Tennessee Valley Authority Is Created

Date May 18, 1933

After decades of debate over government versus private ownership of electric power, the U.S. Congress created the Tennessee Valley Authority, demonstrating the critical relationship between economic and environmental decisions.

Also known as TVA

Locale Tennessee River Valley system, southeastern United States

Key Figures

• George W. Norris (1861-1944), U.S. representative from Nebraska, 1903-1913, and senator, 1913-1943
• Franklin D. Roosevelt (1882-1945), president of the United States, 1933-1945
• Woodrow Wilson (1856-1924), president of the United States, 1913-1921
• Herbert Hoover (1874-1964), president of the United States, 1929-1933
• Arthur Ernest Morgan (1878-1975), engineer and first chairman of the TVA
• David Eli Lilienthal (1899-1981), attorney and TVA board member
• Harcourt A. Morgan (1867-1950), agronomist and TVA board member

Summary of Event

On May 18, 1933, President Franklin D. Roosevelt signed a bill creating the Tennessee Valley Authority (TVA) as the first public regional development agency in the nation. The history of the founding of the TVA is also the history of an enduring national debate over the appropriateness of publicly versus privately owned electric power generation. This controversy illustrates the critical links among economic development, environmental use, and the role of the federal government in economic and environmental decisions.

The debate originated in the nineteenth century and pitted conservationists and Progressive politicians against the electric power industry. Unregulated capitalist ventures in the 1880’s and 1890’s had caused widespread environmental destruction for economic gain. The conservation movement emerged, urging that natural resources be regulated by the federal government to ensure that they would be protected and carefully used. Conservation meant controlled economic development in the first half of the twentieth century. Pioneering conservationist Gifford Pinchot first developed the concept of multiple-use management for the conservation of forest resources and then extended the idea to water resources. He argued that private power companies’ exploitation of only the hydroelectric power of rivers would waste the rivers’ potential for flood control and increased navigation, which could only be realized by public entities. Conservationists were also motivated by changes in technology. Steam-electric power generated by burning coal or oil had been the main source of power since the 1880’s. For the first time, power transmission technology made possible the transport of electric power from remote rivers to cities. Ownership and control of electrical power generation was a critical issue because of the enormous amounts of power needed to run the production processes on which the economy depended.

Progressive politicians supported the regulation of industry for environmental and social purposes. Progressives such as Republican senator George W. Norris of Nebraska accepted the sagacity of the multipurpose use of natural resources. More important, the Progressive politicians feared that if private utilities monopolized hydroelectric resources, they would soon control all industry and, ultimately, the country. Believing that regulatory policy would not be enough, Progressives emphasized the need for competition from public power.

An important focal point for the controversy over public versus private power was the development of the federally owned Muscle Shoals site on the Tennessee River. Near Florence, Alabama, the Tennessee River falls 137 feet over thirty-seven miles. Known as Muscle Shoals, this series of rapids, pools, and rocks constituted an obstruction to navigation. Near the end of the century, the waterpower potential of the shoals was recognized. In 1906, the Muscle Shoals Hydroelectric Power Company began a ten-year attempt to secure congressional approval for a joint navigation and power project at Muscle Shoals in which the government was to bear a substantial portion of the cost. The company failed. Other private developers also tried and failed to purchase the site from the government.

In 1916, the passage of the National Defense Act mandated that Muscle Shoals was to be used by the government to produce the nitrates needed for explosives in the anticipated war effort. Muscle Shoals was chosen primarily because it was both a technically feasible and a politically desirable site. Additionally, the nitrate plants could be used in peacetime to produce the nitrates required for cheap fertilizer needed by southern farmers.

The U.S. Army Corps of Engineers constructed a steam-electric plant to provide power for the nitrate facilities because the urgency of the need for nitrates was so great that there was no time to construct a hydroelectric dam. President Woodrow Wilson ordered the dam—eventually named Wilson Dam—built in addition to the steam plants. The nitrate plants never worked, however, and the dam was not completed until 1925. For ten years, little use was made of Wilson Dam’s power-producing capacity.

After World War I, President Wilson attempted to carry out the mandate of the National Defense Act of 1916 to produce peacetime nitrates for fertilizer, but his plan became enmeshed in the dispute over public versus private operation of hydroelectric plants. The electric power industry expanded rapidly in the decade after the war, and companies were eager to buy Muscle Shoals. In 1921, Henry Ford offered to purchase the site. Several other companies made bids to buy it, but their efforts were consistently foiled by Senator Norris. In 1926, Norris proposed his first bill for the multipurpose development of the Tennessee River watershed. Congress passed the bill in 1928, but President Calvin Coolidge killed it with a pocket veto. Congress passed Norris’s second bill in 1930, but President Herbert Hoover vetoed it amid charges that it was socialistic.

The Democratic Party’s 1932 platform reflected the public-versus-private-power debate by advocating the conservation, development, and use of the nation’s waterpower in the public interest. President Franklin D. Roosevelt took office in March, 1933, with 15 million Americans unemployed and the banks closed by executive order to prevent collapse. As governor of New York, Roosevelt had taken a strong position on the power question, attempting to increase the effectiveness of state regulation. Soon after taking office, he called Congress into special session and asked for legislation similar to Norris’s to create the TVA. He signed the bill as part of his New Deal legislation to bolster economic development and appointed Arthur Ernest Morgan, a renowned engineer, as the first chairman of the TVA Board of Directors. The TVA was administered by the chairman and two directors, who answered to Congress.

The TVA was created as the first public regional development agency. It was charged with planning regional economic development while protecting natural resources in order to create wealth for the people from the resources of the valley. The act defined the TVA region as the area drained by the Tennessee River, which included parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina, Tennessee, and Virginia. The agency was granted three major powers: to construct dams for flood control and hydroelectric power, to deepen the river channel to aid navigation, and to produce and distribute electricity and fertilizer.

Significance

The creation of the TVA had both immediate effects and a long-term impact on the history of U.S. environmental policy. Its most important immediate effect was the agency’s control over the 650-mile-long Tennessee River. Dams constructed for flood control and for hydroelectric power to electrify the rural hinterlands also created large lakes for recreation that brought land developers and tourist dollars to the region.

At least three important long-term trends emanated from the creation of the TVA. The first was that, although the TVA’s establishment did not stop the public-versus-private-power debate, it gave it form and served as a concrete symbol of the continuing debate. Private-power advocates lost the battle for the Tennessee Valley but won a qualified victory in the war against public power. The second trend concerned the exposure of the fundamental relationship between economic growth and environmental use. The TVA represented an organizational effort simultaneously to promote economic growth and to conserve resources. Several important legal and political conflicts have been generated by the TVA’s attempts to carry out these seemingly contradictory tasks over the years.

The third important long-term impact of the TVA was the precedent the agency set for government intervention in power technology. With the government’s participation in the development of hydroelectric power and its emphasis on electric power as important to national defense, the way was paved for the later federal direction of nuclear technology. The government’s Manhattan Project was designed to research and develop the atomic bomb for use in World War II. Oak Ridge, Tennessee, was chosen as one of three secret sites constructed for working on the bomb, in part because of its proximity to an enormous source of electric power: the TVA. In its postwar bid to control the development of nuclear technology, the federal government again turned to the TVA. In 1946, Director David Lilienthal left the TVA to become the first chairman of the Atomic Energy Commission (AEC), the federal regulatory agency for nuclear technology. The TVA was complicit in creating the Cold War nuclear arms race, buying coalfields, increasing their strip-mining operations, and building a vast coal-fired power system to power the federal nuclear operations.

The TVA’s effects have been varied, both in their consequences and in their capacity for social progress. The agency set an important precedent, however, that may benefit many future generations. The TVA was the first organization to seek the protection of public resources as defined by regional, rather than legal, boundaries, resulting in planned efforts toward coastal management, wetlands management, and the protection of the Everglades.

Bibliography

Chandler, William U. The Myth of TVA: Conservation and Development in the Tennessee Valley, 1933-1983. Cambridge, Mass.: Ballinger, 1984. Economic analysis of the TVA’s impact in navigation, flood control, power production, agriculture, and environmental protection concludes that the TVA was a bad investment of tax dollars. The book is flawed in that it uses surrounding non-TVA areas with different economic bases as a control group.

Colignon, Richard A. Power Plays: Critical Events in the Institutionalization of the Tennessee Valley Authority. Albany: State University of New York Press, 1997. A study of the legal and institutional struggles that—through the precedents they set—established the insitutional power of the TVA.

Creese, Walter L. TVA’s Public Planning: The Vision, the Reality. Knoxville: University of Tennessee Press, 1990. Well-written, lavishly illustrated book demonstrates the relationship between the physical impact of TVA on the visual environment of the region and the policy goals of the agency’s leaders.

Gray, Aelred J., and David A. Johnson. The TVA Regional Planning and Development Program: The Transformation of an Institution and Its Mission. Burlington, Vt.: Ashgate, 2005. Study of institutional change within the TVA and its causes and effects in relation to its fundamental mission. Bibliographic references and index.

Hubbard, Preston. Origins of the TVA: The Muscle Shoals Controversy, 1920-1932. Nashville: Vanderbilt University Press, 1961. Documents the various attempts to deal with the Army Corps of Engineers project at Muscle Shoals. Useful for understanding the roots of TVA in the Progressive ideology of the early twentieth century.

McCraw, Thomas K. Morgan vs. Lilienthal: The Feud Within the TVA. Chicago: Loyola University Press, 1970. Detailed analysis of the feud between TVA Chairman Arthur E. Morgan and TVA Director David E. Lilienthal. The feud and its outcome determined the shape that the agency would take.

‗‗‗‗‗‗‗. TVA and the Power Fight, 1933-1939. New York: J. B. Lippincott, 1971. Good, nuanced study of the continuation of the debate over publicly versus privately owned electric power after the TVA was founded, and the role of the TVA in that debate. Particular emphasis on the lawsuits brought against the TVA.

McDonald, Michael J., and John Muldowny. TVA and the Dispossessed. Knoxville: University of Tennessee Press, 1982. Examines resettlement of the population in Norris after construction of Norris Dam. Good analysis of how the TVA used the power of eminent domain as a threat to force residents to sell their land.

Schlesinger, Arthur M., Jr. The Coming of the New Deal. Vol. 2 in The Age of Roosevelt. Boston: Houghton Mifflin, 1958. A classic liberal narrative. Brilliantly written and informed. Part 5 is pertinent to the origins of the TVA. Page notes serve as a bibliography. Fine index. Well worth reading in its entirety.

‗‗‗‗‗‗‗. The Politics of Upheaval. Vol. 3 in The Age of Roosevelt. Boston: Houghton Mifflin, 1960. Superb narrative. Chapter 20 deals with court challenges to the TVA. Wonderful historical work on a dramatic subject. Page notes function as a bibliography. Excellent index.

Wilcox, Clair. Public Policies Toward Business. Homewood, Ill.: Richard D. Irwin, 1966. Superb for essentials on the TVA as a government authority and its effects on the business community. Clear basic presentation, objectively handled. Many page notes, excellent index.