Causes and Impact of Tennessee Valley Authority

Examining The Causes and Impact of the Tennessee Valley Authority

The Tennessee Valley Authority Act, 1933 was instrumental in economic development in the Tennessee Valley during the great depression. President Roosevelt envisioned TVA as a corporation “clothed with the power of government but possessed of the flexibility and initiative of a private enterprise.” TVA was created to manage the Tennessee River and provide energy at affordable prices. They constructed sixteen dams between 1933 and 1944. The paper will examine the causes and roadblocks leading up to the formation of the TVA and its effects on society, nature and economy.

The Tennessee Valley Authority (TVA) was established to improve the economy of the state during the great depression. The Tennessee region was particularly affected by the crisis in the 1930s. Many families lived on $100 annual income. At the time, it was believed that privately owned electricity companies were misusing their power at the public’s expense. Over 90% of the electricity was controlled privately. TVA was created in 1933 for federal ownership of hydroelectric power facilities. It was one of the first federal hydropower agencies. The federal government bought multiple private companies and many others shut down unable to compete with TVA. The congress passed the Public Utility Holding Company Act in 1935 to regulate privately owned electric utilities. There were also regulations imposed by Congress to toughen competition by private companies.

The idea of government ownership of means of production was controversial and faced a lot of opposition. Before the TVA, there were talks by the government to build a dam in the Tennessee River and sell electricity. Senator George Norris, who later became the man behind TVA, was an advocate of the dam and managed to convince Congress to pass the proposition (The Muscle Shoals Bill). However, the bill was vetoed by President Hoover, who stated that “I am firmly opposed to the Government entering into any business the major purpose of which is competition with our citizens” and “to break down the initiative and enterprise of the American people; it is the negation of the ideals upon which our civilization has been based.” The TVA was supposed to pull out the region from economic depression by providing employment and cheap electricity. Dean Russel of The Foundation for Economic Education wrote a book titled ‘The TVA Idea’, detailing how the TVA was not the economic blessing that it promised to be. He argued that even though the TVA would increase employment in the region, it would do so at the cost of the taxpayers who could have spent that money elsewhere, thus nullifying any net increase. He also argued that private hydroelectric companies could do just as good a job of providing cheap electricity as the TVA. He also accused the TVA of creating a monopoly in the power industry that it