Power company satisfied only with complete liquidation

The power company then demonstrated its determination to make a complete example of any politician who dared to challenge its monolithic control of the State of Arkansas. In the language of the witness, "the Arkansas Power & Light Co. was not content with my political defeat, but they were apparently determined to eliminate me. permanently from the political scene" (ibid.). According to his testimony, the further strategy of the power company unfolded as follows:

When the September 1952 grand jury was convened the findings of the highway audit commission were again submitted. This grand jury decided to hire a special prosecutor to assist the regular prosecutor and, without the public knowing it, a private slush fund was raised and paid in secret to this special prosecutor. Large contributions to this fund were later traced to individuals close to Arkansas Power & Light, among them to Harold Young, director of Arkansas Power & Light, and one of the dissenting members of the first grand jury. Meanwhile, Young had managed the campaign of one of McMath's opponents in the primary. McMath testified:

This payment was an out-and-out bribe to get indictments against members of my administration. It was highly irregular, improper, and illegal. All of this was according to the original plan of attack on me and my administration as a result of my decision in the Ozark steam generating plant and my attitude toward the rural electric cooperative program in Arkansas (RDY, p. 509).

The evidence shows that, after the September grand jury had been considering the highway audit commission's findings for several months, information concerning the slush fund reached the ears of the presiding judge and he discharged the grand jury when it refused to investigate the matter (ibid.).

The evidence shows that still another grand jury was empaneled to again investigate the highway audit commission's findings. Again we find among its members three men from the power company's sphere of influence, including the Arkansas Power & Light Co. treasurer. This grand jury returned indictments against two highway department employees, but one was dismissed by the trial judge on the ground that the facts stated therein constituted no offense against the laws of Arkansas. The second employee was tried and the jury returned a verdict of acquittal in exactly 4 minutes (ibid.). According to witness McMath:

Thus ended the long and highly publicized and expensive highway audit inves tigation in which the Arkansas Power & Light Co.'s directors and officers played such a major role. All of this could have been prevented, of course, and this great outlay of the taxpayers' money saved had I agreed not to support the Ozark steam generating plant (ibid.).

This evidence has been treated at some length because the committee feels the Congress and the public should know how a private power monopoly has sought, too successfully, to dominate one of the States of the Union. If anything even approximating this is going on in other States, it should be uncovered without delay. In the words of the former Governor of Arkansas:

The Arkansas Power & Light Co. is the most powerful influence in Arkansas, It has been unhealthy in that it is not conducive to good government for any one monopoly to exercise the influence that they have been able to exercise in our State, in the legislature and in other phases of our government (RDY, p. 518).

How power monopoly exercises political power in a State

In response to the question, How does Arkansas Power & Light make itself felt politically in the State? former Governor McMath replied that they make their influence felt in the legislature by having a number of influential members of the legislature retained or by giving them some other inducement. He cited again the case of Senator Ellis Fagan who gets all the contracts for electrical construction that the Arkansas Power & Light Co. has without competitive bids. He said there were others in that category, adding:

So they use their influence in the Senate to block legislation that might not be desired by the power interests (RDY, p. 523).

McMath responded further that the company has a number of lawyers retained over the State for political action purposes (ibid.). He pointed out that they have large amounts of money to spend for advertising programs. He continued:

They buy advertising in the newspapers and over the radio and they have a certain line they want to sell as far as their philosophy is concerned.

He added:

They buy these ads and, unfortunately, influence the news and editorial policies of some of the newspapers because of the liberal advertising program they have with those particular papers (ibid.).

McMath stated that another way in which Arkansas Power & Light exercises its influence on politics is through employees. He continued:

They are stationed in various clubs and organizations over the State. They build a following of their own. They wield a great deal of political influence. They have a propaganda organization that is very efficient. They can get rumors and propaganda out over the State in 24 hours (ibid.).

McMath testified that the power company has a tremendous interest in taking part in politics because the Public Service Commission. in Arkansas regulates the power industry. By taking part in a gubernatorial race, he continued, they are in a position to name the public service commissions, or at least have a voice in naming the public service commissioners. He added:

If they are successful in that, then they are, in effect, regulating themselves. That is the principal they have in the Governor's race (ibid.).

McMath testified that another way in which the power company builds its influence in the State is through its purchases. He said:

It buys everything from automobiles to bolts and nuts in Arkansas. They do business with individuals. If those individuals incur their ill will they do not do business with them and they incur their ill will if they are not politically right (RDY, p. 524).

McMath testified that "the power Company has waged consistently over the years a campaign of newspaper advertising, radio programs, public speakers-to endeavor to have the individual businessman, particularly the small-business men, identify their welfare with the welfare of the Arkansas Power & Light Co" (ibid.). He said:

They try to convice them and to a degree over a period of years have convinced them*** that any infringment upon the power and light company *** monopoly was, in effect, a restriction upon the free enterprise system (ibid.). Politics and propaganda of Mississippi company

In a previous section of this report reference has been made to the political activities of Mississippi Power & Light Co., insofar as they

involved attempts to block a vote favorable to the formation of a public power district in the North Central Mississippi Electric Power Association area. This included reference to retainers paid a legal firm where the witness saw the only purpose as political influence in the area. This witness, the former secretary-treasurer of the company, Stietenroth, subsequently placed in the record a list of 23 lawyers or legal firms, largely distributed throughout the portion of the State served by the company, together with the location of their offices and the amounts which they received. This list follows:

The number of lawyers on retainer in Jackson, Miss., capital of both the company and the State, may be significant.

Stietenroth testified that there might be other lawyers employed of whom he did not have a record. He said that the compensation listed represented retainers and that the lawyers were paid fees in addition for any work they did (RDY, p. 350). He stated further that he did not think they handled any lawsuits for the company, that all its lawsuits were handled by the company's office attorney or by Mr. Green, the company's general counsel (RDY, p. 348). Only on rare occasions, he added, would the others render any service, like drawing a contract or defending a lawsuit. His answer to the question as to why they were retained was simply this:

Well, these are local people, and people of some local influence and prestige locally, and it is very nice to have local representation (RDY, p. 349).

In this connection the testimony of the Mississippi company's chief financial officer concerning payments to lawyers in Senatobia, center of the area in which the public power district issue was being decided, is significant. According to Stietenroth, a check to this firm was drawn on a Senatobia bank in which the company had funds. added that a clerk brought the check back and said that he had tried to deliver it and that "they didn't want it drawn on any local bank up there" (RDY, p. 365). Obviously, someone did not want it known that the lawyers in question were on retainer.

He

Stietenroth testified to other ways in which the Mississippi company influenced public opinion and politics in the State. In previous pages of this report we have called attention to the total amounts which the company reported to the Securities and Exchange Commission for the year 1953, covering contributions, public relations, dues, and advertising. Some of the items making up those totals are significant.

For instance, the report shows that the company paid Dixie Advertisers $16,010 for public relations services. Concerning this item, the company's former secretary-treasurer, Stietenroth, testified: We have Dixie Advertisers to place all of our advertising, and for a company the size of ours I have always thought our advertising budget was quite substantial. I have observed it appears that it is quite flexible, too, in that the budget overall may not be increased for the year, but if we have particular trouble in one area, we might shift some advertising into that area. [Italics added] (RDY, p. 398.)

The witness testified further that the company has a man on the Dixie Advertiser payroll who gets $16,000 a year from the company for salary and expenses. According to Stietenroth: "He goes around and attends press conventions and just talks quite continuously with the newspapers in the western part of the State of Mississippi" (ibid.).

Stietenroth testified that the company furnished mat service, with the stories prepared by their public relations man or by Dixie Advertisers, and reduced to mats. Then, instead of just sending out news releases to the advertisers, they send the mat. The witness added:

Since the small newspapers already feel pretty kindly toward us and because also it costs them money to prepare a mat and get this linotype put on the press, it saves them some money. In all probability, they will publish our stuff in that form (ibid.).

In connection with this testimony, the report of the company to the SEC shows a significant item in its advertising budget for the year 1953. It shows that, of the total of $121,259 in advertising expenditures for that year, $82,177 went to "309 other newspaper press associations, newspapers, magazines, and other publications, the total of which to any single organization was less than $2,500" (exhibit 19, RDY, p. 747).

Of particular importance in this power company program of maintaining its influence over the political climate and the State government are the daily newspapers published in Jackson, the capital of the State. The 1953 report to the SEC shows that the Clarion Ledger got $3,966 for advertising and the Jackson Daily News $3,637 (ibid.). Stietenroth testified that the Hedeman interests control both of these dailies. He testified that the Mississippi Power & Light Co. pays substantial money to these interests through five separate channels. According to the witness, the company pays them rent for property; the company gives them the lion's share of its printing, frequently allowing them to charge what they consider a fair price after the work is done; the company pays heavy advertising fees to each of the newspapers; and, finally, the company pays substantial amounts to the radio and television station owned by the same interests.

The 1953 report to the SEC, already referred to, shows that the Mississippi company paid radio station WJDX $6,648 in 1953 for radio advertising (ibid.).

Stietenroth testified further that the company sent printing business to other newspapers; in fact, to almost any person who has a press in the western half of Mississippi. He added that the company makes a determined effort to spread that business over the properties. He then summed up the company's relations with the newspapers of the State in these words:

You know, if the local newspaper is getting printing business and advertising, also being called on regularly and kept informed, the relationship is quite cordial (RDY, p. 399).

It is the committee's view that this evidence of a calculated and well-financed program to control the major sources of public information, and thus to be able to manipulate the public mind on matters of concern to private power monopoly, if it should prove representative of what is going on throughout the country, would constitute a very serious threat to the public interest and good government.

The evidence taken at the hearings revealed another channel through which Mississippi Power & Light Co. is reaching out to influence public opinion in the interest of maintaining the company's influence in local and State politics. This is found in another item in this report to the SEC for 1953 which shows that $30,969 of the $35,347, which the company contributed to organizations of a social, educational, professional, trade, or similar nature, went to 272 organizations, the total payment to any one of which was less than $2,500 (ibid.).

Finally the evidence taken in the hearings shows that the Mississippi Power & Light Co. pays out considerable amounts to influence public opinion and politics on a national scale. These include the following payments in 1953 to organizations at the national level:

The company also participated in the Electric Companies Advertising Program through a payment of $12,963 to N. W. Ayer & Son. Inc. In addition, it paid $5,027 for advertising in the American magazine and $6,724 for advertising in Time magazine (ibid.). Thus, in addition to advertising within the State, the company spent nearly $25,000 in 1 year for advertising on a national scale. If the other electric power companies spent the same proportion of their gross electric revenues for such advertising, the total for the country must have approximated $6,400,000.

Similar activities shown for Arkansas company

Information requested by the Arkansas Public Service Commission, in the matter of the Ozark Cooperative steam station, reveals the fact that the Arkansas Power & Light Co. also had a wide range of lawyers and legal firms on its payroll. The list of all fees paid by the company for legal services for the period January 1, 1950, through April 30, 1952, follows: