"Cold Facts" v. Politics

UTILITIES

"Cold Facts" v. Politics

What to do with Muscle Shoals?

Last week President Hoover was squarely confronted with this tough old question. As an answer Congress had sent him a bill about the Government's $135,000,000 power-&-nitrate plant on the Tennessee River.* Carefully he pondered the measure. Carefully his Secretary of War pondered it. Carefully his Attorney General pondered it. They scratched their collective heads in joint perplexity.

For ten long bitter years Congress had wrangled wordily over Muscle Shoals, constructed during the War to produce nitrates for munitions. Henry Ford had wanted it. Alabama Power Co. had wanted it. American Cyanamid Co. had wanted it. But no one had wanted it quite so fiercely as Senator George William Norris of Nebraska--not for himself but for the Government to make and sell electric power. A fanatical advocate of public water power production, he believed that U. S. operation of the 1,000,000-h. p. Muscle Shoals plants would quickly and convincingly show up all the iniquities he had charged against the "Power Trust." As part of his public v. private power fight he built Muscle Shoals up into a major political issue far beyond its physical dimension. It became, in his hands, the supreme symbol of Government operation of water power. Over & over again a Senate majority sustained his position.

But the more conservative House of Representatives opposed the Norris plan for Government operation. In Muscle

Shoals it saw not a power plant but a nitrate fertilizer factory. It wanted to lease the whole works to a private company, get them off the Government's hands. How, asked House jokesters, could the Senate expect to make Muscle Shoals pay when it could not run even its own restaurant and barber shop without a loss?

Last month the deadlock between the House and Senate was at last broken. In the bill which went to President Hoover, Senator Norris had won his main point: The U. S: through a public corporation was to operate the great power plant. It was to build, if necessary, transmission lines, and sell electricity preferentially to States and cities. The House had not totally surrendered: within one year the President was instructed to lease the nitrate plant for 50 years to a private company to make fertilizer with power from the public plant. In the House it was contended that the manufacture of fertilizer at full capacity would utilize all the public power from the plant. Hence, with no surplus to sell, the U. S. would not be in the power business. From the Senate came the retort that the fertilizer scheme would undoubtedly become very minor if not fail altogether; hence power production and sale by the Government would become the major industry at Muscle Shoals.

At the White House, President Hoover was bombarded with advice. The fertilizer industry, which saw where the Muscle Shoals plant could take away six-sevenths of its business, pleaded for a veto. So did private companies, which knew the Government could produce two-thirds of all the electricity consumed in the Tennessee-Alabama-Mississippi territory. Recalled was the President's letter to a Tennessee Congressman during the last campaign: "The House plan will secure developments of this great resource more effectively . . . than the Senate plan. . . . Nor would I approve the [Senate] plan because it is not in the interest of Tennessee or the rest of the nation."

While their constituents prayed in church for presidential approval, southern Senators and Representatives flocked to the White House to ask President Hoover to sign the bill. He was reminded that he had approved Boulder Dam Act which called for Government power production and its cheap sale to his own California. To his attention was called the fact that he had helped put the U. S. Bureau of Mines into the production of helium, thereby putting a private industry out of business.

Pestered by all this clamor, President Hoover issued a statement which many thought foreshadowed a veto. Said he:

"Muscle Shoals legislation is no longer a question of disposing of a War activity. ... It has been transformed into a political symbol and is expected to be a political issue. To be against Senator Norris' bill appears to be cause for denunciation as being in league with the power companies. It appears also as the test of views upon Government operation and distribution of power and Government manufacture of commodities.

"One side issue of this political phase is the use which has been made of Muscle Shoals to sidetrack effective action on the Federal regulation of interstate power. . . . This public necessity has been held aside for 18 months and time of Congress given to 1% of the power and the interests of i% of the people of the U. S. which is proportion of the Muscle Shoals problem to the whole. . . .

"In acting on the bill I have to consider whether it is desirable to adopt a change of Federal policies from regulation of utilities to their ownership and operation; whether the lease provision is genuinely workable. . . . And in general the commonplace, unromantic facts which test the merits and demerits of this proposition as a business. . . . This happens to be an engineering project and is subject to the cold examination of engineering facts."

*Kept in stand-by condition by Army Engineers at a cost of $67,000 per year, Muscle Shoals has lately been bringing the U. S. $250,000 per year from the slack production and sale of power.

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