Evening star., 1938-03-06
BY JOHN H. CLINE.

The long and bitter controversy be-
tween the private power companies
and the Tennessee Valley Authority
moved step nearer solution last night
as David E. Lilienthal. youthful T. v.
A. director, submitted for the first time
a definite proposal to buy up the prop
critics of the private concerns.
Facing prospect of ruinous COM
petition from the Government, Wen
dell L. Willkie, president of Common
wealth g. Southern Corp, the prin-
cipal private power company in the
Tennessee Valley region, promptly ac-
cepted Mr.. Lilienthal's proposal as
basis for negotiation. His acceptance
made it clear. however, that the two
are still far from agreement on the
procedure to be followed in valuing
the holdings of the private concerns.
Mr.. Lilienthal announced his plan
yesterday at press conference marked
by significant political implications.
Morgan Freeze-Out Hinted.
The fact that the peace proposal
was announced by Mr. Lilienthal, pre-
sumably with the Presidents approval,
instead of being made public through
Arthur E. Morgan. chairman of the
T. v. A. board, was construed as con-
firming earlier indications that the
administration has definitely cast its
lot with Mr.. Lilienthal and is deter
mined to force Chairman Morgan out
Of the T. V. A. picture if possible.
Severely criticizing Mr.. Lilienthal
and DR.. Harcourt A. Morgan, the other
T. v. A. board member, Chairman
Morgan last week asked for a con-
gressional investigation of the Gov
ernment power agency. Shortly
thereafter, the President made public
letter from Mr.. Lilienthal and DR..
Morgan in which they suggested that
the chairman resign because he would
not cooperate with the majority
members and. sought to rule or ruin"
the agency.
Morgan in Florida.
After stating he had discussed his
proposal to the utilities with the
President, Mr.. Lilienthal made it clear
that he was proceeding without the
support of Chairman Morgan, who is
now in Florida. In fact, he said,
Chairman Morgan didn't even know
the plan was being submitted to the
power companies
In the past, Chairman Morgan has
opposed construction of T. v. A. ia
cilities that would compete with pri-
vate concerns. advocating a policy of
peaceful negotiation in an effort to
purchase the private property. Mr..
Lilienthal, on the other hand, has
been reported as favoring a fight to
the finish" with the utilities after
they attempted to block the T. v. A.
power program. He has stated, how
ever, that he did not favor destruc-
tive competition.
, Declaring his proposal was not a
take it or leave it" proposition, Mr..
Lilienthal described it as "compre-
hensive plan for long-term adjust
ment Of relations between the Ten
nessee Valley Authority and private
power companies in the Southeast"
He said there were no serious price
obstacles in the way of negotiations
and that he was confident an agree
ment would be reached.
No Estimate on Value.
He said he had no estimate of the
value of the private property involved,
but the proposal to buy it contemplated
the payment of ''the actual legitimate
cost of the properties, less depreciation
accrued since they were installed"
This, in substance, is the prudent
investment" theory of utility valuation
advocated by the President and here
tofore unacceptable to the power COM
panies. This theory of valuation gives
no consideration to the cost of re-
producing the properties and presum-
ably makes no allowance for going
concern" value.
That this pricing theory will be the
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