B005HFI0X2 EBOK (39 page)

Texas alone provided more than a third of the oil used by the United States until the 1970s. The Organization of Petroleum Exporting Countries (OPEC) was founded in Baghdad in 1960 and by the early 1970s power had shifted to OPEC from the TRC. In 1973, during the Arab-Israeli war, OPEC demonstrated its power by imposing an oil embargo on the United States and other allies of Israel.

GIANT POWER

The construction by the United States of a stable global oil infrastructure was accompanied by the completion of the second industrial revolution at home. While Lincoln’s Second Republic of the United States was built on railroads, Franklin Roosevelt’s Third Republic was built on electric grids and interstate highways. The two grids of the second industrial era permitted the decentralization of factories and people, within regions and across the continent.

In the 1920s, three-quarters of the electric-utility sector was controlled by eight holding companies, including Samuel Insull’s. The holding companies eluded state-level regulation and used layer on layer of complexity to baffle regulators and investors alike. Many were as highly leveraged as the House of Insull, which controlled $500 million in assets with only $27 million in equity. Gifford Pinchot, the progressive Republican governor of Pennsylvania, campaigned for Giant Power, a scheme that would replace commercial electric power empires with public utilities. The power companies promoted their private alternative, Super Power.

When the Depression struck, the fragile, overleveraged structures of holding-company systems like Insull’s came tumbling down. Insull lost his fortune, while many of the 600,000 investors in his utility empire lost their life savings. Roosevelt campaigned for the presidency in 1932 denouncing “the lone wolf, the unethical competitor, the Ishmael or Insull whose hand is against every man’s.”

Insull’s fall from grace was swift and dramatic. Shunned in Chicago, Insull and his wife fled to Europe. When Cook County indicted him for embezzlement, larceny, and other offenses, Insull was in Greece. The Greek government refused to extradite him to the United States, but it refused to renew his visa, forcing him to board a steamer to Romania, which turned him away. The Turkish government jailed him and extradited him to the United States, where, after all his travails, he was finally acquitted after standing trial. His health and spirits broken, he moved with his wife to Paris, where he died after collapsing in a Paris metro station. As a final indignity, a Parisian thief took his wallet from his corpse.
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Following Roosevelt’s election, the federal government revolutionized the electric utility business. Responding to the abuse of holding companies as a method of escaping state utility regulation, the Public Utility Holding Company Act of 1935 put the new Securities and Exchange Commission (SEC) in charge of regulating utility holding companies, while the Federal Power Act of 1935 subjected utilities engaged in interstate activities to the jurisdiction of the Federal Power Commission (FPC).
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Rural electrification was another priority of the Roosevelt administration. The Rural Electrification Administration (REA), created in 1936, provided financial assistance to rural electric cooperatives. The number of farm homes with electricity tripled between 1932 and 1941. Thanks in large part to the rural-electrification efforts of the New Deal, the number of farm households with access to electricity and electric appliances like electric lighting, refrigerators, and radios increased from 10 percent at the beginning of the 1930s to 90 percent by 1950.
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The federal government also went into the electrical-power-generation business itself. The best-known example is the Tennessee Valley Authority (TVA), which constructed a series of dams to bring electricity to a depressed rural region as large as Western Europe. Roosevelt adapted as his own a proposal by Nebraska senator George Norris to create a public agency responsible for using hydroelectric power to catalyze the development of the depressed Tennessee Valley region.

The TVA was an independent public agency modeled on the Panama Canal Commission.
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Its second director, David Lilienthal, helped to create the Electric Home and Farm Authority to provide low-interest loans for manufacturing and purchasing electric appliances like waffle irons. With forty-two dams and reservoirs, the TVA lowered the price of electricity, improved freight transportation, controlled flooding, and provided irrigation and fertilizers for the farms in the river valley. In World War II, the TVA provided the power for the Oak Ridge laboratory that helped to develop the first atomic bombs as part of the Manhattan Project. The Lower Colorado River Authority (LCRA), sponsored by Franklin Roosevelt’s dynamic young protégé, Texas congressman Lyndon Johnson, was a similar success in bringing cheap energy and economic development to the impoverished Hill Country of central Texas.

Like the South, the American West was transformed by federally sponsored hydroelectric power. In the middle of the 1930s, all five of the biggest structures in the world were dams that were being built in the United States—the Hoover Dam (Colorado River), the Grand Coulee (Columbia River), the Bonneville (Columbia River), the Shasta Dam (Sacramento River), and the Fort Peck Dam (Missouri River). Another massive water project in the West was the Central Valley Water Project, which diverted water supplied by the Shasta Dam on the Sacramento River and the Friant Dam on the San Joaquin River by way of a series of canals to farms in California’s Central Valley.

The Grand Coulee Dam—more than 550 feet tall and four-fifths of a mile in width—was the largest structure ever built.
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The dam held the record for size until it was surpassed by the Itaipu Dam along the Brazil-Paraguay border in 1982, which in turn was surpassed by China’s Three Gorges Dam in 2006. In World War II, the electricity generated by the dam powered aluminum plants for aircraft. The Bonneville Power Authority hired the folk singer Woody Guthrie to celebrate the Columbia River projects with a collection of songs, including “Roll on, Columbia” and “The Grand Coulee Dam”:

Well the world has seven wonders that the trav’lers always tell,

Some gardens and some towers, I guess you know them well,

But now the greatest wonder is in Uncle Sam’s fair land,

It’s the big Columbia River and the big Grand Coulee Dam. . . .

Uncle Sam took up the challenge in the year of thirty-three,

For the farmer and the factory and all of you and me,

He said, “Roll along Columbia, you can ramble to the sea,

But river, while you’re rambling, you can do some work for me.”

Now in Washington and Oregon you can hear the factories hum,

Making chrome and making manganese and light aluminum,

And there roars the flying fortress now to fight for Uncle Sam,

Spawned upon the King Columbia by the big Grand Coulee Dam.

As impressive as they were, the dams of the New Deal era contributed only a fraction of the energy consumed by industries and homeowners in the boom years that followed World War II. Coal-powered utilities provided the majority of electricity. As an icon of modernity, the hydropower dam was soon overtaken by the nuclear power plant. The Atomic Energy Commission (AEC) worked with the private sector in the 1950s to promote the peaceful use of atomic power. In 1957, the first commercial nuclear power plant opened in Shippington, Pennsylvania. To keep up with growing demand, utilities ordered more nuclear plants in the following decades. Following the accident at Three Mile Island in 1979, public opinion turned against nuclear energy. Even so, by 2000 there were more than a hundred nuclear power plants in the United States, which provided nearly a fifth of the nation’s electricity.

THE INTERSTATE HIGHWAY SYSTEM

In 1915, the wealthy socialite Emily Post wanted to take a trip by automobile across the United States. When she asked a friend who had made several cross-country trips by car what the best route would be, she was told, “The Union Pacific.”
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But change was coming. As early as 1893, the Post Office Rural Free Delivery Act helped to create a constituency for good roads by permitting farmers to shop using mail-order catalogs like the Sears, Roebuck catalog. (In order to prevent postmasters from telling local merchants what they were doing, mail-order customers sometimes asked for the catalogs to be delivered in plain wrappers.) In the early 1900s, farmers, bicyclists, and early automobile-club members had united in a campaign for better roads, whose first success was the Federal Aid Road Act of 1916, which provided matching federal grants to states for road construction.

The American highway system found a champion in Thomas Harris MacDonald, known as the “Chief,” who headed the Bureau of Public Roads from 1918 until 1953, when he was eased out by the Eisenhower administration. Born in Leadville, Colorado, MacDonald grew up in Iowa, where he saw his father, a lumber and grain dealer, forced to pay a “mud tax” because of poor road conditions. MacDonald’s greatest legacy would be the interstate highway system, for which the Eisenhower administration, which fired him, gets the credit. It was MacDonald’s opposition to toll roads that ensured that the federal highway system would be paid for by gasoline taxes.

Although what became the interstate highway system began under Franklin Roosevelt, Eisenhower supported the legislation that completed it. In 1919, a US Army convoy made an arduous trip that began in Washington, DC, and ended sixty-two days later in Oakland, California, having traveled chiefly on dirt roads west of Kansas City. The lesson was not lost on Eisenhower, one of the young soldiers. Later he was impressed by the German autobahn system. So intense, however, was the resistance to a modern highway infrastructure in the antistatist United States that the legislation was only passed in 1956 when it was named the National Interstate and Defense Highways Act and backed by the prestige of the former commander of America’s armies in Europe in World War II.

DECENTRALIZING POPULATION AND INDUSTRY

Like many progressives of his time, including his uncle Frederic Delano of the Regional Planning Association and his own National Resources Planning Board, Roosevelt favored the decentralization of population and industry. In January 1933, Roosevelt had said that it was necessary to “get [the unemployed] out of the big centers of population, so that they will not be dependent on home relief.”
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Harry Hopkins, director of the Federal Emergency Relief Administration (FERA), observed, “It would be a good thing for America if large cities disappeared and their industries were scattered in a thousand small communities.”
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In September 1933, a TVA publication advocated the dispersion of small industries to “smaller communities” in order to “avoid the unfortunate social consequences of excessive urbanization.”
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The two key technologies of the second industrial revolution, electricity and the internal combustion engine, permitted decentralization to be carried out. The dream of mass-producing low-cost homes had been shared by many liberals, including Roosevelt, as head of Secretary of Commerce Hoover’s American Construction Council in the 1920s. With the help of the Truman administration, the Lustron Corporation sought to mass-produce stainless steel houses. But that experiment ended in failure and scandal. Instead of Lustron, Levittown became the symbol of postwar suburban housing, thanks to the success of the Levitt brothers of Long Island in modeling the construction of housing developments on mass-production techniques in the auto industry.

The combination of Federal Housing Administration (FHA) loans and the GI Bill created the postwar suburbs that sprang up alongside new federal and state highways. Before the New Deal, only around 40 percent of the American population lived in a single-family home. Typical down payments were 30 to 35 percent, interest rates were often around 8 percent, and loans had to be repaid in five to ten years. Following the creation of the Home Owners’ Loan Corporation in 1933 and subsequent housing measures, the federal government standardized the thirty-year loan with down payments of 10 percent and interest no higher than 5 percent.
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In 1990, 46 percent of the US population lived in the suburbs.

The golden arches of McDonald’s became the international symbol of America’s postwar suburban middle-class lifestyle. The restaurant chain was founded in the 1930s by two brothers, Dick and Maurice “Mac” McDonald, who created a glass-walled drive-through restaurant that made hamburgers by assembly-line methods. A former milk shake salesman from Chicago, Ray Kroc, and a financial genius, Harry Sonneborn, turned McDonald’s into the largest owner of retail real estate on the planet by the 1980s—and even opened a Hamburger University. “The french fry would become almost sacrosanct for me, its preparation a ritual to be followed religiously,” Kroc explained in his autobiography.
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The conspiracy theory that automobile companies deliberately destroyed mass transit in order to force Americans to rely on cars has no basis in fact and has been debunked repeatedly by scholars.
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Mass-transit ridership peaked in 1919 and began its rapid decline as millions of Americans bought cars.
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Cities began to switch to buses because rail transit was losing ridership and buses were more flexible than fixed-rail lines. A similar shift has taken place in other industrial countries. As automobile ownership spread in Europe and Japan, mass-transit ridership declined as well, although it is still at higher levels than in the United States, which was the first nation with mass automobile ownership.
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The new automobile-centered culture was derided by American intellectuals, many of whom were downwardly mobile children of affluent parents who could afford to live and play in expensive bohemias in New York, San Francisco, and other big cities. By the late twentieth century, the American intelligentsia was all but united in its snobbish disdain for America’s working-class and middle-class suburbs, claiming that “sprawl” deadened the spirit and threatened the environment.