xt7wwp9t2q46_124 https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/mets.xml https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/59m61.dao.xml American Liberty League 37 linear feet archival material English University of Kentucky This digital resource may be freely searched and displayed.  Permission must be received for subsequent distribution in print or electronically.  Physical rights are retained by the owning repository.  Copyright is retained in accordance with U. S. copyright laws.  For information about permissions to reproduce or publish, contact the Special Collections Research Center. Jouett Shouse Collection (American Liberty League Pamphlets), No. 127 "Socialization Of The Electric Power Industry: An Analysis of New Deal Policies and Projects Designed to Destroy Private Industry at Tremendous Cost to the Taxpayer," June 15, 1936 text No. 127 "Socialization Of The Electric Power Industry: An Analysis of New Deal Policies and Projects Designed to Destroy Private Industry at Tremendous Cost to the Taxpayer," June 15, 1936 2013 https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/59m61/59m61_127/Am_Lib_Leag_127_001/Am_Lib_Leag_127_001.pdf section false xt7wwp9t2q46_124 xt7wwp9t2q46 JGIN `   —”——”""`“"—_—"i`”I`” i’“—”'_
THE AMERICAN LIBERTY LEAGUE   * *
The American Liberty League is organized to defend       I    
and uphold the Constitution of the United States and to   _
gather and disseminate information that (1) will teach  
the necessity of respect for the rights of persons and   ,    
· property as fundamental to every successful form of gov-   ;
ernment and (2) will teach the duty of government to   Q A      
encourage and protect individual and group initiative   Q *
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and acquire property, and to preserve the ownership and  
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the people may amend the Constitution to meet condi-  
tions arising in a changing world, there must "be no  
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Since the League is wholly dependent upon the con-   A An Analysis of New Dea] PO],
tributions of its members for financial support it hopes   _ _ _ ,
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_if you cannot contribute it will welcome your support as   to Destroy Private In,
a non-contributing member.  
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an----------------———_——`   clous Cost to the
»ENROLLMENT BLANK   Taxpayer
AMERICAN LIBERTY LEAGUE  
NATIONAL PRESS BUILDING  
WASHINGTON, D. C.  
Date ................   ,
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(127)   U
I E Document N0. 127
  June, 1936

   Socialization of the Electr1c .
  Power Industry
  A *
` Socialism seeks a change of attitude toward
property. At present the_world’s work is carried
, on under domination of private property. So-
  cialism would reverse this process so that the
l world’s work would ultimately be dominated by
g public properties. Policies sponsored or encour-
, aged under the New Deal are giving impetus to
  socialization of the electric power industry. The
l taxpayers and consumers, as well as the industry,
`   will suffer from this changed condition, for al-
though the selling price of electricity may be
lower, the taxes assessed against the remaining
property and income of the consumer will be in-
g creased to pay the greater cost due to inefficiency.
T Already the Government has invested some
A hundreds of millions of dollars in electric power
. plants. The total will become billions if plans
` X I _ _ _ _j actually under consideration are carried out. So-
HEN Neu have flnlsned Wah th"-;   cialistic experimentation revolving around this
· · industry has run riot.
pamphlet please pass tt Cm tl? Some   The industry now has an investment of about
flacna OY acquaintance who lnegnt be   thirteen billion dollars of private capital. The
. . · · Q Government expenditures to date have been at
mteYeSted’ mumg his attention to the the rate of about $3.00 spent to $1.00 that would
membership blank on page gz.   have been spent by private capital to accomplish
  the same result. At this rate it would require
forty billions of government capital if a com-
. pletely socialized industry were to supplant the
present private industry.
_ The Government has seized the market of the
A private electric power industry in many areas.
. The threat of complete socialization hangs over
] the industry in practically all sections of the
A country. Policies being pursued in this sphere
E form a major cause of business uncertainty and
l a deterrent to recovery.
Huge expenditures in the course of the present
adventure in socialism are reflected in treasury
A deficits. The taxpayers are paying the cost of
‘ subsidies to consumers in favored sections. A
chemical manufacturer who recently made a con-
. tract with the TVA may save $300,000 annually,
l but the saving will be paid for by the taxpayers.
l It will take more than 3,000 Federal income tax-
1 payers with salaries of $5,000 per year or 800
Federal income taxpayers with salaries of $10,-
{ 2
l .
4
  L

 g?,0apS§Igg5i§8i1Qr;)€ Igg·;°]1;;Ig1§r_thiS apparent Saving   The Government’s investment in the area prior
Contributing to the trend toward socialization Q Eg ti]: egagment gf l,;h§1L};)€g33S§3g VE;1£;yTP{,lX
of the electric power industry are the following: r Or} yd Owlggg gloom; thr rbl. ‘ k f d
1. The Tennessee Valley Authority created % mmilve $ > > mm 6 pu lc WOT S un
in 1933 as a ermément a Gm ’ g during the fiscal year 1934 and $25,000,000 from
2. The Ru1Pal Electrificitioiii Administration,   €m€rg€Il°},;.fun?S dglriag th? Hscalfgg? \{‘;';5$3g’?
established in 1935 by Executive order and ex- ¤ 3g§I;)°0%ma I? f°I¥ 19%,7 S1ia‘.SY;?Out $40 000 006
tended with a 10-year program by legislationeen- p > r aa O 1 .1 r > ‘
acted in Ma 1936   The total thus far appropriated or allotted to the
3 The Elgétric Home and Farm Authmiity { TVA is about $151,000,000, in addition to the
created in 1933 by Executive order and extended i $1%({;000;_%O(;_ Of Egogeig Eumgeiegglglmzzégd b
to February 1, 1937, by legislation enacted in i th Tifivg guar? bi dg? f 438 000 008,
March,   é B C3 S OI' 8.11 €Xp€I1 1 U.I’€ O 3 , , ,
4. Federal power projects receiving allotments   gilus 1$60’g0€’?0% gggg gggggopgglggse ?;t€1\gF?1?
from funds appropriated for public works and s 0918* EL 10 aggo 1;.1 r tt f . p
Work relief. pI‘OX1II1&}0€ Y $ p€I‘ 1 OWB. O p1`1II13»I`Y power.
5. Non-Federal publicly owned power projects Uqcdef gw Fedegal Wale; Pgrgr *§°J° gf ilgzolgrz
receiving grants and loans from Federal funds. ra 9 m. US TY aa °0nS.ru° 6 p an S m W C
6 The Public Umm Homin Com an Act 7 there will ultimately be installed 6,753,292 horse-
of ieee under which grivate uiilitiespareybur- i rbrrar ibr bba irarrbrarrbri bi aariaariba iibbri
demd and harassed   control and the development of power at ex-
7 New iegieieeieg presented to Congress with i baririiiriraa araraairia abbrri $125 bar kiibrraii bi
administration approval prescribing a national   Prlmary pOW€r‘ Tha Whig dlffemnce m cost
policy for Federal power projects   illustrates the great inefficiency of _the Govern-
8. Proposed legislation, already considered by ‘ ;‘%;Q;Cf;r€Xp€“d‘l“f€S for developments Of this
a Senate committee,ifor the creation of a Mis- ' - · ,
Sissippi Valley Authority affecting a large part Of the wartime investment at Muscle Shoals,
f th are bet een the AUG bellies nd the $47,000,000 represented the cost of the Wilson
gw ki; a' W g a' _ Dam. The TVA has estimated its present value
90 Pr' d 1 islam n al O consid T d b a ‘ to be $33,000,000, less than $20,000,000 of which
eeeeee §§§§$eee§§eee ieeemieeeeee biyethe {Ta- ia rarriai aa rbabrrbr aa rbaraari rb rbrrar» iba
tional Resources Committee, for the creation of E2%?g1I$;1ké@g‘Ié%1S;i1V1d€d between mlvlgatlon and
a Columbia Valley Authority in the Northwest. 3 The TVA was given two plants at Mus C16
th1Q£.Num%Ol;S Eli?   C,I§?Xng power au`. l Shoals capable of generating about 600,000,000
Om ms ra G ne G E ‘ kilowatt-hours of primary power annually on a
` . public utility load factor. From these plants the
The TVA _ TVA actually generated for ultimate customers,
H . h b `t l t ` th 1934,
A$1*;s.rs;ri.rs;r2;r;r‘;; r;.:$:e§2;z;222;.Vr%;r.;    
Gbrarriraaai arbiiraribr rbaraaa a iaraarari bi l this small use; ill? rvlluiew rei? fliieieaieiléi
ga u?’gS&m€nt l°°dH°€]d‘ contmlr n3‘Vl[$0&}°1°n>tpa“ A construction that will bring this total capacity
.10m*t € ini; an (f ar ?;I1;p°,Sj?€’}A S Ya; gm   to 3,500,000,000 kilowatt-hours of primary power
t)nV€S;m€n> G mic Bliito gf capl ar aa t annually and has recommended that construc-
€%1}];n&§£%$n¥§’;ntWFgrC;E Ehé taxpayer to be gon be started on four additional dams that will
.. . . . .. ` ` th ttl `t t 5,800000000 k`l-
  €§“;2ei>2`;“`”{5£l2§e1“§§$£§e‘“e?“e§§$§L£Lie“Eil"§ Wiieieeeie       ie
f8.y0I'€d S€Cl3lOI1   V8.I`ylI1g 3.1'I1OLlI1bS of elec-   there IS 3 large amount Of Sec-
bréiriry aririfribai arb raghbba baabayar aaa rarir » Under the 1eW the wx pays to the state where
O Interest Or t- 6 use 0 IS m(m€Y· ’ its power is generated a tax equal to 5 per cent

 el the ameunli el greee ealee- The laet annnal   the EHFA it was able to show a substantial in-
tax te line Stare of Alabama Wae Only $10900- Q crease in sales of electric appliances.
The Alabama Pewer Company bald mere than   Some of the municipalities buying electricity
$2,500.000 in veriws kinds of taxes- Citizens l from the TVA have had a further subsidy in the
of Alabama have expressed resentment because   fgym of grants and loops from Fodoral public
the TVA nel? Only eeeabee a large Parr el bbe   works funds. Through outright grants it has
taxes to Wbleb Prlyaee lneluerry is eubleer but A been possible for municipalities to get 45 per cent
also because thousands of acres of land which   of thg cgsig gf olislribuliou systems without
heretofore have been a source of revenue have ; ghaygg to thgir owri laxpayors or oustomors
been removed from the tax I'OllS. The 8i~SS€I`b1OH The   Charges gl laygg amgunt Of   gvgr-
hae been made before the Alabama Legislature i head to construction instead of to the operation
that if the TVA paid taxes like other utilities of its oloolrio sysloorrr Evou so, tho amounts
that state alone would be entitled to from $300,- Shgwn in tho 1935 ourluol roporb as spout, by the
000 tv $480,000 annually- J TVA for distribution, utilization, commercial,
’ , new business and general expense, total approxi-
S¤bSidi=i¤gMunicipalities ' §;.i'2.2$..§l.i’..‘i;.l§?.§l;.£?€§$€;..t5‘§z,‘§’.?r;*;.i‘;.§.£.’;r.‘i.‘;‘
7
Much has been made of savings to consumers a total of $246,000. There were 7,500 average
in municipalities which now get their electricity customers served, the total operating expense
from the TVA. According to the annual report i being $32.80 per customer, exclusive. of the cost
of the TVA the average monthly bill for electric l of power. This portion of operating _ expense
service in Tupelo, Mississippi, decreased from ~ usually costs the private electric utilities from
$3.60 to $2.30 and the number of residential cus- I $15 to $20 per customer. The difference reflects
tomers increased about 30 per cent after TVA l the inefficiency in the operations of the TVA and
electricity was available. The fact of the matter   the municipalities. The TVA also showed an ex-
· is that the municipal plant serving Tupelo } penditure of $40,244 for new load development,
charged prior to the TVA from one and one-half l which would add another $5.37 per_customer.
to two times as much as was charged by privately   The private power companies 1n doing all of
owned utility companies in comparable towns   these things usually spend less than $20 per cus-
in the same region. The municipal plant had · tomer.
done nothing to develop business and the average   Misleadin Statements
consumption of domestic customers was very low.   ` g _ _
Under its contract with the TVA, Tupelo was 1 Spokesmen for the TVA have made misleading
able to buy electricity at wholesale at a rate Statements Wlth respect to the effect of 1tsact1v1-
lower than it had been able to buy it previously. , ties upon the business of private companies. Ac-
The subsidy represented in the low rate was sup- { cordmg to such statements the private companies
plemented by a further subsidy in the form of § operating in the TVA areas. have greatly in-
free Supervision ood promotion Sor-VjooS_ The jo, creased their sales of electricity and appliances
crease of residential customers by 30 per cent, l and also show greater earnings under lower rates
which meant from 955 to 1,241, was stimulated ‘ alleged to naye been forced by rbe TVA- _
by the activities of TVA employees. The TVA E Tne Geergla Pewer Cernbany has been_ Cited
annual report shows that it had 154 employees as an example by reaeen el bne laer llbat 1’¤_l‘¤aS
in its division of operation in Mississippi and gieiarly lelllall ;,*leiln`le_eemnanlee ln the Unlrerl
that its budget included $100,888 for sales pro- ‘ h ates ln Sage O e eelrle gelrlgeratere and Water
motion work. The Electric Home and Farm Au- , ee el`S> *;*3] Whae Selgnn lll Sales tel leleetrle
thority, then afiiliated with the rvA, had a fund ;`a§#‘=’ieS» a b (me, rag ale 101* Y Wen Ya gd lm
of $100,216 for pramaudh ahd $100,913 for edu- O a mlm er 0 reel en la ‘i°“S“merS» an. a S0
cational programs. The city of Tupelo itself because the Stale Of Georgm had the lllglleel
Spent for the promotion Of new business a Sum average residential electric consumption of any
hardly sufficient to pay.the salary of one man   State easl Of th€.RO°ky Mounlinme The TVA
but with the aid Of the salesmen Of the TVA and p has claimed credit for these achievements. The
r 6   fact is that Georgia led all states east of the Mis-
7
l
1

 sissippi in residential consumption of electricity   te ggneratie to ultimate cuctcmcisi citlici. directly
·‘e_S 10113 e»g0 ·‘e·S 1932 Wh10h Wa? PHO? te the Sma' j or through its sales to municipalities.
tmh nf the TVA- Tha Geersle POWSY Company   Specific facts with respect to this situation
haS had ah €¤tSI`PI`1Smg seies POIISY fer es mmm i are presented by Wendell L. Willkie president
es 15 Y€e1`S, nlthmlgh the TVA nes snnsht tn SWS l of the Commonwealth and Southern Corpora-
the impression that Until its edwiht PI`0m0thmal   tion, in his annual report to stockholders for the
rates were unknown. The_Georg1a Power Com- l year 1935, made public May 21, 1936- Hc Says:
pany established promotional rates 1n 1929 , c ,
throughout its territory, cut them still lower in S $ie_,?;g$Ie%cth". peel year end a new a t°t,al, ef
1933, and again in January, 1934, before the j cem’ee-’ hprluiglpa aniguli? °f.b°ndS °fS¤*?S1d*e*y
TVA had announced a rate schedule. Even as i p IGS- as een SO ’ wlmg eeeeee maillist
. rates ranging from 4%,% to 3%% and averaging
far back as 1929 the rates of the company were l 3.733%. of this amount of bonds $154536,900 re-
well below the national average and residential E placed like principal amount of bonds refunded
consumption was considerably above the national 3 bearing coupon interest rates ranging from 6% to
avoyaga   4%% and averaging 4.985%. The average public
S In the nee ef deine nede Wen ree-een ie   §§;°i§$.,;‘§‘;?;.&*;$,?$§,?S,;”€;$;3‘i ‘;r,,t°,t?% ae
rnereeeed eelee ef ennneneee in the TVA eree s,,Vi,,g, on these ,,,i,,,,a,g §p.,,,.a,,,, Shaun?
a comparison of sales of three subsidiaries of the to over $1,300,000 per year after amortization
Commonwealth and Southern Corporation within ° ` charges for premiums paid on bonds refunded and
the area and three Subsidiaries Outside is iii_ { discounts and expenses incurred in the refunding
t€Y€Sl?mg· Tha 19‘?f5_Sal€S Qt electric merchandise   Oaihaitogitéctéd that, with exception of the southern
by the three subsrdrerres m the TVA tarrltoryi   companies, whose affairs are immediately influenced
the Alabama Power Company, the Georgia l by the operations of the Tennessee Valley Authority,
Power Company, and the Tennessee Electric l the other subsidiary companies also can take ad-
Powor Company avoragod 126_7 in po]- ooni; of l vantage of favorable financial conditions to reduce
1930 Sa]eS as against an average ef 1634 fer   their capital charges by refunding their outstanding
three subsidiaries outside the area, the Ohio Edi- i bmds and preferred Stocks et IPWEY rates- The
son Company, the Central Illinois Light Com-   geiiencc isfe G°V°’e“m2f‘t ;’i°;“ep§i);1t1°“fhaS ereened
nent end the Cennnnere Fewer Cernnenr- Selee   0r°,,uZ”ZE,§i,$I-]§°ZZ$Eaf£, 3,, sim; Ztest SWIG
of all U0I`th€I`H compenres of the Cemmnnweelth . , points below par and it is impossiblefor them to
and Southern system in 1935 were 61 per cent ` refund their bonds and preferred stocks or to pub-
greater than in 1934, while those of the southern   licly finance their construction requirements. The
S oompaniog, inoroagod by only 26 por oon{;_ i money for such construction requirements has,
e { ther<>efore,e1efhne<éessity been suppeiedhby Bhis enor-
pora ion, e o in com an ,an .it as t us een
Adverse Egects l rendered unable togrestose glue full dividend pay-
dninnene eneen nnen nnreie neidnr eeenne- l ""$‘ii,Ei°liZt‘Q‘}Zf§“521w?f°E}3$§1,Z‘I§, the Tenn esstt
nies operating in the TVA area are mdisputable. Elccuic Pcwci. Ccmpeny, Geereie Fewer Cemeeey
These- effects are evident in theidihiculty encolm- l and Mississippi Power Company been able to effect
tered 1n borrowing money. Utility companies in - refunding on the same basis as our northern com-
many other sections of the country have taken l _ Denies, Servings Of Over $5,000,000 e, year would ac-
advantage of low interest rates to refinance out- l cm? ee mem- This P°¤aaY,Whi°h is bein! levied
standing securities. The companies in the TVA ; against O"? eentnen °°mpam"?’ by the G°V?mm‘?“f
eree h ev e been unable ee do ee-   1ncurs1on into the field of private enterprise, will,
Investment bankers are unwilling to promote ’ xmas? brought to a haim of necessity be paid for
_ _ _ . y either you as security holders or by the rate
the securities of these companies when the Gov- payers—and probably by both. The southern com-
ernment IS threatening to destroy the property panies thus compelled to continue to pay high in-
by taking their customers with rates that are not tefeet retes 01} their eepitel requirements, are
compensatory. They realize that the companies l heres .g""&t dlmculty Hf, bnneine ab°“'* fnnner
face heavy. losses and possible extermination if   resldgmal rene r€d“°t‘°“S·
the Government extends its operations to the   Mr. Willkie asserts in his report that, if the
P01Ht of d€hV€1‘1hg eh th€ POWBF lt HOW PPOPOSGS 1 southern companies of his system received the
l
I .
i
1. _  

 same gifts from the Federal Treasury as the in the PF0¤°¤¤¤e¤1e¤ta¤d Dresram ef the Aiitlierity
TVA, they could lower their rates at least 25 aP“t fro}? the ‘l“‘°’S“°“S WF’_haV"` dlscussed m l`€la‘
va mt bmw the TVA was- }f§‘u§° tfi§§i“§§tZt·§i°Z£S1€§1F sf °t"’i»°°“"“3" °f
The capital investment of private electric i nenyriy ’ ’ A 1 g 6 3 mm CWM 0m`
power and light utilities in the principal Tennes— é
See Valley Stateg is more than $600,()()0,0()()_   The COI1Stitl1tiOI13,lity of the TVA Act is in-
These companies have nearly 800,000 electric f volved in at Suit commenced by 19 public utility
customers in the States of Alabama, Georgia,   CQmpan1eS ln the United States District Court at
Tennessee and Mississippi and serve communi-   Blfmlngham, Alabama, on May 29, 1936.
ties with a population of about 5,300,(§)0. h  
The people of these four states, w o are t e i · ·
chief beneficiaries of subsidized rates of the   Rural Electmflcatlon
TVA, paid only about 2 per cent of all Federal j The Rural Electrification Administration was
taxes in the fiscal year 1935. This means that   made a permanent agency, with funds definitely
98 per cent of the huge cost of the TVA will be _ auth01`iZed for a ten-year period, in a law en-
borne by taxpayers of other sections of the ` acted May 20,1936. The original creation of
country. ithis aglencye) May 11,_1935, was an example of
eonsatutienelity , etlttiet`?esie.ii$i°lttVi»F§§l3tn`l“S§ilitevttiti
The Supreme Cguyt in its deeigign in the   r     I,lI1Cl€I'   Executive OI`Cl€I‘ lJl1€ RU.-
eaee, Went no further than to he]d that the Q ral Electrification Administration was author-
sale of electric energy generated at the Wilson l lZ€d_“t0 lllltlata l0l"ml1lat€, administer, and Su-
Dam was proper because it was lawfully con- 3 P€l”VlS€ a Pmgram of aPP1`0Ve€l D1`0le0tS With
structed under war and navigation powers. The   l`€§P€Ct to tl1e g€11€I`atl011, t1`a11S111iSSi011, and die-
(jenyt made it very eleay that the deeieien Wae g tr1but1on of electric energy in rural areas." The
limited te the ease before it_ The Cenyt did net g Rural Electrification Administrator was author-
eensidei- that the qneetien as te Whether gr net   ized in the Executive order to create an unlimited
the Federal Government could constitutionally 1 Payroll Wlthout regard to the civil SeI`Vi0e laW,
engage in all the "collateral" activities was be- t and to 1110ur expenditures for all sorts of pur-
fore it for determination. Therefore, the real j P0S€S· The REA had 257 €mPl0y€€S 111 Mafeh,
implications in the activities, the professed ob-   1936-
jectives, and the legitimate scope of the TVA   The l1€W l€glSlatl0l1 is an eXamPle of belated
still remain unadjudicated. This limited appli-   actlfm by the administration 111 S€0¤1°l11g Statu-
eatien gf the Supreme Ceuyt deeieien mnet be 1 tory authority for activities first developed on a
eleayly nndepeteed te aveid aeeeptanee ef the g broad scale without such authority. The question
impression which is being subtly given that the   ef the 0011StitUti011alltY of the measure was
TVA in aill its ramifications has been held con-   rgised €lU§11gKtl1€ depaées 1111 C0¤g1`eSS· Senator
stitutiona. g i iam . ing, o ta , asserted that there
Pertinent excerpts from the Court’s decision of   Waa T10 00l1Stltl1tl011al Warrant i01" the type of
February 17,1936,fo~llow: Y activity involved in rural electrification. He
“As we have said, these transmission lines lead Q contended that 90 authomty exlstediunder the
drreeny from the (Wnsnn) Dem, which nes been F (Qonstitution to impose taxes to_bu1ld electric
lawfully constructed, and the question of the consti- llght plants: construct tl`al1S1111SS10I1 l111€S and
tutional right of the government to acquire or A fU1`I1lSl1 electric appliances.
operate local or urban distribution systems is not , The extent to which the rural electrification
involved. We express no opinion of such an eff0rt." program invades the field of private industry is
"We express no opinion . . . as to the status of 1 dependent upgn the peljeiee Whieh may be pur-
‘;’gS€‘;th$;ar?§“ Sshgizir C‘i)‘$?;§,i;‘§€’}sEit*r;l lghe T"¤‘ ; sued. The law is sufficiently broad to make this
, I- apart I . . . . .
nem the Wilson Dem}, , activity a serious menace to private industry
awe express no Opinion _ _ _ es to the validity l and a_ factor in stimulating the trend toward the
nf the Tennessee Veuey Anrnerny Aer], socialization of _the electric power industry.
“We express no opinion _ _ _ ef the claims made   Loans authorized under the law to finance the
10 11

 construction and operation of generating plants i truth re that, lr ccnllaarreene are rnade between
and distribution lines in rural areas may be on W areas of ccrnlaarahle denslty end agricultural ln‘
a 100 per cent basis. Under no other government i eeme, _the Umted Stat€S IS far ahead of other
agency can such liberal credit arrangements be · ccuntrlee Fer eXarnPle,_ rural electrlucatlcn hee
found. Terms and conditions may be prescribed { sepe lcrWard rncre ralndly ln Mlchlgan under
by the administrator, except that the loans are n Prlyate lndustry than ln adlacent Canadlan ter-
intended to be self-liquidating within a period of t rltery, Where there ls a gcyernrnent subsldy·
twenty—five years. The interest rate is to be i
equal to the average rate of oustanding long l The EHFA
term overnment obligations. It is obvious that i _ , ,
if thegREA encroaches upon territory served by i The Eleetrle Heme and Farm Autheltlty. le
private industry the latter will be utterly unable   anether agency fer _ Whleh etatutcry authcrlty
to meet this Subsidized competition. i was obtained after its activities were fully de-
exampiei the administrator is given a term ef   Executive order. Under authority ofthe original
ten years. Except in the case of the Comptroller . Executive order, dated December_19, 1Q33, there
General, whose independence is sought to be as- Was created a Delaware eerberatlell Wrth Pewer
sured by a fifteen-year term, and members of a W te de elmeee auythlug Besldes lluahelhg the
few boards, there are no other administrative of- 4 Sale of _e1eetdee1 alclehances, Whleh Was sulilpesed
neiele in the Government with terms at all eein- e te be de remedy fueeaee, the EHFA mleht
parable. In the case of boards, the terms of i manufacture, buy and sell appliances and other
members overlap and each President has an op- l rrlerchahdlsei buy, dlsceullt and sell eetee and
portunity to make appointments as the terms ‘ m01”tgag€S; borrow money and issue bonds; buy
expire. The Rural Electrification Act sets up J aud sell feel estate, seeurltles end ether brcb‘
an agency whose administrator holds · on-ioe e erty. The charter of this corporation was for a
through parts of three administrations. i seven-‘year Perlcd despite the faet that the Na-
Besides loans for the construction end opera- ~ aeeel reduetdel Reeeyery Aa, uPOn_ Whleh the
tion of generating plants and distribution lines, l Exeeutlve Order Was based, had a llle ef Only
the law authorizes loans to finance the wiring of E tll’O years- _ _ _ _
homes of farmers and acquisition of electrical   Because ef crltlclsrn Wlth reepeet te the bread
appliances No restrictions are imposed as to i powers of the Delaware corporation, the admin-
the terms of payment i 1strat1on caused the EHli‘A_to be reincorporated
While the amount authorized Was out down l under the laws of the District of Columbia with
considerably nene the si,ccc,ccc,ccc proposed i de pewere hmded ehledy te the deeeems ef
in the original bill, the law obligates the tax-   electrlcal abbllah-ces- The neW ccrbcratlcn Ob‘
payers for a very substantial amount. During » tamed 1tS charter on August 1, 1935, supposedly
the first year $50,000,000 is to be loaned to the . fer a tWO‘year PerlOd· Heweyer, under a ruhng
Rural Electrification Adnnnietretien by the ne- r ef the eemptre11er_ General, the EHFA Weuld
construction Finance Corporation, but in each   have ceased te exlst Aprll 1, 1936, When the
of the nine years thereafter $40,000,000 is appro, i eictended National Industrial Recovery Act ex-
priated directly from the Treasury. The total i lured- The laW enaeted Merch 31, 1936, eX·
authorization for the ten-yeer period tnne is _ tendedtheEHFA_untllFebruary1,1937,cr_such
$410,000,000. rreviene to the enactment of the l a eerher dede ee mlsht be fixed by the Preeldeet
legislation the RuralElectrification Administra- J by hlxecutlye Order- The law dces net ccntarn
tion received allotments from the work-relief ‘ any ltenuzatlcn ef the PcWers and _resPOllslblll‘
fund amounting to about $0,500,000, of which ties of the EHFA but merely authorizes continu-
$550,000 Was for administrative expenses and ation of the corporation organized under the laws
the balance for loans to states end other public T ef the Dletdee ef eeldmble- _ _
bodigs and to private Corporaitionss e i Th€ I`€3,SOI1 t,h€·d3,h€ of t,h€ €Xp1I`8,l`,1OI'1 of l`,h€
In propaganda for rural electrification it has hfe ef the EHFA ls February 1, 1937, ie that the
been represented that the United States is more lendlng l?OWers _Or the Reccnstructrcn Finenee
backward than other countries in this Held. The W Ccrpcratlen expde then- The EHFA hae a eaP1·
12 · 13

 _ . Boulder Dam, which was authorized by Con-
rar or aooo>ooo> Whxch Was allotted oy rho Proor gress during the Coolidge administration, com-
ooor rrom the public Works rrmoaaoo may bor" menced under the Hoover administration and
r ow rrom rho.RrrC‘ rr rho aorhorrry or rho RFC dedicated under the Roosevelt administration,
ro.oXroooroo> rr TS assumed roar the EHFA else was not intended primarily as a power project.
Wm be grvoo a oow roaoo or oro i The sponsors of the Boulder Dam project re-
Whoo rho ¤r1s1¤¤1EHFA was formed as a ooo` ported to Congress that there was a market for
srorary of rho TVA rho prooomroorporarroo pro` the output at a rate that would amortize the
Posos ro oporaro oo a oarrorkrrroo oaom .Up ro debt when the power was delivered to other
Maroo 1o> 1ooo> Whorrroo rogrorarroo ro grvo rho distribution agencies without disturbing their in-
EHFA a orarorory oaoro was rmoor ¤¤¤S1d€r¤¤¤¤» vestment in transmission and distribution facili-
1t had _ purchased 8,700 installment contracts tree In other Words, the power, Wee. Sold te the
amormrmg ro o1¤4ao>ooo· Tho ooorraoro our' existing distributing agencies at a rate that made V
srarromg at mart rrmo roraroo about $o7o>ooo‘ it more economical for them to purchase Boulder i
The states in which the EHFA was then operat- Dem power then Oonstruct new generating A
ing were Tennessee, Georgia, Alabama, and Mis- piehre
srssrpor m the TVA. aroa> and Tl¤¤¤iS.¤¤d Omo‘ The original Tennessee Valley Authority Act
Nogorrarloris Woro ro Progross mvorvmg oloora' _ did not give unlimited sanction to the construc-
tions m 35 orhor sraros Up to Marorh looor rho tion of dams and power plants. A considerable
EHFA had operated on a relatively small scale e here cf the present TVA prcgrem fer the crm-
and had oorY 29 omProYoos· _ struction of dams was undertaken by allotments
, Through the EHFA the Govoromoor TS oXorr" from public works funds for projects for which
mg pressure on private manufacturers to reduce there Wee ric Specific authorization m the ieW_
prices of appliances. By its low charges 1t 1S Meer cf the crher impcrceme ricwer rirciecre
Seeking @0 haaimor dom} the raros orrargoo by now under construction with Federal funds had j
PTTVFWB rlnancmg oompamos Tho Govoromoars no authorization in law, at least in the begin-
ability to borrow ¤}onoY ar_oXoooomgrY row m' ning. Their engineering feasibility and economic ‘
’¤€T`€Sl» Yams makos lr a dpmlnam oomporrror rr desirability were decided upon by the President,
the corporation unfairly invades the field of pri- j Whc made eiictmerite frcm funds ermrcprietcd 1
` vate business, it will contribute to the movement {cr public Works and Work relief- Some cf the A
for socialization of the electric power industry rirciecce lacked the approval cf the Army
as well as to the socialization of the banking T ehgmeere
b¤Sm€SS· l The Grand Coulee project in the State of A
_ T Washington involves an immediate outlay of
Federal Power PI°0]€CtS $63,000,000 end];. possibif ultimate cost of $204,- T
. . . ~ 000,000. T e onnevi e project in the State l
The TVA IS the Targ<·>St1¤ r>¤m*¤ of teal em- of Oregon has had $01,000,000 of eiieaed funds
rompraroo mvosrmoor but oy. oo moans the omy and may cost $75,000,000 ultimately. Besides f
Powor Proloor ooaoooo omarory with Fooorar Grand Coulee and Bonneville, there is agitation .
roads- Eorrrory apart ,rrom rho TVA and for other power projects on the Columbia River ’
Booroor Dam> beth or which hav? Srarorory ao' costing considerably in excess of $500,000,000.
rrorrrY> about a ooaoo powsr proloors Wrm somo » Among other power projects initiated at the
oogroo or rmoorraooo have boon ¤¤mm€e¤€d Wrrh r order of the President are the Passamaquoddy
omorgoooy f¤¤dS by oroor or rho Prosroomr tide-harnessing scheme in Maine to cost $37,-
Government competition w1ththepr1