David Lilienthal: The Man Who Managed the American Century

Today, a growing number of voices call for a new American consensus that looks more like the corporatist world of the New Deal and post–World War II decades. Arguments for industrial policy, countervailing union power, and a new elite more tethered to the public interest pervade outlets left and right.

If our present ambitions are to be modeled off this bygone era, however, then it would behoove us to investigate the lives and legacies of the men who made it so. David E. Lilienthal was one of them. He spearheaded the Tennessee Valley Authority, served as first chairman of the Atomic Energy Commission, and tried his hand at international development. Once a titan in the public sphere, biographies of Lilienthal have gone out of print, as have his own published works.

But Lilienthal deserves a second look, as he embodies the New Deal era’s greatest successes and aspirations as well as its most troubling failures and missteps.

The Making of a Midwestern Liberal

David Eli Lilienthal was born at the very close of the nineteenth century in the residential quarters at the back of his family’s grocery store and haberdashery in Morton, Illinois.¹ His parents—immigrants Leo Lilien­thal and Minna Rozenak—had arrived in the American Midwest when the region was, in the words of historian Jon K. Lauck, “the most advanced democratic society that the world had seen to date.”² The Lilienthals benefited greatly from the Midwest’s ingrained pluralism. A rarity for Jews anywhere at the time, Lilienthal could “recall . . . no single instance of exclusion or hindrance because of my being a Jew,”³ even though his hometown of Valparaiso, Indiana, was homogeneous—majority Protestant with a small sliver of Catholics. His was a happy, petit-bourgeois childhood shared on equal footing with his peers.

The Midwest’s deep civic republicanism formed Lilienthal’s character in profound ways. Having been settled by yeoman farmers eager to escape the yokes of either Old World feudalism or the haughty preten­sions that clouded New England, the Midwest had, from the Northwest Ordinance onward, inculcated its inhabitants with republican political virtues through a variety of educational and civic associations. These traditions and habits only deepened after the Civil War as the Midwest became aware of itself as a specific region distinct from the South and the Northeast.⁴ Lilienthal’s boyhood to his adolescence to college years saw him fully steeped in the midwestern way of life. “I regard myself as a Hoosier,” he mused in 1970, “I bear the mark of a boyhood and young manhood in Indiana and the middle west more than any other place I have lived and worked.”⁵

Throughout his youth, a parade of prairie politicos would sweep through Valparaiso. William Jennings Bryan, Eugene Debs, Clarence Darrow, and Wisconsin governor Robert A. La Follette (whose son’s gubernatorial administration Lilienthal would join as an adult) all made stops. A local progressive factory owner, James McGill, whom Lilienthal saw as a second father, introduced him to progressive thought. An aunt with whom Lilienthal was close awakened him to a more radical socialist approach to politics. Lilienthal displayed an early concern for the “little guy” as evidenced by his speeches and essays as a boy. His sympathy for the labor movement waxed following his entry into DePauw University, where he would meet his wife, Helen, and from which he graduated Phi Beta Kappa. One summer, Lilienthal worked grueling manual labor jobs that exposed him to the brutality of indus­trial work. Another summer job for the Gary Tribune opened his eyes to the unfairness and cruelty of life in a company town.⁶

After graduating college, he would attend Harvard Law School, where he found himself under the wing of Felix Frankfurter and, eventually, Louis Brandeis. Labor law beckoned.⁷ As a young labor lawyer, Lilienthal performed well. But a different fight called to him. He was quickly drafted into the ranks of midwestern progressives battling powerful monopolies.⁸ Previously, midwesterners had defended their yeoman-republican lives from the railroads.⁹ Now, the major electric utilities became a new threat; it was an enormous fight over the cutting-edge technology of the time and its social consequences. Lilienthal performed so well here, soon working on Supreme Court cases, that he drew the eye of progressive Republican Philip La Follette in Wisconsin, who was making a bid to reclaim his father’s governorship. La Follette wanted to take on the utilities; he was certain they were cheating con­sumers. He needed a young, aggressive lawyer to head up his Public Service Commission (PSC). Lilienthal was his man.¹⁰

In his fights against Wisconsin’s utility industry, Lilienthal would display in equal measure his brilliance and character defects. Lilienthal expanded the PSC staff and launched aggressive investigations into utilities’ rate structures. He took his mandate to stick up for Wisconsin consumers seriously and worked himself to the brink of collapse for their benefit. For over half a million of them, he won $3 million in reductions.¹¹ But Lilienthal’s drive also proved a liability. Arrogant and combative, he often spoiled opportunities for compromise that may have otherwise soothed the political landscape, allowing for better and more productive relations between industry and the state government. His attempt to force AT&T’s Wisconsin Telephone Company into a one-year, 12.5 percent rate reduction failed in the state’s courts, and he left a bitter taste in the mouths of colleagues and opponents alike.¹²

In scrapping with Wisconsin’s utilities, Lilienthal began to shift his ideological position away from the yeoman-democratic impulses of his upbringing and more toward expert-led technocracy. He often despaired of democratic interference with the job he had to do. Often, his private writings despaired of the citizens themselves, and he grew skeptical of “the will of the middle and working classes to defend their own inter­ests. In many ways, he assumed the citizenry was unorganized, passive, and helpless in the face of private privilege,” in the words of one biographer. His sense of duty as an active, informed, and paternalistic regulator was premised on this newfound pessimism.¹³ This tension would appear again and again in both his life and work. It also underscored a major difficulty with progressive liberalism itself—what rela­tionship did the state and unelected officials have with democracy as such?

Regardless, the battles in Wisconsin had proven that Lilienthal was ready for higher stakes. The national stage was laid out before him by Frankfurter, Brandeis, and public power veteran Senator George Norris of Nebraska. President Franklin Delano Roosevelt would give Lilienthal a starring role in one of his most ambitious projects. It would change Lilienthal and America forever.

The TVA Years

The American utility industry was born in New York, financed in New York, manufactured in New York, and headquartered its pyramidal holding companies in New York. Across the Niagara, meanwhile, Cana­da’s public hydro power supplied better rates with fewer financial and political headaches. As governor of New York, FDR spent considerable time researching the power question, but failed to realize the dream of public power. The industry was too powerful to take on from Albany.¹⁴ But fortunes were about to change for the utility industry.

Once the Great Depression hit, utilities foundered like every other business. But the industry’s Achilles heel was the mistake of pushing “ownership” on consumers through the sale of nonvoting stock used to prop up its holding companies. People lost their money, and the indus­try lost goodwill in equal measure. The industry would lose more still: a penetrating, several-year investigation by the Federal Trade Commission would reveal that the industry mouthpiece known as the National Electric Light Association had used industry money to pursue a national propaganda campaign larger than “has ever been conducted except pos­sibly by governments in war time.”¹⁵ The FTC’s investigation confirmed the American public’s suspicion that large monopolies were little more than insidious cabals crewed by self-serving manipulators. Worse still, utilities had charged their customers for NELA salaries and operations. The scandal forced NELA to change its name to the Edison Electrical Institute and sullied what was left of the utility industry’s good name.¹⁶

By the time FDR hit the campaign trail, the industry was on the ropes. And it still had a major weakness: rural electrification. The busi­ness dynamics of the utility industry aligned perfectly with densely populated areas where it could extract rates from large numbers of consumers whose power needs grew daily. This same alignment of inter­ests didn’t play out in a rural setting with fewer customers per powerline. Utilities weren’t insensitive to the problem—they partnered with land-grant colleges and conducted studies on how best to solve the rural power challenge.¹⁷ But their inability to achieve meaningful results left them open to FDR’s attack.

In 1932, while campaigning in Portland, Oregon, FDR laid into the utility industry and put public power at the forefront of his agenda. He spelled out his desire for regional public power entities that would serve as “a national yardstick to prevent extortion against the public and to encourage the wider use of that servant of the people—electric power.” Roosevelt knew the industry would marshal the whole of its forces to stop him, so he threw down the gauntlet. “To the people of this country I have but one answer on this subject. Judge me by the enemies I have made. Judge me by the selfish purposes of these utility leaders who have talked of radicalism while they were selling watered stock to the people and using our schools to deceive the coming generation.”¹⁸ The crowd roared.¹⁹

As part of his whirlwind first hundred days, FDR passed the Tennes­see Valley Authority Act and tapped the brilliant hydraulic engineer and president of Antioch College, Arthur Morgan, as one of three chairmen to run it. FDR’s plan was characteristically fuzzy. When asked, the president said that “it’s neither fish nor fowl, but, whatever it is, it will taste awfully good to the people of the Tennessee Valley.”²⁰ In brief, TVA was to have agricultural work, hydro-damming and naviga­tion works, and public power welded into a single project.

The president deputized Arthur Morgan to manage the hydro division and to select two additional directors who would handle the authority’s other two arms. Harcourt Morgan (no relation) was an obvi­ous choice for agriculture; he, too, was a college president and agricultural scientist who had earned a warm reputation across the agrarian South despite his Canadian extraction. But who would head the power division?

Most of the lawyers in the utility scene were too aggressive for Arthur Morgan’s taste, but the young David Lilienthal came with commendations from none other than Justice Brandeis.²¹ Lilienthal had been eyeing the news of the TVA with skepticism: the federal government was getting into the power business—in the South no less. “[I]t occurred to me that the stories were mere dope stories,” he wrote in his journal, “and I couldn’t see how I would fit into such a picture at all.”²² Nevertheless, he met Arthur Morgan for an interview in Chicago at the Palmer House. When offered the job, Lilienthal balked. He told Morgan that he wasn’t a southerner, he was “ten years too young for the job,” and had no experience with large-scale engineering projects.²³ Morgan gave him a week to make his final decision. Returning to Madison, La Follette told him to take the job—“any kind of a success in it would stamp a man for life.”²⁴ That was all Lilienthal needed to hear.

A thirty-three-year-old Lilienthal stepped off the train in Knoxville, Tennessee, a month later. The TVA was but a scattering of offices across the city plus a room in the Willard Hotel. Few employees had been paid at all; a sense of tension and uncertainty blanketed the undertaking. The first meeting between the chairmen—an eight-hour marathon lorded over by Arthur Morgan—did little to raise morale. Arthur Morgan’s domineering approach succeeded only in aligning Harcourt Morgan and Lilienthal against him, a dynamic that endured throughout Arthur’s ten­ure as chairman.²⁵ “While fundamentally we may be in agreement, there was some difference of opinion as to tactics and strategy expressed as between myself and Chairman Morgan, with Harcourt Morgan acting as a mediator,” Lilienthal wrote in his journal. “This will require working out.”²⁶ The “working out” never occurred. The tension between Arthur Morgan and Lilienthal would nearly sunder the enterprise.

Arthur Morgan and David Lilienthal were too alike in character, too dissimilar in that character’s expression, and too divergent in their aims to cooperate. Both men had petty, arrogant streaks that dimmed their judgment. Morgan was a progressive moralist and elitist who veered toward tyranny and impracticality. He saw the TVA as “not primarily a dam-building program, a fertilizer job or power transmission job” but “a designed and planned social and economic order.”²⁷ Driven by a puritanical zeal coupled with a penchant for benevolent paternalism and eugenicist thinking, Morgan “envisioned ambitious educational projects, considered introducing local currency, wanted his valley dwellers to abstain from alcohol and tobacco, and intended to dispossess farmers who failed to apply sound agricultural practices.”²⁸

On the other hand, Lilienthal was a happy warrior who cared little for “uplift.” “Welfare work and economic revision are two different things—I don’t have much confidence in the first,” he wrote.²⁹ Lilienthal’s job, as he understood it, was to make the TVA’s public power provision a reality by means cunning and propagandistic if need be. Arthur Morgan often read Lilienthal’s negotiation tactics and public persona as dishonest and “political,” whereas Lilienthal believed his maneuvers put the TVA in a better position in the eyes of the public and at the bargaining table with utilities. While both men believed in tech­nocratic management for the public good, Morgan thought such a goal could be apolitically realized between experts, including the utility industry itself. Lilienthal, his rapier whetted in combat in Wisconsin, disagreed. If Arthur Morgan’s sensibilities bent him toward cooperation, Lilienthal’s pitched him toward competition with the utility industry.

In any event, the region’s poor farmers had to be convinced of public power, and Lilienthal brought them the good news. From 1933 onward, he gave dozens of public speeches, interviews, and radio broadcasts in support of the TVA. He understood that without public buy-in, the project would never happen. And to secure that buy-in, he relied on propagandizing against the utilities, making much use of Roosevelt’s “yardstick” idea. He promised that the TVA would do what many southern utilities thought improbable at the time: to increase consumption as a means for lowering power prices.

Could the TVA do it? There was no way to know, but Lilienthal was determined. Besides, it was what the public wanted to hear. So successful was he in winning hearts and minds that when the TVA sent out a mailer asking for citizen feedback, it received responses like this:

The power trust has done more to sap the vitality of the Nation than the hookworm. And I would rather be the most humble worker for the T.V.A. and do all I could for humanity for a few short years and die than to be the whole power trust and wiggle in its hookworm slime for a million years.³⁰

Nothing made Lilienthal happier. “I’m having the time of my life,” he wrote a friend.³¹ Without Lilienthal’s risk tolerance and sustained full-court press, the project would likely have never succeeded.

Yet with tensions high on the board, the TVA struggled mightily to get into the power business. Wendell Wilkie, the president of the utility Commonwealth and Southern (C&S), whose territory the TVA most threatened, drove the wedge between the board further. A fellow Hoos­ier, Wilkie was Lilienthal’s perfect nemesis. Whereas Lilienthal cut his teeth in labor law and as a utility regulator, Wilkie emerged from the courts having championed private business in general and the utility industry in particular. He played up his folksiness (he pronounced “power” as “pahr”) and equaled Lilienthal in rhetorical skill—“The TVA touches seven states and drains the nation.” As president of C&S, Wilkie was a young gun who became a tribune for the industry as a whole in its fight against the Roosevelt administration’s encroachments.³²

Wilkie’s point was clear: the federal government had no business in the power sector and even less business trying to put his company out of business. Public power had to be cut off at the pass by confining the TVA’s area of operations. Lilienthal bucked all attempts at containing the project. He wanted to make the TVA as threatening as possible to the power industry. In his mind, the question wasn’t, “where could the TVA sell power?” but “where couldn’t it sell power?” Frustratingly for him, Wilkie had leverage: C&S was one of the only customers the TVA had at the start. Without revenues from that deal, the TVA would burn through cash and credibility it did not yet have. Both sides came to an agreement on January 4, 1934, to re-up on the deal.³³ But what appeared as a truce was little more than a cease-fire; Lilienthal and Wilkie would be back at the barricades soon enough.

Meanwhile, legal challenges beset the Authority from the beginning and would not let up for several years. By 1937, thirty-four suits had been filed against the TVA, with over a hundred others challenging related parts of the administration’s public power and utility reform efforts.³⁴ Reflecting on the turmoil in 1938, one staffer lamented, “Almost from the beginning, we have been living in the court and have suffered from everything such a status implies.”³⁵ The Authority had neither the legal staff, the stenographers, nor the legal library to handle the onslaught. Lilienthal snapped into action, hiring a roster of legal talent, many of whom shared Lilienthal’s Harvard mentor Felix Frank­furter.³⁶ Lilienthal’s eye for good talent and a hands-off approach to leadership would become a hallmark of his career.

The first major constitutional challenge came in the fall of 1934 when George Ashwander and thirteen fellow holders of the Alabama Power Company’s (APC) preferred stock filed a suit in Alabama to enjoin the company from going through with the January 4 contract with the TVA. In other words, preferred stockholders were trying to keep APC from obeying a deal worked out by the president of its parent company, Commonwealth and Southern, one Mr. Wendell Wilkie. The Edison Electric Institute, then helmed by Wilkie, also bankrolled Ashwander’s legal efforts. Lilienthal was appalled and enraged at Wilkie, who publicly touted the January 4 contract as evidence of his good faith. As the Ashwander case made its way through the appeals process, eventually vindicating the TVA, it constrained the amount of power the authority could sell, denying it much needed revenues.³⁷

Three months after Ashwander was resolved, a case involving nearly twenty companies (five of them Wilkie’s) challenged the constitutionality of the TVA yet again. The tepco suit began on May 29, 1936, eleven days after Roosevelt reappointed Lilienthal to his position, despite Arthur Morgan’s threats of resignation if the president did so. It was an election year and Roosevelt needed a fighter in Tennessee. Tepco began in earnest that December and immediately scuttled power pool negotia­tions between Wilkie and the TVA. Morgan had thoughtlessly parroted utility industry talking points throughout the negotiations, which incensed Lilienthal and dismayed the president.³⁸ Tensions between the two then boiled over.

Morgan found Lilienthal’s propagandizing against the utility indus­try with the “yardstick” notion inherited from Roosevelt dishonest—he wasn’t entirely wrong. Morgan also reviled what he saw as the New Deal’s turn from cooperation with to punishment of the private utility industry. Having exhausted his internal threats, the chairman turned to the public several months into the tepco case. In a series of articles in the Atlantic, New Republic, New York Times, and Saturday Evening Post, he cataloged the “improprieties” of Lilienthal’s power policy. He decried Lilienthal’s “false and misleading propaganda,” which tended “to substitute private dictation for democratic process of government.” If the government had any sense of fairness about how to settle the power issue, then men like Lilienthal would be “left without a place in the limelight.”³⁹

FDR could no longer refrain from interfering in the TVA. The president’s detractors viewed Arthur Morgan as a martyr. The president shot a letter to Morgan asking for either evidence or retraction of his accusations. Morgan instead disappeared for months only to reemerge as a surprise witness against the TVA during a proceeding in which he accused Lilienthal and Harcourt Morgan of defrauding the government. The latter Morgan and Lilienthal fired back, calling his accusations “false and malicious interference.”⁴⁰

FDR came to Lilienthal for counsel. “What in the hell are we going to do about Arthur Morgan?” the president asked him.⁴¹ Lilienthal suggested Roosevelt call the directors to the White House, so Arthur Morgan could present his case to the president. “I pointed out that by calling on both sides to produce facts,” Lilienthal wrote in his journal, “he would avoid any charge of prejudging the case.”⁴²

After a stressful six-hour meeting in which Lilienthal sucked down an entire pack of cigarettes, Morgan refused to supply evidence or answer straightforward questions. Lilienthal, meanwhile, conducted himself with sagacity.⁴³ The president called for another meeting, but Morgan declined to attend. FDR had no choice but to remove him from office, after which Morgan accused his colleagues of “conspiracy, secre­tiveness, and bureaucratic manipulation,” and called for a “fair and open hearing” by Congress.⁴⁴

Wilkie made several appearances at the ensuing congressional hear­ings, the testimonies of which filled six thousand pages. Lilienthal defended himself with aplomb and Morgan was quickly revealed to be embittered to the point of delusion. What he offered as evidence was opinion; what he called dishonest was politics itself. At one point, even the Republican on Morgan’s side shook his head at the chairman’s accusations, so distant were they from fact.⁴⁵ Ultimately, the hearings would exonerate his codirectors. The investigation had succeeded only in slowing the TVA’s power business as it simultaneously took on the tepco case and the investigation.

Lilienthal and Wilkie found themselves back at it, but with both of their positions weakened. On Lilienthal’s side, the fight against geo­graphical limits to the TVA’s market was lost to physical constraints. Lilienthal admitted that as soon as the barriers were set, “the situation with respect to the power companies’ properties lying outside of such region becomes stabilized.”⁴⁶ On Wilkie’s side, the Public Works Administration threatened construction of a parallel transmission and distribution system. He could either sell or lose everything.

Still, neither man relented. Lilienthal’s capacity for entrenched animosity nearly cost the Authority the deal it needed to get into the power business in earnest—a liability reminiscent of his time in Wiscon­sin. Only an undulant fever Lilienthal contracted from a Valley farmer’s unpasteurized milk unlocked his and Wilkie’s antlers. Joseph Swidler and Julius “Cap” Krug, two of Lilienthal’s staffers, took over for their sickly director and got it done: TVA would purchase tepco’s power plants and power lines while the municipalities would buy its distribution systems. Both sides left open negotiations for the purchase of other C&S properties in Mississippi and Alabama. The TVA would make tepco’s bondholders and owners of preferred stock whole and dole out $7 million to the common stockholders.⁴⁷ Lilienthal, still on the mend, met Wilkie in New York on August 15, 1939, to formally hand him a check for over $78 million. Wilkie accepted the note, saying, “Dave, this is a lot of money for a couple of Indiana boys to be handling.”⁴⁸

The challenges to the TVA, both external and internal, all found resolution between January 1938 and August 1939.⁴⁹ The great experiment would, in the power division, prove successful.⁵⁰ Thanks to Arthur Morgan and his technical staff, twenty-one TVA dams were shovel-ready or under construction by 1938—they also ran ahead of schedule, “a record unheard of in the private construction industry.”⁵¹ In 1933, only a quarter million valley residents had electricity, and by the end of the 1930s, that number had quadrupled.⁵² Although the “yardstick” idea was half-baked—the TVA split the wholesale and retail sides of the business, relied on hydropower rather than coal, and used multipurpose dams and so could not offer one-to-one comparison to private industry—the TVA did bring rates down by increasing consumption as Lilienthal had gambled.⁵³ “Per capita electricity use in the valley was twice the national average, and the price of power one-half the national average.”⁵⁴ Even Wilkie begrudgingly admitted that the TVA was a well-run and successful organization.⁵⁵

But Lilienthal scarcely had time to savor his victories. The TVA soon faced an internal threat: Interior Secretary Harold Ickes, who saw the Authority as another jewel for his crown. A managerial talent of great stature, Ickes was also a cankered viper of a man. In 1938, FDR started to worry that if the United States were drawn into a war in Europe, its power supply couldn’t rise to the occasion. Ickes convinced Roosevelt to recreate the National Power Policy Committee Ickes had once helmed, but under a new name: the National Power Policy and Defense Committee, mandated “to pursue immediate concrete action necessary to meet power needs as estimated by” the committee itself.⁵⁶ As chair, Ickes planned to put all other agencies involved with the power industry under his thumb. Lilienthal knew that if Ickes got his way, he would strip the TVA’s independence. But Lilienthal was ready: when Ickes nearly convinced Roosevelt to put all power agencies under Ickes’s supervision in the summer of 1941, Lilienthal called on the support of “Senator Norris, Leland Olds (Federal Power Commission), Cap Krug, (Office of Production Management), John Lord O’Brien (OPM Chief Counsel), Senator Bone of Washington, Adolph Berle (assistant secretary of state), and Bernard Baruch.”⁵⁷

By mid-August, Ickes’s power grab fizzled. Lilienthal’s cadre stood firm against Ickes and let the president know it. When faced with oppo­sition, Ickes threw a tantrum in the Oval Office and threatened to resign if he didn’t get his way. Roosevelt, dismayed by Ickes’s behavior, pulled his support. Lilienthal exhaled. “The Ickes bushwhacking seems pretty well turned back,” he wrote in his journal.⁵⁸ The defense against Ickes was a testament to Lilienthal’s ability to cultivate, maintain, and marshal allies. But come winter, more challenges would arrive.

On the clear December day after Pearl Harbor, the Federal Bureau of Investigation lifted President Roosevelt into Al Capone’s recently con­fiscated limousine. Capone’s was the only bulletproof vehicle in the federal government’s possession. The president needed safe passage to Capitol Hill where he would give his “Day of Infamy” speech.⁵⁹ “There is no blinking at the fact that our people, our territory, and our interests are in grave danger,” FDR told the American public. “With confidence in our armed forces, with the unbounding determination of our people, we will gain the inevitable triumph—so help us God.”⁶⁰ And thus America entered the war.

After hearing FDR’s speech, Lilienthal hoped that his job at the TVA would become easier as America found itself in dire need of the Valley’s productive forces.⁶¹ He was both right and wrong. The nation would rely on the TVA for the “arsenal of democracy,” a fact that would turn old enemies into new friends, and vice versa. Another reversal: whereas Lilienthal once needed demand, now he needed supply.

At the TVA’s start, Alcoa belonged to Wilkie’s camp, but their position softened over the course of the decade. Sensing that America may soon have to involve itself in the war roiling Europe, FDR called for a fifty-thousand-plane air force in May of 1940. Alcoa suddenly had massive demand for its aluminum—which meant a great hunger for more power from the TVA in the middle of a two-and-a-half-year drought.⁶² The authority strained to give Alcoa all that it needed. “In spite of the drought, TVA had supplied Alcoa with 150,000 kilowatts of power over contract; however it was becoming more difficult to do so,” writes Lilienthal’s biographer. “Things were so desperate in mid-May that Lilienthal seriously considered Bernard Baruch’s idea of using ocean liners, aircraft carriers, and diesel electric locomotives to generate electricity.”⁶³ Eventually, under pressure from Senator Harry Truman, Alcoa’s board chairman Arthur Davis and Lilienthal met to cut a deal over the Fontana tributary site that Alcoa had kept from the TVA the previous decade. Alcoa needed big power from a big dam that only the TVA could build.

The Alcoa negotiations saw Lilienthal at his shrewdest. Alcoa’s first offer caught the TVA off guard in its softness: TVA would acquire the site at no charge provided Alcoa got the whole of the power produced at its “two downstream dams as a result of Fontana Dam’s presence” and that all dams would be lumped into a single system from which the extra power would be divided equally. But Lilienthal and his legal team puz­zled out the consequences: “such terms would allow Alcoa to realize a $15 million windfall profit.”⁶⁴ Lilienthal countered: the TVA would buy the site in cash, split benefits from Alcoa’s dams down the middle, and allow the unified system with the caveat that, because most of the benefits would come from TVA’s Fontana dam, Alcoa could not claim extra benefits. They met in the middle: “TVA retained full control over the total system but allowed Alcoa the extra benefits accruing to its two dams and 11,000 kilowatts of primary power, much less than Alcoa’s original demand.”⁶⁵

The Alcoa deal marked a sea change in Lilienthal’s ideology, indicative of the shift away from the early New Deal and toward a more cooperative, administrative state that joined hands with private industry. In a letter to a friend he wrote that the TVA’s relationship with Alcoa was “a beautiful and illuminating example of the power of a monopoly even at a time of national peril and even when pitted against a governmental organization like the TVA which has no fondness for monopolies.” Lilienthal was aware of the shift, recognizing that the agreement with Alcoa put “TVA virtually into partnership with a huge private con­cern. . . . So far as I know, there is nothing like it in the history of America.”⁶⁶

But national defense required yet more from the TVA. The authority proposed yet another dam, called Douglas, on the Tennessee River’s biggest tributary. To do this, the TVA needed to flood more bottomland and execute another massive relocation effort. Unfortunately for Lilien­thal, this meant awakening the jealous ire of a onetime friend.

Senator Kenneth McKellar once fought for the TVA and helped Lilienthal with various issues in the Authority’s power business. But his view of the Authority had broke the other way by the 1940s. Part of the problem traced itself back to Arthur Morgan, who had been high-handed and condescending to McKeller for the duration of his chairmanship. Moreover, Morgan had refused to play politics when it came to hiring and firing—Morgan saw to it that none of McKeller’s patronage players found employment at the TVA. The second issue for McKeller was pettier still: McKeller disliked that credit for the TVA had gone to Senator George Norris. While Norris had protected the Muscle Shoals dam from private interests until the TVA could incorporate it, and had helped fend off Ickes’s attempt to put the TVA beneath his aegis, Norris was a Nebraskan who, McKeller felt, did less to midwife the southern project than he. Lilienthal’s close relationship with Norris thus soured his once collaborative partnership with McKeller. Jealous, empowered, and motivated, McKeller opened up his enfilade in May of 1941.⁶⁷ He threatened to strip the TVA of all appropriations unless the Douglas Dam bill was dropped.

For Lilienthal, this meant yet another fight with existential stakes for the TVA. “If we yield on this matter,” Lilienthal wrote, “then immediately we will be prey to every big and little politician in the Valley, and every transaction, every purchase of land or equipment, will sooner or later start down the same route.”⁶⁸ Several OPM officials, the vice president, and even the president himself could do nothing to dissuade McKeller, whose stature kept both House and Senate Appropriations Committees at a standstill. But with the war heating up, in 1942, McKeller’s crusade began to look like an attempt to sabotage national defense. He relented; the Douglas Dam bill passed. A TVA staffer in Washington, Marguerite Owen, teletyped to headquarters, “douglas dam bill just signed. start digging.”⁶⁹ The dam went up in record time.

McKeller spent the rest of the wartime years as a thorn in Lilienthal’s side. And he made it personal, directing political campaigns against Lilienthal that demanded his removal. “To make it stick they appeal to anything: not excepting of course prejudice because I am a Jew.”⁷⁰ To fight off McKeller, Lilienthal again turned to the people for defense. He launched a counter-campaign against McKeller that brought local politi­cians and their constituencies together in a call to get the TVA “out of politics.”⁷¹ Lilienthal recognized the irony: “Here again, is the unusual picture of a politician urging the people to bring pressure on other politicians to lay off a public, that is, a politically created, institution.”⁷²

Lilienthal’s approach signaled yet another shift away from the original impulses of the New Deal. Of course, in the immediate term, he was attempting to stabilize and protect an agency that had spent the last decade under siege. Depoliticizing the TVA made good sense from that perspective. But it also meant that, in the long run, the TVA was now operating under post-democratic, technocratic pretenses—and Lilienthal had used the demos to do it. If this had disturbed him, Lilienthal panto­mimed concern more than he felt it. He was, by his own admission, more talker than thinker—“mentally on the quick side,” but “not pro­found.”⁷³

Still, his war for the TVA had given him much to think about. Back when he was fending off Ickes, he had been pressed to articulate just why the TVA should maintain its independence. An idea came: “the grassroots.” Lilienthal combined Brandeis, Tocqueville, and the bur­geoning sense of liberal statism that had overtaken American politics. From Brandeis he brought an insistence on regional control and accountability; from Tocqueville an emphasis on decentralization; and from his statist commitment the conviction that big government was “inevitable and desirable.”⁷⁴ Technology as an instrument for the state to employ for the public good ran through his thinking—so long as science could be paired with transparency and accountability. First in speeches, and then with a book in 1944—TVA: Democracy on the March— Lilienthal finally happened upon a post-hoc vision of the TVA that captivated the world. The book sold well; Lilienthal rejoiced.⁷⁵

The New Deal saw America begin its evolution from an agrarian republic punctuated by large metropolises to something closer to a cohesive nation-state. Lilienthal oversaw perhaps the most ambitious part of that transition. Rare is the man who can square what he has actually achieved with what he believes he has achieved; and Lilienthal was not so rare. In practice, his commitment to democracy was rhetorical—the TVA exerted great centralized bureaucratic power over the Valley.⁷⁶ The Authority was more a public twin to the private utility model than an alternative to it—especially after Lilienthal pushed for depoliticization during McKeller’s protracted assault. That he had both helped to build something of great benefit to the people of the Valley, but had erected an institution exactly in the mode of James Burnham’s fears didn’t dawn on him. In his review of Burnham’s The Managerial Revolution, Lilienthal called it “superficial, pontifical, and as full of unsupported assumptions as a country dog is full of burrs.” Managerial tyranny was not possible in America, he asserted, because the people still retained a choice between a parasitic managerial class and benevolent managers “bound by principles of public service and democratic methods.”⁷⁷

Lilienthal would get a chance to find the perfect admixture of management and democracy a second time—in the shadow of the mushroom clouds that towered over Japan.

The Atomic Years

In a little over a decade, the United States had evolved from a state so humble that its president had to ride in a commandeered gangster’s car on the way to declare war, to a juggernaut capable of vaporizing a quarter million people in an instant. While many recognized that the New Deal and World War II had re-founded the republic, almost none knew its powers had experienced such radical, lethal hypertrophy. They found out the way David Lilienthal did: the news from Hiroshima.

Lilienthal must have known that whatever was happening at what he called the “Shangri-la” plant—Oak Ridge, where Ernest Lawrence worked on plutonium production—was important because it made ever greater demands on TVA resources.⁷⁸ That he knew so little speaks to the tight grip that General Leslie Groves, soon to become a Lilienthal adversary, had on the Manhattan Project.

Lilienthal’s reaction to the bomb allowed him to draw on ideas from Democracy on the March in a new context with global stakes. Over the course of the spring and summer of 1945, Lilienthal would take an impassioned stand for democracy to furnish technological development with positive values and thus positive results. In May at the University of North Carolina, Lilienthal emphasized that there were no guarantees “science research and technology will work for good” without the moral moorings secured through democratic processes “to nourish and strength­en the human spirit.”⁷⁹ A month later, at a college commencement, he would ask, “Are machines to control men, or are men to control machines?”

The University of Chicago rewarded Lilienthal’s summertime jeremiads with a September invite to a conference on nuclear energy. Lilienthal would share the stage with theologian Reinhold Niebuhr and Manhattan Project veterans like Leo Szilard. Lilienthal dressed down the scientific community for their secrecy when it came to developing weapons of nightmarish lethality. “[U]nless the people are properly informed . . . policy regarding the atomic bomb will be neither sound nor enduring.”⁸⁰

Soon, Lilienthal would be called upon to work up a plan for what America should do with the atom now that the world knew about it and the Soviets sought weapons of their own. Undersecretary of State Dean Acheson tapped Lilienthal to lead a consultant group to draw up recom­mendations for the handling of atomic power for the president. In a meeting in January of 1946, Acheson told Lilienthal that “those charged with foreign policy . . . did not have either the facts nor [sic] an understanding of what was involved in the atomic energy issue, the most serious cloud hanging over the world,” Lilienthal reported in his jour­nal. Policy ideas and commitments were being floated and made “with­out a knowledge of what the hell it is all about—literally!”⁸¹

Lilienthal understood what was at stake: the atom would fall under either military or civilian control. At the moment, the military, in the person of General Groves, possessed a monopoly on the lifeblood of democratic decision-making: information. But Lilienthal also intuited that no real secrets exist in science after a discovery has been made. So what kind of atomic policy should a democracy pursue? Lilienthal’s consultant group, which included Robert Oppenheimer, General Elec­tric CEO Chester Barnard, Manhattan Project alumnus Harry Winne, and Monsanto executive and plutonium chemist Dr. Charles Thomas, received the green light by the end of January. So began Lilienthal’s education in the atom.

Lilienthal, once permitted behind the emerald curtain of the atom’s power, trembled in awe. After Oppenheimer’s first lecture in a battery of lessons on the nature of the atom, Lilienthal wrote:

No fairy tale that I read in utter rapture and enchantment as a child, nor spy mystery, no “horror” story, can remotely compare with the scientific recital I listened to for six or seven hours today. . . . I feel that I have been admitted, through the strangest accident of fate, behind the scenes in the most awful and inspiring drama since some primitive man looked for the very first time upon fire.⁸²

The gravity of the moment inspired the best in Lilienthal’s managerial abilities. He expertly smoothed over disagreements and bound the men under his direction—all of them powerful personalities, leaders themselves—into common purpose. Lilienthal knew he was at the height of his power, as did the men about him.⁸³ Lilienthal grew particularly fond of Oppenheimer; “it is worth living a lifetime just to know that mankind has been able to produce such a being.”⁸⁴ But as Lilienthal’s close­ness to George Norris had raised Kenneth McKeller’s hackles, so did his closeness with Oppenheimer rile Groves. “Lilienthal got so bad he would consult Oppie on what tie to wear in the morning,” Groves quipped.⁸⁵ The men were primed for deeper conflict down the road.

The group produced what would come to be called “The Acheson-Lilienthal Report.” It evinced great hope in the atom and bore the stamp of Lilienthal’s dedication to civilian control and transparency. The report rejected banning the bomb, embraced civilian control of atomic policy, and emphasized the need for an international authority—the Atomic Development Authority—to oversee the atom’s use. Last but not least, the report suggested America relinquish its monopoly on the bomb by sharing what it knew with the Soviet Union. The Soviets, in return, would agree not to develop the weapons.⁸⁶ The report was largely well-received as it “offered hope to a world spent by the most destructive war it had ever known.”⁸⁷

Unfortunately for the group, Bernard Baruch, a hard-boiled anti-internationalist who, at seventy-six years old, knew next to nothing about the atom, got the nod to represent the United States at the United Nations Atomic Energy Commission. Lilienthal, flying home from Washington in the radioman’s jump seat of a B-52, wrote that the news of Baruch’s appointment made him “sick.” He believed America needed “a man who is young, vigorous, not vain, and whom the Russians would feel isn’t out simply to put them in a hole. . . . Baruch has none of these qualifications.”⁸⁸

But Baruch understood a truth that men like Lilienthal refused to recognize: the Soviets would accept no fetters on their cultivation of nuclear capabilities.⁸⁹ At the unaec, Baruch pushed for stiffer penalties for treaty violations, for Atomic Development Agency “dominion over” uranium, and for stripping the Security Council of its veto power over ADA punishments.⁹⁰ After another failed call to completely ban nuclear weapons, the Soviets walked away from the table.

His criticism of Baruch aside, it is unlikely Lilienthal’s ideas would have carried the day. His biographer points out that he and his men naïvely believed that the UN was the international body it aspired to be when in reality it was “already more like a bazaar.”⁹¹ Moreover, the idea that the Soviet Union, energy-starved and devastated in the aftermath of World War II, would have surrendered independence over domestic nuclear energy was farcical at best.

Yet on August 1, 1946, Truman made real Lilienthal’s vision for civilian control of the atom. The Atomic Energy Act cemented into law the public-private partnership Groves had laid the groundwork for during wartime—the Atomic Energy Commission (AEC) was granted a total monopoly on fissionable materials at home and abroad (provided foreign countries met safety and security standards) and the power to contract the work out.⁹² The AEC was also given substantial powers in licensing and patents. It became, as the act’s authors wrote, “an island of socialism in the midst of a free enterprise economy.”⁹³

The most contentious move was a major win for Lilienthal: “the act gave the commission control over all military applications and custody of atomic weapons, both assembled and unassembled.”⁹⁴ All of the gov­ernment’s Manhattan Project labs in Washington, Tennessee, New Mex­ico, and Illinois were then placed under the AEC’s control. Harmonizing work between facilities across such a vast geography with contracted engineers from the private sector and university scientists, plus military and security needs, would expose weaknesses in Lilienthal’s managerial capabilities that the structure of the TVA had papered over. True, the TVA was “decentralized” from other federal entities, but it was not decentralized in itself.

Soon after the passage of the Atomic Energy Act, Truman tapped Lilienthal to head up the AEC. Of the five men Truman appointed, only one, Robert Bacher, was a scientist. Sumner Pike had served on the Securities and Exchange Commission, Lewis Strauss was a financier, and William Waymack was the public director of Chicago’s Federal Reserve Bank.⁹⁵ Lilienthal quickly ran the men through team-building excursions to the facilities in their domain to great success.⁹⁶ He also got the other committee members to agree to three major stipulations on how the commission would be run: no patronage, no partisan politics, and operations through private contracting.⁹⁷

Next, the chairman had to wrest the Manhattan Project facilities from Groves, an old dragon who preferred his horde beneath him. The general rightly saw the commission as a band of interlopers ignorant of the scope and scale of the program they were about to inherit.⁹⁸ Groves was obligated to let go, but as Lilienthal and his men took hold of the atomic project, its enormity shook them. “We pull at a worm, like a robin,” said Waymack, “and the whole earth explodes and out comes a two-headed elephant.”⁹⁹ Were they really ready to tackle this problem? Lilienthal’s instinctual optimism and drive ran roughshod over doubt—and perhaps personal reflection.

Lilienthal’s confirmation hearings for AEC chair in 1947 featured a rogue’s gallery of opponents from as far back as his days as a young labor lawyer in Chicago. Even worse, they were overseen by McKeller. In an atmosphere of anti-communism and resurgent anti-Semitism, Lilienthal would fight for months to keep his name out of the mud. Even his wife and daughter Nancy would fall under suspicion of being Reds. Yet McKeller eventually overplayed his hand on the communist sympathies question and allowed Lilienthal to put on one of the best rhetorical performances of his life. So successful was his rebuttal that the men on either side of McKeller clapped and journalists rushed to get transcripts. In it, Lilienthal managed to mount both a defense of the Constitution and the individual, but also savaged men like McKeller for their rabid pursuit of communists in their midst as a violation of those very principles.¹⁰⁰

Lilienthal carried the day, but the process indicated that the atom would not play out on the same political terrain as public utilities. This new theater had yet more heated partisanship (the Red Scare elements of Lilienthal’s confirmation process appeared more like a pretext for Re­publican score settling now that the New Dealers’ age of hegemony had ended), and was penetrated with military influence, corporate interference, presidential posturing, and foreign policy objectives. But there was no turning back now; Lilienthal had sprinted into the mouth of the Cold War’s vertiginous political labyrinth.

Once confirmed, Lilienthal soon ran into trouble. The first problem came from an inspection by Donald F. Carpenter, the new chairman of the Military Liaison Committee. In the spring of 1948, Carpenter toured the AEC’s field offices and returned with a disturbing assessment of what he saw. “He found that the decentralized structure placed almost impossible demands on the general manager,” writes Lilienthal’s biog­rapher, Steven Neuse. Oppenheimer agreed, but Lilienthal reacted defensively to both men. They had touched a core weakness: Lilienthal was not a manager of the day-to-day and did whatever he could to avoid minutiae. He would, after a consoling chat with Oppenheimer, come around. But the dynamic Carpenter identified persisted, if with less force, throughout Lilienthal’s tenure.¹⁰¹

Furthermore, the Manhattan Project relied on private industry in a way that the TVA had not. Arthur Morgan had insisted that the TVA maintain its own technical and construction staff, whereas General Groves by necessity had to rely on the engineering expertise of major firms like General Electric to get the atomic project off the ground. Lilienthal maintained these relationships as part of his decentralized approach, but the wartime quietude between labor and employers had ended. In a series of labor disputes between chemical firm Union Carbide and GE, Lilienthal found himself for the first time sitting across the table from the unions. “With my long record as a pro-union man, and the fine labor record of TVA, it wasn’t easy to say flatly and bluntly that we stood behind the contractor,” Lilienthal wrote, “but looking at our whole responsibility that seemed the only thing we could do.”¹⁰² National security depended on the smooth operation of these firms, which the companies knew, and used it as an opportunity to weaken labor. GE was especially keen on using the House Un-American Activities Committee’s hearings on union loyalty as a solvent to help the company more easily scrape the unions from its hull. Lilienthal had no choice but to side with GE.¹⁰³ Lilienthal was a New Dealer of the old school no more; he couldn’t afford to be.¹⁰⁴

As the truce between labor and capital ended with the war, so did the sense of common cause between scientists, engineers, and the military. As it did in the union spats, security would trump Lilienthal’s advocacy for more “democratic” and “transparent” handling of the atom. To fight this, Lilienthal leaned into his rhetorical gifts, hoping his inspirational leadership style could shift the nation away from Burnham’s nightmare and toward something more like his vision in Democracy on the March. Lilienthal spent the first part of his chairmanship making media appear­ances and writing articles on the need for civilian education in atomic science and open communication between the government and the people. In a characteristic essay from 1948, he wrote that America’s founding “faith in the judgment of the people as a whole” bore “an important companion idea”: “the American people do not care for ‘master-minding,’” by which he meant top-down, unchecked decision-making.¹⁰⁵ Lilienthal recognized that the government monopoly over the atom and secrecy over some of its technology were necessary, but at cross-purposes with core American political principles.¹⁰⁶

In practice, the chairman’s commitment to democracy was far more ambiguous. If democracy was something Lilienthal had come to rely on for moral authority, it was a process in which his faith had diminished substantially. In December of 1948, Lilienthal would take action directly counter to his pleas for more open and honest interaction with the public. Military Liaison Committee member Rear Admiral William S. Parsons wanted to publish a scientifically and politically vetted article meant to sooth the public’s “reservoir of unjustified fear” about atomic weaponry. The atomic establishment, including fellow AEC members, had lavished Parsons’s article with praise for both its style and substance.

But Lilienthal asked President Truman to suppress the article, arguing “that the American people be kept in a state of ‘benign’ ignorance of the facts, on the chance that the Politburo are also ignorant.”¹⁰⁷ Neither his journals nor any other material suggest he recognized a contradiction between his public appeals and his political behavior.¹⁰⁸ To square this contradiction, we might read what Lilienthal meant by “democracy” another way: benevolent paternalism honestly and openly pursued by the unelected. In short, a managerial society along the lines of the practice rather than rhetoric of the TVA.

Still, he had struck on a real problem and struggled earnestly to resolve it. As historian Richard Rhodes phrased the contradictory stance of the Truman administration, the atom “was too important to be left to the military” but it was “also too important to be conveyed to the people.”¹⁰⁹ Expertise, secrecy, and security formed each of Cerberus’s three heads and no one knew how or if the beast could be tamed in a frightened public’s favor.

Meanwhile, Lilienthal’s Wisconsin-era belief that elected representatives frustrated the work of capable men with a job to do deepened. He wasn’t entirely wrong. There was constant badgering of the AEC with unfounded accusations of proto-McCarthyite flavor. Loyalty oaths and security clearance procedures had frustrated the AEC’s attempts to recruit the brightest scientific minds, or even retain the scientific work­force it had already accumulated.¹¹⁰ Lilienthal and the rest of the AEC board, save for Strauss, wanted to award scholarships in atomic science to students even “with doubtful security backgrounds.” After Senator Bourke Hickenlooper got wind of the situation, Lilienthal was forced, under extreme pressure, to accept loyalty oaths as a policy.¹¹¹

Soon after, it was discovered that fissionable material had been misplaced at Argonne Laboratories, forcing Lilienthal to admit that “the lab’s property accounting procedures and our own are sloppy and lax.”¹¹² Hickenlooper then jumped on the chance to investigate Lilien­thal and the AEC for “incredible mismanagement.” The hearings spanned three months, ran 1,300 pages, and wore Lilienthal down to the nub. The hearings turned up nothing and, if anything, did more to expose Hickenlooper as a hack than hurt Lilienthal. But as the committee demanded that the entire D.C. office of the AEC attend almost every single hearing, the commission lay dead in the water for the duration.¹¹³

Despite emerging victorious from the Hickenlooper morass, Lilien­thal knew the accusations of red sympathies and mismanagement had tainted him. He wouldn’t be reappointed; he accepted that. Worse still, the civilian nuclear power program hit wall after wall, in no small part because of the pressure to pursue military capabilities rather than civilian ones. Coordinating between GE, the labs, and various other sprawling limbs of the AEC proved nearly impossible as ambiguity over the agenda existed not just between the entities involved but within them.¹¹⁴ Oppenheimer summed up the situation in a memo to the Gen­eral Advisory Council: “We despair of progress in the [civilian] reactor program.”¹¹⁵ The hawks were more unified and cleaved to a single process and objective: weapons production.

Events outside his control would push Lilienthal and his ideas further out of favor. While he and Helen were on vacation, the world changed. Driving home from a dinner party on Martha’s Vineyard on September 19, 1949, they found General James McCormack standing at the end of their driveway in the fog. Once in private, McCormick broke the news to Lilienthal: the Russians had detonated their first atomic weapon. Lilienthal recognized “the whole box of trouble it portended.”¹¹⁶

In the wake of the news, both Lilienthal and Oppenheimer lost their fight against the development of the hydrogen bomb. Both he and Oppenheimer agreed that developing a bigger bomb would have little to no deterring effect on the Soviets who would, instead, build a massive weapon of their own in response. They cited as evidence the USSR’s recent detonation. Others in the scientific community, the AEC board, the military, and the elected halls of power disagreed. America turned its face toward fusion weapons. Soon, Lilienthal would step down as chairman.

Before the cameras, Lilienthal smilingly turned in his ID badge and then walked out to the front steps of the Public Health Building at 1900 Constitution Avenue to address the press and the American people.¹¹⁷ Lilienthal tried to revive the hopeful atomic spirit of 1946 in his parting words:

For the past four years, I’ve been living with the atom day and night. As I leave to become a private citizen, I’m glad of this chance to share with the people of the United States my great sense of confidence in the future. If we are not timid, if we keep our shirts on, if we do not yield to hysteria and jitters, I believe that we stand at the beginning of one of the greatest periods in all of human history.¹¹⁸

Of course, Lilienthal wasn’t done discussing the atom. He would continue to criticize the security state and its lack of transparency with the public.¹¹⁹ And it’s not as if Lilienthal’s entire tenure was a failure. His greatest success was helping seed what would become America’s civilian nuclear power fleet, a dream to be realized after his tenure. Still, Lilienthal wrote in his journal the day before his resignation, “It was a hard experience, and my views didn’t prevail. . . . I hope I was wrong, and that somehow I’ll be proved wrong. We have to leave many things to God; this one He will have to get us out of, if we are to get out.”¹²⁰

But private life called—as did the private sector. And more adventures besides.

Innocence Abroad

Lilienthal had served the American people loyally for nearly twenty years at the helm of two of its most controversial and consequential institutions. If his life in public service saw him at the forefront of change, private life would see him as merely a man of his time. His biggest blunders awaited.

Lilienthal pivoted easily from progressive politician to private sector booster. Having made the leap in practice, first during the wartime TVA and continuing on through his time at the AEC, he was now free to make the leap in rhetoric. In the 1950s, Lilienthal published a series of articles on the vital role big business played in American life. These would culminate in a book titled Big Business: A New Era (1953), which read like an unsophisticated version of John Kenneth Galbraith’s Ameri­can Capitalism: The Concept of Countervailing Power (1952), that decried the Sherman Act and defended monopolies. In it, Lilienthal envisioned a Basic Economy Act that “would judge business not in terms of bigness—monopoly or oligopoly—but whether or not it fur­thered the public interest.”¹²¹ Rather than offering a new vantage by which to appreciate the vices and vicissitudes of postwar corporatism, the book merely reflected its general premises and commitments, albeit with great enthusiasm. Many of his New Dealer friends were aghast at the about-face, though it could hardly have been too surprising given his experience working with monopolies and oligopolies.¹²²

After leaving the AEC, Lilienthal was hired by the investment bank Lazard Freres, mostly for his name. This would prove a vital steppingstone. As he and Helen traveled the world for the first time, Lilienthal discovered just how far his name had rung out—whether in Europe or the developing world, everyone wanted to meet the man responsible for the “Tennessee Miracle.” After an extended visit with Jawaharlal Nehru in India, who explained to Lilienthal the West’s failure in recognizing what countries like his needed, it dawned on Lilienthal that he could export the TVA idea to countries pursuing economic development.¹²³ What meaningful differences could there be between Colombia’s Cauca Valley, Iran’s Khuzestan, or South Vietnam’s Mekong Delta?

Lilienthal soon found out. With capital from Lazard, he and Gordon Clapp (formerly of the TVA) founded the Development and Resources Corporation (D&R). The dynamic between the two would follow Lilienthal’s managerial modus operandi—ever the deal maker, big dreamer, and sweet talker, he would commit D&R to large, extended, high-risk development projects, and Clapp would be left to execute Lilienthal’s plans, however unreasonable. The stress on Clapp was acute, unnoticed by Lilienthal, and perhaps snatched Lilienthal’s dearest friend and collaborator from him when Clapp perished from a heart attack. Whatever it cost him, Clapp remained loyal to Lilienthal to the last.¹²⁴

Their first TVA-style project was in Colombia. Having fallen in love with the Cauca Valley region during his travels, he saw it as a perfect locale for the kind of project he had in mind. D&R met with military dictator Gustavo Rojas Pinilla. But working with a foreign dictator was different than working with one’s own president. In 1957, Pinilla pulled his support for the project; D&R left the country. In the mid-1960s, the project would be reinstated and achieved great success—without Lilien­thal or D&R.¹²⁵

Undeterred, Lilienthal looked toward Iran’s Khuzestan region for another try. He and the shah hit it off—Lilienthal remained a steadfast friend and supporter of the shah for the rest of his life—and D&R quickly secured a consultation deal. The World Bank was not convinced the project was workable; Iran was riven by internal factions and the economy was hardly robust enough to handle major state investments without punishing inflationary problems. But D&R had Abol Hassan Ebtehaj, director of Iran’s largest bank, on its side, who fought for the project and its independence as Lilienthal had for the TVA. They forged ahead and succeeded in building a series of dams (including the Pahlavi Dam) on the Dez River.

But the project itself was ill-conceived. Lilienthal remained pathologically committed to hydropower dams even when it was clear that thermal generation would have been cheaper, more efficient, and less demanding on state resources to build. Moreover, Lilienthal greatly misread the agricultural politics of Iran, and most of the agricultural efforts in the region succeeded only in uprooting and disenfranchising farmers. Eventually, D&R lost control and support for the project after the shah arrested Ebtehaj and a competing agency, Khuzestan Water and Power Authority, gutted D&R’s resources. The Iran fiasco incurred major losses for D&R, which permanently destabilized the company.¹²⁶

But another project beckoned. Lilienthal had met Lyndon B. Johnson when he was a Rural Electrification Act and TVA supporter in the 1930s. In the 1960s, neck-deep in the Vietnam War, LBJ reached out to Lilienthal for help. Could a TVA be built on the Mekong Delta? Lilienthal, worn out from the tedium of Iran’s internal politics, thought South Vietnam might offer fewer headaches. Visiting the war-torn coun­try did little to dissuade him, despite the incessant rumble of explosions. His involvement in Vietnam nearly cost him his relationship with his son, David Jr. Seemingly ripped from the pages of a Phillip Roth novel, David Jr. was an aspiring writer who worshiped his father. But he and his wife were also committed liberal activists—both dedicated to ending Jim Crow and the Vietnam War. Lilienthal’s hard-headed patriotism—he felt a man was obligated to answer his president’s call to service—appeared a foreign language to his son and daughter-in-law, who moved as far as Italy to put distance between them. While they patched up in later years, it caused great personal strain. Then the Tet Offensive scuttled all hopes for D&R’s Mekong project.¹²⁷

When Nehru met with Lilienthal in the 1950s, he told Lilienthal that when it came to international relations, “people set out to answer questions without having knowledge and understanding requisite to frame the question they are seeking to answer.” Americans visiting India “see many things . . . but they are not receptive to what they see, they don’t imbibe the things they see, are not receptive to things outside themselves.”¹²⁸ Lilienthal listened, but did not hear. By the end of the 1970s, Lilienthal had to dissolve D&R, which could no longer turn a profit.

Age was catching up to Lilienthal as well. He was now more alone in the world as his closest friends and mentors had all shuffled off their mortal coils. His volatile whipsawing between ebullience and anxious despair grew more volatile still. And then there was his health. Hip surgeries put him out of commission for longer than he liked. Still, he was hopeful and working at the end of his life—lectures, plans, business ventures on the horizon. On January 13, 1981, Lilienthal passed while asleep in his hotel room.¹²⁹ Helen received a letter from Arthur Schlesinger Jr. a few days later. “Dave was one of the remarkable men of the century,” he wrote, “remarkable especially in his unflagging and unquenchable commitment to the possibility of constructive work—so rare in an age given over so sadly to the work of destruction.”¹³⁰

Lilienthal Today

David Lilienthal’s life reflected the contours of American liberalism as it shifted in the warp and weft of the twentieth century. Ironies abound in both his successes and failures. The sphinx of a liberal democracy freighted with large, unelected bureaucracies stood before Lilienthal, and he could not solve its riddle. So far, neither have we.

But what can we learn from Lilienthal? Four lessons from his life present themselves.

The first is constancy. As Lilienthal’s biographer notes, his twenty-year career of taking on great public challenges stands out in the current atmosphere of revolving-door politics. Sustained loyalty across presi­dential administrations seems a rarity when so many lucrative book deals, private sector jobs, and NGO opportunities tempt. If we expect a durable reorientation of the American political economy to something like the postwar consensus in which Lilienthal operated, then it would benefit those who want to climb aboard the ship of the state to make long-term fidelity to its voyage their pledge.

The second is rhetoric. Lilienthal’s greatest gift was his greatest weakness. He could spin a political tale advantageous to himself and his objectives, but in conflict with the facts of the matter. This problem is inherent to political life and especially to democracies, as Plato’s dia­logues between Socrates and the sophists attest. Where Lilienthal got into the most trouble was when he seemed to deceive himself about the situations for which he was responsible. The misadventures abroad during the latter half of his career attest to the danger. We can see this today as many boosters of the chips and Inflation Reduction Acts want to argue that they have reawakened manufacturing in America. But while a few plants have been funded, U.S. manufacturing continues to face considerable challenges and China continues to strengthen its advanced manufacturing position. Certainly, the promised innovation hubs in “flyover country” inspire little confidence on the current trajectory.¹³¹ It’s one thing to showcase tertiary results as typical political spin, and another thing to internalize the spin as a reality and walk away before the job is done.

Third, there is no technological fix for politics, as politics is not a static, “fixable” problem. After Lilienthal had moved to the AEC, the TVA grew in lockstep with it—the AEC’s energy needs would, by the 1950s, demand half of the TVA’s power.¹³² Lilienthal’s effort to supply poor southern farmers with power had been conscripted into the war machine. To satiate AEC’s power demand, the TVA built some of the largest coal plants in the world at the time and fueled them with strip-mined coal, tarnishing its sterling conservation record. The public con­demned it. “By the 1960s, critics were charging that the TVA was not an example of creeping socialism, as conservatives had feared, but of creep­ing conservatism,” writes historian Thomas P. Hughes. “The TVA had acquired a bureaucratic and technological momentum” all its own.¹³³

If the TVA, the Manhattan Project, and the AEC marked the shift from benevolent liberal statism to Eisenhower’s “military-industrial complex,” the mid-century backlash to this trajectory signaled another major change for American democracy. Ironically, this backlash would prize the values Lilienthal espoused in his propagandizing for the TVA: the “grassroots,” public accountability, and decentralization. To heap on yet another irony, it is now the Democrats, in their zealous efforts to lower emissions, that strive to pry the TVA’s monopoly apart.¹³⁴

Finally, we must consider the conditions for productive patriotism that made a man like Lilienthal possible. Lilienthal’s education and upbringing in the thick fabric of midwestern civic life furnished him with the skills and values that allowed him to serve the American people. He recognized our country as distinct, valuable, and worthy of his best years and efforts. These are not unrelated phenomena—his writing attests to his reliance on the Western tradition in general and its Ameri­can body of letters in particular for inspiration and guidance. If we desire more men and women like Lilienthal in mold, if not exactly in pour, then our education system and culture cannot afford their current “post-American” drift. Without a basic commitment to our society’s continuation and without tradition, we are lost to ourselves.¹³⁵ Great ambition and decadence alloy only in a single product: tyranny. Liberal education is, as the midwestern tradition insisted, vital to a republican citizenry.¹³⁶ Even the folksy, prairie-born Harry Truman relied on Plutarch for insight.¹³⁷

This article originally appeared in American Affairs Volume VII, Number 4 (Winter 2023): 160–90.

Notes