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The Power BrokersThe Struggle to Shape and Control the Electric Power Industry$
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Jeremiah D. Lambert

Print publication date: 2015

Print ISBN-13: 9780262029506

Published to MIT Press Scholarship Online: May 2016

DOI: 10.7551/mitpress/9780262029506.001.0001

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David Lilienthal and the Era of Public Power

David Lilienthal and the Era of Public Power

Chapter:
(p.51) 2 David Lilienthal and the Era of Public Power
Source:
The Power Brokers
Author(s):

Jeremiah D. Lambert

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262029506.003.0002

During the election of 1932 Roosevelt attacked public utility holding companies as an evil and inveighed against the “Insull monstrosity.” Once in office, with the indispensable support of Senator Norris of Nebraska, he proposed and presided over creation of the Tennessee Valley Authority (TVA) to harness the hydroelectric potential of the Tennessee Valley and raise its inhabitants from rural poverty. TVA had broad social aspirations but served essentially as an autonomous government vehicle to compete with investor-owned utilities. David Lilienthal, an ambitious progressive lawyer and arch foe of the private utility industry then serving on the Wisconsin commission, became the third member of TVA’s three-man board. His brief was marketing low-cost electricity. TVA needed customers for its increasing hydroelectric production. Lilienthal soon locked horns with Wendell Willkie, then head of Commonwealth & Southern, a utility serving the same market TVA required for its survival. A long struggle for market control ensued, ending in 1939 when TVA acquired contested power assets from Commonwealth & Southern. Lilienthal also confronted and survived attacks from TVA’s then chairman, the Secretary of the Interior’s attempt to place TVA within his department, furious litigation seeking to undo TVA on constitutional grounds, and legislative assaults on TVA’s independence. To counter adversaries, Lilienthal claimed TVA’s reliance on grass-roots support but served as TVA’s successor chairman during its enormous wartime expansion when it began to resemble the private utilities with which it was organized to compete. His legacy (shared with Insull) is the decisive impact of low-cost electric power as a means of increasing demand and thereby gaining market share and competitive standing.

Keywords:   TVA, Lilienthal, low-cost power, hydroelectric, market control, grass-roots

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