Electric Warriors

Midway into his first term, President Franklin Roosevelt went to war with the American electric utility empires. The November 1934 elections had increased already large Democratic majorities in Congress, positioning Roosevelt to fulfill one of his campaign promises. In his January 4, 1935, State of the Union address, he urged abolition of “the evil of holding companies,” referring to the multi-layered, closely held financial structures that since the 1920s had dominated the power trade, raking in huge, opaquely accounted-for profits (“Pyramids of Power,” p. 40).

Confronting the Depression during 1933-34, FDR had focused on jobs programs like the Tennessee Valley Authority, created to construct dams and promote development in one of the country’s poorest regions. At the head of the opposition to this expanded government role in the marketplace stood the charismatic Wendell Willkie, president of Commonwealth & Southern, the area’s major utility holding company. The Roosevelt/Willkie confrontation set off what historian Thomas McCraw called “one of the most intense struggles between government and business in American history.” Now, with the TVA fight and other ongoing New Deal battles as a backdrop, the president wanted to reform the entire power industry, further pitting him against Willkie.

Roosevelt had laid out his vision for an electrified America in the 1932 campaign. Speaking in Portland, Oregon, in a presentation broadcast nationwide on radio, he attacked holding companies and called for a massive federal program of dam-building and rural electrification. “The question of power,” FDR declared, “is primarily a national problem.” He lambasted utilities for an “unprincipled campaign of misinformation” that had flooded newspapers and airwaves with self-serving claims and even circulated school lesson plans extolling utilities and justifying higher rates for customers.

Critics portrayed Roosevelt as a revolutionary, but at heart he was a reformer. Expecting to be blasted for advocating socialism, he insisted that “development of utilities should remain, with certain exceptions, a function for private initiative and private capital.” FDR did not