« PreviousContinue »
asts. Some feared that he was deviating from the national power policy; others suspected that he intended to give preferential rates to private industry. Judson King of the National Popular Government League defended Ross but urged him to propagandize the necessity for a balanced load on any public utility. King strongly endorsed the administrator's decision to sell energy to the private utilities and rebuked the champions of public power for not having "thought the thing through or faced the necessity of amortization and what must be done to repay Government loans.” 6
Meanwhile, Ross decided to encourage the formation of utility districts in Oregon and Washington. The fiscal agent for the districts in 1937 and the man responsible for selling their bonds was Guy C. Myers, who maintained an office on Wall Street and had excellent contacts in eastern financial circles. In their formative years, the districts experienced numerous administrative and legal problems, and the administrators treated them as a liability. Jack R. Cluck of the Seattle law firm that handled legal work for the districts described their problems. "We have found defects in the election procedure of four or five districts thus far, making litigation necessary which otherwise could be avoided, and rendering one or two of the districts subject to the serious danger of being held invalid and non-existent." The districts were not ready in 1937 to provide the market for power that Ross desired, and, increasingly, Governor Charles H. Martin of Oregon and local chambers of commerce pressured Ross
to fix rates beneficial to private industry and the power companies.?
Martin publicly, and privately in letters to Ickes and Ross, had raised the legitimate point that the success of the project depended on the government's obtaining the revenues to pay back its investment. Ross agreed but confidently predicted that the project would fully repay the government. He resisted the pressure to give the private utilities and industry a preferential rate. The matter, nevertheless, weighed heavily upon Ross's mind. He had discussed its implication for the national power policy with the president in October 1937, and both men felt it was necessary to establish a yardstick rate that could be applied to other federal hydroelectric projects as soon as possible.8
Ross in March 1938 revealed a plan to conduct public rate hearings to give residents of the Pacific Northwest the opportunity to voice their sentiments. He decided that the initial testimony would be taken in Salem and Olympia. The third hearing, as a matter of protocol, would have to occur in Boise, a point well beyond immediate reach of economical Bonneville power. John Fischer, general counsel of the Bonneville Power Administration, thought that Ross was pursuing "his usual very cagy tactics." He interpreted the rate hearings, the repeated offers to purchase Puget Sound Power and Light, and the rush to form new PUDs as part of the administrator's design
to Ross, Oct. 13, 1936, Dec. 27, 1937, and Federal Power Commission, "Allocation of Costs to Initial Power Development,” Feb. 8, 1938, Box 96, Seattle City Lighting Records, UWL; Daniel M. Ogden, Jr., “The Development of Federal Power Policy in the Pacific Northwest” (Ph.D. diss., University of Chicago, 1949), p. 248; L. C. Kramien to Ickes, Apr. 23, 1937, Tray 81, Box 4, Norris Papers, LC.
6 Judson King to Ross, Feb. 12, 1938, Box 19, Judson King Papers, LC.
7 See Richard L. Neuberger, "Power Play," Col. lier's, Oct. 22, 1938, pp. 12-13; Jack R. Cluck to Neuberger, Nov. 24, 1937, to John C. Fischer, Nov. 29, 1937, to John M. Reynolds, Sept. 25, 1937, and to Llewellyn Evans, Nov. 3, 1937, Box 13, Houghton, Coughlin, Cluck & Schubat Archive (hereafter cited as HCC&S Arch.), UWL; Martin to Ickes, May 4, 1937, and Ickes to Martin, May 13, 1937, Box 23, NPPC Records, CF, RG 48, NA.
8 See Ross to Paul R. Kelty, Aug. 6, 1937, Box 16, Robert W. Beck Papers, UWL; Ickes to Martin, May 13, 1937, Box 23, NPPC Records, CF, RG 48, NA; Ross to Ickes, Oct. 11, 1937, Box 3099, 1-310, pt. 2, Central Classified Files, RG 48, NA; Ross to Roosevelt, Dec. 22, 1937, OF 2882-B, FDRL.
to "bring the power companies of Oregon to their knees.” In fact, by the time the commercial and private utility interests of Portland had advanced their pleas for rates reflecting transmission distance, the burden of testimony was overwhelmingly against them.
Fischer's confidence that Ross would "outmaneuver his opponents” was justified. In June 1938 Ross disclosed that the Bonneville advisory committee, with the approval of the Federal Power Commission, had fixed the monthly charge per kilowatt-hour at $14.50 at the dam and $17.50 for primary power elsewhere on the transmission system. This rate would guarantee the government a return over forty years of 3.5 percent and an additional 1.183 percent for amortization. 10
Ickes as early as April 1938 had declared to Ross that the widespread sale of power "will be a boon to the whole of the Northwest and will justify completely, I am sure, the action of the President and the Administration in developing this great project.” Ross replied, tempering his optimism with an awareness that the work was just beginning. “Our greatest effort,” he wrote Ickes, “is to get out our lines to the market which is waiting.” Privately he had told his executive assistant that the public ownership of all utilities was the only feasible way to attain the lowest possible light and power
At this point the Bonneville project encountered new obstacles. Ross had spent nearly the entire initial appropriation on rate studies, planning, and staffing. Funds were low for financing other essential tasks. The PUD commissioners, meanwhile, admonished him to exert pressure upon Ickes to release Public Works Administration funds for constructing lines and purchasing properties. Skeptical of the worth of the districts and of their ties through Myers to the eastern bankers, Ickes caused PWA to procrastinate in the grant of loans, thereby forcing Ross to search for funds elsewhere. The project also came under criticism from Los Angeles municipal power enthusiasts and from Boulder Dam advocates. The former feared Bonneville's rate schedule would undermine confidence in their own, the latter envied Bonneville's favorable interest and amortization features. The private utilities, naturally, resisted any effort to force them out of business. 12
In these circumstances, Ross resorted to stopgap financing, principally loans from the Reconstruction Finance Corporation and the Rural Electrification Administration, to keep the project solvent and to encourage the districts to purchase utility properties. His success in this regard is evidenced by the fact that congressional appropriations for the BPA increased thirty-six fold during his tenure 13
The project received a major setback when Ross died on March 14, 1939, following abdominal surgery. His death came as a deep shock to friends and critics and especially to Roosevelt with whom he had a warm relationship. Ross had been a firstrate engineer, a business organizer of high ability, and an evangelist of public power. He had known how to operate in the tangled network of bureaucracy that was the New Deal. The Portland Oregonian editorialized that the secret of his success had been to persuade the administration to invest in distribution lines so that the BPA would have to find or create power users. Yet the Bonneville project was still in its infancy at the time of Ross's death. For all his skills, he evidently had found it difficult to delegate authority. The Oregonian noted that he had pointed the project toward a particular goal, but that he also had established a pattern that would prove difficult for his successor to alter should circumstances warrant. In addition, Ross had not devoted sufficient attention to staff problems. “When it came to Bonneville,” Myers wrote, “he did not have time to build up the organization he would eventually have had, as many were forced upon him from Washington and through friendship. ... Mr. Ross was well-aware of the inefficiency of the Bonneville personnel and talked to me about it many times, but as his first job was to construct lines ... to deliver Bonneville power, he did not let the personnel bother him too much." 14
9 Portland Oregonian, Mar. 8, 1938; U. J. Gendron to Ross, Mar. 4, 1938, Box 65, Seattle City Lighting Records, UWL; Fischer to Joel D. Wolfsohn, Mar. 7, 1938, and Ross to Ickes, Apr. 20, 1938, Box 23, NPPC Records, CF, RG 48, NA; Cluck to Ervin E. King, Apr. 23, 1938, Box 13, HCC&S Arch., UWL.
10 Ross to Ickes, Apr. 20, 1938, Box 23, NPPC Records, CF, RG 48, NA.
11 Ickes to Ross, Apr. 27, 1938, ibid.; Bonneville Power Administration, “History of the Bonneville Power Administration,” 3 vols. (unpub., 1945), 1:21. Lilian Davis edited the typewritten copy, which is on deposit in the BPA Library, Portland, Oregon; Ross to Gendron, Dec. 23, 1938, Box 65, Seattle City Lighting Records, UWL; see also Ross to Ickes, Apr. 20, 1938, Box 23, NPPC Records, CF, RG 48, NA.
12 See Cluck to Ross, Jan. 25, 1938, C. C. Hockley to Cluck, Feb. 7, 1938, and Cluck to King, Apr. 27, 1939, Box 13, HCC&S Arch., UWL; Beck to Cluck, Oct. 19, 1937, Box 57, and to Ross, Jan. 17 and Oct. 12, 1938, Box 49, Seattle City Lighting Records, UWL; "History of the BPA," 1:26-27.
13 See Cluck to Ross, Apr. 14, 1938, to King, Apr. 27, 1938, Ross to Cluck, May 31, 1938, Box 13, HCC&S Arch., UWL; Ross to Ickes, Apr. 20, 1938, Box 23, NPPC Records, CF, RG 48, NA; Oregonian, May 26, 1938.
Unfortunately, dissension racked the project after Ross's death and created difficulties for his successors. The Land Division, for example, bitterly resented criticism that it had not furnished information and legal descriptions necessary for acquiring rights of way and that it was delaying the work of the Construction Division. Simultaneously, Monroe Sweetland of the Oregon Commonwealth Federation and Richard L.
Neuberger, a young journalist, public power enthusiast, and future senator, urged the president's aide James Rowe to purge the agency of the "ineffective and incompetent” Fischer. They attributed the delay in constructing lines and the poor élan of the PUDs to Fischer's failure "to gear in with the long-time public ownership groups in Oregon." 15
The search for a new administrator continued through the spring of 1939. David Lilienthal judged correctly that Roosevelt was looking for a second Ross, and, although several candidates were considered, none was satisfactory to him. Ickes exercised a negative veto in the promotion of Robert W. Beck, Ross's right-hand man, but he refused to accept responsibility for any
confusion that occurred in the interim. When the president could not obtain the services of Julius Krug (who was in the final stages of litigation for the properties of Commonwealth and Southern on behalf of the Tennessee Valley Authority), he agreed to Ickes's suggestion that Frank A. Banks, chief construction engineer at Grand Coulee, serve as acting administrator.16
Shortly thereafter, the newspapers of Oregon instituted a campaign to persuade the president to make the appointment permanent, believing that Banks, a former Bureau of Reclamation official, would put a halt to the PUDs. The Oregonian editorialized that the appointment "would imply a valid and important change in general administration policies respecting that project" and would encourage "the thought that Bonneville and Grand Coulee are to be administered as true business
14 See the letters and obituary notices in Package C, Box 1, Guy C. Myers Papers, UWL, the unidentified newspaper clipping dated Mar. 25, 1939, in Box 22, King Papers, LC, and Oregonian, May 26, 1939; Carl Dreher, “J. D. Ross, Public Power Magnate," Harper's Magazine 181 (June 1940) : 56; Myers to Dreher, Aug. 15, 1939, Box Pl, Myers Papers, UWL.
15 “History of the BPA,” 1:16; Monroe 'T. Sweetland to James Rowe, Mar. 16, 1939, and to Benjamin V. Cohen, Mar. 27, 1939, Box 6, Cohen File, NPPC Records, RG 48, NA.
16 David E. Lilienthal, The Journals of David E. Lilienthal, 3 vols. (New York, 1964), 1:107-108; Ickes to Roosevelt, Apr. 22, 1939, President's Secretary's File, FDRL; Tex Goldschmidt to Jerome N. Frank, Mar. 28, 1939, Box 6, Cohen File, NPPC Records, RG 48, NA.
enterprises and not as promoters of political theory and economic experiment." 17
Throughout his tenure, Banks communicated frequently with Ickes, totally reversing the state of affairs under Ross, whose correspondence was infrequent and confined to periodic general summaries. The Oregon Daily Journal saw in this Ickes's determination to exercise a tight rein on the project-now that Ross no longer stood between him and the president. It noted as evidence that Banks, soon after taking office, fired or demoted the three men closest to Ross-John Fischer, Robert Beck, and Charles Carey-and that Oregon's congressmen had attempted to amend the basic law to enable the secretary of the interior to appoint the assistant administrator, chief counsel, and chief engineer.18
Events soon were to prove that Banks did not function effectively in the post. His decision in June 1939 not to promote vigorously the formation of new utility districts, while continuing to sell energy to the private utilities, incurred the wrath of district commissioners and public power enthusiasts. They wrote to Ickes that Banks was betraying the national power policy. Simultaneously, Banks reversed one of Ross's cardinal policies. He encouraged the districts to institute condemnation proceedings against the private companies. This decision precipitated a rebellion led by Beck, Carey, and Fischer, who declared that federal authorities “connected with the formulation of what might be called a national power policy had expressed themselves as being opposed to the institution of condemnation proceedings.” 19
Banks had violated Ross's principle of fair play and peaceful negotiations. His policy decisions also undermined the morale of men who had worked loyally for Ross. Lawrence Fly, the BPA's new chief counsel, complained to Benjamin V. Cohen that "the organization as a whole needs drive." Banks was adept at firing people, but the "greater immediate need is for intelligent hiring” and a “shaking up” of divisions and procedures. Herbert S. Marks, a troubleshooter whom Ickes dispatched to the Northwest in August 1939, offered a more chilling prognosis. “While we have been at work only a few weeks,” he wrote, “it has become increasingly evident to us that the condition of the organization and the attitude of the public towards it are far worse than the gloomy picture which I had been given initially, and that the prospects of remedying the situation are becoming less favorable with each day.” He added that there was “strong reason to doubt the sympathy of the present Administration of the project with the policy ... requiring that preference be given to public agencies over private utility companies.” In the last analysis, Ickes had no real alternative but to effect the removal of Banks.20
Because of the waxing strength of the PUDs, any administrator would have found it increasingly difficult to remain neutral in local political conflicts. The region in 1939 was alive with debate on the future of public power, and enthusiasts like Sweetland and Neuberger, the district commissioners, and the Commonwealth Federations expected the BPA administrator to support them. Banks's policies, ironically, had found little support among private power company executives. His cautious approach in negotiating resale rates, dictated in part by Ickes's close scrutiny,
17 Oregonian, May 6, 1939.
18 "History of the BPA,” vol. 1, ch. 4, p. 33; Seattle Post-Intelligencer, Apr. 28, 1939; Oregon Daily Journal, May 22, 1939; E. K. Murray to Ickes, Apr. 28, 1939, Box 13, HCC&S Arch., UWL; Beck to Thompson, Mar. 29, 1940, Box 7, Beck Papers, UWL.
19 Oregonian, June 11 and 13, July 2, 1939; Cluck to Homer T. Bone, May 5, 1939, and to King, Apr. 20, 1939, Box 13, HCC&S Arch., UWL.
20 Lawrence Fly to Cohen, July 18, 1939, Herbert S. Marks to Cohen, Aug. 9, 1939, Marks to Ickes, Aug. 9, 1939, Box 6, Cohen File, NPPC Records, RG 48, NA.
appeared to confirm their suspicions that he would renege on the commitment to sell them energy.21
While the negotiations were in progress in the summer of 1939, Ickes announced the dismissal of Banks and the appointment of Paul J. Raver of Chicago as permanent administrator. He was relatively unknown to public power enthusiasts, and his background as a professor of engineering and chairman of the Illinois Commerce Commission impelled the Wall Street Journal to predict that Raver would give a "conervative cast" to the BPA. Judson King, however, reassured Jack Cluck that the new administrator would cooperate with the public power movement in Washington and Oregon and “not sell you down the river.”
When Raver arrived in Portland in midSeptember, he found the building program well advanced but few power contracts signed. His maiden speech, a public relations gesture, attempted to sidestep the distribution controversy and to reassure the power companies that he would not use Bonneville to destroy legitimate private enterprise. He pleaded for time to acquaint himself with grass-roots sentiment and to correct the agency's organizational problems.23
Three weeks later, Raver received his initiation into the morass of New Deal politics. Harry Slattery of the Rural Electrification Administration accused him of indifference while the Washington Water Power Company systematically wrecked cooperatives in the eastern part of the state. This type of interagency conflict persisted throughout Raver's tenure. In January 1940, for example, Harlow S. Person re
corded a strong difference of opinion with Raver over the resale rate schedule and the disposal of revenues accruing from power sales to REA-financed cooperatives. His comments left little doubt that REA would fight to retain jurisdiction over both rates and revenues. The Bureau of Reclamation, by contrast, had long been oriented to private interests; it demanded that the administrator increase the rate schedule in order to repay the government's investment as quickly as possible and return taxes to local treasuries. Ickes, meanwhile, pursued his imperialistic scheme to bring all facets of the national power policy under his jurisdiction by continually manipulating his office to deprive the BPA of its autonomy.24
Raver was not indifferent to the criticisms but deeply resented the innuendo that he was sacrificing the goals of the public power movement. Replying to Judson King, he vented his anger upon the super-guardians of public power who denied him credit while seizing upon his mistakes. “Despite all criticism to the contrary," he observed, “in my opinion the public ownership movement has been materially strengthened within the last two months." 25
The administrator's performance, indeed, was promising. Raver had shifted the agency's emphasis to give preference to power sales, savings, and regional planning for power use. He also had consummated four new contracts with the private power companies, and reemphasized the importance of the BPA as a unit in regional and national
21 Ickes to Frank A. Banks, Aug. 17, 1939, Box 3115, 1-310, pt. 1, Central Classified Files, RG 48, NA.
22 Oregonian, Aug. 22, 1939; King to Cluck, Sept. 11, 1939, Box 4, HCC&S Arch., UWL.
23 “History of the BPA,” vol. 2, intro., p. 4; Oregonian, Sept. 17, 1939.
24 Ogden, “Power Policy in the Northwest,” pp. 324-326; King to Raver, Oct. 20, 1939, Box 22, King Papers, LC; Raver's address of May 1, 1940, Box 3100, 1-310, pt. 6, Central Classified Files, and “Minutes of the Meeting of Jan. 17, 1940,” Box 21, NPPC Records, CF, RG 48, NA; Philip J. Funigiello, “Kilowatts for Defense: The New Deal and the Coming of the Second World War," Journal of American History 56 (1969) : 614ff.
25 Raver to King, Oct. 16, 1939, Box 22, King Papers, LC; Raver to Ickes, Oct. 10, 1939, Box 6, Cohen File, NPPC Records, RG 48, NA.