“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
– Henry Ford
“Now Muscle Shoals has got the Swampers.”
– Lynyrd Skynyrd
Big, Big Dreams
“I will employ one million workers at Muscle Shoals, and I will build a city 75 miles long.”
These were the wild declarations of Henry Ford following a trip to the North Alabama town with his pal Thomas Edison in 1921. One can only speculate about the dreamy discussions the two had from the picturesque left bank of the Tennessee River that inspired these grand plans.
At the time, the town of Muscle Shoals, which wasn’t incorporated until 1923, was home to less than 750 residents. And it still had cotton fields within its limits. Likewise, the shallow waterway zone had been Cherokee hunting domain as recently as two generations before.
Nonetheless, Ford, along with the visionary Edison, saw opportunity. In fact, Ford’s dream was to turn the quiet town into a Southern mecca – a “Detroit of the South.”
This, of course, was at a time when Detroit was prosperous, and its citizens enjoyed an abundant standard of living. Ford’s dream for Muscle Shoals, however, was centered on fertilizer manufacturing. Not automobile manufacturing.
To understand the opportunity Ford envisioned, one must understand the actions taken in the area by President Woodrow Wilson during World War I. In particular, construction on Wilson Dam and two nitrate facilities had commenced at the tail-end of World War I.
The intent of these facilities was to provide munitions manufacturing. Yet the war ended before they were complete. And then, President Warren G. Harding halted work and offered the facilities for sale or lease.
Ford saw this as a golden opportunity. He offered the government $5 million for a 100-year lease on the incomplete nitrate facilities and Wilson Dam – a project the government had already invested more than $46 million in. As part of the proposal, Ford promised to finish the facilities and build another dam upstream.
Ford planned to convert the nitrate plants to fertilizer production, so that farming costs could be lowered across the nation. He also intended to employ his unique ideas on urban planning and design. An article in Scientific American, published in September 1922, noted his unique vision:
“Through his ‘75-mile city’ Mr. Ford would have the factory and farm working hand-in-glove.”
The concept was to build the community as a thin strip of outer city. Thus, a factory worker could enjoy the benefits of rural life combined with the convenience of urban life.
Rush for Muscle Shoals
The Scientific American article proposed a hypothetical fertilizer plant worker who spends his off-work time on his personal farm, with cheap nitrate fertilizer, and collective farm equipment loaned by the factory.
The city itself was envisioned to be a loose spread of factories and urban areas separated by these farm homes. What’s more, it would all be powered by cheap, hydroelectric power delivered by Wilson Dam and the subsequent dam.
In 1921, Ford’s idea was so compelling that people from across America flooded into the town. The New York Times published a series of articles in early-1922, one of which led with the following sentence:
“The dream city reared suddenly at Muscle Shoals by Henry Ford somewhat after the fashion of Aladdin with his wonderful lamp is already being peopled.”
Indeed, the plan was popular in the south. This massive undertaking, if implemented, would transform an extremely poor rural area into an industrial center.
With great anticipation, speculators began buying land to create subdivisions. Sidewalks were installed and orchards and farms were planted in South Alabama to feed the population boom expected to arrive in North Alabama.
Ninon Parker, marketing director for the Colbert County Tourism and Convention Bureau, points to relics of the heady development can still be observed.
“There are a few things left you can still see from that boom development. There are a couple of houses, some curbing and fireplugs that once ran straight through cotton fields, and the old Howell and Graves School. There was quite a push for people to come here.”
Alas, the population and wealth explosion never came. Some members of Congress derided Ford’s $5 million offer. And Senator George Norris of Nebraska, who had plans of his own, began a fight to keep the dam as federal property.
The House of Representatives strongly approved the sale to Ford. But Norris blocked it in the Senate. And Ford’s dream city died before it could be born.
Big, Big Hits
In 1924, realizing he was in a no-win situation, Ford withdrew his offer.
Locals were furious. They blamed the federal government for ruining their futures. Norris even received death threats from people angered by his meddling. These people believed Ford had been about to make them rich.
To this day, Muscle Shoals remains a humble city of some 13,000 residents (5,000 fewer than the peak of Wilson Dam construction). Though there are streets and avenues still named for Ford, Edison, and other Detroit namesakes and Ford remnants.
But Ford’s dream city is no longer what Muscle Shoals is known for. Several decades later this small-town city became famous for its big hits.
In 1961, Rick Hall took out a loan to buy an abandoned brick warehouse in Muscle Shoals to build a recording studio. There, legends were born, and magic happened again and again.
Hall’s keen ear and his homegrown studio band – The Swampers – soon put Muscle Shoals on the map as, “The Hit Recording Capital of the World.” Their outstanding talent and distinctive sound shaped the landscape of popular R&B, rock, soul, and county music in the 1960s and beyond.
Hall and The Swampers provided the musical foundation for numerous hits by iconic artists like Aretha Franklin, Wilson Pickett, Bob Dylan, The Rolling Stones, Lynyrd Skynyrd, Duane Allman, Paul Simon, Rod Stewart, Bob Seger, and many more. These studio musicians and their “Muscle Shoals Sound” have been associated with more than 500 recordings, and 75 gold and platinum hits.
Not bad for a lowly recording studio on the North Alabama banks of the Tennessee River.
This proves that you never really know how something will turn out. Perhaps it was for the best that Ford’s grand plans for Muscle Shoals died before they ever really got started.
Such a transformation could have destroyed the scenic natural beauty of the area. And, like Detroit, by the early-21st century it could have become a blighted hellscape.
Fulfill the Dream
With Ford out of the picture, Norris’ intentions were later realized – in part. In 1926, Norris introduced a bill that outlined a plan for the federal government to complete and operate Wilson Dam.
But that wasn’t all the bill included. It also included proposals to build more dams along the Tennessee River.
By 1931, Congress agreed on a bill called the “Shoals Bill” that would give the federal government authority to continue managing that stretch of the Tennessee River. Yet President Herbert Hoover vetoed this bill, and the idea temporarily stalled.
Then in 1933, under President Franklin Delano Roosevelt, and at the depths of the Great Depression, the bill was finally passed.
The objective was to provide navigation, flood control, electricity generation, fertilizer manufacturing, regional planning, and economic development to the Tennessee Valley. From this, the Tennessee Valley Authority (TVA), a federally owned non-profit corporation that is the nation’s largest public power provider, was formed.
TVA was envisioned both as a power supplier and a regional economic development agency to help modernize the region’s economy and society. Later it evolved primarily into an electric utility.
TVA is a corporate agency of the United States. It receives no taxpayer funding and derives nearly all its revenues from sales of electricity.
But just because TVA is a federally owned non-profit corporation. That doesn’t mean it isn’t profitable. In fact, it’s extremely profitable. TVA delivers annual operating revenues on the order of $12 billion, with net annual income ranging between $500 million and $1.1 billion.
Because TVA is federally owned it does not trade on the New York Stock Exchange. In other words, there is no way for retail investors to buy equity shares. However, the business model, which derives income from monthly utility payments, has been repeated by other publicly traded utilities across the country.
These cash cow businesses, which were dreamed up by Henry Ford, churn out highly dependable revenue streams, pay large dividends, and support investor capital preservation during periods of stock market instability.
For these reasons, we recently scoured the market for the best utility stock we could find and included it in the March edition of the Wealth Prism Letter. Paid up subscribers are already fulfilling the dream that comes with diverting other people’s utility bill payments into their own pockets.
And, if that appeals to you, you can fulfill the dream too.
Sincerely,
MN Gordon
for Economic Prism
