead, and Nelson from the Commerce Committee, and
Myers, Smoot, and Pittman from Public Lands; all were foes of
the administration bill except Pittman. House conferees were Sims,
Ferris, Lever, Esch, Sinnott, and Haugen, all progressives.
Rumors of heated discussion and deadlock kept coming from the
committee room. The fact was that the Senators in particular were
finding it difficult to overcome their pride and surrender the doctrine
of states rights. But just when it appeared that this wartime Congress
would, like the preceding Congresses, adjourn with the water power
question unsettled. Chairman Sims announced to the House that a
compromise had been reached. The report was brought up two days
later with only one hour allowed for debate; both Sims and Esch
recommended adoption.
At first blush it appeared that the House conferees had won. Federal
jurisdiction was conceded. Charges for use of the waters and a **net
investment" recapture clause, were retained as were many other con-
servation provisions.
Closer examination revealed, however, that as the price of peace on
the water power front, the House conferees had accepted a joker which
in practical effect would exclude federal government from juris-
diction over virtually all of the important water power sites of
the nation. The Senate conferees with Bankhead in command had
persuaded the House conferees to include the definition of navigabi-
lity contained in the Shields bill. In layman's language this definition
said that unless you could run a steamboat on a river in its natural
state it was not navigable and therefore outside federal jurisdiction.
The Tennessee River with Muscle Shoals, for example, would go
to the states. Per contra, the Administration bill established federal
control whenever a river could be made navigable by building dams,
or otherwise. The unexpected appearance of the Shields definition
in the conference report gave grave concern to weatherwise conser-
vationists in the House, but curiously enough their cause was defended
by that veteran conservative, James R. Mann, who denounced the
provision as subverting the whole purpose of the bill. Cooper of
Wisconsin agreed with Mann and deplored that a bill of such import-
THE FEDERAL WATER POWER ACT OF 1920 55
ance should be held dormant for months, then reported within two
or three days of final adjournment with no opportunity for fair dis-
cussion in an attempt to jam it through. "It is the old system which
I have seen put in practice here ever since I have been a member of
the House."" Notwithstanding, the conference report was agreed
to by the House on September 28, 1918, by a vote of 263 to 65, with
100 not voting. "^
In the Senate the report was to be voted upon during the last day
of the session which expired automatically at noon on March 4. It
was so satisfactory to the power interests that the utility lobby was
exerting all its influence for adoption. On the other hand, Gifford
Pinchot, Phillip P. Wells, and Harry Slattery of the National Con-
servation Association, aware that 15 years of conservation was at stake,
laid their case before liberal Senators. The power bill became the
cause for one of the most sensational filibusters in American history
— engineered by LaFollete of Wisconsin.
The LaFollette Filibuster. The war had ended. President Wilson
had been at the Paris Peace Conference since December 18, but he
made a quick return to Washington to be present at the close of the
65th Congress. He had arranged to go back to Paris on the day Con-
gress adjourned. He did not want Congress in session during his
absence. But several Senators wanted him to call a special session
immediately to begin consideration of postwar reconstruction measures.
During the closing days of this Congress both Houses were holding
day and night sessions in a desperate effort to secure final action
upon important matters. The Senate met for its last session at 10:30
a.m. on March 3, 1919, and remained in continuous session through
the night with President Wilson in an adjoining room waiting to sign
bills that were expected to pour from the hopper.
At 2 a.m. on March 4, Senator LaFollette took the floor and spoke
for three and a half hours while weary Senators took naps on cots in
adjoining rooms. In opening he gave the reasons for his action:
"Eight great appropriation bills aggregating $3,627,000,761 are wait-
ing the action of this body. Back of these appropriation bills are
conference reports on the coal and oil bill and the water power biU.
Wrapped up within the carefully drawn provisions of those two
measures there will be found the means to achieve the private control
and ultimately the private ownership of the coal and oil and phosphates
and other minerals now belonging to the people, and likewise the
water powers remaining upon the public domain ... no opportunity
is allowed to examine the bills with any care . . ." LaFollette assumed
56 THE CONSERVATION FIGHT
the responsibility for preventing the passage of these measures and
declared "idle and foolish" the threat of a "frightful panic" that would
result if they were not passed. At 5:30 a.m. he was reHeved by
Senator France of Maryland. France was relieved in turn by Senator
Sherman of Illinois who continued to speak until nearly noon when
Vice President Marshall sarcastically declared the Senate adjourned
"Sine Deo" (without God) but the Congressional Record reports the
traditional Latin form, "Sine Die" (without a day for reconvening.)
Whatever the judgment of history upon the wisdom of this filibuster,
one thing remains reasonably certain. Except for it the compromise
water power bill would have passed and, under the tremendous pres-
sure of the moment, it might have been signed immediately. The
water power policy approved by both President Roosevelt and Presi-
dent Wilson would have been ditched. The states would have taken
over, and many priceless water power sites over the nation probably
would have passed into private possession.
The Republicans Take Over. The congressional elections of 1918
gave the Republicans a majority of 2 in the Senate and 40 in the
House. The Progressive or "Bull Moose" party had been disbanded
in 1916. Theodore Roosevelt died January 6, 1919, and an ostensibly
united Republican party continued conservative save for an aggres-
sive minority of "insurgents" and conservationists. Congress was call-
ed into special session on May 19, 1919. Representative Frederic
H. Gillett of Massachusetts was chosen Speaker of the House, and
Albert Cummins of Iowa was made president pro tempore of the
Senate with Vice President Marshall still in the chair. Wesley L.
Jones of Washington was now chairman of the Senate Commerce
Committee. Although a regular Republican, he was far more liberal
than Shields or Fletcher. Lenroot had gone from the House to the
Senate; in the latter chamber he was made a member of the Commerce
Committee.
The House continued the Select Committee on Water Power. John
J. Esch of Wisconsin was chairman, and Thetus Sims of Tennessee
was the senior Democrat on the committee. Alben W. Barkley, Demo-
crat from Kentucky who afterward became Vice President, w^as also
a member of this committee. This shift of personnel was accompanied
by a significant change. Up to this time the House had been more
progressive than the Senate. From now on to the end of this history
in 1933 the attitudes were reversed.
The water power bill, now H. R. 3184, with no essential changes,
was reintroduced by Representative Esch and passed easily on July 1
THE FEDERAL WATER POWER ACT OF 1920 57
with no roll call. In the Senate, Chairman Jones of the Commerce
Committee reported back to the floor and after a brief debate on
January 15, the bill was passed, 52 to 18 and again sent to conference. ^"
The measure that became the act of 1920 was now in hands of Jones,
Nelson, Smoot, Myers, and Fletcher, managers for the Senate who
had supported private power; and Esch, Sinnott, Taylor and Lee, mild
progressives, for the House. Again, there was delay. Three months
later, on April 30, 1920, the conference committee reported out a com-
promise with surprises aplenty.
High Points of the Compromise. The jurisdiction of the federal
government over water power in all navigable rivers was aflfirmed.
Ownership was vested in the United States. No more tides in fee
simple and in perpetuity could pass to private hands. A federal power
commission, consisting of the Secretaries of War, Interior, and Agri-
culture, would have authority to make 50-year leases for power deve-
lopment with preference to pubHc bodies in the event of conflict with
private companies. The commission also could propose to Congress
the construction of hydroelectric stations by the government. A crys-
tal clear definition of navigable waters in the compromise bill made
certain that the term included all navigable rivers from source to
mouth and that the presence of shoals or falls did not transfer juris-
diction to the states. The net investment or the actual cash spent on
legitimate promotion and construction was to govern securities and
rates charged. There would be no "watered stock.'*
The conservationists had won out on these provisions, but the utility
and banking interests had succeeded also. The charges levied for
use of water were not to be calculated on the value of the use but
merely to pay for the expenses of the commission and cost of adminis-
tering the act. Most prized of all was the tricky recapture clause
making it so difiicult and expensive for the government to recover
possession at the end of 50 years that the conservationists charged
the leases would be perpetual. Little noticed was the innocent minor
part license clause, which waived the main provisions for a company
desiring to use a stream only for a short time. It was to result in
trouble later.
Senator Norris objected to a political commission. He said it should
be permanent, independent, and not composed of cabinet members.
The crux of the compromise was that a politically appointed, ill-staffed,
and ill-financed commission would be authorized to grant leases, pro-
bably in perpetuity, to private monopolies on public waters worth
many, many millions, for a pittance. Proponents of the bill held that
58 THE CONSERVATION FIGHT
it was the only way to accomplish rapid and much needed develop-
ment. Its opponents charged that this solution was a surrender to the
utilities. It was both antipubhc and indefensible.
The conference bill was a bitter disappointment to House veterans
who had fought for the administration program. It was approved,
nonetheless, on May 4, 1920, by a roll caU vote of 259 ayes to 30 nays,
with 137 not voting. Sims voted nay; Ferris did not vote. " The Senate
approved the bill on May 28 by a vote of 45 ayes to 21 nays, with 30 not
voting. Among those voting against the measure were such liberals
as Borah, Capper, France, Kenyon, Lenroot, Norris, Nugent, and
Sheppard."^
President Wilsons Dilemma. President Wilson now faced a most
difficult and embarrassing decision. He had both lost and won.
Lenroot and others who had championed his cause had warned that
if certain provisions (inadequate charges and faulty recapture, for
example ) were included the bill would be vetoed. A heavy contingent
of his own party and the entire private power lobby was demanding
his signature. On the other hand federal control had triumphed over
states rights with ownership of water resources vested in the nation.
There would be no more alienation of the title to power sites. The
door was left open for public development.
When Congress adjourned on June 5, no word had come from the
White House. There was much apprehension and breath holding on
both sides until June 10, 1920, when it was announced that the Presi-
dent had signed the Federal Water Power Act. The decision proved
wise. Its prime virtue was the establishment of public ownership of
power sites. Without that, during the next 12 years, the title to all
our most valuable sites would have probably passed to corporations.
Knowledge of the power question as a matter of national concern
gained during the first six years following passage of the act provided
training for the struggle over Muscle Shoals from 1916 to 1933. Many
leaders on both sides of the early fight continued through the battle
for the shoals.
vn
WAR AND WATER POWER
The emergencies of World War I had a drastic effect on our na-
tional water power policy and resulted in an unexpected solution of
the Muscle Shoals problem. By 1916 pubhc opinion favored "the new
attitude," as Theodore Roosevelt described it, toward social control
of natural resources but understood that the old order had been able
to forestall water power legislation.
At this juncture a new factor appeared — the nation s need of ni-
trates for explosives. For months Brigadier General Wilham Crozier,
chief of ordnance, had been gravely concerned over locating an ade-
quate supply for explosives. We were depending on the vast nitrate
beds of far away Chile. The only other available solution would be
the fixation of atmospheric nitrogen at home. The uncertainties of
imminent war, with France, England, and other countries drawing
heavily on the Chilean supply, involved too great a risk. In October
1915 General Crozier recommended the construction of an air nitrate
fixation plant but did not specify whether it should be a public or a
private undertaking.
Air nitrate production was then a new industry. Scientists differed
over the relative merits of the processes, both as to performance and
quantity production. The question of the permanence of the processes
was to plague Congress and the country for more than two decades.
The nitrate industry and the power companies did not have the
reserve capacity to meet war demands. The use of water power was
desirable if costs* were not to reach astronomical figures. It was gen-
erally recognized that Muscle Shoals afforded the most feasible site
for an enterprise of this magnitude. Another frequently mentioned
was Priest Rapids in the state of Washington. Power companies and
the manufacturers of electrical equipment alert to the opportunity
organized a newspaper propaganda campaign and sent a powerful
lobby to Washington to press the Shields and Myers leasing bills
previously mentioned.
None of the lobbyists were more active than the agents of the Ala-
bama Power Company and James Mitchell, its president, and the
representative of power companies in the far Northwest, the veteran
promoter H. J. Pierce of Seattle. Mitchell, seeking the Shoals for
59
60 THE CONSERVATION FIGHT
general utility purposes, had broken with his old partner Frank S.
Washburn, the president of the American Cyanamid Company, who
desired the power for his electrochemical corporation. Washburn
and Worthington had severed their connection with the Alabama
Power Company.
The war emergency gave a decided advantage to Washburn in the
controversy since his company held patents on the cyanamid process,
a proved method for large-scale production of air nitrates. General
Crozier had early summoned Washburn, a technical expert in the
cyanamid process, as a consultant on nitrate supply. The DuPont
Company of Delaware was Washburn's chief competitor for the
manufacturing job and for Muscle Shoals but its arc process required
much more electric power.
There was great confidence that the new Congress would pass the
Shields and Myers bills and that the President would approve them;
if not, then some other action would be taken for the production of
nitrates at Muscle Shoals. Washburn expected the latter. On Janu-
ary 22, 1916, soon after he quit working with the Ordnance Bureau
as a consultant and six weeks before the House Military AfiFairs Com-
mittee made its report, the State Sentinel of Birmingham, Alabama,
carried a lead article with the startling heading: "Government To Aid
Cyanamid Co. Muscle Shoals To Be Built by Government and Cya-
namid Company Bonds Endorsed by Uncle Sam. Cheap Fertilizer
is Guaranteed to the Farmers by Government Price Regulation." The
article said in part: "The Government is now considering the plan so
fully and carefully proposed by the Cyanamid Company to have the
Government build at its expense a great water power plant at Muscle
Shoals which will cost some $18,000,000 and permit the use by the
Cyanamid Company of the power in the manufacture of nitrogen for
fertilizer purposes in time of peace and for munition purposes in times
of war, the Government to endorse the bonds of the Cyanamid Com-
pany to the extent of $10,000,000 to enable the company to make the
development."
The House Rejects Another ''Cooperative" Scheme. About 20 bills
were introduced in the new Congress to reorganize and enlarge the
army and military affairs committees of both Houses. On March 6
the House committee reported its bill; Section 82 provided in general
terms for a hydroelectric air nitrate plant and authorized appropria-
tion of funds for construction by the government.
A group in both Houses which strongly opposed war profiteering in
the proposed venture upset the policies that certain business interests.
WAR AND WATER POWER 61
as well as the Army Engineers, expected would be followed. Twelve
members of the House Military Affairs Committee who subsequently
took a prominent part in the disposition of the Muscle Shoals project
during the 1920's backed Section 82 and its plan;
Democrats Republicans
James Hay, Virginia, chairman Julius Kahn, California
S. Hubert Dent, Alabama Daniel R. Anthony, Kansas
Kenneth D. McKellar, Tennessee John C. McKenzie, Illinois
Percy E. Quin, Mississippi John M. Morin, Pennsylvania
James W. Wise, Georgia John Q. Tilson, Connecticut
Samuel J. NichoUs, South Carolina Harry B. Hull, Iowa
This brings us to the origin and nature of the plan thus endorsed.
General Crozier had told the House Committee that fixation of atmos-
pheric nitrogen was a reliable process, and that it would require cheap
current and a power site of at least 100,000 horsepower capacity. He
was opposed to government construction but testified that if no other
solution were available the government itself should build "a huge
plant." On the disputed claim that the cyanamid process was much
cheaper than the arc process, General Crozier testified that cyanamid
"requires less horsepower than the arc process but it requires other
expenses in addition, so there is a difference of opinion between the
proponents of the two processes as to which would be ultimately the
cheaper." He confessed that he lacked knowledge necessary to make
the choice."^
Frank S. Washburn had proposed a "cooperative plan" for securing
an air nitrate supply for war munitions and fertilizer in peacetime.
The committee was friendly and obviously impressed. Their report
explained the plan behind section 82. It proposed that the govern-
ment build and operate a $21 million hydroelectric power plant and
deliver current to a private company. The company would finance
and construct a $24 million nitrate plant. Payment to the government
for the power was fixed at 3 percent per annum on the investment
in the hydro plant.
When the weeklong debate on the bill opened, March 17, Frear of
Wisconsin attacked section 82. It was "an effort to put through Con-
gress a proposal that would not stand the light of publicity." He
quoted "disinterested" chemical authorities in support of his assertion
that Washburn's cyanamid process was not the last word and it was
by no means certain that he could produce nitric acid in quantity as
62 THE CONSERVATION FIGHT
cheaply as he claimed and charged that "on his unsupported word
Congress is asked to authorize an expenditure of $21,000,000 with
which to go into partnership with Mr. Washburn's Cyanamid Com-
» 2
pany.
Chairman Hay, who strongly favored the Washburn scheme, antici-
pated trouble. He had further discussion of the nitrate section post-
poned until the last day of the debate when he proposed to devote
two hours to discussing it. However, when Hay asked unanimous
consent for the proposed debate. Madden of Illinois objected: *1
think if we voted now we would get along better. Everyone knows
what we are going to do. Let's take a vote on it now." The House
agreed with him. The vote was taken without debate and a motion
to strike out section 82 carried 203 to 198; only 30 did not vote. *
Senator Smith Proposes Government Ownership. Dates at this
point in 1916 become interesting. On March 10, four days after the
House Committee on Military Affairs report approved the Washburn
partnership plan between government and private enterprise. Senator
Elhson D. Smith of South Carolina dropped in the hopper a bill for
outright government ownership, construction, and operation of a unified
hydroelectric nitrate project. Its purpose, paralleling Washburn's,
was to assure the production of nitrates for powder in wartime and
for agricultural fertilizers in peacetime. This bombshell was submit-
ted in the Senate only two days after that body had passed the Shields
bill ( authorizing the lease to private enterprise of waterpower resources
outside the public domain) by a two-to-one vote. Senator Smith's
bill seemed absurd, but war plays havoc with sedate convictions.
Smith was a cotton planter who had taken no part in the waterpower
controversy. His move was a surprise. He was no advocate of public
power, nor was he under political obligations to power companies.
He was a positive, picturesque personality, aware of the importance
of cheap fertilizer to the South. His lifelong activities in behalf of
the cotton growers had earned him the nickname of "Cotton Ed." His
bill, S. 4971, was destined to become Section 124 of the National De-
fense Act under which President Wilson ordered the construction of
the Muscle Shoals project. At the Senator's request, S. 4971 was refer-
red to the Committee on Agriculture and Forestry. Several members
of the committee not only supported but strengthened the Smith pro-
posal. Since they laid the groundwork for a public enterprise that
attracted national attention, their names should be recorded.
WAR AND WATER POWER 63
Democrats Republicans
Thomas P. Gore, Oklahoma, Chairman James W. Wadsworth, Jr., New York
Hoke Smith, Georgia Asle J. Gronna, North Dakota
Elhson D. Smith, South CaroHna William S. Kenyon, Iowa
John F. Shafroth, Colorado George W. Norris, Nebraska
Morris Sheppard, Texas
Edwin S. Johnson, South Dakota
Committee chairmen often wield decisive influence on congressional
legislation. It was fortunate for public operation advocates to have
Senator Gore, a pronounced liberal, head the committee. Senator
Norris in particular, as well as others in the Senate, were to decide
the fate of Muscle Shoals.
While fertilizer was uppermost in Senator Smith's mind, other Sena-
tors were more concerned over waterpower. They were keen to ascer-
tain whether the pending Washburn cooperative plan was not actually
the old Muscle Shoals scheme in disguise and whether it was connected
with Cotton Ed's proposed. Hence Washburn was the first witness
called. Kenyon of Iowa questioned him closely about his power com-
pany connections. To Kenyon's astonishment, Washburn denied any
connection with the Alabama Power Company. He had resigned
lately, "within a fortnight," on the day, to be exact, when Senator
Smith introduced his bill.
Washburn stated that his sole interest in Muscle Shoals was to obtain
power for nitrates. He wanted "every bit of it," he said. When he
disclaimed any knowledge of the Smith bill, the Senator hastened to
explain the purpose and origin of his plan. "I want to say that in
introducing this bill my attention had never been specifically called
to the Muscle Shoals or any other water power in the country ... I
want to make this further statement that I have introduced this bill
for bringing out and determining whether or not it is feasible for the
Government to go into this business itself for the purpose of develop-
ing this ingredient without any regard to any private individual or any
water power, anywhere, or anyplace. I simply wanted to get the fact
that this is feasible and can be enacted into law ..." *
The Senator said that before launching his plan he had consulted
the Assistant Secretary of Agriculture, Carl S. Vrooman, a pronounced
liberal who strongly approved the idea. At Vrooman s direction,
Francis G. Caffey, solicitor for the Department of Agriculture, had
drafted the bill.
Origin of Washhurns Proposal. Washburn testified that he had
64 THE CONSERVATION FIGHT
consulted War Department oflBcials, chiefly General Crozier, and had
talked with Secretary Houston and others in Agriculture. Many plans
had been considered. At first he had urged that the government guaran-
tee the bonds for his nitrate plant and take a mortage on the property
but this plan was abandoned in favor of having the government fur-
nish the power while private capital would construct the plant. After
four months of study, War Department officials expressed themselves
as favoring his plan but remained uncommitted. The Department
of Agriculture did not express its opinion.
Senator Norris asked many questions on water power, especially
the feasibility of Washburn's locating a nitrate plant in Ontario to
take advantage of cheap power costs. He developed the information
that Washburn's process was, as Washburn put it, "covered by a cloud
of patents— 100 of them I think." Use of the cyanamid would be con-
trolled by Washburn's patents. ^
Senator Smith introduced Dr. Thomas H. Norton, of the Bureau of
Foreign and Domestic Commerce, who gave the committee extensive
technical information. Norton testified that from German chemical
engineers he learned that if Germany had not put nitrate plants into
operation the year preceding declaration of war, she would have had
to sue for peace. Dr. Norton thought the nitrate industry should be
developed in the United States; he avoided the public-or-private
plant issue. Dr. Leo H. Baekeland, a consulting chemist, also testified
that fixation of atmospheric nitrogen was feasible though the process
needed improvement. He advised that the government sponsor an
experimental plant. When Senator Sheppard of Texas inquired if
government ownership was a good policy, Baekeland replied: "That
would be one way of solving the problem of our unfortunate situation,
but this country up to now does not seem to have grown up to the
condition where it can run as profitably as a private enterpraise such
a vast project."
The committee heard from R. F. Brown, who represented both the
National Farmers Union and the National Grange, and who stated
they were interested in nitrate development because of the prospect
of low-cost fertilizer. He had no objection to government operation
but thought that private interests would be powerful enough to prevent
it. His organizations wanted the government to enter the field as a
regulating force in a "competitive enterprise" of some sort because
they feared that if they got out of the hands of the Chilean nitrate
monopoly they would get into another one in the United States. '
The Senate Committee Reports Favorably. Convinced by the tech-
WAR AND WATER POWER 65
nicians that air nitrate production was practical and impressed by Dr.
Norton's statement that Germany would have lost the war without
advance air nitrate production, the committee endorsed the Smith
plan. In its report on March 30, 1916, it urged immediate action.
"The committee feels that any further investigation would not only be
a waste of time but a dangerous delay." The basic principle of the
bill, that of exclusive government ownership and operation, was not
only retained but strengthened by the addition of a new section insist-
ed upon by Senator Kenyon: "Sec. 7. That this plant or plants pro-
vided for under this Act shall be constructed and operated solely by
the Government and not in conjunction with any other industry or
enterprise carried on by private capital." The committee made one
important change. The final draft authorized the President, instead
of the Secretary of Agriculture, to designate and withdraw the necess-
sary sites.
In exactly what way surplus nitrates would provide the promised
cheap fertilizer was not made clear. Nitrates must be mixed with
other materials to make a fertihzer ready for spreading. Was it antic-
ipated that the government would manufacture the complete product
and sell it to dealers or consumers? Or, would it sell the nitrate
ingredient to private fertilizer mixing companies? Likewise, would
the government sell surplus electric power direct to consumers or
dispose of it to private utilities for distribution to ultimate users? The
decision would be left to the Secretary of Agriculture.
The point is vital and remains a matter of heated controversy. Let
us examine the start of it. Section 5 of the Smith bill read: "That the
products of such plants shall be subject to requisition by the Secretary
of War or the Secretary of the Navy for military or naval purposes and
any surplus not so requisitioned may be sold and disposed of by the
Secretary of Agriculture under such regulations as he may prescribe."
The committee left the section intact except to change the phrasing
from "shall be subject to requisition" to the words "shall be used."
While the section gave the Secretary of Agriculture the option of
wholesaling both power and nitrates to private enterprise, it also
authorized him to make the government its own manufacturer and
selling agent. The possibility brought from the conservatives as
much condemnation as the idea that the government build the plants —
heresy enough, even as a war emergency.
The measure precipitated the first truly major debate ever held
in Congress over "putting the Federal Government into the power
business." Strong men of equal sincerity were at variance, represent-
66 THE CONSERVATION FIGHT
ing the conflicting ideologies of their day. All were conscious that
the war emergency was forcing the government to set a precedent of
momentous consequence.
The Senate Battles Over Public Power. The first skirmish in the
Senate came on March 30, 1916, when reports of committees were
received and bills introduced. Senator Underwood, a Smith bill oppon-
ent, wanted the nitrate plant located at Muscle Shoals in his own
state, Alabama, and he had proposed an amendment to the national
defense bill as a step in that direction. Knowing the Smith bill would
be reported March 30th and go on the calender to await its turn, he
had given notice of his intention to speak at length on his amendment
on the same day. The time would be immediately after the morning
hour. By this maneuver Underwood would have his day in court
before the Smith bill could be reached for discussion.
To the alarm of both Underwood and Smith, Senator Saulsbury
of Delaware, alert to the interests of the DuPont Power Company, dur-
ing the early morning hour read to the Senate a letter addressed to
Secretary of War Baker by Pierre DuPont, president of the DuPont
Company. DuPonf s letter transmitted a bill authorizing the Secretary
of War to give his company a 50-year lease on a power site to be
selected by the Army Engineers. The lease would be for the purpose
of constructing a complete hydroelectric, power-nitrate plant to supply
the government with nitrates. The company would furnish all the
capital, and profits would be fixed by the Secretary of War. After
50 years the government could reclaim the properties at fair value.
By this move the DuPont proposal was the first to capture the atten-
tion of the Senate and the press. Realizing this, Kenyon of the Agric-
culture Committee demanded an immediate reading of the Smith
bill. A little later Smith made the official report on his bill. '
Saulsbury s action made Senator Underwood angry when he did
not get the first break, either in the Senate or the newspapers. He
vehemently charged the DuPonts with maintaining a powerful Wash-
ington lobby to acquire a choice power site and to prevent government
production of nitrates. The DuPonts denied the charge but that was
the last heard of their offer.
Underwood's amendment, intended to steer the new plant to Muscle
Shoals, was as vague on essentials as was Section 82 of the House bill.
Despite the adverse recommendation of the Agriculture Committee,
the Senator wanted an investigation made by the Board of Engineers
for Rivers and Harbors with the approval of the Secretary of War. The
WAR AND WATER POWER 67
Army Engineers were to select a site and a nitrate process, estimate
costs and report back to Congress.
Underwood was opposed to exclusive government operation. Once
military needs had been supplied, he would have the plants "rented"
to private enterprise, the nitrates sold to private manufacturers, the
power sold to companies who would use it in the manufacture of ferti-
lizer. Instead of Smith's proposal to build three or four small plants
costing a total of $15 million, he would have a single large plant cap-
able of developing 130,000 horsepower of electric energy. The power,
he said, would be sufficient for the annual production of 180,000 tons
of nitrates by the cyanamid process, approximately equal to two thirds
of Germany's production rate. An investment of $50 million would
be needed. Underwood noted that the Army Engineers' investigation
showed that this could be done at Muscle Shoals. " With this as an
opening, the real battle was joined a week later, April 7th, when Smith
introduced his bill as an amendment to the national defense bill. The
debate took a major part of the Senate's time until adoption of the
amendment, with some changes, on April 14th.
All the basic issues of governmental policy considered in the fore-
going chapters were again brought into sharp focus. We can best
recount them and recreate the atmosphere in which the discussions
took place by direct quotations from spokesmen for each side.
After an explanatory speech by Senator Smith, Hardwick of Georgia
led the attack against the bill. He hated to oppose his good friend
from South Carolina, he said, "yet this amendment contains elements
of public ownership, of governmental participation in private busi-
ness, that render it impossible for me to lend it my support unless it
is materially modified from its present shape ... it is just a question
of Socialism, pure and simple; that is all." Later, chiding Underwood,
Hardwick declared, "The Senator from Alabama ought to apologize
to Debs and every other Socialist that he has ever criticised during
his whole political career. I am grieved to see a Democratic Senator,
nurtured in the faith of Thomas Jefferson, and one of my best beloved
friends, make such a mistake. If JejBFerson were here and could have
heard this proposition of the distinguished Senator from Alabama I
think he would have left this chamber in disgust; and if he could,
although dead, hear it now he would turn over in his grave in holy
horror." '
Senator Henry Cabot Lodge of Massachusetts was also opposed to
government production of either water power or nitrates. He main-
tained that a sufficient supply even for war purposes could be had from
68 THE CONSERVATION FIGHT
private coke ovens. "I have not myself the slightest doubt that in
that way, or through water power, you can secure all you want if you
will let private enterprise alone and allow it to engage in the under-
taking, and you will get it cheaper than in any other way." He held
that both the Underwood amendment and the Smith bill were backed
by "what may be called the Muscle Shoals scheme." He followed with
a violent attack upon Washburn and inserted in the record several
pages from Moody's Manual of Railroad and Corporation Securities
of 1915, disclosing Washburn's power company and other corporate
connections. The attack on Washburn was a rejoinder to Underwood's
attack on the DuPonts. "I suppose a corporation is wicked in Pennsyl-
vania or Delaware and that a corporation is good in Alabama," he said
sarcastically. ^°
Sutherland of Utah, though usually opposed to legislation calHng
for Federal control or ownership, nonetheless attacked the Smith pro-
posal as exceeding the functions of government: "I want to see this
government operated as a government. I do not want to see it degene-
rate into a business concern. I do not think it was in the contempla-
tion of the framers of it that it was to go into business either to mono-
polize it or in competition with its own citizens. It is utterly unfair
to do it . . . Why not let private capital embark in this business? Why
not leave the door open to private capital instead of closing it by this
sort of legislation and let the matter develop as other commercial and
manufacturing matters develop?""
Husting of Wisconsin, a Democrat, led for the affirmative. Husting
was not impressed by the alleged iniquity or unfairness of government
competition with its citizens in a matter of this kind, nor was he allured
by Washburn's cooperative scheme. "I am opposed to this partner-
ship business, and I am for the amendment with the understanding
that it is to be run as a government institution and be conducted as
a public enterprise. I trust that if we are going to build a dam for
the purpose of manufacturing powder and nitrates, we will hang onto
that dam and use it in time of peace in the best manner and for the
best purpose to which we can put it." He noted that the operation of
a small government powder factory had demonstrated actual costs
of making powder. As a result, "the price of powder manufactured
by the private concerns had dropped from about a dollar a pound to
about 50 cents a pound." Private concerns held a monopoly of patents
on air nitrate manufacture. The Shields bill was still pending;
if passed it would permit private capital to monopolize water power.
WAR AND WATER POWER 69
and "then we turn over to them the land, the water and the air for
their sole use and benefit."
In his argument against monopoly, extortionate miHtary costs, and
war profiteering, Husting struck a note that if supported by others
would have a powerful effect on the outcome. Passage of the Smith
amendment would avert these evils, he said. "I cannot see anything
wrong about this proposition, I like it particularly well because it
is the government itself that is going to do this and is not going into
partnership with anybody else. That will insure us from the danger
of putting our money into a power plant and after having it built throw
it into somebody else's lap for the purpose of enriching not the people
of the United States who built it, but the people who are fortunate
enough to get a permit from the government to use government prop-
erty built with government money."
He felt the time had passed when the cry of socialism was efiFective.
"It is rather strange to find that whatever legislation is proposed which
promises to make for the public advantage— that is, equal taxes, for
instance — or which promises to lighten the burdens of the already
over-burdened people, the opponents of the bill invariably denounce
it as 'socialistic' as though that alone answered all arguments in its
favor and destroyed whatever great progress was intended." '^^
Kenyon, a Republican for the Smith amendment, followed Husting:
"I believe in the Government doing this work, and building and operat-
ing the plant, because I believe that the Government should make its
munitions of war. I voted for the armour plate bill on that theory.
The profits should be taken out of war and there would be less demand
for war in certain quarters." Turning to the fertilizer feature, he said:
"The question of the conservation of our soil is as important a question
as the people of this nation have to face. And so I am inclined to vote
for a government plant to make nitric acid in war and fertilizer in
peace."
Kenyon had dealt with the Muscle Shoals problem ever since he
succeeded, in 1911, to the Senate seat vacated on the death of Dolliver.
Kenyon reviewed the history of efforts to develop the Shoals, disagree-
ing with the Army Engineers who supported the Washburn- Worthing-
ton partnership plan previously described. Hence he sti'ongly opposed
Underwood's proposal that Army Engineers select the site. "We might
just as well write into the amendment that this plant is to be located
at some particular place, and that is Muscle Shoals," he said. He
denied prejudice against the site but urged that selection be made
70 THE CONSERVATION FIGHT
by an unbiased independent board not committed in advance to deal
with private interests. "
Senator Walsh of Montana ridiculed the claim that a government
plant would prevent private capital from investing in the nitric acid
business. After declaring himself in favor of the Smith amendment,
he said: "I submit, sirs, that it is a business proposition that could
receive countenance nowhere in any aggregation of businessmen, that
when you have the very elements of the thing you should turn these
elements over to someone else and allow him to utilize them and then
buy the product from him. Furthermore, Mr. President, I am glad
to vote for this amendment upon exactly the same principle as that
upon which I voted for the erection of an armour plate factory; that
is, sir, to take as far as we reasonably can the profits out of the business
of war ... I would have the Government go in and utilize these great
power sites for the fixation of atmospheric nitrogen so that no one
would be tempted to go into it in order to make money out of it."^*
The temper of the Senate on the Smith proposition was shown by
the vote on an amendment to strike the words "and useful in the manu-
facture of fertilizer." The amendment (by Hardwick) was rejected
47 to 25, with 25 not voting. The opponents of the plan then directed
their e£Forts toward permitting private industry to share in the benefits
of the enterprise. Abandoning his drive for an investigation. Underwood
introduced another amendment authorizing the Secretary of War to
lease both plants, or to lease the hydro-electric power plant alone to
private parties "when not needed for the manufacture of explosives."
He was defeated on this and also on a proposal authorizing the Sec-
retary of War to contract with some private concern for a process of
air nitrate production. "
Norris For Government Project. Norris of Nebraska in several short
speeches supported the principles of government ownership and opera-
tion of the proposed plants since existing processes of air nitrate pro-
duction were not perfected, he suggested the government employ scien-
tists to work out a new and better process of its own. "Mr. President,
this is a system that is rapidly developing, changing, and improving.
It may be that it will be unnecessary for the Secretary of War to pur-
chase any patented processes from scientists who are in the employ
of the Government."'" Two years later President Wilson ordered
the construction of an experimental plant for this very purpose. Feasi-
bility of the cyanamid process was to plague the Congress throughout
the 1920s.
Thus, after weeks of ddbate, bickering, and heated colloquies, the
WAR AND WATER POWER 71
Smith amendment was adopted, 42 to 22, with 31 not voting. The
vote shattered party Hnes and even the usual distinctions between pro-
gressives and conservatives. Among the yeas were such conservatives
as Myers, Overman of North CaroHna, Saulsbury of Delaware, and
Underwood himself. Voting against the measure were Senator Harding
of Ohio, who became President four years later. Senator Curtis of
Kansas, elected Vice President in 1928, and Senator Wadsworth of
New York, all conservatives, and two outstanding progressives, Borah
of Idaho and Chamberlain of Oregon, who had resented the intrusion
of the Smith amendment into his defense bill.
There were many conflicting provisions between the House "Military
Affairs" bill and the Senate "National Defense" bill. The conference
committee attempting to reconcile these differences was composed of
Senators Chamberlain, Beckham (Kentucky), Broussard (Louisiana),
DuPont (Delware), and Warren (Wyoming); and Representatives
Hay, Dent (Alabama), Kahn (Calffomia). The committee revam-
ped the entire bill, rewriting many parts. The first report was rejected
and returned to the committee for further alteration before its labors
were accepted and the bill adopted. "
The nitrate section enacted authorized the President to proceed
with the undertaking at his discretion. It resolved the knotty problems
of location, selection of a process, and the construction and operation
of the plants by turning the plants over to him. Government owner-
ship and operation was assured and made exclusive. The repugnance
to both houses of partnership with industry or to a water power grab
was overcome by retaining the exact text of the sentence which the
Senate Agriculture committee added to the Smith bill. The sentence
read: "The plant or plants provided for under this Act shall be con-
structed and operated solely by the Government and not in conjunc-
tion with any other industry or enterprise carried on by private capital.**
The final text on disposition of surplus— power and nitrates — read
as follows: "The products of such plants shall be used by the Presi-
dent for military and naval purposes to the extent that he may deem
necessary, and any surplus which he shall determine is not required
shall be sold and disposed of by him under such regulations as he may
prescribe." ^^
The wide open authorization implied in this compromise gave
neither side a victory. The President could, after supplying mihtary
needs, devote the plant either to the production of power or to the
manufacture of fertilizer. A conservative President could sell the
surplus power wholesale to a private utility or to a fertilizer company.
72 THE CONSERVATION FIGHT
Underwood conceded these eventualities to Hardwick shortly before
final action on the bill. ""^ The chief consideration that moved Congress
to put the federal government into hydroelectric power production
was, then, not fertilizer requirements of the nation s farmers, but the
dire need of nitrates for war. Congress put its trust in the federal
government as the best means of guaranteeing a prompt supply with-
out war profit to any private enterprise.
Representative Longworth Is Scornful. The views held by the
ultraconservatives on this venture were best summed up in an extremely
sarcastic speech made by Representative Longworth of Ohio before
the final vote in the House. Because he was Repubhcan floor leader
from 1923 to 1925 and Speaker of the House from 1925 to 1931, his
attitude profoundly affected the disposition of the Muscle Shoals pro-
ject, which was constructed under the very law he roundly denounced
in 1916. Longworth questioned the sincerity of the bill's advocates
in attacking the fertilizer feature, ridiculing it as a move to bring
relief to the farmers. He announced that he would vote for the con-
ference report to assure reorganization of the Army, then added:
"There is one provision in this report, however, that I regard as
possibly the most obnoxious and unjustified piece of legislation that
has passed Congress in my experience. I mean the so-called govern-
ment nitrate plant. Unfortunately the parlimentary situation is such
that we must vote the whole report up or we must vote it down. We
must take the bitter with the sweet, if we are to get any of the sweet,
and I am compelled, therefore, at the risk of the permanent impair-
ment of my digestion, to stomach this nitrate proposition, but not
without voicing, if a useless, at least an emphatic protest.
"What is this so-called nitrate proposition? It is a scheme to spend
$20,000,000 of the people's money absolutely uselessly, so far as they
are concerned, and the inherent vice of it all is that this money is
being taken from them under false pretensions. In the name of the
national preparedness we are going to spend $20,000,000, and this is
but an entering wedge, for eventually it will cost millions more if
carried out upon a scheme which has nothing whatever to do with
national preparedness, upon a scheme which, when advocated on its
real merits, has been repeatedly repudiated by Congress ....
"I have heard it said that the Administration insisted that this
scheme should be included in the bill. If that be true, it was due, I
am sure, either to ignorance of the facts or else to misrepresentation
of the facts by those directly interested . . .
"The American people will not benefit by this scheme. Not a soul
WAR AND WATER POWER 73
will benefit except a few highly efficient captains of industry who
know exactly what they want and who at this moment are doubtless
laughing in their sleeves at the ease with which they have pulled
the wool over the eyes of a docile Congress.
"This incident is not closed, gentlemen. It will rise to plague you
in the not-far distant future. The people are going to demand an
accounting for this and other reckless drafts upon their Treasury.
Be well assured that the pork barrel' will not smell sweeter because
of the admixture of its contents with fertilizer." ^
Longworth was right in believing that "efficient captains of indus-
try" with an eye to the main chance might, under the terms of the act,
have achieved their purpose at the hands of a complacent president,
but it soon turned out that they did not. Furthermore, the future
Speaker either ignored or was totally blind to the significance of the
electric power provision. But he was not alone in lack of vision. A
few years later liberals and conservatives alike were astonished at the
project which grew out of dimly forseen, rapidly changing conditions
affecting the national welfare.
But Was It Constitutional? In addition to the wisdom of the so-cal-
led nitrate section, the constitutionality of the bill was questioned.
The right of the federal government to lease and regulate the use of
water power sites had been debated in nine sessions. War or no war,
it is not hard to imagine the rise in temperature caused by a proposal
that the government develop and operate one of the sites. The United
States Supreme Court in the 1913 Chandler-Dunbar case had declared
invalid the ancient legal doctrine that potential power in a river be-
longed to the riparian owner. ^ The court further asserted the right
of the national government to lease or develop power in navigable
waters, but the old debate over constitutionality and states rights
proceeded as though there were no Supreme Court. ^
The argument, old as the Republic, was a typical set-to between
strict and liberal constitutionalists. Worthy of note, however, are
the pleas of progressive statesmen to get action on twentieth century
economic and social problems within the framework of an eighteenth
century constitution. Legalistic Borah, though favoring the nitrate
proposal, thought the constitution would have to be changed; he said,
"We have only such power as the people give us through the constitU'
tion."^ Borah was joined by Smoot, Lodge, Oliver of Pennsylvania,
and others, especially Sutherland. When Smith cited the welfare
clause as a legal base for his scheme, Sutherland retorted: "If the
Senator from South Carolina thinks that is a substantive grant of
74 THE CONSERVATION FIGHT
power, then the Senator and I have no common foundation upon which
we can conduct an argument." ''^ Clapp of Minnesota, a Republican,
firmly believed the welfare clause a substantive grant of power, and
started the following exchange on the floor:
Mr. Clapp: ". . . . I want to put my support upon a ground that
cannot be questioned .... I think the sooner we reach the plain pro-
position in this matter that this government can do those things essen-
tial to the development and welfare of all without doing them in a
roundabout way, the better it will be for all concerned .... There
is no more question in my mind of the right and power of the American
people, under the federal constitution, to develop a fertilizing product,
if it is wise .... than it is to do any other of the thousand and one
things we are doing today under government control, regulation and
through the government itself.'*
Mr Borah: "Under what provision of the Constitution would the
Senator from Minnesota assume to do that?"
Mr. Tillman: "The general welfare clause of the Constitution is
broad enough for me and it is deep enough, too."
Mr. Clapp: ". . . . Under the broad proposition that there is no
warrant for the burdens of government to be assumed by a people
unless those forming that association called 'government' can develop
their moral and material welfare under the instrumentahty of that
association."
Mr. Owen: "I believe in a Hberal interpretation of the Constitution.
I believe the Constitution ought to be construed in the light of being
intended as a servant of the people in their organized capacity. My
only regret is that we could not go further along these lines; but cer-
tainly, even for a strict constructionist, this proposal in the conference
report could not meet with any sound objection."
Mr. Owen, an Oklahoma Democrat, reached this legal conclusion
after an eloquent outburst which illuminated the whole conflict be-
tween outgrown legahsms and human necessities.
vin
BUILDING THE MUSCLE SHOALS PLANTS
The President did not have long to wait to use his authority to
construct plants, under the National Defense Act of 1916, for the
production of atmospheric nitrogen to be owned and operated "solely
by the government." When on April 6, 1917, the United States declared
war on Germany, all the grave possibilities foreshadowed in the de-
bates on the nitrate section of the Act became reality. No one knew
how long the war would last. Since military authorities estimated it
would continue into 1920 or even beyond, calculations for supplies
were made on that basis. ^
It was at once apparent that the procurement of nitrates for explo-
sives to supply the American Expeditionary Force would be a stupen-
dous and difficult task. Four months after entry into war. General
Pershing cabled that France had a serious shortage of Chilean nitrates
and that "to avoid calamity the United States must not only furnish
powder and explosives for all of its own forces but must supply about
half of the French requirements." The situation became grave."*
The task of obtaining nitrates was assigned to Bernard M. Baruch,
a member of the New York Stock Exchange serving as head of the
raw materials section of the War Industries Board. He succeeded in
thwarting speculators from cornering the world market in nitrates and
in stimulating coke production for the duration of the war. He readily
agreed with the Ordnance Board that the government must have an
independent source of supply and gave the Muscle Shoals project his
enthusiastic endorsement. Baruch estimated that one-fourth of our
nitrate requirements must come from these plants. Before the war
ended, he revised the figure to one-half. *
The Selection of a Power Site. For nearly two years the govern-
ment had given serious attention to the necessity of developing at-
mospheric nitrogen but with the declaration of war the decision was
forced. A process had to be chosen and a water power site selected.
In the interim the Chief of Ordnance, General Crozier, had sci-
entists studying the various methods of nitrogen fixation and experts
sent to Europe in 1916 to investigate air nitrate processes. Secretary
of War Baker had also requested the National Academy of Science
and the American Chemical Society to appoint a joint committee to
75
76 THE CONSERVATION FIGHT
study and report on the most economical method of obtaining a
nitrate supply. This committee, acting swiftly, recommended on
January 20, 1917, that the government purchase enough Chilean
nitrate to meet requirements for at least one year, build a plant to
purify and convert coke oven ammonia purchased from private con-
cerns, and construct a large hydroelectric station to supply power at
cost to private companies for fixation of atmospheric nitrogen. *
By the time the reports were made, the likelihood of the U. S.
being drawn into the war had become more threatening. The crucial
nitrate problem remained unsolved. Opinions among authorities as-
signed to the task were sharply divergent. They difiFered not only on
technical questions but on water power sites and the respective parts
government and industry should play in meeting the emergency.
To settle the disputes. President Wilson, on January 15, 1917, ap-
pointed the Secretaries of War, Interior, and Agriculture to consider
and report on the selection of water power sites. The three cabinet
officers at once launched an investigation of possible eastern and
southern sites remote from the seaboard. Nine locations were found.
On March 9th, Secretary of War Baker created a nitrate supply com-
mittee of 15 men to recommend a plan of action. General Crozier
was chairman, but the committee included representatives of military
and scientific organizations as well as private business. ^ On Septem-
ber 28th the President announced that the first nitrate plant would
be located at Sheffield, Alabama, near Muscle Shoals.
Meanwhile, the declaration of war forced the nitrate supply com-
mittee to make a hasty decision based upon incomplete study and
inadequate knowledge. It was a vital decision because German sci-
entists had perfected the secret Haber process requiring a compara-
tively small amount of electricity for the fixation of atmospheric nitro-
gen. On this side of the Atlantic the General Chemical Company
owned the patents for a "modified Haber ' process developed scarcely
beyond the laboratory stage. In April 1917 the company had ten-
dered use of its patents to the government plus the assistance of its
technical staff under certain conditions. With further experimenta-
tion it was thought the process might be capable of producing air
nitrates in quantity, as the Germans were doing. The American
Cyanamid Company owned the cyanamid process, which was already
in large production, but required vast quantities of cheap electricity.
The nitrate supply committee recommended May 11th acceptance
of the General Chemical Company's offer and that the War Depart-
ment build a large plant, preferably in southwest Virginia. The com-
BUILDING THE MUSCLE SHOALS PLANTS 77
mittee further recommended postponement of the decision to use the
cyanamid process and water power development "until the plants . . .
are in operation or until further need arises/'* Only one concern,
the American Cyanamid Company headed by dynamic Frank S.
Washburn, had a process and the know-how capable of meeting this
emergency. Negotiations were promptly begun. Several oJBFers were
made and rejected. Finally the company agreed to form a subsidi-
ary, the Air Nitrates Corporation, to construct a great air nitrate
plant at Muscle Shoals. Electricity was to be supplied by a steam
plant because it was unlikely that a power dam could be built before
the end of the war. The contract was signed on November 16, 1917,
and within a week engineers were on the ground inspecting the
Muscle Shoals site for the subsequently famous Plant No. 2.
A considerable supply of energy was needed for the construction
of the Muscle Shoals project. Fortunately, the Alabama Power Com-
pany had in operation the Gorgas steam plant on the Warrior River,
90 miles southeast of the shoals. It was interconnected with the com-
pany's statewide transmission network. Its capacity was only 25,000
kilowatts, but the company agreed to build at government expense
an additional 30,000 kilowatt unit and a 110,000 volt transmission Hne
to connect with a substation at Muscle Shoals. The system was ready
for operation the following May. The transmission line was to play
an important part in the Muscle Shoals story.
Events now moved rapidly. On July 21, 1917, a Nitrate Division
was created in the Ordnance Department (Colonel J. W. Joyes was
chief) and ordered to proceed with construction of Nitrate Plant No.
1. On August 10th the J. G. White Engineering Company contracted
to build the plant. Construction started October 4. The govern-
ment's frantic search for an economical air nitrate process was on.
It was well understood that Plant No. 1 was to be a trial project.
In August the Ordnance Department was faced with a large de-
ficiency in its supply of explosives and explosive material. Twenty
days after the first spadeful of dirt had been turned for the experi-
mental plant, the Ordnance Department warned Colonel Joyes that
he must prepare to furnish an air nitrate supply far beyond all previ-
ous calculations.
President Wilson Orders Dam No. 2. Although a new steam power
plant was authorized to supply energy for the Nitrate Plant No. 2,
President Wilson on February 25, 1918, ordered construction of Dam
No. 2 at Muscle Shoals. Dam No. 2 was to become Wilson Dam.
The move was surprising because it was highly improbable that this
78 THE CONSERVATION FIGHT
gigantic structure, nearly 100 feet in height and a mile in length,
could be completed in time for war use. Dam No. 2 was the prin-
cipal of three dams recommended to Congress by the Army Engineers
Corps to harness Muscle Shoals for navigation and power purposes. '
Choice of the Muscle Shoals Site. President Wilson's decision to
locate the nitrate plants at Muscle Shoals was severely criticized. He
was charged with having disregarded his military and civihan advis-
ers and of playing the game of Democratic Party politicians in league
with the Alabama Power Company and other private interests that
would benefit later. The criticism was based on the assumption that
the plants were built only to supply nitrates for the war. The evi-
dence discloses that the utilities and industrial interests did not get
what they desired as a result of Wilson's decision. Care had been
taken in its selection. In March 1917 Secretary of War Baker, Sec-
retary of Interior Lane, and Secretary of Agriculture Houston, who
had the responsibility of selecting the site, investigated possible sites
in the southern states in the company of technical advisers, who also
were sent to look into the possibilities of Niagara Falls, Keokuk, and
other places.
In May the nitrate supply committee recommended that Plant No.
1 be located "preferably in south-western Virginia" but the Chief of
the Nitrate Division, Colonel Joyes, found the narrow valleys of this
region unsuitable. He suggested that General Crozier advise Secre-
tary Baker that of the nine sites inspected four best filled the require-
ments— North Chattanooga, Nashville, Sheffield, and North Birming-
ham. General Crozier passed the recommendation on to Secretary
Baker, giving North Chattanooga as his choice. Secretary Baker
decided on Sheffield near Muscle Shoals and President Wilson ap-
proved his selection. * Explaining his reasons for naming Sheffield,
which meant Muscle Shoals, Secretary Baker said he advised the
President that "it would be very much wiser to put this plant where,
when we could build a dam, we would have hydroelectric power
available ultimately . . . because of course we were looking to the
fertilizer end of it as well as the munitions uses."
The great Plant No. 2 was located at Muscle Shoals for the same
reason. The Secretary said he was aware that the chemical and
physical processes then in use were experimental; that the future
would bring great changes but in any event "any process is going to
use larger or smaller amounts of power. Therefore power to a cer-
tain extent is at the heart of the problem. The damming of the
Tennessee River at Muscle Shoals produces an enormous amount of
BUILDING THE MUSCLE SHOALS PLANTS 79
power and makes it possible for us on short notice to expand the
production at Muscle Shoals. Any other place, using similar power,
would be open to the question of immediate and rapid expansion.***
At the time no explanation was given why Muscle Shoals was se-
lected from among other sites recommended, and much was made of
that fact. But there was no unsavory mystery. In the expenditure
of many millions of dollars on the venture the President was trying
to combine immediate production of nitrates with long-term national
welfare. Besides power and navigation such conservation issues as
flood control and soil conservation were acute problems in the offing.
Muscle Shoals was the key to mastery of the entire river. Wilson had
heartily championed conservation principles in his campaign speeches
and Secretary Baker had come to Washington straight from the ma-
yor's chair in Cleveland where he had established a municipally
owned 3-cent light plant. All these things undoubtedly influenced
the choice and led Colonel Joyes to testify "I think I might have been
influenced in the same way if I had been working at it from the
viewpoint of the Secretary and the President.""
There was still another consideration. The War Industries Board
in its prodigious task of equipping and maintaining an army was faced
with a power shortage. The government had no generating stations
of its own, and private power companies lacked sufficient surplus
capacity. In one of its official reports, the board stated: "Among the
many difficulties encountered during the war, having an important
bearing upon the war program of the government, was that created
by the exhaustion, soon after our entry into the war, of the reserves
of central-station electric power in our principal manufacturing com-
munities. This very naturally at once led to inability on the part of
the public-utility companies to honor demands for additional power
made by customers with contracts for war supplies of various char-
acter, and, as a consequence, threatened to interfere seriously with the
production of the equipment and munitions needed for our forces
on land and sea.""
With this example before him. Secretary Baker had good reason
to make certain that the government in the event of another war
would have its own power plant, capable of delivering, as he said,
"enormous amounts of power ... on very short notice.*' The decision
to retain possession of Muscle Shoals and start construction of Wilson
Dam when opposition to public power was at a minimum was an act
of high statesmanship. Time and the contribution of the Tennessee
Valley Authority in World War II have justified the choice of the
80 THE CONSERVATION FIGHT
Muscle Shoals site to say nothing of the fertilizer program and subse-
quent accomphshments of the agency. But for that decision there
would doubtless have been no TVA.
Republicans Attack the Project. Having failed to prevent govern-
ment development of Muscle Shoals, the Republican Party leader-
ship embraced the first opportunity at war end to halt construction
with the intention of transferring the entire project as mere scrap to
private interests as soon as possible. The congressional elections of
1918, held only six days before the armistice, gave the Republicans
control of the 66th Congress that met the following May 19. The
House of Representatives immediately set up a Select Committee on
Expenditures in the War Department. Representative William J.
Graham of Illinois, a conservative Republican, was chairman. Graham
also became chairman of subcommittee No. 5 on Ordnance, which
held extensive hearings and on May 18, 1920, made a sensational
report on the Activities of the President and the War Department in
their efforts to build and operate nitrate plants. The other two mem-
bers of the committee were Albert W. Jefferis (Republican) of Ne-
braska and Finis J. Garrett (Democrat) of Tennessee.
The inquiry, alleged to be nonpartisan, was confined to the ques-
tion of honesty and efficiency in the expenditure of public funds.
The hearings and the findings of the chairman and his partisan col-
league, popularly known as the "Graham Report," disclosed that they
were equally concerned over the policies pursued and the precedent
set in building the Muscle Shoals plant. ^ The report charged that
there had been gross waste of money in constructing the Muscle
Shoals plants, and the evidence sustained the accusation. Cost-plus
contracts commonly produce such results. That much of the report
was well within the purview of the committee. The committee, how-
ever, was not authorized to consider the question of policy though
its report stated categorically that there was "no national necessity
at any time which required the War Department to embark upon the
vast building program for the manufacture of nitrates for war pur-
poses"; that the purchase of an advance stockpile of Chilean nitrates
plus the output of privately owned coke ovens would have been suf-
ficient; and hence that the government's expenditure of an alleged
$116,000,000 on this program produced no nitrates prior to the Armis-
tice, and contributed nothing toward winning the war. ^ The report
charged that the administration had by collusion merely carried for-
ward the schemes of Washburn, Worthington, and the Alabama
Power Company for the development of hydroelectric power at the
BUILDING THE MUSCLE SHOALS PLANTS 81
Shoals, and further that the commercial production of electric power
and fertilizer by the government was a gross violation of American
principles.
Chairman Graham recommended that Plant No. 1 be kept in stand-
by condition, that Plant No. 2 be leased to a private concern, and
that no further funds should be expended or appropriations made in
connection with the Muscle Shoals plants including Wilson Dam
"until some policy as to the future of said plants be determined upon
by Congress."
The Democratic member of the subcommittee. Representative Gar-
rett, wrote a minority report — a much more candid and restrained
document that included many germane facts ignored by the majority.
It showed the Graham report to be a reckless, biased performance
motivated by party politics. Garrett deplored that the President, the
War Department officials, and the distinguished civilian scientists and
engineers who were responsible for devising the nitrate program
should be accused of well-nigh criminal folly, and that many of them
should be accused of corruption and negligence in its execution. Fur-
ther, Garrett pointed out that frequently the record did not support
Graham's intimations and allegations. While agreeing with several
of the findings, Garrett held that such wholesale condemnation without
a word of commendation was shameful and unjustified. "
Garrett also pointed out that Graham's statement about the plants
having produced "no nitrates prior to the Armistice" and his opinion
that there was "no national necessity for building the plants" were mis-
leading, after-the-event conclusions. He cited testimony proving that
in 1917 all military and civilian authorities believed that war would
last much longer than it did, that we had agreed with our allies to
place 80 to 100 divisions in the field, meaning that three to five million
soldiers would be in France by 1919 and 1920, when it was expected
the United States would make its real offensive. The country was
obliged to supply not only a vast army with food, ammunition, medical
service, and all equipment but also to aid its allies. By 1919 the war
program would require around 373,000 tons of ammonium nitrates
unobtainable from any other source. For that reason air nitrate plants
were a necessity unless we intended to have an army at the front with-
out ammunition.
Garrett contended that the administration was no more to blame
for having two unused nitrate plants on its hands on Armistice Day
than for the fact that there were two million man in training who were
82 THE CONSERVATION FIGHT
never sent overseas or that Congress itself was considering another
draft. Moreover, he added, Graham had conveniently ignored or
scouted such factors as the shortage of ships and the extreme danger
from German submarines or warships which might blockade the Pana-
ma Canal and interfere with the Chilean nitrate supply. ^^
Garrett criticized his Republican colleagues for injecting the issue
of government ownership and operation into the inquiry, asserting that
the issue had not been authorized by the resolution establishing the
committtee. Therefore he would make no recommendations or com-
ment, and would leave the disposition of the Muscle Shoals plants to
Congress. His was a wary tactic. A large majority of the members
of the full select committee were hostile to public ownership; they
included some of the Democrats who approved Garrett's report.
While the Graham committee was hard at work on its investigation,
the Wilson administration introduced in the Senate and House (Nov-
ember 17, 1919) a bill to complete construction of Dam No. 2 and
establish permanent government operation of the entire Muscle Shoals
project. This move no doubt prompted Graham's vehement attack.
The fact that the report was not made until May 29 on the eve of the
1920 presidential campaign was evidence enough of political motiva-
tion.
A $100,000,000 Investment. Since a precedent of basic national im-
portance was at stake, the attention given or not given Muscle Shoals
in the platforms of the two great parties is of interest. The Republican
National Convention at Chicago on June 10th declared: "Conserva-
tion is a Republican policy. It began with the passage of the Reclama-
tion Act signed by President Theodore Roosevelt .... We denounce
the refusal of the President to sign the Water Power bill passed after
ten years of controversy." No mention was made of Muscle Shoals.
Wilson signed the Water Power bill that very day. Ten days later
the Democrats at San Francisco resolved in favor of inland waterways,
reclamation, and flood control, side-stepping both Muscle Shoals and
public ownership.
When the final or Lame Duck session of the 66th Congress met on
December 6, 1920, the Republican majority proceeded to put in effect
Graham's recommendations. The maneuver during the last hour of
the expiring Congress succeeded in a fashion almost as sensational
as the LaFoUette filibuster of the previous year.
The Graham report correctly stated $100 million as the amount of
money already spent on the Muscle Shoals venture. There was $12
million in the experimental nitrate and steam plant at SheflBeld and
BUILDING THE MUSCLE SHOALS PLANTS 83
another $70 million in Plant No. 2 and the steam station at Muscle
Shoals. More than $13 million had been spent on Wilson Dam. Ala-
bama Power Company had spent $5 million under its contract for an
additional generating unit and transmission line. ^^ Wilson Dam was
half done. To complete it would cost $12 million. Graham estimated
the additional cost of the administration program to be $28,238,750.
The Republican high command, directing Graham's activities, had
placed the majority of the well-informed members of Congress in an
embarrassing position. The pubhc was not likely to cheer scrapping
the project at war prices or leasing a nitrate plant heralded as a boon
to national defense and agriculture. The $100 milHon figure loomed
like the handwriting on the wall at Belshazzar's feast.
The sundry civil expense appropriations bill reported on December
29, 1920 contained no item for Muscle Shoals. Joseph W. Byms of
Tennessee proposed an amendment to include $10 million to continue
work on the dam. In the ensuing debate Graham and Garrett sum-
marized the contents of their respective reports. The amendment was
defeated but the margin of only seven votes revealed considerable
Republican opposition to the party leaders' position on the shoals.
In the Senate a like $10 million amendment promoted by Underwood
was approved by the appropriations committee after a single hearing.
It was debated and passed the Senate on February 5, 1921, by a ma-
jority of nine. "
The bill went to conference where both sides stubbornly refused to
recede. The Senate was determined to finish the dam, the House just
as firmly opposed. Further hearings were ordered by Chairman James
W. Good; further debates and another conference produced a second
deadlock. The House remained adamant and even on the last leg-
islative day again rejected the Senate amendment by a roll call vote,
thus jeopardizing the sundry civil appropriations bill. Thereafter, to
keep many important agencies of the government functioning, the
Senate receded after midnight and recessed at 1 a.m." President
Wilson signed the bill the next day.
The vast construction operations at Wilson Dam were suspended
in April and not resumed for more than a year. Behind the endless
bickering over items of expenditure or which scientific or engineering
advice was sound, the dominant issue actually was who would have
control of the enormously valuable water power of the Tennessee
River, the government or private industry. Occasionally the real issue
84 THE CONSERVATION FIGHT
came to the surface as in a colloquy between Senators Smoot and
Underwood, when Underwood insisted that the generation and sale
of electric power would be "a successful business proposition." Smoot
agreed but added, "What we are objecting to is that the government
of the United States should go into it. The Keokuk Dam was bulit
by private capital and I cannot see why this should not be built by
private capital just the same as the Keokuk Dam."
Underwood was quick to take advantage of the admission: "The
Senator makes the real issue .... that is, that he does not want the
government to own and control this dam, and in order to keep the
government from doing that he would waste $17,000,000 of the govern-
ment's money." After McKellar of Tennessee reiterated Underwood's
charge, Smoot replied: "There have been $14,000,000 expended on
it and the Senator from Utah is perfectly willing to let the government
sell and take the loss now.""^
Engineer Hugh Coopers Opinion. A far different concept of the
government's financial and economic responsibility in framing a Muscle
Shoals Policy was advanced by Colonel Hugh Cooper before Senate
and House committees in 1921. His testimony was frequently quoted
in debates for years afterwards. He was then in private practice and
was retained as consultant to Chief of Army Engineers Lansing H.
Beach, who was in charge of building the Wilson Dam. Cooper, a
conservative Republican, flatly told his inquisitors that on principle
he was opposed to government in business but that Muscle Shoals
was the unique exception. His reasons can be summarized as follows:
It would be economic folly to halt work at Wilson Dam after so
tremendous an expenditure. Suspension of construction for two or
three years would entail a loss of around $4 million.
Muscle Shoals was basically a power and navigation project. It
should not be used to any great degree for the production of fertilizer.
Air nitrate processes were in flux and would change.
The shoals was the key to power development in an area of 60,000
square miles affecting seven states. Only the goverment could deve-
lop this power. Private capital would not touch it, the determining
factor being that the government could obtain money at 5 percent
interest while private capital would have to pay more.
Fully developed and with generators installed, the dam would cost
$50 million. Its capacity would be 550,000 horsepower, including
100,000 horsepower of firm power available the year around and
BUILDING THE MUSCLE SHOALS PLANTS 85
450,000 horsepower of secondary or intermittent power. All this could
be used in 10 or 15 years. The revenue to the government on a 5 per-
cent interest basis would amortize the investment in 50 years. The
Federal Power Commission should have "absolute control" of the sale
of power with fair and effective regulation and proper management
by the Army Corps of Engineers. Ultimate consumers of the power
would save $10 million a year on their power bills. ^
IX
PROGRESS UNDER WILSON
The Republicans stopped construction of Wilson Dam because
section 124 of the National Defense Act posed the threat of govern-
ment ownership and operation of the entire Muscle Shoals properties.
In January 1919, following the armistice, President Wilson appointed
Arthur G. Glasgow as "fixed nitrogen" director, with instructions to
prepare a plan for disposition of Plant No. 2. Glasgow, a mechanical
engineer and successful businessman of wide experience in developing
large gas, chemical and other undertakings, strongly opposed govern-
ment in business. He first sought to lease the nitrate plant to a private
company, and spent many weeks in calling on electro-chemical ofiicials.
They were not interested.
The alternative was to attempt to sell the $70 million plant as war
scrap (Colonel Cooper later testified that $3 to $5 million might be
offered) or continue government operation. The latter course was
taken. In cooperation with the staff of the Ordnance Department and
in consultation with the Secretary of War a plan was perfected and
presented to the Secretary in October, 1919, accompanied by a draft
of a bill putting its recommendations into effect. Secretary Baker
then called in Representative Julius Kahn and Senator James W.
Wads worth, Jr., Republican chairmen of the House and Senate Military
Affairs committees. He requested them to introduce the bill because
the nitrate plant was primarily designed for national defense and
logically should be handled by the military affairs committees. Both
gentlemen informed Mr. Baker of their opposition to this bill but
courteously agreed to introduce it "by request." Kahn dropped his
copy in the hopper on November 1st and had it referred to his own
committee, where it was pigeonholed forever. Wadsworth, knowing
he was placing himself in the ironical position of fighting a bill that
bore his name, did the generous thing. He requested that the bill be
referred to the Committee on Agriculture and Forestry, well known to
favor its principles.
A Government Corporation Is Proposed. The most significant pro-
vision of the administration bill, aside from the provisions for govern-
ment production and sale of nitrate products and electric energy, was
the proposal for the creation of the United States Fixed Nitrogen
86
PROGRESS UNDER WILSON 87
Corporation, a government corporation which was to operate the shoals
properties, including Wilson Dam when completed. The corporation
was to be independent of all other government agenfcies. Supervision
and control would be vested in a board of directors appointed by the
Secretary of War who was to become ex officio chairman. As to the
other members: "The Secretary of War may appoint any officers of
the War Department or any other person as a director of the corpora-
tion .. . r
All capital stock in the corporation was to be purchased by the
United States. As a starter, an appropriation of $12,500,000 for prefer-
red 5 percent stock was authorized. Within restrictions set out in the
act, the corporation was to have broad powers commonly exercised
by private corporations to insure efficiency and liberty of action. It
was directed to maintain laboratories and continue experimentation
in the production of fertilizer and chemical products. The corporation
was authorized to "sell any or all of its products not required by the
United States to producers or users of fertilizers or to others." This
later applied to sale of Wilson Dam power. Finally, 'T^y direction
of the President," the corporation was authorized to operate Wilson
Dam. The bill was in the nature of an amendment to the National
Defense Act; its constitutionality was assured as a matter of national
defense. "^
As expected, the administration proposal met with a friendly recep-
tion in the Committee on Agriculture and Forestry. Chairman Asle
Gronna of North Dakota was a liberal Republican strongly in favor
of government production of both fertihzer and power. He repeatedly
warned the Senate that exhaustion of soil fertility was rapidly making
low-cost plant foods a farm issue in the West as well as the South
and East. Beside him sat "Cotton Ed" Smith of South Carolina and
six other Senators who, like him, had been members of the committee
in 1916 when it inserted the government operation provision in the
National Defense Act. After adequate hearings, the bill was reported,
without comment, to the Senate floor for passage on June 1, 1920, four
days before adjournment.
The Senate Amends and Approves. ..Debate on Senate approval of
the Wadsworth bill and on the House move to stop construction of
Wilson Dam began December 30, 1920. Underwood led the fight for
the administration plan in the Senate. In the House, Chairman Good
in his opening speech on the sundry civil appropriations act warned,
prophetically, "There is another item which has been omitted which
we shall hear much about before we conclude the bill." He referred.
88 THE CONSERVATION FIGHT
of course, to the $10 million for Wilson Dam. His statement threw
the House into a discussion of the Wadsworth bill and pubHc owner-
ship.
Wadsworth, in the Senate with Smoot, led the fight against the
measure under consideration, describing it as "our first experiment in
state socialism of the purest kind." It would kill the private nitrate
industry, he said, adding, "I think it is about time to pause in our
efforts toward tyranny and oppression in this country and decide how
much freedom is to be preserved to us."'' Smoot's Democratic col-
league, Senator King of Utah, declared the venture was "not only
unwise but it will create a dangerous precedent" leading perhaps to
the nationalization of all industry. He held the functions thus assum-
ed by the government were "clearly within the field of private en-
deavor."
Proponents replied that it was not socialism to preserve and operate
the expensive government plants for the national defense nor to help
relieve farmers from the exactions of the fertilizer trust. To those who
inveighed against "government competition with its citizens," John
Sharp Williams (Democrat) of Mississippi, responded, "The govern-
ment should have somewhere a producer of these things that should
furnish a productive element to stop and check private profiteering."
Here was the "yardstick" idea which TVA later made well known— a
government operation to measure private industry costs and prices
to consumers.
In both Houses it was taken for granted that a corporation was the
best type of operating agency. A war Congress was familiar with
government corporations created to exercise functions usually perform-
ed by private companies. Even Chairman Good, in commenting on
the principle in floor debate, said, "You have got to apply to govern-
ment affairs the same business principles that a businessman adopts
in his affairs if you want the government to succeed in business." It
was not creation of the corporation but its control by the War Depart-
ment that aroused Senate hostility. The friendly attitude of the Army
Engineers toward the Alabama Power Company and Washburn's
Cyanamid Company was discussed once more.
Said Senator Kenyon: "I confess a good deal of suspicion about
any bill that originates around Muscle Shoals .... It is probably a
great water power, and I am not averse to doing that [furnishing
power for the nitrate plants] but here are the cyanamid interests and
the Alabama Power Company and all other interests around Muscle
Shoals that arouses one's suspicions. Talk about a lobby! You camiot
PROGRESS UNDER WILSON 89
go to your office, you cannot get through the corridors anywhere with-
out having some of these lobbies talking to you about bills in Congress."
Lenroot was equally direct. During his 12 years in Congress, he
said, special interests had been at the doors of Congress "asking for
the appropriation of millions of dollars for the development of Muscle
Shoals for their benefit.'' The Army Engineers had cooperated with
them. Therefore, in view of this record, "this legislation should make
it clear that officers of the Ordnance Department shall not control this
government corporation." No objection was made to this peremptory
demand then or throughout the session. Chairman Gronna agreed
and announced that he had prepared an amendment giving appoint-
ment of the board and full control to the President. Later the amend-
ment was unanimously adopted. For full measure, financial control
was taken from the Secretary of War and vested in the Secretary of
the Treasury, the Senate once more agreeing with Wadsworth that
"the Army has no business taking part in such an enterprise." "
No Repeal of Section 124. The case for army control was not aided
when the powers conferred on the corporation were examined critical-
ly. Back in 1916 the most controversial feature of the famous section
124 had been "that the plant or plants provided under this Act shall
be constructed and operated solely by the Government and not in
conjunction with any other industry or enterprise carried on by private
capital."
The pending corporation measure, drafted in the War Department,
reversed this decisive policy and provided that in its operation "the
corporation shall be free from the limitations or restrictions embodied
by the Act of June 3, 1916 and shall be subject only to the limitations
and restrictions of this Act." The language, of course, opens the door
to "partnerships" in which government builds the dams for navigation
and utilities get the electric power.
Senator Lenroot made the most of this startling repeal. Apparently
it came as a surprise to Smith, Gronna, and even Underwood, one of
the Senate's best constitutional lawyers. "Does the Senator from
Wisconsin as a lawyer say that this proposed corporation can enter
into partnership with any private corporation in its operation?", he
inquired.
"They can," Lenroot answered. "The power is expressly given in
two instances in the bill. Paragraph M provides that the corporation
is empowered 'with the approval of the Secretary of War to lease to
other persons, firms, or corporations any of its properties not used
or needed by the corporation or to enter into agreements with others
90 THE CONSERVATION FIGHT
for the operation of such properties/ This would apply to power as
well as fertilizer production." Lenroot contended that under these
vague, broad powers the corporation could even lease the plant to
the American Cyanamid Company. Underwood surrendered, saying
that he and others favoring the measure would vote to eliminate the
provisions. Gronna explained that he and a majority of his committee
favored the principle of the bill and had reported it out speedily
under pressure from the War Department and farm organizations. He
reserved the right to amend it on the floor.
Senator Smith, to whom government operation was the most im-
portant section, was astonished. He explained that he and Gronna
wanted the corporation to have broad powers but not that broad. "I
stand here today and say that my intention is to strike from this bill
any possible power to be delegated to this government corporation
that would give them the right to lease or call into co-partnership with
them any of these interests we have been discussing here . . . ." Gronna
catalogued these interests as "the manufacturers of fertilizer and steel,
in the by-products of coke, in explosives and in powder." The provi-
sions were stricken from the bill. * The financial structure of the plan
evoked an encounter quite as bitter as the question of control. The
bill authorized $12,500,000 initial capital with which to start opera-
tions; the money was to be obtained by the sale of 150,000 surplus tons
of Chilean nitrate, thus relieving the Treasury of the outlay.
Wadsworth, with some justice, ridiculed the financial set-up as "most
sketchy" and demanded the exercise of "business principles." While
the steam plant would furnish power at the beginning, ultimate suc-
cess was dependent on cheap water power when Wilson Dam was
completed. The Senator insisted on a capitalization that would cover
the whole project. He pointed out that $100 million had already been
expended. Admitting that wartime prices and conditions had made
this excessive, he proposed to halve the cost and issue $50 million in
bonds "on which the corporation would be required to pay interest
annually at the rate of 5 percent." If and when Wilson Dam was
completed the corporation would issue an additional $40 million in 5
percent bonds. Also, he would require issuance of $20 million of
common stock, and if at the end of any fiscal year the corporation was
unable to pay interest on its bonds, "it shall forthwith cease operations
and shall not resume until authorized to do so by the Congress." The
restriction was severe since ventures of this kind, public or private,
require a few years to develop markets before showing a profit.
Wadsworth's proposals failed adoption. "
PROGRESS UNDER WILSON 91
The method for the production and sale of fertiUzer also troubled
the Senators. The corporation was empowered "to sell any or all of
its products not required by the United States to users of fertilizer
or to others." Lenroot charged: "There is not a line in the bill pro-
tecting the farmer in securing fertilizer from the operation of the
Muscle Shoals plant." The corporation was not compelled to operate
the plant, and, if it did, the entire product could be sold to producers,
meaning fertilizer companies. This feature and an omission which
permitted retail prices to be fixed by manufacturers and private dealers
were corrected by an amendment worked out on the floor. Senator
Smith proposed "sales preference to those persons engaged in agri-
culture." Lenroot added that retail prices could be regulated by the
government corporation when it sold nitrate wholesale to private
dealers. Harris added that retail prices should be "reasonable." Such
discussion and revision continued for eleven sessions of the Senate
until January 14, 1921, when the bill passed by a roll call vote of 34
to 29. The measure was sent to the House and referred to Chairman
Kahn's Committee on Military Affairs where it died. It was debated
in the House, however, since it arrived when that body was in the pro-
cess of halting construction on Wilson Dam. Arguments, pro and con,
closely followed the line of discussion in the Senate. "
At this critical juncture in the Muscle Shoals fight. President Wilson,
absorbed in his campaign to induce the United States to join the
League of Nations, suffered a tragic paralytic stroke on September 29,
1919. It is probable that he never knew the details of the Wadsworth-
Kahn bill. From the conservationist's point of view the administra-
tion plan devised by Glasgow and approved by Secretary Baker was
sound and praise-worthy on four counts. The unity of the project was
assured. The steam and nitrate plants were to be kept intact or re-
habilitated and used for extensive chemical experiments on fertilizers
and munitions. Wilson Dam, when completed, would assure cheap
power, essential in another war emergency.
On the other hand there was no guarantee in the original draft that
farmers would get the full benefits of low cost fertilizer even if manu-
factured by the government although some farm organizations had
hopefully endorsed the bill. Nor was there any assurance that ulti-
mate consumers would get low cost electric service. Any surplus
power could be sold wholesale at the switchboard, and Secretary
Baker's testimony clearly showed he approved that policy, trusting
92 THE CONSERVATION FIGHT
future regulatory bodies to enforce reasonable rates. There was no
thought of providing in the administration bill or in the debates in
Congress a network of government transmission lines to get power to
the farms, as the rural electrification program has done. Although
too liberal for the conservatives, the measure that died in the House
committee could hardly have established either a power or a fertilizer
"yardstick" to measure private costs.
REACTION UNDER HARDING
The Harding Administration set out to end the Muscle Shoals con-
troversy immediately after the inauguration in 1921. The Democrats
had been blocked by Congress in their eflForts to continue government
operation. The plants on the Tennessee River were now to be turned
over to private corporations and the "trend toward socialism'* would
cease, or so it was planned.
The uppermost issue in the presidential campaign of 1920 had been
the proposed entry of the United States into the League of Nations.
The American people were not prepared for the step by tradition or
experience. They were war weary and irked by unaccustomed res-
trictions on their daily lives and business activities. The RepubHcan
battle cry of "back to normalcy" was comforting, promising relief and
avoidance of foreign entanglements even as George Washington had
advised. Another slogan, "less government in business'* was music
to industry. The Republicans had won a smashing victory.
All realistic historians emphasize the alarm of American capitalists
at the extent of control over their activities by the government during
the war even though it was a matter of military necessity. Fast-growing
industrial and financial super-corporations had bitterly resented inter-
ference with their freedom of action stemming from the various regu-
latory measures of the Roosevelt and Wilson administrations. In some
fields government operation was an actual threat. Now was the time
to terminate this "invasion of their constitutional rights." "Back to
normalcy" and other catch phrases were promptly interpreted as a
license to return to the unrestricted liberty of the nineteenth century
when one could operate almost as he pleased.
The vigorous young electric industry had succeeded the railroads
as a major factor in politics and government, local, state, and national.
The superpower age, inaugurated by long-distance transmission, was
in sight. The utilities had supported the Republicans except in the
South where they supported most Democrats with equal zest and
success. In 1919 the National Electric Light Association, launched a
political and propaganda campaign against public ownership and
eflFective regulation. So extensive was the campaign that 15 years
later, after an exhaustive investigation, the Federal Trade Commission
94 THE CONSERVATION FIGHT
reported to Congress: "The record establishes that measured by quant-
ity, extent and cost, this was probably the greatest peace-time pro-
paganda campaign ever conducted by private interests in this coun-
try.
With powerful backing from business and utilities it was easy and
natural for a party commander on the national level to give orders.
But it was not so easy for individual Senators and Representatives
from many of the states to obey. Agricultural America remembered
the promise of cheap fertilizer when government plants would be
operating at Muscle Shoals. The great national farm organizations
backed the Democratic proposal for continued government operation.
To deliver the giant project to private interests might be political
suicide in many states. Here we have one primary cause of the split
in the ranks of both parties.
The nation was becoming increasingly conscious of the menace of
destructive floods. The demand for inland navigation was still strong.
The need for erosion control and soil conservation had become more
and more obvious. Electric rates charged by private companies were
unduly high as shown by the experience of 2,500 municipal plants and
public ownership and operation of the superpower system of Ontario
Hydro.
A start had been made on government construction of Wilson Dam
so why not continue harnessing the entire river to meet flood control
needs, provide inland navigation and electric power? Two things
were obvious: The needs were there and the most economical and
efficient method of meeting them was by a single, unified operation,
as recommended in Senator Burton's Inland Waterways Commission
Report of 1908, and as clearly indicated by modem techniques. Second,
it was certain that an enterprise of this magnitude and vision was
beyond the province of private enterprise. Neither risk capital nor
the States would undertake a task that clearly belonged to the federal
government. However, it was equally certain that if some private
utility was not permitted to install its own generators and sell electri-
city over its own transmission and distribution lines, the whole project
would be opposed.
Congress was also faced with responsibility for protecting the govern-
ment's investment. More than $100 million had been spent, at war-
time prices to be sure, but even if so discounted the values were still
large. Muscle Shoals was both a peacetime and a wartime project.
To scrap the project or to pass over to a private company the only
money making part of the whole project, power generation, and aban-
REACTION UNDER HARDING 95
don fertilizer production would enrage farmers and offend progressive
citizens.
Such were the deeper forces the Harding administration faced in
disposing of Muscle Shoals when the 67th Congress was called into
special session on April 11, 1921. Few persons in either the executive
or legislative branch of the government had any real comprehension
that the issue was a major, precedent-making matter. To most it was
a vexatious local problem. In Washington high society a derisive re-
ference to Uncle Sam's "white elephant" invited popularity and a
laugh.
The Administration Invites Bids. The move toward riddance was
begun nine days before Congress met in special session. Under orders
from Secretary of War John W. Weeks, the Army chief of engineers,
Major-General Lansing H. Beach, wrote the officers of several power
companies a letter which was given nationwide publicity. It read,
"The Secretary of War has directed me to ascertain what arrangements
can be made to derive a reasonable return upon the investment if the
United States completes the dam and hydraulic power plant at Muscle
Shoals, Tennesssee River. If you are interested, I would be pleased
to discuss the matter with you at this office at the earliest date that
may be mutually determined. It is desirable to develop the matter
and to come to a conclusion at as early a date as possible."
Secretary Weeks doubtless expected a speedy response. Only a
few weeks previously a Republican Congress had roundly denounced
government power development and halted construction at Wilson
Dam by denying an appropriation; Congressional leaders had plainly
indicated their desire to have private capital take over. The most likely
bidder would be the Alabama Power Company, alone or in cooperation
with adjacent companies, which would offer to lease the dam for 50
years under provisions of the Federal Water Power Act passed the
year before. Whether the utilities would themselves desire to finance
completion of the dam or sign a lease after the government had comp-
leted the work would be a matter for negotiation.
The Utilities Decline to Bid. Suprisingly, no proposals were received.
The following February General Beach recounted his disappointing
experience to the House Military Affairs Committee. He testified
that he had received long letters from Thomas W. Martin, president
of the Alabama Power Company, and James B. Duke, president of
the Southern Power Company (operating in the Carolinas,) and a
joint letter from top officials of four companies operating in Tennessee
and Georgia. ^
96 THE CONSERVATION FIGHT
On May 28th Thomas Martin had written that his company had
long been interested in acquiring the Muscle Shoals site but could
not finance it. He could not make an offer until he knew when the
site would be available and at what cost. He warmly desired to
cooperate with the government and work out a solution. On June 2nd
the Tennessee and Georgia company officials repHed that "private
capital could not afford to undertake the Muscle Shoals water power
development, nor make investments to use its output on the basis
of the present plans."
On June 24th James Duke informed the General that his company
could do nothing. Transmission distance was too great, and the
market was not large enough to absorb the power. "In my opinion, the
United States government could not, at the present time, complete
the Wilson Dam and hyroelectric plant and obtain a reasonable return
on its investment .... With every desire to assist the government in
a solution of its problem at Muscle Shoals, I am forced by the facts
to the conclusion that the government should leave the permanent
work as it is and salvage the construction plant. The government
should then wait until labor and materials render possible the com-
pletion of the project at reasonable cost and until there has developed
some nearby use for power at Wilson Dam at an 80 or 90 percent load
factor." «
Officials of the companies complied with General Beach's request
and appeared at his office for consultation. The General's forthright
comment on these interviews at the hearing shows strong resentment.
He stated that he had told the utility officials that their attitude was
exactly the same as if he had proposed a horse trade. He explained
that he had expected concrete propositions from them, not excuses.
Representative Fields, Democrat of Kentucky, was incredulous: "They
did not submit a proposition at all?" The General replied: 'No, sir,
they advised me I was wasting my young life in trying to secure pro-
positions."
In answer to another question from Fields, General Beach said that
he understood Mr. Duke was then closely connected with the Air
Nitrates Corporation, the subsidiary of Washburn's American Cyana-
mid Company, which had built Plant No 2. He summarized Duke's
position thus: "He wrote me a letter stating that the whole project
at Muscle Shoals was very inadvisable and foolish on the part of the
Government. That is practically a synopsis of his letter."
Colonel Hugh Cooper crisply told the committee a few days
later "I have read those utility company statements; I think they were
REACTION UNDER HARDING 97
made with a deliberate attempt to bear the market; that is what I
think of them all. They were not made in good faith. I want to say
that with special emphasis."
The meaning of Coopers charge is clear. The utilities and their
financial backers, believing themselves the only bidders and that the
political situation was well in hand, were out to obtain Muscle Shoals
power at far below its actual value. Their feigned indifference came
to a sudden end on July 8, 1921, when a proposition was received
that surprised Wall Street, cheered the entire nation, brought bids
from utilities and others for the shoals properties, and became the
subject of heated controvers}^ for the next three and a half years. It
stamped "Muscle Shoals" on the American mind so vividly it has never
been erased.
CHAPTER XI
HENRY FORP ARRIVES
The proposition that upset the expectations of the New York and
southern utiHty and banking executives, complacently waiting for the
Harding administration to come to heel and permit them to acquire
Muscle Shoals on their own terms, was made, surprisingly, by Henry
Ford, the automobile manufacturer.
On July 8, 1921, Ford wrote General Reach this offer: First, if the
government would complete Wilson Dam and construct Dam No. 3
20 miles above it as planned by the Army Engineers for river regulation
and power production, he would lease both dams for 100 years and
repay the Government's investment plus 4 percent interest. Second,
he would pay $5 million for all the properties built and owned by the
government in connection with the project. Third, he would "operate
Nitrate Plant No. 2 to approximately present capacity in the produc-
tion of nitrogen and other fertilizer compounds." He would seU the
fertihzer at not more than an 8 percent profit. He proposed that a
board controlled by representatives of the farm groups be empowered
to inspect his books. Further, he would furnish free electric power
to operate the navigation locks at the dams, and keep Nitrate Plant
No. 2 in prime condition ready for use by the government in the event
of another war.
General Reach at long last had his desired "proposition." Front-
page newspaper headlines carried the news to the country. Mr. Ford's
proposal, with its resulting political significance, was enthusiastically
received by urban workers and middle-class folk.
Next to Thomas A. Edison, Ford was the most famous and admired
inventor and industrial genius of the day. At a time when automobiles
were a rich man's luxury, selling at from $1,000 to $5,000 and more.
Ford had produced a reliable poor man's car — the famous "Model T"—
which sold at $650. He also manufactured low cost farm tractors and
trucks. On America's streets and country roads, Model Ts equalled
the number of all other makes co.mbined. In addition Ford was known
as a great humanitarian. He installed a profit sharing plan that distri-
buted millions of dollar to his employees. He set a minimum wage of
the then unheard of rate of $5 a day. In 1916, during the First World
War, he chartered a passenger vessel and at his own expense had
98
HENRY FORD ARRIVES 99
taken a group of distinguished Americans to Europe in an effort to
bring representatives of the warring nations into a conference to end
the conflict. The "Ford Peace Ship" failed its purpose but nonetheless
touched the heart of humanity.
Ford's Dream. In making his offer Ford had mixed in something
besides cheap fertilizer to relieve American farmers although the
objective also had great importance. He intended to build additional
dams on the Tennesse River above the shoals. The dams he proposed
would generate power for several kinds of industries he intended to
promote. A million men would be employed; preference would be
given to veterans.
Without doubt Ford was sincere. He knew the possibilities of
cheap water power. He had harnessed the Little River Rogue in
Michigan, why not the Tennessee? It was a magnificent dream to
round out his career. The new industrial center would be greater than
the one he had already created. He could apply his philosophy of
reducing costs through improved mass production on a greater scale,
sell at a modest profit per unit, and depend on vastly increased sales
for success. His adherence to this principle had been the key to his
amazing success as distinguished from the prevailing practice of
pricing high and selling less. It was well understood by the masses
and was another reason for his great popularity. Here was a reformer
among capitalists — the common man's friend. Here was the popular
idealist who, if given Muscle Shoals, would serve the public better
than any other.
But Ford was also a stern individualist. He was a farm boy who
had risen to dizzy heights through his own efforts. He resented
government interference and had no faith in public ownership and
operation. His failure, Hke that of other bidders for the shoals, was
to realize that the project involved twentieth century social needs and
policies of national import far beyond the province of private capital
or individual initiative, however able and well meaning the individual
might be.
Ford Meets Secretary Weeks. General Beach handed the Ford
letter to his chief, Secretary of War John W. Weeks, who referred it
for study to the legal and scientific staffs of his department and like-
wise to the newly established Federal Power Commission of which
Weeks was ex officio chairman. The Secretary was no novice strug-
gling to master the complicated problem in hand. As an active mem-
ber of Homblower and Weeks, the Boston banking and brokerage
firm, he knew utihty finance before his election to Congress. As a
100 THE CONSERVATION FIGHT
member of the House from 1905 to 1913 and of the Senate later, he
was acquainted with conservation problems and water power legisla-
tion. When Ford came to Washington on January 11, 1922, for con-
sultation with Weeks, there must have occurred a highly interesting
encounter between the veteran statesman and the impetuous indus-
triahst. Ford had stated that the Muscle Shoals issue as "a simple
affair of business which should have been decided by anyone within
a week." ""
When examined, the Ford plan of resolving this ''simple afiFair"
turned out to be an astonishing proposal. As a "horse trader" Ford
was the equal, if not the superior, of the utility executives designated
by General Beach. Secretary Weeks strongly objected to several basic
provisions in the proposed contract; some of the objections Ford
accepted, others not. He returned home and on January 25 submitted
a modified offer. Among other changes he proposed to complete Dam
No. 2 and build Dam No. 3 according to the Army Engineer specifica-
tions instead of leaving it to the government. Weeks forwarded the
second offer to both Houses on February 1, accompanied by a critical
analysis. The document concluded with a neatly turned paragraph
to the effect that it was Congress' responsibihty to decide whether
Ford's inadequate and uncertain guarantees to produce fertiHzer "were
of sufficient importance to justify the proposed departure from the
present policy of the law in regard to deahng with the water power
resources of the nation," as set out in the Water Power Act of 1920. '
Weeks objected to a 100-year lease, to the absence of any provision
for regulation, to sale of the Warrior Steam Plant and transmission
line to Ford, to the government's paying the cost of flowage rights
at Dam No. 3, to selHng the nitrate plants and other property for $5
million, and to the cost amortization scheme. Ford refused to yield
on these points with one exception: if the government could secure
a higher interest rate than the 4 percent he proposed, he would permit
the surplus to be retained instead of having it applied as a reduction
on his obligation.
To meet Weeks' objections that his first offer lacked guarantees for
continuous production of fertilizer if found unprofitable, that the
government could not recover in case of default, and that recapture
of the water power at the end of 100 years was uncertain. Ford made
changes and additions in the second offer, but in such equivocal
language as to raise questions whether his company was legally bound
by them. These changes are noted at length in Weeks' report to
Congress. *
HENRY FORD ARRIVES 101
Ford's final offer contained two main divisions; one dealt with the
dams and the other with the nitrate plants and other properties. Sum-
marized, it agreed to the following 12 points:
Dam Construction. In compliance with plans and specifications of
the Chief of Engineers, to complete Wilson Dam and build Dam No. 3
with money advanced by the government.
Leases. To lease both dams for 100 years.
Amortization. To return to the government the money advanced
for dam construction plus interest at 4 percent. Into a sinking fund
the government was asked to create Ford would make semi-annual
payments of $3,505 on Dam No. 3 and $19,868 on Dam No. 2, totaling
$46,746 annually. These amounts, invested by the government at
4 percent compounded semi-annually, at the end of 100 years would
yield $49,071,935, the estimated cost of the dams and equipment.
Maintenance. To pay $55,000 annually as maintenance and operat-
ing costs of the dam and navigation locks and to furnish annually
200 horsepower of electric energy for the locks, to be operated by the
government.
Property to be Purchased. To pay $5 million for both nitrate plants
with their steam generating plants, the Gorgas steam plant and trans-
mission lines, the Waco quarry, land, villages, construction equipment,
unused material, and all other property connected with the project.
Continuous Fertilizer Production and Guarantees. To operate
Nitrate Plant No. 2 "at the approximate annual capacity of its machin-
ery and equipment in the production of nitrogen and other fertihzer
compounds (said capacity being equal to approximately 110,000 tons
of ammonium nitrate per annum ) throughout the lease period, except
as it may be prevented by strikes, accidents, fires, or other cause
beyond its control."
National Defense. To permit the government in the event of war
to take over and operate Plant No. 2 for the production of explosives,
power to be furnished by the company. At the end of the emergency
Ford was to be reasonably compensated for the use of the plant.
Research. To engage in research designed to achieve "fertilizer
compounds of higher grade and lower prices than using farmers have
in the past been able to obtain/*
Profit. In order that the farmers may be supplied at fair price and
without excessive profit, to restrict the maximum net profit from the
manufacture and sale of fertilizer produced at Plant No. 2 to not more
than 8 percent of the actual cost of production.
Farm Board. To the creation of a board controlled by farm organi-
102 THE CONSERVATION FIGHT
zations empowered to inspect the company's books, ascertain whether
profits were in excess of 8 percent, regulate the price if necessary and
also to determine equitable territorial disposition of the fertilizer.
Seven members of the board to be appointed by the President and
confirmed by the Senate would be selected from panels submitted by
the American Farm Bureau Federation, the National Grange, and the
National Farmers Union. Two additional members would be selected
by the company. An advisory member without vote would represent
the Department of Agriculture.
Default. To agree that in the event of any violation of the contract,
the Attorney General might institute proceedings in the federal courts
leading to the cancellation and termination of the leases on one or both
dams.
Liability. To accept the preceding proposals in whole and not in
part. "Upon acceptance, the promises, undertakings, and obligations
shall be binding upon the United States, and jointly and severally upon
the undersigned, his heirs, representatives and assigns, and the Com-
pany, its successors and assigns.'*
The House Military Committee Approves. The bid ignored the
Federal Water Power Act, the 50-year lease limitation, and, in parti-
cular, the regulatory provisions. It omitted any reference as to how
Ford would use the vast amount of surplus power to be generated; a
relatively small amount would be required for fertihzer production.
The terms of the offer justified Secretary Weeks* curt letter of trans-
mittal.
As so frequently happens in important legislation, congressional
action on the Ford offer was determined in committee, especially by
the chairmen. For the real story we must turn to the House Commit-
tee on Military Affairs.
Twelve days after hearings started on the Ford bid the Alabama
Power Company made an offer, and later its president, Thomas W.
Martin, testified at length. The company proposed to complete at its
own expense Wilson Dam if granted a 50-year lease under the terms
of the Federal Water Power Act. For $5 million it would purchase
the steam plants at Wilson Dam as well as the substations and the
Warrior steam plant and transmission line to Sheffield. It would
maintain the dam and furnish free power to operate the locks. It
would not make fertilizer but would furnish free 100,000 secondary
horsepower to the government or to anyone designated to operate the
nitrate plants. Further power installations at Dam No. 2 would be
HENRY FORD ARRIVES 103
made only in accordance with market demand. The oflEer included
no provision for building Dam No. 3.
OflFers were also received from Frederick E. Engstrum, president
of the Newport Ship Building Corporation, and from Dr. Charles L.
Parsons, who had resigned from the government service. Each one
proposed to form companies to produce fertiHzer. The conditions
were complicated, but, since neither proposed to operate the entire
project as a unit, his ofiFer did not receive serious attention.
The House committee was first to take action on the Ford offer.
Its chairman was the genial Julius Kahn, strong supporter of private
enterprise who pigeonholed the Wadsworth-Kahn bill for pubHc
operation of the shoals in the previous session, evidently with the
approval of the committee.
Around the committee's table, at times of full attendance, sat 14
Republicans and 6 Democrats — 12 supporting and 8 opposing the
Ford offer. Champion of the offer was Representative John C.
McKenzie, a farmer-lawyer from northern Ilhnois, who introduced
the bill (H.R. 11903) for acceptance. Leading critics were Morin of
Pennsylvania and James of Michigan. It was a hard-working com-
mittee. From February 9 to March 13, 1922, it questioned 34 expert
witnesses, some at great length. Their testimony plus supporting
scientific and legal documents makes a book of 1,206 pages printed
in six-point type.
The political atmosphere in which the conmiittee worked was super-
charged. The big utiHty, fertilizer, and investment banking groups
that had in the main supported the Republican ticket were in strong
opposition to the Ford offer. They favored the bid by the Alabama
Power Company. The administration was opposed to the Ford bid
as drafted. On the other hand, individual letters, telegrams, editorials,
and resolutions from farm and miscellaneous organizations, city coun-
cils and state legislatures were deluging Congress. The members
were flooded with demands for immediate acceptance — and no fooHng.
A credible rumor was afloat that the unpredictable Henry Ford, de-
feated in his try for the United States Senate in 1918, intended to run
for President in 1920. A congressional election was only eight months
away.
In the bewildering flood of conflicting claims and propaganda there
were four principal subjects on which the House Military Affairs
Committee sought reliable information — fertilizer, finance, conserva-
tion policy, and uses of surplus power. Although invited, Ford de-
chned to appear. Hence, keen attention was centered on the testi-
104 THE CONSERVATION FIGHT
mony of his personal representative, William B. Mayo, chief engineer
of the Ford company; Colonel Worthington, his adviser; and Gray
Silver and R. F. Bower, officials of the American Farm Bureau Federa-
tion; the federation led the farmers' fight for the Ford bid.
Committee members repeatedly sought an answer to these ques-
tions: Was it technically possible to produce exceptionally cheap
fertilizer at the Muscle Shoals plant? On what authority did Ford
base his promise to reduce the retail price by one half?
William B. Mayo, questioned by Representative Morin on these
points, produced undocumented statements by Dr. N. Caro and Mr.
Washburn. Speaking of the cyanamid process then used in Germany
Dr. Caro had stated: "The possibility therefore exists ... of pro-
ducing cheaply .... ammonium phosphate containing roughly 45 per-
cent of water-soluble phosphate acid and 20 percent of nitrogen."
Washburn had said, "My anticipation is that the establishment of the
nitrogen industry .... with proper and legitimate Government co-
operation, will give the farmer his fertilizer for one-half of what he
would otherwise pay for it." *
Secretary Weeks called fertilizer production "the sticking point"
and questioned whether Ford or his engineers knew whether it could
be done. Major J. H. Bums, chief of the Nitrate Division of the Or-
dance Department, said to the committee, "I honestly do not believe
Mr. Ford with the present knowledge of the game would be able to
materially reduce the price of fertilizer."
Bower, as technical expert for the American Farm Bureau Federa-
tion, cited the Washburn statement and quoted Leo H. Bakeland,
a distinguished scientist who once testified that German authorities
"intend to furnish the farmers of Germany nitrogen fertilizer at about
one-half the price it is costing the consumers here in the United States
and if Germany could do it we could."
Mayo testified that Ford had no new, secret process but was experi-
menting and was hopeful of the outcome. It was admitted that the
cyanamid process installed at Plant No. 2 was already outmoded by the
Haber process, that Ford would be forced to remodel it at an expense
of several million dollars to make ammonium phosphate for fertilizer
instead of ammonium nitrate for explosives.
Such evidence was unconvincing. The committee members care-
fully explored whether the proposed contract guaranteed that Ford
would continue indefinitely to produce cheap fertilizer in quantity if
it proved unprofitable. After a great deal of testimony on the point,
Mayo answered, "Not unless it could be done profitably." There was
HENRY FORD ARRIVES 105
no clear provision in Ford's proposal that the government could recap-
ture the power dams if the company ceased to manufacture fertilizer.
Ford had consented only to the addition of a provision that the govern-
ment could sue in case of default.
The Cash Considerations. As of July 1, 1922, the actual cash spent
by the government on construction and maintenance of the Muscle
Shoals project had reached $106 million. Under the Ford offer, the gov-
ernment in addition v^ould assume the cost of building Dam No. 1 to
insure navigation, the accrued interest on the cost of the dams during
construction, and the cost of flooding land for Dam No. 3. The addi-
tional costs amounted to $17 million, bringing the government's total
investment to $123 million. For all this during his 100-year lease,
Ford v^ould pay $5 million for buildings and properties, $4.7 million
for amortization ($23,373 semi-annually), and $5.5 million in annual
installments for maintenance.
Representative McKenzie told Mayo that "it v^ould probably cost
the government more than Mr. Ford's entire offer of $5,000,000 to be
able to deliver the Gorgas plant to him." Mayo responded that Ford
v^^ould not agree to exclude this item and that the offer must stand or
fall on that point because the plant was needed for immediate pro-
duction of low-cost power.
The Power Aspect. It was established that the ultimate annual
capacity of the two dams would be 3 billion kilowatt hours of primary
and secondary power. No questions were ever asked about the annual
wholesale or retail value of this power if sold at prevailing rates. The
subject was not mentioned in the committee report.
Several members sought specific information on what Ford proposed
to do with surplus power not used in making fertilizer. They were
clearly suspicious that possession of the power was the real objective
and that fertilizer production was a pretense. Worthington had indi-
cated that Ford at first had "hesitated" over the fertilizer angle and in
answering Representative Miller of Washington said, "Why certainly,
he went to Muscle Shoals to see the water power primarily." Mayo
would testify only that it was Ford's intention "as quickly as possible
to use all the power." He told Representative Fields that Ford also
hoped to "ultimately . . . make his raw materials [steel and aluminum]
for his automobiles, trucks and tractors .... it has been his dream to
make the combined price for the automobile, the truck and the tractor
at $1,000. At present the price runs to about $1,200."
It was ascertained several times that Ford declined to be subject
to the Federal Water Power Act of 1920. Greene asked "whether
106 THE CONSERVATION FIGHT
Mr. Ford would be willing to come down to 50 years/' Mayo replied:
*'He would not." Mayo further agreed that Ford's company would
have a preferential right to the power in perpetuity beyond the 100-
year lease.
The Committee Approves the Offer. In executive sessions the com-
mittee decided that Ford's was "the only proposal worthy of serious
consideration." A bill accepting it was introduced by Representative
McKenzie on June 5, 1922 . Four days later he submitted, as acting
chairman, a report to the House with the recommendation that it
"pass" speedily. The House followed the Committee's findings for
the ensuing two years.
Basing its action necessarily on section 124 of the National Defense
Act of 1916, the committee found that the Ford offer was the only one
comprehensive enough to meet its terms. On one point the committee
was unanimous and specific: government production of power and
fertilizer must be eliminated and private enterprise substituted. We
read: "The committee was impressed with the far-reaching possibi-
lities for the good of the nation involved in the operation of the Muscle
Shoals project by private enterprise rather than Government operation,
and was further impressed with the fact that the subject is one of such
transcendent importance that the whole membership of the House
should have an opportunity of passing on the proposition." ^ "To have
the Government undertake to engage in the manufacture of fertihzer
ingredients, with political superintendents, foremen, and straw bosses
is unthinkable, and to undertake such a scheme would be unspeakable
folly."''
In inviting bids Secretary Weeks had asked for offers which would
give a reasonable return on the government's investment in Dam No. 2.
He probably expected a reasonable price for the nitrate plants and
other properties. His attitude made things difficult for the committee,
which frankly admitted that the $5 million offered for the properties
was a "mere bagatelle" in consideration of the millions spent on them.
But the group reminded the House that it had not been considering
the problem on the basis of the pecuniary returns from Mr. Ford.
They contended that the pledge to hold Nitrate Plant No. 2 in readi-
ness for 100 years "as a matter of national defense is a thing of far
more importance than the payment of a few milHon dollars." Further,
that Ford's production of fertilizer would be of equal if not greater
importance.
The four percent amortization scheme was mentioned as anodier
reason why the bid commanded attention. The 100-year lease period
HENRY FORD ARRIVES 107
was held "not derogatory to the interests of the government but to its
advantage" since Plant No. 2 would be kept in readiness. The majority
decided against including the Gorgas steam plant and transmission
line in the sale as not necessary to Ford's operation. The Alabama
Power Company had oflFered $2,500,000 for it; yet eight members sign-
ed a minority report protesting this exclusion. Strong emphasis was
placed on the high cost to the government of permitting the plant to
lie idle. Prompt passage of the bill was urged.
A Minority Report. The committee was sharply divided. A fiew
days later Representative Charles C. Keams, acting for himself and
seven other members (including Morin of Pennsylvania and Hill of
Maryland) filed a sharply worded minority report charging that the
Ford bill violated the Federal Water Power Act; that the amortization
plan was "frenzied finance" and a shrewd way of paying a debt of
$50,000,000 with the comparatively insignificant sum of $4,672,600;
that the maintenance of the dams and repairs would cost $670,000
annually while Ford would pay only $55,000; and that, in sum, Ford
would be given preferences and rights denied to other men; and
therefore the project should be leased under the terms of the Federal
Water Power Act. '
The 67th Congress, however, was in no hurry. A few members
made speeches on the bill, but no action was taken on it, and the Ford
offer passed on to the 68th Congress for decision.
N orris Gets An Unwanted Job. The Ford offer was forwarded to
the Senate by Secretary Weeks on February 7, 1922. Senator Under-
wood, who had favored government operation in the previous Con-
gress but now supported the Ford bid, moved that the document be
sent to the Committee on Agriculture and Forestry. Important
changes had taken place in the membership of this committee since
obtaining passage of the Wadsworth-Kahn bill for government opera-
tion in the previous Congress.
Senator George W. Norris of Nebraska had succeeded Gronna as
chairman of the committee. On the Republican side, Kenyon and
Wadsworth were gone. New members were Gooding of Idaho, Ladd
of North Dakota, Norbeck of South Dakota, and McKinley of Illinois.
On the Democratic side Gore had gone, and Caraway of Arkansas and
Heflin of Alabama, a vociferous advocate of the Ford offer, had been
added.
Interestingly enough in the light of subsequent events Norris opposed
referral of the bill to his committee. Twenty-two years later he wrote
in his autobiography: "I did not ask for the job of leading in the
108 THE CONSERVATION FIGHT
battle for TVA. I thought as chairman of the Committee on Agricul-
ture of the Senate that I should be spared its great burden. I felt
deeply I lacked the strength, the time, and the technical background
to discharge that task creditably. I have never known how it came
to be dumped on my lap." ^
The Senator's feeling was understandable. Although he had joined
Representative William Kent in obtaining the passage of the Hetch
Hetchy bill of 1913, granting municipal ownership of federal power
to San Francisco and had voted for section 124 of the National Defense
Act in 1916, he was not greatly interested in public power. He once
told the writer that it was the Muscle Shoals controversy that brought
him to an understanding of the importance of multipurpose river
development and electric power in the national economy. At that
time he was overburdened with work on bills for the relief of agricul-
ture. The Ford offer was dumped on his lap, of course, because the
senators were thinking not of power but of fertilizer, which the Ford
offer had made a paramount political issue. The Muscle Shoals mat-
ter had been in the hands of the agriculture committee from the begin-
ning. When Underwood and others urged that "the prime objective
is one of agriculture," Norris was forced reluctantly to accept the
assignment. He had favored municipal ownership but was still uncon-
vinced of the feasibility of federal ownership and operation. As to
the Tennessee River, he said: "I came to the conclusion gradually that
the possibilities were infinitely greater than had been at first con-
templated." "
Regarding the Ford offer, Norris told the Senate in 1921: "I consider
the proposition as one of great importance, involving a great deal of
money, and involving a policy which, under the circumstances, it is
very difficult to decide upon. I confess that if it were left to me to
decide today, I would not be able to tell whether I was in favor of
accepting Mr. Ford's proposition or rejecting it, although I have read
it twice." ''
The First Norris Bill for Government Operation. By the time the
Senate committee settled down on April 10, 1922, to continuous hear-
ings on the Ford offer the House committee had been holding hearings
for several weeks. Norris observed that the alternative of continued
government operation of the Shoals project had been ignored; no bill
providing for it had been introduced and no witnesses favoring it
had been heard. Beheving this unwise and that public as well as
private control should have its day in court, Norris on the first day
of the hearings introduced a bill creating a federal chemical corpora-
HENRY FORD ARRIVES 109
tion empowered to operate the whole project. Unhke the Wadsworth-
Kahn bill, Norris proposed a civilian instead of a War Department-
operated government corporation.
Otherwise the Senate committee had on its table the same bids
the House committee was currently examining. As with the House
committee, major attention was given to the Ford oflFer. Hearings
extended intermittently from February until June. By and large,
the same witnesses were heard and much the same evidence was given
as in the House. To Norris, the two paramount questions were whether
Ford could produce cheap commercial fertilizer, and what e£Fect
acceptance of his bid would have on national water power poHcy.
Edison Is Noncommittal. As to the question whether Ford could
produce cheap fertilizer, up to May 20, 1922, the evidence had been
negative. And then, more dramatic than if Henry Ford himself had
consented to testify, Thomas A. Edison was heard. Everyone in and
outside Washington expected Edison s expert testimony to support
the Ford proposition. The men were warm friends and had visited
Muscle Shoals together. On the stand, however, Edison pointedly
decHned to commit himself. He thought cheap fertilizer could be
made at Muscle Shoals and, at Ford's request, was experimenting on
a process for obtaining cheap potash from deposits in the Tennessee
Valley. He was also working on phosphates. When questioned by
Senator McNary about his prospects, he replied: "I might fail. I
have never yet eaten boiled crow and I do not want to start now ....
wait till I get through experimenting." When Capper and Heflin
pressed for an opinion on the details of the Ford offer — meaning, of
course, the nitrate angle — he answered abruptly, *T do not know any-
thing. I never worked in that line. I don't attend to his business."
But insistent Heflin, determined to wring from Edison a newspaper
headline backing up the Ford bid, put the question straight: "Do you
think Ford can manufacture cheap fertilizer at Muscle Shoals?" It
was an unfortunate query for the proponents of the Ford offer. The
wary Edison replied: "Oh, he will put up all kinds of factories for
making anything. There is no end to him." Edison's answer gave
comfort to those claiming that Ford's real objective was not fertilizer
but automobiles and other products. Reminded that Ford wanted
to "get" Muscle Shoals, Edison remarked: "Yes, he seems to want it.
I don't know why. He has got enough work now. I think he would
be very foolish. His wife thinks so too. He has got $127,000,000, he
told me, subject to check. Now, what the devil does he want with
more money? He wants to help the farmer."
no THE CONSERVATION FIGHT
Since Mr. Edison had nothing of importance to contribute, the
hearings soon closed, leaving the committee in graver doubt than ever
about the possibility of getting cheap fertilizer ingredients at Muscle
Shoals. "
In the course of the hearings some members of the committee, and
especially Chairman Norris, privately studied air nitrate fixation. With
the aid of eminent civilian authorities and government experts they
reached the conclusion that the cyanamid process was obsolete and
that no process yet discovered would guarantee cheap fertilizer. Major
J. H. Bums, chief of the nitrate division of the Ordnance Department,
was especially helpful. When the hearings closed Norris warmly
commended him for the "absolutely unbiased services he had rendered
in getting the facts." For example, asked to report on the cost of
power in relation to cheap nitrates, the Major said that to continue
the cyanamid process at Plant No. 2 when it was converted to ferti-
lizer production would require power at one mill per kilowatt hour
whereas the cost of power from Wilson Dam would be at least three
mills. Hence, Plant No. 2 was obsolete for commercial purposes and
valuable only as insurance for national defense. Edison himself had
implied as much when queried by McNary. He had said: "Why the
field is unlimited. The Lord knows in 20 years present processes may
be obsolete. They may all be dead and buried. It is continuous,
continuous— improvements go on forever."
Retail Value of the Power. The House committee gave no attention
to the retail value of the hydro-electric power to be developed at the
dams. It was assumed that ultimate consumers would pay for electric-
ity at current private utiUty rates. The executive officer of the Federal
Power Commission, O. C. Merrill, the electrical engineer who reported
on monopoly in the water power industry in 1916, was not requested
to testify, but Norris summoned him before the Senate committee
where he estimated that the total annual output of the two power
plants at Dams No. 2 and 3 would be three billion kilowatt hours — one
half would be year-round dependable power, and one half would be
secondary power. If sold at a minimum average rate of four mills
per kilowatt hour for the primary power and one and one-half mills
for the secondary power, the wholesale revenue would total $8,250,000.
Domestic consumers were paying 8.2 cents per kilowatt hour for electric
service. The Alabama Power Company was selling its output at an
average 2.5 cents per kilowatt hour to all classes of customers— domestic,
commercial, and industrial. At this rate, the Muscle Shoals power
HENRY FORD ARRIVES 111
would be worth $75,000,000 if all power was sold. If sold at load
factors of from 30 percent to 60 percent, as was then customary, it
would still be worth $30 milHon to $40 miUion per annum.
Viewpoint of Conservationists, To present the far-reaching effect
of the acceptance of the Ford offer on established conservation
policies, Norris summoned Philip P. Wells, chief law officer of the
Forest Service under Theodore Roosevelt. WeUs had also been
counsel for the Inland Waterways Commission of 1908 and had writ-
ten the first official documents applying conservation principles to
specific water power grants, the famous Rainy River and James River
veto messages given by Roosevelt in 1908 and 1909. Since then,
either as a government or civilian attorney, Wells had a hand in all
water power legislation. He was nationally known as an authority on
the subject.
Wells emphasized that the Ford proposal violated not only the
50-year lease period but every other basic principle of the Federal
Water Power Act of 1920 — ^rentals, regulation of rates, provision of
capital by lessees and assumption of all disaster risks to dams, and
payment of excessive profits to the government ( "which means absolute
destruction of what we have fought for the people for 15 years and
won. That is why I am here.").
Wells was a right-wing conservationist who did not favor govern-
ment operation as a rule but who supported the Norris bill as con-
sistent with the water power policy and as a mihtary necessity with
a vast government investment to be protected. These ideas were to
be endlessly repeated with great influence.
Norris Reports His Findings. The Senate committee was sharply
divided in its recommendations. Two sizzling reports were made.
Party affiliations were forgotten. All bids were unaminously rejected
except Ford's, which was rejected 9 to 7. The majority report against
the Ford proposal was signed by Norris, Page, McNary, Keyes,
Gooding, Norbeck, Harreld, and McKinley, all Republicans, and by
one Democrat— Kendrick. The minority report favoring the Ford
offer was made by Ladd and Capper, Repubhcans, and Heflin,
Harrison, Caraway, Ransdell, and Smith (South Carolina), Democrats.
Five favored the Norris bill for government operation — Norris, Mc
Nary, Gooding, Norbeck, and McKinley; all were Republicans."^
Two surprises emerge from these lineups. Democrat "Cotton Ed**
Smith, father of the provision of law under which the Muscle Shoals
plants were built, abandoned public operation and went over to Ford
while Repubhcan McKinley, banker and head of a private power
112 THE CONSERVATION FIGHT
cx)mpany, sided with Senator George Norris and public ownership.
Senator Norris' reaction to the Ford proposal was similar to that
of the majority and of thousands of others who had studied it closely.
He was pleased when it was first announced that the capable, great-
hearted Henry Ford proposed to help the farmers; then, striving to
keep an open mind, he became puzzled, critical, indignant as he grew
aware of the startHng discrepancy between the terms of the proposed
100-year contract and the story told the nation. In Norris' view,
abandonment of existing conservation policies was implied in accep-
tance of the contract. The Norris' report was a critical analysis of the
facts plus a blast of indignation intended to arouse Congress and the
nation to their significance.
The Senator was not impressed by the sentiment then sweeping the
country to "let Ford have it" on the assumption that the great indus-
trialist was an unselfish man. Reminding his readers that Mr. Ford
was then 68 years of age and would be connected with the proposed
corporation only a few years, he commented: ''Conceding all of the
virtues to Mr. Ford that his friends claim in his behalf, is that any
reason why a corporation organized by him should be given a privilege
of extreme and almost unlimited value that we refuse to extend to any
other corporation?"
The proposed of $5 million for the real and personal property at the
Shoals Norris treated with scorn. Five pages in the report were devoted
to listing properties, which had cost $90 million, including such items
as the two great nitrate plants, three large steam power plants, several
miles of railroad track with engines and cars, two sizable villages
equipped with all modem facihties, a great concrete mixing plant,
more than 6,000 acres of land, vast quantities of unused lumber, and
other materials, including platinum worth $5 million. Norris listed a
few items not needed by Ford which could be sold the next day for
more than enough to equal Ford's $5 milhon. He added that if a
minor ovimed such a property and sold it for such a sum "there is no
court in Christendom but would promptly set aside the conveyance
as having been obtained for want of consideration." The value of the
properties acquired, the report continued, "sinks to insignificance when
compared with the lease of the dam."
Summing Up the Ford Proposal. In an effort to correct public mis-
information about the Ford offer, the Norris report dealt directly
both with propaganda and the facts: "The wonderful propaganda
that has been carried on over the country in favor of the Ford offer
has led the people to have an entirely erroneous idea as to what the
HENRY FORD ARRIVES 113
Ford oflFer really is. It is diflBcult to harmonize our idea of Mr. Ford's
fairness with his silence on this subject when his name is so often used
in exaggeration and misrepresentation as to just what he ofiFers to do.
The country has been given to understand that Mr. Ford has guaran-
teed to reduce the cost of fertilizer one-half. He has done nothing of
the kind .... The country has been given to understand that he pays
the Government 4 percent on its investment in the two dams. He does
nothing of the kind. [The report calculated, on a basis of 6 percent
compound interest, that Ford could profit $14.5 billion from federal
investment in the project.]
"The country has been given to understand that the Ford offer pro-
vides for the repayment to the Government within the 100-year period
the entire investment that the Government has made. His offer does
nothing of the kind .... Total payments .... amount to less than 3
percent on the investment and he never pays one dollar of the prin-
cipal. The people of the country have been led to beHeve that the
Ford offer means a reduced price for electricity to the consumer. It
means nothing of the kind. He has not agreed to furnish a single kilo-
watt hour to any home or to any manufacturing concern except his
own .... When you bring together the results that must follow from
these two divisions of the Ford offer, the mind is dazed at the unrea-
sonableness of the proposition, at the enormity of the gift ....
"The acceptance of Mr. Ford's offer would turn back the clock of
progress and open the door wide for the use of natural resoLirces by
corporations and monopoHes without restriction, without regulation,
and without restraint. If this proposition is accepted the fight for the
preservation of the natural resources of the country is lost, the sur-
render to special interest and monopolies is absolute, and a precedent
is established that will take from the control of the people the greatest
resources that ihave ever been given to man by an all- wise Creator." "*
The report concluded with a brief analysis of the Norris bill ( S.3420)
for government operation.
The Minority Report. Senator Edwin F. Ladd wrote and presented
a minority report attacking the Norris bill for public operation on
principle and thus supporting the party line drawn by conservative
Republicans. Once more the nonpartisan character of the conflict and
the curious changes of attitude on the part of individual members dis-
closed by the record are illustrated.
The two Republicans signing the document were liberals. Dr. Ladd,
a chemist by profession, had been president of the North Dakota
Agricultural College. He had been chosen by the Nonpartisan League
114 THE CONSERVATION FIGHT
as its candidate in the election of 1920. The League was a radical
farm organization then operating chiefly within the Republican Party.
Its candidates were in control of the state government and had estab-
lished state-owned and state-operated grain elevators as well as a
state bank and a state hail-insurance company. Hence, although
Ladd was a strong supporter of public enterprise in North Dakota, he
was convinced that the hostihty of the administration foreclosed the
possibility of government operation of the Shoals project, and a lease
to a liberal industrialist such as Ford was the only way out. Others
who later came to Norris' aid were privately of the same opinion.
Senator Capper, the other Republican, was a pubKsher of farm
journals and a conservationist. Of the five Democrats signing the
minority report. Smith, Heflin, and Harrison had voted for the Wads-
worth-Kahn bill, Caraway and Ransdell were absent. Like the Mc-
Kenzie House report, the Ladd report was one of expediency. It
begins: "It is the firm conviction of the undersigned .... that the
heavy losses to the Government, that, since the Armistice, have piled
up at Muscle Shoals, now amounting to about three million dollars,
should be stopped, and .... the quickest way to stop these losses is
to accept Henry Ford's ofiFer ....*'
Fords payment of $5 million for the properties was defended be-
cause of "the large amount of money he must invest to produce ferti-
lizer." The amortization plan was justified because of the claimed
national benefits from Ford's operation, such as navigation on the
Tennessee River without cost to the government. The possible effect
of the offer upon national conservation policies was not mentioned
except for giving approval to the 100-year lease period. It was admit-
ted that commercial success of the venture was controversial and the
argument was turned against government operation. How "in the
face of such testimony can the Senate ever agree for the United States
to go into the fertilizer business at Muscle Shoals?" "
Thus, the Ford offer was before the 67th Congress, but the com-
mittee reports were never acted on. The time was August 1922. A
full year had passed since Henry Ford, urging speedy action, had
made his offer. A year and four months had passed since the Harding
Administration had embarked on the seemingly easy task of disposing
of this "war baby." A year and six months was to pass before Congress
again came to grips with the Muscle Shoals problem and the House
passed a bill accepting the Ford proposal. At first only a local affair,
Muscle Shoals had become the center of a struggle over natural
resources policy and control of the nation's undeveloped water power.
CHAPTER XH
HENRY FORD DEPARTS
In the elections in November 1922 the Repubhcans retained control
of Congress, but their majority in the Senate had been cut from 22 to
10 and in the House from 77 to 14. The G.O.P. tide of 1920 had
receded. RepubHcans had not only lost seats to Democrats, but a
few Farmer-Laborites and Independents had appeared in Congress.
An irritating 18 months elapsed on the Muscle Shoals legislation,
but in that interim the basic conditions of the Ford oflFer and its effect
upon conservation policy came to be better understood. Two days
after the 68th Congress convened on December 3, 1923, Representa-
tive McKenzie reintroduced his bill (H.R. 518), and the final stage
of conflict over the Ford offer began. In the meantime a series of
important events had affected the situation.
A year earlier ( April 25, 1922 ) , Senator Johnson and Representative
Swing, both Calffomia Republicans, had introduced identical bills
providing for government construction and operation of Boulder Dam
(now Hoover Dam) on the Colorado River. Discussion of these bills
had heightened the controversy over public versus private power.
In March 1923, as the result of a resolution introduced by Senator
Norris in 1922, the Federal Trade Commission reported that competi-
tion was keen among the 642 fertilizer manufacturers in the country;
and that although the six largest sold about 60 percent of the total,
they were competitors. There was no overall "fertihzer trust" domi-
nating the industry as claimed. Since the report was made to the
Congress while Chairman Victor Murdock, well-known progressive
Republican and former Kansas congressman, and Huston Thompson,
a progressive Democrat, were in control of the conamission, it had
great influence.
The Gorgas steam plant and transmission line had been sold by
Secretary Weeks on September 25, 1923, to the Alabama Power
Company for $3,472,487. Construction of Dam No. 2 (Wilson Dam)
was proceeding rapidly. Some $8,500,000 had been expended, bring-
ing the total to more than $25 milHon instead of the $17 million when
Ford made his first offer.
President Harding had died, August 2, 1923, and had been succeed-
115
116 THE CONSERVATION FIGHT
ed by Calvin Coolidge whose attitude toward the Ford proposition
was uncertain.
In February 1924, a few days after the Ford bill had been reported
favorably in the House, another natural resource, the Teapot Dome
Oil lease, became a nationwide scandal. It had been simmering for
two years. Secretary of the Interior Albert B. Fall was brought before
a Senate investigating committee. He had leased to oil magnate
Harry Sinclair federal oil lands in Wyoming's Teapot Dome district re-
served for the Navy's use. Similar leases to naval reserves in the Elk
Hills district in California, worth many millions of dollars, had been
given to Doheny. Fall denied bribery charges but declined to testify
on the grounds of self-incrimination. His attitude, tantamount to a
confession of guilt, shocked the nation. Fall ultimately went to prison.
He was the only Cabinet officer in American history to meet such a
fate. This sad story aroused national anger over the loot of natural
resources. Comparisons were inevitable. Even the sedate and tem-
perate Theodore Burton who, after being defeated for reelection to
the Senate in 1916, had been returned to the House, declared "What
policy of economy or conservation of public rights or interests can we
insist upon if we throw this [Muscle Shoals] away? There are pos-
sibilities there my friends that make Teapot Dome look Hke a bagatelle
and Mr. Doheny and Mr. Sinclair as men whose injured innocence
should be forever vindicated.'' "^
Finally, to add further harassment to a troubled administration,
Henry Ford in January 1923 became a candidate for President. "Ford
For President" clubs had been organized in many states under the
slogan "We Want Henry." But Henry kept to himself whether he
would seek nomination as a Republican or a Democrat or run as an
Independent. The popular response was astounding. By fall, old
party leaders were genuinely alarmed. Newspaper and other polls
showed Ford a dangerous competitor. Then came the unexpected.
President Coolidge invited Mr. Ford to the White House. He ac-
cepted, although immediately after the sale of the Gorgas power plant
in October he had denounced Weeks and the administration as being
controlled by interests inimical to the farmers. The visit was made,
but nothing revealed as to its import. On December 6, 1923, Coolidge
in his message to Congress by unmistakable inference endorsed the
Ford bid for Muscle Shoals. Ford immediately abandoned his presi-
dential campaign and in December publicly endorsed Coolidge as
a "safe" man for the presidency. A political uproar followed, including
praise from conservative Democrats, and an inquiry by the Senate
HENRY FORD ARRIVES 117
Agriculture Committee in its Muscle Shoals hearings. Senator Hiram
W. Johnson made a terrific attack on Coolidge. Muscle Shoals had
become a bipartisan political football of the first order.
The House Military Affairs Committee Stands by Ford. In the
68th Congress, the House Military Affairs Committee was weary of
the Shoals debate. After eight relatively short sessions the committee
reported the McKenzie bill favorably on February 2, 1924. One
important amendment provided that Ford be authorized to build a
steam generating plant and transmission line to Muscle Shoals at
government expense. The plant would be a substitute for the Gorgas
steam plant which Secretary Weeks had sold. The amendment was
in response to Ford's threat to withdraw his offer if the authorization
were not made.
The committee was divided. Six members headed by Hull, an Iowa
Republican, filed a minority report calling attention to H.R. 6300, a
bill that Hull introduced on January 28, 1924. H.R. 6300 presented
a bid from the Associated Power Companies, offering to lease the
project under the terms of the Federal Water Power Act. The bid
is noted here because of its bombshell effect. It signalized the entry
of the power companies into fertilizer production in competition with
Ford who had announced that he would build transmission lines to
serve municipalities and farmers in competition with the companies.
The House Approves the Ford Tender. The House settled down
to a week of hectic debate on March 4, 1924. The outcome was a
foregone conclusion. A large majority was determined to devote the
Muscle Shoals project to the manufacture of fertilizer by Henry Ford
and on his terms regardless of its effect on conservation policies. As
Wefald of Minnesota put it, "Mr. Chairman, there is one word that
has resounded throughout this whole debate, and that is fertilizer.
If verbal and intellectual fertilizer would suffice for the purpose of
the farmer, if it would make crops grow as it has made oratory blossom
here, we would now have on hand a fertilizer supply for the whole
length of this proposed contract." ' After three days of general debate,
three days more were given to amendments. Burton's crucial amend-
ment to restrict the lease to 50 years and bring Ford under the control
of the Federal Water Power Act of 1920 was lost, 82 to 104.
Throughout the long discussion only four voices were heard favoring
government operation. LaGuardia, serving his first term (afterward
a famous mayor of New York City); Wefald, first Farmer-Laborite
from Minnesota; Williamson, Republican of South Dakota, and
Wainwright, Republican of New York, who stated the case thus:
118 THE CONSERVATION FIGHT
"I believe the time has come peremptorily to decline to part with
ownership and absolute control of any further natural resources to
private interests. I further beHeve that this poHcy and principle
particularly apply to power contained in the flowing waters of our
great rivers and streams, especially where the structures erected to
make that power available have been created by public funds." °
At last, on Monday, March 10, 1924, H.R.518 was approved 227 to
143, with only 60 not voting, and sent to a waiting and doubtful
Senate, where it was referred to the Committee on Agriculture and
Forestry.
The Senate Committee on Agriculture Recommends Government
Operation. Having once decisively rejected the Ford bid, the Senate
Agriculture Committee was expected to give the vexatious Muscle
Shoals problem short shrift. Senator Underwood and Ford adherents
throughout the country, encouraged by their triumph in the House,
demanded immediate action, but the committee declined to be hurried.
Chairman Norris, Senator McNary, and others now had a vision of
multi-purpose development of the entire Tennessee River basin which
was more grandiose than Ford's dream.
Norris was playing for time. For six weeks (April 16 to May 26,
1924) he conducted hearings as an '^educational campaign." He had
a legitimate excuse: two interesting new bids for the shoals. One
was from Elon H. Hooker, himself an able chemist and head of a
chemical manufacturing concern, who proposed to form a company
and in effect operate the project for the government, to make 40,000
tons of fertilizer annually, generate and sell power under the terms of
the Federal Water Power Act, and divide the profits with the govern-
ment. Senator Wadsworth was so impressed by the proposal that he
introduced a bill for its acceptance. Another bid, from the Union
Carbide Company, proposed to utilize only parts of the project for
fertilizer purposes. Norris had another reason for bidding for time.
He had a new bill of his own — ^his second.
Out of the mass of chemical, engineering, legal, and historical data
presented at these day and night hearings, three conclusions emerged
which were set out in the report submitted to the Senate on June 2,
1924. First, the McKenzie bill contained no basic improvements over
the original Ford bid of 1922 and was therefore rejected. Second,
there was as yet no process that would materially reduce the cost of
fertilizer, not to mention reduction by one-half.
Norris learned that Dr. Harry A. Curtis, a chemical engineer, had
made a study of the nitrogen situation for the Commerce Department,
HENRY FORD DEPARTS 119
then under Secretary Hoover. Without knowing its contents he
secured the passage of a Senate resolution requesting its immediate
pubhcation, which was done. Dr. Curtis found: "The whole proposi-
tion concerning Nitrate Plant No. 2 comes down to the fact that the
plant as it stands today cannot be used to effect any inmiediate result
of large consequence in the fertilizer situation." It might in the future
but new processes and new fertilizer methods must be found. *
Such opinions settled the matter for Norris and the Senate, but not
for others for ttoo years to come.
Third, the Muscle Shoals project should be retained by the govern-
ment as a vital factor for national defense and as the first stage in an
overall, unified plan to harness the entire Tennessee River for navi-
gation, flood control, and power production. Meanwhile research
should continue on a wide scale in the hope that a method of produc-
ing cheap fertilizer might be found.
This comprehensive idea, we may recall, was first advanced 16 years
previously by the Inland Waterways Commission. It was here given
its second legislative endorsement (the Newlands bill of 1913 was the
first).
Governor Pinchot and Giant Power. Pennsylvania's unique ap-
proach to the power issue interested the committee. Under the
leadership of Governor Gifford Pinchot the legislature of 1923 had
appropriated $35,000 to finance a survey of the energy resources of
the state by a "Giant Power Board." Its consulting engineer, Morris
L. Cooke, said that the purpose of the survey was to integrate the
300 private power companies of the state; create a giant power pool
from which the individual companies could be served over a state-
wide network of transmission lines; and generate power from large
steam plants located near coal mines. Except for municipal plants
the giant pool was to be privately owned and managed. It would be
strictly regulated by the state. "Giant power," said Mr. Cooke, "signi-
fies a social as contrasted with either a business or engineering ap-
proach to a study of power— rapidly becoming the most important
single item affecting our material well-being." *
Governor Pinchot appeared before the Senate committee to explain
the giant power idea and to oppose the Ford bid. He declared that
he was not for government ownership, but, as against the Ford or any
other offer for Muscle Shoals, he would prefer the Norris proposal
because it embraced every conservation principle for which he had
been fighting 25 years. '
The Second Norris BiU. The Norris biU, of 1924 (S. 2372-S. 3214)
120 THE CONSERVATION FIGHT
was a revised version of that of 1922 ( S. 3420) but with changes reflect-
ing a wider grasp on the part of the author and the committee as their
study of the problems continued. The government, of course, would
retain title to the properties but instead of creating a federal chemical
corporation to manage the project, it was now designated the Federal
Power Corporation. Dam No. 2 was to be completed and Dam No. 3
built. Surveys for new dams and reservoirs were authorized for the
entire Tennessee River and not restricted to the stretch above the
shoals as before. For the first time the government was authorized
to construct high tension transmission lines for the sale of the power.
Preference was given to public bodies in the sale of power from federal
generators. Fertilizer production was divorced from power and
transferred to the Secretary of Agriculture. The power corporation
was directed to supply him with 100,000 horsepower of electric energy
at cost, and he was to continue research and make and sell fertilizer
either directly or by leasing the nitrate plants. On this feature the
report commented: "If Mr. Ford or any of the other bidders .... can
produce fertilizer ingredients at Nitrate Plant No. 2 at a price that
will reduce the cost to the consumer they will be able through the bill
which we report to lease his plant .... and go into business. The
Secretary of Agriculture under the terms of the bill would have author-
ity to make such a lease, even without charging any rent for the
same . . . ."^
As a new result of its labors the committee on June 2, 1924, reversed
its previous action and recommended passage of the Norris bill for
government operation. A minority report was filed by Senators Ladd,
Smith, Harrison, Heflin, and Caraway as in 1922 but this time the
signatures of Capper and Ransdell did not appear. The next day
Underwood made a gallant attempt to secure immediate consideration
of the report, but since the Republican National Convention was to
begin on June 10 and important bills for farm relief were being rushed
through, the Senate declined. It was determined to adjourn on June 7.
Underwood, however, did obtain unanimous consent, with Norris'
support, that on December 3, 1924, at 2 p.m., the Muscle Shoals bill
would be taken up for consideration and "not laid aside until finally
disposed of and that this order shall not be set aside except by unanim-
ous consent."^
Presidential Campaign of 1924. The campaign of 1924 faithfully
reflected the attitude of political and financial leaders toward the
Muscle Shoals problem ( now a minor national issue ) and their efforts
to collect votes.
HENRY FORD DEPARTS 121
Meeting on June 10 the Republicans nominated Coolidge for Presi-
dent and Charles G. Dawes, a conservative Chicago banker, as his
running mate. The platform contained no specific reference to Muscle
Shoals, but it declared: "The RepubHcan Party stands now, as always,
against all attempts to put the Government into business." It reminded
the voters that "the conservation policy of the nation originated with
the Republican Party under the inspiration of Theodore Roosevelt."
Hence conservation was approved and, definitely, the Federal Water
Power Act, "which preserves the initiative of our people yet protects
the pubhc interest."
The Democrats met June 24 to nominate John W. Davis, a conser-
vative New York corporation attorney, for President and Charles
W. Bryan, governor of Nebraska and brother of William Jennings
Bryan, for Vice President. The platform contained a specific plank
titled "Muscle Shoals and Fertilizer." It read in part: "We reaffirm
and pledge the fulfillment of the policy, with reference to Muscle
Shoals, as declared and passed by the Democratic majority of the
64th Congress in the National Defense Act of 1916 for the production
of nitrates . . . ." It demanded "prompt action" to start fertOizer
production at Muscle Shoals. Section 124 of the National Defense
Act, referred to in the platform, provided for operation "solely by the
Government and not in conjunction with any other industry or enter-
prise carried on by private capital."
The newly organized Progressive Party on July 5 chose as its presi-
dential candidate Senator Robert M. LaFoUette, progressive Republi-
can from Wisconsin, and for Vice President, Senator Burton K.
Wheeler, progressive Democrat from Montana. The platform ad-
vocated "use of power of the federal government to crush monopoly,
not to foster it, and public ownership of the nation's water power and
creation of a public super-power system. Strict public control and
permanent conservation of all natural resources .... in the interest
of the people." Thus, Senator LaFoUette became the first presidential
candidate, aside from the Socialists, to endorse government ownership
and operation of water power. As governor of Wisconsin ( 1901-1905),
he had fathered the movement to establish a state commission for
regulation of utilities though the results were disappointing.
A campaign of unusual acerbity followed. The Republicans won.
Although the Teapot Dome scandal and other issues overshadowed
Muscle Shoals and conservation, they received considerable attention.
In the midst of this heated campaign the unpredictable Henry Ford,
to the astonishment of the country, abandoned his quest for Muscle
122 THE CONSERVATION FIGHT
Shoals. Colliers Weekly (October 18, 1924) carried as a leading
article an interview with Ford by Samuel Crowther. The heading
stated: "Henry Ford Tackles a New Job. He announces through
Colliers that he withdraws his bid for Muscle Shoals and will develop
power and chemicals from coal in clean mining towns in our own way
and outside of political meddhng." Ford was quoted as saying,
"Muscle Shoals? That is not a Hve issue with us any longer . . . [what]
should have been decided by anyone wdthin a week has become a
complicated political affair . . . Productive business cannot wait on
poUtics. Therefore we withdraw our bid."
Many believed that Ford had come to reahze that Coolidge could
not deliver Muscle Shoals to him over the mounting opposition led
by Senator Norris.
CHAPTER Xm
THE UNDERWOOD-COOLIDGE COALITION
Henry Ford's unexpected abandonment of his dream to harness
Muscle Shoals left those determined to devote the project to fertilizer
production at full capacity in a bewildered and embarrassing position.
They had denounced any lease to the "Power Trust" or the "Fertihzer
Trust" and also opposed government operation, and now Senator
Norris' bill was the only one dealing with the subject on the calender
of either House.
The administration was hkewise in trouble. President CooHdge
was heavily obligated to the utilities for having supported him in
the November election. On the other hand, the normally Republican
farm voters in the north and the farmers of the solid Democratic
south where the power companies were unpopular had been sold on
the idea that Muscle Shoals would be dedicated to agriculture in
peacetime and that fertilizer production was feasible.
Moreover, businessmen of the Tennessee Valley were terribly dis-
appointed over Ford's withdrawal. For 18 years they had in good
faith urged development of the Shoals by private capital. Six years
had elapsed since the end of World War I. They were already suffer-
ing from the postwar depression, and now there was prospect of
another delay. Wilson Dam would be completed and ready to gene-
rate electric energy in July 1925. No bid as yet had approached
Secretary of War Weeks' demand that any lease should adequately
protect the Government's investment.
Meantime, the position of the conservationists had been greatly
strengthened. Ford's refusal to abide by the Federal Water Power
Act had contributed to his failure. There was no more talk of 100-year
leases. The concept of multipurpose development of the Tennessee
from source to mouth was gaining adherents. Doubt over whether it
was possible to produce cheap commercial fertilizer was disappearing.
It was widely anticipated that the 68th Congress would "pass the
buck" on the Muscle Shoals issue to its successor. Instead there
ensued perhaps the most sensational legislative battle in the long
series of conflicts over the project; the battle lasted throughout the
session. Private capital came nearer to capturing the government
project in this congress than at any other time.
123
124 THE CONSERVATION FIGHT
Underwood Attempts a Coup dEtat. The Ford bill (H.R.518) had
passed the House on March 10, 1924. The Senate Agricultural Com-
mittee had substituted the Norris bill (S.2372), authorizing govern-
ment operation on June 2. It had been agreed to begin debate on
the Norris proposal at 2 p. m., Tuesday, December 3, at the start of
the second session. The day before Senator Underwood, in a surprise
move, introduced S.3507, a substitute bill providing for private opera-
tion. Debate began on Wednesday, December 4; the Senate was off
for another session-long conflict over the Shoals. ^ It became known
immediately that Underwood's bill had President Coohdge's support.
Study of its provisions convinced its opponents that a deal had been
made for leasing the project to the Alabama Power Company. When
it was so charged, the country was presented with one of those weird
coaHtions of Northern Republicans and Southern Democrats which
have characterized major economic issues in American politics since the
war between the states. The Underwood-Coolidge bill, as it was
often designated in floor debate, was a politically disarming compound
of Ford fertilizer promises, administration power politics, War Depart-
ment ambitions, and possible government operation. Its principal
provisions follow:
The Muscle Shoals properties were "dedicated and set aside" for
national defense and commercial fertilizer production. Dam No. 2
was to be completed, and Dam No. 3, a few miles above, was to be
constructed by the government.
The Secretary of War was empowered, with the approval of the
President, to lease the entire project as a unit. If unable to negotiate
a lease by September 1, 1925, the Secretary should then organize a
government corporation to operate the project. In either case "40,000
tons of fixed nitrogen must be produced annually" beginning four
to six years after the project was started. In either case "the produc-
tion of fixed nitrogen as provided shall be used, when not required
for national defense, as far as it is practicable to do so, in the manu-
facture of commercial fertilizer . . . ." Profits on fertilizer were limited
to 8 percent. Surplus power not required for fertilizer production
when sold or used would be subject to state regulation and would
be exempt from the provisions of the Federal Water Power Act.
Annual rental was to be not less than four percent of the cost of
Dam No. 2 and its power facilities. Rental on Dam No. 3 after con-
struction was a matter for future negotiation.
Fertilizer research and experimentation, multi-purpose development
THE UNDERWOOD-COOLIDGE COALITION 125
of the Tennessee River, and erection and placement of transmission
lines were not mentioned.
Specific details and other terms were to be worked out and agreed
to by the Secretary of War and the lessee.
If government operation became necessary, then on September 1,
1925, the Secretary of War was to appoint &ye persons to organize
the "Muscle Shoals Corporation," an agency to be controlled by a
board of five directors appointed by the President without confirma-
tion by the Senate. The Secretary of War would be ex officio chairman,
with power to designate a vice chairman who would act in his absence.
One hundred shares of capital stock of no par value and 5 percent
20-year bonds not to exceed $50 miUion were to be issued by the
corporation. The Underwood bill freed the corporation from the
provision in section 124 of the Act of 1916 that operation of such
projects would be "solely by the government and not in conjunction
with any other industry or enterprise carried on by private capital."
If, after four years, net earnings did not meet the interest charges,
operation by the corporation would cease until resumption was author-
ized by Congress.
Seven Weeks of Debate. The provisions of the Underwood bill and
the unusual spectacle of an administration measure being sponsored
by a distinguished Democrat again resulted in significant and puzzling
realignments in Congress. Liberals voted conservative, conservatives
voted liberal, party lines were disregarded by many; McKinley, who
had supported Norris, went over to Underwood. McKellar, who had
been a strong pro-Ford man, went over to Norris.
Underwood's biU was severely criticised even by the Secretary of
War. Secretary Weeks, asked for his comment, wrote Norris listing
a dozen objections to the measure because of its omissions and am-
biguous language. "Without careful and thoughtful amendments it
is unworkable."'
The bill received splendid publicity. The country's farmers were
told that despite Ford's withdrawal they were to get cheap Muscle
Shoals fertilizer. It was taken for granted that the backing of the
President assured passage.
Senate Norris was disheartened and gloomily remarked to me, "They
have the votes, but it is the same old game — seizure of the power
under the guise of furnishing cheap fertilizer when that is as yet
impossible." Nonetheless, Norris decided to fight to the end, conduct-
ing his opposition along three principal lines. He would compel
Congress to pay attention to "scientific men." He would "show up
126 THE CONSERVATION FIGHT
the power trust." He would insist on scientific development of the
river basin in accordance with modem engineering concepts.
Underwood's Plea and McNary's Answer. The intensity of the strug-
gle over the Muscle Shoals issue rose to a new high. Almost every
legislative day for seven weeks the Senate debated the question, often
at great length and with acrimony. Underwood insisted that this
was a fertilizer, not a power, proposition. He argued that since Con-
gress had demonstrated its incapacity to come to a decision, the Execu-
tive Department should be allowed to conclude the matter under
directives to be set upon enactment of his law, especially since power
from Dam No. 2 would be ready in July.
To these arguments, Norris and his supporters replied that the
matter was for Congress to decide; that too many crucial matters were
left to the President, whose position was well known; that even Senator
Underwood's directives did not protect the public interest; that the
terms of the Underwood biU proved that it was primarily a power, not
a fertilizer proposition. As Senator McNary put it, delay was better
than disaster. McNary had reference, of course, to the coalition
attempt to sidestep conservation policies. He made a fight to eliminate
Underwood's provision for state control over the use and sale of electric
power and to restore jurisdiction to the Federal Power Commission.
But Underwood was adamant, and the McNary amendment was re-
jected, 34 to 29. ' Jones of Washington, strongly opposed to govern-
ment operation, offered an amendment requiring that any lease be
submitted to Congress for ratification. His amendment was finally
rejected, 43 to 38.
Outright military control of the leasing or operation of the project
was another controversial provision. Dam construction by Army
Engineers was one thing, hydroelectric power policy was quite an-
other. The friendly cooperation long existing between the Army
Engineers and the utility companies had been severely criticized in
Congress. The Wadsworth-Kahn bill of 1919 was amended to transfer
control of the government corporation from the Secretary of War to
the President. Underwood attempted to reverse this policy, but the
subject was so loaded with dynamite that he chose not to make an issue,
and when Ladd moved to strike out "Secretary of War" and insert
"the President" throughout the coalition bill. Underwood announced,
"I do not care to resist it." The amendment was unanimously agreed
to without a roll call.
Following the Ford formula in part, the Underwood measure would
have the lessee pay an annual rental of 4 percent on the cost of Dam
THE UNDERWOOD-COOLIDGE COALITION 127
No. 2 and the power facilities. Such rental would yield around
$1,800,000 on an estimated cost of $45,000,000. The return on Dam
No. 3 when completed was left for negotiation. Construction on Dam
No. 2 had been resumed. The meager return proposed for its lease
proved embarrassing to the coalition. Several Senators addressed
themselves to this angle of the problem. McKellar, bitterly opposed
to private monopolization of the power, attacked the Alabama Power
Company in several speeches.
A Senator Demonstrates. A majority of the Senators were lawyers,
not technicians. Senators seeking rehable information were inchned
to take with a grain of salt scientific information emanating from their
colleagues. But among them was a professional engineer, careful and
considerate in his statements, to whom they listened with respect: a
Repubhcan, graduate of the United States Naval Academy, former
state engineer, and creator and manager of a metropolitan utihties
district responsible for the provision of water, gas, and ice for his home
city of Omaha— Robert B. Howell of Nebraska. He astonished his
colleagues by demonstrating that within a few years Muscle Shoals
as a commercial proposition would have an annual value to the Alabama
Power Company of some $21,400,000. He reminded his hearers that
the standard value of electricity was the cost of production in steam
plants.
Senator Harreld remarked that Muscle Shoals, if turned over to
a government agency to run, "will not be a white elephant." Howell
agreed, adding: "Mr. President, in my opinion if the Government
operates this great power plant it will enjoy a greater return there-
from than could possibly be obtained from a lease .... and will ulti-
mately cause a marked reduction in rates."* Howell's speech went
unanswered. Startling as his figures were, they did not arouse the
ordinary citizen. So, throughout the session, Norris, Brookhart of
Iowa, Shipstead of Minnesota, and others kept hammering home what
such values would signify when passed in reduced electric rates on to
ultimate consumers.
Ontario Hydro's Example. Only one pubhc superpower system on
the continent could be cited as an example of what Muscle Shoals
might do under government ownership and operation — the Hydro-
Electric Power Commission of the Province of Ontario, Canada, which
supphed wholesale power to 248 municipalities and many farm dis-
tricts that did their own distributing of power. Senator Norris had
visited Ontario. In describing "Hydro," he cited many Canadian cities
and towns whose domestic consumers paid an average 2 or 3 cents
128 THE CONSERVATION FIGHT
per kilowatt hour for electricity when householders in the United
States were paying an average of 7.4 cents. His colleagues learned that
Canada's Hydro was a $241 million concern, selling around $17 million
worth of current per year, and that it was not in the red. Several
Senators began asking questions.
"I am extremely interested," said Senator Ransdell. Did the Senator
have any "figures" comparing Ontario costs with private rates in the
United States? Norris had them. He exhibited photostat copies of
two domestic bills stamped "paid," each for 334 kilowatt hours of
electricity. By comparison Mrs. CuUum of Niagara Falls, Ontario,
paid $3.55 and Dr. Cora Smith King of Washington, D.C., paid $23.18
for exactly the same amount of current. As another illustration, Norris
cited the cost of lighting the International Bridge at Niagara Falls,
served on the American half by a private company and on the Canadian
by Hydro. To quote Senator Norris: "The same number of lights,
the same bridge, the same river, the same method of production. All
alike, the power coming from the stream under the bridge. Now for
these people who go into hysterics whenever we say anything about
the Government owning a municipal utility of any kind, let us see what
the blessed private corporation charged on this bridge for the same
light generated from the same power. The Canadian publicly owned
concern charged $8.43 per month. The American private corporation
charged $43.10 per month on the average." ^
The Ontario story was effective and disconcerting to the opposition.
The bridge example was too pat to escape publicity. Labor, weekly
American newspaper serving the 15 railroad unions in this country
and having a circulation close to a million, carried an editorial illus-
trated with a striking cartoon by John M. Baer. The editorial was
widely reproduced. All the Hearst Sunday newspapers and several
magazines gave the story similar publicity. Comparative rates became
a subject of casual dinner table conversation. Mrs. Cullum and Dr.
King became known to millions. Manufacturers, commercial houses,
and offices were also served at similar low rates in Ontario. Official
statistics of the Hydro and the National Electric Light Association were
compared. For example, in 1926 the average cost of industrial power
in Ontario was 93 cents and in the United States it was 1.5 cents per
kilowatt hour. The average for all sales to customers was 95 cents in
Ontario and 2.7 cents in the United States. "
Such comparisons were startling news to most Senators. They per-
ceived something was radically wrong either with the professed "at
cost" public rates of Ontario or with state-regulated private rates
THE UNDERWOOD-COOLIDGE COALITION 129
in the United States. Doubtful conservatives and progressives alike
desired an explanation by competent, unbiased authority. It v^as
supplied them. It created a sensation on both sides of the international
boundary. It resulted in the exposure of methods employed at the
time to influence national legislation, pubHc opinion, and elections —
methods so extreme they came close to occasioning an international
incident.
The Smithsonian Institution Explains. Norris made his Ontario
speech on December 18, 1924. On January 18, when the conflict over
the Underwood bill was at its height, the Smithsonian Institution, a
highly respected government agency devoted to scientific research,
published an illustrated monograph entitled "Niagara Falls, its Power
Possibihties and Preservation." The author was Samuel S. Wyer, an
associate in mineral technology. All members of Congress and many
other government ofiicials received copies of the monograph in the
mails.
Senators discovered that more than one third of this study con-
centrated on utilization of the power and scenic beauty potential
of Niagara Falls. Chapter 3, subtitled "Why Ontario Domestic Con-
sumers Get Lower Priced Electric Service than Domestic Consumers
in the United States," revealed that Ontario's Hydro was "tax exempt,"
that domestic rates were below cost, that "the loss is made up in part
by higher rates for industrial consumers than charged in the United
States," and that "part of the cost comes directly out of the Provincial
treasury in the form of contributions and subsidies," and concluded with
the information that "up to date the electric consumers from the govern-
mentally owned hydroelectric system have failed to pay the actual
cost of the service they received .... by $19,147,014." The economics
was "unsound." Mr. Wyer stated that the deficit had to be made up
by a marked increase in rates or by taxation. Charges like Wyer s
were being made by American utilities, but in this case they came
from an associate engineer of the Smithsonian with the endorsement
of Dr. Charles D. Walcott, venerable secretary of the Smithsonian.
In an introduction to the monograph Walcott had written: "There
is also today a great public interest in and much misinformation on
our water power resources and methods of selling electric service to
the public .... The following original investigation shows .... The
Niagara River is more than a mere boundary stream between two
friendly nations. It is the dividing line between two radically different
methods of rendering electric service to the public; govemmentally
owned on the Ontario side, privately owned but govemmentally reg-
130 THE CONSERVATION FIGHT
ulated on the United States side. Enough data are given in Part III
to permit the reader to make an evaluation of these two methods."
Banner headhnes in the daily newspapers informed the pubHc that
the Smithsonian had discovered the secret of Ontario's low rates —
government subsidy. Editorials followed. The February issue of
The Nations Business, oJBBcial magazine of the United States Chamber
of Commerce, featured an article by Wyer summarizing one part of the
monograph. An editorial note introduced Wyer as "a distinguished
engineer who has just completed a study of Niagara for the Smithson-
ian," and indicated that his "plain statement of facts" was a trustworthy
answer to Norris' claims.
Informed persons were astounded on two counts. They discredited
Wyer's facts, especially that Hydro was $19,147,014 "in the red" on
its service. And how did it happen that the Smithsonian should give
credence to such a charge? Why had a federal agency gone out of
its way to attack the honesty of the official records of an agency of
a friendly neighboring government, particularly when an Englishman,
James Smithson, had willed his entire fortune in 1876 to the American
people to found the Smithsonian as an "establishment for the increase
and diflFusion of knowledge among men."
On the House side Representative Henry Allen Cooper, liberal
Wisconsin Republican who had followed official reports of the Ontario
commission, stated that on receiving the Wyer pamphlet he had written
upon it "propaganda misrepresenting the facts." He noted that Wyer s
pamphlet was issued and circulated just about the time Congress was
expected to take final action on the Muscle Shoals bill. '^
Senator George Wharton Pepper, Republican of Pennsylvania, a
member of the board of regents of the Smithsonian, requested an
explanation from Dr. Walcott. Newsmen made inquiries. Correspon-
dent Louis J. Heath called Secretary Walcott, Curator Mitman, and
Editor True. All expressed confidence in Mr. Wyer as an able, honest,
public-spirited citizen who to their knowledge had no propaganda
connections with power companies. He was wealthy and had paid
the cost of printing the monograph himself, a quite common practice.
As to sources and accuracy of data, Wyer had told them that much
of his information came from a report of the Gregory Commission, a
royal commission that had investigated Hydro but whose findings had
been suppressed. Heath gave Senator Norris a memorandum on his
interviews which he put in the Congressional Record. It said:
"I asked Mr. Mitman if he understood the Gregory Report had never
been published, but that Sir Adam Beck (Chairman of the Hydro)
THE UNDERWOOD-COOLIDGE COALITION 131
had been powerful enough to suppress this report because it showed
conditions unfavorable to the Hydro Commission. He stated that he
had understood from Mr. Wyer that the report of the Royal Commission
had been suppressed in this way, that the only available copy of that
report had in some mysterious way been burned but that, unknown
to Sir Adam Beck, Mr. Gregory had kept a carbon copy of the report;
that it was this carbon to which Mr. Wyer had access, together with
the books of the Hydro Commission, and that he had been furnished
most of his information by Mr. Gregory." ^
The Heath memorandum was a new shocker. The Gregory report
had been made on March 13, 1924, and copies furnished the press.
A full-page article in the Toronto Globe summarized the Gregory
report under the following headlines: "Hydro Electric Commission
Vindicated by Investigation in Canada — Rash Charges of Irregularities
Were 'Baseless Ghost Stories' That Faded upon Investigation— Gregory
Commission's Report, Tabled in Legislature, Completely Vindicates
Hydroelectric Project and Even Commends Sir Adam Beck's 'Notable
Service to his Province— Not a Breath of Suspicion Found of any
'Personal Wrongdoing' — Special Reference to Loyalty and Efficiency
of Engineer Gaby and Acres — Mild Criticism of a Few Things Which
*Have Been Wrong' — Thinks Radical Policy a Mistake." °
Prime Minister Ferguson of Ontario, answering a letter of inquiry
from this writer, wrote: "The statement that the report of the Gregory
Commission was suppressed and burned is so extraordinary and un-
founded it is difficult to treat it seriously." He explained that the
report was submitted to the legislature, and full copies were given to
the press. The copy in his office was available to the public. In fact,
the report had been tabled and no further action taken.
Sir Adam Beck Strikes Back. On the Sunday after the appearance
of Wyer's pamphlet, I telephoned Sir Adam Beck, chairman of the
Hydro, at his home in London, Ontario, and informed him of its
publication. I met with a gruff response. "What in hell do I care?
Your power concerns are always lying about us." He upbraided me for
disturbing his Sabbath rest. I did not know then that he was a sick
man who would die in a year. Angered, I inquired just as roughly:
"Does it mean nothing to you that the honored Smithsonian Institution
has published a brochure by Mr. Samuel S. Wyer, widely known
engineer, in which he states you are short of serving power at cost
by $19 million and that is the reason why you have low rates?"
Sir Adam came awake: "What's that? What's that?" I repeated.
"Send me a copy immediately."
132 THE CONSERVATION FIGHT
"There is a copy in the mails which should reach you Monday
morning."
"Good!" Shortly thereafter Sir Adam sent me 1,000 copies of a
pamphlet in which the "misstatements and misrepresentations deroga-
tory to the Hydro Electric Power Commission of Ontario" were examin-
ed and refuted, under his own authorship. The copies were promptly
distributed to all members of Congress and Washington officials con-
cerned.
Sir Adam Beck not only denounced Wyer's principal statements of
fact as "absolute falsehoods" but raised the question of the impropriety
of an agency of the United States government questioning the integrity
of the financial reports of an agency of a friendly neighboring govern-
ment. His point struck home and the liberal press took notice. The
Baltimore Sun of February 9 ran an editorial, "The Smithsonian Must
Answer." Other papers did likewise. In a letter to Senator George W.
Pepper, Dr. Walcott expressed regret that the Smithsonian had been
brought into the controversy. "My thought in issuing the paper was
to clarify the situation .... Mr. Wyer explained the data used from
the official reports of the Ontario government included an unpublished
report of the Royal Commission appointed to investigate govemmental-
ly owned hydroelectric systems in Ontario." ^°
Norris Replies. The Smithsonian monograph, as The Baltimore Sun
observed editorially, "received immediate and wide recognition ....
and was widely used in discrediting the Norris bill." Senator Norris
was outraged, both because he felt the report made him appear to be
a novice and even worse, it was misleading Congress and the public.
He made inquiries, however, and held his peace until March 18. Then,
supported by an impressive array of documents, he made a devastating
speech, declaring Wyer s alleged facts and conclusions to be false and
exposing the disgraceful fashion in which the Smithsonian officials had
been duped.
No Senator replied. Pepper contented himself by inserting Dr.
Walcott's letter in the Congressional Record together with a memoran-
dum from Mitman, the curator, emphasizing that Wyer had paid for
the pamphlet himself, that Mitman had not 'liad the least indication
of a possible connection between Wyer and any industrial interests,'*
that the curator believed Wyer to be honest in his purpose and would
continue to do so until "I have received proof to the contrary."
No apology came from the administration or the Smithsonian, but
Dr. Walcott withdrew the monograph from circulation, ordered the
plates destroyed, and terminated Wyer's connection with the Smithson-
THE UNDERWOOD-COOLIDGE COALITION 133
ian Institution. Four years later the relations of Mr. Wyer with private
utilities were revealed by the Federal Trade Commission investigation
of propaganda activities of utility corporations. Questioned by Chief
Counsel Judge Healy, on May 11, 1929, Wyer under oath stated that
in 1924 he had been employed by A. W. Thompson, president of the
Duquesne Light and Power Company (Pittsburgh) to make "a de-
tailed study of the entire power situation in Western Pennsylvania,
Western New York and Ontario" for which he had been paid $15,890
for services and expenses. As a part of this job he had collected the
material for the Smithsonian monograph with Thompson's approval.
Judge Healy: "So that the actual printing of the Smithsonian pamph-
let was paid for by the Duquesne Light and Power Company?"
Mr. Wyer: "Correct."
The witness also disclosed that the officers of the National Electric
Light Association had previously been consulted and had agreed to
pay part of the expense of the pamphlet but later withdrew and the
Pittsburgh company paid the whole bill. The association, however,
paid for a second edition of 12,085 copies for its own use. The pam-
phlet was reprinted in Natioris Business.'^^
The Coalition Wins. Having before us the terms and import of the
Underwood coalition bill, our interest now turns to the spectacular
parliamentary battle that led to adoption of the bill by the Senate and
then its abandonment.
On January 8 the Senate, which had been sitting as a Committee of
the Whole, reported the bill favorably by a vote of 48 to 37. Norris
was defeated, the Underwood substitute had displaced his measure,
and a somewhat amended bill still retained most of its vital features.
Seventeen Democrats joined 31 Republicans in approving the Under-
wood-Coolidge measure while 16 Republicans voted with 20 Demo-
crats to reject it. In a strong appeal just before the vote, the Democratic
floor leader, Joseph T. Robinson of Arkansas, justified support of the
bill on the ground that it was in line with the Democratic platform.
That was quite true insofar as the operation of Muscle Shoals would
be devoted to national defense and the production of fertilizer, but
no mention was made of another pledge calling for strong public
control and conservation of natural resources including water power.
Opponents of the bill were angered at this sally. The next day
Norris in a humorous speech ridiculed pro-Underwood Democrats for
lining up with Coolidge Republicans. Referring to Robinson s quota-
tion from his party platform, Norris called another "witness to the
stand." The witness proved to be a pamphlet printed and circulated
134 THE CONSERVATION FIGHT
throughout the west by the Democratic National Committee charging
that the "Whole Coolidge Administration favored the power trust/'
Norris began with a quotation that all knew was from a speech by
Governor Charles W. Bryan of Nebraska, brother of William Jennings
Bryan and the Democratic vice presidential nominee: "*If the water
power sites of the country were allowed to pass into the hands of great
combinations of capital, the people would pass under a yoke of ser-
vitude more galling, if possible, than any foreign landlord system'/'
After reading numerous other quotations, Norris declared: "I want
to have the country view the Democratic action here with these two
pictures before it— one, the pamphlet from which I have been reading;
the other, the speech of the leader of the Democrats in the Senate
trying to convince his colleagues that the right place for Democrats
was to go with these same Repubhcans, whom in the campaign just
closed they had denounced as being part and parcel of the Electric
Trust of America and said they were trying to defeat the public develop-
ment of electricity everywhere and not permit the people to have the
benefit of public development and pubHc distribution of electric
energy/'
He sent the Senate into laughter over this picture: "Mr. President,
I think that we ought to have some ceremony in regard to this getting
together of brethren as shown by the roll call of yesterday .... There
is the senior Senator from Alabama [Mr. Underwood]. If I were
going to couple off these people, I would place the Senator from
Alabama arm in arm with the Senator from Colorado [Mr. Phipps] . . ."
As Senator Norris went on lining up the pairs of Senators to attend
a banquet to feast upon a fatted calf, the Senate and galleries roared
with laughter. Senator Cummins, who was presiding, remarked:
"Under the rules it is the duty of the Chair to admonish the occupants
of the galleries with reference to applause and laughter, but inasmuch
as the Chair cannot distinguish between applause and laughter on the
floor and that in the galleries that duty will be deferred."
Members of the coalition were in turn angered, especially the Demo-
crats. The gist of Robinson's response was: If you beheve that the
President is a crook .... then you are justified in committing yourself
to the doctrine of government operation. Norris' ridicule of the ease
with which party lines crossed and party pledges were forgotten was
a powerful factor in the final defeat of the measure. Such exhibitions
are fatal to party loyalty among the rank and file of party voters. "^
Final passage took four more days. Gloves were oflF and senatorial
courtesy frequently forgotten. Stung by Norris' sarcasm on announ-
THE UNDERWOOD-COOLIDGE COALITION 135
cing his position, Robinson said: "It is a serious and an important issue.
It cannot be disposed of by the acts of a buffoon in this body or else-
where. Ridicule is not argument. Sarcasm is not convincing to the
minds of men who think."
Senator Heflin was more severe. "He [Norris] had me marching
down the aisle with the genial Senator from Utah [Mr. Smoot]. I
hardly know whom I would select to march with the Senator from Neb-
raska. I know one man, but he is dead. He died in Russia. His
name was Lenin. If I had him here, I could yoke him up with the
Senator from Nebraska, and if old Lenin was not swift of foot the
Senator from Nebraska, in his headlong and mad rush into the very
vortex of socialism and bolshevism would knock off aU the footwear
Lenin had on in the march." ^^
Equally conservative Democrats were unmoved by such charges.
Oldest in point of service was Simmons of North Carolina, who made
three long speeches against the Underwood bill on the ground of
inadequate return on a property that would soon be "worth billions
of dollars in all probability." Simmons sought to "save the Congress
from such a colossal blunder." Senator Glass of Virginia, who had
been Secretary of the Treasury in the Wilson cabinet, said: "I think
the terms of the lease are utterly unreasonable and inadequate." And
again: "Somebody may know just exactly who will get possession of
this property and upon what terms, but the Senate does not." Hence,
he was for the Norris bill.
Norris had the last word and spoke with deepest emotion. "I reaHze,
Mr. President, that we are defeated. Personally I feel it very sincerely
and deeply .... I felt that before we voted finally on this proposition
I wanted to call attention, modestly and briefly, to the fact that the
bill that we are now passing [the Underwood-Coolidge measure] is
a power bill. There will be no fertilizer produced under it." He had
hoped that the matter would go over to the next session "and it might
be that in the meantime the great public would crystallize its senti-
ments in such a way and in such form that no Congress would dare
to take the resources of our Government and throw them into the lap
of monopoly."
The bill passed, 50 to 30. The tide was amended to read, "A bill
to provide for the national defense, for the production and manufacture
of fixed nitrogen, commercial fertilizer and other useful products for
other purposes," and it went on its way to the House of Representatives.
Longworth Takes Command. The victory of the coalition was costly.
Before the roll call, Norris charged that an "unseen power," meaning
136 THE CONSERVATION FIGHT
the White House, had changed ten RepubHcan votes, otherwise the
bill would have failed. The majority of the House members were
dissatisfied with the fertilizer provisions and resented administration
pressure. A minority whose spokesmen were LaGuardia of New York
and Hull of Iowa, both Republicans, resented its power provisions. A
repetition of the long Senate conflict, which the coaUtion had to prevent
or risk defeat, was in prospect. Strong-arm methods were invoked.
The bill was not sent to McKenzie's Military Affairs Committee but
remained on the Speaker s desk, a way of avoiding debate until the
close of the session when it could be jammed through without adequate
discussion— an ancient practice. After only four days, McKenzie
moved to disagree and send the bill to conference, but Nicholas
Longworth, Republican floor leader, intervened. Would his party
colleague postpone the matter a few days? He would. Whereat
Garner, Democrat of Texas, gibed, "Then I understand the leaders
have not come to a conclusion as to what is to go into the bill?'*
Longworth replied, "I think that is correct."
Ten days more went by and then suddenly Bertrand H. Snell, chair-
man of the Senate Rules Comittee, moved to send the bill to conference.
Democrats agreed with Republicans on this being "the only way to
get action at this session." They expressed their willingness to trust the
President to ensure fertilizer production. By the overwhelming vote
of 187 to 41, the resolution was concurred in and McKenzie, Morin,
and Quin were appointed as conferees. The debate was short and
proved to be the only one that the House members of this expiring
Congress were to enjoy. "
Norris, McNary, and Smith Are Excluded. When the House action
reached the Senate the following day, an incident occurred which again
disclosed the bitterness and intensity of the struggle. Millions of
dollars were at stake. For generations it had been an almost sac-
rosanct custom of the Senate to appoint as the members of a conference
committee the chairman and ranking members of the standing com-
mittee that handled a measure. In this case Senators Norris, McNary,
and Smith would have been chosen automatically. But Underwood,
to the astonishment of the Senate, moved that the Senate elect Keyes,
McKinley, and Harrison. Conservative Smoot at once inquired whether
this were not "an unusual" procedure. Underwood admitted as much
but held that he was within the rules and that, since Norris and the
others were not in sympathy with the bill as passed, members who
did approve should be the conferees. This rude violation of seniority
and precedent was taken as an insult to Norris. It implied he would
THE UNDERWOOD-COOLIDGE COALITION 137
not honestly represent the majority decisions in conference. Since
Norris was respected by all for his fairness and honesty, Senators
were reluctant to violate their time-honored precedent and offend
Norris, McNary, and Smith.
The situation was embarrassing. A long discussion took place.
Norris announced that he did not desire to serve as a conferee, "so
let us bust this old custom." And when McKellar moved that Norris,
McNary, and Smith be named as conferees, each of them announced
he would not serve if elected. But the Senate elected them nonetheless
by a vote of 35 to 33. All three promptly resigned. Capper and
Ransdell refused to serve, and Underwood finally won out with the
election of Keyes, McKinley, and Kendrick.
The Senate Rejects the Report. The conference committee rewrote
the Underwood bill in many particulars and inserted new matter that
was not in the measure as passed by the House or as passed by the
Senate. The evident intent was to make the terms more attractive
to a private lessee and lessen the chance of government operation.
The move was bold and risky since it violated, not a custom, but
Senate rule 27, which provides that if a conference committee inserts
matter in a report not contained in the bills committed to it the report
is subject to a point of order and must be sent back to conference.
Ironically enough, this rule, adopted in 1918, had been fathered by
Charles Curtis of Kansas when the Democrats were in power. Now,
as Republican floor leader, he was under pressure to disregard it and
did so. ''
It was now the Senate's turn to delay action. Although the con-
ference report was submitted on February 7, it was not taken up until
February 19, and then Underwood instantly called for a vote. But
Norris, equally alert, invoked Senate rule 27 and made a point of order
against it— and another merry-go-round was on. Norris cited several
instances of "new matter." For example, he pointed out that the
Underwood bill fixed the annual rental at four percent on the cost of
Dam No. 2 and its power facilities, but the conferees had inserted a
provision that no interest payments be made on the cost of the locks
at Dams No. 2 and No. 3 or on an additional amount to be determined
by the President as representing the development's value to navigation
improvement.
Norris said that under this provision the figure on which the company
would be compelled to pay four percent interest could be reduced
from $45 milHon to $28 milhon, to $10 milHon, or to nothing. "There
is no limitation upon the President's discretion .... it is possible that
138 THE CONSERVATION FIGHT
the lessee would not pay one cent." He insisted that the fertilizer
provision had been radically changed. The Ford ojBFer provided for
annual production of 40,000 tons of fixed nitrogen for the lease period.
The Underwood bill called for the same amount after six years. But
the conference bill extended this period to ten years and restored the
old joker that the lessee should manufacture the product "according
to demand." Beyond that, it authorized the President to substitute
the making of phosphoric acid "for not more than 25 percent of the
nitrogen production herein specified." To satisfy the pro-Ford mem-
bers, a section setting up a farm board to govern the marketing of
fertihzer which Underwood had omitted was restored to the bill, es-
sentially as contained in the Ford offer. The new matter, violating the
rule, was quite acceptable to the power companies. An able attorney,
Underwood admitted the presence of new matter but argued that it
came within the rule since it was "germane" to carrying out the general
purpose of the act. Senator Cummins, president pro tempore, sustained
Norris' point of order, remarking, "As viewed by the chair, the rule
has been violated." Underwood appealed the ruling to the members
of the Senate. This was on Friday, February 20, with only nine days
left of the session. Time was of the essence. Yet, debate continued
until February 23 when Cummins was sustained by the close vote of
45 to 41, and the bill was sent back to conference. "
Conferees Still Stubborn. Floor leader Longworth's admission to
Gamer that "the leaders" were deciding what was to go in the Muscle
Shoals bill turned out to be doubly true. The second conference
report complied somewhat v^dth the Senate's instruction, but the old,
basic objections were retained; Congress still forfeited its right to
approve or disapprove any lease the President might make; the right
to amend or repeal was still absent. Regulation of power rates and
service was still left under jurisdiction of state commissions. The
fertilizer provisions were still loosely drawn. In short, too much was
left to the President and the Army Engineers to determine to whom
and on what terms the Muscle Shoals project would be leased.
It was now Thursday, February 26. The Congress would expire on
the following Tuesday. The calendar was full, as usual. Norris told me
at the time that he had flatly warned Senator Curtis, Republican
floor leader, that if an attempt were made to railroad the Underwood
bill in the closing hours he would organize a filibuster which would
prevent the passage of important appropriation bills and other "must"
legislation. He reported that Curtis agreed that the bill was "not so
good" and he would not bring it up. Curtis doubtless remembered
THE UNDERWOOD-COOLIDGE COALITION 139
the LaFollette filibuster of 1919. The coalition surrendered. No
action was taken. Norris' vain hope had been unexpectedly fulfilled.
The Underwood-Coolidge bill died and another Congress passed into
history with the 20-year Muscle Shoals problem again unsolved. Con-
gress was still hostile to government operation, private capital was
unwilling to oflFer a reasonable return on the vast investment, and
trustworthy scientists would not guarantee that the farmers' fertilizer
bill could be cut in half by operating Nitrate Plant No. 2.
The House Requests Another Inquiry. After six years of committee
hearings and debates enough information had been collected to enable
Congress to solve this "vexatious problem," as the weary McKenzie
correctly termed it. But Representative Madden was not satisfied.
Two days before adjournment he offered a resolution requesting the
President to appoint a commission of three civilians to assemble in-
formation on "the best, cheapest and most available means" for the
production of nitrates "and to ascertain the most favorable conditions
under which this property may be leased . . . ." He also requested that
the commission advertise for bids and that its findings and recom-
mendations to the President be filed in December at the beginning
of the next session of Congress. After a short debate the resolution was
overwhelmingly adopted.
A Warning From The South, The last word on Muscle Shoals in this
Congress came from Representative WilHam B. OHver of Alabama.
The ideas of the smaU minority led by Norris for multipurpose govern-
mental development of the Tennessee were beginning to be taken seri-
ously in the south. Oliver declared, "No power company should be
permitted to exploit such a dam site for its own local, selfish pur-
poses .... No private lease should be approved unless it clearly pro-
mises a substantial reduction in the cost of commercial fertilizer to
farmers and reasonable rates to consumers as to any surplus electric
energy." Ohver also advocated control of the river from mouth to
source for all purposes in line with the engineering concepts of the
conservationists.
The Report of the Inquiry. The members of the Muscle Shoals
Inquiry exercised due diligence. The group's findings were presented
on December 7, 1925, to the 69th Congress— the third RepubHcan
Congress to attempt a solution of the Muscle Shoals problem by leasing
the project. Like its predecessors, the Congress was to fail.
President Coolidge's appointments to the board of inquiry, made on
March 26, 1925, are of interest. The appointees were:
As chairman, John C. McKenzie, militant sponsor in the House of
140 THE CONSERVATION FIGHT
the Ford ojBFer, long-time member and later chairman of the House
Military Affairs Committee. McKenzie had just retired as representa-
tive from Illinois.
Nathaniel B. Dial, Senator from South Carolina, who retired on
March 4th after supporting the Ford proposal and the Underwood
bill. In private life he was a banker and president of three power
companies.
R. F. Bower, who, as the Washington representative of the Ameri-
can Farm Bureau Federation, had studied all phases of the fertihzer
problem.
William McClellan, consulting engineer from New York, who in
1933 was to become president and director of the Potomac Electric
Power Company, Washington, D.C.
Harry A. Curtis, chemical engineer and professor of chemical engi-
neering at Yale University. In 1923-1924 Curtis was chief of a nitrogen
survey made by the United States Department of Commerce. His
report, "The Nitrogen Situation," had been made a Senate document
on the request of Senator Norris.
The inquiry board selected for its technologist W. C. Waldo, who
from 1916 to 1930 was consulting engineer for the Tennessee River
Improvement Association and had been the technical right arm of
Colonel Worthington in promoting the Underwood bill and the Wash-
bum and Ford offers. Here was a board of experienced, highly quali-
fied men famihar with every phase of the problem at stake. Much was
expected from them. All favored private operation. But ff anyone
anticipated the inquiry would come up with a satisfactory proposed
lease or a happy formula, he was quickly disillusioned. There were
majority and minority reports. This time the split came not between
liberals and conservatives, but between conservatives. Chairman
McKenzie expressed his regret to the President that he was "not able
to make a unanimous report." He hoped that the inquiry would be of
assistance in solving "this vexatious problem." The President sent the
report to Congress without a word of comment. "
There was unanimous agreement in the inquiry board that the entire
project should be leased. But "no private offer" had been received
"which we could recommend for acceptance." A majority, consisting
of McKenzie, Dial, and Bower, held to the old poHcy of a single lease
and would require that Nitrate Plant No. 2 be devoted to fertilizer
manufacture with the expectation that the operation would absorb
practically all of Wilson Dam's power. If that proved impossible, then
THE UNDERWOOD-COOLIDGE COALITION 141
Congress should ^provide for immediate operation by a government
cx)rporation."
Dr. Curtis and Engineer McClellan sharply disagreed. In a critical
minority report they emphasized that the nitrate plant was unfit for
cheap fertilizer production and that "under the plan of the majority
report the lessee could, and probably would, adopt chemical methods
of fertilizer production [by the cyanamid process] requiring little
power, and could then sell practically the whole output of power at
Muscle Shoals without restriction as to use, and at a great profit to
himself." Willing to give private enterprise another try at fertilizer,
they recommended the creation of "The Muscle Shoals Board" with
"all the power of Wilson Dam and the steam plant" to be held in reserve
for two years "for the purpose of manufacturing fertilizer utihzing the
equipment of Nitrate Plants No. 1 and No. 2." Any surplus power not
so taken must be sold to "appHcants who propose using it for the manu-
facture either of fertilizers or of electro-chemical and electric furnace
products of importance in national preparedness." This solution, they
thought, would meet the requirements of the Defense Act of 1916.
Evidently, Curtis and McClellan had little faith that the opportunities
thus proposed would be embraced, for they recommended a separate
lease for the power facihties which would yield the government four
percent on the fair value of the properties, estimated at $42 million.
When Senator Norris read the minority report he chuckled long and
loud. He, too, had insisted that power, not fertihzer, was the govern-
ing factor and that it was financial folly to commit the whole project
to fertilizer production.
CHAPTERXIV
STRENGTH OF THE POWER COMPANIES
Notwithstanding the failure of the inquiry commission to receive a
lease it could recommend, when the 69th Congress met and organized
for action on December 7, 1925, the Muscle Shoals controversy appeared
to be approaching a speedy solution. From the political viewpoint,
the time for negotiating a lease with private enterprise seemed pro-
pitious. The new Congress had been elected in November 1924
when President Coolidge won by an overwhelming majority. The
Republicans also had increased their majority in the Senate from 8
to 16 and in the House from 10 to 59. In addition, they could depend
on the customary support of conservative Democrats in respect of the
Muscle Shoals issue. Vice President Charles G. Dawes, presiding over
the Senate, was an extremely conservative Chicago banker. The
House had as its speaker Nicholas Longworth, son-in-law of President
Theodore Roosevelt. Longworth bitterly opposed adoption of section
124 of the National Defense Act of 1916 under which construction of
the shoals project was authorized.
Above all, just as President Wilson had assumed leadership in 1918
to break a deadlock and expedite the passage of a federal water power
act, so now President CooHdge took conamand determined, as he put it,
to "eflFect a sale to the highest bidder who would agree to carry out
these purposes," namely, for production of nitrogen and incidental
power. In this eflFort he had the support of his entire cabinet and not-
ably of his Secretary of Commerce, Herbert Hoover, who had been
active in aiding private electrical development. At the time Hoover
was chairman of the Northeastern Super Power Committee, composed
of federal oflBcials, and the chairman of the public utiHties commissions
of ten northeastern states. The purpose of the committee was to clear
the way for interconnecting all the private companies in these states
and thus secure to them the financial benefits of an integrated "super-
power system" extending from Boston to Washington. The plan in-
cluded the acquisition of large blocks of power from the proposed St.
Lawrence Seaway project which then had the support of the adminis-
tration since it was fully expected that the power companies would
inherit the power.^
The nation was recovering from the postwar depression, social
142
STRENGTH OF THE POWER COMPANIES 143
discontent was lessening, and the electrical and chemical industries
most interested in the Shoals were rapidly expanding. They had be-
come a political force of the first magnitude and were soHdly behind
the administration. The electrical industry was rapidly consolidating
and the sale of watered securities, an important factor in the stock
market crash of 1929, was in full swing. Although the Teapot Dome
scandal was still fresh in the pubHc mind, President Coolidge was not
held responsible for the scandals that had marred the administration
of President Harding.
The Difficulties. This promising outlook for disposing of the Ten-
nessee river plants again proved illusory. The Congress, in fact, re-
mained unchanged. The House Military Affairs Committee and the
House majority were still determined that no lease should be made
which did not guarantee full use of the plants for national defense and
fertilizer production. John M. Morin, the Pittsburgh businessman and
friend of labor, had now become chairman of the committee. Senator
Norris remained chairman of the Senate Committee on Agriculture
and Forestry during the first session. In the second session Norris
became chairman of the Judiciary Committee and Charles L. McNary
of Oregon, who shared Norris' views, succeeded him as chairman of
the Agriculture Committee. By common consent, Norris remained
as leader on Muscle Shoals matters. Although the Agriculture Com-
mittee acquired two new members, a majority were old veterans in
the conflict. It was soon evident that new proposals would fail of
approval if they contained the provisions that for six years had caused
the rejection of private bids. One of these provisions was low rental
for private exploitation of the hydroelectric power. The general public
had been dimly aware of the power's worth, but a demonstration was
then taking place which brought home to the common man, as a per-
sonal matter, its enormous cash value.
An Object Lesson From Wilson Dam. With 3 of its ultimate 18
generators installed, Wilson Dam had begun producing current on
September 12, 1925. The Alabama Power Company, which had sup-
plied power for construction of the project, owned the only transmis-
sion line connected with the plant and was the only customer available
to use such huge blocks of power. The War Department had no alter-
native but to sell at the company's proffered price. A contract was
signed which fixed the price at 2 mills per kilowatt hour, less than
half its commercial value; the company asserted that this was the cost
of its own production by steam. The government's power along with
its own current was then being retailed by the company to domestic
144 THE CONSERVATION FIGHT
consumers at an average price of 8.5 cents per kilowatt hour. The
company's overall average rate was more than 2 cents.
Citizens of Florence, Alabama, living within sight of the dam, were
paying a domestic rate of 10 cents per kilowatt hour or 50 times the
power cost to the company. This unique object lesson indicating ter-
rific profits was disconcerting to the entire electrical industry. BilHons
of securities were being sold based on the continuance of existing high
rates. Not only the Norris following but others heralded the news of
this Muscle Shoals example.
President Coolidge was too good a strategist not to realize the poHti-
cal importance of getting the "vexatious problem" of Muscle Shoals out
of the way at the earliest possible moment. The obstacles were real and
annoying but seemingly not insurmountable in view of the general
situation. The President assumed leadership in a bold attempt to end
the controversy quickly.
Coolidge Evaluates the Project. In his annual message read at the
opening of Congress on December 8, 1925, Coolidge included the
following paragraphs under the heading "Muscle Shoals'':
"The problem of Muscle Shoals seems to me to have assumed a place
out of all proportion to its real importance. It probably does not
represent in market value much more than a first class battleship, yet it
has been discussed in the Congress over a period of years and for
months at a time. It ought to be developed for the production of nitrates
primarily, and incidentally for power purposes. This would serve defen-
sive, agricultural and industrial purposes. I am in favor of disposing
of this property to meet these purposes. The findings of the special
commission will be transmitted to the Congress for their information.
I am convinced that the best possible disposition can be made by
direct authorization of the Congress. As a means of negotiation I
recommend the immediate appointment of a small joint special com-
mittee chosen from the appropriate general standing committees of
the House and Senate to receive bids, which when made should be
reported with recommendations as to acceptance, upon which a law
should be enacted, effecting a sale to the highest bidder who will agree
to carry out these purposes.
"If anything were needed to demonstrate the utmost utter incapacity
of the national government to deal directly with an industrial and com-
mercial problem, it has been provided by our experience with this
property. We have taxed everybody, but we are unable to secure
results which benefit anybody. This property ought to be transferred
STRENGTH OF THE POWER COMPANIES 145
to private management under conditions which will dedicate it to the
public purpose for which it was conceived/'
Mr. Coolidge evinced an iixitation and impatience unusual for him.
The remarkable thing was not his adherence to the old slogan "get
rid of Muscle Shoals" or even his recommendation that it be sold in-
stead of leased but his estimate of the value of the properties and the
absence of any indication of his awareness of the importance of the
Shoals in a comprehensive development of the Tennessee River Basin.
His comparison of the market value of the properties to that of a first-
class battleship was unfortunate for his cause. The most recent war-
ships that had been launched, equipped, and made fully ready for
battle, were the Colorado, which cost $26,981,007, and the West
Virginia, which cost $27,025,803. The amounts were mere scrap
value when compared with the government's investment of $150,000,000
for the Muscle Shoals plants. ^ The attempt to minimize the importance
of an expanding project, which Senator Howell had demonstrated
would yield a gross income of $22 million annually to private utilities,
did not impress the Congress.
The Snell Resolution. A month passed before Representative
Bertrand Snell, chairman of the House Rules Committee, reported on
January 6, 1926, House Concurrent Resolution 4, embodying the
President's suggestions. The resolution provided that a joint committee
of six be appointed to negotiate a lease of the nitrate and power pro-
perties at Muscle Shoals "for the production of nitrates primarily and
incidentally for power purposes, in order to serve national defense,
agriculture, and industrial purposes and upon terms which so far as
possible shall provide benefits to the government and to agriculture
equal to or greater than those set forth in H.R.518, 69th Congress, 1st
Session [the Ford offer] except that the lease shall be for a period not
to exceed 50 years." The committee was authorized to report a bill
containing a bid by April 1 which would be given a privileged status.
The filing date was later extended to April 26.
In urging passage Representative Snell made a brief speech in which
he warned that no prolonged discussion was desired. Muscle Shoals
was an old issue. Congress was tired of it. The President and the
farmers wanted action. Arguments on the merits of the issue could
be had on the bill recommended by the joint committee. Interestingly
enough, SneU, in private life a paper manufacturer and owner of a
power plant, stated that he personally believed power was the dominant
factor at Muscle Shoals, as did many others, "but that was neither here
nor there." All must yield to the present situation, he said. '
146 THE CONSERVATION FIGHT
The Military Affairs Committee was not permitted to hold hearings.
Speed was the word. Only 90 minutes were allowed for debate. The
bill was shot through the House by a vote of 248 to 27 and sent to the
Senate. Congressman Garrett of Tennessee, Almon of Alabama, and
other Democratic leaders joined Snell in urging passage. The only
objections came from LaGuardia of New York and Huddleston of
Alabama.
The Senate did not comply with the administration plan that the
Snell resolution be approved speedily and without amendment. It
was referred to McNary's Committee on Agriculture for consideration
along with other Muscle Shoals bills. It was amended and passed
some two months later, but during that time the attitude of the Senators
was one of intense apprehension. They recognized that Muscle Shoals
was still one of the most important subjects before Congress. CooHdge
had the votes in a showdown, but members realized they were handling
political dynamite.
Altliough the President had asked for immediate action, the House
Rules Committee took nearly a month to make its report indicating
the kind of solution desired. Rumors were flying that a deal had been
made. Rut with whom? The utilities? Heavy chemicals? Ford?
No one professed to know. Again, it soon became evident that the
Coolidge-Underwood coalition was still in operation. The Senator
was ill at his farm home 12 miles from the Capitol, but his Alabama
colleague, the voluble Heflin, took charge of the resolution in his
absence.
A Disconcerting Interlude. Apprehension was heightened by a bold
move on the part of the private companies. The Tennessee Electric
Power Company and the National Power and Light Company (a
subsidiary of the Electric Rond and Share Company of New York) had
organized the East Tennessee Development Company and on August
26, 1925, had applied to the Federal Power Commission for preliminary
permits to construct 11 dams on the Tennessee River from above
Chattanooga to the Cove Creek site where Norris Dam is now located.
On December 15 Major Harold C. Fiske, District Army Engineer in
charge of that region, held hearings. Rumors were insistent that the
plans of the company's engineers were likely to be approved.
Alarmed by this unexpected move, Norris, on January 4, introduced
Senate Joint Resolution 35, providing for suspension of the authority
of the Federal Power Commission to issue licenses on the Tennessee
River until such time as Congress had taken final action on Muscle
Shoals. A Senate Agriculture Committee hearing was called for
STRENGTH OF THE POWER COMPANIES 147
January 11, 1926. The reaction of political and economic interests
to this seemingly reasonable step was both drastic and forceful. Even
Norris was surprised: "I did not expect there would be anybody here."
Instead, a delegation of some 50 manufacturers, business and utihty
executives, and others appeared to protest. The objectors were led
by Mayor Richard Hardy of Chattanooga, who was accompanied by
several senators and representatives.
Norris explained that "a whole lot of permits would interfere*' with
government planning and construction if his bill for comprehensive
mouth-to-source government development (S.2147 introduced January
5) were adopted and that everything should be held in abeyance until
at least the disposition of Wilson Dam was determined. * Such a
policy did not satisfy the delegation. Several speakers vigorously
urged immediate construction of power dams on the upper Tennessee
to aid industrial expansion. They emphasized their opposition to
government ownership, urged private operation, and held that Norris
was proposing unnecessary delay and impeding progress. Senator L.
D. Tyson of Tennessee read a letter from his governor, Austin Peay,
which illustrated the states' rights attitude. Peay wrote, "We want
the permits issued on our sites as soon as possible. It is well known
that strong financial interests are asking those permits .... and what
Tennessee wants is the earliest possible development."
As to retail rates. Governor Peay assured the committee: "Our legis-
lature will provide whatever is necessary to protect the public interest
insofar as regulation is needed to insure reasonable charges for the
power and in any other respect. All we are asking of Congress is to
save us from its own interference. The present power act is sufficient
for all purposes." °
Major Fiske and J. A. Switzer, professor of hydraulic and sanitary
engineering at the University of Tennessee, were expert witnesses.
Both strongly approved the Norris concept of harnessing the entire
Tennessee River for all purposes but held it could be done by private
capital and that that the general plan of the Army Corps of Engineers
would not be interfered with if the pending permits on the upper
Tennessee were granted — the Federal Power Commission would be
in control. ' In opposing the Norris resolution the major was not
speaking out of turn. As he testified a letter expressing the same view
lay on the chairman's table from the Federal Power Conmiission signed
by Dwight F. Davis, chairman. Secretary of War; Hubert Work, Sec-
retary of the Interior, and Secretary of Agriculture W. M. Jardine. The
letter stated, in effect, that adoption of the Norris resolution "would
148 THE CONSERVATION FIGHT
be distinctly detrimental to the interests of the United States as re-
presented in its power development at Muscle Shoals .... We recom-
mend that it not be passed."
A Joint Leasing Committee Is Created. The administration won and
so did Norris. His resolution was not reported, but the Federal Power
Commission issued no permits. This incident over, the committee gave
two days to the Snell resolution and approved it, 11 to 5. It was
reported not by McNary or Norris but by Heflin, February 3, without
change or recommendation. Beginning on March 1, the Senate floor
battle on the Snell resolution continued for a whole week. Its sup-
porters, with Heflin leading the fight, and aided by Bruce of Maryland
and Harrison of Mississippi, offered no new evidence and contented
themselves with emphasizing the administrations desire for speed.
They were troubled, however, by the opposition's steady barrage,
voiced forcefully by Howell, that the big private bidders all looked
upon Muscle Shoals as primarily a power project, that the attempt
to make it a fertilizer proposition was a hoax, and that anybody, who
sincerely believed such a claim was misled.
The opposition declined to be restrained. McKellar and Cotton Ed
Smith, who had supported the Ford offer, abandoned hope of receiving
a satisfactory offer and introduced individual bills for government
operation. Even George, of Georgia, dubbed the present move as a
utiHty "grab."
Angered, Heflin heatedly declared that such assertions were untrue
and that the power and fertilizer trusts were opposed to the Snell re-
solution. Pausing, he observed that Senators McKellar and Smith
appeared to be amused by these statements. Both Senators smihngly
responded, "We are." On March 14, 1926, the Snell resolution finally
passed. A committee was named to negotiate a lease for the Shoals
project. Vice President Dawes* appointments were freshman Sena-
tor Charles S. Deneen of Chicago, Senators Sackett of Kentucky
and Heflin of Alabama. Speaker Longworth named John M. Morin of
Pennsylvania, W. Frank James of Michigan, and Percy E. Quin of
Mississippi.
The Committee Organizes for Action. The activities of the joint
committee constitute a significant part of our history since this was
the most strenuous and final effort of the Harding-Coolidge administra-
tions to reverse the Wilson poHcy of government operation and transfer
the Muscle Shoals project to private management. It again spotlights
the political impasse that scientific and conservation necessities had
brought about.
STRENGTH OF THE POWER COMPANIES 149
The committee met promptly and organized on March 15, 1926, with
Senator Deneen as chairman and Representative James as vice chair-
man. Having but a short time to fulfill the enormously important and
meticulous assignment of negotiating a private lease or leases, it held
closed sessions and thereby earned for itseK much imjust cricitism for
''secrecy." It sent out calls by telegram and letter to 53 utihty and
manufacturing concerns; April 10 was the deadline set for reception
of bids. A few days were spent with experts— including army engineers
and the veteran J. W. Worthington of the Tennessee River Improve-
ment Association — in studying the Ford oflFer (H.R.518) to establish
standards by which to judge bids.
Secretary Hoover Lends His Aid. On March 27th, members of
the Federal Power Commission and Secretary of War Davis, Secretary
of Interior Work, Secretary of Agriculture Jardine, and Secretary of
Commerce Herbert Hoover were summoned into conference. Hoover
was evidently the most competent to give advice, not only as a cabinet
officer but as a mining engineer. He had become deeply interested
in the progress of the electrical industry. In addition to serving as
chairman of the Northeastern Super Power Committee, he had been for
several years the outstanding speaker at the annual conventions of the
National Electric Light Association and allied groups.
The record reveals that the expressions of fact and opinion at this
closed conference were refreshingly frank. The difficulty if not the
impossibility of obtaining a single bidder to undertake both fertiHzer
and power production, as defined, was admitted by all four secretaries.
The upshot of the entire discussion was that if quantity manufacture
of fertilizer was to take precedence it must be heavily subsidized.
Secretary Jardine insisted that the hope for cheap fertilizer lay in
supplying it to farmers in "concentrated form"; one reason was high
freight rates. He was blunt: "The private concerns will not do it. If
it is done it will have to be done by the Government." He thought,
however, that "if the power companies want it under your scheme they
should be required to give enough power to guarantee the manufacture
of fertiHzer." He meant subsidizing fertilizer. ' Secretary Hoover
remarked, "Under this plan they could not only give power for nothing
but they could give power with a bonus." He estimated that "the
plant as it stands today is worth to any lessee as a power business not
less than $2,500,000 a year net to the Government and as a result of
development of the upper river it might be worth a million more."
He said, "None of these bids have given the government any benefit
whatever of that great increase that is going to come sooner or later."
150 THE CONSERVATION FIGHT
Replying to a query from Representative James concerning Major
Bums' testimony that in five years Nitrate Plant No. 2 would not be
needed for v^ar preparedness, Secretary of War Davis said: "That is
the feeling in the Ordnance Department. I have talked with General
Williams along the same lines." ^
An Advisory Board Is Created. Chairman Deneen asked for techni-
cal help in evaluating bids. Secretary Hoover, who had most to say
and clearly directed the course of the conference, suggested the crea-
tion of an advisory board composed of experts in the four departments.
On his recommendation, the following were appointed: Brigadier
General Edgar Jadwin, assistant chief of engineers. United States
Army; Paul S. Clapp, Secretary Hoovers assistant on power and utiUty
matters; Dr. S. C. Lind, associate director of the Fixed Nitrogen Re-
search Laboratory; Dr. F. C. Cottrell, Director of the Laboratory;
and C. A. Bissell, representing the Bureau of Reclamation, Department
of Interior. In addition, five army engineers were called on to aid the
advisory board. "
Thus organized, the joint committee settled down to work. By
noon of April 10, the hour set for receipt of proposals, ten bids had been
received. Only three came within hailing distance of the stipulations
of the Snell resolution. One from the 13 newly organized Associated
Power Companies of the South, one from the American Cyanamid
Company through its subsidiary, the Air Nitrates Corporation, and
the third from the Union Carbide Company. All of the companies
were apparently in strong competition with each other. The electric
utihties won the contest to the astonishment of the fertilizer contingent
in Congress. For three years they occupied the center of the stage
as Ford had monopolized it up to that time.
Power Companies Enter the Arena. A clear understanding of the
nature and impact of the Associated Power Companies requires a
review of previous efforts of the private utilities to acquire Muscle
Shoals, noted only briefly heretofore.
The 1926 bid was the third effort made by the Alabama Power
Company and its allies to lease the Shoals since Secretary Weeks had
called for bids in April 1921. The refusal of the companies to make
an offer and their gratuitous advice that construction of Wilson Dam
should be abandoned because neither private capital nor the govern-
ment could afford to complete it had been a tactical blunder. The
unexpected bid by Ford had forced then to execute a swift right about-
face and make competing bids.
The first of these offers had been made on February 15, 1922, by
STRENGTH OF THE POWER COMPANIES 151
the Alabama Power Company, which since 1906 had urged gOA^'em-
ment development of Muscle Shoals for navigation with itself as a
partner to secure the power.
The governing terms of this first bid in competition with Ford were
as follows:
The company would finance the completion of Wilson Dam at an
estimated cost of $26,354,000 on which the government had already
spent $17,000,000. It would purchase for $5,000,000 in five annual
payments the Warrior steam plant, the steam plant at Nitrate Plant
No. 2, and other power facilities. As to fertilizer, it would furnish free
100,000 horsepower of "secondary" power estimated to be available
82 percent of the time for fertiHzer production at Nitrate Plant No. 2.^°
The second attempt was made two years later during the first session
of the 68th Congress. On January 15, 1924, a few days before the
House Military Affairs Committee was about to report favorably on
the Ford offer. Secretary Weeks received a more liberal proposal. This
time it came in the form of a joint bid from the Memphis: Power
and Light Company, the Alabama Power Company and the Tennessee
Electric Power Company, which served Chattanooga and several other
municipalities in Tennessee. Together with other companies not
named, they proposed to form a corporation with a capitahzation of
$10 milhon to lease for 50 years under the Federal Water Power Act
the steam plant and Wilson Dam when they were completed. The
corporation would pay annual rentals of $300,000 for the first seven
years; $1,500,000 for the next four years, and $2,000,000 annually there-
after. Should Dam No. 3 be constructed, the company would lease
it on similar terms. Also it was agreed to create a fund of $1 million
to be "used in electrochemical research in the interest of agriculture
and national defense," controlled by governmental departments. The
corporation would also agree to supply at actual cost up to 60,000
horsepower of energy to be used solely in the manufacture of fertiHzer.
The three companies amended their offer nine days after filing it
by agreeing to organize a $5 million corporation to make fertilizer at
eight percent profit. This company would lease the nitrate plants for
50 years. Power would be supplied at cost and, after a preliminary
period the corporation would "produce annually fertilizers which con-
tain 50,000 tons of fixed nitrogen as rapidly as there may be a com-
mercial demand therefor at the prices herein provided for; such ferti-
lizers to be in the form of ammonium phosphate, ammonium sulphate
or other concentrated nitrogen fertilizers." "
The Tour de Force of 1926. The proposals made to the joint commit-
152 THE CONSERVATION FIGHT
tee by the 13 Associated Power Companies in a virtual tour de force to
gain possession of Muscle Shoals properties were the third power
company bid. Concurrently, the same interests were applying for
licenses on headwater power sites. If both efforts were successful,
it would have given private power interests control of the entire river
from below the Shoals to its headwaters.
To impress on Congress the character and force of this drive and
who was behind it. Senator Norris had inserted in the record and placed
on the wall of the Senate a chart prepared for him by Marion H.
Hedges, research director of the International Brotherhood of Electri-
cal Workers. The charts showed all but one of the associates were,
through the holding company system, ultimately controlled by the
Electric Bond and Share Company of New York and, in turn, by the
General Electric Company.
At the conclusion of its labors the joint committee had before it two
bids from which to choose, both of which had been revised during
the negotiations: — the bid of the Cyanamid Air Nitrates Corporation
and the bid of the Associated Power Companies. After considerable
bargaining, the latter was recommended for acceptance by a majority
of the committee. ^
Terms of the Associated Bid. The Associated Power Companies had,
under Florida laws, organized two companies that would lease the
Muscle Shoals properties for 50 years: the Muscle Shoals Fertilizer
Company (Louis C. Jones, vice president) and the Muscle Shoals
Power Distributing Company (Thomas W. Martin, president). The
power company would own the common stock and control the fertilizer
company.
The fertilizer company agreed to lease both nitrate plants at an
annual rental of $1,000 and at its own expense to make additions there-
to and construct facilities adapted to the production of fixed nitrogen
by the synthetic ammonia process as well as to the production of
phosphoric acid and other ingredients necessary to a balanced ferti-
Hzer. Capital up to $20 miUion would be advanced by the power
company. A farm board similar to the one set up in the Ford offer
would have certain powers over production and sale. Profits likewise
would be limited to eight percent. Within two years from date of lease
it would produce concentrated fertilizer containing 5,000 tons of fixed
nitrogen. After that, in response to market demand, it would install
more units and increase production from time to time up to the total
capacity of Plant No. 2, 40,000 tons of fixed nitrogen for the remainder
of the lease period. The company was given preferred rights to use
STRENGTH OF THE POWER COMPANIES 153
of needed power. The price would be fixed by the Secretary of
Agriculture. However, if and whenever fertihzer containing in excess
of 5,000 tons of nitrogen remained in storage unsold, further manufac-
ture would be suspended until such excess was sold. In any case there
would be no forfeiture of the control of power.
The Muscle Shoals Power Distributing Company would agree to
lease the existing power properties under the terms of the Federal
Water Power Act and would pay the following rentals: $300,000 a year
for the first 6 years, $1,200,000 annually for the next 6 years, $1,500,000
a year for the next 6 years, and $2,000,000 a year for the remaining 32
years. If the United States should elect to construct Dam No. 3, the
company would lease the power. If in addition it should elect to
construct Cove Creek Dam and other headwater storage dams, the
company would lease the power and also pay for the additional capa-
city these dams would add to Dam No. 2 at the rate of $20 per horse-
power but not to exceed $1,200,000. Operation of the dams for navi-
gation would be regulated by the Secretary of War. Securities issued
would be regulated by the Federal Power Commission but electric
rates to consumers would be regulated by state commissions.
The Competing Bids. The Cyanamid Company-Nitrate Corporation
bid was comphcated. As a prerequisite to fertihzer manufacture, the
government was required to equip Wilson Dam to full power produc-
tion (adding 10 generating units to the 8 installed), construct Dam
No. 3 with an installed capacity of 200,000 horsepower, and connect
the two with a transmission Hne. In addition the government would
direct the Federal Power Commission to issue to the company 50-year
licenses for Cove Creek and other dam sites. The company would
pay the government four percent on its investment and $55,000 annual-
ly for maintenance and repair of the dams.
The company agreed to install machinery in Nitrate Plant No. 2
to manufacture a plant food called Ammo-Phos and by the third year
offer for sale a quantity of the production containing 10,000 tons of
nitrogen. If and when the corporation "succeeded in seUing the full
production of this first unit through three successive years then the
corporation would progressively install other units up to 40,000 tons
of nitrogen" and beyond that if the sales warranted. The Cyanamid
Company would guarantee air nitrates production. A farm board
was provided as in the Ford offer. Surplus power not used at Muscle
Shoals would be disposed of by the lessee for the "purpose of distribu-
tion" under federal and state laws. (This provision was vague.)
Suspension of fertilizer production would not forfeit the power lease.
154 THE CONSERVATION FIGHT
The Joint Committee Reports. The joint committee reported April
26, 1926, as instructed. Like the inquiry board, it was divided in opin-
ion. A majority report recommending the Associated bid was signed
by Chairman Deneen, Sackett, Morin, and Quin. Heflin did not sign.
Vice Chairman James filed a minority report. DupHcate bills for
acceptance of the Associated bid were introduced by Deneen in the
Senate (S.4106) and by Morin in the House (H.R.11602) directing
the Secretary of War to execute leases.
Reception accorded these bills was from the start tantamount to a
rejection by both chambers. In the House it was referred to the Com-
mittee of the Whole and went on the calendar, where it died. It was
never debated. On June 21 Representative Almon of Alabama was
given 15 minutes to explain his opposition. That was all. "^
In the Senate Deneen failed to get immediate action on his bill.
When it came up three weeks later on May 18, 1926, several senators
called out, "Let the bill go over," and over it went to the second session
in December. On December 13, early in the session, Deneen again
sought action and the Senate again declined to consider. McNary had
let it be known that he would move to refer the bill to the Committee
on Agriculture of which he had just become chairman. His motion
would prevail, so why waste time? But the Senate acceded to
Deneen's request to deliver his prepared speech, and Sackett followed
with a short dissenting address. No discussion. The chamber turned
to other matters. ^*
Minority Views of Mr. James. Manifestly, the White House had
collided with a brick wall. Hostility had mounted since adjournment
while nationwide discussion had been in progress. The reasons were
evident. At the outset a majority of the House, committed to fertilizer
production, was disappointed. Members wanted to know why a
Coolidge commission directed to consider fertilizer first and power
generation as "incidental" had permitted the power companies to win.
Vice Chairman James informed them in a minority report. He was
believed because he was respected for his integrity^ courage, and
knowledge of the subject since he had been a member of the Military
Affairs Committee for ten years and was perhaps the most earnest
student of the question.
In the most sensational document that had appeared since Norris'
denunciation of the Ford bid, James charged improper collusion be-
tween the power companies and the advisory board while the joint
committee was attempting to negotiate a lease. This was accompani-
ed by a sarcastic review of the history of Alabama Power Company's
STRENGTH OF THE POWER COMPANIES 155
dealings with the government on Muscle Shoals. He captioned the
section, "Ways That Are Dark and Tricks That Are Vain." As to secret
team play, he wrote: "I have heard of 'grapevine diplomacy but never
knew how effective it was until I served as a member of the Joint
Committee If the advisory board on a certain day had decided
to report to us that a certain flaw had been found in the power com-
panies' bid, 'mental telepathy' conveyed the idea to the power com-
panies so that they always had the necessary changes sent in (cor-
recting such flaws) even before the advisory board had been able to
place the proposed changes before us.'*
Quite as disturbing because of its political import to members up
for reelection was James' disclosure that two Washington representa-
tives of the American Farm Bureau Federation had appeared before
the committee, made virtually the same charges, and expressed their
"indignation" at the possibility that the Associated bid might be accept-
ed.^^
James charged that vital provisions of the measure were deceptive.
There was no guarantee of fertilizer production as professed. The
national defense pretension was a mockery. There was no forfeiture
of the lease if fertilizer manufacture was abandoned. The return on
investment was inadequate. He concluded: "Furthermore, the people
of the country can now understand that the Power Trust, which is now
in charge at Muscle Shoals and now operating our power plants there,
is really in control of the situation. When the people ask us just when
we are going to use our property to free the country from its depen-
dence upon Chile for nitrates, and when we are really going to have
some cheaper fertilizer made at Muscle Shoals for the farmers, as we
promised them for the past ten years, we can only reply, *Not till the
Power Trust permits us to do so.' " "
More Surprises. When the hearings were pubHshed later it was
found that on April 10, the day set for closing bids, the president of
the Union Carbide Company had appeared before a closed session of
tlie joint committee and recommended the acceptance of the bid of
the Associated Power Companies, his supposed rival. He explained
to a surprised committee that an agreement had been reached whereby
if Associated were successful it would sell power to Carbide for its
use in large chemical plants to be built at Muscle Shoals. But if As-
sociated failed, Carbide would press for the acceptance of its offer.
The exact terms of this deal were not disclosed until two months later,
when, on June 21, Deneen submitted the documents in comphance
with a resolution introduced by McKellar. They showed that Carbide
156 THE CONSERVATION FIGHT
was to get up to 50,000 horsepower of primary energy at $17 per horse-
power, and a grant of land for its plants. In turn, Carbide would aid
Cyanamid with the use of its patents and technical staff. "
It was also revealed that Associated had pledged upwards of $5
million for fertilizer experimentation and forfeiture of the power lease
if the company failed or ceased making fertilizer. But neither of these
items were mentioned in the biU.
The Senate Buries the Bid. No action was taken by the Senate until
February 25, 1927, six days before adjournment, when Chairman
McNary made a motion to have the Associated bill referred to his
Committee on Agriculture. The brief debate that followed is note-
worthy only because of statements made by Deneen and Sackett.
Deneen was now in a most embarrassing position in respect to the
joint committee. Sackett was advising rejection. Heflin was support-
ing the Cyanamid offer. James was fighting him, and Morin and Quin
were eloquently silent.
In evident self-defense, Deneen laid responsibility for the situation
squarely on the White House doorstep, assuring the Senate that **the
Joint Committee did not vary a hair s breadth from the recommenda-
tions made by the Advisory Board of disinterested experts, supervised
by the secretaries named. The Joint Committee followed the govern-
ment; so we have back of the judgment of this committee the judgment
of the experts on the Advisory Board and their associates, who foUowed
the testimony, analyzed it for the Joint Committee, and discussed the
bids fully with the Joint Committee as a whole and with its individual
members." ^^
Deneen's frank admission did more harm than good to the utilities'
proposals. It served to confirm James' charges that the terms of the
Deneen bill were influenced by the Army Engineers and, by inference,
by Secretary Hoover who had suggested the creation of the advisory
board, and whose assistant, Paul Clapp, had taken a prominent part
in its activities.
Sackett pointed out that under the lease the grand total the company
would pay for power would be only $83,800,000 for 50 years. It was
worth much more. He was opposed to the bill and wanted to give
the joint committee another chance. Underwood wanted to amend
the bill. He cried out, "If the bill goes back to the committee it is
dead. It is not only dead but the earth is poured on the grave."
McNary won, 49 to 35. The bill was "sent back," and it expired
along v^dth the demise of the joint committee. Thirty-two Repubhcans,
STRENGTH OF THE POWER COMPANIES 157
16 Democrats, and 1 Fanner Laborite voted for burial; 13 Republicans
and 22 Democrats voted against it.
President Coolidge thus failed to get early disposal of Muscle Shoals
by his own party. Congressman James had spoken truly when he had
written in his minority report: "If they [the private utilities] believe
that there is any chance of this oflFer passing Congress they must agree
with Bamum that *One is bom every minute.' "
CHAPTER XV
THE CHEMICAL BARRAGE
Following the 1926 rejection of the Associated Power Companies'
bid for Muscle Shoals, even though recommended by President
Coolidge's joint committee, Associated's chief competitor, the Ameri-
can Cyanamid Company, made a dramatic effort to gain acceptance
of its proposal. American Cyanamid had sought possession of the
shoals' hydroelectric power ever since 1906. The company had built
Nitrate Plant No. 2 in 1918 as a government war plant. The work had
been performed under die dynamic leadership of its founder and
president, Frank S. Washburn, who died in 1922 at the age of 62, dis-
appointed over his failure to obtain a peacetime lease and fulfill his
life-long dream of founding an electrochemical empire on the Ten-
nessee River. His successor, William B. Bell, a forceful and able at-
torney, vice president of the company and former counsel to the Duke
interests, renewed the effort before the joint committee in 1926 in
association with the Union Carbide Company. It was agreed that
Union Carbide would receive a large block of power and land for its
own purposes. The combined assets of the two giant concerns then
totaled many millions, controlling many subsidiaries and marketing
some thousands of different chemical and electrochemical products.
To them the shoals was a prize of the first magnitude.
At the start, Bell's chances of success appeared promising. President
Coolidge, irritated by delay, was extremely anxious to dispose of the
properties. The American Farm Bureau Federation stood ready to
battle with him and had influence at the White House. BeU's offer
also had the support of the Tennessee River Improvement Association,
headed by a powerful political figure, Claudius H. Huston. Bell
soon let it be known that his chief counsel on constitutional matters
in drafting his bill was Charles Evans Hughes, who in 1916 had re-
signed as Associate Justice of the Supreme Court to become Republi-
can nominee for the Presidency.
A revised draft of the Cyanamid proposal was introduced on January
27, 1927, by the brilliant senator, Frank B. Wilhs of Ohio, and in the
House by Martin B. Madden, Republican of Illinois, popular and in-
fluential chairman of the Appropriations Committee, close adviser to
158
THE CHEMICAL BARRAGE 159
the President, and a top leader in his party. (The bills were S. 2786
and H.R. 8305.)
Provisions of the Bill. The Willis-Madden bill did not authorize
an outside agency to negotiate a lease but was drafted as an actual
contract between the Secretary of War for the United States and the
American Cyanamid Company and its subsidiary, the Air Nitrates
Corporation. It provided a fifty-year lease of all existing properties
except navigation locks. The government was required to equip
Wilson Dam to full power capacity, construct Dam No. 3 and the Cove
Creek Dam likewise to full power capacity, and connect the three with
high tension transmission hues.
In retm-n the company would pay four percent interest on the
government's investment plus $55,000 annually for maintenance. The
company would also provide a sinking fund, which when reinvested
by the government at compound interest would return to the United
States in cash the entire investment at the end of 100 years. The
controversial Nitrate Plant No. 2 would be remodeled for the manufac-
ture of Ammo-Phos, the new plant food. Within three years a sufficient
quantity would be made to contain 10,000 tons of nitrogen. After
that, if sales justified the corporation would progressively install other
units to produce 40,000 tons of nitrogen or more annually. Profits
were hmited to eight percent. A farm board was set up as in the Ford
offer. All surplus power not needed for fertilizer purposes could be
utilized by the corporation for making its own products or sold to
utilities or others at its discretion.
It will be noted at once that the two basic guarantees, the lack of
which had helped defeat all previous bids, were not included — full
continuous production of fertilizer and surrender of the lease promptly
if and when discontinued. The House committee held extensive hear-
ings on the bill in a strenuous effort to close a lease before the expira-
tion of the 69th Congress. It virtually pleaded with Bell to agree to sur-
render the lease if the manufacture of fertilizer was discontinued, but
in vain. The offer went over to the next Congress.
The Slemp Bill — Final Hoodwink. Concurrently with hearings on
the Cyanamid Company bid, B. Bascom Slemp, a Washington lawyer
who had just resigned as secretary to President Coolidge, and Augustus
O. Stanley, ex-governor and former Senator from Kentucky, appeared
before the House Military Affairs Committee in behaff of a bill that
received widespread publicity and created a temporary sensation.
Introduced by Representative B. Carroll Reece of Tennessee H.R.
16396 embodied the proposal of the recently formed Farmers' Federated
160 THE CONSERVATION FIGHT
Fertilizer Coiporation, which sought a 50-year lease of the Muscle
Shoals project. For obvious reasons, the bill was promptly dubbed
the Slemp Bill. Congress and the pubHc were informed that a group
of farmers and farm organizations, disgusted over the delay caused
by "poHtics," had come upon the scene determined to get prompt
action. Given a lease, they would, as the publicity proclaimed, make
and sell fertilizer at cost, pay more rentals for the power than any bid
yet made, amortize the entire investment, reheve Congress of making
any further appropriations.
The skeptical committee, however, soon discovered that the federa-
tion was composed solely of three ex-Secretaries of Agriculture from
the states of Kentucky, Ohio, and Kansas, who owned farms but were
not "dirt farmers." The real backers were Ellis L. PhilHps and G. W.
Olmstead, consulting engineers of New York City. Refreshingly
frank, Phillips testified that he was 15 times a millionaire and an official
of several power companies. He would finance the scheme by selling
stock— $30 million worth or more, deriving his profits from the manu-
facture of unnamed byproducts and the sale of surplus power. If
the fertilizer venture proved unprofitable, he would quit but would
not forfeit the power lease. He would sell his fertilizer wholesale at
cost to a farm board, which must shoulder the responsibiHty of re-
tailing to farmers. Amortization of the $130 million investment was
also transferred to the farm board, which during the 50-year lease
period would pay into the United States Treasury annually a sum
which would more than liquidate the investment at the end of 100
years. The committee spent a good deal of time in analyzing these
and other ridiculous features of the bill, which were rejected and
given no further consideration. It was an absurd and self -revealing
attempt to hoodwink Congress and the country and was an appropriate
anticlimax to years of negotiation."^
A Wearied Committee Warns Bidders. At this point the attitude
of the Military Affairs Committee underwent a radical change that
constituted an important landmark in the history of Muscle Shoals.
After listening patiently to PhiUips and Bell and finding the usual
loopholes in their bids, the committee decHned to waste further time,
yet was hopeful of obtaining a private lease. On February 2, 1927, a
subcommittee, with Mr. James as chairman, was authorized to negoti-
ate with applicants and ascertain if they would agree to certain
specified conditions. If not, the subcommittee was directed to reject
the bids and recommend future action.
The conditions were that the government should remain in absolute
THE CHEMICAL BARRAGE 161
control of the entire project for defense purposes and that Nitrate
Plant No. 2 would be kept in good condition; that a lessee should make
and sell fertilizer in peacetime; that the entire project would be leased
as a unit; that if fertilizer remained unsold the lessee could temporarily
discontinue its manufacture but give profits from power to the govern-
ment until fertilizer production was resumed; and that the power
lease would be forfeited upon failure to produce 40,000 tons of nitrates
a year.
These directives were followed by James but to no avail. The sub-
committee report was unanimous in rejecting the PhiUips and Bell
bids. This action was reported to the House on March 3, 1927, by
James, who also presented two committee recommendations. First,
the committee wanted the Federal Power Commission advised that
no preliminary permits should be issued to private capital at Cove
Creek or other points on the river until after the expiration of the
next session of Congress. "Were the Federal Power Commission to
grant a preliminary permit at Cove Creek it would in my opinion
absolutely prevent us from getting any kind of acceptable bid from
any private bidder," James told the House. "More than that, if the
United States had to operate Muscle Shoals itself it would be seriously
handicapped if it did not ovsoi Cove Creek Dam."
Secondly, the committee proposed to wait until the 70th Congress
met in December and if an acceptable bid had not then been received
*'this committee should give the matter of operation at Muscle Shoals
by a Government corporation full and careful consideration." To this
James added: "Private bidders do not seem to understand that our
committee cannot be fooled into reporting out a bill which only pre-
tends to carry out the intention of the National Defense Act and in
reaHty makes Muscle Shoals a power proposition." ^
The Cyanamid Drive Persists. The new Congress— the 70th— met
and organized December 5, 1927. The Republicans were in control
with reduced majorities. The committees in charge of Muscle Shoals
showed Httle change. No new proposals to lease the project had been
received. The May warning had been ignored. The House Military
Affairs Committee prepared for the next act in the drama — "full and
careful consideration" of government operation. The Senate had
already done so.
Cyanamid's forces were not through and were still hopeful. The
professional lobby was discredited, but since adjournment in May the
powerful American Farm Bureau Federation had been conducting
a nationwide campaign on their behalf. Some 15,000 newspapers and
162 THE CONSERVATION FIGHT
magazines of various kinds were notified that a postcard request
would bring, without cost, a series of illustrated articles telling the
truth about the Cyanamid offer. Senator Willis and Representative
Madden had again introduced their bills (S. 2786 and H.R. 8305).
The fireworks shifted from the House to the Senate.
Senator Willis Explodes. When the Senate Committee on Agriculture
( McNary of Oregon was now chairman ) met on January 24, 1928, to
consider Muscle Shoals legislation. Senator Willis appeared, without
invitation, and in a 4 minute talk literally read the riot act to his col-
leagues. Delay on the question had become "little short of a national
scandal," he heatedly told them. The cyanamid process was not
obsolete and, no matter what the committee thought, he wanted his
bill considered and the Muscle Shoals question settied at this session
of Congress. Declining to answer questions, he stormed out, but an
undisturbed committee smiled at this unusual breach of senatorial
coiutesy. The gentleman from Ohio was an active candidate for the
presidency and the farm vote was important.
The appearance of Chester Gray, Washington representative of the
Farm Bureau Federation, touched off a senational encounter with
Norris, which, in its effect on Congress and the public, nearly equalled
Representative James' blast at the Associated Power Companies' offer
in the preceding Congress. Norris charged that the Cyanamid bid was
a power grab in disguise and that Gray in his testimony and his news
releases had not told the whole truth. Gray vigorously denied this.
Then he was challenged by Norris as to whether either he or the
Cyanamid Company, if granted a 50-year lease free, without rentals,
without taxes, and supplied with power at cost, would agree to produce
fertilizer at Plant No. 2. Gray retorted that the proposition was absiurd.
The usually mild Norris was plainly angered. So was Gray.
Norris demanded to know how much the propaganda drive for
Cyanamid was costing the Federation? Gray did not know; but
countered by asking how much the propaganda for the Norris bill was
costing? The Senator retorted that he had spent five or six thousand
dollars of his own money. "Who pays your bills?" asked Norris. "A
local agency which prints and distributes our releases and the Farm
Bureau 'cooperatively,' " was the reply. That was all Norris was able
to discover.
Two years later a Senate lobby investigation disclosed that the
Cyanamid Company and Union Carbide had jointly footed the Farm
Bureau bills to the extent of $7,000. Further, Gray admitted that it
THE CHEMICAL BARRAGE 163
was the custom of the federation to permit private interests "when
going our way" to finance such propaganda ventures. °
The committee took no more testimony on the Wilhs bill, briefly
reviewed the Norris compromise bill for pubHc operation which it had
reported favorably to the previous Congress and approved it again.
The companion Madden bill met the same fate in the House. In a
floor speech on May 9, 1928, Representative James explained why the
Military Affairs Committee finally declined to recommend it. From
this speech it appears that the committee was so hostile to government
operation that it was willing to grant Bell's power demands provided
he would undertake quantity fertilizer production and agree to return
the power facilities to the government if he failed.
The Congressman related at length the efforts of Madden and him-
self over many months to induce Bell to include a satisfactory recapture
clause. When Bell finally refused. Madden withdrew his support of
his own bill. Announcement that the outstanding proponent in the
House of a private lease had turned against the plan he once sponsored,
when he became convinced it was a disguised power grab, helps to
explain why the House turned to government operation. *
Why the Cyanamid Offer Was Rejected. While lack of a recapture
provision was the over-riding cause of the House rejection of the
Cyanamid offer, there were other provisions so grave that Norris de-
clared: "It would be the greatest donation, the greatest subsidy by
the government of the United States that has ever been given to any
individual or any corporation .... In my opinion it is absolutely the
worst bid of any that has ever been made from the standpoint of our
government." °
This opinion was based on a factual analysis of the bid by O. C.
Merrill, executive secretary of the Federal Power Commission, whose
statistics in such cases were seldom challenged and who was com-
mended by Senator Norris on the floor for his fairness and accuracy.
A comparison of Merrill's expert analysis and of the arguments advan-
ced for acceptance of the bid and the claims made for it by the Farm
Bureau Federation in its publicity reveals numerous discrepancies.
For example, the Farm Bureau emphasized that four percent interest
would be paid on the total investment. After deductions, the true
figure was only 2.6 percent. The Farm Bureau had asserted "there
is only about 345,000 horsepower" available, but an engineering analysis
showed the new installation required by the bid would total 1,200,000
horsepower. "
Back of Merrill's devastating memorandimi lay 20 years of study of
164 . THE CONSERVATION FIGHT
the power problem. In this situation he abandoned caution and made
statements in direct conflict with the attitude of many of his superiors.
He wrote: "It is apparent, therefore, that the primary purpose of the
companies making the offer is not to produce and sell fertilizer but
to secure control for their own purposes of the largest block of cheap
power now available anywhere in the United States/' Hence, he
declared: "If to secure such private operation it is necessary [to agree
to such stipulations] it would seem time for the United States to aban-
don efforts in this direction and experimentation on a commercial
scale would demonstrate the possibihties of utilization of the nitrate
properties, where it could negotiate a business deal instead of sitting
in on a poker game as at present."^
Congress itself had arrived at the stage of irritation and at long last
turned to pubHc operation enacting a modified form of the Norris
compromise, which President CooHdge pocket-vetoed. Meantime,
another farce deserves attention.
A Belated Coup Fails. Like the power corporations, heavy chemicals
failed to capture Muscle Shoals power, but BeU of Cyanamid was a
determined man. One year after Congress had ordered government
operation and was waiting for the Supreme Court to decide its validity,
he sprang a sudden, unexpected maneuver to restore confidence in his
good faith and win the prize. Basically Bell had lost out because of
his refusal to agree to surrender of his lease if he discontinued making
fertilizer. To remedy this, on January 19, 1929, he sent the House
Military Affairs Committee a 15-page amendment to the WiUis-Madden
bill, claiming it provided an absolute guarantee of such surrender. The
amendment was extremely involved. Chairman Morin and a majority
of the committee held it abortive, refusing to report it, but B. Carroll
Reece of Tennessee, on a day when the chairman and ten members
were absent, had the bill reported favorably. This was on February 16,
1929, and although the vahdity of the action was challenged, Speaker
Longworth ruled with Reece, and the biU went on the calendar.
A week later, Morin, acting for a majority of the committee, made a
report on the whole history of the bill (H.R. 8305).' He called it
"an unwise contract," which had been rejected five times. He showed
that the government would have to spend $88 million in addition to
the $127 milhon already spent on the project and from $40 milHon to
$50 million more to recover the properties. He commented that under
the new recapture clause "the Congress, the Secretary of War, and
members of the judiciary, including the United States Supreme Court
are required to comply with a maze of specific detailed conditions, each
THE CHEMICAL BARRAGE 165
within stated limitations of time, in order that the United States may
protect its proper rights. It is submitted that this unprecedented
procedure required of the United States is beneath the dignity of the
sovereign/'
Thus, in his last act before retiring from Congress, Morin turned
Bell's eflFort into a boomerang. Confidence in the good faith of the
Cyanamid company was so seriously impaired that although the bill
was introduced in the next Congress it was never again given serious
consideration. '
CHAPTER XVI
THE NORRIS BILLS AND PUBLIC OPINION
After four years of study Senator Norris had come full circle in his
conception of what use should be made not only of the Muscle Shoals
project but of the entire Tennessee River and its tributaries. In 1922
and in 1924, he introduced in Congress measures that called for partial
development by the government. But on January 5, 1926, Norris
introduced a bill (S.2147) for multipurpose development of the water-
shed which would provide for national defense, maximum naviga-
tion, power, flood control, and also experimental production of cheap
fertilizer. Built by the Army Engineers, the project was to be trans-
ferred to a government corporation for management.
Keeping our bearings on the evolution of national policy, we should
know that the bill embodied the recommendations of Teddy Roosevelt* s
Inland Waterways Commission of 1908 and that it was the only one
of its kind presented in Congress between the Newland's bills of 1913-
19 and the Tennessee Valley Authority bill of 1933. It reflected the
Senator s personal views but the Agricultural Committee and the Con-
gress would not embrace so comprehensive a plan.
Time was running out. The long delay in settling the issue was
denounced as scandalous. The Senate and House were at loggerheads
on power and fertilizer. Congress was restive. Anything could hap-
pen.
The Compromise. At this juncture Norris, McNary, and a majority
of the Committee on Agriculture decided on a bold compromise. They
would say in effect to the House, very well, if you vdll agree to govern-
ment production of both fertilizer and power, we will agree not only
to continue research but to operate Nitrate Plant No. 2 at full blast
and try the cyanamid process until it is demonstrated who is right in
this matter of quantity production. This challenge was embodied in
a bill (S.J.Res. 163) introduced by Norris and reported favorably on
February 26, 1927, five days before the end of the 69th Congress. The
bill was introduced in the Senate as the House committee was inform-
ing bidders that if a satisfactory offer were not made it would consider
government operation when the new Congress met.
The compromise bill was amended and passed despite the opposi-
tion of Coolidge and the Republican and Democratic right wings. For
166
THE NORRIS BILLS AND PUBLIC OPINION 167
an understanding of the cause of this sharp reversal it is necessary to
look beyond Washington to what was happening elsewhere.
The Changing Climate. Our industrial chemistry had caught up
with Germany. The "Haber Process" of producing air nitrates was in
use, displacing the cyanamid process installed at Nitrate Plant No. 2.
Government laboratories were revolutionizing old ideas regarding
fertilizers and not all of Wilson Dam power would be needed for
experiments. A revolution that had quietly taken place in the tech-
nical and financial status of the electrical industry had to be faced if
the national, state and local government were to be more than adjuncts
to private capital.
Long distance, high tension transmission had given birth to the
superpower age. Scores of large and small municipaHties and great
industries could be served by a network of "high lines" with power
generated at a few giant stations. Small stations for each town were
out. Improved methods of burning coal or oil or gas were greatly
reducing costs.
Pyramiding of holding companies had followed, and there was a
wild scramble to buy up the smaller operating concerns. Vast amounts
of inflated securities were sold in the hope and expectation of main-
taining existing high retail electric rates. The electrical industry went
into politics and propaganda with a vengeance to achieve these ends.
The Administration Is Helpful. In May 1924 Secretary of Commerce
Herbert Hoover, as chairman of the Northeastern Super-Power Com-
mittee, reported a plan to "interconnect" all private companies operat-
ing in the northeastern states and to develop unused hydro sites, in-
cluding the St. Lawrence, for their use.^ Public ownership was not
mentioned. However, he said the scheme would save $250 million an-
nually to the companies. When I telephoned Paul Clapp, the Secretary's
power aide, to ask about savings to retail consumers the reply was that
it had not been considered.
The Electrical World in May 1927 described the operation of the
Ohio Public Service Company serving 191 conmiunities with a popula-
tion of 440,000, a unit of Henry L. Doherty's City Service empire. The
caption read: "What Consolidation Brings About. Seven Properties
Consolidated in 1921 Have Increased Net Earnings 191 Percent— In-
vestment 124 Percent — Production Costs Halved." But there had been
no such startling reduction in consumer rates.
General Jadwins Plan. During 1927 two devastating floods — acts
of God, in legal lore— occurred, shocking the nation and directing atten-
tion to the necessity of reservoir dams to supplement levees in control-
168 THE CONSERVATION FIGHT
ling such catastrophes. Excessive rainfall on nearly every important
tributary watershed of the Mississippi system produced minor floods.
The rains continued and for six weeks in April and May culminated
in the most gigantic flood on the Mississippi since 1844. The damage
extended from Cape Girardeau in southeast Missouri to the Gulf.
Secretary Hoover, who personally directed relief, characterized it as
"the greatest peace-time catastrophe in the history of the nation." To
note only one illustration of the havoc, the Red Cross installed 80
concentration camps to care for some 700,000 persons driven from
their homes. The camps extended a thousand miles to the Gulf from
Cairo, Ilhnois. More than 200 Hves were lost.
On November 3 the greatest flood catastrophe in the history of New
England ravaged Vermont, New Hampshire, Massachusetts, and Con-
necticut. The known loss of Hfe was 112. Some 900 bridges were
washed out. The property loss to agriculture, industry, utihties, and
city dwellers was around $111 milHon, including actual damage to
structures.
Federal, state, and municipal governments and private organizations
contributed millions of dollars to aid the sufferers and repair damages.
Aroused citizens demanded action from the federal government to
safeguard the public against future calamities. Coolidge responded
by appointing a commission controlled by the Corps of Army Engineers,
of which Major General Edgar Jadwin, chief of the corps, was chair-
man. The Jadwin Plan was developed, submitted to Congress by the
President, passed and finally approved on May 15, 1928. An official
summary of the plan says: "The Army Engineers [Jadwin] plan for
flood control of the Mississippi River contemplates at this time flood
control of the waters of the Mississippi in the 'Alluvial Valley' only.
Outside the Alluvial Valley control of flood waters is not so imiK>rtant
and can wait future developments. The AUuvial Valley is that portion
of the Mississippi Valley below Cape Girardeau, Missouri."
Below Cape Girardeau, a town 100 miles south of St. Louis, levees
on the main stream to the Gulf were to be raised three feet. Spillways
were to be constructed to drain off the crests of superfloods into
swamp areas along the lower river. A spillway channel five miles
long and 2 miles wide would drain off dangerous crests into Lake
Ponchartrain and thus protect the city of New Orleans. The estimated
cost was $325 million. The construction of headwater reservoirs on
the Missouri, Ohio, and other watersheds was dismissed as too costly.
Such remedies as reforestation were dismissed as having Httle value.
This flouting by the Army Engineers of modem conservation methods
THE NORRIS BILLS AND PUBLIC OPINION 169
advanced for a quarter century aroused much indignation. In a speech
on the floor on March 9, 1928, during the debate on the Muscle Shoals
bill, Senator Henry B. Hawes, Democrat of Missouri, denounced the
Jadwin plan and pointed out that it had been rejected by a conference
at Chicago called to consider the emergency and also by 95 percent
of the civilian experts who testified before the House and Senate com-
mittees considering it. Jadwin's triumph was due to the poHtical in-
fluence of the utilities and dredging and levee contractors who feared
that pubhc power might be developed at retention dams. ^
75 There a Tower Trust? In answer to the charge that pubhc owner-
ship or even regulation of utilities was "socialism," liberals warned
against the dangers of the power trust. Articulate utility spokesmen
heatedly denied the existence of such a trust. Both terms, used as
epithets, were characteristic exaggerations. If Muscle Shoals was
Socialism so was the Post Office and the Panama Canal. The electric
industry was neither owned nor controlled by a single group as the
term Power Trust implied. The only sense in which it was at all justi-
fied was that 90 percent of the industry was united in an organization
for political and propaganda purposes. The real issue was whether
rapid consolidation of ownership and control was creating monopohes
in violation of the Sherman Anti-Trust Act and becoming a menace
to free enterprise and the public welfare.
In February 1925 the Senate passed a resolution by Norris directing
the Federal Trade Commission, headed by William E. Humphrey,
Republican and ex-Congressman from Washington, to investigate to
what extent monopoly existed in the electrical industry. General Elec-
tric in particular was to be studied because of its control of the Electric
Bond and Share Company. Efforts being made by the utilities to con-
trol public opinion on the question of public ownership were also
specifically designated for study.
Two years later in February 1927 a report was submitted which
showed the percentage of the national output of electric energy gene-
rated and sold by each great holding company. The report indicated
no national monopoly. But there was no comment on regional mono-
polies. It developed that the Federal Trade Commission had merely
mailed questionaires to the companies and tabulated the answers.
This was tantamount to accepting as vahd what the utihties had to
say about themselves. They were commended in the report for their
"praiseworthy cooperation.'' Comment on mergers was limited to the
statement that a large number of independent companies had *l3ecome
affiliated with larger power groups" during the inquiry which made
170 THE CONSERVATION FIGHT
the work difficult and, significantly, "no attempt was made to deter-
mine whether the book value of investment conformed to the sale
value thereof." The rate of profit "averaged nearly 8 percent," of
course, including watered stock. No investigation of propaganda, as
ordered, was made. It was explained that the Attorney General had
ruled that provisions of the appropriation bills forbade expenditure
of money for that purpose. Progressives at once denounced the report
as a whitewash. '
Senator Walsh Drops a Bombshell. Six days after this innocuous
report had been received. Senator Thomas J. Walsh, Democrat of
Montana, delivered a major floor speech on February 28, 1927, deman-
ding an investigation by a five-man Senate Committee into the practices
of public utility holding companies. Ignoring the Trade Commission
report and also the public ownership issue, Walsh declared that the
Sherman Anti-Trust Act had never been properly enforced by any
administration and that it was being flouted by the power companies.
For proof he had placed on the desks of the Senators his own study
showing 1,500 "mergers" in 1925 and 1926 alone. The Hst took up 11
pages of fine type in the Congressional Record. Was not this mono-
poly? And a threat and a menace to a competitive economy? Not
only the utilities but the financial world was alarmed and the proposed
Walsh investigation received as much attention in the press and else-
where as Muscle Shoals itself. Walsh was feared. If his resolution
for an investigation passed, he would become chairman of the com-
mittee. He had conducted the Senate probe into the notorious Teapot
Dome scandal, which had forced the resignation of Edwin Denby,
Secretary of the Navy, and later sent Secretary of the Interior Albert
B. FaU to prison. This accomplishment, in addition to his reputation
as an able constitutional lawyer, had given Walsh a national reputa-
tion for integrity and fearlessness.
Against Government Operation. With their reputation and pohtical
control at stake, the utilities acted with vigor. The National Electric
Light Association in June 1927 set up a joint committee of national
utilities associations, representing the trade organizations of the elec-
tric, gas, and street railway industries. George B. Cortelyou, Secretary
of the Treasury under Theodore Roosevelt, and then president of the
Consolidated Gas Company of New York, was named chairman.
Offices were set up in Washington and New York and $400,000 voted
to finance operations. Cortelyou announced that there would be no
lobbying. The committee's sole purpose was to teU Congress and the
THE NORRIS BILLS AND PUBLIC OPINION 171
public the truth about the utilities and refute misrepresentation by
irresponsible radicals.
The National Electric Light Association, trade organization of com-
panies generating 90 percent of the nation's power supply, continued its
propaganda and poHtical activities, supplemented by 12 regional Com-
mittees of Public Information, which also issued pamphlets and releases
to newspapers representing the utility point of view. The Insulls of
Chicago were prominent in the association. The utihties had the
influential backing of such organizations as the United States Chamber
of Commerce, the National and the Investment Bankers Associations,
the National Manufacturers Association, the American Farm Bureau
Federation, the great insurance companies, and even the National
Association of Railroad and Utilities Commissioners. The latter were
state agencies set up to protect the public. In the Muscle Shoals region
the Tennessee River Improvement Association was continuing its
efforts to assure a private lease. The only voices urging pubHc opera-
tion in that region were those of Allen J. Roulhac, ex-county judge and
mayor of Sheffield, Alabama, and Dr. John R. Neal, who conducted a
private college of law.
For Government Operation. A few national organizations favored
the Norris position. The American Federation of Labor at its annual
conventions of 1923 and 1925 unanimously adopted a Muscle Shoals
resolution that opposed "any encouragement whatever to a privately
owned and operated power system" and urged "the necessity for a
coordinated public development and control of said water resource
for the service of the people at cost, giving due regard to the four-fold
duty of water for domestic supply, for irrigation, power production and
flood water storage."
Others supporting Norris were the National Farmers Union, the
National League of Women Voters, the Methodist Federation for
Social Service and, more specifically devoted to the subject, the Nation-
al Popular Government League of Washington. Senator Robert L.
Owen was president of the League and this writer was executive direc-
tor. Also backing Norris was the PubUc Ownership League of America
located in Chicago. Former Congressman A. M. Todd was president
and Carl D. Thompson was secretary. Both were long-time and ardent
crusaders for public ownership.
The Press. A large majority of the daily and weekly newspapers of
the nation were quite hostile to Norris. Most vigorous in opposition
were such leading daihes as the Washington Post, Philadelphia Ledger,
New York Times, New York Sun, Boston Herald, Chicago Tribune,
172 THE CONSERVATION FIGHT
Omaha World-Herald, Portland Oregonian, New Orleans Times Pica-
yune, Chattanooga Times, and the Los Angeles Times. Supporting
government operation were the 37 Hearst papers, the Scripps-Howard
chain of 20 dailies, the New York World, St. Louis Journal and the
Madison, (Wis.) Capital Times.
In the magazine field, the Nation and the New Republic were espec-
ially militant. By 1927 the farm press was divided, a majority of edi-
tors having abandoned the idea that cheap fertilizer from Muscle
Shoals by the cyanamid process was commercially feasible.
Muscle Shoals had passed the status of a local postwar problem and
become a test case involving public control of natural resources on
which all America was taking sides. Hence, the intellectual and emo-
tional atmosphere in which the 70th Congress operated differed greatly
from previous years. The prophecies of the conservation leaders of
1908 regarding soil erosion, reforestation, flood control, and the neces-
sity of integrated development were being tragically fulfilled. The
electric utilities had led the forces opposed to conservation policies.
The necessity for government operation of Muscle Shoals had be-
come apparent unless, as the editor of the Philadelphia Public Ledger
advised in May 1928 : "Uncle Sam should say goodbye to Muscle Shoals
and get rid of a bad bargain "(that is, treat it as; war scrappage ) . That,
however, meant political suicide to too many. AU these issues were
being hotly debated throughout 1927, in conventions, in the press, and
by men in the street, to a hitherto unprecedented degree.
The public was aware of the basic issues. The long delay in settHng
the Muscle Shoals question was denounced as a national scandal, and
demand for action became more and more insistent. Congress took
note.
CHAPTER XVn
CONGRESS TURNS TO PUBLIC OPERATION
According to an ancient proverb, the stone the builders reject may
become the cornerstone of the building. This is what happened to
the Norris compromise bill for government management of the Muscle
Shoals undertaking.
The 1926 elections had been unkind to the party in power. The
RepubHcan majority of 10 in the Senate had been wiped out. There
were now 47 Democrats, 47 Repubhcans and one Farmer-Laborite,
Shipstead of Minnesota, a liberal. The Republican majority in the
House had been reduced from 61 to 39. Congress proved less v^ing
to take orders from above.
When the 70th Congress met on December 5, 1927, the House had
received no offer for a private lease of Muscle Shoals as solicited at
the close of the previous Congress. Chairman Morin's Military Affairs
Committee set to work drafting a bill for public operation which would
guarantee national defense and fertihzer.
Senator Norris reintroduced his compromise bill (now S. J. Res. 46)
on December 15. The bill was reported favorably by the McNary
committee on February 3 and after three weeks of intermittent
but strenuous debate it was approved by a roU call vote of 48 to 25
and sent to the House.
The Morin bill (H.R. 12448), also a compromise, was substituted for
the text of the Norris bill and on March 30, 1928, after a short floor
debate, the House passed it and sent the measure back to the Senate,
which declined to accept the House version. A conference committee
was appointed consisting of McNary, Norris, and Cotton Ed Smith for
the Senate, and Morin, James, Reece, Quin and Wright for the House.
Its first report was rejected, but a second report was adopted by both
Houses on May 25, 1928. The Senate vote was 43 to 34, and the House
vote 211 to 147. In the Senate 16 Republicans, 22 Democrats, and
one Farmer-Laborite voted yea; and 22 Republicans and 12 Democrats
voted nay. In the House 74 Republicans, 134 Democrats, 2 Farmer-
Labor and one Socialist voted yea; and 123 Republicans and 24 Demo-
crats voted nay. It can be seen that a total of 90 Republicans refused
to follow the leadership of President Coolidge. While the measure
would have passed the House without Republican support, it would
173
174 THE CONSERVATION FIGHT
have been defeated in the Senate but for 16 RepubUcans who voted
with Norris on final passage. ""
The Pocket Veto. The bill was laid on President CooUdge's desk
the next day, May 25. He neither signed nor vetoed it but kept silent.
The first session of this Congress adjourned on May 29. Ten days
passed and no word from the White House. The bill had received a
pocket veto.
A constitutional question at once arose over whether the 10 day
limit allowed a President for vetoing a bill applied to a session as well
as to the final adjournment and legal death of a Congress. If not,
Senate Joint Resolution 46 was law despite the pocket veto. The
U. S. Supreme Court just then had under consideration an identical
question in the case of the Ontonagon Indians. The court finally ruled
on May 27, 1929, that such a veto was valid. In the meantime the
Muscle Shoals bill had been shelved. A whole year had elapsed with
nothing done. The bill was dead.
The Provisions of the Vetoed Bill. Although vetoed, the bill reflected
the progress of congressional agreement on solution of the Muscle
Shoals problem. The measure that Congress approved had provided
for ownership and operation of the entire project to be supervised by
the Muscle Shoals Corporation of the United States for national de-
fense, navigation and flood control, power and fertilizer production;
the corporation to be governed by a board of three members, appointed
by the President and confirmed by the Senate.
The hydro-power station at Wilson Dam and the two steam stations
nearby were to be equipped with generating units to full capacity.
Only one new dam was ordered built — at Cove Creek on the CKnch
River, 375 miles upstream, to regulate river flow. The right was given
to construct transmission lines "in any direction" at will when needed.
The nitrate plants were to be rehabilitated and kept in perfect condi-
tion for instant use in the event of a war emergency.
The adopted policy on electric energy provided that it would be
supplied at cost for defense or fertilizer purposes. Surplus power
would be sold wholesale to private utihties, industrial corporations,
or others, and to all public bodies and nonprofit electric farm coopera-
tives, which were given preference in case of a conflict with private
concerns. Contracts were limited to 10 years. Wholesale rates for
electricity would be fixed by the board. Retail rates would be regulated
by the Federal Power Commission, not by state commissions. The
power program was to be self-sustaining, and the net proceeds from
power and other sales would be deposited in the United States Trea-
CONGRESS TURNS TO PUBLIC OPERATION 175
sury, as a special fund available to the board to finance fertilizer and
other activities. Ten million dollars would be appropriated to launch
the program without delay.
Comprehensive research and experiments were authorized for the
"manufacture of fertilizer or any of the ingredients of fertilizers." The
board was to modernize the nitrate plants and manufacture fixed nit-
rogen ready for application to the soil. ^
The Case For the Norris-Morin Bill. To summarize, there were four
principal arguments that caused Congress to abandon its former atti-
tude: the economy and wisdom of retaining the project for instant
defense purposes; the value of the power to ultimate consumers; the
prospect of better and cheaper fertilizer; and the failure to induce
private capital to make a fair, acceptable offer for a project on which
$130 million had been spent.
It was fertilizer and the devious tactics of bidders which had most
influenced House members. Representatives James and LaGuardia
voiced resentment at attempts to "fool" the House and at "the arrogance
and brazen attitude of the lobby." Such remarks brought applause.
On the Senate side, since Norris had been compelled to abandon his
plan to harness the whole river basin for all purposes, his chief interest
in the compromise lay in the prospect of supplying homes, farms, and
factories in the entire valley with low-cost power. He felt that electric
rates over the nation were unreasonably high. This persistent ham-
mering had brought a rebuttal from an unusual source.
Utility Lawyers Present 'Hhe Facts." When the Walsh resolution for
a Senate investigation of utilities was pending in January 1928 a 282-
page booklet was presented in opposition. Styled a memorandum, it
purported to give facts about the utilities. It was signed by 173 utility
law firms in 37 states. Represented were 262 attorneys, 141 of whom
were or had held pohtical offices from governor and United States
senator on down. The document charged Senator Walsh with mis-
representing their clients, the electric and gas industries. It contended
that the companies (including holding companies) were efficiently
regulated as to securities and rates by the states; that consumers were
getting the benefits of lowered production costs; and that electric
consumers in Ontario were no better off than those in the United States.
The volume contained a full-page chart showing that in 32 selected
cities in the United States with a total population of 25 million the
average cost of residential electric service had dropped from an average
of 9.2 cents per kilowatt hour in 1910 to 7.4 cents in 1926.
Islofris Also Exhibits a Chart. During his speech on March 9, 1928,
176 THE CONSERVATION FIGHT
Norris hung on the Senate wall a large reproduction of the lawyers'
chart, prepared by this writer. There was an added parallel line in
red which showed that since the pubHc hydro-electric power system of
Ontario began operation in 1910 the average cost of residential service
in 21 Ontario cities and tovms v^th a population of 1,179,000, had
dropped from 9.3 cents to 1.6 cents per kilowatt hour in 1926. Added
to the chart was a table which illustrated that if 10 percent were added
to Ontario rates for taxes, another 10 percent for profit, and another
30 percent to pay for coal, the domestic rate would still be only 2.4
cents per kilowatt hour compared to the 7.4 cent rate in the United
States. This left 5 cents per kilowatt hour of the United States rate
unexplained, as the chart pointed out.
The eflFect on the Senate was unusual. Cotton Ed Smith interrupted
Norris to remark, "I do not think there has been any more illuminating
statement on the question of power than the one the Senator is now
making for the benefit not only of Senators but of the country at large."
At the suggestion of Blaine of Wisconsin the rule against printing
charts of this character was suspended and the chart with accompany-
ing data appeared in the Congressional Record of March 9, 1928. ' It
was reproduced in many liberal newspapers and magazines.
As a rejoinder, Thomas W. Martin, president of the Alabama Power
Company, issued a statement that was inserted in the Record by Heflin,
to prove his company was selling power more cheaply than several large
municipal systems. A table showed that in 1926 his company sold its
output of just over one biUion kilowatt hours at an average rate of
1.24 cents per kilowatt hour. As against this, the total output of the
municipally ovmed plants of Seattle, Cleveland, Los Angeles, James-
town (New York), Springfield (Illinois), Jacksonville (Florida), and
Tacoma (Washington), had been just over one billion kilowatt hours
but sold at an average rate of 2.18 cents per kilowatt hour. This startling
announcement lost its impressiveness when it was disclosed that Mar-
tin's statistician had included vast quantities of power sold for a few
mills wholesale while the municipal rates were all retail. Martin was
charging his domestic consumers 8.5 cents per kilowatt hour while the
municipalities were charging an average of less than 4 cents.* From
jousts of this kind Washington and the nation learned the value of
Muscle Shoals.
The Case Against the Norris-Morin Bill. For the first time in the
long fight over the Shoals projects, foes of the Norris-Morin measure
had no substitute solution. So they resorted to repeating cries of
socialism— or worse. Representative Charles A. Eaton, Repubhcan
CONGRESS TURNS TO PUBLIC OPERATION 177
of New Jersey, whose biographical sketch in the Congressional Direc-
tory stated that he was a former Baptist minister and a Mayflower
descendant, began a speech with the following:
"Mr. Chairaian, I can not understand how our MiHtary AflFairs
Committee, composed as it is of able, conscientious, and experienced
legislators, could be induced to bring before this House a bill dealing
with a major matter of pubHc interest, which is so hopelessly unsound
and vicious from every American point of view. The only possible
explanation seems to be that the committee, like the coimtry and the
Congress, is sick and tired of the interminable Muscle Shoals delirium
which has afflicted our country for almost 10 years, and in desperation
they have at last shut their eyes and jumped off into space, landing,
without intention or desire on their part, in a bottomless morass of
injustice and economic absurdity. Of all the wdld and weird legisla-
tion introduced in the present session of Congress this Muscle Shoals
bill caps the chmax .... I am not willing as a member of this House
to sit silently by and see this industry [fertilizer] confiscated and
destroyed by action of our Government .... I believe the farmers of
this country would be the first to protest against such legalized robbery
and oppression .... This bill puts the United States Government
squarely into the power business and into the fertilizer business. Both
proposals are contrary to the genius of our political and economic insti-
tutions and are fraught with serioois menace to the prosperity and pro-
gress of our people."
After asserting that private utilities were adequately serving the
South with power that "is among the cheapest and most efficient in
the world," Mr. Eaton concluded: "If we must go outside America
to find some solution for the Muscle Shoals problem, why go to
Russia?"*
Senator Black and Land Values. In their shortage of arguments, foes
of the bill protested against the nation's footing bills from which a single
region would benefit. The measure provided for distribution of power
among the states within transmission distance from Muscle Shoals. It
was evident that the plan would not only provide flood control on the
Tennessee but would materially contribute to the control of floods on
the Mississippi River. Senator Black of Alabama argued that if people
outside the project get the benefits of flood control they could properly
contribute to the cost of it. "But suppose it raises the price of lands
bordering on the Mississippi River or in the Mississippi Valley," Black
declared, "then we ought to have a legislative decree that the in-
creased profits which come from the raising of the price of those lands
178 THE CONSERVATION FIGHT
by flood control shall be equitably distributed among all the other
States." " That principle of taxation is, of course, the one advanced by
Henry George as the basis for all taxes. Representative Grosser, of Ohio,
had voiced the general theory on the House floor, but Black applied it to
multi-purpose projects.
It is manifestly unjust that landholders should, without turning a
hand, profit from investments by the federal or state governments to
promote the general welfare; or, indeed, from the investments and
labor of the citizenry. That is an untapped, legitimate source of
revenue with which the future must and doubtless will deal as soon
as the American people come to understand the nature of fundamental
democracy.
CHAPTER XVin
POLITICS AND WATER POWER
The presidential campaign of 1928 was important in the evolution
of a national water power poHcy because it helped spread public
understanding of the engineering and fiscal techniques necessary to
achieve its goals. The RepubHcans won easily with Secretary of Com-
merce Herbert Hoover, Iowa farm boy, mining engineer, and Quaker.
The Democrats ran Governor Alfred E. Smith of New York, a small
businessman, Roman Catholic, and sachem of Tammany Hall.
The dominant issues were the continuance of prosperity and enforce-
ment of the federal prohibition amendment of 1919. Hoover was a
conservative and a "dry"; Smith was a liberal and a "wet." The nation
was not ready to give up its attempt to control 'iDOOtleg" hquor, much
less to repeal the prohibition amendment, which Hoover called a
"noble experiment." The wet and dry problem over-shadowed all
others. ReHgiouis prejudice played a part. Smith was the first Catho-
he ever nominated for the highest ofiice in this predominantly Pro-
testant land. His opponents waged an underground campaign of religi-
ous bigotry such as had not been witnessed for a hundred years.
Notwitlistanding all this, the Coolidge pocket veto of the Norris
Muscle Shoals bill, the pending Boulder Dam bill, the proposed St.
Lawrence seaway and the daily front-page pubHcity given the Federal
Trade Commission investigation of the propaganda methods of the
private utilities, made the pubHc versus private power issue one that
could not be disregarded.
A bulletin that I issued in the midst of the campaign sunmiarized the
conflict as it appeared to liberals: *We make progress in the power
war. For the first time electric power becomes an open issue in a
presidential campaign. It isi not the chief issue in the public mind. It
will be a powerful factor in determining the election, but the people
will not know that. The majority are voting on prohibition and theology
despite all denials. Meantime the power trust is busy with an eye
on the main chance. This bulletin deals exclusively with power . . ."
Both Parties Sidestep. The Republican and Democratic parties held
nominating conventions in June. Managers of each hoped to sidestep
the power question. The keynote speakers. Senator Simeon D. Fess of
Ohio for the Republicans, and Claude G. Bowers, New York journalist,
179
180 THE CONSERVATION FIGHT
for the Democrats, ignored the subject. In their platforms both praised
conservation and development of water power resources in general
terms. Each claimed credit for the Federal Water Power Act of 1920
and, in effect, assured the voters that their equity was secure under
that law. ^ But there was nothing on concrete issues such as public
versus private construction and operation, the great multipurpose dams
im.der consideration, or whether there should be "high" dams with
power or "low" dams for navigation only. Senator Norris declared
"the dominant parties" were "silent as the grave" on these germane
questions, causing the liberal New York World to comment, "It is diffi-
cult to dispute the accuracy of this description." Editors generally
began debating whether water power should command more attention.
Since the platforms were not specific, attention turned to the candi-
dates. Would they take up the cudgels? What were their attitudes?
Candidate Hoover Is Evasive. The answers came in August when
the candidates delivered acceptance speeches. Secretary Hoover at
his home town of Palo Alto, California, was discursive and indefinite,
leaving the wonderment undispeUed. At Albany, Governor Smith
was positive and definite. He favored perpetual public ownership of
water power sites and public operation of the generating plants.
In his Palo Alto address Hoover gave considerable time to water
resource development but confined himself to description and admoni-
tion, thus: "We must adjust reclamation and irrigation to our needs
for more land. Where they lie together we must co-ordinate trans-
portation with flood control, the development of hydroelectric power
and of irrigation, else we shall as in the past commit errors that will
take years and millions to remedy." But "government should not en-
gage in business in competition with its citizens," and should avoid
regulating business unless "public rights are violated." The Federal
Trade Commission investigation of utilities then in progress, was not
mentioned, but the speaker attempted indirectly to mitigate the rising
tide of public displeasure by pointing out that "business is practical,
but it is founded upon faith — faith among our people in the integrity
of business men and faith that it will receive fair play from the govern-
ment. It is the duty of government to maintain that faith."
Hoover did not mention Boulder Dam despite the special interest
of California voters in that project and their intense desire to know
their fellow Californian's position. Senator Johnson was stumping the
state at the time in behalf of his bill for federal construction of the dam
and denouncing false propaganda against it, which had been revealed
by the Federal Trade Commission investigation. Such severe criticism
POLITICS AND WATER POWER 181
followed that Hoover decided to make clear his position on Boulder in
a speech to be delivered at Los Angeles on August 17. Public interest
heightened from coast to coast.
High or Low Dam at Boulder. As chairman of the commission that
in 1922 had negotiated the interstate compact for the development
of the Colorado River, Hoover had favored a low flood control dam
to protect the Imperial Valley at a point some 100 miles below the
Boulder Dam site. This would leave the high dam at Boulder open
to private exploitation, to which a large majority of California voters
were opposed. The Los Angeles speech devoted only four short para-
graphs to the project and only one sentence to the question of the
hour. Hoover said: "We want the greatest reservoir and the highest
dam at Boulder Canyon that the engineers will recommend and I am
hoping that the project will receive favorable action from the present
Congress."
Again disappointment. A flood of editorials, left and right, from
coast to coast followed, speculating on what Hoover meant. The
candidate was in a politically troublesome position. His home state,
as well as that of his rival and some others, was committed to public
ownership of power. He was personally opposed to this policy, and
so were the leaders of the financial, industrial, and commercial world
supporting his candidacy. For nearly two months after his ambiguous
Los Angeles pronouncement. Hoover said nothing of consequence
pubHcly. Years later, F. E. Scattergood, chief engineer of the Los
Angeles Bureau of Power and Light, told me how President Coolidge
and candidate Hoover were warned that unless they promised to back
the passage of the Swing-Johnson Boulder Dam bill. Hoover would
lose his home state. The pledge was given and passed along. The
Republicans won. The pledge was kept, and the biU was passed and
signed by Coolidge on December 21, 1928.
Governor Smith Is Positive. With his opponent and his own party
platform noncommittal on the power issue. Governor Smith boldly
took the initiative. In his acceptance speech at Albany on August 22,
1928 he commended the Federal Trade Commission investigation: "No
more dishonest and unpatriotic propaganda has ever been seen in this
country than that disclosed." He pledged that if elected he would
insist that title to all power sites remain in pubHc possession and that
public agencies construct and operate all dams and generating plants.
His solution of the old issue of jurisdiction was clear: 'Where they are
owned by the federal government they should remain under federal
control. Where they are owned by an individual state they should be
182 THE CONSERVATION FIGHT
under the control of that state, or where they are owned by states
jointly they should be under the control of those states."
He advocated that energy be sold wholesale at the switchboard to
private companies for distribution to consumers. "Fair and reasonable
rates and equal distribution of power" were to be secured by "con-
tractual agreement with the distributing companies." He added:
"As to Boulder Canyon, I am of the opinion that the best results would
flow from setting up a Colorado River Authority, representative equally
of all the states concerned. The development should be by the states
through the agency of this Authority by treaty ratified by Congress."
In the case of Muscle Shoals, Smith favored government ownership
and control and development of "a method of operation which would
reclaim for the government some fair revenue from the enormous
expenditures already made for its development and which now is a
complete waste."
Al Smith kept hammering away constantly on the issue, challenging
Hoover to be specific and to come out in the open. At Denver on
September 22 he devoted his entire speech to his power program. The
speech received a great press including an unusual amount of editorial
comment. Many Republican and Democratic papers, as well as the
liberal and independent papers, were critical, and justly so. It was
widely asserted that the governor had made power an important issue
in the campaign and that the people were demanding a show-down
from the Repubhcan leaders. At that time "public ownership" was
in the opinion of the business world and millions of voters tantamount
to socialism. Smith's pronouncement was a compromise with states'
righters and devotees of private operation, but at last it became re-
spectable for Democrats and independents to favor government in the
power business as a byproduct of m^ultipurpose dams.
Secretary Hoover Responds. Hoover spoke October 6 at Elizabeth-
ton, the home of Representative B. Carroll Reece, in the eastern tip
of Tennessee, which had voted Republican since the Civil War. The
voters in this part of the Muscle Shoals territory were anxious to
know exactly where he stood. But the Republican nominee again
disappointed his audience by saying: "I do not favor any general exten-
sion of the federal government into the operation of business in competi-
tion with its citizens. It is not the system of Lincoln or Roosevelt. It
is not the American system .... There are local instances where
government must enter the business field as a by-product of a great
major purpose such as improvement in navigation, flood control.
POLITICS AND WATER POWER 183
scientific research or national defense, but that does not vitiate the
general policy to which we should adhere/'
At once orators and editors — even some RepubHcans — ^lambasted the
candidate for evasiveness. When Hoover reached Knoxville two days
later, he was interviewed by Edward J. Meeman, editor of the Knoxville
News Sentinel. The News Sentinel was a member of the Scripps-
Howard chain of daily papers, which was supporting the Norris
Muscle Shoals bill, the Swing-Johnson Boulder Canyon biU, and ac-
curately reporting the Federal Trade Conmiission investigation. Aware
that the crucial question in the minds of his readers had not been
answered, the alert Meeman asked the candidate specifically how his
reference to the desirabihty of government ownership in certain in-
stances appHed to Muscle Shoals.
Mr. Hoover replied: "You may say that means Muscle Shoals." Here
was a scoop of nationwide significance. The wires crackled. Front-
page headhnes informed the country that the Republican candidate
favored government development at Muscle Shoals. But anti-
climax soon followed. On reaching New York City, Hoover evidently
discovered that his campaign managers thought he had gone too far.
When a clarifying statement was issued, it said in part that there
was no question of government since "the government already owns
both the power and nitrate plants." The RepubHcans had dedicated
the Shoals to agriculture and national defense. The '"by-products of
surplus power should be disposed of on such terms and conditions as
to safeguard all public interest. I entirely agree with these proposals."
Reporters looked at each other and asked: 'What does it mean?"
They left it to their editors to decide, according to veteran independent
Thomas L. Stokes. '^
Confusion followed. The jubilant Scripps-Howard papers, which
were supporting Hoover for other reasons, editoriaHzed: "We are glad
that both presidential candidates are determined that the government
shall retain Muscle Shoals. For this will give the people at least one
check and balance against unjust rates and prices of predatory inter-
ests." Tennessee Valley people were elated. Muscle Shoals would
be put to work. The consimiers of the region would benefit. The
conservative press held this to be no commitment since the candidate
was opposed to government in business. General bewilderment was
voiced by the independent Baltimore Sun, which asked, "What does
one know from Mr. Hoover's statement about his real purpose with
respect to Muscle Shoals, in the event of his election? Precisely
nothing."
184 THE CONSERVATION FIGHT
A Nonpartisan Analysis. For some weeks I had been studying the
pubHc utterances and official acts of the candidates. On October 11
the National Popular Government League published a bulletin titled
"The Power War and the Presidential Candidates." CarefuUy
documented, the bulletin showed the opposing candidates' attitudes
on 20 phases of the power problem.
Smith's position on the sale of pubhc power disturbed me. Hoover's
position was clear. In an address before the Columbia Basin League
at Seattle on August 25, 1926, Hoover had said: "Where there is a
byproduct of dams for other major pubHc purposes such as navigation,
etc., then the federal government should lease the power rights so
as to recover as much of the whole of its total investment as can be."
That pronouncement still stood unchanged.
With Smith it was different. Since 1919 he had campaigned for
"public ownership of power." It had been assumed he meant all the
way from the water wheel to the house, office, store and factory. He
had cited Ontario Hydro as an example and advertised the fact that
Ontario consumers were buying current at one-half the rates charged
in New York. In a special message to his legislature in 1923 he demand-
ed the immediate development of the Niagara and the St. Lawrence
with the state itself owning and operating the power plants and trans-
mission Hnes and selling the power direct to municipalities. This was
the Ontario practice that Norris and Johnson were fighting for at
Muscle Shoals and Boulder Dam.
Three years later, in 1926, Al Smith proposed for the third time the
creation of a state power autiiority to develop the water power of the
entire state. But he was vague in his statements regarding regulation
and distribution. On March 15, 1926, he told a New York Times re-
porter: "When we speak about furnishing cheaper light, heat and
power, we mean we will furnish it cheaper to the distributing company
than such company is now able to buy it from privately owned and
privately operated generating plants .... the state will own the energy
and must find someone to idistribute it from this point, it can therefore
have something to say about the piice at which the private corporation,
owning the distributing system, may finally dehver it for consumption."
This change in his policy was reflected in his acceptance speech
when he stated he would fix retail rates in the contracts with private
distributors. Having no confidence in the contract proposal, I ad-
dressed a letter to the governor inquiring whether he would include
a provision in the law giving the government or a state the right to
construct transmission lines to market the power in the event the
POLITICS AND WATER POWER 185
private companies refused to guarantee satisfactory low rates. To
be fair and make certain Hoover had not changed his opinion, I ad-
dressed a similar letter to him. From Hoover's secretary came a letter
saying, 'with kind regards," that it was impossible for the candidate
to answer many such questions, and, "I hope you will forego insisting
upon a departure from the rule." No reply came from Smith so I
wrote my question on a sHp of paper, mailed it to an influential friend
in Smith's headquarters, Raymond V. IngersoU, who believed as I did,
and asked that it be shown the governor. Pronto, as I was about
to go to press, the answer came back that Smith would say no more
on this subject in the campaign. It was clear then that both candidates
were sidestepping this phase of the controversy.
Another question then agitating the pubHc mind was the comparative
merits of regulation and pubhc ov^niership. Smith had expressed no
confidence in regulation by state commissions but had said Uttie or
nothing about federal regulation. Hoover was different. His position
was clearly defined in the title of his address on October 14, 1925,
before the National Association of Railroad and PubHc UtiHties Com-
missioners. It read: "Why the public interest requires state rather
than federal regulation of electric pubHc utiHties." He asserted that
state regulation 'lias been effective" and that there was "pubHc danger
in further federal centralization."
At that time the states had no control over the securities and rates
of operating companies owned or controlled outside their boundaries
by gigantic holding companies. The holding companies operated in
interstate commerce and were then issuing bilHons of dollars of so-
called "blue sky" stock unsupported by tangible assets. There was
no federal law to protect investors so the field was clear for ''write-ups,"
especially of common stock. In 1928 the situation was menacing.
Because of the lack of pubHc control many thousands of investors lost
uncounted milHons of dollars in the stock market crash a year later.
Under the Act of 1920 the Federal Power Commission did have
power to regulate securities and rates of companies operating water
power plants under lease if there was no state regulation. Hence, the
appointment of the Secretaries of War, Interior, and Agriculture, then
automatically constituting the commission, was of great importance.
Would they or would they not enforce the law?
The evidence showed that Hoover had been the chief speaker at
three annual conventions of the National Electric Light Association
and that these addresses as well asi his poHtical speech in 1924 attacking
the pubHc ownership position of Senator LaFoUette, candidate for
186 THE CONSERVATION FIGHT
the presidency on the Progressive ticket, had been printed and widely
circulated by the utiMties. Smith had no such record. Hoover had
ignored the findings of the Federal Trade Commission investigation;
Smith had quoted from them at great length.
Following Patrick Henry's practice of judging the future by the past,
I predicted that if Mr. Hoover were elected President he would ( 1 )
quietly or openly oppose, or veto if necessary, pubHc ownership of a
generating plant or the public distribution of power anywhere; (2)
favor the side of the private power companies in the event of a com-
promise bill; (3) appoint cabinet officers who would speed up the
leasing process; and, (4) be constantly quoted and used as a major
authority in power trust propaganda while remaining silent on the
methods of the power interests in influencing the press, the platform,
the universities, and the public schools.
Governor Smith if elected would ( 1 ) actively and openly aid in the
enactment of bills for pubHc ownership and generation of power to be
leased for distribution to private companies on short terms with rates
to ultimate consumers fixed in the contract; (2) favor the side of the
people on any compromise bill; (3) appoint cabinet members who
would not speed up the leasing process and would enforce the Federal
Water Power Act, including the clause giving first right to publicly
generated power to public agencies; ( 4 ) would be quoted as favoring
public power and would oppose the propaganda methods of the utiH-
ties.
During the next four years these forecasts were to be fulfilled with
an accuracy that surprised even myself.
The presidential contest closed as Hoover devoted a Madison Square
Garden speech to warning the nation against socialism. Smith's reply
at Boston stated that the conservation measures being urged were no
more socialistic than any other governmental activities — many of which
had at their inception been similarly denounced as radical or socialistic.
The G.O.P. Wins. The Republicans won by a landslide, carrying
40 of the 48 states for Hoover and gaining control of both Houses of
Congress by large majorities. In the larea where the power question
was a vital issue results were surprising. In the Muscle Shoals region
Hoover carried the normally Democratic states of Tennessee and North
Carolina and made big gains in Alabama. Obviously, the Elizabethton
speech, which the voters understood as an endorsement of government
operation of Muscle Shoals, had helped him.
The Aftermath. The Republicans held their victory to be a "man-
date*' against government in business — especially the electric power
POLITICS AND WATER POWER 187
business. Progressives were dismayed and discouraged. Senator
Norris was downcast. Although he was a "dry" and disagreed with
Smith on the distribution of power he had astonished his prohibition
friends by actively supporting the governor in the campaign because
of his conviction that disposition of the country's water resources was
of paramount importance. In frequent conservations he told me the
power trust had achieved its greatest poHtical victory, almost incon-
ceivable to him in the face of the revelations of the Federal Trade Com-
mission investigation. He predicted that unless the Supreme Court
held the Coohdge pocket veto invalid and his Muscle Shoals bill, passed
in June, was in fact law, the property could not be saved for the people.
Other liberals were not so gloomy. They pointed out that the Re-
publican contingent in Congress had been and was still sharply divided
on the power question. Senator William E. Borah of Idaho, outstand-
ing liberal Republican who vigorously supported Hoover, stated that
he disagreed with him on the power question and if power were the
only issue in the campaign he would not have supported him.
President Coolidge Signs the Boulder Canyon Bill. The campaign
pledge made to hold California's votes by passing the Swing-Johnson
Boulder Canyon bill, pending for six years, was kept though with some
unwanted amendments. The enactment came promptly at the begin-
ning of the final session of the 70th Congress and was signed by
Coolidge on December 21, 1928. The federal government, with the
Reclamation Service as its agent, was authorized to build the dam and
powerhouse. But government transmission lines were denied. The
Secretary of the Interior was authorized to allocate power at the dam
between public bodies and private companies.
CHAPTER XrX
HOOVER'S HONEYMOON DAYS
Election of Herbert Hoover brought a vast sense of relief and great
expectations to many people. Millions of voters believed a dangerous
Roman Catholic politician had been kept out of the White House and
that a high-minded humanitarian engineer-statesman had been elected
instead. They expected vigorous direction and action. Such promis-
ing leadership would redeem past party mistakes and merit public
esteem. The economic system would be kept on a sound footing and
prosperity assured, with a "chicken in every pot," for even the humblest
toiler. The Prohibition Act would be enforced, and the morals of the
masses improved. Natural resources would be developed and utility
services rigidly regulated.
To be sure, Hoover did not favor public power, but that was a
local problem. Along with Coolidge, he made an exception in the
case of Boulder Dam, and gave the country to understand he would
do the same in the Muscle Shoals case. It was generally anticipated
that Congress would reenact the Norris Muscle Shoals bill and that
Hoover would approve it. Thus, the old squabble would end. Hoover
would faithfully administer the new Boulder Dam Act and muni-
cipalities of Southern California would receive preference in use of the
hydroelectric power as provided by law. The Federal Water Power
Act would be administered as intended, and no private company would
be permitted to issue millions of watered stock on a lease for develop-
ment of a publicly owned site.
All these pleasing prospects were shattered within weeks after the
new president took command. On March 3, 1931, Hoover vetoed the
Norris bill for government operation of Muscle Shoals. His veto
message had a vehemence seldom paralleled. Significantly, a Repubh-
can House rejected the leadership of its President and passed the Norris
bill over his veto by a majority of 73. The Senate came within six votes
of reenacting the bill over the Hoover veto, although a two-thirds
majority is required.
Public opinion turned against the power trust and created a national
climate that made its political support a liability. After 30 years of
warfare, the nation was ready for public operation of Muscle Shoals
and multipurpose development of the Tennessee River watershed.
188
HOOVER'S HONEYMOON DAYS 189
Part of the reason was to be found in events of the previous ten years
and part in sensational happenings in Hoover's first two years in the
White House.
The Stock Market Crash. The "Great Depression" of 1930-1936
started on October 29, 1929, with the worst stock market crash in
American history, following the "Mad Decade" of frenzied speculation.
It has been estimated that book values of stocks and securities of all
kinds dropped $40 bilHon in eight weeks. A sizable proportion were
electric utiHty stocks. Tragic disillusionment followed. Through
1928, despite warnings that the business boom was due partially to
over-capitalization of corporations and was dangerous, Coolidge and
his milHonaire Secretary of the Treasury Andrew W. MeUon, whose
financial judgment was supposed to be infallible, had gone out of
their way to advise the nation that all was well. Hoover had confirmed
this comforting assurance when he took ofiice and announced that an
era of permanent prosperity for all had arrived.
Purchasers of industrial stocks in the boom period knew they were
taking a chance but the holders of electric utility securities had a
special reason for confidence. A constant barrage of propaganda by
the industry had assured the public that electric securities were
completely safe and sound because their issuance had been approved
by powerful state public service commissions. Hundreds of thousands
of investors, from rich bankers and businessmen to overalled workers
and even "widows and orphans" were horrified to find these "customer
owned" stocks suddenly worthless.
What was the cause of this catastrophic and totally unexpected
debacle? Was it an "act of God" or one of human origin which might
have been avoided? Fortunately, the Federal Trade Commission in-
vestigation of electric and gas corporations was in progress to show
that the catastrophe was not an "act of God." Its disclosures of the
utilities' financial and propaganda activities threw a flood of light on
the whole economic system. Historians pronounced it the most
important inquiry into the economic life of our republic up to that
time. And, since our people were doing more sober thinking on the
basic structure of our civihzation than they had since 1776, this inquiry
became Episode No. 1.
The FTC Investigation. Senator Thomas J. Walsh of Montana
introduced his resolution for the investigation in February 1927, and
it passed a year later, February 15, 1928. Open hearings began on
March 8, when the presidential nominating campaigns were becoming
intense, and lasted seven years.
190 THE CONSERVATION FIGHT
Walsh was disturbed over the pyramiding of holding companies and
the consequent inflation of securities and defiance of antitrust laws.
He feared a financial panic. Norris was also alarmed over false utility
propaganda and its cultural and pohtical effects. Walsh and Norris
joined forces, seeking a Senate investigation of the Teapot Dome
variety headed by Walsh. Utility executives, fearing Walsh, assured
the Senate they had nothing to hide but objected to an investigation
by poHticians; let it be by economic experts — the Federal Trade Com-
mission, for example. When the investigation was ordered, everybody
prepared for a whitewash similar to that of 1926. The investigation
would have been a fiasco but for one thing, the accidental appoint-
ment of Robert E. Healy as general counsel. Healy was a real public
servant, both intelligent and courageous, who held personal and pro-
fessional integrity above party poHtics. A former member of the
Vermont Supreme Court, Healy was a Department of Justice attorney
who had been recommended by Attorney General John G. Sargent,
another Vermonter, shortly before passage of the Walsh resolution
and without reference to that inquiry.
I had prepared to fight and publicize data that I expected the Federal
Trade Commission would ignore, but presently word came from its
employees that this investigation was to be the real thing. One day
Colonel William H. England of the commission came to my oflBce to
inquire if I knew anything about a handsomely printed pamphlet wide-
ly publicized and sent to all members of Congress. Its author was
E. A. Stewart, professor of agricultural engineering at the University
of Minnesota. By inference, the reader got the impression that the
university had sponsored the pamphlet since the name of the publisher
was not given. The pamphlet purported to prove that the farmers
were being served electricity by private companies just as efficiently
and cheaply as the Ontario publicly owned system served Canada's
farmers.
I handed the colonel a jacket filled with data and was able to inform
him that when I was on an investigation trip the previous summer a
professor at the Michigan Agricultural College at Lansing gave me a
copy of this pamphlet with the remark that "Stewart has made us a
reliable report on Ontario hydro rurals.*' By "us" he meant members of
the teaching staffs in the nation's agricultural colleges dealing with
rural electrification, who considered Stewart a trustworthy authority.
Their confidence was further enlisted by Stewart's statement in his
preface that his data had been approved by Ontario engineers. I told
Colonel England that the engineers angrily denied to me that they had
HOOVER'S HONEYMOON DAYS 191
endorsed Stewart's findings and that his report was false and mis-
leading; moreover they were outraged because they had been given
to understand the study was for his university.
I told Colonel England I was certain Stewart had been employed and
paid by the private utilities to do that job. One reason I gave was that
the report had been mailed to Congress at a critical stage in the dis-
cussion of the Muscle Shoals bill. Its manifest purpose was to refute
Senator Norris' claims that Ontario rural service cost less than that
charged farmers in the United States. The refutation was to be ac-
complished by pitting against him a purportedly scholarly and scienti-
fic study of the subject. The investigation later proved the truth of
my surmise. The Stewart case became an ugly example of how univer-
sity men were used in utility propaganda. ^
Chief Counsel Robert E. Healy. The England interview occurred
early in the investigation when a whitewash was anticipated. A few
days later Chief Counsel Healy requested that I come to his office
for a conference. I found him to be a tall man of dignified bearing
with a keen eye and an impressive bass voice. I had been wondering
if he would be able to resist the terrific pressure certain to be brought
on him. At the conclusion of the talk I remarked, rather facetiously:
"Judge, are you aware you are becoming a curiosity in Washington?
My friends on the Hill and elsewhere are asking me how it happens
that you, a conservative RepubHcan from CooHdge's home state, are
going to bat for the Walsh resolution. Would you Hke to know what I
am telling them?" He showed no resentment at the brash question
but smiled quizzically and said, "Indeed I would." To this I responded:
"Well, I tell then that in my opinion you have two aflFlictions. First,
you have an old-fashioned New England conscience and, secondly,
you have respect for the ethics of your profession. You are no advocate
of public ownership but you seem possessed with the absurd idea,
politically speaking, that you have been retained as an attorney by the
Senate to defend the interests of the people of the United States and
propose to do it."
The ex-judge seemed pleased. Rising to his full height and shaking
his finger at me very earnestly, he said: "That's about it. But if these
utility fellows are found guilty they will be condemned out of their
own mouths and official records." I knew then that the probe was
in competent hands and there would be no whitewash.
A Fair Investigation. The investigation was eminently fair. Hear-
ings were presided over by Commissioner Edgar A. McCulloch, former
chief justice of the Supreme Court of Arkansas. Judicial procedures
192 THE CONSERVATION FIGHT
were observed. The utilities and their attorneys were given oppor-
tunity to refute any statements of fact, with the result that the findings
were incontrovertible. The findings received press coverage and con-
sequently had great influence on public opinion.
By 1930 Congress and the nation had learned how the electrical
industry, through the National Electric Light Association, spent millions
of dollars to influence the press, the educational system, and profes-
sional and civic organizations in their warfare against pubhc owner-
ship. Electricity consumers were not pleased to learn that they were
paying for this propaganda as a part of utihty operating expenses and
that it did not come out of the pockets of the company owners.
The Apologia. Throughout the early hearings, utihty spokesmen
proclaimed that when they had their day in court their answer would
satisfy the public. The answer came in January 1930 when Bernard
F. Weadock, an $80,000 a year attorney for the NELA, who had been
in constant attendance at the hearings, made a statement to the Federal
Trade Commission and gave out an extensive press release.
He denied none of the facts unearthed. He claimed the industry
had been on the defensive and had been forced to "combat the mis-
representations and activities of an interlocking group of organizations
and individuals opposed to private ownership of any industry." This
he dubbed "an unholy alliance" whose aims were the same as those
of the Socialist party.
The charge was both false and ridiculous. The National Popular
Government League was one of the four groups named. The others
were the League for Industrial Democracy, the Public Ownership
League of America, and the Socialist party. All four were operating
independently as always, and their combined expenditures would total
only a small fraction of the sums expended by the power trust. In an
open letter to George B. Cortelyou, chairman of the Joint Committee
of Utility Associations, I pointed out the absurdity of the answer and
since he had declared his organization was "going to give the facts
about the utilities" I challenged his sincerity. There was no answer.
For two years the Federal Trade Commission hearings dealt with
utility propaganda. The public, educators, and authors learned much
that was new about the relationships of big business and government.
The commission, however, was not authorized to look into power
company lobbying and politics. However, in each of these fields, an
incident, so sensational and revealing as to challenge national attention,
occurred in the fateful year of 1930.
Chairman Huston. During the venter of 1929-30, when the Muscle
HOOVER'S HONEYMOON DAYS 193
Shoals controversy was at white heat in Congress, a lobby investiga-
tion had been in progress by a special committee composed of such
outstanding Senators as Borah, Walsh, Blaine, and Robinson. The
caustic Caraway was chairman. During February 1935 commonplace
Muscle Shoals lobbyists had been summoned to testify, but on March
12, Claudius H. Huston, New York businessman and chairman o£ the
Republican National Committee by appointment at the instance of
Hoover, was placed on the witness stand. Reporters thronged the
hearing room.
Congress was well acquainted with the work of the Tennessee River
Improvement Association, which was devoted to private development
and had fought all the Norris Muscle Shoals bills for government
operation. It was not well known that Huston, then a manufacturer
living in Chattanooga, had been head of the organization. The astound-
ed senators were told by the witness under oath that although he had
been president of the association from 1915 to August 1929, he could
supply no definite information as to how much money had been col-
lected and spent during that period. He could only estimate that
the association had "probably spent between $400,000 and $500,000."
No books had been kept showing individual contributors and only
check stubs for expenditures. Colonel Worthington handled the funds.
The committee was never able to get stubs or canceled checks from
either Worthington or Huston. It became obvious that the power
companies had been heavy contributors. Queried as to how and for
what purpose this vast sum had been spent, Huston s memory failed
him on all critical points. He referred the committee to Worthington.
Finally, Huston admitted that on March 7, 1929, three days after
Hoover's inauguration, and only four months before Huston became
Republican national chairman, he had solicited and received a check
for $22,000 from the Union Carbide Company, then a bidder for Muscle
Shoals. The check was to be used by lobbyist Worthington in Wash-
ington. Overnight Huston became a political liabiHty. Newspapers
reported that Republican senators urged him to resign and pressured
Hoover to force him to do so. After a round of denials, Huston resign-
ed.
The Plot to Unseat Senator Norris. Ordinarily the unsavory tactics
of political campaign managers are passed over by the American
people as antics of imperfect men in this imperfect world. But oc-
casionally some super-reprehensible trick, which boomerangs dis-
astrously upon its perpetrators, is tried. Such an incident occurred
when both national and state Republican committees attempted to
194 THE CONSERVATION FIGHT
defeat Senator George W. Norris of Nebraska as the nominee of the
Republican Party in the primaries and general election of 1930. As the
campaign opened in the summer, the Senator's principal opponent
appeared to be Nebraska State Senator W. B. Stebbins, a prominent
Methodist churchman. Though it seemed that nothing unusual would
occur, there came a surprise. At the last moment one George W. Norris
of Broken Bow, a little prairie town in Nebraska, filed as a candidate for
the Senate. No one outside Broken Bow had ever heard of the other
George W. Norris, but inquiry soon disclosed that the unknown aspir-
ant was a young grocery clerk, of meager education, dependent on
his weekly wages and without any political experience whatever.
A clever plot was at once revealed. The name George W. Norris,
without any descriptive words, would appear twice on the ballot. The
voters would be unable to know whether they were voting for the
Senator or for the grocery clerk. The election authorities would be
forced to throw out all Norris ballots and the Senator would be defeat-
ed although he could run as an independent in the general election.
The plot would have succeeded except that the grocer's application,
sent by mail, was postmarked July 3, the very deadline for fihng, and
was not delivered until July 5, after the holiday. The secretary of state,
a "regular" Republican, accepted the July 3 postmark and declared the
entry legal. Attorney General C. A. Sorensen, an "insurgent," ruled
it was not. The case went to the State Supreme Court, and on July 18
Chief Justice Goss decided the grocer's entry had arrived too late and
that the Senator's name was the only Norris on the ballot.
The Nye Committee Investigates. On July 19, a Senate select com-
mittee on campaign expenditures headed by virile young Republican
Gerald P. Nye of North Dakota arrived in Broken Bow only to find
grocer Norris had vanished. United States marshals could not locate
him. Moving to Lincoln, the conmiittee heard state officials and
campaign leaders solemnly swear they knew nothing about the fledg-
ling aspirant. He had entered the race on his own initiative. Tracked
down and put on the stand the young grocer swore all this was true.
Chairman Nye was stumx>ed. The affair took on the aspect of a detec-
tive mystery. Intense national interest was aroused before the ^'break"
came. Walter W. Head, treasurer of the Republican State Committee,
and chairman of the board of the Nebraska Power Company, had
employed Victor Seymour, a Lincoln attorney, to conduct a statewide
straw vote to ascertain the strongest candidate to defeat Norris. The
result was discouraging.
Paul Y. Anderson, who was covering the investigation for the St.
HOOVER^S HONEYMOON DAYS 195
Louis Post Dispatch, interviewed Seymour's secretary about the survey
and incidentally discovered she had typed the newspaper release
announcing the candidacy of grocer Norris. Nye promptly subpoen-
aed the young lady, who verified the story.
Consternation followed. Key witnesses changed their testimony to
avoid prosecution for perjury. It was then disclosed that candidate
Stebbins, operating through Seymour and a Broken Bow attorney, had
paid the grocer a $500 Liberty Bond and expenses. Nebraska voters
responded with a big primary election victory for Senator Norris. In
the general election the Republican state committee threw its support,
to no avail, to the Democratic candidate, former Senator Gilbert M.
Hitchcock, owner of the most powerful newspaper in the state, the
Omaha World.
It was evident in both elections that large sums of money were being
spent to defeat Senator Norris, some from outside the state. The Nye
committee was curious to know who paid for hundreds of thousands
of copies of a scurrilous pamphlet attacking Norris which had been
printed in Washington, D. C. Sitting in Washington, the committee
disclosed that the money came from Robert H. Lucas, director of the
Republican National Committee. Lucas admitted he had spent $4,237
on the pamphlet but claimed he had borrowed the money and paid for
it out of his own pocket. J. R. Nutt, treasurer of the RepubHcan
National Committee, testified he had personally reimbursed Lucas.
Both shamelessly declared to the effect that they were out to beat "a
Democrat" and that Norris should be kicked out of the Republican
party. Despite flagrant violations of law and decency, the only persons
prosecuted were grocer Norris and Seymour who served short jail
terms for perjury.
A Nonpartisan Broadside for Norris. In the 1930 campaign the
Republican high command, national and state, was so deeply indebted
to power interests they took joint action to eliminate Norris lest he
succeed with his Muscle Shoals bill. Early in the campaign Senator
Bronson Cutting of New Mexico asked me to drop in for a talk about
the situation. He told me that Senator Norris was vdthout campaign
funds, had no personal organization and no newspaper support with
one minor exception. With the well-financed machines of both old
parties against him, his chances of wdnning were gloomy indeed. Norris
needed help. I prepared a broadside, tabloid newspaper size, sum-
marizing Norris' record and carrying endorsements from distinguished
liberals in all parties. A circular letter carried an appeal for checks
and endorsements of Norris' -candidacy. I received far more endorse-
196 THE CONSERVATION FIGHT
ments than could be used. Excerpts were used in the broadside, telling
Nebraska voters that the Senator was needed to protect the national
interest as well as their own. The endorsements came from economic
and cultural fields as well as political. On the political side, strong
support for Norris came not only from Hiram Johnson and young Bob
LaFoUette, who were on the outs with Hoover, but from Senators
Borah and Howell, GiflFord Pinchot, and from Democrats hke Senators
Walsh of Montana, Dill of Washington, Congressmen James of Michi-
gan and Grosser of Ohio. William Allen White, the Republican Sage
of Emporia, Kansas, wrote : "The election of Senator Norris is the most
important matter before the RepubHcans of this country." Professor
John Dewey, Golumbia University's famous philosopher, added that
"anything but a triumphant re-election of Norris would be a national
calamity. I cannot believe that the power interests can deceive and
mislead the voters of Nebraska." Noted cartoonists John M. Baer of
Labor and Talburt of the Scripps-Howard chain contributed cartoons,
and 28 correspondents from the Senate press gallery sent tributes for
the four-page, tabloid flyer. We printed 200,000 copies and mailed
15,000 direct to Nebraska state and county officials, school superin-
tendents and teachers, and a roster of professional organizations that
included the state's lawyers, doctors, and dentists. The rest went to
the one-room headquarters of the Senator's secretary, campaign mana-
ger, and son-in-law John P. Robertson at Lincoln. Gontributions were
sufficient to send Robertson $1,200 surplus for other campaign expen-
ses.
During preparation of the broadside my office was broken into, and
all letters from the press gallery stolen. The police never located the
thieves, but the press boys sent duplicates and wrote articles about
the incident as one more illustration of the tactics and desperation of
the opposition. The vote on November 5 stood Norris, 247,118 and
Hitchcock, 172,795. Norris won by a majority of 74,323.
The Revolt of the Educators. A few weeks after the Federal Trade
Gommission investigation began, a veteran Washington correspondent,
John Snure, hailed me on the capitol steps: "Keep your eye on this
business of power trust propaganda in the public schools. The people
won't stand for it. It is going to raise hell!" John Snure was prophetic.
The inquiry revealed a highly financed campaign to mould the mind
of youth through education from grade schools to university graduates,
with attendant corruption of many teachers and abandonment of uni-
versity ethics. The boldness and crudeness of the scheme proved its
undoing. The storm of resentment generated had marked repercus-
HOOVER^S HONEYMOON DAYS 197
sions in politics. It is. of more than mere historic interest since the
power interests suspended their mass attack on the American mind
for only a few years and then returned to it.
An Invitation. In 1928 Dr. Peter H. Odegard, an alert young pro-
fessor of government at WilHams College (Massachusetts), wrote me
that he was chairman of a roundtable discussion on the political scan-
dals of that year, to be held in Chicago on December 29 at the annual
convention of the American Political Science Association. Odegard
wanted me to address the discussion group on power trust propaganda,
especially in universities, as exposed by the Federal Trade Commission
investigation.
I replied that I was too busy to stop and write a poHte academic
treatise suitable for such an occasion and that even if I had the time
r would doubtless offend his group by exhibiting a half dozen pamph-
lets or books published by utiHties in which prominent university
professors were quoted as authorities for outright misstatements of fact
or palpably misleading statements, with their academic connections
carefully displayed. Also I would recount where they had appeared
in courts as expert witnesses for power companies. Next, I would
pull out official documents proving their statements were falsehoods.
Moreover, I would display a copy of an exhibit from the Federal Trade
Commission files showing how much the professors were paid by the
utilities for consultant services unknown to the public. I concluded,
of course, that he would not dare have a presentation of that kind.
Dr. Odegard replied that was exactly what he wanted done. Un-
decided, I consulted Senator Norris and he said: "You must! you must! I
We cannot miss this opportunity to get the truth to university men.''
So I accepted and gave an offhand talk, just as I had forecast, using
a brief case full of documents. About 200 university men, many stand-
ing along the walls, packed the room. I never had a more attentive
audience. A week later Odegard wrote me:
". . . . The effort of the Power Trust to insinuate itselF and its pro-
paganda into American schools and colleges constitutes a challenge
which educators cannot ignore. Anyone interested in the probity of
the teaching profession cannot be indifferent to the appalhng facts
disclosed in your Chicago speech.
"So many requests have been made for copies of your address that
I am writing you in the hope that it can be put in some printed form
so as to be available to members of the American Political Science
Association, the American Association of University Professors and
like organizations. You will recall that a resolution embodying this
198 THE CONSERVATION FIGHT
request was unanimously adopted at the round table meeting in
Chicago .... In view of the importance of the subject and the great
interest manifested in it you are under a peculiar obligation to see that
this is given the widest possible pubHcity.
"If I can be of lany assistance in making this possible please feel free
to call on me. It is imperative that there be as little delay as possible."
The Challenge To Educators. Several professors helped raise a fund
for the purpose and in April 1929 I published a 48-page bulletin entitled
The Challenge of the Power Investigation to American Educators.
Several thousand copies were mailed to professors in the engineering
and social science departments of our leading universities and colleges.
They met the challenge thus sponsored by the political scientists in
creditable fashion. Proper relations with industry was one thing, but
unauthorized use of university names for false propaganda by faculty
members secretly in the pay of the utilities was quite another thing
and could not be tolerated.
Specific Cases. Several examples of misuse of educators were cited
in the roundtable talk. I held up and described a 36-page pamphlet,
Government Fails in Business — Federal, State, Local, which had been
circulated by the the Washington lobby, the Joint Committee of Na-
tional Utilities Associations. One chapter, headed "Ontario Hydro-
Power Myth," sought to explain why rates of the public power system
of Ontario were one-half to two-thirds lower than private rates in the
United States. One paragraph read: "Dr. A. E. Kennelly, professor of
electrical engineering at Harvard University and the Massachusetts
Institute of Technology, reports that the Ontario public treasiuy pays
50 percent of the cost of current sold to households and farms."
Next I exhibited the October 1928 issue of the official Bulletin of
the Ontario Hydro-Commission, which reported that the total domestic
revenue of the entire system for the three years 1925, 1926 and 1927
was $22,264,000. Since power is sold "at cost," then according to Pro-
fessor Kennelly's statement more than $11,000,000 must have been
taken from the provincial treasury to pay for it. The report, however,
showed that the Hydro system had paid all expenses out of revenue
without subsidy from the provincial government. The province had
put $2,735,013 during the previous six years into construction of rural
distribution lines to aid agricultiure, but this was in no way a subsidy
to Hydro.
I then showed another exhibit from the Federal Trade Commission
investigation which revealed that Professor Kennelly was a consultant
to the National Electric Light Association. His fee was $5,000. After
HOOVER'S HONEYMOON DAYS 199
citing several circumstances, I described the fashion in which the Uni-
versity of Idaho was used for a specific purpose.
Enter the University of Idaho. On September 10, 1927, The Electri-
cal World of New York carried an article captioned "Government
Energy Dear: Farm Engineer and University Agricultural Department
Head Doubts Economy of Service from Government Plant at Minidoka,
Idaho." The text disclosed that Professor M. R. Lewis had made a
survey and found when proper cost accounting was applied the actual
cost was "15 cents per kilowatt hour delivered." In letters to me the
professor had truthfully disclaimed the use of this figure but he dechn-
ed to request the magazine to make a correction.
The Boise (Idaho) Capital Times on April 18, 1927, stated that the
report "reveals Minidoka power really costs the settlers seven times
company's juice." The Hof er publicity agency of Salem, Oregon, which
specialized in fighting public ownership, had a similar statement in
circulation. The Hofer agency was sending free material to small city
daily and weekly newspapers throughout the United States — some
13,000 of them. It was subsidized by power companies to the extent
of $84,000 annually. "" The purpose of the pubhcity was clear: The
Boulder Dam and Muscle Shoals bills were still pending, and the fact
that a government dam could give consumers low cost power must
be discounted. Wanting to know how low and why, my wife and
I spent a week in 1926 investigating the Minidoka project. I des-
cribed it thus: "Here is an area of 190 square miles wihich in 1904 wa^
a sage-brush desert. Today it has a population of 14,000 — ^2,286 farms
— 7 towns — 23 schools — 33 churches — 5 banks— and products valued
at $5,000,000 per year. A power plant at the irrigation dam built in
1910 on the Snake River pumps water for the land and also furnishes
commercial electric service. Over 100 miles of transmission lines carry
electric current from the 10,000 H.P. power station to the towns and
also to some twenty mutual farm companies."
In the front yard of each farm home stood a 20-foot pole topped by
an electric light giving a person standing on a high building in Burley,
Idaho, the impression of a large city stretching in every direction. The
town of Burley bought its wholesale current at an average of one cent
per kilowatt hour, retailed the current at a top rate of eight cents and,
after paying all costs, was putting a profit of $10,000 a year into the
city treasury to reduce taxes.
The Federal Trade Commission had investigated and found that
the Idaho Power Company financed Professor Lewis' report. W. R.
Putnam, vice president and general manager of that company, admitted
200 THE CONSERVATION FIGHT
that in May 1925 there had been organized in the oflfice of Dean E. J.
Iddings, dean of the University of Idaho College of Agriculture, a
group known as the Idaho Committee on the Relation of Electricity to
Agriculture. The committee consisted of 17 educators, farm and utility
leaders. Dean Iddings was made chairman; Prof. M. R. Lewis, head
of the Engineering Department ( a drainage, not an electrical engineer )
was secretary; and Mr. Putnam treasurer. The purpose was to *'aid
the farmer." First came a survey of the extent and character of rural
electrification in the state. Professor Lewis was engaged as chief
researcher with Prof. Hobart Beresford as assistant. Three reports
had been made, the second of which contained the misrepresentations
regarding the Minidoka mutuals which had been so widely publicized.
The entire expense over four years had been borne by Idaho and north-
west power companies. Lewis had been paid $785 for his services
and Beresford $1,850. '
A National Movement. That was not all. Putnam testified that the
Idaho committee had been instigated by Dr. E. A. White, director
of the National Committee on the Relation of Electricity to Agriculture.
The committee's oflBces were in Chicago. Other Federal Trade Com-
mission reports revealed that the national committee had been pro-
moted and principally financed by the National Electric Light Associa-
tion in 1923, ostensibly to promote rural electrification by the industry.
Its membership comprised a long list of educators, farm organization
officials, and utility executives, with Dr. White as director. Dr. White
in turn was connected with the American Farm Bureau Federation.
Eighteen state committees had been created. The reason why Idaho
received special attention became clear. Senator Norris and others
were citing Minidoka's low rates from a Federal dam and so it had
to be discredited.
A Hesitant Statistician. Similar examples cited in this talk involved
the universities — of Cornell, Pennsylvania, Minnesota, and Iowa, and
the Smithsonian Institution. The trustworthiness of the evidence was
not to go unchallenged. I was unaware that the chief statistician of
the National Electric Light Association was in the audience. He came
forward when I was answering questions and asked to be heard,
I had exhibited a reprint of the chart that Senator Norris used on
the Senate floor, showing that United States residential consumers
served by private systems were paying over 5 cents per kilowatt hour
more than consumers served by the public system in Ontario. Pointing
to the chart politely, for he was a charming gentleman, the NELA
statistician stated that the comparison was unfair and utterly mislead-
HOOVER'S HONEYMOON DAYS 201
ing because Ontario was served by cheap Niagara Falls power while
all but a few American cities were forced to use coal burning steam
plants at a much higher cost. Questioning eyes were turned my way.
I was "on the spot/' It was common knowledge not only that water
power was cheaper than steam but the nation had been repeatedly told
by utility publications that Niagara was an exceptional water power
site, far cheaper than any other such site in the country or the world.
The attack, of course, raised the question whether I was an un-
trustworthy zealot for public power. With all the grace I could com-
mand I calmly said, "It is a fair question. Now will the gentleman tell us
the differential in generating costs between water power and coal
burning steam plants?" Evidently taken by surprise, he hesitated and
then replied, "I do not know."
"What!" I exclaimed, "Do you mean to tell us that the chief statis-
tician of the National Electric Light Association — ^trade organization of
the electrical industry — does not know such an elementary thing as the
cost of production, by whatever means^ of his product?" Again he an-
swered "I do not," and abruptly left the scene.
After he had gone I asked the group not to judge him too harshly be-
cause the point at issue, like finance, was a trade secret. If he had re-
vealed it he would have been severely censured, just as most educators
dare not tell too much truth in their classroom work. Even the experts
of the famous giant power survey in Pennsylvania in 1925 had great
difficulty unearthing the same data but found the difference, while vary-
ing from one plant to another was only a few mills. It did not explain
an overcharge to consumers of over five cents.
At the time this address was made the Federal Trade Commission
probe had been in progress only ten months. There was also another
investigation of a different character. A survey of pubhc utility instruc-
tion in colleges and universities by a joint committee of utility men
and college professors, financed by the NELA and headed by Profes-
sor C. O. Ruggles of Ohio State University, had been in progress since
October 1927. Group conferences had been held in central cities.
Some of the professors present at my meeting had been guests of the
local utilities. Their expenses were paid. It was evident to me that
this accounted for the large attendance and for the friendly attention
I was receiving. The honor of a great profession was in danger. Many
professors present were worried that teachers who revealed forbidden
truths about utilities might be denied promotion or even face dismissal.
They had arrived at the fighting stage and wanted more ammunition.
I was pleased to comply. Knowing that the Federal Trade Commission
202 THE CONSERVATION FIGHT
was about to release "exhibits" covering the information desired, I
postponed publication of my "challenge" bulletin until the release of
an especially important one on March 13, 1929. This document. No.
4167, contained extracts from the proceedings of the National Electric
Light Association conventions, for the previous eight years and includ-
ed a special section covering educational activities. By adding cita-
tions from this and other exhibits and from sworn testimony at hear-
ings, I was able to present as a table of contents to the 48-page
pamphlet the following summary:
"Recent exhibits filed during March in the power investigation by
the Federal Trade Commission give final proof that the utihties have
deliberately planned to control in their own economic interest our
entire educational system from the universities to the grade schools.
It is the first attempt of its kind known to American history.
"The investigation has been judicially fair but effective, all evidence
being obtained from the industry itself.
"The board plan is to capture ( 1 ) professors in the universities and
colleges, (2) teachers in teachers colleges, high schools and grade
schools, (3) textbooks used in all schools.
"The subjects of principal concern are economics, law, political
science and government and all social sciences — engineering and busi-
ness management are distinctly secondary.
"Control of the teaching force and textbooks especially in imiveir-
sities will, it is expected, insure 'straight economic thinking' and the
possession of so-called 'correct information and thus mold the mind
not only of this generation but succeeding generations. Two results
of great financial value to the utilities will follow:
"A. 'Judges of the various courts,' lawmakers in city councils, state
legislatures and in Congress,' members of pubhc utiHty com-
missions, tax commissions, or other administrative bodies, local,
state and Federal,' prosecuting attorneys, engineers, — in short,
all public officials — will be so trained as automatically to oppose
genuine regulation, public ownership, honest valuation, equi-
table rates, etc.
"B. A public opinion will be created so that voters will elect offi-
cials who will approve such policies of government, local, state
and national.
"The character of the alleged 'correct information' desired taught is
already indicated by false and misleading statements of fact, as well
as opinions on public policy, found in reports and expert testimony
HOOVER^S HONEYMOON DAYS 203
of prominent university professors who are now discovered to have
been in the pay of the private utihties.
"Through their organizations, the National Electric Light Associa-
tion, the Joint Committee of National UtiHties Associations, and the
various State Committees of Public Utility Associations, the utilities
have the money, the men, the machinery and the influence to accom-
plish their purpose unless stopped now. This constitutes a challenge
to American educators who are the natural leaders in the struggle to
maintain the integrity of our educational institutions.
"The 'Committee on Cooperation with Educational Institutions' is
the special agency through which the NELA is working. The conven-
tion speech of Dean C. O. Ruggles and the confidential proceedings of
the educational committee, meeting at Chicago just prior to his nation-
wide tour, together v^th other official data, disclose with startling con-
creteness the real import and technique of the whole plan previously
outlined by Chairman Parker.
"Is not a quiet survey of the teaching and writing personnel inevi-
table, if not already in progress?"
Aftermath. The preceding summary epitomized the results of the
investigation up to April 1930, and its overall accuracy was confirmed
as the inquiry proceeded. But I was disappointed with the reaction
to my bulletin and later complained to my friend Professor E. A. Ross
concerning the few letters I had received from educators either ap-
proving or dissenting from the pamphlet. He rebuked me in fatherly
fashion, assuring me that although "the boys" were not saying much
the utilities could no longer get "within ten rods" of a vast majority of
them. He himself was on a committee of the Association of University
Professors investigating the Ruggles' survey, which very shortly quit
"cooperating" with the utilities and disappeared.
Why Cooperation Ended. The origin of the Committee on Coopera-
tion With Educational Institutions is set out in great detail in Exhibit
No. 79 of the Federal Trade Commission which, with many other
exhibits, indicates the importance attached by Judge Healy and the
commission to this episode. It was the most brazen attempt ever made
up to that time to corrupt educational institutions. The investigation
was of the highest value in educating the educators as well as exposing
utility tactics.
The National Electric Light Association set up the educational group
in 1923 under the direction of its public relations section. Its official
purpose was "to bring about a clearer understanding and better meth-
ods of education with reference to pubhc utilities in the higher institu-
204 THE CONSERVATION FIGHT
tions of learning/* The first chairman was John C. Parker, chief en-
gineer of the Brooklyn Edison Company. From 1915 to 1922 he had
been a professor of electrical engineering at the University of Michigan
and enjoyed and merited a national reputation in both academic and
engineering circles. The chairman who launched the Ruggles survey
of utility instruction in colleges and universities was Carl B. Jackson,
general counsel of NELA. He had been chairman of the Railway and
Utilities Commission of Wisconsin and president of the National As-
sociation of Railroad and Utilities Commissioners.
An Epochal Meeting. Jackson held a special meeting of the
committee at the Drake Hotel in Chicago on October 27 and 28, 1927.
Nineteen top electric utility officials and twelve university professors
heard Jackson explain its purpose: "It is my belief that the work has
gone as far as it could go until we had a survey of conditions of a broad
nature to establish the program for future cooperation .... and that
such a survey could be done only by one having the confidence of
educational institutions."
Jackson then introduced Dean Ruggles, who had spent two months
preparing the program.
"Among other things" said the dean, "the proposed survey should
attempt to determine the extent to which students in our higher educa-
tional institutions have the opportunity to take courses in economic and
closely related lines, and courses in public utilities which will enable
them to have some understanding of public utility problems ....
"The graduates of law schools will come in contact with the public
utility field in some such capacities as the following:
"1. As lawmakers, in city councils, state legislatures and in Congress.
The importance of this function is seen when it is realized that the
majority of the membership of these bodies is made up of lawyers.
"2. As members of public utility commissions, tax commissions or
other administrative bodies, local, State and Federal.
"3. As counsel for the utility companies and for the public or regu-
lating authorities.
"4. As judges of the various courts before which are brought many
utility problems.
"The engineers will be called upon to an increasing extent to serve
in at least the first three capacities mentioned above. The knotty
problems which the power and light industry confronts in the deve-
lopment of an efficient so-called superpower system throughout the
country are not so much engineering in nature as they are economic,
social and political. As employees of public utility companies engineers
HOOVER^S HONEYMOON DAYS 1805
should realize that poor power factor may be found in the field of public
relations as well as in the field of engineering ....
"The graduates of hberal arts colleges and schools of business will
constitute a very important part of the public' with which the utilities
must constantly deal. Many of these will, of course, became teachers
in the colleges and universities. It goes without saying that it is in
the interest of the public and of the public utiHties that such graduates
may help to bring about fair and equitable regulation of the pubhc
service industries."
The survey was going to determine the exact status of public utility
teaching, or lack of teaching, in all universities and colleges throughout
the country. The program disclosed Professor Ruggles as an advocate
of "fair and equitable regulation" as opposed to public ownership, as
were nearly all the professors present — ^but not quite all. Two young
professors were in disagreement. Horace M. Gray, of Illinois, wanted
to strike from the program sections that implied students should be
trained to favor the utilities' viewpoint. Professor Sharfman, of Michi-
gan University, said bluntly, "We have not a clear idea of what we
are after." General George H. Harries, of H. M. Byllsby and Company,
gave answer: "Are we telling our right names? We of the utilities
would expect to be the beneficiaries of this survey because there is so
much false doctrine in the economics which affect us ... . This is a
missionary effort and nothing more."
E. S. Mansfield of the Boston Edison Electric Company wanted
"the type of curricula to educate the men we want in our industry."
Efforts to get specific were sidestepped by Jackson and Ruggles with
the assurance that "the big problem is to get a perspective in the field
of fundamental economics and the ability for straight thinking." Vener-
able Prof. Richard T. Ely, formerly a noted progressive at the University
of Wisconsin, backed up the idea with the remark that "economics
is the most fundamental subject which a law^^er ought to have." James
C. Bonbright, of Columbia University, wanted to know what sound
fundamental economics might be.
There is no record of response to the objections; indeed, the public
minutes of the meeting reflect none of the discussion.
Ruggles Rebels. The outcome of this auspicious undertaking was
humiliating to the utility leaders who promoted it — the demise of the
Committee on Cooperation. The reasons were giving in the June 1,
1929 report of the survey prepared by Prof. Ruggles, the directors, and
signed only by the educators. The report was pubhshed by the Na-
tional Electric Light Association with the explanation that when the
206 THE CONSERVATION FIGHT
Federal Trade Commission hearings began making charges against the
power people for their educational activities the utiHty members of the
committee withdrew from participation. The report stated that until
the electrical industry had freed itself of the charges of "lack of good
faith, of improper propaganda, and of practices subversive of the public
welfare" it was untimely for educators to cooperate further and there-
fore membership "is automatically terminated." And membership
was never revived. The professors, Ruggles especially, felt they had
been trickled and embarrassed. Ruggles stated: "Upon the organiza-
tion of the committee for the survey in October, 1927, the representa-
tives of the industry assured the educational members that the utilities
were willing to make available all information relative to the public
aspect of the industry. But although no attention was paid to public
ownership and regulation full information asked for was not forth-
coming, especially about holding companies [which made] effective
and fruitful cooperation out of the question."
Political Scientists Take Action. The American PoHtical Science
Association, at the time of the roundtable discussions, unanimously
adopted a resolution by Charles A. Beard and A. R. Hatton, requesting
the American Association of University Professors "to inquire into the
foundation of such charges against universities and university pro-
fessors" as had grown out of the Federal Trade Commission investiga-
tion and to recommend "standards of professional ethics."
The association s report of 1930, written by E. R. A. Seligman, promi-
nent Columbia University economist, and signed by John Dewey of
Columbia, and Edward Allsworth Ross of the University of Wisconsin,
found that "there has been a close connection between public utilities
and the academic professions." Referring to the survey, the professors
found that "while the tone of the Ruggles speeches was perhaps a
little too exuberant and while a still franker statement of the situation
might seem to have been desirable, there does not seem to be much of
a serious character to criticize in the way he conducted this investiga-
tion or in the activities of the cooperating instructors." Professor
Seligman concluded: "The university professor must be like the judge.
His reputation for impartiality must be equally unsullied. He cannot
take pay from private interests and maintain the wholehearted confi-
dence of the public. In the past there have been some sad instances
of such loss of standing on the part of hitherto distinguished scholars."
The report condemned secrecy and found that an educator "is not
justified in accepting a retainer from private persons in any contro-
versial case involving questions of public policy."
HOOVER'S HONEYMOON DAYS 207
At its; annual convention the following December, the American
Association of University Professors discussed utihty propaganda
methods and the Seligman report and passed this resolution: "Resolved,
That the American Association of University Professors adopt the
following statement of principles: No university professor who receives
a fee or other compensation from any person or association interested
in public discussion or testimony respecting a particular question of
public importance should take part in such discussion, or furnish such
testimony, without making pubHc the fact that he receives a compen-
sation therefor and the name of the person or association paying him
said compensation."
The Common Schools Also. PubHc furor over utihty propaganda in
the public schools from kindergarten to high school was even greater
than the attempt to influence higher education. The National Educa-
tion Association in annual convention excitedly discussed the subject,
and Dr. Joy Elmer Morgan, editor of the association's journal, ran an
article by Senator Norris in the December 1930 issue roundly denoun-
cing the power trust for its subterranean tactics. This phase of the
utility plans to control the American mind "from the cradle to the
grave," as one utility official put it, ceased at the time along with most
other utility propaganda activities because of the Federal Trade Com-
mission exposures.
Fears of the Educators Are Confirmed. The final report (Part No.
71A) of the Federal Trade Commission on electric and gas utilities
propaganda, 486 pages with thousands of exhibits from utility files and
quotations from sworn testimony, supports the general conclusion:
"The record estabHshes that, measured by quantity, extent, and cost,
this was probably the greatest peace-time propaganda campaign ever
conducted by private interests in this country." The report found that
the electric companies were responsible for 75 percent of this effort,
which "gave most consideration to contacting and exploiting" the press
and the schools following methods first employed by the Insulls of
Chicago. The report gave exact figures on the number and cost of
the thousands of copies of pamphlets and books sent free to grade
schools, universities, and libraries. It stated: "The utility program for
educators and schools from kindergarten and universities was designed
to mould the thoughts and beliefs of the present and future genera-
tions in conformity with the utility interests."
The cost of the educational campaign uncovered, including direct
payments made to educational institutions and professors and for
208 THE CONSERVATION FIGHT
books, pamphlets, and school contests, was a grand total of $1,312,265,
of which $114,960 went to professors.
The stand of the educational leaders against subversion of the schools
accounts for the shift of public opinion against the utilities during the
first two years of the Hoover administration in a far greater degree
than generally recognized. The press largely surrendered to the
utilities; the educators did not, and the public had more confidence
in them.
Hoover himself did nothing to help the public get facts about holding
companies, regulation and public ownership of utilities. For 12 years
as Secretary of Commerce and as President, he remained unchanged.
Through the eight years of its investigation, the Federal Trade Com-
mission received no accolade from him. He remained silent throughout
all the disclosures and reports. As late as 1955, Hoover, as chairman
of the Commission on Organization of the Executive Branch of the
Government still held that the government has no right to engage in
the power business and that tiie power function of the Tennessee Valley
Authority and similar projects should be turned over to private
concerns.
As of the Late 1950s. As of the summer of 1955 an unprecedented
propaganda campaign was at high tide to reverse the nation's conserva-
tion policies to meet the insistent demands of so-called free enterprise —
including the abandonment of TVA principles. Evidence multiplies
that this drive embraces renewed pressure on our entire educational
system. Assured that a comparison between the methods employed
in the 1920 period and those of the 1950s is in place here, I have made
considerable inquiry. The results are epitomized in letters from which
I am permitted to quote — ^written, dramatically enough, by the two
young educators who asked pointed questions at the Chicago Con-
ference in 1927. Each of them has been drafted from time to time by
federal or state governments for service that has brought them into
direct contact with practical utility problems. They know the past
as well as the present.
Dr. James C. Bonbright, professor of finance in Columbia University's
graduate school of business, who served for several years as chairman
of the board of the New York Power Authority, writes:
'Tublic utility propaganda today — I mean propaganda on behalf of
the private utility industry — is much subtler and probably more eflFec-
tive than it was in the rougher days of the 1920s. Moreover, it is more
effectively tied in with the support of capitalism in general. Consider,
for example, the success of the public utility industry in identifying
HOOVER'S HONEYMOON DAYS 209
private ownership with 'free enterprise/ Now I happen to be a strong
supporter of private ownership of public utility companies, as well as a
strong supporter of privately endowed universities and also of state
universities. But the last thing that I would dare to claim for a private
utility company is that it represents 'free enterprise' — if it did I should
want to get rid of it."
Dr. Horace M. Gray, University of Illinois professor of economics,
had this to say:
"The power trust is now [1955] engaged in a great national prop-
aganda campaign to destroy pubhc power and to capture atomic
energy. But, hke other big business interests, it has became sophisti-
cated and pseudoscientific. It no longer seeks to 'contror education
by the crude methods of the 1920s — such as dictating the content of the
courses and textbooks, introducing special interest propaganda in the
classroom, or intimidating teachers. Rather, it relies on the 'saturation*
technique of propaganda, in which all media of mass communications
are utilized to inculcate certain social attitudes and behefs among the
people generally. By employing the arts of deception gleaned from
psychological research in human behavior, modern hucksterism seeks
to condition public opinion to believe that big business is beneficient,
efficient and progressive; that government is inherently corrupt, in-
efficient and tyrannical; that government intervention in economic
affairs is a prelude to socialism; and that critics of big business are
either doctrinaire theorists or cryptocommunists bent on destroying
the American way of life. The power trust is a ringleader in this vast
enterprise.
"The effects of this technique are deadly. It stultifies the rational
faculties, paralyzes social action, breeds fear and insecurity, creates
a feeling of abject dependency on private enterprise and extreme
aversion to government, and induces a mood of blind, irrational defense
of the status quo. Those who have faced college classes reared on this
pap of hucksterism cannot have failed to detect the lamentable con-
sequences. Their social attitudes are already fixed; they express them-
selves in the standardized, vacuous slogans of hucksterism; they are
conditioned to respond according to a set pattern. Such students are
ill-equipped to think for themselves or to reach valid independent con-
clusions on social questions. Even when confronted with facts, they
are prone to deny the evidence and to seek refuge in the security of
received dogmas. Their disposition is to avoid complex, controversial
subjects requiring intensive intellectual effort and to devote themselves
to technical vocational training for private employment. This is easier.
210 THE CONSERVATION FIGHT
safer and more remunerative, but fatal in the long run for a free
society . . ."
Whether the educators, the students, and the pubhc of this genera-
tion will succumb or revolt as did their fathers and grandfathers, only
the future will tell. What is needed is an investigation captained by
a pubHc servant of the cahber and integrity of Judge Healy and his
loyal staff.
CHAPTER XX
FEDERAL POWER COMMISSION BATTLES
During the first two years of his administration several acts of Presi-
dent Hoover contributed to rejection of the Norris Muscle Shoals biU
in the Congress.
Six factors in the situation for which Hoover was not responsible have
been sketched. When the "Great Engineer" entered the White House,
the Federal Power Commission had been operating for over nine years.
It was under severe criticism for failure to honestly and efficiently
administer the Federal Power Act of 1920. Hoover had frankly stated
his opposition to public power but with equal force had insisted on
**rigid regulation," to use his favorite phrase. Hence the pubhc, and
most conservationists of the Gifford Pinchot type who had labored
for his election, expected a cleanup and speedy enforcement of the
law. Others had doubts.
Hoover s appointments of cabinet members who ex officio consti-
tuted the Federal Power Commission were none too reassuring.
Former Representative James W. Good of Iowa had been an outstand-
ing opponent of government ownership. As Secretary of War, Good
became chairman of the commission and the dominant member. The
attitude of Dr. Ray Lyman Wilbur, Secretary of the Interior, a friend
and neighbor of Hoover and former president of Leland Stanford
University at Palo Alto, was unknown. The same could be said of
Secretary of Agriculture Arthur M. Hyde, attorney and former gover-
nor of Missouri.
Chairman Good died in November 1929 and was succeeded by
Patrick J. Hurley, an Oklahoma oil man. Ray Lyman Wilbur became
acting chairman of the commission and faithfully executed White
House policies.
In late June 1929 O. C. Merrill, electrical engineer formerly with
the Forest Service, resigned. Merrill, who had been executive secretary
from the beginning, was succeeded on July 1 by Frank E. Bonner, a
field engineer of the Forest Service. On the same day Charles A.
Russell, an experienced expert in utility valuation law with the Inter-
state Commerce Commission, became solicitor to serve with James F.
Lawson, acting chief counsel, and WiUiam V. King, chief accountant,
both of whom had also been with the commission from the beginning.
ni
212 THE CONSERVATION FIGHT
Through personal friendship and many interviews I knew them to be
pubHc-minded oflBcials and firm beHevers in the poHcies of the act they
were administering. With these changes the Hoover Administration
was off to its fresh start.
Russell Gets His Orders. I learned from Russell tliat a few days
before he took office the new executive secretary, Bonner, had directed
him to have a conference with M. O. Leighton, Washington representa-
tive of the Electric Bond and Share Company of New York; that in a
two-hour session Leighton, as Russell put it, '*told me how to run our of-
fice," especially emphasizing that the "net investment" features of ac-
counting provisions were not to be insisted upon. This revealing attempt
at influence was, of course, known to few, but another incident within
a month received nationvdde publicity and proved most embarrassing
to the administration and the electrical industry.
The Secret Memorandum. On July 30 Laurence Todd, a reporter
for the Federated Press, got possession of a lengthy, unsigned, undated
statement, titled, "The Federal Water Power Act and its Administra-
tion— A Summary v^dth Suggestions — Confidential." The document
made it clear that the entire electrical industry disapproved the way
the Federal Power Commission's executive secretary, Merrill, insisted
on enforcing the power act and since Merrill was about to resign, it was
critically important to secure the appointment of someone friendly
to the power companies. It was specified that the new secretary should
be a man who would discharge William V. King as supervisor of the
accounting staff and turn the accounting system over to men from the
War, Interior, and Agriculture Departments because "it is believed
that these departments wiU not have men specially trained for this
work, at least they will be removed from the direct supervision of Mr.
King."
Internal evidence indicated the source of the document and one
reason why "regulation" by state and federal commissions was not
meeting expectations: ". . . under Colonel I. C. Kelly, the first chief
engineer of the Power Commission, now president of the Niagara Falls
Power Company, and his assistant. Major Bennim, now with our own
National Electric Light Association, a considerable number of licenses
were granted. Recently, however, the conditions under which Hcenses
have been issued have been more stringent and possession of federal
water power has been hard to acquire."
The memorandum said that the aid of the Water Power Develop-
ment Committee of the United States Chamber of Commerce had been
enlisted to present these arguments [about King] "to the Secretaries
FEDERAL POWER COMMISSION BATTLES 213
who form the commission/* The concluding sentence read: 'It is to
be hoped that discreet representations can be made to the new Sec-
retaries on the commission/' This was an evident appeal to utiHty
executives throughout the nation to bring pressure to bear. The author-
ship was never openly disclosed. Newspapers quickly picked up Todd's
scoop on this alleged attempt of the power trust to direct the com-
mission s actions. Denials followed, but, a Senate investigation seven
months later disclosed that Bonner attempted to follow the poHcy
outHned in the memorandum while be served as executive secretary
during Hoover's regime as president. The President was known to be
in constant touch with his former aide, Paul S. Clapp, now managing
director of the National Electric Light Association.
For months newspapers reported conflicts in the commission, usually
attributing them to personal clashes between Bonner on the one hand
and Russell, King, and Lawson on the other. Knowing that vastly
deeper issues were at stake, I published a National Popular Govern-
ment League bulletin soon after Congress convened in December 1929,
charging that if the present policies prevailed "the conservation move-
ment, started in President Theodore Roosevelt's day, would be largely
negated in respect of water power." The bulletin, which reflected
common talk on the Hill, got a good press.
The Senate Investigates. Senator James Couzens of Michigan,
chairman of the Interstate Commerce Committee, on June 8, 1929,
introduced and secured the passage of Senate Resolution 80, ordering
an investigation of federal regulation of power. A miUionaire who
made a fortune as a partner of Henry Ford before severing his con-
nection and becoming mayor of Detroit, Couzens in his 14 years in the
Senate as an independent Republican established a singular reputation
for probity and force. Couzens' purpose was to prepare the way for
an independent commission. Hearings were held in February of 1930
with Couzens as chairman. Others attending were Metcalf of Rhode
Island, Brookhart of Iowa, Glenn of Ilhnois, Hastings of Delaware,
Kean of New Jersey, and Pine of Oklahoma, all Republicans; and
Democrats Wheeler of Montana, DiU of Washington, Pittman of
Nevada and Wagner of New York.
Russell Testifies on Disharmony. The committee wanted to know
whether the existing agency was a power trust commission and Bonner
a hand-picked executive secretary to carry out its orders. Sohcitor
Russell was put on the stand first. He told the committee that trouble
in the commission arose over chief accountant King's efforts to keep
**blue sky" out of utility valuations on which rates ar© based. Russell
214 THE CONSERVATION FIGHT
explained that companies built plants on navigable streams under
preliminary permits but that final 50-year licenses were issued only
after the Power Commission, on recommendation of the chief ac-
countant, had approved the capital costs. Capital cost could include
only legitimate "net investment" with no "writeups," "watered securi-
ties," or "fictitious values." It was illegal, the solicitor said, to issue a
final license before this capital cost was determined and unwise to do
so because electric consumers must pay dividends for half a century
on the amount. It would also be the amount the government would
pay the company if it decided to recapture the site. "^
Russell stated that many of the larger companies flouted the law;
they included all sorts of fictitious and illegal items totaling millions
of dollars. He cited an instance in which a Chicago company had
included in its costs the building of some plants in Minnesota and Wis-
consin and the thousands of dollars paid to a lobbyist from 1917 on to
fight the Power Act before it was passed in 1920. He testified that
accountant King by attempting to enforce the law had held up several
important Hcenses; that Bonner wanted King to take "short cuts," which
meant acceptance of the companies' claims and would lead to issuance
of excessive securities and excessive electric rates. Russell testified:
"He [Bonner] said it was my duty to tell Mr. King to lay off . . . In
one conversation Bonner said to me, when he wanted to do something
in a certain way ... 1 think it is your duty as the solicitor, when I find
unworkable provisions of this Water Power Act that cannot be complied
with, to find me a way around it'." To drive his point home RusseU
cited the fact that the Niagara Falls Power Company had been refused
a 50 year license because it claimed a $77 milHon net investment
including $32 million "as the value of the water that the government
gives them." Russell's interpretation of the law was strongly supported
by Acting Chief Counsel James F. Lawson, who had been an attorney
for the commission since its inception.
Billions at Stake. The intensely interested senators now wanted to
know more about this "net investment" requirement. Big money was
at stake and Chief Accountant William V. King was asked to furnish
more exact information and explain the stalemate. King was a mild-
mannered man, but a master of his profession who relished the oppor-
tunity to tell his story where it might count. The senators were astound-
ed to learn that commission sessions lasted only about 30 minutes and
averaged less than one a month.
The real responsibility fell on the executive secretary. The com-
mission's own staff included fewer than 30 persons; all others were
FEDERAL POWER COMMISSION BATTLES 215
borrowed at intervals from the War, Interior and Agriculture Depart-
ments. The chief accountant in 1928 accomplished his work with only
two assistants. Since 1920 more than 1,000 applications for Hcenses
had been filed, involving thousands of millions of dollars. King had
been utterly unable, for lack of trained staff, to keep his work current.
He testified that while the smaller valuation cases had been satis-
factorily adjusted with no "water" included, six or eight large cases
were not processed because the holding companies claimed millions
of dollars in fictitious values and refused to permit him to examine their
books and vouchers. The industry was advancing the absurd theory
that the net investment should be deteamined at the end of the 50 year
lease.
Instructions of the Commissioners. Executive Secretary Bonner,
who was regarded as the administration spokesman, started his testi-
mony in a positive vein:
"During the past few months there has been some discussion in
certain sections of the press and elsewhere about the performance of
the Federal Power Commission. Most of this discussion has been whol-
ly irresponsible and free from the handicap of facts. Either from
ignorance of the subject or dehberate design, certain individuals have
labored by insidious methods to create the impression that the com-
mission fails to safeguard adequately the public interest in the water-
power sites under its jurisdiction. Anyone familiar v^dth the work of
the commission knows these attacks to be absolutely baseless and
recognize in them the crafty poHtical or self-seeking motives of the
originators."
Bonner called the "importance and difficulties" of accounting work
"exaggerated." He said Russell and King desired to build up **a
powerful new agency." At this point Senator Wheeler asked whether
Wilbur, Hurley, and Hyde would "approve the statements you are
making here," and Bonner repHed: "As nearly as I can interpret the
instructions of the members of the commission this is in conformity
with such instructions." The witness then all but shed a tear for the
power companies, saying: "It would be unfortunate indeed if the pub-
He utiHty companies of the country through persecution are driven
to abandon economical hydroelectric projects and employ steam
generation exclusively."
For many months the electric utilities and their allies had decried
the current investigation by the Trade Commission as "persecution,**
and to have a Government official in Bonner's position echo that prop-
aganda was something new and significant. A long quiz followed
216 THE CONSERVATION FIGHT
later by Senator Wagner and others as to just who was misleading
the country by this alleged "irresponsible" publicity. The first offender
named was the author of this book, whose vanity was thereby en-
hanced. Said Bonner: "I have in mind one case, an article by a man
named King, Judson King, who is in charge of one of these propaganda
agencies in Washington and I have forgotten the name of it, but it
was widely published in some newspapers here in the East . . . that
article was widely published." His memory failed him on other in-
stances and at this point Chairman Couzens remarked, "I think the
Senator from Montana [Mr. Wheeler] will agree that it is very well
demonstrated where the sympathy of the witness lies." Bonner could
not remember who recommended him for his job — a lapse of memory
which was to prove imfortunate.
Merrill Answers. Former executive secretary O. C. Merrill was
another star witness. He had directed the 1915-16 Senate investigation
revealing rapid growth of monopoly in the electric industry. He was
not an apostle of public ownership but favored private development
under strict regulation. Senator Norris had praised his integrity and
courage and relied on him for accurate information. MerriU flatly
differed from Bonner on commission law and the reasons for dishar-
mony. Accountant King was "an extremely rehable man." As to
Russell, "They told me he was a stormy petrel, and I told them I would
take a stormy petrel if he was competent."
Merrill was most emphatic when he testified that the Power Act
could not be sucessfully administered in the pubhc interest as enacted.
He had repeatedly fought to have the act amended to enable the com-
mission to employ and pay its own staff but had been turned down by
the Budget Bureau under CooHdge and by Congress. Hence, Congress
was partly responsible for the existing impasse and the slowdown in
water power development.
The situation had become so intolerable and dangerous that on
MerrilFs recommendation the commission in February 1928 issued
Order No. 27, "not to issue any other licenses until all questions with
respect to accounting had been properly settled." But work and
responsibilities were increasing. On February 28, 1929, only three
months before Merrill resigned, the commission had approved a
decision he had prepared affirming federal jurisdiction over rates and
securities of licensees. MerriU emphasized that this formal decision
had also been approved by "the law officers of three departments" —
War, Interior, and Agriculture. The job could not be done by state
commissions, he said, because all the big plants licensed by the com-
FEDERAL POWER COMMISSION BATTLES 217
mission were controlled by holding companies that were transmitting
power over state Hnes and were beyond the jurisdiction of the states.
Bonner had contended that in nearly all the states in which federal
power sites were located there were commissions which could protect
the public interest. King had sworn this was not true and that only
two or three states exercised any control whatever on rates and securi-
ties. To repeat and emphasize this prime controversial issue, Merrill
said: "I contend that the commission has the authority to regulate
rates of its own Hcensees engaged in interstate conmierce." Chairman
Couzens and the others agreed with him.
Secretary Wilbur Supports Bonner. Secretary Wilbur and Lieutenant
Colonel M. C. Tyler, the commission's chief engineer, on loan from
the War Department, supported Bonner on policies and the reason
for "disharmony" in the staff. Little information of value was gained
from questioning them. Finally, veteran James F. Lawson, whom I
knew to be gravely disturbed by the commission's activities, reviewed
its history and legal status. He stated: "I have not yet lost hope that
the statemanship of Senator Newlands and of President Theodore
Roosevelt, in urging coordination of river control, is not yet to be lost
to the country."
"The whole set-up of the Commission is so incomprehensible that
it is one of the rottenest exhibitions of government I have ever heard
of," Senator Couzens exclaimed during the hearings. This outburst
rang through Washington and was carried by the press to the nation.
It epitomized public opinion, leading to the passage of Couzens' bill
(S. 3619) on June 23, 1930, creating an independent five-man com-
mission to take administration of the power act out of politics and
enforce it properly. Congress adjourned on July 3 until December
so that there was insufficient time to examine and confirm appointees
to the new agency. Meantime, the Wilbur commission remained in
control and during those five months some surprising events occurred
which heightened the controversy over "government in the power
business."
Eggs and Disharmony. Bonner's inability to remember who recom-
mended him for his job would probably have been forgotten in official
circles but for one of those personal incidents that intrigue the public.
This one kept Washington and the country alternately laughing and
indignant for two months.
On March 26, 1930, glaring press headlines informed the public that
Mrs. Minnie L. Ward, chief file clerk at the Federal Power Commission,
on returning from lunch the previous day with a dozen eggs purchased
218 THE CONSERVATION FIGHT
for the family breakfast, found F. W. Griffiths, chief clerk, poking into
her files. Angered — reporters called it a "brainstorm" — she threw six
of the eggs at him, four of which landed, and then doused him with a
pitcher of water. Here was "disharmony" in unexpected quarters.
Everybody knew Mrs. Ward to be a calm, courteous, efficient lady.
She had been in government service for 23 years and for 10 of the
23 years had presided over the files without friction.
Mrs. Ward was suspended. Her appeal to Chairman Wilbur for a
hearing was refused. Two weeks passed and on April 8 her husband,
Herbert S. Ward, an attorney, announced that he had filed a brief with
Attorney General Mitchell, calling on him to take action on formal
charges and facts disclosed therein; important records of the Federal
Power Commission had been destroyed or removed to hide them from
senatorial investigation. This was a penitentiary offense. He got no
answer. The headHnes blared "Egg Barrage Bares Power Intrigue.*'
On April 14 Ward mailed a similar brief to President Hoover, adding
that the actions of Griffith and Bonner were conspiracy, and Bonner s
testimony contempt of the Senate. There was only silence at the White
House. In the meantime ace reporter Marion L. Ramsay, for Universal
Service, interviewed Mrs. Ward. He quoted her as saying: "I hold
no brief for throwing the eggs, except that I did it in a good cause —
about 30 letters were removed with the answers." Also, she said that
Bonner had called for the files on June 29 and again in September.
On April 18 Norris sent the Senate into roars of laughter with a
comment on the episode. Frazier of North Dakota had described the
egg throwing incident. Norris interrupted to say that Mrs. Ward had
used very bad judgment. Asked why, he responded, "I understand
the eggs she threw were all good eggs."
On May 1 Attorney General Mitchell sent Wilbur results of a six
weeks' investigation of the episode. A batch of letters had been found,
but Wilbur, who had promised to press the matter and make the
findings public, now declined to do so. Mrs. Ward appealed to the
United States District attorney for aid to no avail. She was never
granted a hearing.
It was widely reported that among other utihty men, Bonner s most
influential sponsor had been Paul M. Downing, president of the Pacffic
Gas and Electric Company, a college friend of Secretary Wilbur. Final-
ly, on July 2, the Senate unanimously approved Senator Wheeler's
resolution requesting the Attorney General to make available all testi-
mony and documents in the case. The Attorney General declined.
FEDERAL POWER COMMISSION BATTLES 219
Merriment over egg throwing was not good politics and a Congres-
sional election was coming in November.
Minnie Ward had become a heroine for rendering a great public
service. After the overwhelming defeat of Hoover and the reorgani-
zation of the Federal Power Ck>mmission, Mrs. Ward got her job back
too.
InsuU's Attempt to Censure Ambassador Sackett. Unfortunately for
the administration there followed, right on the heels of the egg-throw-
ing scandal, another incident, which Labor, a weekly newspaper for
railway workers, declared worth "at least a million dollars of imfavor-
able advertising" to the power trust.
When the World Power Conference met in Berlin on June 16, 1930,
Frederic M. Sackett, Hoover's ambassador to Germany by appointment,
was invited to make an address. The ambassador, a Harvard man and
lawyer, aged 62, had been president of the Louisville Lighting Com-
pany and of gas and coal companies. A former member of the United
States Senate, he had been active in power matters and a supporter of
"rigid regulation."
Samuel InsuU, Chicago utility leader, was attending the power con-
ference as an observer. When the press release concerning Sackett s
address was issued, Insull visited the ambassador and induced him to
cancel the engagement on the ground that his speech would not be
well received. Not wanting to offend, Sackett compHed and asked
for the return of the advance copies. But the United Press man got
the facts and reported the story.
An indignant conference, which included many delegates from pub-
lic power systems thoughout the world, insisted that the address be
made. Insull agreed but insisted that the undesired passages be cut
out. By this time Sackett's dander was up; he flatly refused and made
the speech as written. The offending paragraphs were:
"I know of no other manufacturing industry where the sale price
to the great mass of consumers is fifteen times the cost of production
of the article sold.
"Among the users of your product, the class which is greatest in
numbers is that vast body of men who every month pay a 6 cent charge
in their households for an article which we are constantly told is being
produced in efficient electric stations for from three-tenths to four-
tenths of a cent."
He added, "This excess price is a weakness which calls for the
keenest thought in your deliberations." That "dynamite," as the press
dubbed it, ended any real influence of the United States power combine
220 THE CONSERVATION FIGHT
in the conference and over the world. Sackett's remarks were applaud-
ed by liberals amid silence from opponents of the Norris Muscle Shoals
bill. Commented editor Lowell Mellett, of the Washington (D.C.)
News on June 20: "That part of the speech which was to be censored
has now been applauded by the World Power Conference and studied
by millions of newspaper readers and electric consumers.**
It later developed that the National Electric Light Association had
put up $25,000 for the conference; that the American delegation con-
sisted of hand-picked utility men; and that Secretary Wilbur had
selected Bonner to represent the Federal Power Commission but with-
drew the appointment after the egg-throwing ajBFair. Insull*s boner was
another misfortune for Hoover and the party that Insull had strongly
supported in the fall campaign — ^his last venture in poHtics before the
collapse of his empire.
Background of Prime Movers. Throughout his long career as chair-
man of the board of the mighty Electric Bond and Share Company,
Sidney Z. Mitchell was the able, ruthless, tough-minded bellwether
among utility executives opposed to the Federal Water Power Act.
It was Mitcheirs Washington lobbyist, Leighton, who attempted to
instruct Solicitor Russell of the Federal Power Commission on what
was expected of him.
Mitchell was determined that one of his subsidiaries, the Ap-
palachian Electric Power Company, be given a "minor part** illegal
license to build a power plant on the New River near the town of
Radford in western Virginia. The hcense had been approved by the
state of Virginia but refused by O. C. Merrill in 1927. Mitchell had
hoped that Hoover's Federal Power Commission would be more rea-
sonable. If not, he was ready to go to court to have the power act
declared unconstitutional.
Another relentless foe of federal regulation was Howard C. Hopson,
creator of the fabulous holding company. Associated Gas and Electric
Company, which went into receivership after he was sent to prison
for illegal practices. Hopson had warred unsuccessfully with the
power commission in an attempt to induce it to grant one of his sub-
sidiaries, the Clarion River Power Company, a final 50-year license
on a small river in western Pennsylvania. He failed because, as ac-
countant King had told the Couzens committee, his company claimed
a net investment of $6,387,731 in the plant, 55 percent of which was
fictitious write-up.
The President Requests a Legal Opinion. When a law clearly in
the public interest was likely to be challenged it was the custom of
FEDERAL POWER COMMISSION BATTLES 221
Theodore Roosevelt to enforce it until the courts declared the law
unconstitutional. Taft and Hoover were not of the same persuasion.
The records reveal that in the absence of Congress and before the
five-man commission created by the Couzens act could take office in
December 1930, the Federal Power Commission s Bonner, with the
support of Secretary of the Interior Wilbur, urged the commission to
approve the Appalachian Company hcense. At this critical juncture,
with legal action pending, Hoover entered the arena and requested an
opinion from Attorney General Mitchell whether it was permissible
for the Commission to approve the Appalachian Company's applica-
tion.
The power act authorized the Federal Power Commission to issue
short-term permits to utilize a small power site for a strictly temporary
purpose without forcing the lessee to comply with the requirements
of a 50-year license and Federal regulation. This was known as a
"minor part" Hcense. On September 22, 1930, Mitchell advised the
President that a minor part license could be issued on the 185,000 horse-
power site; that the New River was a nonnavigable stream wholly
within the state of Virginia and outside federal jurisdiction. Mitchell's
letter concluded: "This interpretation appears necessary in order to
avoid serious questions regarding the constitutionality of the act . . !*
The opinion was, although indirect, a virtual admission that the power
act was unconstitutional and was so regarded on both sides of the
controversy. The power trust was pleased.
A month later came an opinion from the acting chief counsel of the
Federal Power Commission, J. F. Lawson, who had been bypassed in
the matter. He stated that for many years the government had exer-
cised jurdisdiction over the New River because it was an important
tributary of the Kanawha and that the Kanawha River was an im-
portant tributary of the Ohio River. Lawson showed that from 1872
to 1928 Congress had appropriated a total of $115,000 for improve-
ment of New River, both as to navigation improvement and power
development. *
For some reason the electrical industry had never questioned the
validity of the power act. Now, with the Couzens bill for more rigid
regulation already passed, and the Norris bill for government operation
of Muscle Shoals in danger of adoption, the time for resort to the
courts had arrived. As laymen and some legal minds saw it, a green
light had flashed from the White House.
Action speedily followed, first by Hopson, then by Mitchell. On
October 2 the Clarion River Power Company was notified to appear
222 THE CONSERVATION FIGHT
on November 5 for a hearing on the claimed "net investment." But
on October 24, 1930, the Company filed suit in the District of Columbia
Supreme Court to restrain the Federal Power Commission from holding
the hearing on the ground that the commission lacked jurisdiction. A
few months later, when its time came, the Appalachian Electric Power
Company followed the same course.
Answering the Attorney General. Late one rainy night in September
my wife and I returned from a three-week auto trip investigating the
Crisp County, Georgia, power plant, the first county plant in the
country. As I unlocked the door we heard the telephone ringing and
hastened to answer. Solicitor Russell was calhng to inform us the
power people were plotting to undermine the power act. A few days
later the Mitchell opinion was handed to President Hoover and Russell
was outraged. If the government conceded unconstitutionality, who
could successfully defend the Power Act in court? he asked.
Here was a grave crisis. Direly needed was a rejoinder demolishing
Mitchell on which we could get national pubHcity. No government
attorney who knew the law and the case dared open his mouth for fear
of instant dismissal. After vainly waiting a few days for some lawyer
to speak up, I had Mitchell's opinion mimeographed and mailed to
a dozen prominent lawyers who were unafraid and knew utility law.
There was one attorney whose standing overshadowed that of
Mitchell — former Federal Judge George W. WoodruflF, then in retire-
ment, whom we have previously encountered as solicitor for the Inter-
ior Department under Theodore Roosevelt. For a quarter century
WoodruJBF, a Republican, had been the leading legal authority in the
conservation movement. Would he cross swords with Mitchell and
Hoover? I went to his home in Berwyn, near Philadelphia, to find
out. I shall never forget that interview as an exhibition of righteous
wrath on the part of a mild-mannered gentleman. Woodruff was a
man of fine physique (a football star at Yale) and possessed of a
natural dignity. He was in his garden when I arrived, and as I waited
for him in the living room I noticed the Mitchell opinion I had sent him
lying on a card table by my chair. Entering he greeted me, picked
up the document without another word and, still standing, began
discussing it with deep but well-controlled emotion — in substance thus:
"I have been expecting this move for a long time. It is what the power
interests want and to my personal knowledge have been scheming to
secure. It is unsound and violates every provision of the power act.
I helped draft every line of that act and I think I know. If this becomes
a precedent and stands, then 25 years of effort to protect our vast water
FEDERAL POWER COMMISSION BATTLES 223
power sites in the interests of this generation, and those to come, is
swept away. The public stewards have become the friends of the
exploiters of public property. The crisis is very grave indeed.*'
I must confess that in publishing this verdict later I toned down
one sentence. What Woodruff really said was: "The pubhc stewards
have become friends of the thieves of the people's property." He
continued: "Let me tell you how I know who and what is really back
of all this. Since my retirement from the bench I have resumed prac-
tice to a limited degree. One of my cHents is a coal company which
buys its electric power from this Appalachian Company, now asking
a minor part license, which is controlled by American Gas and Electric
and in turn by Electric Bond and Share. A member of Bond and
Share's principal law firm who has charge of Appalachian's affairs,
chances to be an old friend and Yale classmate of mine. In meeting
to negotiate our contracts we have frequently lunched together and
he has repeatedly urged upon me the identical legal doctrines contain-
ed in Mitchell's opinion. In the indirect fashion in which such pro-
posals are made, I was given to understand that if I would carry a
case to the United States Supreme Court to have the Power Act de-
clared unconstitutional I could name my own fee. Of course I turned
the offer down — do you suppose I could attempt to murder my own
ohild?"
After further discussion I said: 'Well, I am down there in Washing-
ton fighting this thing, practically alone. Will you come down and
help?" He answered "I will" and he did. A few days later I was able
to release to the press and mail to key government officials a memoran-
dum by the Judge which tore Mitchell's legal opinion to shreds. It
began:
"The Attorney General's opinion in this case is neither good law nor
good administration; and it is neither a fair nor correct nor full state-
ment of the essential facts concerning the Federal Water Power Act
and its enactment, and concerning the status of New River as a navi-
gable or non-navigable stream.
"Apparently the failure is due to such haste and oversight of history,
law and facts as ought to cause the Attorney General to recall his opin-
ion, and, if he finds that factual study warrants such action recall
it from the President and the Federal Power Commission for cor-
rection and resubmission. During such reconsideration the Com-
mission should delay action on the request of the applicant power
company."
Wrecking Regulation Also. The release was followed up by a
224 THE CONSERVATION FIGHT
National Popular Government League bulletin, No. 140, "Wrecking
Regulation; Also A Summary of the Past 19 Months of the Power War,'*
which we mailed to Washington correspondents and to all sections
of the country. The bulletin recited the facts set out above, quoted
Judge Woodruff and Professor John H. Gray, a noted authority, and
charged that the President was the real leader in the drive to nullify
the power act. It confirmed Judge Woodruff's statement about the
real source of legal attack by reveahng that Mitchell's opinion was
actually prepared at Hoover's request by Charles W. Thatcher, Solici-
tor General. Thatcher was a member of a New York law firm which
for many years counseled the Electric Bond and Share Company, prime
mover in the whole scheme. By lucky chance, the pamphlet, dated
October 20, 1930, was issued just in time, four days before the Clarion
River lawyers filed their suit in the Supreme Court of the District
of Columbia.
Intervention Is Sought. Not knowing who would be picked to de-
fend the case for the government. Judge Woodruff advised interven-
tion and suggested that I, as the executive director of the National
Popular Government League, sponsor the petition, on behalf of the
league's members. The petition, written by the judge and filed with
Justice Jesse C. Adkins on November 13, 1930, was also signed by 16
outstanding attorneys, among them Frank P. Walsh, soon to become
chairman of the New York Power Authority; Felix Frankfurter, Harvard
Law School Professor; Jackson H. Ralston, of Washington; Nathan E.
Kendall, former governor of Iowa; Donald R. Richberg, of Chicago;
Lawrence G. Brooks, of Boston; and Francis G. Heney, of San Fran-
cisco.
The petition reviewed the 15 year struggle to pass the power act and
eight years of failure in attempting to achieve proper administration.
It charged that the utilities were seeking to destroy the law, as
Theodore Roosevelt predicted, "by every means which money can
buy and the ingenuity of able corporation lawyers can devise." The
Attorney General's opinion, it charged, "endangers the rights and
interests of all citizens . . . Intervention is sought only to assist in
protecting the public interest in the upholding of the power and juris-
diction clearly granted to the Federal Power Commission."
Judge Adkins denied our request to intervene by argument but
allowed the attorneys and the Attorney General of Pennsylvania to
file briefs. The publicity given the affair had its effect. Solicitor
Russell, the "stormy petrel" of the Federal Power Commission who
had been selected to defend the government, won in brilliant fashion.
FEDERAL POWER COMMISSION BATTLES 225
On January 29, 1931, the plea for an injunction was denied. Judge
Adkins' decision was upheld in the higher courts. This effort to "get
around the law" had failed.
The New Commission Is Appointed. By the time the fateful 71st
Congress convened for its regular session on December 1, 1930, the
conflict centering around the Federal Power Commission was charged
with as much political dynamite as the earlier debates over Boulder
Dam and Muscle Shoals. Voters still considered the two projects to
be local problems, but everybody shared the concern about high
electric rates and holding company writeups. The Power Commission
scandals were sometimes comic but sometimes aroused indignation, too.
President Hoover was on the spot. If he appointed a new commis-
sion of able, fearless men who would enforce regulation, he would
be certain to offend his most influential supporters, the power company
executives. Otherwise he would offend the voters. Announcement
of his appointees was awaited with great interest. He sent the follow-
ing names to the Senate for confirmation two days after Congress
assembled: Dr. George Otis Smith (Repubhcan), of Maine, veteran
chairman of the United States Geological Survey; Claude L. Draper
(Republican), member of the Wyoming state public service commis-
sion; Ralph B. Williamson (Republican), an attorney at law in the
State of Washington; Colonel Marcel Garsaud (Democrat), civil en-
gineer and ex-manager, Port of New Orleans Commission; Frank R.
McNinch (Democrat), attorney and former mayor of Charlotte, N. C.
The list was respectable but not convincing. Not one was qualified
by training or experience to cope with the tremendous problems at
stake. On the other hand, with no pertinent records behind them,
none could be classified as partisans. The Couzens Interstate Com-
merce Committee approved them and after brief hearings they were
confirmed by the Senate. Only two met resistance: Smith aroused
the suspicions of liberals by his somewhat equivocal answers to ques-
tions regarding his position on minor part licenses, stock inflation, and
the preference clause. McNinch had opposition from some southern
Democrats because he, a strong prohibitionist, had bolted his party
to head a campaign committee for Hoover.
It was a gloomy and puzzling situation, and the President was a
stubborn man. The Wilbur commission had followed his orders.
Would the new commission obey him? I determined to find out.
Personal relations between Chairman Smith and myself were most
friendly. I was genuinely sorry to see such a distinguished scientist
jeopardize a Iffetime reputation for public service by accepting this
226 THE CONSERVATION FIGHT
appointment and getting into this mess. That is what I told Smith
when I called on him. "But why?" he asked me. Answer: "Because
Hoover is determined to break the power act and has picked you as
his man for the job." Smith took this in good humor, showing no anger.
A two-hour discussion followed during which he demonstrated from
a stack of his printed addresses what a faithful friend of conservation
he had always been. But he did not refute my charge as to the Presi-
dent's intentions nor did he give me assurance he would stand by the
law. I left with gloomy forebodings.
Three Commissioners Take Command. Confirmed on Saturday,
December 20, Chairman Smith and Commissioners Garsaud and
Draper were sworn in on Monday and took charge. Commissioners
McNinch and Williamson, not yet sworn in, had gone home for the
holidays with the understanding that nothing would be done until
they returned. On Tuesday SoUcitor Russell and Chief Accountant
King found on their desks curt notices of dismissal, signed by Chairman
Smith. No advance notice had been given and no reasons were assign-
ed. Executive Secretary Bonner got one too, but he had already re-
signed and was given a position in the Reclamation Service by Secretary
Wilbur. Both Russell and King were dependent on their salaries.
Their dismissals came practically on Christmas Eve and aroused public
sympathy. Liberals saw the dismissal of the two men whose refusal
to violate the power act had forced the scandals of nonenforcement
into the open as a startling indication that the President did not intend
to enforce regulation of power companies or defend the constitution-
ality of the power act itself. RepubHcan Senator Brookhart announced
that an attempt would be made to reconsider the Senate's confirmation
of the three commissioners. The attempt was made. My scrapbooks
of the period are filled with articles with screaming headlines reporting
an "unprecedented episode in American history" and "New Phase
of the Power War." It proved a bitter battle.
The Senate Would Recall The Three. On January 9 the Senate voted
44 to 37, requesting the President to return the nominations of the
three commissioners for reconsideration. The President declined but
responded with a stinging attack on the Senate's action: "I cannot
allow a false issue to be placed before the country. There is no issue
for or against the power companies." He added: "The resolution of the
Senate . . . may contain a hope of symbolizing me as the defender of
the power interests if I refuse to sacrifice three outstanding public
servants or to allow the Senate to dictate to an administrative board
the appointment of its subordinates, and if I refuse to allow fundamen-
FEDERAL POWER COMMISSION BATTLES 227
tal encroachment by the Senate upon the constitutional independence
of the Executive ... It will be recalled that on my recommendation
the Federal Power Commission was reorganized ... If the Power Com-
mission had failed to employ honest and capable oflBcials, it is within
my power to remove such officials as well as members of the Com-
mission. I have and shall not hesitate to exert that authority." "
The Senate resented Hoover's assimiption of credit for the Couzem
reorganization act. Hoover had kept silent about the Power Commis-
sion scandals until it was fairly clear what Congress would do about
it. In the debate Walsh, Norris, Dill and others charged that Hoover
was a power trust President attempting to mislead the pubhc on the
real issue, and, besides, had he forgotten that the Federal Power Com-
mission was an arm of Congress, not of the Executive Branch? *
On February 4, 1931, on motion of Walsh, Smith's confirmation was
recalled by a vote of 40 to 33 and a suit was instituted to oust him
from office. The sensational and unprecedented case occupied the head-
lines for several months. Such distinguished attorneys as John W.
Davis, Democratic nominee for the presidency in 1924, were employed
by the Senate, and ex-Senator George Wharton Pepper represented the
President. ^ The Supreme Court held with the President. Smith kept
his chairmanship, but the fight hurt Hoover. He had definitely pledged
himself to enforce the regulatory provisions of the power act, but the
first action of his new commission shattered all faith in that promise.
The New River Case. The next major move of the Federal Power
Commission was to give priority to the New River case.
It was well known that Chairman Wilbur and Secretary Bonner
had been intent on issuing a minor part license to the Appalachian
Power Company but were unable to get Commissioners Hurley and
Hyde to agree. At the final meeting of the old commission, on Novem-
ber 15, 1930, a remarkable decision was reached, as shown by the
11th report of the Commission. " Bonner recommended that the com-
mission issue the minor part license — "in accordance with the opinion
of the Attorney General." But "after due consideration the commission
declined to take action upon the application favorable or adverse. It
was concluded that in view of the importance of the questions of juris-
diction as between the United States and the state of Virginia involved
in this case a court adjudication is desirable."
As soon as the new commission was organized, five weeks later, the
Appalachian Company renewed its application for a minor part license.
Pressure was brought for immediate action. A. E. Carson, chairman
of the Virginia State Corporation Commission, which had given the
228 THE CONSERVATION FIGHT
company a permit to build a dam, persuaded Chairman Smith, to hold
a hearing. Everyone predicted favorable action.
The hearing was held, February 16-17, 1931, in a large room over-
flowing with power company representatives and representatives sent
by the governors of Virginia, West Virginia, Kentucky, Alabama,
Tennessee, and Arkansas, to support the Appalachian Power Com-
pany. The line of argument was that the country was in a great
depression with millions unemployed. In the five states besides
Virginia the power companies were ready to invest millions in new
projects that would restore prosperity if given minor part licenses, but
they would not yield to federal regulation. The New River Hcense
would set a precedent. Attorney General Mitchell was right, speakers
contended. The commission could act at once in behalf of the nation's
welfare. The atmosphere was that of a friendly gathering of states*
righters. No opposition was expected or desired. The outcome seemed
foreordained. The commission would follow the President and the
Attorney General. Soonething must be done.
During an afternoon recess on the second day, I asked Chairman
Smith permission "to make a request." On reassembling he stated
that Judson King of the National Popular Government League had
requested permission to address the commission but since he could
not be considered a proper party in interest the commission would
deny the request. Springing to my feet, I called out heatedly, "Mr.
Chairman, I made no such request!" Surprised, he hestitated and
before he could gavel me down I charged that the people's side of the
issue was not being heard; that I asked for a hearing at which it could
be heard. Commissioner Wilhamson snapped: "Does not this com-
mission represent the people?" I responded, in essence: "That is
not the question. You sit here as a quasi-judicial body to decide a
question which is new to you. I desire you to Hsten to Judge George
W. Woodruff, who more than any other man wrote the law you are
administering. He will prove to you that the water power act has
here been grossly misrepresented by the attorneys of the power trust
and their friendly poHticians."
The effect was electric. A hundred unfriendly eyes glared at me.
Carson of the Virginia State Corporation Commission jumped up,
calling out, "Who is this man who talks about the interest of the people?
I protest his intervention." I was told I could file a brief for my organi-
zation. Refused a public hearing, I protested that it was necessary
ff the people were to know the facts. A mere brief would not do.
Williamson said curtly, "It will 'have to do."
FEDERAL POWER COMMISSION BATTLES 229
A dozen bored correspondents for the great news agencies and vari-
ous independent papers came awake. For hours they had been wait-
ing for something to indicate "the slant" of this new commission, and
the next morning the press featured my "row'' with the commission
at its first open hearing. Ruth Finney s story for the Scripps-Howard
papers, as it appeared in the Washington Daily News, was headed:
"Power Body Refuses to Hear Pubhc on New River Project." The
Washington Herald headed the dispatch by Fulton Lewis, Jr., then a
cub reporter for Hearst's Universal Service: "Smith Refuses People's
Plea in Power Case. Federal Interests Side in Vital New River Case
Requested."
Pennsylvania's Governor Gifford Pinchot, learning of this episode,
at once wired the commission for peimission to intervene in the public
interest. I dishked this sort of warfare, but my friend Dr. Smith had
made it necessary. The incident had tagged the conmiission as sub-
servient to the power trust.
Commissioner Williamson Is Troubled. When the hearing adjourned.
Commissioner Williamson asked me to accompany him to his office.
He was deeply troubled. He said very earnestly: "Mr. King, do you
mean to tell me that Judge Woodrujff is against this minor part provi-
sion and believes it destructive of the power act?" After I related
my interview with the judge, WiUiamson told me: "You see, I was a
cub lawyer under Judge WoodruflF when he was solicitor of the Interior
Department in TR's day. I have a very high regard for him both as a
lawyer and a public servant. The situation is becoming far more seri-
ous than I at first anticipated from what I have been told."
A Call On Commissioner McNinch. Soon after I called on Commis-
sioner McNinch. At the hearing he had appeared to resent my con-
duct as unseemly — that of a soapbox zealot. I told him frankly that
I sought an interview because Senators Norris and Brookhart had told
me that they considered him the most likely member of the commission
to adhere to the letter and intent of the power act and remain unmoved
by poUtics and power trust pressure; that I wanted him to know my
action had been made necessary to expose Hoover's attempt to make
a shambles of the power act; and that since public utility regulation
was a new field for him, I had a store of information on the subject if
he desired it.
McNinch took this as a personal reflection and said sternly: "If that
is the President's intent why did he appoint me on this conmiission?"
I rephed: "That is very simple, Mr. McNinch. You are a Southern
Democrat who bolted your party, fought Al Smith and headed up a
230 THE CONSERVATION FIGHT
Splinter faction to help elect Hoover. This is your reward and notice
to other Southern insurgents for future campaigns. He simply takes
for granted that you will go along and obey orders." McNinch demur-
red, saying he could not think it possible that I was correct, but within
a few weeks we were on friendly terms and the friendship lasted until
his death.
More "Disharmony." The three members of the new commission had
peremptorily discharged Russell and King to end disharmony, but now
disharmony broke out within the commission itself. Chairman Smith
and Garsaud were intent on granting the minor part Hcense but Mc-
Ninch opposed it with the support of Draper and Williamson. It was
a great news story and Congress and the the nation became aware of the
fundamental issue at stake. The result was denial of the minor part
license. On June 8, 1931, the Appalachian Company, practically on
behalf of the entire electrical industry, filed suit in the United States
District Court at Norfolk to restrain the commission from requiring
a regular federal license and thus test the oonstitutionaHty of the Feder-
al Water Power Act.
As in the Clarion River case, the question arose concerning the
trustworthiness of the attorney selected to defend the act. Smith
favored a lawyer in whom McNinch had no confidence. Newton D.
Baker, secretary of war in the Wilson adminstration, would appear as
chief counsel for the power companies. McNinch held that a lawyer
of comparable capacity, well known to the public as a believer in the
purposes of the power act, should be engaged to oppose Baker and
thus establish confidence in the rectitude of the commission. To that
end he urged the appointment of Huston Thompson, former chairman
of the Federal Trade Commission. A bitter fight within the commission
followed, lasting for weeks. Finally McNinch telephoned me one night
and said worriedly and sadly "Judson, I am sorry to tell you we have
lost. The majority will not accept H.T." "Very well," I replied, "this
is outrageous and very serious. You need help. There are six 16-indh
guns on Capitol Hill all primed and ready for action. I mean six
Senators. Tell my friend Dr. Smith that if Huston Thompson is not
engaged within 48 hours they will turn loose and we will see whether
or not the pubhc interest will be betrayed." The warning may or may
not have been the only cause of reversal. At any rate, Thompson was
appointed the next day.
Nine Years of Legal Warfare. The legal warfare thus begun lasted
for nine years, during which 41 states joined the power trust in its
eflFort to have the power act declared unconstitutional on the ground
FEDERAL POWER COMMISSION BATTLES 231
that the federal government had no concern over river development
except in the promotion of navigation. The rest should be left to the
states. It was not until December 6, 1940, that the Supreme Court,
setting aside adverse decisions of lower courts, sustained the act.
The following sentences from the Supreme Court decision should
have put an end to 40 years of bickering: "In our view, it cannot pro-
perly be said that the constitutional power of the United States over
its waters is limited to control for navigation ... In truth the authority
of the United States is the regulation of commerce on its waters. Navi-
gability ... is but a part of this whole. Flood protection, watershed
development, recovery of the cost of improvements through utilization
of power are likewise part of commerce control . . . Water power
development from dams in navigable streams is from the pubHc's
standpoint a by-product of the general use of the rivers for com-
merce . . . the point is that navigable waters are subject to national
planning and control in the broad regulation of commerce granted the
Federal Government." ''
The next year the Supreme Court held further. The state of Okla-
homa had challenged the right of the federal government to build,
without its consent, the Dennison Dam on the Red River at a point
above the head of navigation. The decision, in what is known as the
Atkinson case, stated very clearly that the federal power extended
to all nonnavigable tributaries of navigable rivers as essential to river
control and multipurpose projects. ^ Thus, after 40 years, the law had
caught up with modem engineering and common sense. The principles
laid down by scientists of the caHber of Dr. W. J. McGee and engineers
like Arthur PoweU Davis were placed beyond doubt as fixed national
policies — or so it seemed.
The 1930 Election Background. It requires a far abler pen than
mine to characterize the high hopes and expectations of the electorate
which gave Herbert Hoover such an overwhelming victory in 1928.
For them a new era in poHtics was dawning. An article, "Why I Am
For Hoover," by Roy W. Howard appeared in Collie/s magazine three
weeks before election day. Howard was chairman of the board of the
Scripps-Howard chain of newspapers. Its founder, E. W. Scripps, had
enlisted pubHc confidence by his Hberal policies and independence.
When I visited his home in 1910, Scripps told me of his instruction to all
his editors to support labor progressives like LaFollette, Norris and
Hiram Johnson. He had also founded the United Press in 1907 as an off-
set to the conservative policies of the Associated Press. By 1927 the wire
service and the Scripps papers had become the Scripps-Howard chain.
232 THE CONSERVATION FIGHT
with Roy Howard as chairman of the board and president of the
United Press. In his Colliers article, Howard explained why the chain
was supporting Hoover. "Here was a once virile Republican Party,
grown fat, flabby and corrupt," he wrote. Hoover was a clean, strong
man who "would not stand for graft and corruption." He would **thrill
America with constructive achievements" and give it "good, safe and
new direction." Then this: "We are by no means sure that we will
agree with the methods he will employ in dealing with the great prob-
lem of super-power. But even in our disagreement we have faith in
Hoover. We believe that facts, not emotion or pohtical expediency,
will govern his actions."
There were many mistaken liberals supporting Hoover. The New
Republic on October 17 published results of a straw vote of 176 liberal
leaders : Hoover received 65; Smith, 86; and Thomas, 25. Businessmen
were largely for Hoover; the intellectuals were for Smith or Thomas.
Judson C. WelHver, distinguished editor of the Washington Herald
of the Hearst chain (pro-public power also) was even more optimistic
than Roy Howard. As early as June 28, 1928, Welliver ventured a
prediction. His signed article was captioned "Hoover's Speech to
Declare Against Power Combine"; and the subhead, "Candidate's
Address of Acceptance to Give Party Stand on Vital Questions Evaded
by Platform Makers." Hoover, he wrote, was "much disappointed"
over the deliberate exclusion of such a plank from the party platform.
Where the usually reliable Welliver got his tip he did not reveal; what
he predicted is exactly what the candidate did not do at Palo Alto and
candidate Smith did do in his acceptance speech at Albany.
Far from their former hopefulness that Hoover would be honest and
fair in power matters, many liberals became so impressed with the
political power of the utilities that they regarded Senator Norris' fight
as hopeless.
President Hoover appointed an outstanding commission to study and
report on law enforcement. Roscoe Pound, dean of the Harvard School
of Law, was a member. Dean Pound had supported me in a fight in
1919 against Attorney General Mitchell Palmer's "red raids" and signed
a brief known as "The Report of the 12 Lawyers on the Illegal Practices
of the Department of Justice." We were on cordial terms. During
a long conversation he advised me in a friendly manner to quit wasting
my time on the power issue and said — ^his words are still etched on my
memory — "Don't you know that Wall Street will soon take over Muscle
Shoals just as I pick up this box of matches?" He suited action to the
words. It was discouraging, though given with the best of intentions.
FEDERAL POWER COMMISSION BATTLES 233
for I knew he had a deep understanding of forces in a democracy and
the power of Wall Street. I could only reply, **Well, we'll be in there
fighting when they take it."
Another Landslide, in Reverse. The 1930 elections were a Demo-
cratic landslide of greater significance than the Republican sweep of
1928. Democratic governors replaced Republicans in the states of
Massachusetts, Connecticut, Ohio, Kansas, New Mexico, and Idaho.
Minnesota elected a Farmer-Laborite and Oregon elected an Indepen-
dent. Only South Dakota replaced a Democrat with a Republican.
In Pennsylvania, veteran Republican conservationist Gifford Pinchot
had won in the primary election, causing the private utilities and
railroads to bolt to the Democrats along with the powerful Vare ma-
chine in Philadelphia — something they had not done since the party
was founded.
The Republican majority in the Senate was reduced from 16 to one.
But since Shipstead, Minnesota Farmer-Laborite, was militantly pro-
public power and usually voted with the Democrats the advantage
in the power field was tenuous. The change in the conservative House
membership gave clearer evidence that a political revolution was afoot
in the land. The unprecedented Republican majority of 162 was re-
versed to a Democratic majority of 12 plus one Farmer-Labor member.
This political reversal was caused by Hoover s refusal to use federal
powers and his reliance on the voluntary aid of Big Business to deal
with the depression; his signing of a high tariff bill, after promising
reductions; and his failure to enforce prohibition. Conservation of
natural resources and pubhc power were also major factors, as editorial
comment from all viewpoints plainly showed. Muscle Shoals had be-
come a weather signal. Would the Administration take heed?
CHAPTER XXI
THE NORRIS COMPROMISE BILL
At the turn of the century only a small minority of the American
people understood the importance of hydroelectric power as envisioned
by the leaders of the conservation movement and the electrical industry.
But by 1931 the vast majority was acutely aware of its significance.
The hour had struck for social control not only of the nation's water
power but of the entire electrical industry.
Against this background of public opinion a two-year battle was
waged between Hoover and Congress over Muscle Shoals. Progres-
sives had interpreted a campaign statement to mean he would "make
an exception" of the Shoals and sign the Norris bill that CooHdge had
pocket-vetoed. They were doomed to disappointment. In his first
annual message to Congress on December 3, 1929, Hoover said:
"It is most desirable that this question should be disposed of. Under
present conditions the income from these plants is less than could
otherwise be secured for its use, and more specifically the public is
not securing the full benefits which could be obtained from them.
"It is my belief that such parts of these plants as would be useful
and the revenue from the remainder should be dedicated for all time
to the farmers of the United States for investigation and experimenta-
tion on a commercial scale in agricultural chemistry. By such means
advancing discoveries of science can be systematically applied to agri-
cultural need, and development of the chemical industry of the Ten-
nessee Valley can be assured.
"I do not favor the operation by the Government of either power or
manufacturing business except as an unavoidable byproduct of some
other major purpose."
Hoover proposed that Congress establish a commission to negotiate
contracts for operation of the government plants. His pronouncement,
like the ambiguous "high dam" statement on the Boulder project,
engendered debate as to its meaning when the nation expected clarity.
He appeared to favor leasing. But suppose Congress should hold that
public power was an "unavoidable byproduct." Would he veto the
Norris bill? Some said "yes" and others said "no." Editorial opinion
conflicted and there was uncertainty for a year and three months.
The Senate Stands Pat. Coolidge pocket-vetoed the Muscle Shoals
234
THE NORRIS COMPROMISE BILL 235
bill passed in May 1928. A year later (May 27, 1929), in the case of
the Ontonagon Indians, the Supreme Court decided a pocket-veto was
valid. On the next day Senator Norris reintroduced his bill, now
numbered Senate Joint Resolution 49. The Committee on Agriculture
reported the bill favorably one week later when it was agreed to con-
sider it immediately after the Smoot-Hawley tariff was out of the way.
This caused a delay of ten months. The Norris measure was passed on
April 4, 1930, by a vote of 45 to 23. Only two major speeches were
made, one by Norris for the liberals and one by Fess for the opposition.
Fess deftly avoided concrete issues, declaring himself a follower of
Jefferson and chiding the Democrats for abandoning the doctrine that
the least government was the best. He would not junk the project
but would keep the government out of business by leasing it. His
motion to strike out government construction of Cove Creek dam was
defeated without roll call.
Norris, for the benefit of new members, reviewed the history of the
project — emphasizing the reasons why the problem had not been
settled long ago. He used as an example the American Cyanamid
Company bid again under consideration by the House and backed
by the American Farm Bureau Federation. Norris inserted in the
Congressional Record an analysis made of the American Cyanamid
bid by O. C. Merrill, secretary of the Federal Power Commission. The
analysis revealed that approval of the bid would mean an additional
investment by the government of $69 million. Also involved was a
subsidy of $4.4 milHon to induce the company to undertake fertilizer
production with no guarantee of full-scale continuous manufacture.
Southern Senators were still insisting on the leasing of Nitrate Plant
No. 2 for fertilizer operation. It was noteworthy, however, that a large
majority led by Hugo Black was now against the leasing of the power
plants, Heflin included.
Vandenberg and Taxes. The federal government had never paid
taxes on its own properties or activities. Senate Joint Resolution 49
provided that Eve percent of gross income from electric power sales
should be given to the states of Tennessee and Alabama "in lieu of
taxes." Senator Vandenberg of Michigan, supported by a majority of
his Republican colleagues, made a prolonged fight to strike this pro-
vision from the measure and nearly succeeded. He argued that the
states had never been given the right to tax federal properties or func-
tions within their borders; that the southern states had "not mentioned
taxes" when the project was authorized; that "the advantages that
flow from the development are incalculably greater than the taxes which
236 THE CONSERVATION FIGHT
would attach to this comparatively undeveloped sector'; and that a
"cash dole" in addition to spending so many millions on the project
could not be justified. He agreed to vote for the Norris bill if the tax
feature were eliminated, although he favored private operation. His
reason was that no acceptable bid had been received and furthermore,
"it is my information that there probably never would have been any
such comprehensive development under private auspices at any time.'*
Norris agreed in principle with Vandenberg's position on the taxa-
tion of federal properties, but pointed out that if the government took
over real estate and other properties on which states and communities
ordinarily collect taxes they would lose access to revenues needed for
schools and other public purposes. Since the government would be
going into business, Norris thought it only fair to pay the amount of
state and local taxes that private companies would pay but not to in-
clude federal taxes. He explained that power companies paid from 1.4 to
12.2 percent of their gross revenues in state and local taxes and that 5
percent would be a fair payment on wholesale power only. Vanden-
berg's motion was defeated, 34 to 32, a close vote; 25 RepubHcans and 6
Democrats voted with him.
A Signal Gun Majority. At the conclusion of this debate on April 4,
1930, the Muscle Shoals bill was passed for the second time, 45 to 23,
exactly 13 months after Mr. Hoover came to the White House. Analysis
shows that 26 Democrats, 18 Republicans and one Farmer Laborite
voted for the bill. All the Administration could muster was 21 Re-
publicans and 2 Democrats in opposition.
A signal gun had been fired. Under no circumstance would the
Senate surrender control of the Tennessee River, including its power,
to private interests under the guise of fertilizer production. ^
Reece at the Helm. Fortunately for the Hoover faction, when the
Norris bill got to the House, chairman W. Frank James of the Mihtary
Affairs Committee was in Walter Reed Hospital. Acting chairman
Harry C. Ransley, a Republican conservative, appointed a subcom-
mittee to draft a substitute. The committee was headed by the Presi-
dent s lead man in the House, B. Carroll Reece. The Reece draft was
substituted as an amendment to the Norris bill (S. J. Res. 49,) and was
reported favorably by the full committee on May 12. There was no
time to lose. With Speaker Longworth in command, a special rule
was obtained and "the Reece bill" came up for floor debate on May 27,
1930. '
The "amendment" gave the House its first look at what Hoover
wanted done. As McSwain pointed out in his minority report, the
THE NORRIS COMPROMISE BILL 237
fundamentals on which the House had acted for eight years had been
disregarded. He correctly predicted that "the country will be shocked/'
The President was empowered by the measure to appoint a leasing
board without any requirement of Senate confirmation. The board
could make several leases and split the project. When approved by
the President, the leases would constitute a vahd contract for 50 years
without being examined or agreed to by Congress. The fertilizer
provisions were slightly improved but most of the old jokers were
retained. There would be return of the plants if a lessee flunked.
Power was to go to the companies. A ''holding company" or other
lessee must build the key Cove Creek dam if it were ever built, and
it could be recaptured by the state of Tennessee, but not by the federal
government. The substitute dismissed Congress and gave Hoover
sole command.
Debate was limited for good reason. The members knew how they
would vote and they were sick of Muscle Shoals. Besides, the Smoot-
Hawley tariff bill was still under discussion. In the two-day tussle
party lines were shattered. One side held with Hill of Alabama that
if the bill passed "Muscle Shoals will go into the hands of the power
and fertilizer trusts forever." The other side scoffed at such charges.
"Can't you trust the President of the United States?" In pohte language
the answer was "No."
The Issue of Low-Cost Power. The high cost of power came up
constantly. In a closing speech Rep. Crosser of Ohio exhibited the
large chart I had prepared for Senator Norris comparing the average
cost of domestic service in the United States and Ontario from 1910
to 1928. Representative Dempsey, a Republican who lived within 30
miles of Niagara Falls, charged Crosser with making an unfair com-
parison. Domestic rates, he asserted, were low in Ontario because
industrial users (the big load) were charged much higher rates than
in our country. This argument of "robbing industrial Peter to pay
domestic Paul" had been vended to business men for years and many
congressmen believed it. From the gallery, my wife and I saw Crosser
signal to a page. When Dempsey sat down the page brought another
big chart of mine on industrial rates. Plainly ruffled but polite, Crosser
proved from data in the pro-private power Electrical World that our
manufacturers were paying an average in 1928 of 13.4 mills per kilowatt
hour while the Ontario costs were only 6 mills, less than half as high.
The dramatic rejoinder had its effect — Demsey kept silent. Both charts
were printed in the May 28, 1930, Congressional Record and can be
found at page 9752.
238 THE CONSERVATION FIGHT
The House Bows to Hoover. The Reece substitute passed, 186 to
135, with 105 not voting. Thirty-one Democrats joined 155 Republi-
cans in approval while 42 Republicans and one Farmer Laborite team-
ed up with 92 Democrats in opposition. Geographically, the Yea vote
came from the East and the South and the Nay vote mainly from the
middle states and the West. The House had, under pressure, rejected
the Senate bill. The Senate refused to agree. The two bills went to
conference where they remained for nine anxious months during which
the 1930 election was held. '
Deadlocked Conference. After the bills had been in conference for
a week, Senator Norris in a statement to the press, June 7, 1930, report-
ed a deadlock and told why. Four days later Representative Quin
of Mississippi got the floor and made a sensational plea to Reece to
break the deadlock and allow the House to vote on the proposed
compromise. He explained that the Senate managers, McNary, Norris,
and Smith (South Carolina) insisted on government control of the
project. However, they had offered to permit the House managers
to write their own provisions authorizing President Hoover to lease
the fertilizer facilities under certain conditions. To this, Quin and
Fisher of Tennessee had agreed, thinking the terms reasonable. But
Ransley and Wurzbach, a Texas RepubHcan, had declined. Reece
had been absent; would he not now accept the compromise and get
the action so much needed?
Quin, the "Gentleman from Mississippi" was an unique character.
Son of a Baptist minister-farmer from southwestern Mississippi, teacher,
and then lawyer, he had been a member of the House Military Affairs
Committee ever since he came to Congress in 1913. He had voted
for the 1916 Defense Act provision that dedicated the Muscle Shoals
plant to national defense and its fertilizer to farmers in peacetime. In
the tone and language of a Baptist revivalist exhorting sinners to
repentance, Quin besought Reece and his group to "come to the mour-
ners' bench," and deliver the country from the clutches of the power
trust by signing the conference report so that the House could vote
upon it the next day.
Reece calmly declined. No company would sign a lease under the
Norris terms, he said. Wurzbach stood by him. *
The President Stands Pat. The 71st Congress adjourned on July 3,
1930, and assembled again for its final session on December 1. The
Republicans had lost control of the House in the November elections,
but President Hoover stood pat on Muscle Shoals and the power issue.
In his message to Congress he had only this to say: "I have in a previous
THE NOBRIS COMPROMISE BILL 239
message recommended effective regulation of interstate electric power.
Such regulation should preserve the independence and responsibility
of the States."
Despite Hoover's indifference to election results, many Republican
House members were alarmed. B. Carroll Reece had been defeated
despite Hoover's personal campaign letter urging his return. Wurzbach
of Texas had become Repubhcan top man on the conference committee,
but he had won his House seat only by a small majority.
An early settlement of the conference committee differences on
Shoals bills was expected when Congress reassembled, but a month
passed while the deadlock held firm. Then, restive Quin on January
6, 1931, again took the floor and told an anxious House who was to
blame. Section 11 of the Senate draft expressly authorized the con-
struction of transmission lines to be paid for "either from appropriations
made by Congress or from funds secured from the sale of such power.**
Quin reported that "every single issue has been settled" except that
Wurzbach insisted on omitting the words "or funds secured from sale
of power." Why was this so vital? Because successful operation of
the power plants could be delayed and wrecked if a hostile Congress
refused money for transmission hnes and if appropriations for the lines
had to be authorized months in advance. A presidential veto, either
of a bill authorizing the lines or a subsequent appropriation bill, could
wreck successful operation. Since the language to which Wurzbach
objected had been in a bill previously approved by the House, it was
clear that conference Republicans were now doing a chore at the
demand of the power trust. This was dangerous politics. Wurzbach
took heed. The next day he yielded on the transmission dispute. The
full committee met, agreement was reached with Norris, and Wurzbach
was chosen to make the report to the House. But nothing happened.
Wurzbach Explains. Finally, John N. Gamer, Democratic floor
leader, on January 17 introduced House Resolution 340 to discharge
the House conferees and appoint others to take their place. One
week later Wurzbach explained the situation. He was trying to get
a draft the President would sign and not have to call a special session
after March 4 to act on Muscle Shoals. He was hopeful Hoover would
sign if the lessee received the right to manufacture certain byproducts
as well as fertiHzer to full capacity of the plants. This would absorb
all the power, and the vexing question of competition with the power
companies would be eliminated. Would not the House give him more
time? It did, and Garner's resolution was laid aside.
Quin, however, was skeptical. A week went by with no action.
240 THE CONSERVATION FIGHT
Knowing that the report could have been made in two days, he took
the floor and on January 31 delivered a revealing and caustic attack.
He drew laughter when he began with, "I propose to discuss the Hid-
den Mystery, or Who Skuldugged Muscle Shoals in Conference.'*
Quin recounted that on January 7 a majority of the conferees con-
sisting of Wurzbach, Fisher, and himself reached an agreement with
the Senators. Wurzbach was authorized to write the House report.
A photograph of the members was made, and the press agencies had
carried the news. Then, "a trainload of telegrams" inspired by the
power and chemical industries flooded the House in protest. The
congressman charged that the Republican leaders had decided that
no agreement should be reached and that W^urzbach had yielded,
back- tracked, and taken Fisher with him. **You need not fool your-
selves, these gentlemen do not intend to agree. They were forced
away.'*
No incident in our narrative illustrates more clearly upon what
seemingly small pivots great public policy matters can depend in this
technological age. In this instance, the power trust seized upon a
detail to gain its end. The issue of government transmission lines —
vital to successful electrification — is still being raised in midcentury
to defeat pubhc power.
The Bill Passes the House. Three weeks went by. On February 19
the conferees made a report signed by McNary, Smith, and Norris for
the Senate, and by Wurzbach, Quin, and Fisher for the House. Reece
submitted a statement that he agreed to the fertilizer part, which he
hoped would succeed; as a result all the power would be taken and no
transmission lines would be needed. Ransley did not sign.
The House was first to act. Ransley and Douglas, Democrat of
Arizona, called the fertilizer conditions too strict and predicted public
power would follow. Wurzbach and McReynolds voiced the confident
belief that Hoover would approve the bill because all the power would
be used for fertilizer. Chairman James said he had not been interested
in power but in national defense and fertilizer. *T am firmly convinced
that the President can make a lease under the present bill. I sincerely
hope you will stand by the four House conferees." The House did and
approved the conference bill 216 to 153.
Three days later McNary moved to consider the Muscle Shoals
report in the Senate. He had unanimous consent. There was no
debate and in a matter of minutes the bill was passed. Shortly after-
ward, Bingham, Republican from Connecticut, returned from lunch,
and expressed consternation at what had happened in his absence.
THE NORRIS COMPROMISE BILL 241
After some bickering, he was allowed an hour for discussion provided
Norris use 20 minutes of the time to state the case.
Bingham led off with a warning against ''tyranny/' Johnson of Cali-
fornia took some time to congratulate and to felicitate Norris in his hour
of triumph. Then Reed of Pittsburgh, and others, took so much time
none was left for Norris.
On a roll call, the bill passed 55 to 28 with 13 not voting. •
The White House was the final hurdle for the Norris compromise
measure. Friend and foe alike took another look at its provisions to
determine if Hoover would sign it as the "exception ' to his basic re-
source views. The measure which had just been passed was the Norris
bill which Coolidge had pocket-vetoed, reenacted. It retained absolute
ownership and operation of the entire $150 milhon project by the feder-
al government through a government corporation. The bill provided
that for twelve months following the passage the President might
lease the nitrate plants for not to exceed 50 years. But the bill provided
that conditions should be stipulated in any lease contract. The Presi-
dent could fix "fair and just" rental charges. A lessee must manufacture
fertihzer and fertilizer ingredients "exclusively." Within "reasonable
market demands" the output of fertilizer containing 10,000 tons of
fixed nitrogen must be achieved within three years, and gradually in-
creased to the full capacity of the plants. To make this output possible,
the President could sell power to the lessee at the lowest price charged
any buyer, up to the full capacity of the government power plants.
To guarantee fertilizer production the bill stipulated that the lessee
must manufacture fertilizer and not divert the plants to other chemical
products except insofar as a useful byproduct would be produced in
the process. For the production of such a byproduct, a 15 percent in-
crease in power could be made available. Finally, no lessee could
charge royalties on patents he owned or make a profit in excess of
eight percent on the annual output. What would happen if a lessee
honestly tried under these conditions and failed was left for future
Congresses to decide.
The bill was in effect a challenge to industry to "put up or shut up**
on fertilizer within 12 months or let Uncle Sam see what he could do.
The Veto Message. President Hoover vetoed the Muscle Shoals
compromise bill on Tuesday, March 3. His message was handed the
Senate in the midst of a heated debate over recognition of Soviet Russia
but everything was suspended until the message was read. Jones of
Washington then asked whether his conference report should not be
laid aside since a veto message had higher privilege. Vice President
242 THE CONSERVATION FIGHT
Charles Curtis, who was presiding, ruled no. Robinson of Indiana
spoke for an hour against recognition of Russia; then came the real
fireworks with charges of misrepresentation so violent that the whole
nation, so to say, cried out — ^Who is telHng the truth?
The President based his veto on four principal objections: First:
Under government operation the power plant would lose at least
$2 million annually. The generating and transmission costs would be
about 9.1 mills per kilowatt hour wholesale whereas private companies
were already selling it at about 7.2 mills. Second: The fertilizer pro-
vision was, because of its limitation, "of no genuine importance." In-
quiries made by Hoover had indicated that no responsible concern
would make a bid. Third: Because of the ineptitude of the federal gov-
ernment "competent management" was impossible. Fourth: The whole
concept was utterly wrong. Regulation and not public ownership
was the solution. Fifth: The right solution was for Alabama and Ten-
nessee to appoint a commission which, with a member from the farm
organizations and one from the Corps of Engineers, would be empower-
ed to lease the plants.
The Veto Is Attacked. For vehemence and tone of contempt the
message had few parallels. Those who believed government operation
was best did not relish an implication that they were degenerates who
had destroyed the original purpose of the project and true Americanism.
They charged Hoover with betraying voters who relied on his campaign
promise to "make an exception" of Muscle Shoals (Hoover had ex-
plained in the message that such exception should be made only in
periods of national emergency).
Senator Black, questioning the array of figures used to show the
fiscal unsoundness of government power, wanted to know what army
engineer had given "the great engineer" his figure of 9.1 mills as the
cost of power. He quoted a report made by the Corps of Army Engi-
neers and approved by its chief. General Lytic Brown, to the effect that
power could be generated and distributed within a radius of 350 miles
at 4.16 mills.
Norris spoke briefly, beginning with a grim, ominous calm that soon
deserted him. After describing the potential benefits of his own bill,
he closed with: "That is what was in this measure and that is what
the President of the United States has taken away from the American
people by his wicked, his cruel, his unjust, his unfair, his unmerciful
veto."
The Veto Is Defended. Only one Senator — a newcomer, Otis F.
Glenn of Illinois, defended Hoover. Glenn began by complimenting
THE NORRIS COMPROMISE BILL 243
Norris whom "every member of this body honors and respects** although
he had used "rather strong and intemperate language" respecting the
President. Glenn backed Hoover s power cost figures by inserting in
the Congressional Record a letter from General Brown to Secretary of
War Patrick Hurley. The letter was dated March 2 — the day before.
It read, "I have checked over the figures in the President's veto message
on S. J. Res. 49 and have found them to be correct.'*
Senator McKellar in his remarks criticized the President for inconsist-
ency on the matter of the governments competition with its citizens.
The Farm Board, with Hoover's approval, McKellar said, was doing 15
percent of the cotton business in direct competition with private cotton
interests. Senator Smith closed the debate with a reminder that I have
emphasized many times myself. Section 124 of the Defense Act of 1916
was a "contract with the American people," he said. It was a contract
under which $150 million was spent on Shoals plants. It provided
operation "solely by the government and not in conjunction with . . .
private capital." But when the money was spent and the project was
ready for operation, the trusts and combines of the country got in their
work and the great facilities were idled for years. Smith declared,
"We do not know" . . . even "the President does not know" what the
power will cost or whether fertilizer can be economically produced as
a result of "a plethora of conjectures." So let us find out by experiment.
"I do not know that I am committed to Government ownership, but,
thank God, I am committed to common honesty."
On a motion to override the veto the vote was 49 to 34, with 13 not
voting. Seventeen Republicans, 31 Democrats, and one Farmer La-
borite voted to override: 31 Republicans and 3 Democrats voted to
sustain. The motion failed for lack of a two-thirds majority. No vote
was taken in the House.
The roll call vote of March 4, 1931, climaxed the efifort begun in 1919
by Old Guard Republicans to prevent public operation of the Muscle
Shoals power system as desired by the bi-partisan Senate, and fertihzer
production as desired by the Republican House of Representatives. But
the President had his own solution — turning the Shoals over to the
states — so the warfare continued. '
Reaction To Veto. Comment on the veto was universal and
lusty. Two sentences summarize the two sides: It was "a cour-
ageous defense of sound basic principles of the relations between
government and business." And, "It ignored the public interest
and public opinion in favor of private capital as the price of cam-
paign funds and political support." The KnoxviUe News-Sentinel
244 THE CONSERVATION FIGHT
and other Scripps-Howard papers quoted Senator Norris as saying that
President Hoover had alhed himself and his party with the power trust
against development of the Tennessee Valley for the common good.
A few days later Representative Reece retorted in the same papers that
the Norris bill was a "dangerous experiment in Sovietism."
A less torrid view was expressed by the Whaley-Eaton Service
(March 7, 1931), to which business executives subscribed to get the
"low down" on Washington news, that until the new Congress met
in December the administration would be particularly active on two
major problems — the utilities and trade associations and mergers. The
purpose would be to assume the oflFensive and evolve a "definite utility
program on which he [Mr. Hoover] would stand for reelection."
The President's Solution. The President's plan to end the contro-
versy by turning Muscle Shoals over to the states was at once recog-
nized as a political maneuver in his campaign for reelection. Hoover
had lost the Senate on all counts. But the House still rated fertilizer
above power. So if Alabama and Tennessee teamed up with him and
the Senate again refused he could appeal to the nation to support his
plan during the campaign. The plan was designed to please the power
trust, agriculture, and the great body of states' righters. Transfer of
complete control of the project to the two states had been emphasized
by the concluding words in his veto: 'They can lease as their wisdom
dictates and for the industries that they deem best in their own interest.
It would get a war relic out of politics and into the realm of service.''
The Muscle Shoals Commission. The Tennessee legislature, acting
promptly and with no opposition of consequence, set up a commission
to work with Hoover, March 23, 1931. Governor Henry Horton ap-
pointed three members to represent the state. The legislature of Ala-
bama was less cooperative. Its approval was not secured until June 30
because of a statewide revolt headed by the Tri-Cities Chamber of
Commerce of Sheffield, Florence, and Tuscumbia, three cities near
Wilson Dam. Their move was supported by many municipalities and
business interests and, surprisingly, by many Farm Bureau Federation
men who rejected the leadership of their national president, Edward
A. O'Neal, who had consistently opposed the Norris bills.
After a bitter encounter the commission bill passed the state legisla-
ture, and Governor B. M. Miller appointed Alabama's three members.
Writing at the time. Judge Allen J. Roulhac, of Sheffield, stated for
the benefit of the people of other states: "The people of Alabama who
are informed on this subject know that the resolution for a Muscle"
Shoals Commission originated with and was supported by the Alabama
THE NORRIS COMPROMISE BILL 245
Power Company and their attorneys and lobbyists." And J. G. Baker,
secretary of the Sheffield-Muscle Shoals Chamber of Commerce, wrote:
"You cannot imagine, unless you were in the district for a time, what
our people have been subjected to in the way of coercion and trickery
at the hands of the power gang."
The Alabama Power Company was buying Wilson Dam power for
two mills per kilowatt hour and retaihng it to domestic consumers in
Florence at ten cents. Significantly, the resolution adopted by the
state contained a clause forbidding the new commission to approve
a lease for the operation of the Muscle Shoals properties except *T3y
a private corporation or an individual." Congressman O. B. Lovette,
who had defeated Reece for reelection, said in an address at Florence
on June 11, 1930 "I would rather see Muscle Shoals rot and rust than
be placed in the hands of a power trust which would manacle our
children forever."
A Who's Who of the Commission. Governor MiUer of Alabama
appointed to represent his state on the commission County Judge S. F.
Hobbs of Selma, who became chairman. Judge Hobbs had been cam-
paign manager for the Governor, who was backed by the Alabama
Power Company.
Governor Horton's most influential choice was Mercer Reynolds,
president of the Chattanooga Oil Company, ex-president of that city's
Chamber of Commerce, and ex-president of the Tennessee River As-
sociation. Reynolds had labored in opposition to the Norris bills with
Claudius H. Huston. For many years head of the association, Huston
was made chairman of the RepubHcan National Committee by Hoover.
Another appointee, however, was W. F. McFarland, a former city
official of Florence, who apparently did more hard work and spent
more time than any of the six members from the states.
The President Cooperates. Edward A. O'Neal, president of the
American Farm Bureau Federation, was the most prominent appointee
of the President on the commission. He had long opposed pubHc power
and worked in behalf of the Cyanamid Company proposal. On Decem-
ber 19, 1930, O'Neal had secured passage of a resolution by the federa-
tion authorizing their board of directors to lease and operate the Muscle
Shoals project for fertihzer manufacture, and to sell surplus power **so
as to benefit agriculture and preserve the public interest."
Hoover also appointed Lieutenant Colonel Joseph I. McMuUen,
army attorney, and Colonel Harley B. Ferguson, of the Corps of En-
gineers, as members. In addition. Lieutenant Colonel Max C. Tyler
was technical adviser; Major George P. Hill, legal adviser, and Captain
246 THE CONSERVATION FIGHT
Thomas H. Green, secretary. The latter two were from Colonel Mc-
Mullen s office.
As a working task force, Hoover had five Army men on the commis-
sion— not two as his message had suggested. The President's six
balanced the six members from the two states. The National Grange
and the National Farmers Union, both of which were opposed to the
President's policies, were not asked to represent agriculture.
Puzzled Congress. Hoover sent the Muscle Shoals Commission's
report to Congress on December 17, 1931, with no comment. The
report was a handsome, richly illustrated quarto of 120 pages. Three
were devoted to "unanimous" conclusions and recommendations, fol-
lowed by a highly technical 32-page survey of the fertilizer industry
by Dr. P. E. Howard, a government chemist. Lieutenant Colonel M.
C. Tyler presented a 33-page report on the cost to the federal govern-
ment of transmitting and selling Muscle Shoals power and similar
matters.
At first glance most readers in Congress and out were highly amused.
But after that, eyebrows were raised. The President, follower of Alex-
ander Hamilton, had turned states righter and offered Alabama and
Tennessee a free gift of Muscle Shoals to dispose of "as their wisdom
dictates." But legislatures and Governors had rejected the offer with
the recommendation that Congress authorize the President to lease
the properties.
The commission found quantity production of certain types of com-
mercial fertilizer "economically feasible," but laid down safeguards
nearly as objectionable as those in the bill the President rejected.
The power plants should be leased. No transmission lines should
be built. Yet the government should build Cove Creek Dam as soon
as leases were made for the other dams. How this $87 million project
could be built without further appropriations, as proudly announced,
was not explained. Dr. Howard's article did not support the fertilizer
recommendation. Colonel Tyler was against construction of Cove
Creek Dam until some years later when justified by market demands.
If the government attempted to operate the plants, it would lose $39.6
million in 15 years, he estimated.
Climax and Anti-Climax. Nearly two weeks later, on January 5,
1932, a critical and politically alert House Military Affairs Committee,
now under Democratic control, began consideration of the report.
Chairman Quin presided at two sessions but was taken ill and died on
February 4, 1932. His successor, John McSwain, appointed W. Frank
THE NORRIS COMPROMISE BILL 247
James, Republican, to preside over the remaining ten hearings, which
were extensive.
The committee was intent on discovering how much "local" and how
much administration "wisdom" had gone into shaping the report. Be-
ginning with Chairman Hobbs, each member of the commission was
questioned about the source of the report and its contents. It was
estabHshed that a half-dozen one-day public meetings had been held
over the region; that none of the information gathered had been in-
cluded; that in the four months between appointment and report the
chairman and most of the commissioners had spent only ten days on the
assignment. All the other legal, power, and chemical data had been
suppHed by the War and Agricultiu-e Departments except for informa-
tion received from Charles J. Brand, secretary of the American Ferti-
lizer Association. The commission's office was a room in the War De-
partment with Captain Thomas H. Green, as its secretary, working
under the direction of McMuUen and Ferguson. They had prepared
the report, paid for out of the President's contingent fund.
It was admitted that although the document had been heralded and
signed as a unanimous report. Hoovers men had not agreed that
quantity production of fertilizer should be attempted, and the Army
Engineers were against early construction of Cove Creek Dam, al-
though both were recommended. To the astonishment of the congress-
men and the country, members from the two states asserted respon-
sibility for only three pages of the report following the headlines "Con-
clusions" and "Recommendations" as their own.
Commenting on the report's value after so much fanfare, time, and
expense, Vice Chairman McSwain said to Hobbs: "Now Judge, your
report has not in my humble judgment added one syllable of addi-
tional information to the thought or to the solution of the Muscle
Shoals problem that has not been before us all these years." There
was no dissent.
At the close of the testimony, President O'Neal of the Farm Bureau
Federation expressed his happiness that the report he had signed "is
a unanimous one." Under sharp questioning, he admitted that the
statement by Army men contradicted the recommendations — ^"A lot of
the facts in these statements are true, and a lot I don't think are true.*'
He had difiFered on important matters in respect to both fertiHzer and
power, but he had said "in order to keep harmony, let her go in." He
had urged the inclusion of matters of his own choosing, but none of it
was printed. Pressed to state the specific mininum and maximum
quantity requirements he would insert in a lease for making fertilizer
248 THE CONSERVATION FIGHT
and the disposition of power he exclaimed, "You have to trust some-
body besides God." So turn it over to a board, and "safeguard it in that
way/' Representative McSwain said that "the red book [the report had
red covers] looks to me hke a red herring trail." O'Neal made no
denial.
Orders Obeyed. All three of the President's appointees testified
that the report did not reflect their independent opinions. The Army
members testified that they had delivered what was expected of them.
They said there was fear that the present Congress might pass the
Norris bill for the third time. Then Congressman McSwain asked:
"Isn't this the truth: that being the major premise, to wit, the effort
to pass the Norris bill, that all this study of Colonel Tyler was to get
some dope to help head it off?" Colonel Ferguson replied: "That is
what we were doing." The colonel was of the opinion that "Muscle
Shoals is a power proposition. You can't escape that." Regarding
fertilizer: "Anybody that wants to can keep on being in favor of nitra-
tes. He is wasting his life." Colonel McMullen, the lawyer, was just as
frank. At the outset he assured the Congressmen, "I am an Army offi-
cer ... I don't generally offer my personal opinions unless I am asked
for them." So a report was prepared which "reflected the enunciations
in the President's veto message."
Colonel Tyler's answers to questions brought added confusion as
to who did what and why. General Lytle Rrown had said that he
detailed Colonel Tyler to serve with the commission because of the
fine work he had done in preparing estimates for the President's veto
message. He had great confidence in the colonel. But the colonel
promptly denied that he alone supplied the figures. The statement
was the work of three or four people, including Engineers Pillsbury and
Drew as well as himself. It was a hurry-up job, accomplished in the
hours between afternoon and midnight on one day. The Committee
thereafter paid little attention to the President's claim of 9.1 mills
per kilowatt hour as the cost of delivered power with huge losses sure
to be suffered through government operation. They considered it
evident that the engineers had handed Hoover the kind of estimates
they knew he wanted.
Since the Army had for years advised construction of Cove Creek
dam to double the power output of Wilson Dam and regulate the river
for flood control and navigation, the committee questioned the colonel
and Chief Engineer Lytle Brown about that dam. Brown replied,
"The view of my office is that it is the function of the federal govern-
ment to furnish the navigation and cooperate with private interests
THE NORRIS COMPROMISE BELL 249
wherever it is economically feasible to get the power/' Cove Creek
was "primarily a power proposition" and should be left to the power
companies. Brown also insisted it was not the business of the govern-
ment to provide either flood control or power. "I don't think it is
any business of the federal government to provide local control of
waters," he said. The Army Engineer chief pleaded inability to give
the committee any data on comparative advantages of federal or pri-
vate construction of Cove Creek or other dams although he represented
the government's experts on dams.
The House Passes Its Own Bill. These prolonged hearings were part
of the backstage maneuverings in the conflict between the President
and Congress on the Muscle Shoals problem. Hoover had made no
comment on the report when forwarding it to Congress. He never did
publicly express his disappointment that the states had not only re-
jected his proposal that they take over and lease the project but that
they also rejected the Reece proposal empowering him to negotiate
leases without any supervision by Congress.
Having disposed of the President's federal-state commission, the
House committee appointed a subcommittee, with Representative
Lister Hill as chairman, to draft a bill in line with its previous measures,
but making important concessions in a desperate effort to get going.
A Muscle Shoals Board was set up to be appointed by the President
subject to approval by the Senate. But any lease of the fertilizer
plants which the board might make was subject only to his approval.
It was not to be sent to Congress.
The old "market demand" provision reappeared. If a lessee did not
sell its full production, it could suspend manufacture until the surplus
was disposed of, provided that fertilizer containing 2,500 tons of
nitrates is kept in storage. Profits of eight percent were allowed, by-
product chemical production was permitted. If no satisfactory ferti-
lizer leases could be made and the government was forced to operate
the plant, the board could even negotiate leases at a later date if that
proved advisable. The board would operate the power plants and
supply low-cost power for fertilizer and chemical production. Any
surplus power was required to be sold "at the switchboard" with pre-
ference to public bodies. This meant no transmission lines, perhaps the
greatest concession of all.
There the yielding ended. If Hoover found himself unable to per-
suade private capital to make fertilizer under these generous terms
in 18 months, then the government would automatically proceed to
develop the whole project. Representative Hill introduced the com-
250 THE CONSERVATION FIGHT
mittee bill, House Resolution 11051. The Rules Committee gave it
the right-of-way. It was discussed for two hours on May 4 and 5, and
then passed. Representatives Ransley and StaiBFord led the RepubHcan
attack on Socialism and Moscow. McSwain and Hill officered the
Democratic defense. The old shibboleths were repeated.
The roll call vote shows that on Ransley's motion to recommit the
bill and kill it, 129 Repubhcans and 21 Democrats voted Yes. But 157
Democrats and 42 Republicans and one Farmer-Laborite voted No.
Thirty-nine Republicans and thirty-seven Democrats did not vote.
The bill then passed on division by 183 to 132 and was sent to the
Senate where it died v^th this Congress.
CHAPTER XXU
THE PRESIDENTIAL CAMPAIGN OF 1932
Throughout the Hoover administration the great depression steadily
deepened. The collapse of our entire financial and economic system
was threatened, and everybody from ditch digger to capitaUst was
suffering from it. Hence, by March 1932, with the presidential election
in the offing, the role that the federal government should play in meet-
ing the emergency became the paramount issue.
Conservative writers have never credited the Muscle Shoals problem
with the part it played during the campaign and afterward. Yet, it
was important because Muscle Shoals symbolized the struggle be-
tween the general welfare and private capital for priority from gov-
ernment. The Tennessee River was already supplying a national yard-
stick— one by which candidates were measured.
The decision on Muscle Shoals would set precedents on regulation
and utilization of water resources and on regional planning which far
exceeded the importance of precedents established by the Boulder
Dam Act.
Two Congresses had decided that the federal government should
remain in control of the Muscle Shoals project and operate its power
facilities. Two Presidents, Coolidge and Hoover, had vetoed this
solution. If the Republicans won the election, it appeared certain
that Hoover's policies would wreck efficient regulation of utilities and
end public waterpower development. The conflict could not be con-
tinued much longer. Thirty years of conservation effort would be
gravely impaired, if not entirely lost.
If the Democrats won, what would happen? Would the old bi-
partisan coalition be strong enough to lease the entire project or defeat
any effective plan of government operation? The performances of
the House under Democratic control after the 1930 election gave
little hope that the party could shake off power trust influence and
meet the requirements of 20th century statesmanship.
Thus far the House had insisted on sale of any surplus power at the
busbar right beside the generator, assumedly to private power com-
panies. States and municipalities were to be given first right to buy the
power but few had, or could afford, transmission lines to pick it up
at some far-off dam. The Senate insisted that the government build
251
252 THE CONSERVATION FIGHT
the transmission lines and market its power wholesale at city gates.
From the viewpoint of conservationists and liberals during those
critical months one hope remained — the election of a president with
intelligence and courage to meet the crisis without compromise on
essentials. The Senate had stood pat on certain fundamentals. The
utilities and their corporate allies had done Hkewise. The power
company allies included the national organizations representing bank-
ing, insurance, mining, manufacturing, and other business interests.
They even included the National Association of Railroad and Utihties
Commissioners, composed of the public officials who were supposed
to regulate the companies. A majority of the members of the engi-
neering and legal professions supported their utility clients ( or hoped-
for clients). The educational world was silent except for a few out-
standing individuals.
Power And Politics. The Federal Trade Commission was not allowed
to investigate the political activities or money spent by the utilities.
That would have been too much to expect since men in both the old
parties were involved. There was a great need for more daylight
on what to expect from the candidates, especially the presidential
candidates.
Mr. Hoover s attitude was now known and his renomination assured,
but what about the Democrats? On March 18, 1932, I issued, a 47-
page National Popular Government League bulletin, entitled, "The
Power Records of the Presidential Candidates; a Nonpartisan Analysis
for the Information of Voters." It was issued before the national con-
ventions and before the party candidates were finally named.
The bulletin received coast-to-coast newspaper coverage because
of an introductory statement signed by 15 Senators and 22 House
members, about equally divided between the parties. Their statement
read:
"We regard the power question in its economic, financial, industrial
and social aspects as one of the most important issues before the
American people in this campaign of 1932.
"Its political significance cannot be over estimated and must chal-
lenge the attention of those interested in any progressive movement
or measure. The reason is plain. The combined utility and banking
interests, headed by the power trust, have the most powerful and
widely organized political machine ever known in our history. This
machine cooperates with other reactionary economic, industrial, and
financial groups. It is strenuously working to control the nomination
THE PRESIDENTIAL CAMPAIGN OF 1932
ZSZ
of candidates for the Presidency and the Congress of both dominant
political parties."
The statement was signed by the following senators: Republicans —
Brookhart (Iowa), Cutting (New Mexico), Frazier (North Dakota),
Howell (Nebraska), Johnson (California), Norris (Nebraska), and
Nye ( North Dakota ) . Democrats — Costigan ( Colorado ) , Dill ( Wash-
ington), Gore (Oklahoma), Long (Louisiana), McKellar (Tennessee),
Walsh (Montana), and Wheeler (Montana). Farmer-Labor — Ship-
stead (Minnesota). Among members of the House signing were:
Republicans — ^Amlie (Wisconsin), Horr (Washington), La Guardia
(New York), and Sinclair (North Dakota). Democrats — Cannon
( Missouri ) , Evans ( Montana ) , Howard ( Nebraska ) , Rainey ( Illinois ) ,
and Thomason (Texas). Others who signed were: John A. Simpson,
president, National Farmers Union, and Judge George W. Woodruff,
Interior Department solicitor during the Roosevelt administration.
The bulletin attempted to reveal where each candidate, if elected,
would stand on three major issues: public or private operation of the
Muscle Shoals project; enforcement of the Federal Water Power Act
and federal regulation of interstate power corporations; and the
character of appointments each would make to administrative offices.
More attention was paid to what the candidates had done as public
officials rather than what they had said, to determine whether they
would act in the pubhc or private interest. Deductions from the
documented evidence were summarized in the bulletin as follows:
Republican
Hoover
Disposition of Regulation of Appointment of
Muscle Shoals utilities administrators
Private
Private
Private
Democrat
Governor Franklin Delano Roosevelt
John N. Gamer, House Speaker
Newton D. Baker, Ex-Secretary of War Private
Albert C. Ritchie, Maryland Governor
Public
Public
Public
Public
Unknown
Unknown
Private
Private
Private
Private
Private
Private
Newton D. Baker had built Cleveland's famous municipal power
plant when he was mayor of that city. As Secretary of War and in
testimony before congressional committees, he favored government
ownership. He was nationally regarded as a great liberal, but the
254 THE CONSERVATION FIGHT
public was unaware that he had been attorney for the Electric Bond
and Share Company in the New River case which was instituted to
have the Federal Water Power Act declared unconstitutional, an act
Baker had helped draft; and also, that he was the utihties' dark-horse
candidate for the presidency. I discussed this unusual situation with
U. S. Senator Edward P. Costigan over his dining room table
we wrote this sentence for the bulletin: "How can he do this today
as a lawyer and tomorrow defend the public interest as President,
when as both lawyer and President he takes an oath to uphold the
Constitution of the United States? It is for Mr. Baker to explain."
The bulletin gave notice that progressive leaders intended to make
power a prime campaign issue. The bulletin was mailed to all dele-
gates to the Democratic convention at their home addresses before the
meeting. Among other things, it alerted the delegates to the activities
of Secretary Baker and Alfred E. Smith regarding utility problems.
The Utilities Are Bipartisan. The warning by members of Congress
that the power trust was "strenuously working to control the nomina-
tion of candidates for the Presidency and the Congress of both dom-
inant political parties" was based on known activities in their respec-
tive high commands.
The Republican National Committee, since Theodore Roosevelt left
the White House, had been in sympathy with the power trust. Re-
peated Republican efforts to "get rid of Muscle Shoals," always to
private companies, made that party's position clear. It was preparing
to run Hoover again.
A serious conflict had developed among Democratic leaders. Al
Smith, as governor of New York and candidate for the Presidency
in 1928, advocated state ownership and operation of the power plant
to be built on the St. Lawrence River. He proposed to sell the power
wholesale to private companies at the switchboard and fix the retail
rates in the contract. This policy had the support of the governor's
friend, Owen D. Young, a Democrat and chairman of the board of
General Electric Company.
Immediately after his nomination. Smith had appointed his friend,
John J. Raskob, as chairman of the Democratic National Committee.
Raskob, formerly a Republican, was a millionaire capitalist, director
in several banking and industrial concerns and later connected with
the Du Ponts. He resigned as chairman of the finance committee of
General Motors on accepting the Democratic chairmanship. In 1930
he was a director of the corporation that constructed the famous
Empire State Building in New York City. Al Smith was president
THE PRESIDENTIAL CAMPAIGN OF 1932 255
of the corporation. It was noticeable that after battling the power trust
for ten years Smith became silent on the power issue and Raskob
equally so.
In a press release one week before the Democratic convention in
1932 I wrote: "For the past four years under the guidance of Mr.
Raskob the Democratic headquarters in Washington with its much
lauded press bureau under the direction of Charles Michelson has
been profoundly silent on every phase of the power question. They
have given no publicity to the starding revelations of the investigation
of power by the Federal Trade Commission. They have taken no
stand on any of the important power bills before Congress herein
mentioned. They have said nothing about the attempted destruction
of the Federal Water Power Act. In short, they appear to have been
as much annoyed by the warfare against the power trust as Hoover
himself and the Republican National Committee. On the other hand,
a vast majority of the rank and file of the Democratic Party is progres-
sive. It has real leadership in the liberal bloc of Senators, Congress-
men and many State leaders of the nation. The fateful question is
what leadership will the 1,155 delegates at Chicago select?''
The Democratic National Committee met in Washington in March.
Smith, titular head of the party and again candidate for the presidency,
attended. Questioned by newsmen, he minimized the power question
as a secondary issue, saying it was too complicated for the people to
understand. National leaders at once interpreted this remark as a
retreat and concluded that Al had gone reactionary. He tried to deny
this impression in a press release dated April 3: "I hope that the Demo-
cratic convention will declare in its party platform in no uncertain
terms for government ownership, control and operation of electrical
energy developed from falling water to be exercised at the site." The
three words "at the site" are revealing because that policy was exactly
what the utilities were demanding at Muscle Shoals and elsewhere —
no government transmission lines.
Governor Roosevelt and Divided Counsels. Franklin D. Roosevelt
became governor of New York on January 1, 1929. Like Senator Norris,
Roosevelt had strong personal convictions that the cheapest possible
electrical supply for all the the American people was a matter of utmost
social and economic importance. He was confronted with a sharp
division within his own state as well as nationally. The parallels are
striking. If the genesis of the New Deal is to be found in Roosevelt's
experience as governor, as he afterwards stated, it was doubly true
of his power policy. Roosevelt had inherited from Gk)vemor Smith
256 THE CONSERVATION FIGHT
the policy of marketing St. Lawrence power to private concerns at
the switchboard and had endorsed the idea in the 1928 campaign.
He was aware of its dangers, however, and his tactic in meeting the
dilemma was a masterpiece of political strategy.
The utilities were assuring the public that they were making a
profit of only six to eight percent. Taking them at their word Roosevelt
sent a message to the legislature on March 12, 1929, in which he said
the state would sell the utilities the power, fixing rates in the contract
to enable them to earn eight percent profit on the actual cost of their
transmission and local distribution systems. Here was their chance
to serve the public. But Roosevelt's proposed elimination of "water"
in valuations was as objectionable to the utilities as public ownership
itself, and the public caught the point.
For two years New York was in political turmoil over the issue until
on April 4, 1931, a bill was passed authorizing state development of
the project but without the right to build transmission lines. Roosevelt
appointed Attorney Frank P. Walsh, a well-known progressive, as
chairman of the State Power Authority and the fight continued. No
construction was possible during Roosevelt's term because of the United
States Senate's refusal to approve a treaty Hoover had negotiated with
Canada.
For Efficient Regulation. Governor Roosevelt frequently and publicly
expressed his belief that consumers were not protected by the State
Public Service Commission. On March 25, 1929, at his request, the
legislature set up a six-member commission to survey the workings
of the public service group. Republican leader John Knight was
chairman. Roosevelt was permitted to name three members; he
chose Frank P. Walsh, James C. Bonbright, of Columbia University,
and David C. Addie, a social welfare worker.
Ten months later, after an exhaustive inquiry, there came a unan-
imous report that regulation had broken down, chiefly because the
method of arriving at "valuation" as a rate base was wrong. Roosevelt's
men recommended that the "prudent investment" principle be made
obligatory and that municipalities be given the right to construct or
acquire their own systems without permission of the legislature. With
this Knight and his appointees did not agree. The few minor acts
passed were of so little import that on March 2, 1932, Roosevelt in a
message to the legislature reviewed the three years of effort and
charged that $100,000 had been spent on the survey, but "it has as
yet produced no legislative action for the benefit of the people of the
THE PRESIDENTIAL CAMPAIGN OF 1932 257
state." Shortly thereafter President Hoover appointed Senator John
Knight as a District Federal Judge.
An Historic Friendship Is Broken. Al Smith and FrankHn D. Roose-
velt had been personal friends and political teammates since 1912, when
both were members of the New York legislature. At the Democratic
conventions of 1924 and 1928 Franklin made speeches nominating Al
for the presidency, naming him the "Happy Warrior." On Al's insis-
tence, Franklin left his retreat at Warm Springs, Georgia, where he
was desperately trying to recover from the crippling e£Eects of polio-
myelitis and to walk without crutches. Reluctantly, he accepted the
nomination for the New York governorship.
After Smith's defeat and Roosevelt's election it appears that the older
man felt he should be political godfather to his younger associate, but
Roosevelt stubbornly insisted on being free of a monitor. One potent
cause of the evident rupture was a clash over disposition of St. Law-
rence power. Smith had compromised on sale of power at the switch-
board and its transmission over private hues. Roosevelt had not.
Their whole cleavage over power was to make its appearance in
Chicago at the Democratic National Convention.
The Republican National Convention. The Republican convention
came first. It was held at Chicago June 14-17 and ran true to form.
Its main concern was to give color to the Hoover administration as
soundly progressive and impress voters with the sacredness of party
regularity.
To that end, the manager selected to insure the President's renomi-
nation was his Postmaster General, Walter F. Brown of Ohio. Brown
had been attorney for the Toledo Railway, Light, and Power Company,
political boss of Toledo and regional right arm of the famous "Boss
Cox" of Cincinnati, head of the Repubhcan state machine. In 1912,
however, Brown joined up with Theodore Roosevelt as a BuU Moose
progressive, a reputation now of political value. Hoover won easily
although there was some feeble opposition.
Equally important was the allegiance of James R. Garfield, son of
the former President and Secretary of the Interior in Theodore Roose-
velt's cabinet. As secretary he had been a vigorous supporter of TR's
conservation poHcies. Since his retirement he had become a practicing
attorney in Cleveland. The public still regarded him as a conserva-
tionist and friend of GiflFord Pinchot. Therefore, Garfield's selection
as chairman of the platform committee was ideal for campaign pur-
poses. Time and party loyalty had mellowed Garfield. The President
knew his policies were safe in Garfield's hands. As chairman of
258 THE CONSERVATION FIGHT
Hoover's committee on conservation and administration of the public
domain, Garfield had recommended that 178.9 million acres be handed
over to the states with all their vast forests, minerals, oil and grazing
resources. The report had contained, however, a specific exception
that reservoir sites for irrigation projects should remain under federal
ownership and control. It further suggested that it was desirable to
adopt "a definite policy relative to hydroelectric development," but
the issue of whether by the government or private enterprise was dis-
creetly sidestepped. Chairman Garfield's platform planks in this
respect were likewise discreet:
"Conservation. The wise use of all natural resources freed from
monopolistic control is a Republican policy, initiated by Theodore
Roosevelt. The Roosevelt, Coolidge and Hoover Reclamation pro-
jects bear witness to the continuation of that policy. Forestry and
all other conservation activities have been supported and enlarged.
"Public Utilities. ... As proof of the progress made by the Re-
publican Party in government control of public utilities, we cite the
reorganization under the administration of the Federal Power Com-
mission with authority to administer the Federal Water Power Act.
We urge legislation to authorize this commission to regulate the
charges for electric current when transmitted across state lines."
After Garfield read these planks in a nationwide radio broadcast,
the Republican hosts went forth to battle under the conservation ban-
ner of Theodore Roosevelt. An observant public noted that Gifford
Pinchot, father of the conservation movement, did not attend the con-
vention and, like other outstanding conservationists, he did not sup-
port Hoover's campaign.
The Democratic Convention. Meeting in Chicago, June 27, 1932,
the Democratic convention began a six-day battle that narrowly escap-
ed a repetition of the fiasco of 1924 in New York, when the struggle
between McAdoo and Smith went to 103 ballots.
I attended the Chicago convention and was in contact with delegates
for the entire week. The utilities and their allies tried to nominate
their own candidate while the nation was being entertained by news
of accustomed maneuvering and the hectic conflict over the pro-
hibition plank, won by the "Wets."
The Roosevelt forces were in a modest majority and organized the
convention, electing Senator Alben W. Barkley of Kentucky as tempo-
rary chairman and Senator Thomas J. Walsh as permanent chairman.
But they did not have the two-thirds majority necessary to nominate
their candidate. Next in voting strength came former Governor Smith,
THE PRESIDENTIAL CAMPAIGN OF 1932 259
followed by Speaker of the House Garner. Governors Byrd of Virginia,
Ritchie of Maryland, George White of Ohio, and Murray of Oklahoma
were favorite sons, who received almost no support outside their state
delegations.
There were an unusual number of fights within state delegations.
Inquiring the reason, I was frequently told: "why the utilities, of
course," or "this power trust gang." Many delegates were beholden
to their power companies back home, even members of some of the
Roosevelt delegations.
Presently I was informed that a former secretary of Newton D.
Baker was quartered in a room in the Congress Hotel interviewing
delegates and urging their support of the former Secretary of War
when his name was placed in nomination. Being acquainted with
the gentleman, I called on him at the mysterious room and found the
information correct. The modest Newton D. Baker was an active
dark-horse candidate.
A Deadlock Threatens. The strategy now became clear. Roosevelt
had a safe majority but not the needed two-thirds to win the nomina-
tion. Governor Smith could not win. The opposition could defeat
Roosevelt if it held together and continued balloting until an exhausted
convention turned either to a "favorite son" or, preferably, to a dark-
horse candidate who had not aroused factional and personal hatreds.
Balloting did not begin until 9 o'clock on Thursday night, June 30.
For four days and nights the delegates had labored under high tension
in distressingly hot and humid weather. Tactics of delay were employed
to slow up the voting so that after an all night session, which lasted
until 9:15 Friday morning, only three ballots had been taken, with
all delegates standing pat. A prolonged deadlock seemed inevitable.
At this juncture the prime coup of the utilities was launched. A
deluge of telegrams from every state in the union rained upon the
delegates, urging the nomination of Newton D. Baker, proclaiming him
the master statesman who could restore party harmony and win the
election.
Willis J. Spaulding, of Springfield, Illinois, presented me with a
telegram he received from Port Washington, New York. It read:
"Baker for president clubs in colleges and universities urge nomination
of Baker, powerful Democrat, widely trusted national leader. Signed:
Central Committee of Colleges."
The name of the sender was not given. Inquiry failed to uncover
any such committee. Many messages were of like obscurity, but the
260 THE CONSERVATION FIGHT
majority were properly signed and disclosed utilities as the prime
movers of the broadside campaign.
Instead of stampeding the convention the effort backfired. Several
delegates laughingly made comments to me, as: "That telegram stunt
must have cost the power trust a lot of money." Nevertheless, its
occurrence demonstrated the existence of a pro-utihty minority among
Democrats.
The Deadlock Is Broken. The "Stop Roosevelt" scheme collapsed
at 9 o'clock Friday night when the convention reassembled for its
fourth ballot. When California was called, William G. McAdoo took
the platform amid a tumultuous uproar of cheers and boos. He stated
that "to bring this contest to a swift end and, we hope, satisfactory
conclusion" his state would now transfer its vote from Gamer to
Roosevelt. He added that Gamer had told his Texas delegates to
follow suit. Five votes more than the required two-thirds had been
transferred. It was a tiny margin in a convention of 1152 votes, but
it was conclusive.
The contest was over. The effect was electric. Everybody knew
that Roosevelt had won. As state after state came over, the New York
governor was nominated. This was a pivotal moment in American
history.
The victory was not easily won. A liberal eastern delegate of
uncanny insight and knowledge told me as we left for home: **We
will never know how close the Wall Street bunch came to deadlocking
the convention and putting over its candidate [meaning Baker]. It
makes me shiver to think of it. Every possible inside pressure was
brought to bear."
The "New Deal'* Acceptance Speech. Instead of going through the
usual pompous formalities, Roosevelt boarded an airplane for Chicago
while the convention waited for his appearance. This break with
tradition astonished the Nation and centered attention on his speech,
which concluded with the historic words "I pledge you, I pledge
myself, to a new deal for the American people."
Public power people were disappointed that the only reference to
their issue was praise for the platform plank "calling for the letting
in the light of day on the issues of securities." But perhaps it was a
good tactic to avoid sore spots in an effort to restore party harmony and
create an efficient fighting force.
The Platform. The Democratic platform was the shortest of record.
The power planks read: "We advocate the conservation, development,
and use of the Nation s water power in the public interest. . . . The
THE PRESIDENTIAL CAMPAIGN OF 1932 261
removal of Government from all fields of private enterprise except
where necessary to develop public works and natural resources in the
common interest . . . Regulation to the full extent of federal power,
of ( a ) holding companies which sell securities in interstate commerce;
(b) rates of utility companies operating across state lines; (c) ex-
changes in securities and commodities."
Mention of Muscle Shoals, hot in the public mind and mentioned in
former pronouncements, was conspicuous by its absence.
At the request of Senator Clarence C. Dill, I addressed the Resolu-
tions Committee on the power question and was the only one to do
so. I emphasized that the battle for public ownership and operation
of the Shoals project was over; that the real issue at stake was whether
ultimate consumers would get the benefit of power from federal dams,
notably on the Tennessee River, and that the issue turned upon federal
operation and the right to build transmission fines to market its power,
with public bodies preferred. The talk was received in silence and
promptly forgotten. No questions were asked.
The power planks were, of course, typical platform generalities.
The chances of establishing an efficient, clean-cut superpower system
on the Tennessee or elsewhere which would dehver actual low cost
power, as Ontario had done, depended on Roosevelt. Doubtless he
would support comprehensive valley development but would he in-
sist on the right of the government to market its own power over its
own transmission lines? That was one basic question among others
bothering advocates of public power, including Senator Norris, as the
campaign swung into high gear.
Roosevelt's Portland Speech. Following his acceptance speech,
Franklin Delano Roosevelt delivered 20 major addresses in various
sections of the country, each deafing with a separate problem. He
got to "public utilities" at Portland, Oregon, on September 21. After
pointing out that for 300 years English and American law had held
utilities to be licensed agents of government and not competitive
private business, as utifity propaganda would have it, he reviewed the
history of the electric industry and then came directly to Muscle
Shoals and public power:
"State owned or federal owned power sites can and should and must
properly be developed by government itself. . . . When so developed
by government, private capital should, I believe, be given the first
opportunity to transmit and distribute the power on the basis of the
best service and lowest rates to give a reasonable profit only. The
right of the federal government and state governments to go further
262 THE CONSERVATION FIGHT
and to transmit and distribute where reasonable and good service is
refused by private capital, gives to government — in other words, the
people — that very same essential 'birch rod' in the cupboard."
After mentioning Boulder Dam and repeated vetoes of Muscle
Shoals bills, Roosevelt pledged Columbia River development. He
indicted Hoover for failure to regulate utilities, including their financial
operations, and charged that Republicans were "dominated by private
rather than public interest."
He continued :
"My distinguished opponent is against giving the federal govern-
ment in any case the right to operate its own power business. I favor
giving the people this right where and when it is essential to protect
them against inefficient service or exorbitant charges. . . .
"I promise you this: Never shall the federal government part with
its sovereignty or with its control over the power resources, while I
am President of the United States." ^
Hoover At Madison Square Garden. Once he had made his accep-
tance speech, August 11, candidate Hoover chose to remain silent on
the utility issue until a week before the election. On Monday night,
October 31, he referred to it briefly, along with many other issues in a
major address at Madison Square Garden, New York City. With com-
mendable candor he came quickly to the power question, the matter
uppermost in the public mind.
"I have stated unceasingly that I am opposed to the federal govern-
ment going into the power business. I have insisted upon rigid
regulation. The Democratic candidate has declared that under the
same conditions which may make local action of this character desir-
able, he is prepared to put the federal government into the power
business. He is being actively supported by a score of Senators in
this campaign, many of whose expenses are being paid by the Demo-
cratic National Committee, who are pledged to federal government
development and operation of electrical power.
"I find in the instructions of campaign speakers issued by the Demo-
cratic National Committee that they are instructed to criticize my
action in the veto of the bill which would have put the government
permanently into the operation of power at Muscle Shoals with a
capital from the federal Treasury of over $100,000,000 ... In that
veto I stated that I was firmly opposed to the federal government
entering into any business the major part of which is in competition with
our citizens."
Hoover read an extended excerpt from the veto message and ended
THE PRESIDENTIAL CAMPAIGN OF 1932 263
with the charge that the Norris proposal was degradation not liberal-
ism.
Clarifying the Issue. Roosevelt was a lawyer whose reputation
rested on his ability as a politician. Hoover s reputation had been built
on his occupation as an engineer and his public service career. Many
inteUigent citizens were confused. Might not the engineer be right
on the technical side? Whither were we drifting? Were not army
engineers and distinguished scholars supporting Hoover?
The bulletin I had issued in March carried a prefatory statement on
the significance of the power question, signed by 37 members of Con-
gress. But they were also politicians. With this suspicious attitude of
the voters in mind, I published on September 9 an extended bulletin
on the power records of Hoover and Roosevelt. It was prefaced by
a statement that is of interest here since it reflects the attitude of the
progressive scholarship of the era which had the courage to speak
out. Thirty-seven outstanding authorities in the field of economics,
the political and social sciences, engineering and labor relations signed
the statement, which read:
The Crux of the Power Question. "The power issue, squarely met,
means an abundant supply of cheaper current for industries and busi-
ness houses, large and small;
"Substantial reduction in rates and increased use in homes now
serviced, the extension of electric service to millions of farms, town
and city homes not yet supplied;
"Reduction in cost of municipal street fighting, pumping, etc., thereby
relieving the tax burden;
"Preservation and planned use of the nation s water power resources,
coordinated with flood control, navigation and irrigation.
"This is an issue of enlightened civilization against primitive living.
"We now know regulation as practiced is not enough. It permits
unsound inflation and high rates and leaves the country confronted
by a virtual monopoly too powerful for commissions to control.
"There are two courses open to us:
"1. We may drift in the channels cut for us by interested promoters
of private utifity companies, whose methods are well known;
2. We may adopt a program of positive action, which means the
stiffening of regulation on the basis of prudent investment and fair
return; and the extension of public competition, demonstrably the
most effective regulatory force yet devised.
"We are at the parting of the ways. The issue is nonpartisan and
264 THE CONSERVATION FIGHT
all candidates for President and Congress must make clear where they
stand."
Among the signers of this statement were Charles A. Beard, political
scientist and historian; George S. Counts, professor of education,
Columbia University; John R. Commons, professor of economics. Uni-
versity of Wisconsin; Arthur Powell Davis, former director and chief
engineer. United States Reclamation Service; Felix Frankfurter, then
a professor at Harvard University; Frank A. Fetter, professor of
economics, Princeton University; M. H. Hedges, research director,
International Brotherhood of Electrical Workers; Judge Francis J.
Heney, of the Los Angeles superior court; Dr. William E. Mosher,
director, Syracuse University School of Citizenship and Pubhc Affairs;
E. A. Ross, professor of sociology, University of Wisconsin; Dr. John
A. Ryan, industrial ethics. Catholic University of America; E. M.
Scofield, consulting engineer, Los Angeles.
The Governor Is Specific. The bulletin set up ten test questions
to which the answers, derived from the records of the candidates,
would indicate their probable performance in ofiBce.
President Hoover's record was clear save on one point; answer to
a letter of inquiry was politely declined by one of his secretaries on
the ground that he was too preoccupied with other matters.
As to Governor Roosevelt, my information was incomplete on some
critical points; besides the air was full of charges that he was a clever
politician who could not be depended on to "stay put." I sought an
interview in the hope that I might judge for myself whether pubhc
power and conservation were matters of real personal conviction with
him, for which he would fight to the bitter end without disastrous
compromises or, on the other hand, whether they were merely popular
campaign issues on which to get elected.
Senator Norris had announced his support because he was certain
Roosevelt would sign his Muscle Shoals bill.
An interview with Roosevelt was arranged by my friend Marvin H.
Mclntyre, one of his aides. I was invited to lunch on a hot fore-
noon in early August. Afterward, we discussed power for two hours
in Roosevelt's workroom at Hyde Park. I queried in substance: "You
have put teeth into Al Smith's contract plan for private transmission
and distribution and you have said it would yield cheap power. But
you have never said how cheap. I figure it could be sold at 3 cents
per kilowatt hour to homes and farms and propose to say so in this
bulletin. How about it?"
I shall never forget the comeback to that challenging question. The
THE PRESIDENTIAL CAMPAIGN OF 1932 265
famous Roosevelt smile disappeared. Blue eyes flashed. Leaning
forward with finger pointing, Roosevelt exclaimed with tremendous
force: "Yes! And progressive reductions thereafter!"
It was my turn to smile. No slippery politician could have simulated
the sincerity of that direct, swift response right in the middle of a
campaign at a time when average domestic private rates exceeded
7 cents. A typical trickster would have equivocated and suggested we
wait on further research. Roosevelt knew it was the governing sore
spot in the whole controversy and did not flinch.
The rejoinder convinced me that Muscle Shoals would be in safe
hands and that the Roosevelt supporters would not have to make
post election apologies.
On the other point Roosevelt was not so definite. The right of the
federal government to construct transmission lines was left up in the
air. He seemed disinclined to go beyond the stand taken in his home
state. But in his message of March 12, 1929, to the legislature he had
stated that if the private companies would not accept his proposal
"then the State may have to go into the transmission business itself.*'
And I was so confident that the private companies would never agree
to that plan that I was convinced he would approve govenmient Hues
when the time came.
I Miss the Boat. To begin the interview, I had handed Roosevelt
the previously noted introductory statement to my bulletin. He read
it carefully and exclaimed "Fine! And add this." I scribbled away
several minutes in my notebook while he dictated. Then, I protested:
"Good heavens. Governor, I can't get all that on the front page of this
pamphlet! You put all that into a campaign speech." Whereat we
had a good laugh and turned to my questions.
A few months later I came to regret my interruption. At the moment
I had not realized he was outlining his vision of regional planning for
development of the natural and human resources of the Tennessee
Valley, in addition to the provisions of the Norris bill for navigation,
flood control, and power.
F. D. R. did not reveal his Tennessee Valley plans in a campaign
speech, but at Warm Springs, Georgia, on February 2, 1933, at a press
conference he announced his proposals as he had stated them to me.
Had I been alert enough, less intent on printing space, and added a
page or two to my pamphlet I might have announced one of the world's
greatest designs for regional planning, later embodied in the TVA Act.
Back in my hotel at Poughkeepsie, I was tackled by a bevy of re-
porters. I told them that with the exception of Senator Norris, F. D. R.
266 THE CONSERVATION FIGHT
was the best informed statesman on the philosophy and technical
details of the power issue I had met in 25 years and that if elected
he would fight for the same policies he had as governor.
The score in my subsequent bulletin showed that on ten test ques-
tions Hoover favored the power corporations position on seven, the
public on one and that he was silent on two. Roosevelt favored the
public interest on nine- and was uncertain on one. On that basis I
predicted that Hoover would veto another Norris bill and Roosevelt
would sign it even if it included provision for government operation
of transmission lines. The bulletin received a surprisingly large press.
Two hundred thousand copies were sent to editors, speakers, and
educators among others in a nationwide distribution. I was pleased
that many papers emphasized the statement of the scientists.
The Vote. The landslide of 1932 exceeded the landslide of the pre-
vious presidential election. Roosevelt received 472 electoral votes,
Hoover 59. The popular vote for Roosevelt was 22,809,638; for
Hoover, 15,758,901; and for Norman Thomas, 884,781.
CHAPTER XXm
PASSAGE OF THE T.V.A. ACT
President-elect Franklin Delano Roosevelt did not wait until he
entered the White House to assure the nation that his campaign pledges
would be kept. He had promised leadership in developing public
power on the Columbia, Colorado, St. Lawrence, and other rivers and
had concluded with the words: "Never shall the federal government
part with its sovereignty and control over its power resources while
I am President of the United States."
Roosevelt was detained at Albany to round out his term as governor,
which ended on December 31, 1932, and to attend to private affairs.
On the way to Warm Springs, Georgia, for a rest, he made a personal
inspection of the Muscle Shoals project on January 20. He declared
it to be twice as large as he anticipated. He was accompanied by
Senators George Norris, Hugo Black, Kenneth McKellar, and Cordell
Hull and by Representatives Lister Hill, John J. McSwain, and several
others with whom he discussed future action on the project.
The next day at Montgomery, Alabama, standing on the exact spot
on which Jefferson Davis took the oath of office as president of the
Confederacy, Roosevelt outlined his solution of the Muscle Shoals
problem. He would continue government operation and put the
project to work at once. Setting aside the compromise bills vetoed
by Coolidge and Hoover, he advocated multipurpose development of
the entire river system for navigation, flood control and power, as
proposed by Senator Norris in 1926. His unique contribution, later
amplified, was regional planning to conserve natural and human re-
sources in one comprehensive enterprise.
Beyond that, Roosevelt signalized that his vision and plans were
nationwide. On the trip with him were Frank P. Walsh, chairman of
the New York Power Authority, F. E. Scattergood, chief engineer of
the Los Angeles Public Power System, Frank R. McNinch, member of
the Federal Power Commission, and Senator Clarence Dill of Wash-
ington. Their presence was fair warning that public power develop-
ment and the regulation of private power companies would have very
different treatment at his hands than they had received during the
previous 12 years.
The TV A Message — Regional Planning. By the time Roosevelt took
267
268 THE CONSERVATION FIGHT
office, on March 4, 1933, at least 15 million people were unemployed
and business was at a standstill. Our financial structure was in such
a perilous condition that all banks were closed by executive order
until emergency measures could be taken to restore confidence and
prevent collapse. Congress was called into extra session.
On April 10 Roosevelt started moving on the Muscle Shoals problem
with the following message to Congress:
"The continued idleness of a great national investment in the
Tennessee Valley leads me to ask the Congress for legislation necessary
to enlist this project in the service of the people.
"It is clear that the Muscle Shoals development is but a small
part of the potential public usefulness of the entire Tennessee River.
Such use, if envisioned in its entirety, transcends mere power devel-
opment; it enters the wide fields of flood control, soil erosion, affor-
estation, elimination from agricultural use of marginal lands, and dis-
tribution and diversification of industry. In short, this power devel-
opment of war days leads logically to national planning for a complete
watershed involving many States and the future lives and welfare of
millions. It touches and gives life to all forms of human concerns.
"I, therefore, suggest to the Congress legislation to create a Ten-
nessee Valley Authority — a corporation clothed with the power of
Government but possessed with the flexibility and initiative of a pri-
vate enterprise. It should be charged with the broadest duty of plan-
ning for the proper use, conservation and development of the natural
resources of the Tennessee River drainage basin and its adjoining
territory for the general social and economic welfare of the Nation.
This Authority should also be clothed with the necessary power to
carry these plans into effect. Its duty should be the rehabilitation of
the Muscle Shoals development and the coordination of it with the
wider plan.
"Many hard lessons have taught us the human waste that results
from lack of planning. Here and there a few wise cities and counties
have looked ahead and planned. But our Nation has 'just grown.'
It is time to extend planning to a wider field, in this instance compre-
hending in one great project many States directly concerned wdth the
basin of one of our greatest rivers.
"This in a true sense is a return to the spirit and vision of the pioneer.
If we are successful here we can march on, step by step, in a like devel-
opment of other great natural territorial units within our borders."
The "Yardstick" Idea. In the document proposing the creation of
a regional authority, the new President emphasized the conservation
PASSAGE OF THE T.V.A. ACT 269
of human resources as a factor in regional planning more strongly than
ever before and gave notice that the Tennessee River experiment was
to serve as a pattern for regional planning for other watersheds. In
his Portland, Oregon, campaign speech, Roosevelt referred to such
experiments as yardsticks *'to prevent extortion against the pubHc."
Meantime, there had been further conferences with the President.
The leaders in both Houses of Congress were ready with bills to
e£Fectuate the enlarged program.
A day after the President sent his message to Congress Senator Norris
in the Senate and Representative John J. McSwain in the House
introduced bills creating the Tennessee Valley Authority. The next
day the Senate Committee on Agriculture reported the Norris bill
( S.1272) favorably without holding hearings and it went on the calen-
dar.
The House Military Affairs Committee, of which McSwain was
chairman, was more deliberate. Hearings were held on his bill
(H.R.4859) and others from April 11 to 15. Little new persuasive
evidence, pro or con, was presented. The outstanding feature of the
hearings was the appearance of Wendell L. Willkie, who on January 1
had been made president of the Commonwealth and Southern Corpora-
tion, a New York holding company that controlled several large operat-
ing companies in the Tennessee region. Willkie informed the commit-
tee that he was a northern Democrat. He was to be the leader of the
opposition to TVA development for the succeeding seven years until
he became the Republican nominee in 1940 for the Presidency.
Surprisingly enough, Willkie hailed President Roosevelt's proposal
for comprehensive development as a great step forward to which he
and E. A. Yates (the same gentleman of the famous Dixon- Yates pro-
posal of 1955, aimed at undermining TVA ) and other southern power
executives present were not opposed provided the government did not
build transmission lines to market its power. If the government were
to do so, he said, it would destroy utility company investments totaling
$400 million. Government money would be wasted since company
lines were already serving the area. Willkie cited Governor, now
President, Roosevelt in support of his demand that public power be
sold at the busbar to private utilities for marketing. ^
The House Passes The Hill Bill. However heartily a majority of
the House members might have rejoiced over the President's program,
they still held that the existing plants at the Shoals must be devoted
to fertilizer production at full capacity. In this the southern delega-
tions were clearly representing the will of their people whose depleted
270 THE CONSERVATION FIGHT
lands were in tragic need of fertilizer. The outcome of the House
hearings was a comprehensive committee bill (H.R.5081) introduced
by Lister Hill, an ardent public power member. A special rule per-
mitted only six hours of debate. Hill opened the discussion. He told
about two extensive conferences he and McSwain had with President
Roosevelt. "While the bill does not altogether represent my views on
this subject, it stands today, in my judgment as the expression, in its
broad aspects, of the program of the President," he said. In the debate
on the special rule and the bill itself the familiar arguments were re-
peated; with Treadway, Ransley, Taber, and Eaton leading the Re-
publican opposition. Representative John Rankin, Democrat of Mis-
sissippi, who had introduced the text of the Norris bill as H.R.4883,
sought to have it substituted for the Hill measure but failed.
On passage, April 25, the vote stood: for, 306; against, 92; not
voting, 32. '
The Senate Again Dissents. The six-hour House discussion was
mild indeed in comparison with the hectic debate in the Senate, which
began on May 1 and consumed the better part of three days. Before
the Senate were both the Norris and the Hill measures. Asked by
Tydings to point out the diflFerence, Norris named only two points of
consequence — the provisions for fertilizer and for transmission lines.
The Norris bill provided for experiment and research in the hope
that a process for producing low-cost fertilizer might be achieved.
Bankhead of Alabama moved to strike out the Norris fertilizer section
and substitute the provision of the House bill. The House text re-
quired that "the Board shall manufacture fixed nitrogen and/or other
fertilizer ingredients at Muscle Shoals by the employment of existing
facilities and by modernizing existing plants . . .*' And again: "It
shall be the duty of the Board to operate existing nitrate plants . . ."
to produce at least 10,000 tons of fixed nitrogen. If sold, production
should continue to the full capacity of the plants. But if it is found
that the method is not "economically justifiable," then, "it shall be
the duty of the Authority to operate such plants and facilities for the
production of phosphoric acid and/or other fertilizer ingredients . . ."
Bankhead's speech in behalf of his motion reflected the belief of a
majority of the southern delegations in Congress that the cyanamid
process was not obsolete. Norris replied that the process was obsolete
since not a single plant of that kind was being built, that it required
too great a subsidy, and that the power trust would be glad to see the
power so used if it could not secure possession. During the debate
Norris explained that the propaganda of the power trust and the
PASSAGE OF THE T.V.A. ACT 371
American Farm Bureau Federation had pictured him as no friend
of the farmers because of his stand on fertihzer so he would "call their
bluff" once more. Immediately after Bankhead's motion was rejected,
Norris proposed an amendment authorizing the President within four
months to lease "to the American Farm Bureau or any corporation'
the existing facilities to produce commercial fertilizer at a rental of
only one dollar a year, and provide them with government power at
cost. The amendment was adopted and went in substance into the
final bill. The opportunity thus legally available has never been
embraced.
Bankhead lost by a roll call vote of 12 to 73. '
Government Transmission Lines? In both bills the provisions for
transmission of power were long and specific. Both gave preference
to states, municipaHties, and farm cooperatives in use of the electricity
generated. Both gave the TVA the right to construct, lease, or pur-
chase high-tension hues. They differed in one important particular.
The Norris bill "expressly authorized" the TVA board to decide what
method it would employ. It was empowered to construct its own lines
by appropriations from Congress, by the sale of bonds, or from funds
secured by the sale of power. But Bankhead moved to substitute the
provisions of the House bill which required the board to negotiate
first for the sale of power at the busbar, and "in the event the board
was unable to make satisfactory contracts with persons, firms or cor-
porations engaged in the distribution of electricity," then it might
proceed to construct its own lines but not until it had "the approval
of the President ... if found economically justified and necessary
to carry out the provisions of this Act."
Senator Bankhead claimed his amendment would save millions of
taxpayer dollars and avoid the alleged economic sin of duplicating
lines. He crowned his effort by asserting that "this idea is entirely
in line with the views that President Roosevelt had entertained on
this subject." In proof he read excerpts from Roosevelt's speeches
and writings as Governor, and inserted in the Congressional Record
the entire text of the act Roosevelt had signed in 1931 creating the
New York State Power Authority.
True enough, the New York Power Authority act provided ( section
10) for sale at the busbar. But if the authority found itself unable to
agree with the private utilities on the terms of a contract, it had to
defer to the governor and legislature for further action.
Norris replied that the fatal loophole in the Bankhead substitute was
that whenever the TVA board desired to build a transmission line the
272 THE CONSERVATION FIGHT
door was open for the utiKties to bring an injunction on the ground
that the board had not sought to negotiate a "satisfactory" contract
with them. Endless htigation would frustrate effective development
of the project. Norris flatly denied that the New York Power Authority
Act reflected Roosevelt's personal views on transmission and distribu-
tion. He recalled that, as Gk)vemor, Roosevelt was compelled to com-
promise with the Republican legislature to insure passage of the law.
A heated dispute that followed ended with Norris* exclamation: "If
the Senator from Alabama or anybody else can bring a statement from
Roosevelt that he favors that amendment to this bill, I will promise
to wire my resignation as a member of the Senate to the Governor of
my state within ten minutes after it is produced!"
Bankhead asked for a roll call vote, but could not get enough Senators
to join in the request and the amendment was lost by a voice vote. No
statement from Roosevelt was produced. The Senate's bill was then
substituted for the House bill (H.R.5081), and passed 63 to 29.*
The "Birch Rod." If the people are to obtain the full benefits of low
cost power from a public system the right to construct and operate
high-tension, long-distance transmission lines, or "grids", is just as
essential as dams or electric generators. Utilities today still try to
make it impossible to transmit government power from dams to con-
sumers, just as they did in 1933. This gives the government no
choice but to sell its power to the utility which can build the lines
to the dam.
Representatives McSwain and Hill and Senator Bankhead had good
reason for claiming that their proposal was in line with the President's
ideas. As a matter of fact, Norris himself and Roosevelt had been at
odds on the subject of transmission lines since 1929 and the uncertainty
was to continue to within 48 hours before the TVA Act was signed.
I know. I was there.
Norris was safe in challenging Bankhead to produce a statement
from the President favoring busbar sales because Bankhead had not
stated the conditions Roosevelt had laid down for such sales; namely,
the elimination of all "water" from securities and six or eight percent
profit on the "actual cash" invested in transmission and local distri-
bution facilities.
But suppose the House provision, requiring the TVA Board to first
negotiate sale of power at the busbar, should be inserted in the bill,
what then? Would the President agree? Norris was worried — he had
no more faith in that policy than Roosevelt had in state regulatory
commissions.
PASSAGE OF THE T.V.A. ACT 273
The Senator's disagreement on this; point began with Roosevelt's
message to the New York Legislature on March 12, 1929, accompanied
by a bill for development of the St. Lawrence site.
Edward Keating, former Democratic member of Congress from
Colorado who was then editor of Labor, the weekly newspaper of
15 railroad unions, asked Norris' opinion of the governors poHcy.
The Senator's response appeared in the March 23rd issue of the paper:
"Governor Roosevelt has taken a step — a very brave step — in the
right direction. Rut he has stopped to change horses in the middle
of the stream. He will find that there is no logical place for him to
stop until he comes clear across and advocates pubhc ownership of the
distributing system as well as the generating system . . ."
Roosevelt had repeated his first-chance-to-private-companies policy
in an address before the 1931 governors conference at French Lick,
Indiana, and again in his major campaign speech on power, September
21, 1932, at Portland, Oregon. Here he compared the right of the federal
government and a state to own and operate their utilities to "a birch
rod" in the cupboard to be taken out and used only when needed.
He said:
"When so developed by government, private capital should, I
believe, be given the first opportunity to transmit and distribute the
power on the basis of the best service and the lowest rates to give a
reasonable profit only.
"The right of the Federal Government and of the State government
to go further and to transmit and distribute, where reasonable and
good service is refused by private capital, gives to Government — ^in
other words, the people — that very same essential *birch rod' in the
cupboard."
Relieving that Roosevelt would support and sign his comprehensive
Muscle Shoals biU, Norris had announced he would campaign for the
governor. Rut this "birch rod" idea alarmed him. Roosevelt, on his
return east, addressed a huge crowd at McCook, Nebraska, Norris'
home town, with high praise for the Senator's statesmanship. In a
letter to me soon after, Norris wrote: "I stated in my remarks intro-
ducing Governor Roosevelt that I did not agree with him 100 percent
on power but that his position on public utilities was the most pro-
gressive ever taken by a candidate for President."
I was well aware that the main disagreement was over transmission
lines, and that the Senator, sensing trouble ahead, had given fair
warning that he would not compromise on that essential. And so the
274 THE CONSERVATION FIGHT
matter stood when Congress was summoned for a special session after
the inauguration.
The Final Deadlock. It was now May 8, 1933. For five days the
Senate TVA bill had been on Speaker Rainey's desk with no action
taken although everybody expected swift consideration to help relieve
unemployment. Disturbing rumors were afloat, not only that the
old conflicts between the House and Senate were still in evidence but
that unexpected differences in each of the committees in charge of the
bill had arisen over its final terms.
In those days I used to have my consultations with Senator Norris
when driving him to and from the Senate Office Building. On that
morning my wife and I picked him up at his home in Cleveland Park
and all the way to the Hill he held forth on Muscle Shoals in most
vigorous English. He was a man of deep emotions and only once had
I ever seen him so agitated — that was back in 1925 when the Under-
wood bill was in danger of passing. Cotton Ed Smith had gone over
to the House position on transmission and fertilizer. Norris' bill was
about to be stalemated again, and he was angered. He would not keep
silent after 12 years of labor to allow the bill to be mutilated, the
people robbed of low-cost power and disappointed as to fertilizer.
He declared, "I am going on the floor today and raise hell! I'll tell
the country what and who is at the bottom of all this."
I remonstrated, pointing out that this would be a bad blow at the
administration, so soon in office, and might start frictions that would
jeopardize final enactment of a TVA bill. I said I thought I could
do something to help and begged him not to make the attack that day.
He was reluctant, but finally agreed.
On reaching my office, I phoned Harold L. Ickes, Secretary of the
Interior, whom I had known since Bull Moose days, and asked to see
him. He was about to depart for a cabinet meeting. "All the more
important," I said. After giving him a hint of my errand, he agreed to
wait and I laid the situation before him. At that time Ickes was for
regulation but was not a pubHc power advocate. He asked, 'What
can I do?" "Tell FDR that Norris will break loose tomorrow," I replied.
^'Suggest that he call the Senator and John McSwain to the White
House tomorrow forenoon, and tell John where he stands."
"All right," Ickes agreed. "Now let's go or I will be late."
A few days later Ickes wrote me a note which, condensed, said —
'Well, Judson, I delivered and you can see what happened!"
This Is What Happened. The next day. Chairman McSwain asked
unanimous consent to take the TVA bill from the Speaker's desk, to
PASSAGE OF THE T.V.A. ACT 275
disagree with the Senate bill and ask for a conference, explaining:
"The President invited Senator Norris and myself to the White House
this morning for a conference. The President indicated in very un-
mistakable terms his desire that this bill should go to conference
promptly and that he w^anted speedy action."
Prior to this something else had happened. Chairman McSwain
and Senator Lister Hill were at odds on transmission Hues. So Hill,
who favored public lines, confidentially advised the former Speaker
of the House, John N. Gamer, now Vice President and presiding over
the Senate, to call a conference and invite McSwain and himself. Gamer
obHged and after the discussion very positively asserted, "Jo-'^^j its
no go. We have got to have government transmission lines.'*
Besides losing the support of the President and the presiding officers
of both chambers of Congress, more trouble threatened Congressman
McSwain. Representative John Rankin, Democrat of Mississippi,
had introduced the Norris bill and persistently fought for it to no
avail. He was about to move that the House conferees be instructed
to report the Senate bill. Another bitter debate was in prospect, but
after McSwain s statement Rankin told the House he would withdraw
his motion as he felt sure the power distribution provisions of the
Norris bill would be agreed to. That brought applause, whereupon
Speaker Rainey, a strong public power man, appointed McSwain, HiU
and James as conferees. The Senate appointees were Chairman Smith,
Norris, Wheeler, and McNary. ^
The conferees reported back on May 15. The main text of the Norris
bill had survived. On the two high points of dissension, the final bill
provided that while the TVA Board was authorized to recondition
the nitrate plant and to manufacture and sell commercial fertilizer to
any extent by employing the cyanamid process if desired, it was not
directed to do so and it never exercised the authority. Likewise it
might sell electric current at the busbar or constmct transmission
lines at its owm option. Norris had won on both counts.
The Senate agreed to the conference biU on May 16 without a single
comment from any Senator. The House approved the next day after
a brief debate by a roll call vote of 258 to 112, 60 not voting. The
party line-up stood: For: 241 Democrats, 18 Republicans, and 2
Farmer-Laborites. Against: 28 Democrats and 88 Repubhcans. "
On May 18, 1933, President Roosevelt signed the bill surrounded
by a goodly company of Senators, Representatives, and others who
had led the fight for the measure. The 35-year legislative warfare
276 THE CONSERVATION FIGHT
over who should control development of the Tennessee watershed had
ended — ^for the time being.
The First TVA Board. The Board of Directors appointed by Presi-
dent Roosevelt to implement the TVA Act was composed of a civil
engineer, Dr. Arthur E. Morgan, president of Antioch College; an
entomologist and authority in agricultural science. Dr. Harcourt A.
Morgan, president of the University of Tennessee at Knoxville; and
an attorney and specialist in utility law, David E. Lilienthal, member
of the Wisconsin Public Service Commission.
Confirmed by the Senate, the TVA Board held its first meeting on
June 16, 1933, and began work on its precedent-setting task.
CHAPTER XXIV
RETROSPECT AND PROSPECT
TVA has now been in operation for 25 years during which the tur-
bulent Tennessee River has been harnessed and put to work. Add to
this period the 35 years' conflict over the estabhshment of the project,
and we have the events of 60 years before us for review. Two ques-
tions immediately occur: What is the demonstrable truth about the
practical results of this experiment? And, what of the future? As
a guide to national policy, should the Tennessee Valley Authority be
continued, revamped, or eliminated? Adequate answers to these ques-
tions, very much in the public mind because of the Eisenhower
administration's eflFort to tear down TVA and similar federal programs,
would require volumes; therefore, they cannot be undertaken here.
There is, however, another approach from which to review the 60-year
period that is within our scope.
At the turn of the century our nation was still engaged in unrestricted
exploitation of resources. There had been no fear of shortages; when
resources played out in one place exploiters moved on to new areas.
Then the conservationists appeared. They saw the country's forests,
minerals, water power, soil, and other basic assets being frightfully
wasted and monopoHzed. They saw that resources were not inexhaust-
ible and that soon there would be no new areas for exploitation. They
believed that in the national interest waste, ruthless exploitation, and
monopolization must cease and private capital must submit to regula-
tion and control. They propounded what they described as the "new
attitude." Their doctrine was at once assailed as impractical, sociaHs-
tic, and treasonable to the American way of life, but its fundamental
concepts prevailed and in 1935 much of it was embodied in the act
creating the Tennessee Valley Authority.
Fundamentally, our 60-year story has been one of the inevitable
resistance of unregulated private exploiters to the new situation; of
the individual battles between the old attitude and the new; and of
the development of ideas and pohcies for the new era. The evolution
is not complete. The struggle is still going on in Congress over bills
to facilitate (or paralyze) the TVA and federal resource programs
on the Columbia, the Missouri, and other rivers, and on many other
277
278 THE CONSERVATION FIGHT
natural resource fronts. We will see the battle continuing in the
1960 elections and for generations to come.
On this background, let us Hst and examine some of the new ideas,
some basic and some of limited scope. Knowledge of them is quite
as important as knowledge of physical structures and financial consi-
derations.
1. Jurisdiction: That the federal government has jurisdiction over
the development of hydroelectric power resources.
The 1897 bill to permit a private company to build a lateral dam to
generate hydroelectric power at Muscle Shoals provided no compen-
sation for the use of the falling water. Congress amended the bill
to include a charge. Power companies fought federal jurisdiction and
the states' rights battle was begun. It continued until the Supreme
Court in the New River case in 1940 affirmed federal jurisdiction over
hydroelectric power in the navigable waters of the United States.
2. Ownership: That the potential water power in navigable rivers
of the United States belongs to the American people.
Conservatives stoutly held that riparian owners of land adjoining
power sites had an exclusive right to develop power under state laws,
but in 1913 in the Chandler-Dunbar case the United State Supreme
Court held otherwise, and in 1920 Congress, in the Water Power Act,
nailed down title to the remaining sites that had not been given away.
This included about 90 percent of the national total, then estimated
at around 50 miUion horsepower.
3. Federal Leadership: That development of great river systems
was a job for the national government since the states could not or
would not undertake it and private capital openly declared it was
beyond its financial capacity or functions.
The early conservationists decided on government leadership be-
cause even then the states were too much under the political control
of the utilities and bankers. Their foresight proved correct. Not a
single state has since undertaken comprehensive development projects
and interstate compacts have come to nothing. President Hoover's
offer in 1931 to turn the Muscle Shoals project over to the Tennessee
Valley states was declined.
4. Independent Management: That the planning, construction,
and operation of such comprehensive projects should be placed in
the hands of new, independent federal agencies, and not under existing
agencies.
This surprising recommendation of the Waterways Commission in
1908 was aimed at avoiding long delays and even sabotage, certain
RETROSPECT AND PROSPECT 279
to result from conflicting interstate interests and departmental jeal-
ousies. New agencies accept new ideas while the inertia of the old
delays progress.
5. Decentralization: That an enterprise of the size and complexity
of TV A is too big to be managed by absentee bureau chiefs in Wash-
ington.
TVA was made a government corporation so it could easily locate
its headquarters and its employees in the valley in direct contact not
only with state and local ofiicials but with the people it would serve.
The citizens soon found out that the "Authority" was there to supply
basic services and help them help themselves. They have cooperated
gladly and with vigor. The charge that TVA is a superstate suppressing
freedom has been repudiated by the people and state and local gov-
ernments throughout the valley.
6. Research and Invention: That government should undertake
research related to resources development and conservation.
The fertilizer problem which divided congress for years was quickly
solved by TVA's application of research and scientific knowledge. The
authority early engaged Dr. Harry A. Curtis as head of a team of
scientists to solve the problem. The old nitrate buildings were soon
housing laboratories, electric furnaces, and manufacturing plants.
TVA developed economical, highly concentrated phosphate fertiHzer.
By using it and getting thousands of "demonstration" farmers to plant
legume crops for the nitrogen they release to the soil, TVA quickly
got a vast soil-saving, soil-building program under way in 30 states.
The fertilizer industry, which for 12 years declared that it would suffer
or be bankrupted by government invasion of its field, is now taking
advantage of TVA discoveries. The industry is prospering as never
before. It has free use of the patented processes, but no monoply is
granted to any one company, and TVA has demonstrated that public
research on practical problems of conservation can help everyone —
those who have the problems and those who benefit from the new
markets that are created.
7. Midtipurpose Engineering: That the most effective and econo-
mical way to control a river is to harness it and its tributaries from
source to mouth with a series of high dams plus afforestation and
erosion control.
This concept of socially minded engineers and scientists was first
officially recommended in 1908 in the preliminary report of the Inland
Waterways Commission appointed by President Theodore Roosevelt.
This approach, it was urged, would give dependable year-round navi-
280 THE CONSERVATION FIGHT
gation, flood control, electric power, irrigation and municipal water
supply in arid regions, and other benefits in one coordinated operation.
It would also save untold millions in cost of construction, maintenance,
and management. True, it would be expensive, but not in the long
run. A major part of the cost would be met by the sale of hydroelectric
power. But that was the hitch! Private utilities wanted the power sites,
without cost. Had this bipartisan commission proposed that private util-
ities be taken into partnership for exclusive production and sale of the
power, without a doubt the whole river basin development idea would
have been hailed as a national benefaction and development would
have proceeded apace. Instead, the utiHties denounced the plan as
chimerical, went into poUtics, and held it up for 25 years. TV A is
the only project where the concept has had anything approaching a
fair trial.
8. Power and Flood Control: That it would be an economic crime
not to generate power at public dams on the assumption that the
reservoirs must be kept empty to hold flood waters.
TVA gave answer to the false assumption that power and flood
control conflicted. This was proclaimed by special interests for
nearly two generations to block development and it appeared plausible
to the uninformed. The devastating floods in most areas occur inter-
mittently between January and April. Rainfall is generally lightest,
or it falls as snow, in the winter months when power demand is high.
Consequently, the levels of reservoir dams are lowered and ready for
heavy spring flows in the natural water cycle. Reservoir level manage-
ment can take care of occasional off-season storm waters, especially
where reforestation and afforestation exist.
Centralized control of an entire river system has given remarkable
results in the Tennessee Valley especially in 1946, 1947, 1948, and 1957
without a large loss of potential power. Chattanooga alone was saved
an estimated $120 million damage, including $66 million from the
catastrophic flood of 1957, by TVA flood control operations. Munici-
palities and farmlands on the tributaries and the river below were
also protected. To this must be added damages averted on the lower
Ohio and Mississippi from several floods during this period; for ex-
ample, crests were lowered in the two 1950 floods by 1.9 and 1.2 feet
at Cairo, Illinois, by the TVA system, relieving both the city of Cairo
and 200 square miles of rich farmland that might have been flooded.
9. Power for Defense: That it is wise for the government to have
available its own source of power, ready for instant defense use.
TVA and the Columbia River dams "saved our lives" in World
RETROSPECT AND PROSPECT , 281
War II. They made possible production of phosphorus, nitrates, light
metals and other war materials, including materials for the atom bomb.
By their nature, private profit-making utilities do not develop generat-
ing capacity faster than customers will buy the power. Consequently,
utilities have always lagged behind demand. They contended that Ten-
nessee River power could not be fully used for 100 years. Fortunately,
the government developed the river so that it was in a position to
make quick use of existing plants and expand generation when World
War II occurred. TVA plus the Columbia Basin, where new dams
were being brought into production, became known as the Arsenals
of Democracy because their government-owned facihties could meet
skyrocketing power requirements quickly. Since World War II there
has been a federal "defense power" program which exists entirely
to assure the nation adequate electric capacity in case of a future
emergency.
10. Navigation: That source-to-mouth, multipurpose developments,
including high reservoir dams, afford shippers a much better navi-
gation channel than low dams.
Beginning in 1922, the Army Engineers made a comprehensive sur-
vey of the Tennessee River and in 1929 recommended a series of 32
low dams to provide a 9-foot, 652-mile navigation channel between
Knoxville and the Ohio River at government expense but with the
proviso that private companies, if they desired, could build and finance
higher dams to generate power under the Federal Water Power Act.
The survey cost $1,090,800, was sent to Congress on March 24, 1930,
by Secretary of War Patrick J. Hurley, and printed as House Docu-
ment No. 328, 71st Congress, 2nd Session.
The TVA Act pigeonholed that proposal and a modem deep channel
was completed in 1945. Cost was justified by a 1940 estimate that in
1960 the waterway would be carrying 7 million tons of freight annually
and save shippers $9 million. In 1956 the tonnage was up to 10 million.
The deeper, slack-water channel with relatively few locks is far superior
to the army's original plan. Stored water in the big reservoir dams
assures dependable navigation even if there is drought, such as has
seriously hampered navigation in the Mississippi River in recent years.
11. Nondiscrimination in Power Supply: Since electric service
vitally affects their daily lives and welfare, average citizens as well as
giant industry should he assured the benefits of low-cost power.
During the 1920s large industries over the nation were able to buy
private company power at from one to two cents per kilowatt hour;
otherwise, they would install their own generating plants. Domestic,
282 THE CONSERVATION FIGHT
commercial, and other small users were charged an average of seven
to nine cents per kilowatt hour, far beyond the cost of delivery. By
1933 an estimated 225,000 residential customers in the TVA area used
around 50 kilowatt hours per month, for which they paid the companies
an average of 5.7 cents per kilowatt hour. In the year 1956 a total
of 1,270,000 domestic customers bought an average of 490 kilowatt
hours per month from TVA, at a cost of 1.16 cents per kilowatt hour.
When the TVA and plants of its 149 distributors are out of debt, this
1.16 cent rate can be cut still lower. The day of economic, all-electric
homes, heated and air-conditioned cheaply, has already arrived in
the Tennessee Valley.
12. Preference: That since the people own government projects,
the people's municipalities and rural cooperatives have the first right
to purchase the power therefrom. The surplus can be sold to private
parties.
This is the so-called "preference clause** that has been inserted in
federal laws from 1906. Challenged as unfair to power companies,
it is now sought to be circumvented and repealed but repeated attacks
have been repulsed to the present.
13. Rural Electrification: That rural America could be provided
electricity.
Throughout the battles over Muscle Shoals, Senator Norris and his
group emphasized the need for rural electrification and Congress took
notice. Service to farmer cooperatives was authorized in the TVA Act
of 1933, and in 1934 several cooperatives began operation. President
Roosevelt created the Rural Electrification Administration by executive
order in 1935 and the Norris-Raybum Act of 1936 established it in law.
In 1922 the National Electric Light Association and the American
Farm Bureau Federation started a campaign to "electrify rural Amer-
ica'' but held that what farmers needed was education, that rates were
not an essential factor although they ran from 8 to 20 cents per kilowatt
hour. By 1934 the number of the nation's farms electrified had only
increased from 2.6 percent to 10.9 percent, with six million farms
unserved.
Industry executives informed the country that "areawide service"
to farmers was economically impossible, that most farmers lived too
far apart, and their power use was too small to pay for lines. Yet a
bitter campaign, including the erection of "spite lines," was launched
against the formation of cooperatives. But undaunted and undeceived,
the farmers went ahead and succeeded in all states except Massachu-
setts, Connecticut, and Rhode Island, which have no co-ops because
RETROSPECT AND PROSPECT 283
of the political influence of private utilities. More than 95 percent of
the nation s farmers now have electric power.
14. Labor Relations: That the government should he a model
employer and that just labor relations can best he insured by collective
bargaining with bona fide labor unions.
In 1933 the idea of collective bargaining by government was rank
heresy to the majority of federal, state, and municipal officials. TVA
board members thought otherwise. In their opinion, with ten mammoth
dams to build, requiring a labor force of 10,000 employes, the project
needed a trained, satisfied, loyal crew of men and women. The TVA
Board aimed at uninterrupted construction. The act directed TVA to
pay "not less than the prevaiHng rate of wages" and with "due regard. . .
to those rates which have been secured by collective agreement by re-
presentatives of employers and employes." Norris had seen to that. After
conferences between management and union labor, with David E.
Lilienthal for the board and Marion H. Hedges, research director of
the International Brotherhood of Electrical Workers, for organized
labor, a precedent-making policy was worked out and approved by
both parties. The agreement assured : the right of collective bargaining
and labor participation in management; the right of labor to organize
in unions of its own choosing; the freedom of employes to join or not
to join unions because federal law precluded closed shop contracts;
an annual wage conference to estabhsh equitable wage schedules
and working conditions, with grievances from either side to be promptly
considered and settled; a five-day, 40-hour week with time and a half
for overtime and vacations with pay; and efficient apprentice training
and advance training for journeymen and helpers.
Since thousands of workers would have to live for long periods in
camps in regions remote from the towns, the Authority added the
following on its own account: model construction camps for married
and single employes with standard educational facihties for children;
community houses with recreational facilities for all; a model health
and sanitation program with complete hospitalization and medical
service; and a safety program that achieved new lows in the severity
and frequency of accidents. Cooperating in framing the labor policy
were craft unions of electrical workers, machinists, blacksmiths, carpen-
ters and lathers, bricklayers, boilermakers, plumbers and steamfitters,
operating engineers, iron workers, sheet metal workers, plasterers,
painters, teamsters, and hod carriers. These unions formed the Ten-
nessee Valley Trades and Labor Council, which negotiates with TVA
at the annual wage conferences.
284 THE CONSERVATION FIGHT
Construction of the Dams. When the TVA Board took over Muscle
Shoals from the Army Engineers on June 16, 1933, it included Wilson
Dam, the steam plant near Nitrate Plant No. 2, and a small steam plant
at Nitrate Plant No. 1. Construction of Norris and Wheeler dams was
immediately begun, and by March 1936 a grand plan for the unified
development of the Tennessee River system had been worked out and
approved. The schedule called for 10 new dams for navigation, flood
control and power to be completed by 1944. Some were built ahead of
time because the peacetime schedule of TVA was interrupted by
World War II. All scheduled dams were built, and an additional one,
Douglas dam, was built in the world-record time of 12 months and
16 days, within the estimated cost, to help supply the power to meet
Roosevelt's goal of 50,000 war planes a year.
Meanwhile the purchase of the Tennessee Electric Power Company,
in 1939, brought more dams, including Hales Bar. By 1956 the Ten-
nessee Valley Authority was operating 25 dams, 20 of which it had
built. In addition the Authority directed the storage and release of
waters of five major dams owned by the Aluminum Company of Amer-
ica. Today a single office controls the water flow in the Tennessee
River and its developed tributaries for flood control, navigation, and
power. The once destructive river has been tamed and its power
serves mankind instead of destroying properties.
TVA's first steam generating plant was started in 1940 in response to
military needs. It was a 240,000-kilowatt steam plant at Watts Bar
on the Tennessee River below Knoxville, first built to supply power
for a secret project at Oak Ridge, which was later disclosed to be manu-
facturing materials for atomic bombs.
The war over, continuing atomic bomb production plus growing
civilian demands threatened a power shortage, but since all major
damsites had been harnessed, the TVA board requested funds to con-
struct a steam plant at Johnsonville in western Tennessee. The private
power companies launched a bitter attack on the proposal, alleging
that they should be given the right to supply the needed power. The
80th Republican Congress failed to approve the project, but the 81st
Democratic Congress (1947-1948) voted the funds. Construction
began on May 12, 1949, and operation commenced on October 27, 1951.
By 1950 the Korean War, the threat of Russian aggression, and the
speed-up of the atomic age again thrust peacetime planning into sec-
ondary place. Unprecedented amounts of power for defense were
needed. Congress, with an eye to economy, directed TVA to build six
additional steam plants to meet the situation. First came Widows Creek,
RETROSPECT AND PROSPECT 285
a 675,000-kilowatt station, begun on March 28, 1950. And then be-
tween January 1951 and November 1953 five more great stations were
built. The total capacity of the six stations adds up to 5,175,000 kilo-
watts. By 1957, 50 per cent of TVA's whole power production went
to defense and defense-related uses. Over one-half was taken by the
huge plants of the Atomic Energy Commission at Oak Ridge, Ten-
nessee, and Paducah, Kentucky.
The Ebasco Fiasco. Providing energy for the huge gaseous difiFusion
plant at Paducah developed a nationally heralded race between the
Tennessee Valley Authority and private utilities. The Atomic Energy
Commission asked TVA to furnish all the power, but changed its mind
in December 1950. The Atomic Energy Commissioners decided to get
half the power from a new private corporation, organized by a group
of private utilities for the purpose and styled "Electric Energy, Inc."
It would build its steam plant at Joppa, Illinois, directly across the
Ohio River from TVA's Shawnee steam plant at Paducah. The condi-
tions were the same and the power trust press boasted their private
enterprise would show government inefficiency a clean pair of heels,
building faster at less cost. The private companies employed Electric
Bond and Share Company to do their construction work.
TVA got its first unit into operation on April 9, 1953. The private
Joppa plant was many weeks later getting a unit in operation. TVA
stayed within its cost estimates. Electric Energy, Inc., exceeded its
estimate by many millions of dollars. "^
The race became famous as the "Ebasco Fiasco." In fact, Electric
Bond and Share Company had to be fired and others put in charge of
construction before the private plant was completed.
Defense Power Savings. It is well known that TVA's low rates are
saving civilian power consumers nearly $103 million a year compared
with average rates prevailing in the nation. Furthermore, they became
a yardstick for measuring power rates. TVA rates have reduced private
rates in adjoining states. It is not common knowledge that the yard-
stick is saving the United States Treasury sums on power for defense
which make the above figures appear modest.
According to Edison Electric Institute reports for the past five years,
railroads and large industrial users have been paying private companies
a national average of about 1 cent, or 10 mills, per kilowatt hour for
electricity. The Atomic Energy Commission has been buying power
from TVA for less than 4 mills. If there had been no TVA Uncle Sam
would have to pay private companies the private average of 10 mills,
assuming they could deliver. This conclusion is fortified by the fact
286 THE CONSERVATION FIGHT
that in the continental United States in fiscal 1956 the Army paid
utilities an average of 10.8 mills per kilowatt hour for electricity at all
its installations — a little more than private utilities charged raihoads
and heavy industry. The vast proportion of this power came from
private systems.
The AEC is now purchasing from TVA and the private plants at
Paducah a grand total of around 50 billion kilowatt hours annually at
less than four mills per kilowatt hour in both cases. It is left to readers
to estimate what Uncle Sam saves on his own power bill because there
is a TVA. On a 50 billion (kilowatt hour) demand, each saving of one
mill per kilowatt hour equals $50 miUion.
Investment, Repayment and Taxes. The canard that TVA is sub-
sidized and not paying out is vddely spread around the nation. The
1957 annual report of the TVA reveals the falsity of such charges. TVA
financial statements are audited and reviewed by the General Account-
ing Ofiice. The power program was required by the 1933 Act to be
"self-supporting and self-liquidating." The Comptroller General re-
ports that payments of $216.5 milHon made to the Treasury by TVA
since 1948 are $68 million, or 46 percent, ahead of schedule, noting
that net earnings annually average four percent of the investment. The
canards against TVA are thus completely demolished by the audited,
financial facts.
Taxes. Another charge made against TVA is that it does not pay
taxes. The Federal Government does not pay income taxes to itself
on its own property. However, the TVA Act provides that five percent
of gross power income, exclusive of sales to Federal agencies, be paid
to states and counties involved "in lieu of taxes." From 1933 to 1957
the total so paid amounted to $45 million and the municipalities and
rural cooperatives had paid $64 million. This tax system was decided
upon by federal and state authorities. It is satisfactory to them and
TVA is paying off as planned, without any burden on the nation as a
whole.
First Major Assault on TVA. In addition to perennial criticism of
TVA, two major assaults on the enterprise have aimed at the destruc-
tion of the unified, basinwide development plan: One was made
during the administration of President Roosevelt, the other in that of
President Eisenhower. The first assault came in 1938. In response to
pressure from private utility and banking interests and on the insis-
tence of right-wing Republicans in both Houses, a resolution was pass-
ed for an investigation of TVA by a joint congressional committee. '
Committee leaders expected that corruption in management would be
RETROSPECT AND PROSPECT 287
uncovered. Seemingly sound reasons for the probe had been supplied,
surprisingly enough, by the chairman of the TVA board himself — Dr.
Arthur E. Morgan.
When the final draft of the TVA Act was under consideration. Dr.
Morgan, a distinguished civil engineer who was president of Antioch
College in Ohio, was summoned to Washington as a consultant. He
had already been selected as chairman of the TVA board although he
was not formally named until May 22.
Whether at that time he had mental reservations on marketing the
power, or subsequently changed his mind, I do not presume to say.
What I do know is that one day he requested me to come to Senator
Norris' office for an interview and, to my astonishment, began the con-
versation by saying emphatically: "I want to tell you one thing. I am not
going to fight the power companies." I responded: "Well they are going
to fight you. What will you do about it?" Morgan made no answer.
I was left to wonder whether he would compromise and cooperate with
the utilities and whether his emphasis on the pronoun "I" meant that
he expected the other two members of the board, when appointed, to
become mere ciphers under his domination.
I did not have long to wait for clarification. Dr. Harcourt A. Morgan,
president of the University of Tennessee, scientist and agricultural
authority, and David E. Lilienthal, attorney and member of the Wis-
consin Public Service Commission, were appointed to fill the three-man
board. In June 1933, Chairman Arthur E. Morgan was chosen to
manage dam construction. Dr. Harcourt Morgan to manage fertilizer
production and David Lilienthal to manage the generation and market-
ing of power.
Lilienthal acted promptly. On August 25, 1933, three weeks after
the board took over, he announced, with the support of Dr. Harcourt
Morgan, that the top rate for residential consumers of TVA power
would be three cents per kilowatt hour, or one-half that charged by
private companies serving the area. Other schedules were of the same
order. In compliance with the act, it was to be public power in its
flow from the generators to ultimate consumers. No private concern
would be allowed to put up a toll gate and reap profits during the
journey. Partnership with private concerns was definitely out.
The chairman disagreed, so he told me. He held his peace until
the summer of 1936 when, in an interview with the President and
Senator Norris, he heatedly opposed the reappointment of Lilienthal,
who had drawn the short, three-year appointment when the board
was formed. Morgan failed in the attempt.
288 THE CONSERVATION FIGHT
Power Pooh and Partnership. Four months later, on September 30,
1936, President Roosevelt held a conference on power pooling. Wendell
L. Willkie was there as president of the Commonwealth and Southern
Corporation, which controlled the Tennessee, Alabama, Georgia, and
Mississippi power companies. Willkie proposed a transmission pool
that would give his companies the whip hand in local distribution.
Otherwise, he proposed that the government buy the companies at
"fair value," which meant the inclusion of watered valuations. Willkie's
proposals were rejected.
Attention next centered on the marketing policy advocated by Chair-
man Arthur Morgan, as presented in the form of an extensive memo-
randum prepared with the assistance of George W. Hamilton, former
chief engineer of InsulFs Middle West Utilities Company, and other
private power experts. Morgan proposed a tremendous transmission
pool. It would be managed by a joint board of company and TVA
officials, which would fix rates and terms of service in wholesaling cur-
rent to municipalities or to private companies for retail distribution.
Next, he would divide the TVA territory into exclusive regions.
Willkie's companies would operate in some, the TVA in others in re-
tailing the power, thus eliminating direct competition. If a city or
town desired to start a public system in competition with an existing
private concern, as Seattle had done, it was forbidden to do so. It
could only buy out the private system, paying severance and "inciden-
tal costs and damages," which would amount in practice to the private
company's own asking figure.
These and other stipulations would have destroyed the preference
clause and rendered impossible electric service "at the lowest possible
cost." Frank R. McNinch, chairman of the Federal Power Commis-
sion, J. D. Ross, then a member of the newly created Securities and
Exchange Commission, President Roosevelt, and Senator Norris were
in strong opposition to Dr. Morgan s plan. The Senator said pubHcly:
"If I had read his statement without knowing the author, I would
unhesitatingly declare that it was the work of a power trust attorney."
On The War Path. Sincerely convinced that he was in the right,
Arthur Morgan went on the war path when his plan was rejected. He
would secure a congressional investigation and have the TVA Act
amended in line with his policies. During 1937 in public addresses and
signed articles in the Atlantic Monthly, the Saturday Evening Post, the
New York Times, and other publications, the chairman charged his fel-
low board members with dishonesty and corruption. Finally the other
two members of the board. Dr. Harcourt Morgan and Lilienthal de-
RETROSPECT AND PROSPECT 28«
manded a showdown, charging Morgan with * unpermissible conduct"
on the part of a member of the board. President Roosevelt summoned
the three men to the White House for a hearing on March 11, 1938.
Lihenthal and Harcourt Morgan had been specific, but when the
chairman was asked to present concrete facts to prove his charges he
refused to do so. He held that he should give his facts to an investi-
gating committee of Congress. Arthur Morgan was removed from
office on March 22 for "contumacy" — contemptuous disregard of or
opposition to lawful authority. By the time of the removal there were
15 resolutions for an inquiry pending in Congress; some members
predicted that corruptions "worse than Teapot Dome would be re-
vealed." On April 4, 1938, a resolution was passed creating a joint
committee of nine members to investigate TVA management.
Senator Vic Donahey (Democrat of Ohio) was made chairman.
Lynn J. Frazier (North Dakota) and Representatives Charles A. Wol-
verton ( New Jersey) and Thomas A. Jenkins ( Ohio) . Four were Demo-
crats: Senators James M. Mead (New York) and H. H. Schwartz
(Wyoming), Representatives Albert Thomas (Texas) and Graham A.
Barden (North Carolina). The committee engaged Francis Biddle of
Philadelphia as chief counsel and T. A. Panter of the Los Angeles Public
Power System as chief engineer of a large staff of independent technical
experts. W. O. Hefferman was made secretary and auditor for the
committee, which had thus prepared itself for a major operation.
The initial hearing was held on May 25, 1938, with Dr. Arthur Mor-
gan as the first witness. The Senate caucus room was jammed with spec-
tators and an army of reporters expecting to make the wires hum with
tales of corruption of the Teapot Dome variety.
But Arthur Morgan astonished everyone by saying: "I have not
charged that any director of the TVA has taken bribes or stolen money;
nor have I charged that any director has profited financially through
any transaction of the Authority . . . there are more subde forms of
failure to meet a public trust."
A constrained silence followed this surprising statement. If no
evidence of bribery, profiteering, or other personal wrongdoing was
to be revealed, the prospect of a scandal went glimmering. The cause
of the dissension within the board turned out to be an old-fashioned
squabble over administration. The committee heard Lilienthal and
Dr. Harcourt Morgan, then reported to Congress: "No evidence has
been presented that shows any conspiracy or other unethical be-
havior . . . The committee is forced to conclude that there were dif-
ferences of opinion in the board, which became exaggerated out of
290 THE CONSERVATION FIGHT
all proportions because of the chairman's propensity for attributing
moral delinquencies to anyone who opposed him." "
Meantime, the committee's technical staflF, having dug into TV A,
found that the law had been executed as intended. It was decided
that the power division was doing as well as could be expected in view
of lawsuits and other Jiarassments brought by private utilities, causing
long delay. The poHcy of marketing the power was sound and would
pay its way and amortize the investment, and the rejection of partner-
ship with private companies was justified. In sum, the entire TVA
concept of "unified development" was approved.
Three Members Dissent. A dissenting report was filed by Davis,
Wolverton and Jenkins. They criticized the conduct of the probe,
but found nothing dishonest or corrupt. They stated that the power
program was not paying its way and that the deficit was being paid by
the taxpayers of the rest of the country; that the investment allocated
to power was too low; and that the interest rates were too low for a
fair yardstick. Their recommendation was that the whole function of
river control, including the construction and operation of power at the
dams and the tielines between the different dams should be turned
over to the War Department and that other TVA functions should
be turned over to appropriate agencies.
The underlying reason for such destructive proposals for future
legislation aimed at "reorganization" appears in their statement that
there was great need "to protect the rights of private business." Com-
plaint was made that their colleagues had failed to estimate the damage
done, if any, to private interests by TVA. *
The conflicting reports reflect fairly well, but not fully, the political
line up of 1933-39. No rightwing Democrat was then in evidence.
Six leftwing Democrats and one Republican (Frazier) would continue
TVA as conceived. Three rightwing Repubhcans wanted to reorganize
it, ending competition, low-cost public power and unified river control.
Congress understood and accepted the majority report. No major
blitzkrieg against the project was launched until Dwight D. Eisenhower
became President in 1952.
The Second Assault. TVA symboHzes the basic soundness of "uni-
fied development" based on regional or basin-wide planning. The
conservation idea was the brainchild of far-seeing thinkers in both
parties; under the leadership of Theodore Roosevelt the Repubhcan
Party first promoted it, and under the leadership of Woodrow Wilson
and Franklin D. Roosevelt the Democratic Party put it into law and
action. Since 1933 the Democratic high conmiand has svrung to the
RETROSPECT AND PROSPECT 291
left and the Republican high command, to the right. President
Eisenhower s "partnership" proposal is the second major assault on the
basic principles on which TVA is based.
The Partnership Policy. Announcement of the partnership poHcy
was made by Eisenhower in an address on September 23, 1954, at
Walla Walla, Washington, dedicating McNary Dam on the Columbia
River. While approving comprehensive Federal projects, Eisenhower
insisted that wherever possible private enterprise should be permitted
to take over the power part of any project and thus cut down budget
expenditures and the national debt. As to power, he said: "It is not
a federal responsibility to try to supply aU the power needs of our
people. The federal government should no more attempt to do so
than it would assume responsibility for supplying all their drinking
water, their food, their housing and their transportation." The Hells
Canyon episode was soon to illustrate for the northwest one meaning
of "partnership" and at the very moment President Eisenhower was
speaking at McNary Dam, the Dixon- Yates deal was educating the
TVA region on another phase of it.
The Dixon-Yates Deal. In December 1953 the TVA board made
known its need for funds to start constructing a 450,000 kilowatt steam
plant at Fulton, Tennessee, 30 miles north of Memphis to meet the
growing civilian needs. Approved by Truman but cut from the
budget by Eisenhower, the TVA board was informed that there would
be no more money for steam plants.
In lieu of the Fulton plant the President, on June 16, 1954, directed
the Atomic Energy Commission (AEC) to negotiate a contract with
Edgar H. Dixon, president of Middle South Utilities, Inc., a New York
holding company, and Eugene A. Yates, chairman of the board of the
Southern Company, also of New York, to supply AEC with power
for use by TVA.
Dixon and Yates proposed to build a steam plant for that purpose
at West Memphis, Arkansas, across the Mississippi River from Mem-
phis. Secret conferences had been in progress since December. Their
offer accepted, they organized the Mississippi Valley Generating
Company to execute the contract and build the plant. A 25-year
binding contract was signed on November 11, 1954. Omitting de-
scription of the complicated financial structure that involved leading
Boston and New York investment bankers, let us come at once to how
the deal would affect ultimate electric consumers.
The plant (600,000 kilowatts) would cost up to $107,250,000, to
be paid for out of rates. At the end of the contract the company would
292 THE CONSERVATION FIGHT
own the plant. In comparison the Fulton plant of 450,000 kilowatts
and reflated facilities would cost $90,000,000, and be amortized in
40 years with TVA in possession of a debt-free plant.
The AEC and Budget Bureau experts admitted that this private
power output would cost $3,685,000 more per year than at Fulton
power rates, or $92,125,000 for the life of the contract. But TVA
experts, disclosing jokers in the complicated contract, established that
the actual increase would be $5,567,000 annually or $139,175,000 in
25 years. This is only one item among many which demonstrated that
the contract was drawn in the interest of the company and not of the
public.
The inside facts regarding the Dixon- Yates deal which had been
kept confidential under cover of "executive privilege*' were developed
through investigations by the Congressional Joint Committee on
Atomic Energy and the Antitrust Subcommittee of the Senate Judiciary
Committee in the summer of 1954. ''
The Deal Is Resisted. Tennessee Valley people declared war on
the scheme. They were supported by pro-public power men and
organizations and press from coast to coast. A precedent of national
importance was being established. As to its significance, Gordon R.
Clapp, former chairman of the TVA board, said: *Tt means that the
first step in the strangulation of its electric utility demonstration will
have been taken; that the consumers of the Tennessee Valley will be
marked for further victimization by the holding companies that sur-
round TVA, to whose strength will have been added the strength of
the United States Government against one of its own agencies ... to
squeeze the TVA into submission to the private utilities.'* '
The policy at stake became a campaign issue and a prime factor in
giving Democrats control of the next Congress. There were angry
debates in Congress, glaring headlines, and as the weeks passed the
affair became a national scandal. Finally, when the city of Memphis
officially refused to buy the AEC power, and took steps to install a
municipal plant, Eisenhower on July 11, 1955, ordered the contract
cancelled.
The Government Is Sued. Cancellation, however, did not end the
matter or the uproar. The Senate Antitrust subcommittee, chaired by
Estes Kefauver of Tennessee, continued hearings. It revealed that
Adolph H. Wenzell, vice president and director of the First Boston
Corporation of New York, an investment banking corporation taking
part in financing the Dixon-Yates deal, was employed as special con-
RETROSPECT AND PROSPECT 293
sultant by the Budget Bureau and participated in planning and negotia-
tion of the scheme. ^
The effect of this disclosure, carefully hidden from the public by
the Eisenhower administration, was Hke pouring oil on a smouldering
fire. Senator Kefauver contended that Wenzell's double role was
contrary to the conflict-of-interest statutes. Government attorneys
had approved the contract. But now the government attorneys were
forced to declare it illegal and not binding on the United States. Dixon
and Yates, who had started construction, brought suit for damages
on December 13, 1955, for $3,534,534.45 (to be exact) in the United
States Court of Claims.
During the Antitrust Subcommittee hearings, Chairman Kefauver
got into the record a copy of a report made to the Budget Bureau by
Wenzell, proposing sale of TVA and other federal power facihties
to private owners. The White House refused to supply the report
to the subcommittee, pleading executive privilege, but it was obtained
through Wenzell himself.
The Dixon- Yates scheme and Wenzell's report made it clear that
the power monopolists had an open door at the White House and
explained not only the deal to undermine the TVA power program
but made it easier to interpret Eisenhower power policies in other
sections of the United States.
Hells Canyon. Pursuant to the Eisenhower partnership policy, his
Secretary of Interior, Douglas McKay, shortly after taking office in
1953, withdrew federal government opposition to the Idaho Power
Company's plan for three comparatively small dams in the Middle
Snake River between Oregon and Idaho.
The Army Engineers, in a comprehensive plan for development of
the Columbia basin, had recommended a giant Hells Canyon dam
in the same stretch of the river. * President Truman attempted to get
the big dam authorized and built. Korean war demands for appropria-
tions and power trust opposition blocked him, so the Idaho Power
Company applied to the Federal Power Commission for license to
build its Httle dams instead. The Korean war over, public power
proponents renewed their drive for a giant Hells Canyon dam, but the
Federal Power Commission, ignoring measures pending in Congress
and its own responsibility to recommend federal construction, if that
was best, issued licenses to the power company. As a consequence,
dams that will yield only one-third as much flood control and less than
one-half as much power as a high Hells Canyon dam are being built
294 THE CONSERVATION FIGHT
in the Snake River Canyon, which is deeper than the Grand Canyon of
the Colorado River.
Although Eisenhower had publicly praised Theodore Roosevelt's
policies, his administration refused to lift a finger in defense of Teddy's
conservation policies in the Hells Canyon case.
The REA Also. The Rural Electrification Administration is also
feeling the eflFect of the Eisenhower private power policy. More and
more cooperatives are being denied loans to construct transmission
lines from government plants or to install their own diesel or steam-
generating plants. The purpose is to force the cooperatives to seek
a supply from private companies, with accompanying higher costs. To
cap all, as this is written, a move is on to raise the interest rate on loans
from the statutory 2 percent. High interest costs would jeopardize
the success of many marginal cooperatives and force higher electric
rates for all.
Past — Present — Future. All realistic historians appraise the conser-
vation movement as a radical forward step in the evolution of Ameri-
can democracy. No adequate appraisal of the onslaught against the
movement since the Korean war can be made without understanding
what has happened to the American economy since July 4, 1776.
Social and economic justice did not follow the advent of the Re-
public. Owners of land, natural resources, and essential public ser-
vices have been permitted to do largely as they pleased with their
holdings under the sanction of legal dogma. The divine right of
property has replaced the ancient dogma of the divine right of kings
on this side of the Atlantic.
American economic history is the story of the efforts of our less
privileged citizens to better their lot in life through the 18 decades
that have passed since the Declaration of Independence. Up to the
turn of the century standard historians dealt chiefly with war and
politics. Simultaneously with the conservation movement rose a new
school of historians who began to study our past economic and social
way of life. They have brought to hght the reasons why change was
necessary. Their tribe has increased. At no time has our civilization
been under such critical scrutiny at the hands of fearless scholars,
statesmen, and leaders of reform movements.
The rank and file is beginning to understand. Their understanding
makes certain that the present effort to fix the status quo and revert
to 19th century concepts cannot succeed. We are confronted by many
grave financial, economic, educational, housing, and resource problems
that are above and beyond mere party politics.
RETROSPECT AND PROSPECT 295
Water a National Problem. This volume is centered around the prob-
lem of water. Major floods and flash floods have increased in number
and destructiveness. Lives are lost. Property damage runs into
billions of dollars. The federal and state governments, the American
Red Cross, and other priviate agencies are called on to supply millions
of dollars in relief money for the stricken areas. Likewise devastating
droughts are on the increase in the east as well as the west, and the
nation with increasing frequency is asked to come to the rescue
of "disaster areas."
Experts in the important modern science of hydrology have pooled
tlheir findings to warn us that in the not too distant future the United
States will have to deal with a major shortage of water. They explain
that our main dependable source in most regions is ground water, but
underground water levels are dropping. This source cannot possibly
meet the demand from our tremendously increased population and
modern industry, which already uses approximately as much water
as the total of our irrigation districts. Our only solution is to conserve
water. The best way is the construction of reservoir dams to store
all possible rain water that drops from the skies. "
2000 A. D. Thus far in the history of our democracy, common sense
has ultimately prevailed over selfish interests, obstructionists and
clingers-to-the-status-quo. Sometimes progress has been held back
until a natural cataclysm like the Mississippi river flood of 1937, an
economic collapse as in 1929, or a war, has forced adoption of pro-
gressive measures. But they ultimately get adopted.
The unified conservation idea symbolized by the Tennessee Valley
Authority has not been duplicated in any other watershed in the
United States, although 1958 was TVA's 25th anniversary year. But the
old-line agencies like Army Engineers, Bureau of Reclamation, Forest
Service and Department of Agriculture were all busily engaged in
their limited fields attempting to create counterfeits of the basic TVA
ideas which can be passed off on the pubHc as equally good. They
cannot succeed for the continuance of multiple-agency forces divid-
es the conservation job among those agencies in bits and pieces. It
prevents the effective integration of land, water, power and human
development projects into a unified whole.
The Pick-Sloan plan in the Missouri Basin, which has been described
as a "shotgun wedding" of Army Engineer flood control and navi-
gation planning with Bureau of Reclamation's irrigation and power
projects, is a dramatic example of the old-line agency efforts to counter-
feit the TVA-type of over-all, integrated development of all the re-
296 THE CONSERVATION FIGHT
sources of a great watershed. Threatened by creation of a Missouri
Valley Authority patterned after TV A, the Corps of Army Engineers
and the Bureau of Reclamation in one day "co-ordinated" the Army's
plans for flood control and navigation dams in the Missouri Valley with
the Bureau's plans for power and irrigation dams. They got the De-
partment of Agriculture to add a soil plan several years later, but,
meantime, at least two national Commissions ( the Hoover Commission
on Reorganization of the Executive Branch of the Government and the
Truman Water Resources Pohcy Commission) had pointed out the
phony nature of the so-called "shotgun wedding" in the Missouri
Basin and recommended that there be real integration of resource
development, or that more TVA-type authorities be set up.
Floods, droughts, water shortages, need for full hydroelectric
power development are increasingly making themselves felt. Popula-
tion growth increases pressure from another direction. It is inevitable
that before our first Conservation Century ends around 2000 A.D. that
application of basic TVA ideas, first enunciated by the conservationists
at the turn of the century, will have blanketed our nation just as they
are already spreading through the world.
REFERENCES
I
1. Congressional Record, 1899, Vol. 32, p. 1410.
II
1. Congressional Record, 1903, Vol. 36, p. 3071.
2. Ibid., Vol. 36, p. 3072. 3. Ibid., Vol. 36, p. 3071-3073.
4. Ibid., Vol. 39, p. 3662. 5. Ibid., Vol. 36, p. 3661-3667.
6. Ibid., Vol. 40. Passed House, p. 7813; passed Senate p. 8453, 8614. Ap-
proved by President, p. 9157.
7. Ibid., Vol. 39, p. 1280.
8. Ibid., Newcomer opinion at p. 5. The communication was printed as
Senate Doc. 173, 58th Congress, 3rd session.
9. Central Light and Power Stations, Special Report, 1902, U. S. Census
Bureau p. 4.
Ill
1. GiflFord Pinchot, The Fight for Conservation (New York: Doubleday Page
and Co., 1910), p. 53.
2. Preliminary Report, Inland Waterways Commission, 1909, Vol. 1, p. 15.
3. Theodore Roosevelt, Autobiography (New York: Macmillan, 1913), p. 422.
4. Ibid., p. 16.
5. The nine members were Theodore E. Burton, chairman. Senators Francis
G. Newlands, William Warner, John H. Bankhead, General Alexander Mackenzie,
Dr. W. J. McGee, F. H. Newell, GiflFord Pinchot, Herbert Knox Smith.
6. Ibid., p. 26. 7. Ibid., pp. 22-26.
8. Ibid., pp. 30, 31. 9. Ibid., pp. 31, 32.
10. Congressional Record, 1908, Vol. 42, part 5, p. 4698.
11. John R. Homaday, Soldiers of Progress and Industry— The Life of Captain
Lay, (New York, Dodd Mead & Co., 1930), pp. 91-92.
12. Conference of the Governors of the United States, 1908, pp. 192-194.
13. Ibid., p. 323. 14. Ibid., pp. 210-212.
15. Ibid., pp. 159-160. 16. Ibid., p. 202.
17. National Conservation Commission Report, Senate Doc. 676, 60th Con-
gress, 1st session, P. 1. The sections with their chairmen and secretaries were
Waters: Congressman Theodore E. Burton, chairman; Dr. W. J. McGee sec-
retary. Forests: Senator Reed Smoot, chairman; Overton W. Price, secretary.
Lands: Senator Knute Nelson, chairman; George W. WoodruflF, secretary.
Minerals: Congressman John Dalzell, chairman; J. A. Holmes, secretary. Execu-
tive Committee: Gifford Pinchot, chairman, Thomas R. Shipp, secretary.
18. Congressional Record, 1909, Vol. 43, pp. 978-980.
19. GiflFord Pinchot, Breaking New Ground (New York: Harcourt, Brace &
Co., 1947), p. 364.
20. Theodore Roosevelt, Autobiography, (New York: Macmillan, 1913),
p. 425.
21. Congressional Record, Vol. 43, p. 3310.
297
298 THE CONSERVATION FIGHT
22. Ibid., 1909, Vol. 44 (H. R. 6277,) pp. 4823, 4838, and 5096.
23. Proceedings, Second National Conservation Congress, St. Paul, Sept. 5-8,
1910 p. 82-93.
24. Congressional Record, 1912, Vol. 48 (Senate Document 949,) p. 11796.
25. From memoranda among the papers of the author.
26. Proceedings of the First National Conservation Congress, Seattle, Wash.,
August 26-28, 1909 (for Hanford and Pardee, pp. 192-198.)
27. Proceedings, Second National Conservation Congress, St. Paul, Sept. 5-8,
1910.
28. Proceedings of the Second National Conservation Congress, St. Paul,
Minn., September 5-8, 1910 (for Hay and Stubbs, pp. 70-71, 75-77; for Roosevelt,
p. 82 et seq., and pp. 90-93. )
29. Proceedings of the Third National Conservation Congress, Kansas City,
Mo., pp. 55, 223, 31, 88, and 218.
30. Proceedings of the Fourth National Conservation Congress, pp. 41, 232,
318.
31. Ibid., pp. 160-162.
32. For vivid description of this affair, see Kerwin, Federal Water Power
Legislation, pp. 161-170. Also Reports of the Committees on Water Power and
Resolutions, Fifth National Conservation Congress, 1913.
IV
1. House Document 781, 60th Congress, 1st Session, 1908, pp. 50, 54-55.
2. House Document No. 14, 60th Congress, 2nd Session, 1909, pp. 14, 17,
18-20.
3. House Document No. 20, 63rd Congress, 2nd Session, 1914.
4. Hearings, Rivers and Harbors Committee, December 12, 1941.
5. Congressional Record, Vol. 51, pp. 14660, 15153-15155, 15507, 15525, (for
full debate consult Index on H. R. 13811.)
6. Ibid., Vol. 52, pp. 1859-1874.
7. House Document No. 1262, 64th Congress, 1st Session, 1916, p. 3.
1. H. R. 112, Congressional Record, 1913, Vol. 50, p. 82; reintroduced
August 1, 1913 as H. R. 7207, Ibid, p. 3023. For general description see open-
ing speech by Ferris, Chairman, Public Lands Committee, ibid., pp. 3894-3924.
2. "Section 6. That the grantee is prohibited from ever selling or letting to
any corporation or individual, except a municipality or a municipal water district
or irrigation district, the right to sell or sublet the water or the electric energy
sold or given to it or him by the said grantee. Provided, that the rights hereby
granted shall not be sold, assigned, or transferred to any private person, corpora-
tion or association, and in case of any attempt to so sell, assign, transfer or con-
vey, this grant shall revert to the Government of the United States."
3. Ibid., Vol. 50, p. 3963; Vol. 51, p. 343.
4. Ibid., 1913, Vol. 51, p. 285 for Borah's speech. For House vote, see p. 4151;
for Senate vote p. 385.
5. George W. Norris, Fighting Liberal, the Autobiography of George W.
Norris (New York; Macmillan, 1945), p. 162.
6. Elizabeth T. Kent, William Kent, Independent, an unpublished biography,
p. 325. See also Kent's House speech on water power, June 23, 1914, in
Congressional Record, Vol. 51, 1913, pp. 12568-12570.
REFERENCES 299
VI
1. Jerome G. Kerwin, Federal Water Power Legislation, (New York: Col-
umbia University Press, 1926), p. 171.
2. Elizabeth P. Kent, William Kent, Independent, p. 333.
3. House Report, 842, 63rd Congress, 3rd Session, 1914. Also hearings on
H. R. 14893, 63rd Congress, 2nd Session, 1914.
4. Congressional Record, 1916, Vol. 53, appendix, pp. 1303-1311.
5. Ibid., p. 3228. 6. Ibid., p. 2693-2694.
7. Ibid, pp. 3756-3757. 8. Ibid, appendix, p. 535.
9. Ibid, 1918, Vol. 56, p. 851. 10. Ibid, p. 9898.
11. For debate on S. 1419 consult Congressional Record Index, Vol. 56,
1918, p. 389. For House Report 715 on bill. Congressional Record, Vol. 56, 1918,
p. 8455. For Sims' statement. Ibid,, p. 9037. For roll call. Ibid., pp. 10049-53.
12. Ibid, p. 8932. 13. Ibid., pp. 10477-10484.
14. Ibid., 1919, Vol. 57, pp. 4638-4639. 15. Ibid., pp. 4640.
16. Ibid., 1920, Vol. 59, p. 1574. 17. Ibid., p. 6539.
18. Ibid., 1920, Vol. 59, p. 6329, for report. For final report, Ibid., p. 7779.
VII
1. Hearings on H. R. 12766, Increase of Military Establishment, House Com-
mittee on Military Affairs, 64th Congress, first session, 1916, pp. 491-493 and
532-535.
2. Congressional, Record, 1916, Vol. 53, pp. 4320-4324.
3. Ibid., pp. 4724-4730.
4. Hearings on S. 4971, To Authorize the Withdrawal of Water Power Sites
for the Manufacture of Nitrates, Senate Committee on Agriculture and Forestry,
64th Congress, first session 1916, p. 42.
5. Ibid., p. 14. 6. Ibid., p. 107 et seq.
7. Congressional Record, 1916, Vol. 53, pp. 5133-5137.
8. Ibid., pp. 5145-5146, for Underwood's speech.
9. Ibid., pp. 5638-5639, 5971.
10. Ibid., pp. 5640-5649. 11. Ibid., p. 5962.
12. Ibid., pp. 5650-5652. 13. Ibid., pp. 5705-5711.
14. Ibid., p. 5966. 15. Ibid., pp. 5967-5968.
16. Ibid., p. 6107. 17. Ibid., pp. 8027-8047.
18. Ibid., p. 8046. 19. Ibid., pp. 8118-8119.
20. Ibid., pp. 8397-8398.
21. U.S. V. Chandler-Dunbar Water Power Company et al, 229 U.S. 53 ( 1913).
22. Jerome Gregory Kerwin, Federal Water Power Legislation (New York:
Columbia University Press, 1926) for full discussion.
23. Congressional Record, 1916, Vol. 53, p. 8118.
24. Ibid., p. 5640.
VIII
1. House Report 998, War Expenditures, 66th Congress, second session.
May 18, 1920, Part 2, p. 97.
2. Ibid., p. 101.
3. Hearings, War Expenditures, House Select Committee on Expenditures in
the War Department, 66th Congress, second session, 1920, Part 3, p. 3016.
4. War Department Docimient 2041, Report on the Fixation and Utilization
300 THE CONSERVATION FIGHT
of Nitrogen (Washington, D. C: Government Printing OflBce, 1922) p. 262.
5. Ibid., p. 264. 6. Ibid., p. 264.
7. House Document 1262, Reports on Preliminary Examination and Survey
of the Tennessee River Between Browns Island and Florence, Alabama ( Muscle
Shoals), 64th Congress, first session, 1916.
8. Hearings, War Expenditures, House Select Committee on Expenditures in
the War Department, 66th Congress, second session, 1920, Part 3, pp. 2578-2579
for Baker testimony; p.- 2688 for Colonel Joyes' testimony.
9. Ibid., pp. 2578, 2595. 10. Ibid., p. 2689.
11. Colonel Charles Keller, Corps of Engineers, The Power Situation During
the War (Washington: Government Printing OflBce, 1921,) p. 1.
12. Congressional Record, 1919, pp. 381, 640-647, 719.
13. House Report No. 998, War Expenditures, Ordnance, 66th Congress, Second
Session, May 18, 1920, Part I, p. 1.
14. Ibid., Part 2, p. 95. 15. Ibid., pp. 100-106. 16. Ibid., Part I, p. 60.
17. Hearings on H. R. 15422, Sundry Civil Appropriations, 1922, Senate Appro-
priations Committee, 66th Congress, third session, 1921.
18. Congressional Record, 1921, Vol. 69, pp. 4500-4506 for House action;
pp. 4432-4438 for Senate action.
19. Ibid., p. 2647.
20. Hearings on H.R. 15422, Sundry Civil Appropriations, 1922, Senate Appro-
priations Committee, 66th Congress, third session, 1921, pp. 1-28.
IX
1. Congressional Record, 1919, Vol. 60, pp. 812-813.
2. Ibid., pp. 992 and 1362. 3. Ibid., pp. 1397-1398 and 1997.
4. Ibid., pp. 1209-1211, 1359. 5. Ibid., pp. 990-992 and 1297-1298.
6. Ibid., pp. 1298, 1364, 1247, 1414 for Senate roll calls; p. 1415 for passage.
1. Senate Docimient 92, Simimary Report of the Federal Trade Commission
to the Senate Pursuant to S. Res. 83, 70th Congress, first session, on EflForts by
Associations and Agencies of Electric and Gas Utilities to Influence Public Opinion,
1934, 70th Congress, first session, 1928, Part 71A, p. 391.
2. Hearings, Muscle Shoals Propositions, House Committee on Military AflFairs,
67th Congress, second session, 1922, pp. 115-121.
3. Ibid., pp. 38, 115, 117.
XI
1. Samuel Growner, "Henry Ford Tackles a New Job," Collier's Weekly,
October 18, 1924, p. 5.
2. Hearings, Muscle Shoals Propositions, House Military Affairs Committee,
67th Congress, 2nd session, 1922, pp. 3-27.
3. Ibid., pp. 8-9. 4. Ibid., pp. 252-253.
5. House Report No. 1084, Muscle Shoals Proposition [To Accompany H. R.
11903] Two Parts, 67th Congress, second session, June 9, 1922, Part I, p. 2.
6. Ibid., p. 45. 7. Ibid., Part 2.
8. George W. Norris, Fighting Liberal, the Autobiography of George W. Norris
(New York: Macmillan Company, 1944) p. 240.
9. Ibid., p. 247. 10. Congressional Record, 1921, Vol. 62, p. 2211.
REFERENCES 301
11. Hearings on S. 3420, Muscle Shoals, Senate Committee on Agriculture and
Forestry, 67th Congress, second session, 1922, pp. 701-705.
12. Senate Report No. 831, Muscle Shoals, Two Parts [To accompany S. J.
Res. 227], 67th Congress, second session, 1922, Part I.
13. Ibid., pp. 27-2^. 14. Ibid., Part 11.
XII
1. Congressional Record, 1924, Vol. 65, p. 3640.
2. Ibid., p. 3901. 3. Ibid., p. 3585.
4. Senate Doc. 88, The Nitrogen Situation in the United States, 68th Congress,
first session, 1924, p. 44.
5. Hearings, on S. 139, S. 2372, S. 2747, S. 3214, and H. R. 518, Muscle
Shoals, Six Parts, Senate Committee on Agriculture and Forestry, 68th Congress,
first session, 1924, Part I, pp. 402-417.
6. Ibid., pp. 425, 444.
7. Senate Report No. 678 [To Accompany H.R. 518], Muscle Shoals, Two Parts,
68th Congress, first session, June 2, 1924, Part I, p. 31.
8. Congressional Record, 1924, Vol. 65, p. 10473.
xin
1. Congressional Record, 1924, Vol. 66, pp. 20, 63, 113.
2. Ibid., p. 253. 3. Ibid., p. 314.
4. Ibid., p. 719. 5. Ibid., p. 875.
6. Bulletin, Hydro-Electric Power Commission of Ontario, Vol. 16, October,
1929, Table 12, p. 319. The Electric Light and Power Industry in the United
States (New York: National Electric Light Association, June, 1931) Table 23,
p. 140.
7. Congressional Record, 1925, Vol. 66, p. 3888.
8. Ibid., Vol 67, p. 355. 9. Ibid., p. 35. 10. Ibid., p. 351.
11. Senate Document No. 92, Utility Corporations, A Letter from the Chairman
of The Federal Trade Commission Transmitting in Response to Senate Resolution
83 a Monthly Report on The Electric Power and Gas Utilities Inquiry, Four parts,
70th Congress, first session, 1929, No. 14; ibid.. No. 16 pp. 93-95, ibid.. Exhibits
1-126 [To accompany Part I], p. 399 fp.
12. Congressional Record, 1925, Vol. 66, pp. 1449-1451 and 1504-1510.
13. Ibid., p. 1513. 14. Ibid., pp. 2536-2549.
15. Ibid., 1918, Vol. 56, p. 3179. 16. Ibid., 1925, Vol. 66, p. 4403.
17. House Document No. 119, Muscle Shoals Inquiry, Majority and Minority
Reports, 69th Congress, first session, 1925.
XIV
1. The Northeastern Super Power Committee, Super Power Studies for the
Northeastern Section of the United States (Washington, D.C.: Federal Power
Commission, May, 1924).
2. Navy Dept., Bureau Supplies and Accounts, Naval Expenditures 1941,
(Washington, D.C.: Government Printing Office, 1942) p. 326.
3. Congressional Record, 1926, Vol. 67, p. 1513.
4. Hearings on S. J. Res. 35, To Suspend The Jurisdiction of The Federal
Power Commission to Issue Licenses on The Tennessee River Watershed, Senate
Committee on Agriculture and Forestry, 69th Congress, 1st Session, 1926.
5. Ibid., p. 4. 6. Ibid., pp. 16-17.
302 THE CONSERVATION FIGHT
7. Hearings, Leasing of Muscle Shoals, Pursuant to S. Con. Res. 4, Joint
Committee on Muscle Shoals, 69th Congress, first session, 1926, p. Ill for Jardine.
8. Ibid., pp. 47, 112. For Major Bums' testimony, p. 47.
9. Senate Report No. 672, Muscle Shoals [To accompany S. 4106], Two Parts,
69th Congress, first session, 1926.
10. Hearings, Muscle Shoals Propositions, House Committee on Military Affairs,
67th Congress, second session, 1922.
11. House Document No. 158, Plan for the Development of Muscle Shoals and
House Document No. 173, Additional Offer Made by the Tennessee Electric Power
Company to Manufacture Nitrogen and Fertilizers at Muscle Shoals, 68th Congress,
first session, 1924.
12. The companies included Tennessee Electric Power Company, Memphis
Power and Light Company, Mississippi Power Company, Mississippi Power and
Light Company, Kentucky UtiHties Company, Gulf Electric, Louisiana Power and
Light Company, Georgia Railway and Power Company, Arkansas Power and
Light Company, and New Orleans Public Service Company.
13. Congressional Record, 1926, Vol. 67, pp. 1926, 11693.
14. Ibid., Vol. 68, pp. 348-362.
15. Senate Report No. 672, Muscle Shoals, Two Parts, 69th Congress, first
session, 1926, Part II, pp. 2-9, Minority Views of Mr. James; Hearings on H. R.
16396 and H. R. 16614, Muscle Shoals, Four Parts, 69th Congress, second session.
Part I, p. 256, for Mr. James' close examination of General Jadwin.
16. Ibid., p. 15.
17. Hearings, Pursuant to S. Con. Res. 4, Leasing of Muscle Shoals, Joint
Committee on Muscle Shoals, 69th Congress, first session, 1926, pp. 239-248,
for testimony of O'Shea; Senate Report No. 1120, Stock Ownership of Muscle
Shoals Fertilizer Company and Muscle Shoals Power Distributing Company and
Contracts Between American Cyanamid Company and Union Carbide Company,
69th Congress, first session, 1926.
18. Congressional Record, 1927, Vol. 68, p. 4755.
XV
1. Hearings on H. R. 16396 and H. R. 16614, Muscle Shoals, Four Parts,
House Committee on Military Affairs, 69th Congress, second session, 1927, Part I,
pp. 89-115 and Part II, pp. 875-892.
2. Congressional Record, 1927, Vol. 68, pp. 5836-5837.
3. Hearings, Lobby Investigation, [Pursuant to S. Res. 20], Four Volumes,
Subcommittee of Senate Committee on Judiciary, 71st Congress, second session,
1930, pp. 2824, 2834-2835.
4. Congressional Record, 1928, Vol. 69, p. 8228. 5. Ibid., 3521.
6. Hearings on H. R. 16396 and H. R. 16614, Muscle Shoals, Four Parts,
House Committee on Military Affairs, 69th Congress, second session, 1927, Part II,
pp. 1069-1083.
7. Ibid., pp. 1071-1976.
8. Congressional Record, 1929, Vol. 70, pp. 4613-4623.
9. Ibid., pp. 3601-3607.
XVI
1. The Northeastern Super Power Committee, Super Power Studies for the
Northeastern Section of the United States (Washington, D. C: May, 1924).
2. House Report No. 1072, Flood Control in the Mississippi Valley (To
REFERENCES SaS
Accompany H. R. 8219), 70th Congress first session, 1927, pp. 1-26; House Report
No. 1100, Flood Control on the Mississippi River and Tributaries [To accompany
S. 3740], 70th Congress, first session, 1928.
3. Senate Doc. No. 213, Control of Power Companies, 69th Congress, 2nd
Session, 1927, pp. 12-18.
XVII
1. Congressional Record, 1928, Vol. 69, p. 9842, for Senate vote; ibid., p. 9957,
for House vote. Consult General Index at p. 572.
2. Ibid., pp. 9694-9696. 3. Ibid., pp. 4401-4403.
4. Ibid., pp. 4402, 4403. 5. Ibid., pp. 8223-8225. 6. Ibid., p. 4537.
XVITI
1. Congressional Record, 1928, Vol. 69, pp. 10619-10638.
2. Thomas L. Stokes, Chip Off My Shoulder (Princeton, N. J.: Princeton
University Press) 1940, p. 245.
XIX
1. Professor Stewart performed many other tasks for the utilities. For the
entire story consult references listed under his name in the propaganda indices
of Utilities Corporations, Report of the Federal Trade Commission . . . Pursuant
to S. Res. 83, 70th Congress, first session (Senate Doc. 92, 70th Congress, first
session ) .
2. Ibid., Part VII, pp. 222-260. 3. Ibid., pp. 261-215.
XX
1. Hearings, Investigation of Federal Regulation of Power (Pursuant to S. Res.
80 and S. 3619), Two parts, Senate Committee on Interstate Commerce, 71st
Congress, second session, 1930.
2. Congressional Record, 1931, Vol. 74, pp. 1718-1727.
3. Ibid., p. 1747. See p. 1979 for Hoover press release.
4. Ibid., pp. 2943-2964. 5. Ibid., p. 3996.
6. U.S. Federal Power Commission, 11th Annual Report (Washington: Govern-
ment Printing Office), 1931, p. 80.
7. United States v. Appalachian Power Company, 311 U. S. 377-434 (1940).
8. Joseph C. Swidler and Robert H. Marquis, "TVA in Court; A Study of TVA's
Constitutional Litigation," Iowa Law Review, Vol. 32, January, 1947.
XXI
1. Congressional Record, 1930, Vol. 72, pp. 6358-6377, 6399-6442, 6497-6503,
6506, and 6511.
2. House Report No. 1430, Muscle Shoals (To accompany S. J. Res. 49) Two
parts, 71st Congress, second session, 1930.
3. Ibid., Part II, McSwain Minority Report; and Congressional Record, 1930,
Vol. 72, pp. 9728-9734, 9667-9689, 9727-9767.
4. Congressional Record, 1930, Vol. 72, pp. 10504-10507.
5. Ibid., 1931, Vol. 74, pp. 1490-1493, 3089-3097, 3710-3715.
6. Ibid., pp. 5548-5572, 5707-5716.
7. Ibid., pp. 7046-7048, 7070-7078, 7084-7098.
304 THE CONSERVATION FIGHT
xxn
1. Franklin D. Roosevelt, Public Papers and Addresses ( compiled by Samuel I.
Rosenman) Vol. I, The Genesis of the New Deal, 1928-1932 (New York: Random
House, 1938) pp. 739-742.
XXIII
1. Hearings, Muscle Shoals, House Committee on Military AiBFairs, 73rd Con-
gress, first session, 1933, pp. 107, 2243-238.
2. Congressional Record, 1933, Vol. 77, pp. 2176-2205, 2340, 2341.
3. Ibid, p. 2182, 2777-2790.
4. Ibid, pp. 2^23-2639, 2661-2691, and 2777-2809.
5. Ibid., pp. 3084-3085, and 3125. 6. Ibid., p. 3474, pp. 3554-3602.
XXIV
1. Clapp, Gordon R., An Approach to the Region, TVA, (Chicago University
of Chicago Press, 1955) pp. 45-52.
2. Public Resolution 83, Creating a Special Joint Congressional Committee to
Make an Investigation of the Tennessee Valley Authority, 75th Congress, third
session, 1938.
3. Senate Document No. 56, Investigations of the Tennessee Valley Authority,
Report of the Joint Committee on the Investigation of the Tennessee Valley
Authority, Pursuant to Public Resolution No. 83, Five parts, 76th Congress, first
session, 1939.
4. Ibid, Part 1, pp. 6-10 and 50-51.
5. Hearings on S.3323 and H. R. 8862, To Amend the Atomic Energy Act of
1946, Joint Committee on Atomic Energy, Two parts, 83rd Congress, second
session, 1954, Part II, pp. 1026-1027.
6. Hearings, Power Policy ( Dixon- Yates Contract ) Subconmiittee of the Senate
Committee on the Judiciary, Two parts, 83rd Congress, second session, 1954,
Part II, p. 609.
7. Committee Print, Power Policy-Dixon Yates Contract, Staff report of the
Subcommittee on Antitrust and Monopoly of the Senate Committee on the Judi-
ciary (Pursuant to S. Res. 61 as extended by S. Res. 170, 84th Congress, first
session), 1956, 84th Congress, second session.
8. House Document No. 531, Columbia River and Tributaries, Northwestern
United States, Eight volumes, 81st Congress, second session, 1952.
9. Samuel D. Sturgis, "Will Water Become Scarce?", U. S. News and World
Report, Vol. 40, April 27, 1956, pp. 84-92 ff. Luna B. Leopold, Water and the
Conservation Movement, Chatauqua Address, July 8, 1957.
INDEX
Adams, John Quincy, 2
Adamson, William C. (D-Ga.), 6, 45,
46, 47, 50
Addie, David C, 256
Adkins, Jesse C, 224, 225
Agriculture, Department of, 295-96
Air Nitrates Corp., 77, 96, 150, 152,
153, 159
Alabama Power Co., 18, 26, 34, 38,
46, 59, 63, 77, 83, 95-96, 102-03,
107, 110, 115, 122, 127, 143, 151,
154-55, 176, 244-45
Alabama Traction, Light and Power
Co., 36
Aldrich, Nelson W. (R-R.I.), 26
Almon, Edward B. (D-Ala.), 146, 154
Aluminum Co. of America, 47, 284
American Assn. of University Profes-
sors, 197, 203, 206, 207
American Chemical Society, 75
American Cyanamid Co., 9, 34, 60, 62,
76-77, 96, 150, 152, 153, 158, 159,
162, 164, 165, 235, 245
American Farm Bureau Federation,
104, 140, 155, 158, 161-63, 171,
200, 235, 244, 245, 247, 271, 282
American Federation of Labor, 171
American Fertilizer Assn., 247
American Forestry Assn., 28
American Gas and Electric Co., 223
American Political Science Assn., 197,
206
Amlie, Thomas R. (R-Wis.), 253
Ammo-Phos, 153, 159
Anderson, Paul Y., 194-95
Angell, James B., 21
Anthony, Daniel R. Jr. (R-Kans.), 61
Appalachian Electric Power Co., 220,
221, 222, 223, 227-31
Arc process, 60, 61
Army Engineers, 5, 6, 7, 15, 35-39, 61,
67, 78, 79, 126, 147, 156, 168-69,
242, 245-46, 247, 249, 281, 284,
293, 295-96
Army Ordnance Dept., 77, 86, 104,
150
Associated Gas and Electric Co., 220
Associated Power Companies, 117, 150
151, 155-56
Associated Press, 231
Atkinson case, 231
Atomic bombs, 284
Atomic Energy Commission, 285, 286,
291, 292
B
Baekeland, Dr. Leo H., 64, 104
Baer, John M., 128, 196
Bailey, Dr. L. H., 23
Baker, B. N., 27
Baker, Charles H., 35
Baker, J. G., 245
Baker, Newton D., 39, 51, 66, 75-79,
86, 91, 230, 253-54, 259, 260
Ballinger, Richard A., 26-27
Baltimore Sun, 132, 183
Bankhead, John H. (D-Ala.), 2, 3, 11,
26, 33, 54, 270-72
Barden, Graham A. (D-N.C), 289
Barkley, Alben W. (D-Ky.), 56, 258
Baruch, Bernard, 75
Beach, Maj.-Gen. Lansing H., 84, 95-
99
Beard, Charles A., 206, 264
Beck, Sir Adam, 51-52, 53, 130-32
Beckham, John C. W. (D-Ky.), 71
Bell, William B., 158-65
Beresford, Prof. Hobart, 200
Biddle, Francis, 289
Bingham, Hiram (R-Conn.), 240-41
Birmingham State Sentinel, 60
Bissell, C. A., 150
Black, Hugo L. (D-Ala.), 177, 235,
242, 267
Black, Gen. W. M., 37, 39
Blaine, John J. (R-Wis.), 176, 193
Boise Capital Times, 190
Bonbright, Dr. James C, 205, 208, 256
Bonner, Frank E., 211-21, 226, 227
Borah, William E. (R-Idaho), 43-44,
53, 58, 71-74, 187, 193, 196
Boston Edison Electric Co., 205
Boston Herald, 171
Boulder Dam, 115, 179-82, 187, 188
Bower, Russell F., 104, 140
Bowers, Claude G., 179
Brand, Charles J., 247
Brookhart, Smith W. (R-Ia.), 127,
213, 226, 229, 253
305
306
INDEX
Brooklyn Edison Co., 204
Brooks, Lawrence G., 224
Broussard, Robert F. (D-La.), 71
Brown, Lathrop, 51
Brown, Gen. Lytle, 242, 243, 248-49
Brown, R. F., 64
Brown, Walter F., 257
Bruce, William C. (D-Md.), 148
Bryan, Charles W., 121, 134
Bryan, William Jennings, 19, 20-21,
30, 40, 41
Budget Bureau, 292, 293
Burleson, Albert S., 41
Burnett, John L. (D-Ala.), 33
Burns, Maj. J. H., 104, 110
Burton, Theodore E. (R-Ohio), 2-5,
11, 21, 26, 35-38, 94, 116, 117
Byms, Joseph W. (D-Tenn.), 83
Caffey, Francis G., 63
Cairo, III, 280
Calhoun, John C, 1
Cannon, Clarence (D-Mo. ), 253
Cannon, Joseph G. (R-IIL), 26, 52
Capper, Arthur (R-Kans.), 58, 109,
111, 114, 137
Caraway, Thaddeus H. (D-Ark.), 107,
111, 120, 193
Carmack, Edward W. (D-Tenn.), 7
Carnegie, Andrew, 19
Caro, Dr. N., 104
Carson, A. E., 227, 228
CathoHc university, 264
Census, U. S., 8
Chamberlain, George E. (D-Ore.), 71
Chandler-Dunbar case, 73, 278
Chattanooga, Tenn., 1, 280
Chattanooga Oil Co., 245
Chattanooga Times, 172
Chicago Tribune, 171
Civil War, 2
Clapp, Gordon R., 292
Clapp, Moses E. (R-Minn.), 26, 74
Clapp, Paul S., 150, 156, 167, 213
Clarion River Power Co., 220-2-2, 224
Clark, James B. (Champ) (D-Mo.),
51
Cleveland mimicipal light plant, 79
Clinch river, 174
Collier's, 122, 2431-32
Colorado river, 45, 51, 115, 181, 267
Columbia river, 45, 51, 262, 277, 280-
81
Columbia university, 205-208, 256,
264
Comer, Gov. Braxton Bragg (Ala.), 20
Commerce Department, 118
Commission on Reorganization of the
Executive Branch of the Govern-
ment, 208, 296
Committees, congressional {see Con-
ference, House and Senate Com-
mittees )
Commons, John R., 264
Commonwealth and Southern Corp.,
269, 288
Conference committees : Federal
Water Power bill (1920), 54-55;
National Defense bill ( 1916), 71-
72; Norris compromise bill ( 1930-
31), 238-41; Norris-Morin bill
(1928), 173; TVA bill (1933),
275; Underwood - Coolidge bill
(1925), 136-39
Conflict of interest, 293
Congress, U. S. (see Conference com-
mittees. Elections, Filibusters,
House and Senate committees.
House and Senate votes, Vetoes,
and names of individual mem-
bers)
Congressional Record, 5, 6, 130-31,
132, 176, 235, 237, 243, 271
Connecticut river, 51
Conservation, 9, 10-33, 40, 103, 115,
116, 119, 126, 168-69, 172, 186,
208, 233
Consolidated Gas Co., 170
Constitutionality, 42, 45, 73-74, 87,
174, 221-22, 226, 230, 231
Conventions, political ( see Democratic
and Republican platforms)
Cooke, Morris L., 119
Cochdge, Calvin, 116, 121, 122-46,
157, 158, 166, 168, 173, 174, 181,
187, 189, 234-35
Cooper, Henry Allen (R-Wis.), 47,
54, 130
Cooper, Col. Hugh, 46, 84-85, 86, 96-
97
Coosa river, 26, 31
Cornell university, 23, 200
Cortelyou, George B., 170, 192
Costigan, Edward P. (D-Colo.), 253,
254
Cottrell, Dr. F. C, 150
Country Life Commission (1908), 23
Counts, George S., 2-64
Court of Claims, U. S., 293
THE CONSERVATION FIGHT
307
Couzens, James (R-Mich, 213, 216,
217, 227
Cove Creek Dam, 146, 153, 159, 161,
174, 235, 237, 246, 247-49 {see
also Norris Dam)
Grosser, Robert (D-Ohio), 178, 196,
237
Crowther, Samuel, 122
Crozier, Brig. Gen. William, 59-61,
64, 75, 76, 78
Cullum, Mrs. J., 128
Cummins, Albert B. (R-Ia.), 53, 56,
134, 138
Curtis, Charles, 71, 137, 138, 242
Curtis, Dr. Harry A., 118-19, 140, 141,
279
Cutting, Bronson (R-N.M.), 195, 253
Cyanamid process, 34, 60, 61, 67, 70,
76-77, 104, 110, 141, 162, 166,
172, 270, 275
D
Dam No. 2, 37, 77-78, 82, 100, 106,
120, 124-127, 137, 153 {see also
Wilson Dam)
Daniels, Josephus, 41
Davis, Arthur Powell, 2-31, 264
Davis, Dwight F., 147, 149, 150
Davis, John W., 121, 227
Dawes, Charles C, 121, 142, 148
Decentralization, 279
Democratic platforms: (1912), 40;
(1920), 82; (1924), 121; (1928),
180; (1932), 2^0-61
Dempsey, Stephen W. (R-N.Y.), 237
Denby, Edwin, 170
Deneen, Charles S. (R-IU.), 148-50,
154, 155-56
Dennison Dam, 231
Dent, S. Hubert Jr. (D-Ala.), 61, 71
Depression, 189, 233, 251, 258
Dewey, John, 196, 206
Dial, Nathaniel B., 140
Dill, Clarence C. (D-Wash.), 196,
213, 227, 253, 261, 267
Disaster areas, 295
District court, U. S., 230
Dixon, Edgar H., 291-93
Dixon-Yates deal, 269, 291-93
Doheny, E. L., 116
Doherty, Henry L., 167
DoUiver, Jonathan P. (R-Ia.), 26, 69
Donahey, Vic (D-Ohio), 289
Douglas, Lewis W. (D-Ariz.), 240
Douglas Dam, 284
Downing, Paul M., 218
Draper, Claude L., 225, 226, 2-30
Droughts, 295, 296
Duke, James B., 95, 96
DuPont, Henry A. (R-Del.), 71
DuPont, Pierre, 66
DuPont Co., 60, 66, 254
Duquesne Light and Power Co., 133
East Tennessee Development Co., 146
Eaton, Charles A. (R-N. J.), 177, 270
"Ebasco fiasco," 285
Edison, Thomas A., 8, 109-10
Edison Electric Institute, 285
Educational Institutions, Committee
on Cooperation with, 203
Educators, propaganda among, 196-
210
Eisenhower, Dwight D., 34, 39, 277,
291-94
Elections: off-year, (1914), 48;
(1918), 56, 80; (1922), 115;
(1926), 173; (1930), 233; presi-
dential, (1912), 40-41; (1920),
93; (1924), 121, 142; (1928),
186; (1932), 266
Electric Bond and Share Co., 47, 51,
146, 152, 169, 212, 220, 223,
224, 254, 285
Electric Energy, Inc., 285
Electric rates, 53, 94, 110, 113, 127-
29, 144, 153, 167, 174-76, 199,
219, 225, 237, 245, 261-65, 282,
285-87
Electrical industry, 6, 8, 41, 42, 93,
142-57, 167, 169, 215, 230, 234,
240, 259
Electrical shortage, 79, 284
Electrical World, 167, 199, 237
Eliot, Charles W., 27
Ely, Prof. Richard T., 205
England, WiUiam H., 190-91
Engstrum, Frederick E., 103
Erosion, 94, 279
Esch, John J. (R-Wis.), 51, 54-57
Evans, John M. (D-Mont), 253
Exploitation, 277
Fall, Albert B., 116, 170
Farm board, 101-02, 138, 152, 153,
159, 160
308
INDEX
Farm Bureau (see American Farm
Bureau Federation)
Farm press, 172
Farmers Federated Fertilizer Corp.,
159-60
Federal leadership, 52, 278
Federal operation, 52, 57, 62-65, 69,
70, 71, 82, 86, 93, I74, 241
Federal Power Commission, 52, 57,
99, 110, 146, 147, 149, 153, 161,
163, 174, 185, 211-33, 235, 293
Federal Power Corp., 120
Federal Trade Commission, 93-94,
115, 133, 169, 179, 180, 181, 183,
186, 187, 189-93, 196, 197, 198,
199, 200, 201, 202, 203, 207-08,
2-52, 255
Federal Water Power Act (1920), 45-
58, 82, 100, 102, 105-06, 107,
111, 117, 118, 123, 151, 153, 223,
255, 278, 281
Federated Press, 212
Ferguson, Col. Harley B., 245, 247,
248
Ferris, Scott (D-Okla.), 43, 47, 51,
54, 58
Fertilizer, 49, 60-70, 73, 78, 87, 91,
94, 103-09, 113-20, 123-26,
135, 139, 149-54, 160, 164, 166,
174, 175, 237, 241, 249, 269-70,
279 (see also Ammo-Phos and
Nitrates )
"Fertilizer trust," 88, 115, 123, 148,
237
Fess, Simeon D. (R-Ohio), 179, 235
Fetter, Frank A., 264
Fields, William J. (D-Ky.), 96, 105
Filibusters, 55-56, 138-39
Finney, John H., 47
Finney, Ruth, 229
First Boston Corp., 292
Fisher, Hubert F. (D-Tenn.), 238,
240
Fisher, Walter L., 47
Fiske, Maj. Harold C, 146, 147
Fletcher, Duncan U. (D-Fla.), 52, 57
Floods, 12-14, 35, 42, 79, 94, 119, 166-
69, 172, 174, 177, 231, 248, 249,
263, 267, 268, 280, 295, 296
Florence, Ala., 1, 144, 245
Folk, Gov. Joseph W. (Mo.), 20
Ford, Henry, 98-122
Forest Service, U. S., 10, 13, 295
Forests, 10, 11-13, 268, 279
France, Joseph I. (R-Md.), 56, 58
Frankfurter, Felix, 51, 224, 264
Frazier, Lynn J. (R-N.D.), 218, 253,
289, 290
Frear, James A. (R-Wis.), 38, 61
Fulton steam plant, 291, 292
Garfield, James R., 23, 26, 47, 257
Gamer, John N. (D-Tex.), 136, 239,
253, 259, 260, 275
Garrett, Finis J. (D-Tenn.), 80, 81,
83, 146
Garrison, Lindley M., 41
Garsaud, Marcel, 225, 226, 230
General Accounting Office, 286
General Chemical Co., 76
General Dam Act (1906), 6
General Electric Co., 152, 169, 254
Geological Survey, U. S., 10, 32, 225
George, Henry, 178
George, Walter F. (D-Ga.), 148
Giant Power Board, 119
Gillespie, Gen. G. I., 5
Gillett, Frederic H. (R-Mass.), 56
Glasgow, Arthur G., 86
Glass, Carter (D-Va.), 135
Glenn, Otis F. (R-Ill.), 213, 242-43
Good, James W., 47, 83, 87-88, 211
Gooding, Frank R. (R-Idaho), 107,
111
Gore, Thomas P. (D-Okla.), 63, 253
Gorgas steam plant, 77, 101, 105, 107,
115, 116, 117
Governors' conservation conference
(1908), 19-21
Graham, Wilham J. (R-Ill.), 80, 81,
83
Graves, Henry, 25, 31
Gray, Chester, 162-63
Gray, Horace M., 205, 209-10
Gray, Prof. John H., 224
Green, Capt. Thomas H., 246, 247
Greene, WiUiam S. (R-Mass.), 105-
06
Gregory Commission, 130-31
Griffiths, F. W., 218
Gronna, Asle J. (R-N.D.), 63, 87, 89,
90
H
Haber process, 76, 104, 167
Hales Bar Dam, 284
Hall, E. K., 51
THE CONSERVATION FIGHT
309
Hamilton, George W., 288
Hanford, C. H, 28
Harding, Warren G., 71, 93-97, 114,
115
Hardwick, Thomas W. (D-Ga.), 67,
70, 72
Hardy, Richard, 147
Harreld, John W. (R-Olda.), Ill, 127
Harries, George H., 205
Harris, WilHam J. (D-Ga.), 91
Harrison, Pat (D-Miss.), Ill, 114,
120, 136, 148
Harvard university, 11, 27, 51, 198,
224, 232, 264
Hastings, Daniel O. (R-Del.), 213
Hatton, A. R.. 206
Haugen, Gilbert N. (R-Ia.), 51, 54
Hawes, Henry B. (D-Mo.), 169
Hay, James (D-Va.), 61, 62, 71
Hay, Gov. Marion E. (Wash.), 28-29
Head, Walter W., 194
Healy, Robert E., 133, 190, 191, 203,
210
Hearings, congressional {see House
and Senate committees)
Hearst newspapers, 128, 172, 229, 233
Heath, Louis J., 130
Hedges, Marion H., 152, 264, 283
Hefferman, W. O., 289
Heflin, J. Thomas (D-Ala.), 107, 109,
111, 114, 120, 135, 146, 148, 156,
176, 235
Hells Canyon, 291, 293-94
Heney, Francis G., 224, 264
Hepburn, William P. (R-Ia.), 6
Hetch Hetchy, 40-44
Hill, Maj. George P., 246
Hill, James H., 19
Hill, John B. P. C. (R-Md.), 107
Hill, Lister (D-Ala.), 237, 249, 250,
267, 270, 272, 275
Hitchcock, Gilbert M., 195, 196
Hobbs, S. F., 245, 247
Hofer publicity agency, 199
Holding companies, 53, 167, 169, 170,
175, 185, 190, 215, 217, 220, 225,
237, 261, 292
Hooker, Elon H., 118
Hoover, Herbert, 119, 142, 149-150,
156, 167-68, 179-89, 208, 211,
218, 220, 221, 224, 225, 226-27,
229-30, 231-39, 241-46, 248-53,
257, 262-66, 278, 296
Hoover Dam, 115 {see Boulder Dam)
Hopson, Howard C., 220, 221
Horr, Ralph A. (R-Wash.), 253
Horton, Gov. Henry (Tenn.), 244, 245
House committees: Agriculture, 50;
Interstate and Foreign Com-
merce, 5, 24, 45, 50; Military
Affairs, 61, 62, 86, 91, 95, 102-
07, 117, 143, 151, 159-61, 164-65,
173, 236, 246-49, 269; PubHc
Lands, 43, 47, 50; Rivers and
Harbors, 2, 35, 36; Rules, 50,
146; Select Committee on Ex-
penditures in the War Depart-
ment, 80-82; Select Committee
on Water Power, 56
House votes: Federal Water Power
biU (1920), 58; Ford bid for
Muscle Shoals (1924), 118; Hill
compromise bill (1932), 250;
Norris-Morin biU (1928), 173;
Reece Muscle Shoals bill ( 1930),
238; TVA bill (1933), 270, 275;
Wilson water power bill (1918),
52, 55
Houston, David F., 41, 51, 64, 78
Howard, Edgar (D-Nebr.), 253
Howard, Dr. P. E., 246
Howard, Roy W., 231-32
Howell, Robert B. (R-Nebr.), 127,
145, 148, 196, 253
Huddleston, George (D-Ala.), 146
Hughes, Charles Evans, 19, 158
Hull, Cordell, 267
Hull, Harry E. (R-Ia.), 61, 117, 136
Humphrey, Wilham E., 169
Hurley, Patrick J., 211, 215, 227, 243,
281
Husting, Paul O. (D-Wis.), 68-69
Huston, Claudius H., 38, 158, 192-93,
245
Hyde, Arthur M., 211, 215, 227
Hydro-Electric Power Commission of
Ontario, 51, 53, 127-29, 176 {see
also Ontario Hydro)
Ickes, Harold L., 44, 274
Idaho Power Co., 199-200, 293
Idaho, university of, 199-200
Iddings, E. J., 200
Illinois, university of, 209
Imperial Valley, 181
Industrial use of water, 295
Ingersoll, Raymond V., 185
Inland Waterways Commission, 13-
16, 94, 111, 119, 166, 278-80
310
INDEX
Insull, Samuel, 171, 219-20, 288
International Brotherhood of Electrical
Workers, 152, 264, 283
Investment Bankers Assn., 171
Iowa, university of, 200
Irrigation, 10, 12, 42, 49, 263, 280,
295
Izaak Walton League, 43 ,
J
Jackson, Carl B., 204, 205
Jadwin, Brig. Gen. Edgar, 150, 168-
69
James, W. Frank (R-Mich.), 103, 148-
50, 154-57, 160-63, 173, 175, 196,
240, 247, 275
James river (Mo.), 22
Jardine, W. M., 147, 149
Jefferis, Albert W. (R-Nebr.), 80
Jenkins, Thomas A. (R-Ohio), 289,
290
Johnson, Edwin S. (D-S.D.), 63
Johnson, Hiram W. (R-Cahf.), 115,
117, 180, 196, 241, 253
Johnson, Robert Underwood, 43
Johnsonville steam plant, 2^4
Joint Committee of National Utility
Assns., 192, 198, 203
Joint Leasing Committee, 148-56
Jones, Louis C, 152
Jones, Wesley L. (R-Wash.), 56, 57,
126, 241
Joppa steam plant, 285
Joyes, Col. J. W., 77, 78, 79
Jurisdiction, 1, 2-3, 6-7, 16, 20, 30-31,
41, 46, 52, 54, 57, 126, 181, 216,
217, 221, 227, 278
Kahn, Julius (R-Calif.), 43, 61, 71,
86, 91, 103
Kanawha river, 221
Kean, Hamilton F. (R-N.J.), 213
Kearns, Charles C. (R-Ohio), 107
Keating, Edward, 273
Kefauver, Estes (D-Tenn.), 292-93
Kelly, I. C, 212
Kendall, Nathan E., 224
Kendrick, John B. (D-Wyo.), Ill,
137
Kennelly, Dr. A. E., 198
Kent, William (R-Calif.), 27, 41. 42,
43, 44, 46, 50
Kenyon, William S. (R-Ia.), 38, 58,
65, 66, 69, 88-89
Keokuk Dam, 5, 9, 46, 78, 84
Kerwin, Jerome C, 45
Keyes, Henry W. (R-N.H.), Ill,
136-37
King, Dr. Cora Smith, 128
King, Judson, 131-32, 171, 176, 179,
184-86, 190-91, 195-96, 197-203,
213, 216, 222-24, 228-30, 232-33,
237, 252-54, 258-61, 2-63-66, 274,
287
King, William H. (D-Utah), 88
King, WiUiam V., 211-17, 220, 226
Kingman, Gen. Dan G., 35-36, 37, 38
Knight, John, 256, 257
Knoxville, Tenn., 1
Knoxville News-Sentinel, 183, 243-44
Korean War. 2^4, 293
Labor, 128, 196, 219, 273
Labor relations, TV A, 283
Ladd, Edwin F. (R-N.D.), 107, 111-
14, 120, 126
LaFollette, Robert M. (P-Wis.), 26,
38, 55-56, 121, 185-86
LaFollette, Robert M. Jr. (P-Wis.),
196
LaGuardia, Fiorello H. (R-N.Y.), 117,
136, 146, 175, 253
Lane, Franklin K., 41, 51, 78
Lawson, James F., 211, 213, 214, 217,
221
Lay, William Patrick, 18, 21
League for Industrial Democracy, 192
Lee, Gordon (D-Ga. ), 57
Leighton, M. O., 32, 212
Lenroot, Irvine L. (R-Wis.), 38, 46,
50, 51, 56, 58, 89, 90, 91
Lever, Asbury F. (D-S.C), 54
Lewis, Fulton, Jr., 229
Lewis, Prof. M. R., 199-200
Lilienthal, David E., 276, 283, 287,
288-89
Lind, Dr. S. C, 150
Lindbergh, Charles A. (R-Minn.), 46
Lindsay, Judge Ben B., 30
Lobby, power, 48, 49, 55, 58, 59, 88-
89, 175, 193
Lodge, Henry Cabot (R-Mass.), 67-
68, 73
Long, Huey P. (D-La.), 253
Longworth, Nicholas (R-Ohio), 72-
73, 136, 142, 148, 164, 236
THE CONSERVATION FIGHT
311
Los Angeles Times, 172
Louisville Lighting Co., 219
Lovette, Oscar B. (R-Teiui.), 245
Lucas, Robert H., 195
M
Mackenzie, Gen. Alexander, 6, 7, 15,
16, 35
Madden, Martin B. (R-IU.), 43, 62,
139, 158, 162, 163
Madison (Wis.) Capital Times, 172
Mann, James R. (R-Ill), 6, 24, 54
Mansfield, E. S., 205
Marshall, Thomas R., 54, 56
Marshall, Gen. W. L., 35
Martin, Thomas W., 95-96, 102-03,
152, 176
Massachusetts Institute of Technol-
ogy, 198
Mayo, William B., 104, 105, 106
McAdoo, William G., 41, 260
McClellan, William, 140, 141
McCulloch, Edgar A., 191
McFarland, W. F., 245
McGee, W J, 10-11, 13, 16, 21, 32,
231
Mclntyre, Marvin H., 264
McKay, Douglas, 293
McKellar, Kenneth D. (D-Tenn.), 61,
84, 125, 127, 137, 148, 155, 243,
253, 267
McKenzie, John C. (R-Ill.), 61, 103-
06, 115, 136, 139-40
McKinley, William, 1, 3, 10
McKinley, William B. (R-IU.), 107,
111, 125, 136-37
McMullen, Lt. Col. Joseph I., 245,
247, 248
McNary, Charles L. (R-Ore.), 109,
111, 118, 126, 136-37, 143, 154,
156, 166, 173, 238, 240, 275
McNary Dam, 291
McNinch, Frank R., 225, 226, 229-30,
267, 288
McReynolds, Samuel D. (D-Tenn.),
240
McReynolds, T. C, 41
McSwain, John J. (D-S.C), 236-37,
246, 247, 248, 250, 267, 269,
272, 274-75
Mead, James M. (D-N.Y.), 289
Meeman, Edward J., 183
Mellett, Lowell, 220
Mellon, Andrew W., 189
Memphis, Tenn., 292
Memphis Power and Light Co., 151
Mendenhall, W. C, 32
Mergers, power company, 11, 12, 169,
170
Merrill, O. C, 47, 51, 110, 163-64,
211, 212, 216-17, 220, 235
Metcalf, Jesse H. (R-R.I.), 213
Methodist Federation for Social Ser-
vice, 171
Michelson, Charles, 255
Michigan, university of, 21, 204
Middle South Utilities, Inc., 291
Middle West Utilities Co., 288
Miller, Gov. B. M. (Ala.), 244, 245
Miller, John F. (R-Wash.), 105
Minidoka power project, 199-200
Minnesota, University of, 190-91, 200
Minor part Hcenses, 57, 220, 221, 225,
227, 228, 229, 230
Mississippi river, 5, 168, 280, 295
Mississippi Valley Generating Co., 291
Missouri river, 277
Missouri Valley Authority, 296
Mitchell, James, 36, 38, 59
Mitchell, John, 19
Mitchell, Sidney Z., 47, 220
Mitchell, WiUiam D., 218, 221, 222,
223
Mondell, Franklin W. (R-Wyc), 43,
46, 47
Monopoly, 5, 11, 12, 14, 15, 16, 22,
29, 31, 40, 43-44, 49, 53, 57, 68-
69, 113, 135, 169, 170, 263, 277,
293
Monroe, James, 1
Montana Power Co., 47
Morgan, Dr. Arthur E., 276, 287-89
Morgan, Dr. Harcourt A., 276, 287,
288-89
Morgan, John T. (D-Ala.), 4, 7
Morgan, Dr. Joy Elmer, 207
Morin, John M. (R-Pa.), 61, 103, 104,
107, 136, 143, 148, 154, 156, 164-
65, 173
Mosher, Dr. William E., 264
Muir, John, 43
Multipurpose development, 11, 13-14,
16, 108, 123, 124, 139, 166, 172,
188, 231, 267, 268, 279-80, 281
Municipal power, 40-44, 49, 51, 94,
119, 176
Munitions, 48, 60-62, 69, 78, 79
Murdock, Victor (R-Kans.), 46, 47,
115
312
INDEX
Murray, "Alfalfa Bill," 259
Muscle Shoals, 1, 59, 75-85, 94, 114,
172, 233, 251, 267; first power
bill, 1-3; second power bill, 4-9;
third power bill, 5-6; value
compared to battleship, 144-45
Muscle Shoals Board, 141, 249
Muscle Shoals Commissiop, 244-48
Muscle Shoals Corp., 125, 174
Muscle Shoals Fertilizer Co., 152
Muscle Shoals Hydro-Electric Power
Co., 9, 34-37, 39, 46, 49
Muscle Shoals Inquiry, 139-41
Muscle Shoals Power Co., 1, 2
Muscle Shoals Power Distributing Co.,
152, 153
Myers, Henry L. (D-Mont), 47, 54,
57,71
N
Nation, 172
National Academy of Science, 75
National Assn. of Manufacturers, 171
National Assn. of Railroad and Utili-
ties Commissioners, 171, 185, 204,
252
National Bankers Assn., 171
National Committee on the Relation
of Electricity to Agriculture, 200
National Conservation Assn., 27, 55
National Conservation Commission, 24
National Conservation Congress, 27;
(1909), 27-28; (1910), 25, 28-
30; (1911), 30; (1912), 30-32;
(1913), 32-33
National Defense Act (1916), 39, 75,
86, 87, 106
National Education Assn., 207
National Electric Light Assn., 93-94,
128, 133, 149, 170, 171, 185, 192,
198-205, 212, 213, 220, 282
National Farmers Union, 64, 171, 246,
253
National Grange, 64, 246
National League of Women Voters,
171
National planning, 231, 268
National Popular Government League,
171, 184, 192, 213, 224, 228-29,
252-54
National Power and Light Co., 146
National Waterways Commission, 15
Nations Business, 130, 133
Navigable waters, 2-6, 41, 45, 50, 52,
54, 57, 221, 223, 231
Navigation, 12-14, 35-38, 41, 48, 79,
84, 94, 105, 114, 119, 153, 166,
174, 231, 248, 263, 267, 279-80,
281, 295
Neal, Dr. John R., 171
Nebraska Power Co., 194
Nelson, Knute (R-Minn.), 54, 57
New Deal, 260
New Orleans Times-Picayune, 172
New Republic, 172, 232
New river, 22€, 221, 223
New river case, 31, 227-31, 278
New York Power Authority, 208, 256,
267, 271
New York Sun, 171
New York Times, 171, 184, 288
New York World, 172, 180
Newcomer, Maj. H. C, 7
Newell, Frederick H., 10
Newlands, Francis G. (D-Nev.), 11,
15-16, 20, 21, 217
Newport Ship Building Corp., 103
Niagara Falls, 1, 8, 78, 129; bridge,
128
Niagara Falls Power Co., 212, 214
NichoUs, Samuel J. (D-S.C), 61
Nitrates, air, 59-61, 75-85, 110; Chi-
lean, 59, 64, 75, 76, 80; from coke,
67-68, 75, 76, 80 ( see aho Ammo-
Phos; arc, cyanamid, Haber and
synthetic ammonia processes)
Norbeck, Peter (R-S.D.), 107, 111
Norris, George W. (R-Nebr.), 38, 42-
44, 47, 57, 58, 63, 64, 70, 72, 107-
12, 115, 118-20, 122-30, 132-39,
141, 143, 146-48, 152, 162, 163,
166-76, 180, 187, 190, 193-97,
200, 207, 218, 227, 229, 232,
234-50, 253, 261, 264, 267, 269-
75, 282-83, 287- 88
Norris, George W., grocer, 194-95
Norris Dam, 146, 284 {see also Cove
Creek Dam)
North American Conservation Con-
gress (1909), 22-23
Northeastern Super Power Committee,
142, 167
Norton, Dr. Thomas H., 64, 65
Nugent, John F. (D-Idaho), 58
Nutt, J. R., 195
Nye, Gerald P. (R-N.D.), 194-95, 253
Oak Ridge, Tenn., 284, 285
THE CONSERVATION FIGHT
313
ird, Dr. Peter H., 197
Ohio Public Service Co., 167
Ohio river, 221, 280
Ohio State university, 201
Ohver, George T. (R-Pa.), 73
OHver, William B. (D-Ala.), 139
Olmstead, G. W. 160
Omaha World-Herald, 172, 195
O'Neal, Edward A., 244-48
Ontario Hydro, 51, 53, 94, 127-29,
176, 184, 190-91, 198, 237
Ontonagon Indians, 174, 2-35
Overman, Lee S. (D-N.C.), 7, 71
Owen, Robert L. (D-Okla.), 30, 74,
171
Ownership, public, 33, 52, 53, 57, 58,
62, 64, 65, 70, 71, 82, 86, 118,
174, 241, 278
Pacific Gas and Electric Co., 42, 218
Pack, Charles L., 28
Page, Carroll S. (R-Vt.), Ill
Palmer, Mitchell, 232
Panter, T. A., 289
Pardee, Gov. George C. (Calif.), 28
Parker, John C, 203, 204
Parsons, Dr. Charles L., 103
"Partnership," 34-39, 62, 68, 69, 89,
90, 287, 288, 290, 291
Peay, Gov. Austin (Tenn.), 147
Pennsylvania, university of, 200
Pepper, George Wharton (R-Pa.),
130, 132, 227
Pershing, Gen, John J., 75
Philadelphia Public Ledger, 171, 172
Phillips, Ellis L. 160, 161
Phipps, Lawrence C. (R-Colo.), 134
Pick-Sloan plan, 295-96
Pierce, H. J., 59
Pinchot, GiflFord, 10-13, 21-28, 33, 47,
55, 119, 196, 229, 233, 258
Pine, William B. (R-Okla.), 213
Pittman, Key (D-Nev.), 43, 54, 213
Platforms (see Democratic and Re-
publican )
Population growth, 296
Portland Oregonian, 172
Potomac Electric Power Co., 140
Pou, Edward W. (D-N.C), 51
Pound, Roscoe, 232
Power and flood control, 280
Power for defense, 280-81; savings,
285-86
Power trust, 28, 32, 39, 123, 126, 134,
148, 155, 169, 179, 186, 187, 188,
192, 196, 197, 209, 213, 219, 221,
227, 228-230, 237-240, 244, 245,
251, 252, 254, 259, 260, 270, 285,
288, 294
Preference clause, 48, 52, 57, 106, 120,
152-53, 174, 225, 261, 271, 282,
288
Price, Overton, 10
Priest Rapids, 59
Princeton university, 264
Profiteering, 60, 69, 80, 88
Progressive ("Bull Moose") platform
(1912), 40
Progressive platfor m(1924), 121
Prohibition, 179, 188, 233
Propaganda, utility, 59, 93-94, 112,
129-33, 161-62, 167, 169, 170,
171, 179, 181, 186, 189-92,
196-97, 206, 207, 208-10, 261,
270-71
Public Ownership League of America,
171, 192
Putnam, W. R., 199-200
Quick, Herbert, 30
Quin, Percy E. (D-Miss.), 61, 136,
148, 154, 156, 173, 238-40, 246
R
Rainey, Henry T. (D-IU.), 46, 253,
274, 275
Rainy river, 16-17
Raker, John E. (D-Calif.), 41, 43, 47,
51
Ralston, Jackson H., 224
Ramsay, Marion L., 218
Rankin, John (D-Miss.), 270, 275
Ransdell, Joseph E. (D-La.), Ill,
128, 137
Ransley, Harry C. (R-Pa.), 236, 238,
240, 250, 270
Raskob, John J., 254-55
Reclamation Service, 11, 15, 25, 187,
295-96
Red Cross, 168, 295
Red river, 231
Redfield, William C, 41
Redwood forest, 43
Reece, B. Carroll (R-Tenn.), 159, 164,
173, 182, 236, 238, 239, 240, 244
314
INDEX
Reed, David A. (R-Pa.), 241
Reed, James A. (D-Mo.), 50
Regional planning, 251, 265, 267-68,
290
Republican platforms: (1912), 40;
(1920), 82; (1924), 121; (1928),
180; (1932), 258
Research, 101, 119, 120, 124, 175,
270, 279
Resources, survey of, 21-22; exploita-
tion of, 277, 294
Reynolds, Mercer, 245
Rich, Maj. C. S., 35, 37
Richardson, William (D-Ala.), 4, 5,
6, 11, 35
Richberg, Donald R., 224
Ritchie, Albert C, 253, 259
Rivers and Harbors Board, 35, 37
Robertson, John P., 196
Robinson, Arthur R. (R-Ind.), 242
Robinson, Joseph T. (D-Ark.), 133,
134, 135, 193
Roosevelt, Franklin D., 253-68, 275-
76, 287-90
Roosevelt, Theodore, 3, 4, 7, 9, 10,
13, 14, 16, 19-25. 29-30, 35, 40,
56, 217, 221, 224, 279, 290
Ross, Prof. Edward A., 203, 206, 264
Ross, J. D,. 288
Rossell, Col. William T., 35
Roulhac, Allen J., 171, 244-45
Ruggles, Prof. C. O., 201-06
Rural electrification, 282-83, 294
Russell, Charles A., 211-16, 222, 224,
226
Ryan, Dr. John A., 264
Ryan, John, D., 47
Sackett, Frederic M., 148, 154, 219-20
St. Lawrence river, 19-20, 45, 51, 267
St. Lawrence seaway, 142, 179
St. Louis Journal, 172
St. Louis Post-Dispatch, 195
San Francisco, Calif., 42, 44
San Joaquin Valley, 42, 43
Sargent, John C, 190
Saulsbury, Willard (D-Del.), 66, 71
Savannah river, 24
Scattergood, F. E., 181, 267
Schurz, Carl, 11
Schwartz, H. H. (D-Wyo.), 289
Scofield, E. M., 264
Scripps, E. W., 2-31
Scripps-Howard papers, 172, 183, 196,
229, 231, 244
Seligman, E. R. A., 206
Senate committees: Agriculture and
Forestry, 62-65, 86, 107-14, 116-
17, 118-20, 143, 146-47, 162-66,
173, 235, 269; Commerce, 47, 48,
54; Interstate Commerce, 213-17;
Judiciary, Antitrust subcommittee,
292-93; MiHtary AfFaii^, 86;
Public Lands, 47, 54
Senate votes: Federal Water Power
bill (1920), 58; Norris compro-
mise bill (1930), 235, 236;
Norris-Morin bill (1928), 173;
TVA bill (1933), 272, 275;
Underwood-Coolidge bill (1925),
133, 135
Seymour, Victor, 194, 195
Shafroth, John F. (D-Colo.), 63
Shaler, Nathaniel S., 11
Shawnee steam plant, 285
Sheffield, Ala. 1, 76
Sheppard, Morris (D-Tex. ), 58, 63,
64
Sherley, Joseph S. (D-Ky.), 46
Sherman, Lawrence Y. (R-IU. ), 56
Shields, John K. (D-Tenn.), 47, 48-
50, 54
Shipp, Thomas R., 21, 27
Shipstead, Henrik (F-L-Minn.), 127,
173, 2SS, 253
Silver, Gray, 104
Simmons, Fumifold M. (D-N.C), 135
Simpson, John A., 253
Sims, Thetus W. (D-Tenn.), 51-58
Sinclair, Harry F., 116
Sinclair, James H. (R-N.D.), 253
Sinnott, Nicholas J. (R-Ore.), 54, 57
Slattery, Harry, 27, 32, 55
Slemp, B. Bascom, 159
Small, John H. (D-N.C), 51
Smith, Alfred E., 179-86, 232, 254-55,
257-59
Smith, Elhson D. (Cotton Ed) (D-
S.C), 62-66, 73, 87-91, 111, 114,
120, 136-37, 148, 173, 176, 238,
240, 243, 275
Smith, Dr. George Otis, 225-30
Smith, George R. (R-Minn.), 46
Smith, Herbert Knox, 11
Smith, Hoke (D-Ga.), 63, 67
Smithsonian Institution, 129-33, 200
Smoot, Reed (R-Utah), 43, 47, 54,
57, 73, 84, 88, 135, 136
THE CONSERVATION FIGHT
315
Snake river, 293-94
Snell, Bertrand H. (R-N.Y.), 136, 145
Snure, John, 196
"Socialism," 13, 23, 44, 45, 67, 69, 88,
93, 135, 169, 177, 182, 186, 209,
244, 250, 277
Socialist party, 192
Soil conservation, 10, 13, 79, 94,
172, 268
Sorensen, C. A., 194
Southern Co., 291
Southern Power Co., 95
Sparkman, S. M. (D-Fla.), 36, 37, 38
Spaulding, WilHs J., 259
StafiEord, William H. (R-Wis.), 250
Standard Oil Co., 12
Standish, William H., 22
Stanley, Augustus C, 159
States rights, 3, 6, 15-21, 25-32, 35,
40, 44, 45, 48, 54, 58, 73, 147,
182, 228, 244, 246, 278
Steam plants, 77, 82-83, 90, 100-02,
117, 119, 127, 141, 151, 174, 201,
284-85
Stebbins, W. B., 194, 195
Stevens, Raymond B. (D-N.H.), 46
Stewart, E. A., 190-91
Stimson, Henry L., 26, 30-31
Stock market crash, 189
Stokes, Thomas L., 183
Stubbs, Gov. Walter R. (Kans.), 29
Super-power system, 142
Supreme Court, D. C. 222, 224
Supreme Court, U. S., 73, 174, 227,
231, 235, 278
Sutherland, George (R-Utah), 68, 73-
74
Swing, Philip D. (R-Calif.), 115
Switzer, J. A., 147
Synthetic ammonia process, 152
Syracuse University, 264
Taber, John (R-N.Y.), 270
Taft, WilHam Howard, 6-7, 21, 23-30,
35, 36, 221
Talburt, Harold, 196
Tawney, James A. (R-Minn.), 25, 26
"Tax-exempt" public agencies, 129,
286
Teapot Dome, 116, 121, 143, 170
Tennessee Electric Power Co., 146,
151, 284
Tennessee river, 1, 45, 51, 54, 119,
120, 166, 251, 277, 280
Termessee River Improvement Assn.,
38, 140, 149, 158, 171, 193, 245
Tennessee university, 147, 276
Tennessee Valley Authority: Act, 267-
76; counterfeits, 295-96; idea,
265; investigation, 286-90; labor
relations, 283; operation, 277-96;
repayment, 286; taxes, 286
Tennessee Valley Trades and Labor
Council, 283
Tesla, Nikola, 8
Thatcher, Charles W., 224
Thomas, Albert (D-Tex.), 289
Thomas, Charles S. (D-Colo.), 49
Thomas, Norman, 232, 266
Thomas, Percy H., 8
Thomason, Robert E. (D-Tex.), 253
Thompson, A. W., 133
Thompson, Carl D., 171
Thompson, Huston, 115, 230
Thompson, N. F., 4
Tillman, Benjamin R. (D-S.C), 74
Tilson, John Q. (R-Conn.), 61
Todd, A. M., 171
Todd, Laurence, 212
Toledo Railway, Light and Power Co.,
257
Toronto Globe, 131
Townley, Calvert, 51
Transmission lines, 5, 77, 92, 94, 117,
120, 125, 143, 174, 187, 239, 240,
246, 249, 251-52, 255, 256, 257,
261, 265, 266, 269, 270, 271-75
Transmission, long-distance, 8, 12, 93,
167
Treadway, Allen T. (R-Mass.), 270
Truman, Harry S, 291, 293, 296
Tuolumne river, 42
Tuscumbia, Ala., 1
Tydings, Millard E. (D-Md.), 270
Tyler, Lt. Col. Max C, 217, 245, 246,
248
Tyson, L. D., 147
U
Underwood, Oscar (D-Ala.), 26, 45,
46, 66, 67, 70-72, 83, 84, 87-90,
107, 108, 118, 120, 123-41, 146,
156
Union Carbide Co., 118, 150, 155-58,
162, 193
United Press, 219, 232
U. S. Chamber of Commerce, 130, 171,
212
316
INDEX
U. S. Fixed Nitrogen Corp., 86-87
Universal Service, 218, 229
Utility lawyers, 175
Vandenberg, Arthur H. (R-Mich.),
235-36
Van Hise, Charles Richard, 11
Vetoes: Coolidge, of Norris-Morin
bill, 174, 234-35; Hoover, of
Norris Muscle Shoals bills, 188,
241-42; TR, of Muscle Shoals
bill, 4-5; TR, of James river bill,
22, 111; TR, of Rainy river bill,
16-17, 111; Taft, of Coosa river
biU, 26, 31
Vrooman, Carl S., 63
W
Wadsworth, James W. Jr. (R-N.Y.),
63, 71, 86, 88, 89, 90, 118
Wagner, Robert F. (D-N.Y.), 213,
216
Wainwright, Jonathan M. (R-N.Y.),
117-18
Walcott, Dr. Charles D., 129-32
Waldo, W. C, 140
Wallace, Henry C, 30, 31
Wallace's Farmer, 30
Walsh, Frank P., 224, 256, 267
Walsh, Thomas J. (D-Mont.), 43, 49,
70, 170, 189-90, 193, 196, 227,
253, 258
War Industries Board, 75, 79
Ward, Herbert S., 218
Ward, Minnie L., 217-19
Warren, Francis E. (R-Wyo.), 71
Warrior steam plant, 100, 102, 151
Washburn, Frank S., 9, 34-38, 49, 60-
64, 68, 76, 104, 140, 158
Washington Daily News, 220, 229
Washington Herald, 229, 232
Washington Post, 171
Water, a national problem, 295
Water Resources Policy Commission,
296
Watts Bar steam plant, 284
Weadock, Bernard F., 192
Weeks, John W., 95, 99-100, 104-07,
115, 117, 125, 151
Wefald, Knud (F-L-Minn.), 117
Welliver, Judson C, 232
Wells, Philip P., 11, 55, 111
WenzeU, Adolph H., 292-93
West Memphis steam plant, 291
Westinghouse Corp., 51
Whaley-Eaton Service, 244
Wheeler, Burton K. (D-Mont.), 121,
213-216, 218, 253, 275
Wheeler, Gen. Joseph, 2
Wheeler Dam, 284
White, Dr. E. A., 200
White, George, 259
White, J. B., 31
White, Wilham Allen, 196
Widows creek steam plant, 284-85
Wilbur, Ray Lyman, 211, 217, 218,
220, 221, 226, 227
Wilhams, John Sharp (D-Miss.), 88
Williams college, 197
WiUiamson, Ralph B., 225, 226, 228,
229 230
Williamson, William (R-S.D.), 117
WiUis, Frank B. (R-Ohio), 43, 158,
162
Willkie, WendeU L., 269, 288
Wilson, William S., 41
Wilson, Woodrow, 30, 39, 40, 44, 45,
46, 50, 51, 52, 53, 55, 56, 58, 70,
76, 77, 78, 79, 82, 83-92, 290
Wilson Dam, 77, 79, 81, 83, 84, 86,
87, 90, 91, 94, 95, 96, 98, 101,
102, 115, 123, 140, 141, 143, 147,
151, 159, 167, 174, 245, 248, 284
(see also Dam No. 2)
Wisconsin, university of, 11, 205, 206,
264
Wise, James W. (D-Ga.), 61
Wolverton, Charles A. (R-N.J.), 289,
290
Woodruff, George W., 11, 222-24, 228,
229 253
Work, Hubert, 147, 149
World Power Conference, 219-20
World War I, 50, 59-82
World War II, value of TVA in, 79-80
Worthington, J. W., 9, 34, 36, 38, 46,
49, 60, 104, 105, 140, 149, 193
Wright, William C. (D-Ga.), 173
Wurzbach, Harry M. (R-Tex.), 238,
239, 240
Wyer, Samuel S., 129-33
Yale university, 10-11, 41, 140
"Yardstick" idea, 88, 268-69, 285
Yates, Eugene A., 269, 291-93
Yosemite National Park, 41, 42, 43
Young, Owen D., 254
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