by Amity Shlaes
And Roosevelt was correct on the last. In the autumn of 1933, the New Deal project seemed worthy. The Tennessee River was what the experts called a “flashy” river. In a minute or two the waters of a calm creek could rise into a giant wall of water, almost as the Mississippi had in 1927. There were highs, there were lows, and there were surprises. Around Muscle Shoals, for example, the water dropped 140 feet in 30 miles, as much as the Niagara Falls of Roosevelt’s own New York.
As for the people of the Tennessee Valley, they were among the poorest in the country, truly forgotten men. Their land was poor and overfarmed. Exactly how overfarmed, Tugwell, now assistant secretary of agriculture, was demonstrating in a report on Grainger County, part of the area to be purchased in the TVA plan. The report warned that the conditions of the land were now so bad that it might be impossible to restore it, and that the farming methods of the citizens were “little better, if any, than that of the early colonial farmers in the tidewater sections of Virginia and Maryland.” Tugwell concluded that the lands in the river basin of Wilson Dam “were approaching the limits of arability.”
The TVA, everyone hoped, would change all this. Even as the news of the TVA circulated, homeless families or families led by unemployed men started appearing around Muscle Shoals to watch as the first bits of construction started. Many did find work. Within a month after the start on Norris Dam, construction began on Wheeler Dam. The TVA management hired thousands of people. By the middle of 1934, there would be more than 9,000 employees at TVA. As locals watched, workmen erected seven more bunkhouses, a cafeteria that would serve 3,000 meals daily, a theater facility, a library, even Norris’s own post office. In the area around the valley, men from the CCC planted 3 million trees and laid 2.6 million square yards of brush to keep the soil in place. TVA workers in Norris received a wage above those in the area, and they could eat all they liked for twenty-five cents in the Norris cafeteria.
Arthur Morgan, who at first ran the whole project—especially the details at Norris—recognized that it was the greatest opportunity to build a community he would have in his lifetime. He and his wife, Lucy, poured energy into each detail of Norris. Houses had electricity then. The walls of the houses in Norris—or at least some—were made of attractive local stone. Pedestrians would walk not on hard concrete sidewalks but rather on softer, curving footpaths constructed of natural earth.
The soul of the TVA worker also concerned Morgan. While riding on a train one day in 1933 from Washington back to Yellow Springs and Antioch, Morgan roughed out a moral code for the staff of the Tennessee Valley Authority. It included rules such as absolute openness. “A man who will lie for me will lie to me,” taught Morgan, accurately enough. TVA employees could not take gifts from contractors; employees should live modestly as well.
Morgan served workers in the Norris area with a mobile library. But he worried that those farther out cutting timber must also need books. Morgan’s team came up with an answer: “Why not place a box of books beside the tool box and make the saw-filer its custodian?” The saw filers then played the role of librarian to their fellow woodsmen. Observers noted that the demand for children’s books was the greatest—the average woodsman had only made it to the seventh grade. Children’s books proved the most popular.
The principle was that good and industrious living would also be better living was even applied when it came to building a school. The planners created a large brick building—to be heated entirely with electricity—to house a school that would be open twelve months a year. Children would be instructed not only in traditional subjects but also in enterprise, so they might be more self-sufficient than their Appalachian parents.
Morgan had critics. (One was a Chicago minister who noticed that the town, so minutely organized, was built “without provision for religious worship”—it would be “Godless Norris.”) But he also had support very high up, for the president was constantly on the hunt for ways to defend the TVA and other New Deal projects. In Britain for the year, Frankfurter wrote Roosevelt that he ought to take heart and put all criticism in context by looking up what attacks had been leveled against Teddy Roosevelt or Wilson. Roosevelt gave an assignment to Tugwell in a memorandum: “Do you think you could get someone to dig up the expressions and utterances made against T.R., Chas. E. Hughes, and Woodrow Wilson, when they were trying to get through their exceedingly mild type of legislation?”
Still, most people were impressed with the results. The Norris Dam proceeded rapidly. On September 14, 1933, only a few months after the TVA directors had held their first meetings in the Farragut Hotel in Knoxville, Lilienthal was ready to announce the TVA’s first rate schedule. The TVA would provide power more cheaply than any other company. Citizens of Muscle Shoals requiring small amounts of electricity—enough for a few lights, a percolator, a toaster—would be charged $1.50 per month for fifty kilowatts, compared with $2.94 in Chicago, the city of Insull, or $4.50 in New York, Thomas Edison’s old home territory. For families who used more electricity, the new low prices were even more dramatic: $4.50 a month for 200 kilowatt-hours, whereas the price was $7.44 in Chicago.
Behind the spectacular headlines, there was trouble among the TVA heads. Of the directors it was Lilienthal who was rapidly becoming the public face of the TVA—he gave public address after public address. His very youth, his frank speaking, captured both the crowds in the South and his most important audience, the TVA’s immediate boss, Roosevelt. To the Americans of the era, well versed in the Bible, it was not hard to think of this David as something like the young David of Scriptures, the precocious hero who went up against more powerful figures.
The first of such figures was his own partner, Arthur Morgan. For as Lilienthal began to succeed, he began to find the fact that Morgan outranked him irritating. Early that first summer of 1933 the three TVA heads divided up their work: Arthur Morgan in charge of the dams, Harcourt Morgan in charge of agriculture, and Lilienthal in charge of power and rates. Still, even with such a clear division, Arthur Morgan and Lilienthal began to quarrel—Morgan playing his usual part, the utopian, and Lilienthal the constructive intellectual, heir to Frankfurter and Oliver Wendell Holmes.
Nominally, their struggle was over the project. Lilienthal did not like the way Morgan did things. But it was also a struggle for political control of the TVA. Harcourt Morgan, the oldest of the three directors, interested Lilienthal less. He was over sixty-five, and focused on farms—less of a potential source of revenue for the project. It was A. E. Morgan, the dam builder, who dominated. If Lilienthal could prevail over A. E., he could rule the TVA. The very idea seemed as improbable as the TVA itself had ten years ago. But of the two, Lilienthal was the cleverer player and by far the more tenacious.
Another who would now encounter that tenacity was Wendell Willkie of Commonwealth and Southern. Before the TVA became law, Willkie had briefed the House Military Affairs Committee on the concern that TVA might supplant Commonwealth and Southern, and that that could threaten $400 million in shareholder equity. “I have not much at stake in this except my position, and that does not amount to anything, but I do feel a great urge as a trustee for these securities.” The Dow’s young utilities index, which had started in January of 1929 at 86, had been down to 19 in April of ’33. Not many weeks after the TVA became law, Willkie had dined with a seemingly friendly Arthur Morgan in New York in a private room at the University Club. Willkie had interpreted the new law to say that while the TVA might generate power in the South and transmit it, private companies would distribute it and sell it. Morgan did not necessarily agree—but he assured Willkie that a solution could be found. Reassuringly, in the meantime, the TVA was a limited entity. It could make power, but had no means to distribute or sell it. Willkie wanted to lock in Commonwealth and Southern’s future by writing a multiyear contract with the TVA under which C and S would deliver and sell power generated by Wilson Dam.
Later in the summer, it became Lilienthal alone who controlled negotiations wi
th power companies. Lilienthal set up a meeting in early October 1933 at the Cosmos Club in Washington, the club being, in Lilienthal’s words, “about as neutral a ground as we could think of.” A decade later, Lilienthal wrote about the meeting: “I recall that we were two exceedingly cagey fellows who met at lunch that noon. In appearance, Willkie was a much better looking article than he is now, not being heavy.” Following the meal, the men repaired to an enormous dark-stained table in a corner of the Cosmos Club lounge.
Willkie played the Indiana connection for all it was worth. He, the man from Elwood, Indiana, should after all be able to get along with Lilienthal, who was from Michigan City. Indiana University and DePauw could see eye to eye. What, Willkie asked Lilienthal, could the TVA want with the sale of power? That work was the private sector’s job. Why not stick to generating power, or perhaps generating and distributing, and leave the actual sale to Commonwealth and Southern? The TVA had its appropriation from Congress—$50 million. But it might not get more. Willkie would pay $500 million for this contract with the TVA. If it wrote contracts with Commonwealth and Southern, the TVA might be able to balance its budget.
Willkie was a formidable debate partner. He was not a rogue, like Insull. He was even friendly with progressives, just like Lilienthal; Willkie’s own candidate for president, Newt Baker, had also talked about expanding the role for government in the power business. He was one of New York’s most successful corporate lawyers. And he had the power companies up and running—six in the South, producing electricity from steam plants. There was even some good news, of a sort, for his industry; the Dow Jones utility index had hit the 30s over the summer of 1933 and was now trading in the mid-20s. This was still a far cry from its original high, but at least above the level of 19 that the index had seen in April.
All that Lilienthal had were two things: a portfolio full of blueprints for future dams, and Wilson Dam, for whose electricity Willkie’s own Alabama Power already had a contract. In later meetings and perhaps in this one as well, Willkie tried yet another tack. No one, he argued to Lilienthal, went into government without the intention of going into the private sector later. The private sector, after all, was where the business lived. If Lilienthal was too nasty, then he was not likely to find work at private utilities companies. Lilienthal was, by his own admission, “pretty badly scared” by the time he left the Cosmos.
Yet after the meeting, Willkie found that he was not getting all he sought. A contract between the U.S. Army Engineers and Willkie’s Alabama Power & Light was due to expire January 1, 1934, and Willkie wanted Lilienthal to see that that contract was renewed promptly. Lilienthal confidently dragged matters out, aware that control of timing was a big part of any such battle. He was emerging as a harder partner to negotiate with than Morgan. Lilienthal really believed something that Willkie thought improbable: the future of power might actually lie in the public sector, with the TVA, and Willkie, therefore, and not he, ought to be the mendicant in meetings. Lilienthal was forcefully playing the role Frankfurter had taught him a decade before, that of virtuous government’s agent at the table wrangling with the less virtuous corporate attorney. And the play was unfolding precisely as Frankfurter had envisioned it would.
Willkie still couldn’t believe Lilienthal’s audacity. “I think he was about as shocked at my ideas, as in the next conference or two I began to explain them, as I was shaken by his assumption that the whole TVA would amount to nothing except selling a little power to his companies,” Lilienthal later explained. Still, even as he stalled, Lilienthal was furiously building up the TVA. He was even creating an electric appliance retail program to finance the purchase of TVA power by poor southerners, a version of Insull’s old idea of selling irons to Schenectady housewives; this also replicated an old habit of Willkie’s, selling appliances to boost demand. Roosevelt backed Lilienthal up with an executive order on the matter. Late that fall Lilienthal also wrote and signed TVA’s first contract with a town, Tupelo, thereby entering the distribution and sales market; a contract with Knoxville followed.
In the scheduled meetings, Willkie fought back, “with a good deal of bellowing,” as Lilienthal later recalled. Lilienthal was taken aback to find Willkie trying histrionics: “I couldn’t have the blood on my hands,” Willkie replied when Lilienthal made clear that TVA wanted to move into much of Commonwealth and Southern’s territory. The blood to which Willkie was referring was the blood of shareholders, who had already seen the Commonwealth and Southern share price come down. But also, perhaps, the blood of customers that C and S might have served.
But Willkie was not merely a good actor; he was also truly concerned. And though Lilienthal could not help but like Willkie, and even envy him his confidence, he did not see Willkie’s concern as justified. To Lilienthal, as to Frankfurter, shareholders were misty background figures. And so Lilienthal ambivalently wrote off Willkie’s outrage. “I always marked off this walking back and forth, arms swinging, etc., as just a part of Willkie’s selling technique.”
None of this was especially visible to those who were not C and S shareholders or customers. What they could see at this point was the hope that the TVA offered. Morgan imagined that the region would not only wisely develop power but also move away from the old concept of private property and generally foster “the development of ethical attitude and conduct.” Lilienthal warned the power companies that when it came to the Tennessee Valley, the valley’s interests would prevail over the interest of the private sector—and the TVA and its spokesman, Lilienthal, knew what that interest ought to be.
Meanwhile, what the rest of the country saw was the architectural reality of the rising dams. Like the Hoover Dam, they astounded. Much later, critics would write about the dams’ effect on people—F. A. Gutheim would call the TVA an example of “the architecture of public relations” and say that from “the conception of the scheme to its final execution you feel that each decision has been made in the light of the fact that the public would come, look, and judge by what it saw”; Lewis Mumford would write in the New Yorker of TVA that “the pharaohs did not do any better.” Visitors were beginning to come to see the new marvel. At some points during the Depression the number of visitors at Norris, Wilson, and Wheeler would rise to a thousand a day.
In Washington, the whole story seemed an early proof of the success of the New Deal experiment, and it showed that the TVA was beginning to put the United States back where it belonged in world competition. The Soviets—to be sure, with American advice and supervision—had ruled the world with Dnieprostroi when it was completed in 1932. But the TVA was building more than seven dams as large as Dnieprostroi. Thirty-five Boulder Dams, or ten Grand Coulee Dams—Grand Coulee was a New Deal project, but not a TVA one—could have been built with the amount of material used at the TVA, Lilienthal would note.
He grew more ambitious. In the coming years he would not only move his family to Norris but even acquire a horse, a bay named Mac, and ride it through the town’s streets. Like the rivers in his projects, his thoughts cascaded forward. Flood control and dams were not enough; there had to be generation of power. Selling electricity should also be the TVA’s job, no matter what Morgan said. Appliances were also good; if he really could convince southerners to buy them, they would use more electricity. Lilienthal negotiated with General Electric and the National Electrical Manufacturers Association for low prices. Lilienthal also tried his hand at designing a logo for his new appliance entity, the Electric Home and Farm Authority. To the modern eye, it looks close to something from the Europe of the 1930s: a black fist holding a blazing bolt, and the words “Electricity for All.” He asked Eleanor Roosevelt to write the introduction to an EHFA flier.
But these projects were only the start. The TVA would address farm problems by rerouting waters. The South was especially poor in recreational bodies of water—nothing like Wisconsin, where Lilienthal had been fishing when the call had come to join the administration in the spring of 1933. But now the TVA
was making lakes.
The soil was a problem, but here there was a TVA solution, too. TVA power could provide phosphate fertilizers, made with power from the dams. TVA engineers would discover a cheap way to deliver them in concentrated form. Farmers might not understand about phosphates, so the TVA created a demonstration farm project to teach them. Lilienthal and Harcourt Morgan were especially enthusiastic about the phosphates, describing them as having an “almost magic” effect. Treeless stretches made the land susceptible to floods. The TVA could plant new forests. In the first four and a half years of TVA’s existence, Lilienthal gave forty major speeches.
Roosevelt was also inspired. The TVA seemed to be succeeding, and faster than he ever could have hoped in his days as a progressive governor in New York. Ickes at the Interior Department was busy facilitating matters by handing out cash to towns so that they might build their own power stations and no longer be dependent on the private sector companies. The same November that Cove Creek got going, his PWA gave $7.5 million to North Platte, Nebraska, for a diversion dam and reservoir. Roosevelt was especially interested in fostering the creation of rural pools of farmers to buy power, and was now considering writing legislation to that end. Already Paul Douglas of Chicago had brought Ickes together with others to help individual farmers form cooperatives so that they might buy power at a reasonable price. This was the beginning of what would be known as the Rural Electrification Program.
Tugwell too seemed to be doing splendidly. For weeks he had engaged in a tiff with the pragmatist George Peek, head of the AAA, over the administration of National Recovery Administration codes. Another thing that Peek objected to, probably all too loudly, was the left-leaning general counsel at his own AAA, Frankfurter protégé Jerome Frank. Tugwell the idealist won, and Peek was moved over to head a temporary committee to look into the creation of a new export agency. Influential columnist Arthur Krock trumpeted Tugwell’s victory, writing that “the hero of the contest, Mr. Tugwell, is a brilliant, engaging, good looking man.” Krock called him “the winnah and new champion.” Rex had arrived.