Chapter 11: The Power Lobby

CHAPTER 11 The Power Lobby Actually there are three power lobbies. There are, of course, the public power lobby and the private power lobby. But the third lobby is not so well known because it is informal and unorganized. Possibly it should be called an "attitude" instead of a lobby. It is composed of certain private interests — including private power companies — and government officials who want the government to produce electricity to be distributed by private companies. The most powerful of these three lobbies — the public power lobby — includes federal agencies such as the Federal Power Commission, the Rural Electrification Administration, the Corps of Engineers, the Bureau of Reclamation, TVA, and the Department of the Interior, as well as many elected and appointed officials of the federal and state governments who are exerting continuous pressure for the widening of government power activities. This public power lobby includes the powerful National Rural Electric Cooperative Association. This lobby is also supported by various government and private organizations that believe in the superiority of government ownership and operation of the means of production. The effectiveness of this public power lobby is amply demonstrated by the encroachment of government into power production over the last twenty years.

72 THE POWER LOBBY The lobby for private enterprise in power is composed of paid representatives of the private electric companies that wish to produce and distribute electricity. This lobby examines — and usually opposes — the various congressional bills that are designed to increase government power production or to increase government controls over private power production. Sometimes this lobby is successful. For instance, the private power lobby had a great deal to do with defeating the proposed TVA steam generating plant in 1948. But by and large the record shows that this private power lobby is running a poor second to the public power lobby. The position of the third power lobby can be best described by the word, "compromise." It is indicated by the following extracts from an article by Richard H. Syring in the Wall Street Journal of May 13,1948: ".. . private utilities have gone all-out for expansion of federal hydroelectric projects in the [Pacific] northwest. Until recently, they fought public power ownership tooth-and-nail, but the need now is so great they believe expansion of federal projects is the only solution.

"This compromise, however, has not affected their battle to retain the right to distribute federally-generated power. Any additional energy, they maintain, should be sold to private utilities for transmission over their lines. They also want five-year contracts with the government, 'so we'll know where we stand in the future,' instead of the year-to-year contracts which the Bonneville administration insists on writing. "Another gripe of private utility men here is lack of a unified government power policy. They blame Congress for purse-pinching on power funds. . . ." "One utility executive asked: Is the government going ahead and develop hydroelectric power to take care of the load growth of this area, or is it going to piddle along with token appropriations?' PRIVATE COMPANIES ALSO DESIRE SUBSIDIES 73 "They fear, for example, that Congress will trim the Bonneville appropriation for the next fiscal year downward from the $36 million requested. ... In the current fiscal year Bonneville is operating on a slim budget of less than $16 million. . .."

Nor is this attitude of compromise confined merely to the Pacific Northwest. It is supported by various persons throughout the industry. For instance, the New York World-Telegram of June 1, 1948 carried this story on the annual meeting of the Edison Electric Institute: "He [the president of the E. E. I.]... advocated federal development of water resources.... But there, he said, the government's part in such projects should end. 'Our utilities,' he declared, 'should absorb and market power from new government dams. This desire to secure "cheap" government power is not confined to just a few private power companies that wish to sell the electricity. The owners of many other types of private businesses also appear anxious to have their electricity bills subsidized by the taxpayers. The most dramatic example of this is found in a halfpage advertisement in The Chattanooga Times of May 30, 1948.

This advertisement is headlined: YOU MUST DO YOUR PART TO KEEP YOUR cheap ELECTRICITY. It is sub-headed: DON'T LOSE cheap TVA POWER. This advertisement urges all persons everywhere to write their senators, and demand that the government build a TVA steam generating plant. It is signed by 95 private companies in various lines of industry! There is much evidence — including conversations with 28 private utility executives — to indicate that many owners of private electric companies are not completely opposed to government ownership and operation of the means of producing hydroelectricity. As a result of this attitude, we now have the peculiar situation of the owners of private power companies split into factions — the larger faction devoted to preventing government ownership 74 THE POWER LOBBY and operation of the means of producing electricity; the lesser faction devoted to increasing government ownership and operation of the means of producing electricity!

The first group, for example, seeks to prevent government construction of a TVA steam generating plant. It dwells at length on the evils of government ownership and operation of the means of production. The goal of the second group is to speed up government construction of hydroelectric dams in various sections of the country. This group includes several private electric company executives who now seem quite willing to have the government use the taxpayers' money to subsidize them through government-built hydroelectric dams! It is doubtful that many private electric company officials were ever deceived by the navigation and flood control arguments of TVA. Most of them have always been aware that TVA was designed for the primary purpose of producing electricity. Nor are the private power officials deceived by the navigation and flood control arguments advanced by government on behalf of its dams on other rivers in other sections of the country. Again, most of them are well aware that the primary purpose is generally the production of electricity. As nearly as can be determined, some of these private electric company officials now oppose TVA — but favor Bonneville and other government hydroelectric projects — primarily because in the first case the government itself controls the distribution of the electricity, while in the second case the private companies are frequently permitted to distribute it.

Here follows the essence of an actual example of the confusion caused by this attitude of expediency: An electric company executive asked this question in a private conversation: "How can we stop the government from taking over the electrical industry? The situation is getting desperate/' PURPOSE OF TVA; SOCIALISM IS DESTRUCTIVE 75 "Are you in favor of the government-built Grand Coulee hydroelectric dam?" he was asked. "Why, yes," he answered, seemingly surprised at such a question. "Why are you in favor of it?" "Because private enterprise couldn't build a dam that big and expensive," he said. "Couldn't or wouldn't?" he was asked. "Private industry has sufficient money and materials. The engineers and construction men would have worked just as well for a private company as for the government. Now did private industry not build the dam because it couldn't do it, or because it wouldn't do it?"

The electric company executive then admitted that private industry could have built Grand Coulee if it had wanted to. "Then why didn't private industry build it?" Finally he admitted that in his opinion the dam wasn't worth what it cost to build. He said that at least he would never have bought stock in any private company that decided to build it. He agreed that probably it would never have been built unless the government had used the taxpayers' money to make up the difference between value and cost. He admitted that such a procedure is socialism — as costly and inefficient and destructive as socialism always finally ends up to be. Yet he does not oppose Grand Coulee nor, with the exception of TVA, any of the other government hydroelectric projects, so long as the government permits his and other private companies to buy and distribute the electricity. If government can efficiently produce electricity, why can't it efficiently distribute it? If government should own and operate the means of producing electricity, why should it not also own and operate the means of distributing it? Is there any difference in principle?

Thus we have one of the main reasons why government owner76 THE POWER LOBBY ship of the means of production is increasing in America. Many of the leaders of private industry themselves are either in favor of it, or have given up all hope of stopping it. Many of them are now saying: "But we've got to be practical about this matter. The interests of our stockholders and employees demand that we compromise on certain issues in order to keep any business at all." But what does this compromise mean? When it consists of abandoning another sector of private industry to government, is it not surrender rather than compromise? It is impossible for a project to be owned by both government and private interests at the same time. Either it is socialistic or it is not. Private enterprise, therefore, cannot "compromise" with socialism. It can only surrender to it or fight it whenever and wherever it appears. Literally, there is no other choice. Now which procedure is the practical one?

Admittedly many private producers of electricity have been maneuvered — or have maneuvered themselves — into a position where they now feel that they must either sell out to government, bow to government control, or face bankruptcy. Since this study is concerned with the future of private enterprise, it seems pointless here to excuse or condemn the past actions of power companies that now find themselves in this awkward position. But if freedom of enterprise is to survive in America, this much is certain: As harsh as it may sound — and as tempting and expedient as compromise or surrender may seem — private utilities everywhere must continue to resist both the threats and promises of the advocates of government power production. This must be done if freedom is to survive in America. In the final analysis, this study concerns persons, and not things. When we speak of the socialization of the electrical industry, we are, of course, referring to persons. Electricity doesn't care who or what produces it. In a like manner, when we speak of controlled production or controlled prices, we really mean controlled persons.

GOVERNMENT CONTROLS PERSONS, NOT THINGS 77 Under a controlled economy, it is persons — not things — who are told by government what they must or must not do. This coercion of individual citizens is the vital issue. And in the long run the individual consumers of electricity have just as much at stake in this matter as do the private producers of electricity.