Sunday. 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
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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 . . .
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$2.45 Per 80 Lb. Sack
YOU BE THE JUDGE
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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 .
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Western Life
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Stnd. Life Ins. Co. ; .. '.
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Metropolitan ., .
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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
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1 300 Queen Anne 2-8463
Eagle Point E. P. 3902
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P. O. Box 571.
944 Whitman.!.
4425 Pac. Hi-way S.
135 S. Central
.2-9322