The First Atomic Age: A Failure of Socialism

As atomic innovation and entrepreneurialism gains momentum, I thought it would be a good time to revisit an article that I wrote more than 21 years ago. It was first published in the January 1, 1995 issue of The Freeman: Ideas on Liberty.

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The first Atomic Age began with high hopes, but it has languished, being replaced in succession by the Space Age, the Computer Age, and the Information Age. Atomic planes, trains, and remote power stations discussed by 1940s visionaries were never built. Atomic powered ships, able to operate for years without refilling their fuel supply have seen limited civilian and military application. Most are now museums or being laid up as anachronisms. Nuclear submarines, powered by compact engines able to push their massive bulk at high speeds for years without any atmospheric intake or exhaust are widely thought to be expensive Cold War relics with no real mission or lesson to offer.

Hype Versus Reality

Was it all hype? Were Dwight Eisenhower, Al Gore Sr., Issac Asimov, Alvin Weinberg, Leo Szilard, Enrico Fermi, Lewis Strauss, and H.G. Wells all hopelessly wrong in their predictions for a new source of abundant energy? If not, how did the present stagnation in the industry happen?

First the facts. Uranium is abundant. One indication of the enormity of the resource is that the U.S. has an existing stockpile of enriched uranium large enough to fuel over 1000 Trident class submarines for fifteen years. Another indication is that the price of natural uranium has fallen so low that domestic mining companies are crying for protection from foreign “dumping”.

Uranium, thorium and plutonium are concentrated energy sources. One pound of any of them contains as much potential energy as 2,000,000 pounds of oil or 2,600,000 pounds of high grade coal.

Uranium, thorium, and plutonium have all been used as fuel in fission reactors. Fission waste products weigh less than the initial metal used for fuel and are compact enough to be completely retained within the reactor core. Each year, we produce approximately 4000 tons of spent fuel from all 108 nuclear electric plants in the U.S. while a single 1000 megawatt electric (MWe) coal station produces that much ash every day.

A 1000 MWe nuclear power plant uses about seven pounds of fuel each day and produces no carbon dioxide. A 1000 MWe coal plant burns 11,000 tons of coal and produces 42,000 tons of waste gas every day.

A total of three people have been killed by nuclear accidents in the United States in the forty years that we have been operating power reactors. All three were killed in a single accident at an experimental military reactor in the early 1960’s. Not a single person has ever been killed handling the waste from a nuclear power station.

The Atomic Age was not stopped by protesters, mismanagement, technical hurdles, economic hurdles, or heavy regulations. All of these may have played a role, but they were more symptoms than causes. The true reason that atomic power has not yet fulfilled its promise is that the industry was established and operated as a socialist enterprise. Like all other experiments that prevent innovation, experimentation, and individual rewards it was doomed from the beginning.

Nationalized Atom

By 1946, the power available in the nucleus of certain heavy metals was well known. The extent of the heavy metal resource was not well understood, but there were indications that there were extensive deposits. The means for using the power were not yet known, but scientists and engineers were confident that the heat produced by fission could be put to good use. If atomic power had been like other technological developments, it should have been time for rapid innovation and eventual commercialization.

Unfortunately, politicians thought that atomic power was different. Although the basic science had been developed over a period of decades with most work taking place in European laboratories, American congressmen, secure in their belief that the United States was the world’s only remaining technological power, claimed atomic energy as domestic property. They also decided that no one but the government could be trusted with the awesome power contained in tiny atoms and nationalized the whole industry.

All nuclear knowledge was declared secret and U.S. scientists were forbidden to discuss their work with even such notable colleagues as Niels Bohr, whose liquid drop model of the nucleus had helped explain how fission worked, and Bertrand Goldschmidt, a French chemist who developed a plutonium extraction process as part of the Manhattan Project. Uranium gained a new name as “special nuclear material” and was declared to be federal property. Inventors of devices designed to use special nuclear material were required to give their patents to the government who would then decide on just compensation.

A commission was established to decide how best to proceed with the development of atomic energy. The commission was given the responsibility for the national laboratories that had developed atomic bombs. They took several years to decide how to organize themselves. Most of the scientists and engineers involved with the Manhattan Project returned to their pre-war duties while the Atomic Energy Commission was figuring out their priorities.

Within three years the Soviet Union exploded their first atomic weapon, making it obvious to the world that atomic energy was no longer an American monopoly. It took five years for Congress to recognize that fact and take action to loosen some of the controls established by the Atomic Energy Act of 1946.

Socialized Atom

Bureaucracies relinquish control reluctantly; many onerous provisions of the Atomic Energy Act of 1946 were retained when the new act was passed in 1954. The government maintained ownership of all special nuclear material and provided a means to license it to users who would then pay a “reasonable” fee to the government for its use. Of course, the fee was determined by bureaucrats based on complicated formulas and obscure cost accounting.

About the same time that the Atomic Energy Act of 1954 became law, the USS Nautilus reported that she was “Underway on nuclear power.” Her performance during the subsequent demonstration period made headlines. Her builders gained head of the line privileges at the Atomic Energy Commission which had to approve and license any new reactor designs.

Although the Nautilus’s power plant was functional, it had many limitations. It depended on keeping water under extreme pressure so that it would remain a liquid at temperatures far above the normal boiling point. The hot, high pressure water was a potential hazard with even small leaks in the lengthy piping systems. The valves, pumps and piping required specialized materials since hot water is an excellent solvent and is quite corrosive. The reactors needed fuel with a higher concentration of U-235 than was found in natural ores, requiring the use of a complex process of isotope separation.

Despite the difficulties, the pressurized water system was probably the best that could be rapidly produced under the technology constraints existing in 1950. It was suited for the specialized application of a submarine because it was far more capable than diesel engines combined with batteries for underwater operation and because the enrichment plants were already built and producing products for the weapons programs. There was no way that the submarine system could compete economically with engines burning oil costing less than $2.00 per barrel, assuming that air and exhaust space was freely available.

The President and certain Congressmen who were interested in using the new form of energy for civilian applications decided it was in our national interest to encourage the nuclear industry. From their point of view, the natural customer would be the electrical generating industry, one they were familiar with from the government’s involvement in public power projects. They invited some utility industry representatives to Washington to discuss their needs.

The contractors who had built the Nautilus, the Seawolf (a submarine with a sodium cooled reactor plant), and the land based prototypes were invited to the government discussion because of their obvious nuclear experience. The contractors involved in the government work were mammoth companies, used to doing things in a big way. Their governing economic philosophy seems to have been similar to those of the state agencies in the Soviet Union, i.e. if a piece of machinery is not economically competitive, make it bigger. This philosophy matched the economy of scale concept that the utility companies had been taught by Samuel Insull.

These three groups, utilities, contractors and government bureaucrats, decided where best to concentrate their efforts to develop civilian nuclear energy. The decisions seemed right to the queried group; light water reactors would be developed because they were proven energy producers, and they would be made bigger, assuming that would make them cheaper. The U.S. monopoly on enrichment services might have played a role in this decision. Some effort would be made to produce sodium cooled breeder reactors, these would be based on the Seawolf technology and on plutonium extraction technology from the weapons programs. These would also be made economical by increasing their size.

Bigger is Better?

Of course, many people with an interest in energy production were left out of this decision process. There were no farmers, railroad executives, airline operators, ocean shippers, steel mill operators, gold miners, or aluminum smelters at the table despite the fact that their industries are highly dependent on energy inputs. No invitations were issued to entrepreneurs or inventors. Because of the government’s secrecy about the technology, most of them did not even know that nuclear energy existed or that it could be used to meet their needs. Most of the mentioned groups still have no idea what nuclear fission could do for them.

The results of the socialistic decision are now clear. The bigger the plants got, the more complex they became. They became more complex to build because the increased size of critical components like pressure vessels, reactor coolant pumps, containments and steam generators made fabrication, inspection, and transportation uniquely difficult compared to other energy production systems. They became more complex to finance because the huge electricity factories required multi-company partnerships, large bond offerings and a whole coalition of banks. Raising billions for a single project is a time consuming and costly endeavor.

They became targets of intense opposition that seemed to intensify in the mistrust of government and major industry prevalent in the 1970s. Compared to other regulated industries, they became a nightmare for bureaucrats. Proof of safety became a difficult issue with heavy reliance on complex computer modeling techniques. Unlike commercial airliners, for example, reactors are simply too big and expensive to fully test. Regulators, given only the responsibility to ensure public safety, appear to feel that the best way to do their job is to make licensing as difficult as possible.

Because nuclear power plants are almost universally viewed as huge, capital intensive, risky, and potentially hazardous there have not been any new plants ordered in the United States since Gerald Ford was President.

Things might have turned out differently if atomic energy had been developed by entrepreneurs.

Entrepreneurial Atom

Suppose there had not been a Hitler or a Mussolini active in 1938 when Otto Hahn announced that he had found barium in the sample of uranium that he had bombarded with neutrons. Maybe Enrico Fermi would have stayed in Europe and continued his work, perhaps forming a research partnership with Leo Szilard, who had already filed a patent for a power producing reactor. Being scientists, they would have widely published the results of their experiments, demonstrating to the world that uranium was a potent new source of energy. Even if those individuals had gone on to other projects, others might have taken up the research.

A smart money man, perhaps one who had spent his life finding oil in difficult places, or one who had cut his teeth in a coal mine, or one who had spent a lifetime eking out small efficiency gains in oil burning steamships might have recognized the significance of a compact energy source and seen a way to turn this scientific knowledge into a useful and profitable product. He might have been enough of an inventor to see that fission could be a heat source able to function in any system normally heated by burning coal or oil. He would have recognized that some applications would be entirely new since fission needs no oxygen supply or means for routine dispersal of waste products.

An entrepreneur would keep his risks as low as possible. He would not have government insurance or contracts to bail him out if he failed. Any engines would be based on natural uranium since the enrichment process would be viewed as too risky and expensive to attempt. He would test his new product to ensure adequate safety. He might concentrate on finding premium markets where high margins would allow him to write off development costs in the shortest possible time.

He would do extensive research, seeking to determine where his product could beat the existing competition. He would base his decisions on both study and gut feel derived from extensive personal experience of how the world uses energy. A market for an atomic engine that would have been familiar to a 1940s entrepreneur would have been a high speed ocean liner, like the Queen Mary, which burned approximately 1000 tons of fossil fuel per day during Atlantic crossings.

Using the proceeds from sales to premium markets, he would push his developers to design products that could serve the widest possible market, knowing that diverse customers increase income and protect against cyclic economic pressures. Instead of moving toward bigger plants, he would have realized that smaller engines would find more customers. He might have tried limited enrichment at this point in order to reduce the size of his engines.

The money man would have understood that he had to tell people about this fantastic new product. Magazines, newspapers, television, radio, and billboards would all have been full of advertisements trumpeting the ability of atomic engines to push stackless, smooth running ships across the ocean for years without needing new fuel.

The entrepreneur would arrange special demonstrations for dignitaries and influential members of the media. He would work to attract additional investors for his capital hungry endeavors. He would develop partnerships and he would arrange for lease purchases of his engines for customers unwilling or unable to afford the initial capital expense.

Competition

Competitors would have surely appeared after seeing the success of the initial pioneer. They would develop better systems that could lure customers away from the established company. They, too, would look for ways to broaden the market. Some design standards would have been established to take advantages of the installed base of trained operators and suppliers while still allowing room for product differentiation.

The industry would have been attacked. There would have been people genuinely concerned about potential hazards and others more selfishly concerned about their jobs and investments with existing energy suppliers. The enormous industry involving the supply, transportation, storage and marketing of coal, natural gas, and oil would have been particularly vocal and possibly violent. The adolescent nuclear industry might have decided to form an industry group to lobby for its own interests and to refute bogus claims from the competition. They would commission studies and ensure that their advertising outlets provided balanced coverage of the hazards of their industry versus the competition.

There would probably have been some people who saw the leftovers from reactor operation as potent new raw materials and made arrangements to take the waste off the hands of the reactor owners. The reactor operators would probably have taken whatever price was offered by this budding scrap industry, preferring to concentrate on figuring out ways to take advantage of the new systems that were being offered by the engine manufacturers. The engine manufacturers might have become customers of the scrap industry for raw materials for new engines.

There would have probably been some notable accidents during the early phases of this new industry. The industry would have learned from the accidents and figured out ways to prevent their recurrence. Engineering societies would have played a strong role in establishing construction and operation codes. There might have been several pioneering companies that collapsed because of lack of vision, poor management, failure to recognize competition, or inability to correct design faults. This is probably the point where the government would have become involved. Up until then, the government would not have recognized what was going on in the exciting new industry.

This whole business might have gone on for years before anyone mentioned that the incredible energy available in uranium could be released fast enough for a militarily useful explosive. By that time, it would have been far too late to attempt to impose a government owned monopoly of “special nuclear materials.”

Lessons

The above is speculative hindsight, of course, but it holds important lessons for us in 1994 as we work on new information systems, flat screen display panels, and options to fix a supposed crisis in medical care.

Even democratic governments are poor managers of new technology. They are worse when they choose a socialistic model for their enterprise. Governing bodies respond better to existing interests than they do to people with fresh ideas who want to alter the status quo. Because of their competing interests and regular changes of the guard, bureaucrats are doomed to fail in a pioneering effort that requires singleness of purpose and continuity of effort.

The solution is for the government to allow innovation to happen, keeping in mind its responsibility to respond to dangers to the common good. Whenever governments begin to protect chosen industries or work to encourage their development, they inevitably make decisions that have impacts they did not intend.

Perhaps it would be beneficial to fully open the debate about nuclear energy, this time allowing all interested parties to participate. The best forum for such a debate is the free market with its competition and ability to handle more decisions at one time than any politically selected management body. Although it is not recognized as such by liberals, the market is an ideal body for making tough decisions.

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During the interval since I wrote “The First Atomic Age: A Failure of Socialism”, I’ve continued to learn. I’d probably write it a little differently today. However, it’s still a pretty good reflection of my interpretation of the reasons for the historical trajectory of nuclear energy. My prescription for the future hasn’t changed much; I’m still confident that innovation, creativity, free thinking, and a competitive desire to make the products that best meet customer needs.