Medford mail tribune. (Medford, Or.) 1909-1989, November 28, 1954, Image 5

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Medford mail tribune., November 28, 1954, Image 5

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Newspaper Page TextSunday. November 28. 19S4 MEDFORD (OREGON) MAIL. TRIBUNE FIVE ' Editor's note: A dispute .that betas early this, year and shows every "in of continuing has put the names "Dixon" and "Yates" into frequent headlines. The issues are involved; the discussion heated. The following dispatch gives the history and back ground of the Dixon-Yates contract, and the pro and con arguments that have been made about its terms. - By PAUL SOUTHWICK United Press Correspondent Washington U.R) The Dixon-Yates contract has em broiled the Eisenhower admini stration in controversy with con gressional Democrats because it calls on private utilities to meet a power shortage in the Tennes see Valley Authority area, the nation's foremost public power domain. Specific terms of the contract also have come in for considerable dispute. But critics and defenders agree that the ba sic issue is whether the govern ment owned TVA or a private company should build the new steam - electricity- generating plant which all agree is needed in the vicinity of Memphis. .- Since it was created 21 years ago in the early days of the New Deal, TVA has grown into a , billion-dollar enterprise, opera ting toot only the 30 flood con trol and hydroelectric dams or iginally conceived for the pro ject but also 15 steam genera ting plants. Its total power cap acity is now 6,075,000 kilowatts. Power Shortage MONEY GROWS quickly when invested here . . . whtr INSURED SAFETY end LIB. ERAL EARNINGS await your sav ings. Open an account tomorrow and get rhesa worthwhile savings from now on. FIRST FEDERAL SAVINGS & LOAN ASS'N of Medford -., 27 North Holly An Institution Dedicated To Those Who 5a vo , Even -this is not enough, how ever, to meet the steadily grow ing power needs of the valley. During and since World War II, the Atomic Energy Commission has built two huge A-bomb plants in the area, at Oak Ridge, Tenn., and Paducah, Ky. These and other defense installations now use nearly 40 per cent of TVA's power. The seven-state TVA area al so has undergone tremendous expansion in private industry, sparked partly by TVA's cheap power. Power needs have climb ed particularly around Mem phis, where many of the new in dustrial plants are located. TVA asked Congress two years ago for $100,000,000 dol lars to build a new steam plant at Fulton, Tenn., north of Memphis,-to meet the looming power shortage. . Then-President Tru man endorsed the request, but Congress turned it down. Request Killed 1 Last year, with the Republi cans in power, TVA repeated the request. President Eisenhower, who once, referred to TVA as "creep ing socialism" and w h o w a s looking for ways to trim govern ment spending, killed the re quest. Mr. Eisenhower told Congress last January he was looking for an "arrangement," presumably with private utilities, to replace TVA of the necessity of supply ing 600,000 kilowatts of power to the atomic plant at Paducah. That would 1 make that much TVA power available for Mem phis and make a new TVA plant unnecessary, he said. The President has since ex plained that he believes the fed eral government cannot go on forever building new power plants in the Tennessee, Valley without treating other areas un fairly. If TVA's expansion, con tinued, he said recently, ''logi cally we would have to begin plans for a gigantic power devel opment to cover the entire na tion equitably." - On Mr. Eisenhower's orders, AEC Chairman Lewis L. Strauss early this year started sounding out private utilities about a long term contract to supply 600,000 kilowatts of power to Paducah. Dixon was Interested J. W. McAfee, president of Electric Energy, Inc., a private utility which already furnishes about 40 per cent of the power for the Paducah atomic plant, said he wasn't interested. If the AEC eventually decided it did not need all the power, he said, there would be no other market for it in the Paducah area. ' But McAfee told Strauss that Edgar H. Dixon, president of Middle South Utilities, Inc., was interested in supplying power to TVA at Memphis. Dixon's holding company owns the Mis sissippi Power and Light com pany, New Orleans Public Ser vice company, Arkansas Power and Light company and Louis iana Power and Light company. Dixon latenwas joined in the conversations with Strauss by Eugene A. Yates, 73-year-old board chairman of the Southern company, wnicn owns utilities in Mississippi, Florida, Alabama and Georgia. In June, on direct orders of Mr. Eisenhower, the AEC start ed negotiations with Dixon and Yates to build a $107,250,000 steam plant at West Memphis", Ark., across the Mississippi fiv er from Memphis. - Under that plan, Dixon-Yates would supply 600,000 kilowatts to TVA at Memphis. This would "replace" the 600,000 kilowatts TVA was sending to, the AEC' up north at Paducah. Prompt Protests TVA supporters -promptly pro tested. They said the proposed contracts would be far different from the long-term power pur chase contracts which the AEC had signed with private utiltiies in the past. The difference was, they said, that the power in this case would not be delivered di rectly to an atomic plant, but would be fed into the TVA pow er grid nearly 200 miles south of the AEC installation that was ostensibly "buying" the power. TVA advocates contended the administration was using the GTT OsRE FOR Yl!Je MKIGY WITH ALL THESE FEATURES ' 1 v . k V MJhtin9 for Greater , ' " 1 . THE HILLSDALE V Ven00p J -.. Y Model S13.M- A f J HERFS ANOTHER HONXT 2 1 -inch table model with HaioLight, the vS ' ' ' Silver-Screen Aluminized Picture Tube plus f''3tero,,Mv ' '( the PhotoPower Chassis. Comes in genuine : V " - f f"'' T" ' """"l Mahogany Veneer. Blonde Korinay slightly . -$ fT' a..VSV Av AlJ.YAlA ler'11 f "ssssssssssssWl &L XT VI Model legs extend 1 ; Wl Sev" stL- TO SUIT EVERY CU2C2T 0UI33V wj.iu gup grass jaereM - The KIRKWOOD Medol 534 21-incfa Console with HaloLight, Alaminized Picture Tube and Super PhotoPowxx Chassis. Is, Genuine Mahogany Veneer. Also in Blonde Korina, slightly higbet. CITY I S9QQ95 - fiiVW INCORPORATED 127 N. Central - Opposite Penney's - Ph. 2-5743 AEC as a front to enter into a deal the real purpose of which was to "strangle" TVA's hold and growth and give private power a foothold in the TVA area. ' . TVA supporters also claimed that the AEC would pass "ex cessive" costs of the " Dixon- Yates contract on to TVA. This would raise TVA rates to its customers and destroy the so- called yardstick" role TVA had played in setting standards of low cost nower. Former TVA Chairman Gor don Clapp said the contract was "the opening step in a program deliberately planned to destroy TVA." President Defends Plan ' Mr. Eisenhower replied vig orously that he was not trying to destroy or cripple TVA. He said the Dixon-Yates contract was the best plan presented for meeting power needs in the TVA area without a big outlay of fed eral funds for a new government owned generating plan. Herbert Vogel, recently ap pointed TVA chairman by Mr. Eisenhower, backed the Dixon Yates contract and said he was sure AEC and TVA could work out an agreement so that TVA "will bear only those costs that are commensurate with the ben efits." The controversy raged through a Senate filibuster on the atomic energy control law last spring and into the congressional elec tion campaign. It produced two congressional investigations, by the Senate Anti-Monopoly Sub committee and the Joint Con gressional Atomic Energy Com mittee. Finally, on Nov. 11, the con tract was signed. A few days later the Congressional Atomic Committee, with its 10 Repub lican members outvoting the eight Democrats, waived a legal ly required 30-day waiting per iod to let the contract take ef fect at once. 25-Year Contract Under its terms, a new com pany, the Mississippi Valley Generating Company, will be formed, with the Dixon group having 80 per cent interest and the Yates group the other - 20 per cent. The contract runs for 25 years, with an option for the govern ment to extend it to 45, years. The Dixon and Yates groups will put up $5,500,000 of their own capital. The rest will be borrowed by the combine from other sources, such as insurance companies. ' The contract calls for con struction within three years of" a steam plant estimated to cost $107,250,000. The AEC will pay Dixon-Yates about $9,000,000 a year as a "base charge" for the plant, plus $9,699,000 a year for the actual power. The latter figure includes $536,000 a, year as an offset for federal income taxes which the company would have to pay on its expected pro fits. ... . ' If construction costs turn out to be higher than $107,250,000, the AEC will split the extra costs with Dixon-Yates, up to an overall total of $117,000,000. Above that the company will nave to stand all added expense. Last Minute Changes The AEC also will shart 50-50 with the company in any sav ings realized by a cut in. con struction costs. Last minute changes in the contract . also provided: 1. A $600,000 a year earning limit for the company. ' This represents a ceiling of 10.9 per cent on the company's annual profits on its proposed $5,500, 000 investment. It is not a guar antee that the profits must be that large. 2. The right of the government to take over the plant within the first three years if necessary "in the public interest." 8. Prior approval by AEC of the contractor, designer or arch itect selected for the job. Above Estimates The last change was aimed at meeting protests that Dixon Yates planned to use - Ebasco Services, Inc., as contractor on the job. , Ebasco was fired .from a Joppa, 111., powerplant project for AEC when costs ran $40,000, 000 more than, estimates. - Acting Comptroller General Frank H. Weitzel had reported to Congress earlier that there was no limit on the profits the company might make and that the government could cancel the contract only with, costly pen alties. The last-minute chances apparently were designed to meet these objections. Weitzel also held that some other parts of the contract, which have not been changed, were loosely drawn and may have loopholes to benefit the company. For instance, the AEC must pay the company for its expected income taxes at the rate of $536,000 a year even if the company makes no profit and therefore has no tax to pay. To these and other criticisms, Dixon and Yates have replied that the contract is anything but a plum for their companies. Claim Small Earnings "The possible earnings are too small . to make it attractive as a usual business venture," they said in a. recent statement. "The return the Mississippi Valley Generating Company hopes to' earn on its investment under the contract is less than that realized by electric utilities on the average throughout the Physical Medicine Program Underway For Domiciliary Camp White A program of physical medicine and rehabilia- tion is now established for the special needs of domiciled vet erans at the V. A. Center here, according to Dr. Samuel D. Ear- hart, in charge of this phase of the medical service. The schedule together with the special facilities provided and projected has received the en dorsement of Dr. A. B. C. Knud son, director of physical medi cine for the Veterans Adminis tration. . "Dr. Knudson recognizes that our' facilities as, well as our aims are somewhat limited, Dr. Earhart declared. The plan now calls for rehabilitating the men so that they may remain at the domiciliary and not be sent to hospitals, he said. Some will be enabled to return home. Ther apy, recreation and detail are employed to this end. At present from 70 to 80 men are enrolled with a record of 1600 treatments during the past month. "We plan to extend this program as equipment and per sonnel are provided," Dr. Ear hart stressed. Two more ther apists are needed for physical and corrective therapy and one each for manual arts therapy and occupational therapy. Special calesthenics for one group of men lacking coordina tion are being . considered. In addition, it is planned to provide an incentive for time spent in such diversions as fishing, lapi dary and art : work as well as hobbies for which no credit is given at the present time. Dr. Earhart feels that the initiative and interest shown by the few engaged in these pastimes should be recognized. Volunteer aid in forming classes in art; flower making, stamp collecting and in training of aphasia patients have supple mented regular occupational therapy and arts and crafts.1' Manager Eugene Bicker sums up the situation by express ing the "hope of all of us that the, work, beyond its present preliminary stage, can be ac complished in the not too dis tant future." : . ; Damage Suit Filed In Josephine Court Grants Pass A $10,365.20 personal injury damage suit has been filed in Josephine county circuit court against Moore Tim ber Products, , Inc., by Freeman A. Felton. - A complaint filed this week charges Felton was injured Sept 1 in an accident at a Moore com pany sawmill . while employed there as an edging-picker. Felton asks $10,000 general damages, $265.20 for loss of wages, and an unspecified amount for medi cal expenses. : " ' DAIRYMEN Have you tried . . . KOWKANDY Crown's 14 Dairy Ration Still $585 Per Ton F.O.B. MEDFORD $2.45 Per 80 Lb. Sack YOU BE THE JUDGE yHY PAY MORE? Pacific Feed & Seed Co. 4TH and FIR PHONE 2-2413 3 United States as a whole. The contract provides a modest ceil ing beyond which earnings on risk capital may not go." : - AEC and Dixon-Yates claim there is no guaranteed profit, that the company could lose money badly if its estimates on costs are too low. Another risk which Dixon Yates is incurring, according to supporters of the contract, is that the government might can cel the whole deal sometime in the future and leave the firm with a lot of power to be market ed somewhere else. Eight-Year Cancellation The contract provides that the AEC may cancel the contract, after the plant is built, in this manner: First, it must give Dixon-Yates three years' notice. After that period, AEC may re duce its power take each year by 100,000 kilowatts until it is no longer paying for any power. Thus complete cancellation would take eight years. . Escalator clauses in the con tract protect the company from sharp rises in operating costs and the AEC from sharp drops. If fuel and labor costs rise above estimates, the AEC ' will pay more for the power; if these costs decline, the annual payments will drop. Critics of the contract argued that the last-minute changes did not put an effective ceiling on Dixon-Yates earnings, and that, in the words of Sen. Estes Ke fauver (D-Tenn.), "The sky is still the limit" on profits. Extra Profit Possible Kefauver pointed out that the plant is expected to have a ca pacity of 650,000 kilowatts, giv ing the company 50,000 kilo watts more than required by the government. He said the con tract provides that the company can sell this in any way it wants t an extra profit. Some of the other charges raised in the controversy and the administration's answers: Charge: The contract was ne gotiated in secret and no com petitive .bids were sought. Answer: President Eisenhower personally ordered, all files on the negotiations to be made pub lic, and they were on Aug. 21. The administration claims com petitive bids are not feasible on such contracts and were not called for on similar AEC power contracts under the Truman ad ministration. The Eisenhower ad ministration did consider, and reject, another proposal for a plant by a group of New York investors. Argue Over Site ; Charge: The West Memphis, Ark., site is a poor one which has been flooded by the Missis sipi river in the past. s - K Answer: The company, which picked the site, stands to profit only if it can make good on schedule under the contract. Charge: The Dixon-Yates plant will cost ' the government any where from $3,600,000' to $5, 000,000 a year more than a new TVA plant, and the 'government still won't end up owning it. , Answer: The difference in cost is explained by thedifference in taxes which Dixon-Yates would be liable for and TVA free of, the greater cost to Dixon-Yates of financing the i project, the profit to Dixon-Yates, and the extra costs because of the site." ROGUE VALLEY Youth for Christ PRESENTS Rev. Val Cloud MONDAY, NOV. 29TH 8:00 P.M. at . . . MEDFORD NAZARENE 1 1 TT 1 VUUUU1 NORTH HOLLY & 1ST. STREET Rev. Cloud Will Bring a Real Gospel Message Rev. Cloud, a fiery Evangelist and song leader and party will present a .varied .musical program. 1 M1MBIRQF I I m Tncitd a ut? IMS ft) UWHIUinVE I L 1 I V OUR LOCAL LIFE UNDERWRITERS' ASSOCIATION is a member of The National Association of Life Underwriters (N ALU) , the prof es sional organization of life underwriters in the United States. Founded in 1890, NALU today comprises approximately 60,000 life underWriters in more than' 600 local associations throughout the United 'States. ' ',; ''':'-y'"":?, .- ' NALtFs guiding principles and code of ethics are designed to guarantee you, the client: . ; A continuing program of education for the life underwriter, aimed et assisting him to aid YOU in the solution of YOUK family's protection through the use of life insurance. , A legislative program which exerts a powerful and worthwhile influence : on national, state and local legislation affecting the life insurance in- ; ; r: dustry and YOU, the policy-holding public ; - Fair competition, for the privilege of serving YOU, assured by qualifi cation and license laws, statutes forbidding rebating, twisting and mis , t representation, and the individual Association member's pledge rigidly v . ' ' to adhere to the observance of the highest standards of business and : professional conduct.' . : ' The professional life underwriters, members of this Association, who subscribe , to, endorse and actively participate in this program are listed . below. , 'A v - v l', I i HAVE YOU REVIEWED YOUR LIFE INSURANCE PROGRAM RECENTLY? WHY NOT. CALL YOUR LIFE 6NDERWRITER TODAY? Rogue Valley Association of Life Underwriters v. MEDFORD, OREGON Abbott, Chas. -Wm. Acklen, Gerald G. Adams, Myrle C. Arant, Donald L.'- ' Bpker, Edith E. Bringle, Homer J. Brown, Eugene C. ' Burger, Frank M. Burpee, Jack F. Caldwell, Wm. M. . Carter, John A. Crick, Joe E. Cutting, David C. Elliott, Robert A. Evans, Lloyd W. Fabrick, Glen L. , Garred, Barton D. Gilkey, Leonard Hamaker, Chet Harbison, John W. Jr. Hopkins, Curt L. . McClintock, Chas. R. . McCullough, Glenn McGee, Allen O. ' Salade, Wm. A. Schmidt, Clarence R. ' Sears, Fred S. : Tinseth, Helmer T. Van Scoy, W. I. Webster- Joseph H:-' Wilkes, Virgil R. 1954-55 ROSTER Mutual Life of New. York . Mutual Life of New York I I Western Life Mutual of New York v Stnd. Life Ins. Co. ; .. '. Business Men's Assurance Metropolitan ., . Mutual of Omaha & United, Omahi Northern Life Ins. Co. Occidental Life Ins. Co. State Farm Life Ins. Co. Provident Life Ins. Co. -Northern Life Ins. Co. Connecticut Mutual Life Mutual Life of New York Standard Life Ins. Co. New York Life Ins. : New York Life Ins. Standard Life Ins. Co. Travelers Life Ins. Co...: ! . Western Life & Aetna Group Occidental Life Ins. Co. Provident Life Ins. Co. State Farm Life Ins. Co. Phoenix Mutual Life Ins. Co. - Metropolitan Prudential Life Ins. Co. ' -State Farm life Ins. Co. ; . :. ; : Provident Life Ins. Co. Lincoln National Life Ins. Co. State Farm Ins. Co. , - , Franklin Bldg P. 6. Box 61 0 ?. O. Box 492 Franklin Bldg. P. 6. Box 623. 204 W. Main .2-9271 ..Grants Pass Ash. 2-3691 2-9271 2-4426 .2-8696 229 Vashti Way 2-9584 11S. Riverside 2-9787, Brophy Bldg- , 2-6502 P. O. Box 548 2-5173 135 S. Central. 12-9322 921 N: E. CampusGrants Pass 708 S. E. 8th St. Grants Pass Hotel Medford ' 2-6884 Franklin Bldg.. 2-9271 P. O. Box 63 :3-2983 924 Grant Avenue . 3-2987 25 WilUm' 3-9QR7 Franklin Bldg 3-2983 220 S. CentralIHll2-2347 Rm. 20 Goidy Bldg.: 2,9422 2110 W. Fruitdale Grants Pass 29.Keenway Drive- 3-3191 38 E. MainAshland 6416 .2-7801 .2-8830 1 100 Winchester - 2-2270 1 300 Queen Anne 2-8463 Eagle Point E. P. 3902 .2-7068 P. O. Box 571. 944 Whitman.!. 4425 Pac. Hi-way S. 135 S. Central .2-9322