Hales Bar Dam was built on cavernous Mississippian limestone, by a private power company, from 1905 to 1913. Inadequate foundation treatment and lack of realization of the true conditions beneath the dam resulted in serious leakage through the foundation. Several attempts were made to stop the leaks, but none were successful until a four-year repair program was undertaken by the Tennessee Valley Authority, in 1940. Most of the caves were the result of solution of shattered limestone along two small thrust faults.

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