Utility Co-op Connection
Electricity service transformed rural America
By Anne Mayberry
Rural Utilities Service
USDA Rural Development
anne.mayberry@wdc.usda.gov
ay 11 is the 75th
anniversary of the Rural
Electrification
Administration (REA),
the predecessor agency
to the Rural Utilities Service of USDA
Rural Development. When President
Franklin Roosevelt signed the executive
order creating the REA in 1935,
unemployment was 20 percent. Average
annual wages — for those employed — were $1,600. You would expect to pay
10 cents for a gallon of gas. If you lived
on a farm, you — along with 5.5
million other farm
families nationwide —probably would not
have had electricity.
Without electricity,
residents in rural areas
were not able to enjoy
the same economic
advantages as their
urban counterparts.
Water for livestock,
cooking and cleaning
had to be hauled from a
well. There was no
refrigeration. During
warm weather, dairy
farmers risked milk spoilage, which
meant that all their milk had to be
thrown out. Work was finished in
darkness, or by lantern light.
For years, electric utilities insisted
that it was not profitable to sell
electricity to farmers. But rural
electrification was viewed as a desirable
step toward improving the lives of rural
residents. Signing the executive order
was the first step toward creation of the
agency.
Yet, while the executive order
established the importance of rural
electrification, it did not spell out
details of how the program was to be
designed or implemented. For example,
the agency was originally intended to be
part of the U.S. Department of the
Interior. While there was general
agreement that low-cost financing was
key to bring electric power to rural
areas, many expected the electric
industry to participate in the program.
Established as a temporary agency,
one of REA’s first decisions was to
determine how to best fund
construction of electric systems in rural
areas. Again, the utility industry, which
had the expertise and capability of
acting on short notice, seemed to be the
preferred course of action. The plan
they set forth was to connect 351,000
rural residents and businesses.
But according to the utility industry,
rural electrification was a social, rather
than an economic, problem. There was
no agreement on the definition of
profitable service or the extent of the
work to be done. These divergent
views, along with utility industry
concerns about the rural electrification
program, resulted in a shift that
eventually led to the creation and
funding of rural electric cooperatives.
Farm co-op roots led
to electric co-ops
Farmers had a history of working
with agricultural marketing
cooperatives. It was this experience that
led to an agreement under which REA
would furnish the engineering and legal
expertise, in addition to loans, for newly
formed rural electric cooperatives. One
year to the date of the executive order,
Congress approved legislation creating
the REA.
The 1937 Report of REA noted that
the most spectacular increase of rural
electrification in the history of the
United States had been achieved. More
than 1.2 million farms had electric
service, and the gap between urban and
rural standards of living was closing.
For the first time in history, thousands
of rural communities had hope of
securing electricity.
During the 1940s, REA funded
cooperatives, which built rural electric
systems with tremendous speed. In
1944, still over one-half of the nation’s
farms did not have electric service. Yet
by 1953, over 2.5 million farms had
electricity and REA had loaned nearly
$2.8 billion to 983 rural electric
cooperatives, 44 public power districts
and 25 electric companies.
Seventy-five years later, there can be
no doubt that REA has had a
tremendous impact on rural America. It
is credited with transforming a life of
darkness and drudgery into one of
productivity and prosperity. REA’s
successor, the USDA Rural Utilities
Service (RUS), loans approximately
$6.6 billion annually to rural electric
cooperatives to continue to bring
modern, reliable service to rural
America.
“The electrification of rural America
is considered one of the biggest
engineering triumphs of the last
hundred years,” says RUS
Administrator Jonathan Adelstein. “The
role of the Rural Electrification
Program was one of the greatest
successes in government technology
programs of all time.”
Editor’s note: Sources for this article
include: Electricity for Rural America, by
D. Clayton Brown, Greenwood Press,
1980; Rural Lines newsletters and Report
of the Administrator (various dates), both
published by the Rural Electrification
Administration of USDA.
