Morgan v. Morgan & Lilienthal

When Franklin Roosevelt produced the Tennessee Valley Authority Act, he knew that his Administration was launching an immense and crucial expedition into some of Government's least charted waters. To give the TVA "the flexibility and initiative of a private enterprise" in promoting the social and economic development of a territory of 40,000 square miles and 2,000,000 people, the Act provided for a policy-making board of three directors, each of whom was chosen by the President with the greatest care. Each was promptly hailed by large sections of the public as the best possible choice. It is possible that the choice was too good, for the three paragons have been squabbling like butcher boys for two years and last week their brawling tumbled into the White House and the offices of Senators and Congressmen.

Big, lean Arthur Ernest Morgan is a top-flight civil engineer, an expert on flood control, a famed progressive educator, and a man of stern and often inflexible ideas. Plain, stringy Harcourt A. Morgan is a farmer and entomologist who came to TVA from the Presidency of the University of Tennessee, and knows more about Tennessee Valley farmers than anyone in the Authority. David Eli Lilienthal is a young lawyer, a former associate of Donald Richberg, with a background of fighting Wisconsin utility companies as a member of the La Follettes' Public Service Commission. The Great TVA Schism, boiled down to its essentials, means simply that Powerman Lilienthal, whose chief interest is selling cheap power, and Engineer Morgan, who disapproves of the constant struggling with utility companies which this entails, look at TVA from different angles and are equally uncompromising. Because Harcourt Morgan agrees with David Lilienthal, practical result has been a constant 2-to-1 collision on the Board, which has led Chairman Morgan to carry his fight out of the boardroom and onto the lecture platform. Last week, he thought he had enough ammunition to carry the TVA Schism to Congress.

Marble Bait. Chairman Morgan's ammunition was an extraordinary set of mineral leases for the exploitation of marble deposits on land flooded by the construction of the Authority's Norris Dam. One of the chief leaseholders is none other than Tennessee's loud, egregious Senator George Leonard Berry, who bought them from farmers in the district for an immediate cash consideration of about $1 apiece. But George Berry has been a potent figure in the Roosevelt Administration and when he filed complaints against the TVA for damages on his marble properties, Directors Morgan and Lilienthal, meeting according to custom as a quorum in Chairman Morgan's absence, agreed to have the value of the claims adjudicated by a special "conciliator" instead of by a condemnation commission. They capitulated when Chairman Morgan, who asserted that the claims represented a bald attempt to "defraud" the Government, got Secretary Ickes to refuse the loan of Director John W. Finch of the U. S. Bureau of Mines as conciliator, insisted on a condemnation commission. When last week, nearly three months after the start of hearings during which witnesses for the Berry interests presented evidence by which the value of the leases could be estimated variously between $1,500,000 and $87,000,000, the three-man commission took a good look, decided that it was worth not $87,000,000 nor $1,500,000, but nothing at all.

First major reaction to this news came from Arthur E. Morgan, vacationing in Clermont, Fla. who next day issued an 8,000-word statement to the press: After recounting his own part in the Berry case and accusing his colleagues of "conspiracy, secretiveness, and bureaucratic manipulation," the TVA Chairman came to his astounding nub:

"The TVA deserves a fair and open hearing, which is full and impartial and without any predilection for or against any person or against the TVA itself. The investigating body should be provided with sufficient funds to make possible a first hand examination of the obscure financial records of the power program [administered by Director Lilienthal], and of all other important phases of the TVA which come into question. The fertilizer policy [administered by Director Morgan] . . . was adopted without being disclosed to the TVA Board, and no impartial technical appraisal and report of the fertilizer program ever has been made to the board or to the public. . . ."

In Washington, the Morgan gauntlet was picked up without delay. Texas' Maury Maverick, who thinks that TVA may have sold too much power to private companies and too little directly to consumers, introduced a resolution calling for a joint House & Senate investigation as Mr. Morgan proposed. George Norris insisted that the investigation be kept out of Congress, referred to the Federal Trade Commission, but FTC members gave him scant encouragement. To the Senate's anti-Administration bloc, even the remotest prospect of uncovering a Roosevelt Teapot Dome was so exciting that Utah's Democratic King and New Hampshire's Republican Bridges hastened to introduce a resolution calling for a Senate committee investigation of TVA on 23 "charges." Among the 23: wasting public funds, suppression of audits, interference in neighboring labor disputes, coercion of rural customers, "creating deceptive or untrue propaganda."

Franklin Roosevelt's reaction to this onslaught was to pass out to the press, without comment, a memorandum from Directors Morgan and Lilienthal which had been in his hands since Jan. 18. Having been prepared before the chairman's charges were made, it did not answer them. But in it the majority directors accused the minority chairman of obstructive tactics in failing to abide by majority decisions, charged that Chairman Morgan had collaborated with private utilitymen to hamper the Board's program, implied that the sensible conclusion would be for Minority Member Morgan to resign.

Retorted Arthur Morgan, hopping mad: ". . . Mouthpieces for Mr. Lilienthal have been suggesting or forecasting my resignation ever since . . . 1933."

Proposals. The collaboration with private utilitymen to which Director Lilienthal objected was a conference called at the White House in the autumn of 1936 at Chairman Morgan's suggestion, at which Commonwealth & Southern's Wendell L. Willkie and other utilitymen discussed a "power pool" for merging TVA and private power systems. David Lilienthal has proposed a version of the power pool himself but at the time it looked to him as though Chairman Morgan was consorting with the enemy. David Lilienthal considered himself justified in his opinion, inasmuch as five months before the White House "love feast" (whose results were inconclusive), 19 southern utility companies, including four Commonwealth & Southern subsidiaries, had sought to tie up TVA's power program by challenging its constitutionality. Result was a decision by a three-man Federal tribunal in Chattanooga last January which flatly upheld the constitutionality of the contracts under which TVA has sold some $3,500,000 worth of power to 32 co-operatives and municipalities and nine industrial corporations, cleared the way for Director Lilienthal to fulfill contracts with other municipalities (including Knoxville, Chattanooga, and Memphis).

When unruffled Dave Lilienthal turned up in Washington himself last week, he refused to discuss the question of a TVA investigation and hinted that a conciliator would probably have come to the same conclusion about the marble claims as the commission. But his main job was to hand out to reporters a statement containing his own formula for dealing with Mr. Willkie and ending TVA's war with the private utilities. In it, after dexterously shifting blame for the trouble to litigation instituted by the utilitymen themselves, he proposed that the TVA should negotiate for the purchase of private power facilities on behalf of 400 communities in the TVA area. To this Mr. Willkie, who last year dramatically begged the Government to buy his properties instead of ruining them, replied that he would be "delighted" to negotiate for his companies if they would be bought as "going concerns" and not piecemeal or at distress rates. But the terms, suggested equally shrewd Mr. Willkie, should be set by an independent committee, in view "of the recent newspaper reports of a diversity of opinion as to policy within the TVA." Mr. Willkie's suggestions for committeemen: President Clarence A. Dykstra of the University of Wisconsin, President Karl Compton of Massachusetts Institute of Technology, Harvard Law Professor Felix Frankfurter.

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