Morgan, Morgan & Lilienthal

Only five years ago Franklin Roosevelt called TVA "the widest experiment ever undertaken by a government." By last winter the experimenters chosen to do the job had become one of the President's worst headaches. Quarreling among the three TVA directors obliged him to call them to the White House to try their charges against one another. He was pained when Chairman Dr. Arthur Ernest Morgan, insisting that the trial would not be adequate, refused to discuss with the President his complaints against his co-directors, insisted on taking them to Congress (TIME, March 21). When the President dismissed him as TVA's chairman, Arthur Morgan went right on using the title and, at his home in Yellow Springs, Ohio, bided his time.

Last week Dr. Morgan's time came. A Congressional joint committee of five members from each house, headed by Ohio's affable, gum-chewing Senator Vic Donahey, foregathered in the Senate's cavernous marble caucus room. Senator Donahey called Arthur Morgan to present his complaints first. The gaunt, eagle-faced old hydraulic engineer carried to the stand a fat bale of mimeographed matter. As he read, his big audience became successively quiet, bored, restless. For in low, mumbling tones he continued reading, uninterrupted, for five and three-quarter hours.

Morgan v. Colleagues. In 1931, toward the end of his presidency of Antioch College, Dr. Morgan was obliged to rest his mind with a long vacation in Europe. The private view of many of his critics is that he needs to rest his mind again. The form, substance and manner of the case which he last week presented bore out no such view. He was calm, cogent, precise. He began by stating that he accused his colleagues of no dishonesty except intellectual dishonesty. Said he:

"Specifically I charge:

"1) Inaccurate and misrepresentative reports to the President, the Congress, and the public.

"2) Mismanagement of the power program.

"3) Lack of candor in statements to the Congress and the public concerning the power program.

"4) Improper and misleading accounting, reporting and publicity in reference to the 'yardstick.'

"5) Collusion, conspiracy and mismanagement in administration.

"6) Subservience to political and other special interests."

Some of his supporting charges:

P: Lilienthal hired an ex-Insull employe to promote sales of TVA electricity, then criticized the Chairman for hiring an ex-Insull engineer to coach him for a power conference called by the President.

P: Lilienthal misrepresented the attitude of Commonwealth & Southern (biggest private utilities system in TVA-land) toward sale of its properties to TVA, thus maintaining "an attitude of antagonism and bitterness in the public mind."

P: The famed power rate "yardstick," as developed by Lilienthal, was false because from TVA's rate bases were omitted many costs which private utilities would have had to meet; the power loads built up to bring rates down were built haphazardly, wastefully, with expensive ballyhoo.

In the allocation of costs on TVA dams and reservoirs--between navigation, flood control, national defense, agriculture and power--Director Lilienthal tried to make TVA adopt the "byproduct" theory of power development, which would make the power look extremely cheap. "But for the power issue, the TVA dams never would have been built. To deny that is sheer hypocrisy . . . Mr. Lilienthal's byproduct theory is a subterfuge."

Dr. Morgan hammered both his former colleagues when he came to the Berry Marble Case. In the Senate Chamber nowadays, Major George Leonard Berry sits very quietly, a bit dejectedly, his thinning hair plastered sidewise over his pate like an oldtime bartender's. Now junior Senator from Tennessee, as well as President of the International Pressmen's Union, he was Coordinator of Industrial Co-operation in the New Deal when, in 1935, he suddenly hove into TVA's picture as a claimant for $1,600,000 for certain marble deposits in lands which TVA had flooded. Arthur Morgan last week reasserted that the lands had been surveyed by TVA experts and found to contain no marble of commercial value, that Directors Harcourt Morgan & Lilienthal nevertheless tried to have a conciliator to decide the value of the Berry claims; that not until evidence of bad faith by Berry & Partners was unearthed during condemnation proceedings were the claims finally declared worthless and the Government saved from a "bare-faced" steal.

Colleagues v. Morgan. First to reply to Arthur Morgan next day was quiet little Harcourt Morgan. He deplored the fact that, whereas Dr. Arthur's original charges "have been generally understood ... to be charges of personal financial dishonesty and corruption," only now, three months later, were they known not to be charges of graft. "During these many weeks a heavy cloud has rested on Mr. Lilienthal and myself, as well as the entire staff of TVA. . . . The most painful experience that I have suffered in nearly 40 years of connection with public undertakings.

He then declared that, from the very first meeting of the TVA board, Chairman Morgan had taken bit in teeth and galloped off in many directions. He had fired at them "a series of unrelated proposals, some of which were details, others which were of far-reaching and startling significance." Examples:

"Proceed with the fertilizer program. . . . Acquire some phosphate land. . . . While the phosphorus plant is getting under way, work out plans for a complete cycle of processes, perhaps including Portland cement and dry ice. . . .

"A training program at Cove Creek can be begun, even though we have not a completed plan. This will require a number of men and we should begin to build that staff. . . .

"We should at once appoint a small commission to study the proper function of the real-estate man in an organized society, and to formulate a policy. . . . We could then refuse to deal with real-estate men who refuse to adopt that policy. . . ."

Also in a "disconnected and scattered" way, Chairman Morgan had proposed a separate TVA coinage, and taking land away from farmers who misused it.

Harcourt Morgan went on to testify that:

P: He and Lilienthal had proposed that each member of the Board take temporary responsibility for specified phases of TVA work. To this the chairman agreed. Not until five years later did his colleagues know that he imputed to them improper motives in pressing this plan.

P: He was "shocked" to discover in 1936 when Director Lilienthal's first term expired that Arthur Morgan was wangling to have Lilienthal dropped, and discussing with at least two of his subordinates the possibility of getting one of them appointed in his place.

P: When Lilienthal was reappointed Dr. Arthur did not resign, as threatened, but tried to get President Roosevelt to approve the principle that the Board could act only after a unanimous vote. Failing in that, he tried to tie the Board's hands by going away for a long rest.

P: When the two-man Board went ahead with its work without him, he sought to prove their actions invalid. Then they adopted a formal rule of majority procedure, and thereafter Chairman Morgan was not isolated by them, but "by his own action, removed himself" from the Board's work by chronic dissent, or by absence (28 out of 94 meetings).

Testifying last, Director Lilienthal was expected to supply the major fireworks. Although he occasionally put some feeling into his voice, once pounded his desk, his was mostly another long, dull recital. After deploring the "reckless charges, insinuations and unjustifiable slurs" of a "character assassin," Director Lilienthal defended his "yardstick," his negotiations with Commonwealth & Southern, the wisdom and economy of his power program. Of the Berry Marble Case he said: "I deny flatly that I adopted ... a position of deference to Major Berry. . . . This particular situation concerns a mere difference of opinion ... as to the course of procedure best adopted to protection . . . from the danger of a costly award."

Significance. To Washington observers who regarded the investigation as a contest between a high-minded oldster (Arthur Morgan), able but unstable, and a purposeful man (David Lilienthal), not too squeamish about the means necessary to promote public ownership in which he heartily believes, shrewd Mr. Lilienthal would have the better of it. Save as a political incident, the investigation appeared important only as it might publicize some lesser known facts about the Government's "widest experiment."

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