Tennessee Valley Authority - History of Business in the U.S.
Identification: Government-owned corporation established to provide electricity and economic development to the Tennessee Valley region
Date: Founded on May 18, 1933
Significance: Through electric power production, agricultural advances, river improvements, land management, and social and recreational programs, the TVA has revitalized much of the Tennessee Valley. The agency remains an important example of how public ownership and private interests can intersect to create economic development.
In April, 1933, one month after taking office as president of the United States, Franklin D. Roosevelt recommended the Tennessee Valley Authority (TVA) Act to Congress’ consideration. Roosevelt championed the plan of Senator George Norris of Nebraska to build a series of dams to control flooding, provide navigation, generate electric power, and stimulate industrial development on the Tennessee River. On May 18, 1933, Congress passed the TVA Act by a wide margin, and later that same day Roosevelt signed the measure into law. Congress appropriated $50 million for the Tennessee Valley Authority and gave it comprehensive powers for owning, developing, and operating hydroelectric resources in the economically depressed Tennessee Valley. The authority’s operating region included parts of Tennessee, Alabama, Kentucky, Virginia, Georgia, North Carolina, and Mississippi.
During the 1930’s, the TVA embarked on a massive engineering effort to harness the power of the Tennessee River and its tributaries. Natural resource development and regional planning were crucial to the Tennessee Valley Authority’s approach to rebuilding the region. The giant turbines in the powerhouses of the TVA’s dams quickly electrified rural areas. A stable power supply and a 650-mile navigable waterway attracted new industry to the poverty-stricken Southeast. Existing businesses in the region, such as the Aluminum Company of America (ALCOA), benefited greatly from the Tennessee Valley Authority’s work. The TVA also brought hundreds of new jobs to the region.
Initially, a three-member board of directors managed the agency. Arthur Morgan, David Lilienthal, and Harcourt Morgan served on the first board and together led the agency through the tumultuous 1930’s. Each member focused on a particular area of the TVA’s work: Board chair Arthur Morgan led the engineering effort and resettlement programs for those directly affected by the projects; Lilienthal directed the electric power program and drafted power policy; and Harcourt Morgan managed an agricultural division focused on fertilizer production and educational programs for farmers.
Electric power production remains the most important facet of the Tennessee Valley Authority’s operations and its history. By the mid-1930’s, Arthur Morgan, who favored cooperation with private power companies, clashed with Lilienthal, who encouraged expansion and competition. At the same time as these early board disagreements, the Supreme Court ruled several other New Deal agencies unconstitutional. Two legal challenges, led by George Ashwander and the Tennessee Electric Power Company, brought the TVA before the Supreme Court. In both cases, the Supreme Court upheld the constitutionality of the authority. Early board struggles resulted in Arthur Morgan’s removal from the board and Lilienthal’s ascendancy to the chairmanship. Lilienthal led the agency during World War II and into the early years of the Cold War.
By the 1950’s, the TVA had completed more than twenty dams and largely accomplished its goal scientifically to control the Tennessee River. On the whole, subsequent Tennessee Valley Authority leaders attempted to keep electric power rates low, expand their services, develop community-based programs, encourage economic and industrial growth, and manage natural resources.
During the last half of the twentieth century the TVA found itself in the middle of several controversies. Its efforts to complete the Tellico Dam during the 1970’s brought considerable public outcry. The Tellico project, completed in 1979, inundated several important Native American sites, further threatened the endangered snail darter, displaced local residents to make way for upscale lakefront residential communities, and flooded many acres of quality farmland. The authority also built over a dozen coal-fired power plants and began construction of nuclear power plants to keep up with increased electric demands. These projects drew fire from environmentalists, politicians, and residents. As a result, the TVA made efforts to reduce air pollution and halted construction of many planned nuclear plants.
The Tennessee Valley Authority is the nation’s largest public power company. With the help of 159 locally owned distributors, the TVA serves power to about 8.8 million people in the Tennessee Valley. The authority is an international example of regional development and government regulation. Its multiple missions have resulted in untold benefits and spurred enormous economic growth in the Tennessee Valley for over seventy-five years.
Aaron D. Purcell
- Chandler, William U. The Myth of TVA: Conservation and Development in the Tennessee Valley, 1933-1983. Cambridge, Mass.: Ballinger, 1984. In this critical assessment of the agency, Chandler questions the TVA’s economic benefits and charges that the authority may have impeded growth in the region that it was intended to improve.
- Hargrove, Erwin C. Prisoners of Myth: The Leadership of the Tennessee Valley Authority, 1933-1990. 2d ed. Knoxville: University of Tennessee Press, 2001. While reviewing the TVA’s leadership, Hargrove explains how the agency remained relevant long after its dam projects had concluded.
- Hubbard, Preston J. Origins of the TVA: The Muscle Shoals Controversy, 1920-1932. Nashville, Tenn.: Vanderbilt University Press, 1961. This survey chronicles the events leading up to and the reasons behind the creation of the Tennessee Valley Authority.
- Lilienthal, David E. TVA: Democracy On the March. New York: Harper&Brothers, 1944. In masterful fashion, Lilienthal connects public ownership to democracy and free enterprise, arguing that the TVA represented a model of decentralization that gave economic power back to the people.
- Owen, Marguerite. The Tennessee Valley Authority. New York: Praeger, 1973.Written by a TVA employee, this excellent introduction to the history and purpose of the authority remains a relevant work.
- Purcell, Aaron D. “Struggle Within, Struggle Without: The TEPCO Case and the Tennessee Valley Authority, 1936-1939.” The Tennessee Historical Quarterly 61, no. 3 (2002): 194-210. Reviews the early history behind the TVA’s commitment to public power production and its relationship with preexisting private power companies in the Tennessee Valley.