Oral History Interview with
Paul W. Ager
Chief Budget Officer, Tennessee Valley Authority, 1940-47.
Hollywood, California
August 15, 1970
Number 1
By Dr. Charles W. Crawford [Notices and Restrictions | Interview Transcript | List of Subjects Discussed | Additional Ager Oral History Transcripts]
NOTICE
This is a transcript of a tape-recorded interview conducted for the Harry
S. Truman Library. A draft of this transcript was edited by the interviewee
but only minor emendations were made; therefore, the reader should remember
that this is essentially a transcript of the spoken, rather than the written
word.
Numbers appearing in square brackets (ex. [45]) within the transcript indicate the pagination in the original, hardcopy version of the oral history interview.
RESTRICTIONS
This oral history transcript may be read, quoted from, cited, and reproduced
for purposes of research. It may not be published in full except by permission
of the Harry S. Truman Library.
Opened December, 1981
Harry S. Truman Library
Independence, Missouri
[Top of the Page | Notices and Restrictions | Interview Transcript | List of Subjects Discussed | Additional Ager Oral History Transcripts]
Oral History Interview with
Paul W. Ager
Hollywood, California
August 15, 1970
Number 1
By Dr. Charles W. Crawford
[1]
DR. CRAWFORD: Mr. Ager, I suggest that we start by getting a summary, in whatever form you want to give it, of your early life, your education, your experience before joining TVA. I suggest you start with when and where you were born and just develop it from there, if you
will, to the point that you became associated with TVA.
MR. AGER: Well, I was born in Worthington, Minnesota, Nobles County, in 1904. At the age of four my father, my older brother and sister and mother and I moved to Southern Oregon where my father became a schoolman, first in a small, country school and gradually progressed to a small city school. In 1916 he became County School Superintendent in Jackson County in
Southern Oregon. This terminated in 1920 when the pay of a county school superintendent, fixed by state
[2]
law, was so low that my father chose to go back to being a city school superintendent, and we moved from Southern Oregon to Vale, Oregon in Malheur County, in the eastern edge of the state, where I graduated from high school in 1922. The following fall my father became superintendent of schools at Bend, Oregon, at a considerable increase in salary, and I entered the
University of Oregon in Eugene, where I graduated in 1926 with a major in economics.
I had supported myself through college with summer employment as playground supervisor at Bend, Oregon, which I continued to do the following summer, after my graduation because no jobs seemed to be immediately available. The following fall I was called back to the university to become a research assistant to the President of the University of Oregon and to do graduate work in economics. It was a part time job which didn't pay a great deal, but enough so that I could live on it. I did statistical studies for a new president, Arnold Bennett Hall, to help him secure additional funds in support of the University of Oregon. These had to do with state support of higher education, student fees, and all other gambits of university finance. In the following
spring I applied for, and was awarded, a scholarship
[3]
MR. AGER: in transportation economics at Yale University. But shortly before the summer vacation started I came down with what later turned out to be a case of tuberculosis, so I never went through with my graduate work in transportation economics. In place of that, after completing my recovery from this tubercular attack, secured employment in Portland, Oregon, with the Northwestern Electric Company in January, 1927. I was in the Rate Department, again doing statistical studies and assisting in preparations for a proposal that the voters of Portland approve the merger of the Northwestern Electric Company with the much larger Portland Electric Power Company.
During my stay with the Northwestern Electric Company I was loaned by the company sometime in 1928 to a Oregon State Property Tax Relief Commission that had been established by the legislature. I was Executive Secretary to this commission on the reform of the tax system in the State of Oregon. I served in this capacity until the legislature met in January of 1929 at which time I was again loaned to the House Committee on Taxation and Revenue to serve as clerk of that committee to see what could be done about the program of the Property Tax Relief Commission. The next legislature did, indeed, adopt most of the
[4]
reforms that had been recommended by that commission which included the first successful income tax law adopted by the State of Oregon, and also established the first system of state supervision of assessment from the state capitol of all the county assessors in the State of Oregon.
Shortly after my return to the Northwestern Electric Company from this six or seven month period of loan to these two organizations I was asked by the President of the University of Oregon, the same one Arnold Bennett Hall if I would permit him to use my name before the Board of Regents as a prospect to become Assistant Controller of the University of Oregon, with the understanding that if my services were satisfactory, I would become controller the following year on the retirement of the incumbent controller. After brief discussion of salary matters I gave my consent and shortly thereafter was appointed Assistant Controller of the University of Oregon, in which capacity I served for one year, when I was then installed as Controller of the University of Oregon in July of 1930. I served in this capacity or related capacities for a little over two additional years, during which time the Oregon system of higher education was being reorganized from a system of[
[5]
independent institutions to one with a single head to be known as a chancellor with campus presidents.
This reorganization also included the decision to establish a single, central business office under
a controller for the entire system of higher education, to which position I aspired. As time went on toward the culmination of this period of reorganization, it became clear that the incumbent president at the Oregon State College was putting on a most strenuous campaign to be the new chancellor of the system of higher education. He was a man that I did not respect. It was my hope that a new man from outside the State of Oregon would be brought in for the position of chancellor. As a precaution I took the step of securing offers of scholarships from the University of Chicago and Columbia University. And when the regents finally did make the incumbent president of the state college Chancellor, and I was offered the controllership of the system of higher education, I refused the position and accepted a scholarship at the University of Chicago.
I enrolled at Chicago in September of 1932 in the Department of Education, with a major professor by the name of Floyd W. Reeves and took courses from
[6]
him and Dr. Judd, who was the head of the Department of Education, and several other outstanding men. As the winter quarter began I was offered, and accepted, an appointment as Executive Secretary of a National Committee on Standard Reports for Institutions of Higher Education which was in the throes of trying to establish uniform reporting for privately and publicly financed institutions throughout the United States. I served in this capacity under the chairmanship of Mr. Lloyd Morey, then Controller of the University of Illinois, an outstanding authority on institutional finance and accounting. I was working in this capacity when Mr. Reeves came to me one day and asked if I would go to lunch with him and Dr. Morgan.
DR. CRAWFORD: Do you remember when that was, sir?
MR. AGER: It was something like May of 1933. I agreed to go and we had lunch and Arthur Morgan indicated that President Roosevelt had offered him the chairmanship of the Tennessee Valley Authority and he was interviewing prospects for possible openings in the Tennessee Valley Authority, and that Mr. Reeves was helping him in lining up prospects for such positions.
We had an extensive discussion on my background
[7]
and on a theory that Arthur Morgan had that some kind of cost standards could be established for the industrial power customers of the Tennessee Valley Authority, which I did not completely understand. But I did try to discuss it with him and point out the difficulties that were inherent in such a concept. Some time early in June I had a phone call from Floyd Reeves who said he was calling from the Willard Hotel. I think it was about the twelfth of June, but I cannot be exact. And they needed someone immediately to take the position as Treasurer of the Tennessee
Valley Authority because they suddenly realized that under the Tennessee Valley Authority Act they could not meet any payrolls until they had a treasurer, and would I kindly agree to accept this position as an interim position until they could get better organized.
I told Mr. Reeves that I would want to think about it, that it was important to me, to a certain extent, to know how much the position would pay. He said that he hadn't the slightest idea how
much it would pay, but if I would wait just a moment he would get Arthur Morgan on the phone. So Mr. Morgan got on the phone and said he understood that I was somewhat interested in this temporary position
[8]
with the understanding that something more to my liking would be worked out in the future, but that I wanted to know what the pay would be. He said, "How much did you make in your last position at the University of Oregon?" I said, "Well, my salary was $3600 a year, and the university contributed $180 a year towards the Carnegie Foundation Retirement System that the university had established, so you might say that I was earning $3780 a year." He said, "What about $4000?" I said, "Well, that sounds reasonable, but I still have to think about this, discuss it with my wife and talk to some other associates about it, and I'll call you back within 24 hours or call Mr. Reeves back within 24 hours."
In that 24 hour period I talked to Lloyd Morey, who thought I was ruining my career as a higher educator to take such a job with such an awful New Deal agency; and I talked with Louis Brownlow, who thought it was the greatest opportunity any person ever had. I talked to a man by the name of Alan Eaton, whom I had known for years, who is with the Russell Sage Foundation and happened to be in Chicago at this time. He knew much more about the Tennessee Valley Authority than I did, and he thought it was a golden opportunity. And between
[9]
us, my wife and I decided that I should take a chance on going with the Tennessee Valley Authority. So I accepted the temporary position and reported for work on the 26th of June, I believe, 1933.
DR. CRAWFORD: Mr. Ager, let's get into some of the experiences you have had in your first work with TVA, your first impressions, the state of the organization as you found it, and what happened in the very early developmental phase. Did you report to the Willard Hotel first and do you remember your first meeting with the TVA Board of Directors? I think perhaps the date was
June 16, though I am not certain of that, when the first meeting was held at which I suppose TVA was incorporated according to the act.
MR. AGER: I did not report to the Willard Hotel. I believe it must have been June 16, but they called me instead on June 12, as I said earlier because I know that we had a very short time to get our things packed and get from Chicago to Washington, D. C. My first contact with the Board of Directors and Floyd Reeves in his capacity as Personnel Director, and a Mr. Carl Bock, who was sort of an assistant to Arthur Morgan, was at the old Interior Department Building where the TVA had acquired some temporary space. I found the TVA
[10]
in a state of complete confusion. It had no money. It had no organization. It had no pay scales.
Therefore, my first job was to contact the Bureau of the Budget and find out where the money
was coming from and how I went about getting it, and to contact the General Accounting Office to get a little further information with respect to how to prepare payrolls and get people paid. I also made other contacts to acquire some assistance in doing all this. I discovered that in spite of the lack of any money or anything else that TVA had engaged some people to undertake survey work in connection with access roads to Norris Dam and to establish some offices in Knoxville, Tennessee. It was not until some time after the first of July that we finally were in a position to put out our first payroll. And in the meantime I had made the fatal mistake of saying that our payroll could not be met until the President of the United States had approved a certain piece of paper, for which I was severely reprimanded because no one in government is supposed to reveal that the President can be a bottleneck.
DR. CRAWFORD: Who reprimanded you for that?
[11]
MR. AGER: Oh, George somebody--Gillingham, or some such name. He was kind of a public relations type they picked up somewhere. This story got in the newspapers the fact
that TVA's payrolls were held up by the President. That's why I was reprimanded.
DR. CRAWFORD: So at the time you went to Washington, you had met Floyd Reeves, you'd met Arthur Morgan, and at your first meeting who else was present that you remember?
MR. AGER: Yes. Well, I remember meeting Carl Bock, and Dave Lilienthal. I don't recall Harcourt Morgan being present. I may have met some secretaries, but there weren't very many around. There were lots of job applicants. They were swarming through the place.
DR. CRAWFORD: I believe no one had been paid at that time, had they?
MR. AGER: That's correct. Once we had gotten our money and met our first payrolls, which included a payroll for the people working out of Knoxville, Tennessee, I proceeded to sit down with Mr. Reeves to discuss the prospects for a financial organization of TVA. I recommended
that TVA have a controller and at least one, if not more, assistant controllers, a budget planning officer, and a
[12]
treasurer, which was required by the law.
DR. CRAWFORD: What was your title at first
MR. AGER: Treasurer. That was my first title. Mr. Reeves presented this plan of organization to the Board of Directors meeting shortly thereafter and it was approved. And not long after that we interviewed a former controller of American Airlines by the name of Francis Carr, who had been one of the founders of the Controller's Institute of America and was a graduate of Whartman School of Commerce. Between us, Mr. Reeves and I decided that he was a very good prospect to be our first controller; he was offered the job and accepted it. Shortly thereafter, some time in July I believe, maybe early August, he reported to work.
Not long after that they succeeded in persuading a man who was retiring from the General Accounting Office to serve as an audit advisor to him, a man by the name of Harding. He also recruited a woman by the name of Goodrich to replace me as Treasurer of the Tennessee Valley Authority, and I became an Assistant Controller with my emphasis being on plans and budgets, and Hugh Smith became a second Assistant
[13]
Controller with his emphasis being on accounting and reports. Not long after that another man, whose name escapes me, was appointed Budget Director under my supervision. He had had a rather distinguished career in this field, but was quite elderly. I can't recall his name.
DR. CRAWFORD: Were your headquarters in Washington at this time?
MR. AGER: We were still in Washington, but we had moved out of the temporary space in the Interior Building into an old temporary building E or F, or something like that, that was down on the mall not far from the Washington monument, and it was a hell hole as far as temperatures were concerned. There was no air conditioning. We worked from 12 to 18 hours a day trying
to get this organization shaped up, and sometime early in this period Floyd Reeves came to me one day and said he was going to have to have an assistant and what did I think of Gordon Clapp, who was also a graduate student under Mr. Reeves at the University of Chicago, as a possible assistant to him? I said I thought it would be wonderful if he could get him. I said though, "As you know, he has very deep roots back in Wisconsin." He said, I know that but I think
[14]
I can get him." And sometime around the middle of July, Gordon Clapp showed up, which helped a great deal since I had a dining companion at least; my wife had seen fit to go with her former boss, the former president of the University of Oregon, and his wife to State College, Pennsylvania, to escape the heat of Washington, D. C.
Finally, in early September We had ourselves well enough organized so that it was time for me to move from Washington, D. C. to Knoxville, Tennessee. I took temporary lodging at the Andrew Johnson Hotel until my wife could get back from State College and gather up our things in the temporary apartment we had taken on Connecticut Avenue and join me in Knoxville in my search for housing.
DR. CRAWFORD: Was that in September of '33?
MR. AGER: Yes, early September, which, of course, coincided with the beginning of publicity about football at the University of Tennessee, and I discovered to my amazement, (and I want this on the record) that the coach and the squad of the University of Tennessee had been the survey party surveying the route from Cove Creek into Norris Dam, A few weeks later
[15]
an engineer came to me with a project authorization for the re survey of the route from Cove Creek to Norris Dam, and I said, "We've already had a survey of that route from Cove Creek to Norris Dam. What's the problem?" He said, "The elevations are off from ten to twenty feet. Apparently the survey party was too busy practicing football to do much surveying."
DR. CRAWFORD: Had you been in the South before this time, before September 1933?
MR. AGER: Never, never had.
DR. CRAWFORD: What was your first impression of the Valley and the city of Knoxville?
MR. AGER: Well, I'd like to tell it this way. I met my wife in a new Chevrolet car that I was trying out at the railroad station of the Southern Railroad and drove her from the station down Gay Street to the Andrew Johnson Hotel where I had been staying. As we approached the hotel she asked me where the main business district was and I said, "Well, darling, we've just driven through it." Half of the buildings on Gay Street were boarded up, but I think one bank was open. It was pretty pathetic.
[16]
A few weeks later, accompanied by a man who had been employed to specialize on our power accounting problems, we made a trip to Muscle Shoals. I offered, since the TVA had no fleet of automobiles, to drive my new Chevrolet down on the condition that my wife could
go along. This was approved.
So we proceeded down the Tennessee River through Chattanooga, Huntsville, Alabama, to the Muscle Shoals Reservation where there was modest visitor accommodations. It was the most depressing area I had ever driven through in my life. From Huntsville to Muscle Shoals we had driven on a dusty, dirt road, and at the end of the day passing one field of cotton after another with nothing but little shacks in the edges of fields. There were no gardens, no animals, other than the mule and a dog. There was no power or automobiles (the vehicles we passed on the road were the horse drawn vehicles carrying cotton to the gin and in the dust it was very difficult to avoid hitting them, but we managed to get through somehow). This was in late September of 1932. My first view of the old nitrate plants, with all of the World War I supplies stowed away on shelves and carefully inventoried was also a sickening experience. The drives around the Muscle Shoals area with street signs in all directions, but no streets, left me very
[17]
depressed. It was far from a stimulating sight. Wilson Dam was being well maintained and the old steam electric plant was on lease to the Alabama Power Company. One of the reasons for the visit to Muscle Shoals with Mr. Hughes, the accountant that I referred to earlier, was to start preparations for negotiations with the Alabama Power Company with regard to this steam plant lease.
DR. CRAWFORD: What arrangements were made with the Alabama Power Company for the use of power at that time, Mr. Ager?
MR. AGER: I don't remember much of the detail, but it's my recollection that they had some sort of contractual agreement with the army engineers to secure this power at some reasonable price and to operate the steam electric plant when and if they saw fit. Someone else better informed than I will have to give you the details of this because I was not involved personally in any
of the negotiations that ensued with respect to this settlement with the Alabama Power Company on this agreement that was inherited from the army engineers. I was on the periphery and only heard tidbits, you might say, about the negotiation of the agreement that followed and the settlement that was finally reached with respect to termination of the arrangement, but I
cannot recall the details of this at all. It escapes me.
[18]
DR. CRAWFORD: What was your work then during the first year with TVA?
MR. AGER: Well, primarily I organized a system of what we then called "allotment releases" which simply were short term project authorizations for various and sundry categories of activity that was being initiated by the various branches of TVA as they were being organized. And this was simply to institute a minimal type of control over expenditures. And I began studies in collaboration with the man that was employed to be our budget officer on forming a budgetary system. In fact, not long after this, some time in late '33 or early '34, we called on the Public Administration Service located in Chicago to send us some specialists to help us further perfect
our budgetary system, and Donald Stone and a man by the name of Gus Moe and one other man whose name I've forgotten, came down and spent several weeks with us, analyzing and studying our problem and making suggestions as to what we should do to perfect a sound system of budgeting and control.
DR. CRAWFORD: Did you find that your background and training in educational administration or educational finance was adequate for this sort of work?
[19]
MR. AGER: Yes, it was generally adequate. It was helpful to me, I believe to have had the experience of assisting in the reorganization of the finance system of the Oregon system of higher education, to use some of the principles at least that were involved there in instituting a comparable system within the Tennessee Valley Authority. Although obviously the Tennessee Valley Authority had many problems and activities that are foreign to the operation of a normal university of 3000 students, which the University of Oregon was at that particular time when I was controller there. The biggest mistake that we made in the very early days of TVA was to try to anticipate the detail that we thought we might be asked to produce at some future date as the result of audit activity on the part of the General Accounting Office or inquiries from Congress.
DR. CRAWFORD: You had capable assistants in preparing for that, didn't you?
MR. AGER: We had quite capable assistants but unfortunately we got carried away with the fascination of putting things on the electronic accounting machine that we rented from IBM. It was not a computer in the sense that we have computers today, but we allowed our
[20]
engineers and other administrative officials to proliferate accounts to the point where we kind of
lost track of the forest for the trees.
DR. CRAWFORD: Could it have been simplified?
MR. AGER: It was simplified. In 1936, I believe it was, our first controller, Mr. Carr, decided to leave the TVA to take a position with the United States Steel Company as Vice President in Charge of Finance for American Steel and Wire Company. After considering a number of candidates we selected Eric Kohler to become the controller of TVA. Mr. Kohler had been for many years a senior member of the firm of Arthur Andersen & Company in Chicago and one of the first things that Mr. Kohler did in coming to TVA was to recommend that we simplify and streamline our accounting system and to take a lot of the accounting off of these IBM machines and secure instead some more or less standard “tried and true” bookkeeping machines.
DR. CRAWFORD: Did you do that?
MR. AGER: We did this and many, many people in TVA for the first time began to understand what they were
[21]
doing with respect to their budgets and accounts.
DR. CRAWFORD: Had it been too complicated before? Had the system been one that many people didn't understand?
MR. AGER: The thing that was wrong about the early IBM setup was that it only produced numbers, no words, and there are very few people that can relate numbers to anything by just numbers. And it helped a great deal when they began getting reports that told them what they had spent their money for in the way of salaries and supplies, and other items. It was a glorious experiment--the electric machine was a glorious experiment--but it didn't work. We simply went too far. I won't say anything more because Mr. Kohler, with the help of Mr. Smith, managed the accounting reform. At this point I had become Assistant to the General Manager and Chief Budget Officer of TVA and was completely removed from the Finance Department.
DR. CRAWFORD: Were both jobs difficult to manage at the same time?
MR. AGER: Well, I never was trained as an accountant. My training was in economics. I did take some
[22]
accounting courses the year that I was research assistant to the president at the University of Oregon, and I never wanted to be an accountant. I think that we made a similar early mistake in our progress reporting, and I can tell about that a little more fully than I can about the reorganization of the accounting system since I had a good deal more to do with the reforming of the progress reporting system.
Someone in the early days of TVA in the General Manager's Office dreamed up the idea that everybody should write a monthly progress report and that somehow all of these monthly progress reports should be compiled into an overall progress report that went to the Board of Directors of TVA. And by the time I became Assistant to the General Manager and the Budget Officer in 1937 this monthly document was approximately 2 inches thick and there was practically no summary information whatever for the benefit of people who are too busy to read the detailed monthly progress report.
So with the help of a young man by the name of Sandy Brant, who had at one time been a science editor for Reader's Digest, we proceeded to try to develop
[23]
and succeeded in developing, a summary progress report for the benefit of the Board of Directors and the General Manager and other key officials who were too busy to read the detailed monthly reports of all the departments and divisions of the Tennessee Valley Authority.
DR. CRAWFORD: Did you maintain both types then--the complete report and the summary?
MR. AGER: We did, excepting we discontinued delivering the detailed reports to the General Manager and the Board of Directors of the Tennessee Valley Authority, and instead worked out a system where the departments that had interfaces would exchange copies of their monthly progress reports and copies came into my office for review by report's analysts who had the
responsibility of preparing the summary report that went to the Board of Directors. But we soon found that our summary report was out of date if we waited until we got the detailed monthly progress reports, so we perfected a scheme where each of the major departments of TVA would give us highlight reports in the first week of the month, which we could use in preparing our summary reports, and in addition to that, if there was a significant event during the
[24]
month such as a flood or a power failure, or something of that sort, we made it a point to require
that that event be written up thoroughly and promptly for use as the lead story in our ensuing highlight monthly report.
As a consequence, within a few months of effecting this reform this summary report, which was being prepared initially for the information of the Board of the Directors and the General Manager, was being reproduced in many copies which went to all departments of the TVA, including shop stewards who represented the organized personnel of the TVA, so that all of the employees of TVA had an opportunity to see these highlight reports that were going to the
Board of Directors. There was one page on both sides of statistical information and about two pages of text on both sides with highlight, written information. Whether this reporting system is still being continued, I don't know, but it is one that I thought was quite successful and helpful.
DR. CRAWFORD: Did you ever feel that too much time was being put in in preparing these monthly reports?
MR. AGER: Oh, yes. I felt that very definitely, and they
[25]
did get shorter once this business of discontinuing the delivery of the detailed report to the Board of Directors became known throughout the TVA.
DR. CRAWFORD: Was this information valuable later in the time of the Congressional investigation?
MR. AGER: Very little of it was, in my opinion. The Congressional investigation you are referring to, I assume, was the one that related to the so called Arthur Morgan contumacy, dismissal and the hearings that ensued?
DR. CRAWFORD: Yes.
MR. AGER: As I remember it, my own contribution to that hearing related primarily to an action that we took to acquire phosphate deposits for operations of the super phosphate facilities, electrical super phosphate facilities, that we built at Muscle Shoals. We had shown in our budget to Congress no intention to purchase phosphate ore deposits, but the intention to produce super phosphate fertilizer from mined ores purchased from private industry. It turned out that
this became some sort of a bone of contention in this hearing, and I was asked to testify as to how
[26]
we could possibly divert money for the purchase of raw materials from private industry and instead take it to purchase phosphate deposits and institute our own phosphate mining operations to get the phosphate ores that we needed to operate our furnaces.
DR. CRAWFORD: How did you justify that?
MR. AGER: On the grounds of economics. It was cheaper than to pay the prices that the phosphate suppliers were trying to get from TVA. There was another matter of a similar nature that occurred much earlier in the history of TVA that I don't think got into the Congressional investigation of TVA that illustrates this same point and this relates to the supply of cement for the construction of our dams. You may have this from some TVA engineer already, but the
cement industry at that particular time had a pricing system that I'm sure was contrary to anti trust laws and what have you. As a consequence when TVA called for bids on cement, the bids invariably were uniform, regardless of where the cement plants were located. And the prices were high, certainly high in comparison with the cost of producing cement.
So the TVA (and this was primarily Arthur Morgan
[27]
then, and some of the engineers who had joined TVA who had been in association with him on earlier projects) instituted an investigation of what it might cost to establish and produce our own cement--establish a plant and produce our own cement for the construction of TVA dams. At the same time, a proposal was made to the cement industry that we would be willing to negotiate with them a long term cement contract with appropriate price escalator-de escalator clauses if they were willing to do this.
In order to get the cement industry to think seriously about this, though, TVA had to establish
to its own satisfaction and to the satisfaction of the cement industry that it was indeed feasible for TVA to produce its own cement. One of the contacts that was made with this Canadian cement industry which had been established by Lord Beaverbrook. We were looking for a cement specialist, and it turned out that we had on our own staff in TVA a man by the name of
Eckle who had been a principle advisor to Lord Beaverbrook in the establishment of his Canadian cement interests in New Brunswick, I believe. So Mr. Eckle was immediately diverted from whatever geological work he was doing at the time to proceed with the investigation of sites for the raw materials and
[28]
economical production of cement to supply the need to the Tennessee Valley Authority program. Not long after that the cement industry agreed to the employment of a firm of accountants, jointly appointed, who would indeed assist in the formulation of a contractual basis for the acquisition, as I recall, of a minimum of ten million barrels of cement from the cement industry. Before I left TVA we had used considerably more than ten million barrels of cement. TVA never built a plant. Is that enough on that?
DR. CRAWFORD:.Can you give some detail, Mr. Ager, about the decision of TVA to do its own construction work? It would be interesting, I think, to know who was responsible for this decision, what opposition there was to it, and how it was carried out.
MR. AGER: Well, I really can't say that there was any opposition. It seemed to me that from the time I appeared on the scene that it was a foregone conclusion that TVA would do its construction with its own forces. Whether there had been discussions and disagreements about this, I don't know, but I regarded it as one of the most significant and important early decisions that TVA made, and it laid the groundwork for the finest piece of planned engineering and
[29]
construction and equipment utilization that I have ever seen performed anywhere in my thirty-odd years of experience with the federal government.
DR. CRAWFORD: Why was it so successful?
MR. AGER: I think it was so successful for several reasons. One was that TVA was able to recruit the cream of the engineering and construction industry at its inception because of the depressed condition of that industry throughout the United States. We had the engineering know how within our own forces to formulate such a program and we had the personnel leaders that were needed to develop the kind of labor relations that would enable a government corporate agency to do this sort of a job. The thing that my wife and I used to marvel about was the progress of the primary crusher that was purchased to crush the rock for the construction of Norris Dam as it moved from place to place throughout the Tennessee Valley. Whether it's still
being used today, I do not know, but I know of at least five dams that this same primary crusher was used to crush the rock. Over the years I found it rewarding as I visited the various TVA projects to observe the rationale that our project managers used in justifying, for example, the subsidy that went
[30]
into the operation of our construction camp cafeterias, for example, on which we lost approximately ten cents per meal. This caused concern both by representatives of the General Accounting Office and representatives of the Bureau of the Budget, and of the appropriation committees. But our project managers, with no particular encouragement from me, were able to demonstrate beyond a shadow of a doubt that this kind of feeding and concern for our personnel paid dividends in the progress of the construction and the reduction of costs of the overall projects.
DR. CRAWFORD: How were things like that computed?
MR. AGER: By ordinary accounting methods. Everything had its own income and expense statement, and of course the expense of the camp was charged off to the cost of the project in any case. The fact that the employees did not pay the full cost of the meals was incidental. The fact that they didn't pay the full cost of building the construction camp was incidental. It all ended up either in pay or in camp costs that went into the cost of the dam.
DR. CRAWFORD: You just computed that as part of the construction cost?
[31]
MR. AGER: Correct.
DR. CRAWFORD: Do you feel that helped in securing the quality of people at the dam sites you wanted to get?
MR. AGER: There's no question about it. It was far superior to having a disgruntled labor force, complaining about inadequate housing and inadequate food, trying to get a dam built on schedule to supply the power that was needed to produce the aluminum to produce the airplanes to win the war for example.
DR. CRAWFORD: What about the expenses of other services you provided at construction sites? You had some education and recreation facilities, I believe.
MR. AGER: Yes, we did, and these expenses were treated as a part of the overhead of the TVA that ended up in the cost of our construction projects. The library service program frequently was used, not only to provide library service to our own employees at the project, but to lay the basis for a continuing library service that was not subsidized by TVA in that particular area after the construction was completed. There were schools established that were
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established in collaboration with the local school authorities in very much the same way. And some health services of somewhat of an unusual nature were worked out and improved sewage disposal facilities were shared with communities that previously had been dumping raw sewage into the Tennessee River. There were many things of this sort that are too numerous to mention, I think, in this brief discussion, but all of which I think contributed both to the success of TVA as being a good neighbor to the communities where we were undertaking radical changes in the environment by the construction of these dams, but contributed to the long term welfare of the Tennessee Valley and the people who chose to remain and live in the Tennessee Valley.
DR. CRAWFORD: You ended up with many expenses you didn't anticipate at the beginning, didn't you?
MR. AGER: Well, I don't quite know when you say the beginning because we had a budgetary situation once we started making budgets which, of course, was sort of automatic for the fiscal year 1933. The Congress simply made some money available and how they arrived at that figure
I can't remember. But from then on, for many years, up until World War II, TVA's budget was included as an item
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in the president's public works budget, and regardless of what TVA requested, the TVA usually received about forty million dollars, which apparently was the rule of "thumb" figure that President Roosevelt thought was about the right figure of the total five hundred million for public works that should be spent in the Tennessee Valley.
I recall one experience while Arthur Morgan was still chairman of the TVA where our request, for some reason, was reduced from something over forty million to about thirty-six million dollars, and we decided to appeal to the President on this cut. This was the cut as we were advised of by the Bureau of the Budget, so I prepared a memorandum for Mr. Morgan
indicating any items that we felt simply had to be restored out of the forty-two million dollar original request if the TVA was to keep rolling on some kind of a reasonable progress schedule. Mr. Morgan took this memorandum on a trip to Warm Springs, Georgia, some time between Thanksgiving and Christmas, where he proceeded to discuss this appeal with President
Roosevelt and we got word back from the Bureau of the Budget that our appeal had been approved at thirty-nine million, nine-hundred thousand dollars, which relieved a great many of us that particular year.
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DR. CRAWFORD: Do you know why that appeal was approved?
MR. AGER: All I know is that Mr. Morgan reported back that President Roosevelt wanted to know who is this man, Ager, that wrote this memorandum? And shortly thereafter I was asked by the Secretary of Labor if I would be her budget director.
DR. CRAWFORD: Frances Perkins?
MR. AGER: Yes, and I told her I didn't care to be. But apparently there was some discussion, but what took place I can't tell you in detail. All I know is what happened to me.
DR. CRAWFORD: Did you find your work with TVA interesting?
MR. AGER: Always satisfying, always interesting, always satisfying, and of course as time went on it sort of became second nature with me, but with World War II being what it was, it became even more of a challenge to do the things that had to be done to contribute our part to the war effort. And, of course, our budget grew many times over this forty million dollar ceiling. I think we had one year where we came close to spending as much as a quarter of a
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billion dollars, during World War II.
DR. CRAWFORD: Did that necessitate an increase in your budget staff?
MR. AGER: A nominal increase only not a large increase in my budget staff. I'm sure it necessitated a substantial increase in accounting personnel, but I had no concern with that. My concern was in the budgeting process, and I don't think we added maybe more than one or two people during that period. We simply tightened our belts and carried on. And, of course, the problems during World War II, budget wise, were quite different than the problems up to World War II. By this time TVA knew what it was doing. We didn't have to hem and haw as much within our own forces to make up our minds. And in the second place, the officials in the Bureau of the Budget had a different attitude toward the TVA than they had had before World War II.
DR. CRAWFORD: Did your budgeting work become smoother as time went on?
MR. AGER: Oh yes, much smoother.
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DR. CRAWFORD: What about the attitude of officials in the Bureau of the Budget? How did it change? What was it in the early thirties, then how did it change during the war?
MR. AGER: Well, generally through the whole period it was a friendly attitude. But during the years when the people in the Bureau of the Budget knew of the President's rule of thumb ceiling for TVA, it was very difficult to institute anything new or unusual in our budget, even though it was very meritorious. Of course, once World War II was going full blast and we were under tremendous pressure to produce additional power from whatever source, including steam electric plants which we hadn't dreamed we would ever get authority to build, the problems became more and more problems of dealing with the priority agencies in the government who controlled
the materials. And a part of my staff was actually diverted from its normal budgetary duties to assisting in the process of acquisition of construction materials through the allotment agencies in Washington. There was also one incident that preceded World War II that you may not have a record on that would illustrate an aspect of this World War II atmosphere.
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At the time, in 1939, I believe it was, TVA had reached the point where it needed its initial appropriation to start construction on what was then known as Gilbertsville Dam and is now known as Kentucky Dam, which was the dam near Paducah, Kentucky, near the mouth of the Tennessee River, and this was a tremendous, big project. We had asked for an initial appropriation of ten million dollars, which had been approved by the Bureau of the Budget and the President and was knocked out either by the House Appropriations Committee or on the floor of the House, I don't know which. But everyone in TVA felt very strongly that this dam should go ahead. So Mr. James Pope, a member of the Board of Directors, and Theodore Parker, our chief engineer, and John Blandford, our then general manager, and I went to Washington to see what we could do about getting this appropriation restored in the Senate. The first person we checked in with was Senator McKellar, who at that time was a full supporter of TVA.
DR. CRAWFORD: That was before his difficulty with David Lilienthal?
MR. AGER: Yes, that's correct. Mr. McKellar proceeded to call a number of senators for appointments for us,
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including Senator Adams of Colorado and Senator Truman of Missouri. I remember these two men distinctly. Senator Adams was a very powerful member of the Appropriations Committee who had the impression from an experience in Colorado that Arthur Morgan built dams out of gold. Our interview with him was short and to the point, and he said, "Well, if this dam isn't going to be built out of gold and Arthur Morgan isn't going to have anything to do with it (by that time he was not with TVA), I will support it." We then got to Senator Truman's office at lunch time, and Senator Truman asked if we wouldn't join him for lunch, that he was just about to order his lunch, and we said that we would be delighted to. So the secretary brought in the menu and we all stated our wants, sat around the table. He immediately said, "You don't need to argue with me about the need for that dam." He said, "Take a look at what's happening in Europe," and he got up and started pointing to the map of Europe and what the Germans had done already, and he said, "We're in for another World War.”
DR. CRAWFORD: Do you remember what year and month that was?
MR. AGER: This would be the spring of 1939, and he gave us the most graphic summation that I had heard from anyone of what was impending. We had a very pleasant lunch
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with the man and went on our way. It was very pleasant, and I'll never forget that experience.
DR. CRAWFORD: Did you have any sort of conflict with the Bureau of the Budget?
MR. AGER: Hardly ever any basic conflict. We helped, really, pioneer methods of budgeting for government business activities in which the Bureau of the Budget was tremendously interested with respect to other agencies. And I think that fact, plus the fact that some of our very early consultants on formulating our system became staff officers in the Bureau of the Budget later on, may have helped us considerably in our relationships with the Bureau of the Budget.
DR. CRAWFORD: Why was TVA able to pioneer in business procedures for government agencies? Was it because you were a fairly new and flexible agency?
MR. AGER: Correct, and the fact that we had this aura of being a government corporation quote, unquote. That was at the same time we had the obligation of securing appropriations to conduct the construction effort and certain resource development efforts that
were non-revenue producing in nature.
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DR. CRAWFORD: You really had a rather unique situation, didn't you?
MR. AGER: We did have a very unique situation and there were other agencies already in existence and others being started such as the Bonneville administration and so forth that had similar unique situations.
DR. CRAWFORD: Did you have any difficulties because of rivalry with or jealousy from other agencies in government about TVA's special status?
MR. AGER: Not particularly. I recall one instance that happened late in World War II that will illustrate one aspect of this business, and TVA personnel people could give you many other examples because there was almost every year a bill introduced to bring TVA employees in under the cloak of civil service. I won't go into that, but towards the end of World War II the war assets administration was given the responsibility of disposing of surplus property. TVA, many years before that, had developed its own surplus property disposal system, and we had conducted
many sales and sold innumerable things from our construction projects and from other sources, such as the old nitrate plant at Muscle Shoals. At the point
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that I am thinking of, Mr. Will Clayton had been placed in charge of the War Assets Administration and somehow his staff had interpreted their charter to give them jurisdiction over the disposal of surplus property by the Tennessee Valley Authority, and we received a communication that hereafter we must follow their procedures. I was asked by the General Manager, accompanied by Tom Griffin, I believe, who was from our legal division, to seek an appointment and discuss this matter with Mr. Clayton.
We were successful in getting an appointment and got in to see this gentleman and just began
explaining to him our unique status as an independent corporate agency of the federal government and discussing with him what our surplus property disposal methods were, at which point he pressed the buzzer and called in one of his assistants and said, "I don't know who it is in our organization that decided that TVA should be under our jurisdiction, but whoever he is, find him and tell him it should not be under our jurisdiction. They know what they are doing," and that was the end of the matter. Essentially, as I understand it, that's what happens on all of these bills with respect to covering the TVA employees into civil service. The bills would be
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introduced, then they would get killed in committee as the result of testimony to the effect that TVA knew what it was doing in its personnel work. Is that a logical stopping place? You'll have to kind of steer me, I think, from now on.
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and Restrictions | Interview Transcript | List of Subjects Discussed | Additional Ager Oral History Transcripts]
List of Subjects Discussed
Alabama Power Company, 17
Brent, Sandy, 2
Bureau of the Budget, and TVA,: 39
Carr, Francis, 12
Clapp, Gordon, 13-14
Clayton, Will, and TVA, 41
Eaton, Alan, 8
Gilbertsville Dam, 37
Hall, Arnold Bennett, 22
IBM electric accounting machines, treat of, 19-21
Kohler, Eric, 20
McKeller, Senator Kenneth, and TVA, 37-38
Morey, Lloyd,: 6
Morgan, Arthur,: 6, 7-8, 9
Oregon, tax reform in, 3-4
Reeves, Floyd, 6, 7-8, 9
Tennessee Valley Authority (TVA):
appropriations for, I: 33-34
budgeting and control,: 18-21
cement issue, 26-28
construction of facilities, 28-31
financial organization,: 28-31
health and education facilities for construction crews, 31-32
and phosphate purchase issue,: 25-26
progress reporting, 22-25
and World War II, 35-38
Truman, Harry S., and TVA, 38-39
University of Oregon, in 1920's and 1930's, 2, 4-5
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