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“Electricity for All”: The Electric Home and Farm Authority and the Politics of Mass Consumption, 1932–1935

Published online by Cambridge University Press:  13 December 2011

Gregory B. Field
Gregory B. Field
Affiliation:
Gregory B. Field is a research associate with the Thomas A. Edison Papers, Rutgers University, and a doctoral candidate in history at the University of Massachusetts, Amherst.
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Extract

The following article traces TVA director David Lilienthal's efforts to establish the Electric Home and Farm Authority the Tennessee Valley and analyzes the outcome of that program in the early 1930s. The essay demonstrates that, contrary to some interpretations, administrators like Lilienthal were advocating state-sponsored consumption-driven economic growth well before the late 1930s.

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Articles
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Business History Review , Volume 64 , Issue 1: Government and Business , Spring 1990 , pp. 32 - 60
Copyright
Copyright © The President and Fellows of Harvard College 1990

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References

1 Franklin D. Roosevelt, “New Conditions Impose New Requirements upon Government and Those Who Conduct Government,” in Roosevelt, , Public Papers and Addresses, comp. S. I. Rosenman (New York, 1938–1950), 751.Google Scholar A. A. Berle wrote the Commonwealth Club speech, but the economic maturity theme was shared by many of Roosevelt's advisors. See, for example, Rexford Guy Tugwell, ’Design For Government,” Political Science Quarterly (Sept. 1933): 321–32. For analyses of the speech, see, Schlesinger, Arthur M. Jr, The Age of Roosevelt, vol. 1: The Crisis of the Old Order (Boston, Mass., 1956), 425–26Google Scholar; and Schwarz, Jordan, Liberal: Adolf A. Berle and the Vision of an American Era (New York, 1987), 78–79.Google Scholar

2 The literature on New Deal politics and economic thought is vast. For a useful sample of the material, see, Leuchtenberg, William E., Franklin D. Roosevelt and the New Deal, 1932–1940 (New York, 1963)Google Scholar; Rosenof, Theodore, Dogma, Depression, and the New Deal (Port Washington, N.Y., 1975)Google Scholar; Hawley, Ellis, The New Deal and the Problem of Monopoly (Princeton, N.J., 1966)CrossRefGoogle Scholar; Hawley, Ellis W., “The Corporate Ideal as Liberal Philosophy in the New Deal,” in The Roosevelt New Deal, ed. Cohen, Wilbur J. (Austin, Texas, 1986)Google Scholar; May, Dean L., From New Deal to New Economics: The Liberal Response to the Recession (New York, 1981).Google Scholar

3 United States Code (Washington, D.C., 1983)Google Scholar, Title 16: Conservation, chap. 12A, p. 885; Leuchtenbetg, FDR and the New Deal, 54–55; McCraw, Thomas K., TVA and the Power Fight (Philadelphia, Pa., 1971), 61–62.Google Scholar

4 David E. Lilienthal, correspondence with A. A. Berle and James C. Bonbright, correspondence 1932, box 55, Seeley G. Mudd Manuscript Library, David E. Lilienthal Papers, Princeton University [hereafter cited as Lilienthal Papers]. Acting on Berle's advice, Lilienthal hired Columbia economist Bonbright as a consultant for the Wisconsin PSC's attempts to lower the state's telephone and electric rates. For useful surveys of the underconsumption school, see Dorfman, Joseph, The Economic Mind in American Civilization (New York, 1959), vol. 5Google Scholar; and, Rosenof, Theodore, Patterns of Political Economy (New York, 1983), esp. 17–46Google Scholar, “Explanations of Depression.”

5 Lilienthal, Draft Copy of “Philadelphia Speech,” 30 Dec. 1933, 4, Lilienthal Papers, box 62; reprinted as ‘Business and Government in the Tennessee Valley,” in Towards National Recovery, The Annals of the American Academy of Political and Social Science 172 (March 1934): 45–49.CrossRefGoogle Scholar

6 For a general survey of TVA's relations with the power industry, see McCraw, TVA and the Power Fight.

7 “TVA Appliances,” Business Week, 17 March 1934, 10–11.

8 Lilienthal, “Philadelphia Speech,” 5.

9 Lilienthal to Marvin McIntyre, 21 Nov. 1933, Lilienthal Papers, box 62; also cited in McCraw, TVA and the Power Fight, 62.

10 Morris L. Cooke to Lilienthal, 11 Dec. 1933, Cooke Papers, Franklin D. Roosevelt Presidential Library, Hyde Park, N.Y., box 53, folder 23 [hereafter cited as Cooke Papers].

11 Lilienthal to Donald Richberg, 30 Nov. 1933, Lilienthal Papers, box 62.

12 Lilienthal to Richberg, 30 Nov. 1933; and T. K. Quinn to Lilienthal, 4 Dec. 1933, Lilienthal Papers, box 62.

13 “TVA Demonstrator,” Business Week, 19 May 1934, 11.

14 T. K. Quinn to Lilienthal, 4 Dec. 1933, Lilienthal Papers, box 62; Lilienthal correspondence with Quinn, Nov. and Dec. 1933 in Records of the Electric Home and Farm Authority, National Archives, Record Group 234, Reconstruction Finance Corporation/Electric Home And Farm Authority, Manufacturers Files, box 85 [hereafter cited as RG 234, RFC/EHFA]; Lilienthal memorandum to Franklin D. Roosevelt, “National Home and Farm Electrification Program Proposed by Tennessee Valley Authority,” n.d. (c. early Dec. 1933), Lilienthal Papers, box 60.

In a technical sense, the EHFA's rates were not “below market,” for the agency's rates actually became part of the market. I use the phrase “below market” to denote rates that were lower than those offered by sales finance companies at that time. I thank Martha Olney of the University of Massachusetts, Amherst, Economics Department, who pointed out the need for this clarification.

15 A useful overview of the development of installment financing is Olney, Martha Louise, “Advertising, Consumer Credit, and the ‘Consumer Durables Revolution’ of the 1920s” (Ph.D. diss., University of California, Berkeley, 1985).Google Scholar For a study of credit and appliance purchasing in England, see Bowden, Sue, “Credit Facilities and the Growth of Consumer Demand for Electric Appliances in England in the 1930s,” Business History 32 (Jan. 1990): 52–75.CrossRefGoogle Scholar

16 Lilienthal memo to Roosevelt, c. Dec. 1933.

17 Brinkley, Alan, “The New Deal and the Idea of the State,” in The Rise and Fall of the New Deal Order, 1930–1980, ed. Fraser, Steve and Gerstle, Gary (Princeton, N.J., 1989), 85–121.Google Scholar

18 Two studies amply illustrate the development of this growth-oriented network and its agenda. See Steve Fraser, “The ‘Labor Question’ ” The Rise and Fall of the New Deal Order, 55–84; and Friedlander, Peter, “The Origins of the Welfare State: The Keynesian Elite and the Second New Deal, 1910–1936” (unpub. MS, 1987Google Scholar)

19 Cooke to Hillman, 15 April 1920, as cited in Fraser, “The ‘Labor Question,’ ” 60n9.

20 Fraser, “The ‘Labor Question,’ ” 62.

21 Lilienthal, David, TVA: Democracy on the March (1944; New York, 1953), 23.Google Scholar

22 New York Times, 20 Dec. 1933, 33, col. 1. Leuchtenberg notes that the Times eventually became a strong supporter of the TVA. See Leuchtenberg, FDR and the New Deal, 55n39.

23 Franklin D. Roosevelt, Executive Order No. 6514,19 Dec. 1933, RG 234, RFC/EHFA, box 5; “Certificate of Incorporation of Electric Home and Farm Authority, Inc.,” 17 Jan. 1934, copy in RG 234, RFC/EHFA, box 4.

24 Lilienthal-Quinn correspondence, 1 and 4 Dec. 1933, RG 234, RFC/EHFA, box 85; V. D. L. Robinson, TVA administrative assistant, to W. J. Browne, Gibson Corporation, 2 Feb. 1934; H. W. Newell, Frigidaire Corporation, to Lilienthal, 5 March 1934, RG 234, RFC/EHFA, boxes 84 and 80, respectively.

25 EHFA correspondence with Manufacturers, Feb.-March 1934, RG 234, RFC/EHFA, boxes 80–85. The EHFA denied approval based on technical considerations for only one company, the Rutenber Electric Company of Marion, Indiana. The wiring in its stoves was deemed inadequate; the first refrigerator it sent for testing leaked coolant, and the second failed to maintain a satisfactory internal temperature under extreme external conditions (external temperatures over 100 degrees Fahrenheit). See correspondence with Rutenber Co., box 83.

26 “TVA Appliances,” Business Week, 17 March 1934, 10–11.

27 “Certificate of Incorporation of Electric Home and Farm Authority, Inc.,” 17 Jan. 1934, copy in RG 234, RFC/EHFA, box 4; New York Times, 25 March 1934, 1, cols. 4 & 5. The other five corporations were: Commodity Credit Corporation, Public Works Emergency Housing Corporation, Federal Surplus Relief Corporation, Susbsistence Homesteads, and Tennessee Valley Associated Cooperatives. The report characterized Delaware incorporation laws as “easy” and also reported that the charters were drawn up “by officials now assisting in the administration of their [the corporations'] activities.”

28 EHFA Correspondence with Refrigerator Manufacturers, March-July 1934, RG 234, RFC/EHFA, boxes 80-85.

29 Lilienthal to McIntyre, 21 Nov. 1933.

30 Hughes, Thomas P., American Genesis (New York, 1989), 231–38Google Scholar; Weaver, Glenn, The Hartford Electric Light Company (Hartford, Conn., 1969), 98–99Google Scholar; “Appliance Bargain,” Business Week, 17 Sept. 1938, 27.

31 Whitwell, George E., “Only Industry Selling Will Beat Yardsticks and Taxes,” Electrical World, 24 March 1934, 427Google Scholar.

32 “T.V.A. Effects A Deal with Southern Utilities,” Electrical World, Jan. 1934, 120; “Federal Spending Compels Utility-Selling,” ibid., Feb. 1934, 209.

33 Forrest Allen to George D. Munger, EHFA Commercial Manager, 26 June 1934, RG 234, RFC/EHFA, box 15; “TVA Demonstrator,” Business Week, 19 May 1934, 12.

34 “TVA Demonstrator,” 12; “Budget for Promotional Division for Fiscal Year Beginning July 1, 1934,” RG 234, RFC/EHFA, box 15.

35 “Chattanooga Exhibit,” RG 234, RFC/EHFA, box 15.

36 EHFA Statement of Operations, Installment Contracts Purchased through 31 Aug. 1937, RG 234, RFC/EHFA, box 4.

37 George D. Munger, to H. W. Newell, Frigidaire Corporation, 2 July 1934, RG 234, RFC/EHFA, box 80.

38 D. K. Galtney, Galtney Motor Company, to EHFA, no date (c. fall 1934), RG 234, RFC/EHFA, box 34.

39 Electric Refrigeration News, 8 Aug. 1934, 8.

40 Lilienthal Memorandum to Franklin Roosevelt, 21 Nov. 1934; Lilienthal to G. D. Munger, 29 Jan. 1935, both in RG 234, RFC/EHFA, box 34.

41 New York Times, 9 May 1934, 35, col. 2.

42 For a report on the coordinated efforts of the three associations, see R. E. Baylis, “Liberalized Credit—Its Disadvantages and Its Effects on Buying Power,” Proceedings of the Silver Anniversary Convention of the National Retail Credit Association (1937), 94; for the quotes, see NASFC News, June 1935,1, and Nov. 1935, 1. The NRCA Proceedings and the NASFC materials are located in the Baker Library of Harvard Graduate School of Business Administration, Boston, Mass. I am indebted to Martha Olney for informing me of the existence of these records.

43 A. E. Morgan to Lilienthal, 7 Sept. 1934, and G. D. Munger for Lilienthal to Morgan, 20 Oct. 1934, RG 234, RFC/EHFA, box 5.

44 Lilienthal to Roosevelt, 3 Dec. 1934. Lilienthal Papers, box 63.

45 Material on this shift can be found in several different EHFA files. See Executive Order No. 7139, 12 Aug. 1935, ending the Delaware corporation; Lilienthal to Roosevelt, 26 July 1935; and, Congressional File, RG 234, RFC/EHFA, boxes 4, 5, and 31, respectively.

46 “EHFA Pussyfoots Successfully,” Business Week, 15 Aug. 1936, 37.

47 EHFA-REA Relations, Correspondence, Oct. 1938, RG 234, RFC/EHFA, box 32; Executive Order No. 9256, 13 Oct. 1942, liquidating the EHFA, RG 234 RFC/EHFA, box 4.

48 “Memorandum. Re: Operations of Electric Home and Farm Authority,” no date, c. 1938, RG 234, RFC/EHFA, box 5. Coppock, Joseph D., “Government As Enterpriser-Competitor: The Case of the Electric Home and Farm Authority,” Explorations in Entrepreneurial History 1 (1964): 190–92.Google Scholar

49 Coppock, Joseph D., Government Agencies of Consumer Instalment Credit (New York, 1940)Google Scholar; Coppock, “Government As Enterpriser-Competitor,” 188–98.

50 “Expenditures for Electrical Appliances by Workers in 42 Cities,” Monthly Labor Review 46 (Feb. 1938): 447–54Google Scholar; Leitzell, Ted, “Uncle Sam, Peddler of Electric Gadgets,” New Outlook 164 (Aug. 1934): 51–52.Google Scholar

51 For studies of the emergence of this mass production-mass consumption synthesis, see Aglietta, Michel, A Theory of Capitalist Regulation: The US Experience, trans. Fernbach, David (1976; London, 1979)Google Scholar; Davis, Mike, “ ‘Fordism’ in Crisis: A Keview of Michel Aglietta's ‘Regulation et crises: L'experience des Etats-Unis,’” Review 2 (Fall 1978): 207–69Google Scholar; and Davis, Mike, Prisoners of the American Dream (New York, 1986), 52–117Google Scholar.

52 A recent study of the RFC during the New Deal by James Olson asserts that the EHFA was “an instant success,” financing the sale of over 70,000 refrigerators during 1934. This estimate appears greatly inflated, as agency records in the National Archives indicate a total of 4,886 contracts financed from the EHFA's start in 1933 through the end of June 1935. Given the small number of contracts, Olson's figure of 70,000 refrigerators seems quite impossible. For Olson's appraisal, see Olson, James S., Saving Capitalism: The Reconstruction Finance Corporation and the New Deal, 1933–1940 (Princeton, N.J., 1988), 142Google Scholar. My appraisal is based on reports made by the EHFA. See, Untitled Statement of Operations, through 31 Aug. 1937, RG 234, RFC/EHFA, box 4.

53 During House debates on power policy, Mississippi congressman John Rankin, whose district included Tupelo and other TVA and EHFA territory, read excerpts from letters written to him by his constituents that described how they made use of more power due to reduced rates. He read fifty or more of the accounts, noting that he had many more in his office. Some letters listed a wide array of appliances and electric tools, all of them listed at least three basic items—lights, fans, and radios. For examples, see Speech of John Rankin, 25 March 1936, Congressional Record, 4346–50.

54 McCraw, TVA and the Power Fight, 75–76; and EHFA Statement of Operations, 1939, 5–6, and chart 1, RG 234, RFC/EHFA, box 31.

55 For studies of the growth-oriented coalition that shaped America's postwar economy, see Collins, Robert, The Business Response to Keynes (New York, 1981)Google Scholar; McQuaid, Kim, Big Business and Presidential Power (New York, 1980)Google Scholar; and Wolfe, Alan, America's Impasse: The Rise and Fall of the Politics of Growth (New York, 1981).Google Scholar For a provocative study of which industrial sectors joined the New Deal coalition, see Ferguson, Thomas, “From Normalcy to New Deal: Industrial Structure, Party Competition, and American Public Policy in the Great Depression,” International Organization 38 (Winter 1984): 41–94.CrossRefGoogle Scholar

56 Lilienthal to Frankfurter, 7 Aug. 1934, Lilienthal Papers, box 63.