Utility Co-op Connection
Electricity service transformed rural America

By Anne Mayberry
Rural Utilities Service
USDA Rural Development

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.

March/April Table of Contents