Rural Electrification Administration 1934-1941
Rural Electrification Administration 1934-1941Introduction
Suggested Research Topics
Electrical power began to serve American industry, cities, and homes in the 1880s and for many years was regarded by most as a luxury and a curiosity. By the 1920s, however, largely (but not entirely) through the efforts of private industry, more than half of all urban homes had electric lights and a sizeable minority had a wide range of electrical appliances. Electric power, with its associated conveniences and efficiencies, became regarded as an essential element of modern life. Since bringing power to rural areas was more expensive, however, less than ten percent of farm families had electricity. Increasingly, this disparity between cities and the countryside was seen as unfair and a threat to the American social fabric.
Early efforts by private power companies to encourage rural electrification failed because they did not address the main obstacle, which was the cost of the service. By the 1920s other countries, such as Europe, Canada, and New Zealand had made much better progress in electrifying rural areas through public cooperatives and government assistance, but until the Depression most people in the United States believed that such approaches were un-American and threatened traditional values of self-reliance and private enterprise.
The extreme trauma of the Great Depression finally changed the conservative climate of power supply in America and made it possible for the public to accept a government program that would provide electricity to rural areas. The stock market crash of 1929 and subsequent Great Depression would highlight the increasing poverty of rural America. President Herbert Hoover (served 1929–1933) believed in individuals helping themselves and using private charities—taking a hands-off approach to such problems as rural poverty. President Roosevelt, however, during a campaign swing through the South in the summer of 1932, was particularly struck by poverty and associated sanitation problems. Roosevelt was convinced that having electricity available to such areas in the nation would be one major step toward modernization and increased productivity. Electricity would make possible running water in homes and power refrigerators to keep food from spoiling, but the power would have to be inexpensive for people to afford it. With the election of Franklin Roosevelt to the presidency in 1932, many Americans, facing dire economic circumstances, were willing to try new ideas to bring about the return of prosperity.
In March 1933 Roosevelt and his advisors began introducing numerous economic relief and recovery programs that would be collectively known as the New Deal. An essential element of the earliest New Deal programs was relief for the agricultural industry and rural America. After establishing the Agricultural Adjustment Administration (AAA) to bring relief to farmers and the Tennessee Valley Authority (TVA) to develop power projects in the Southeast, the Roosevelt administration in 1935 established the Rural Electrification Administration (REA) to create badly needed jobs and to build prosperity in rural areas by bringing electricity, modernization, and efficiency to rural families and American agriculture. Under the guidance of Morris L. Cooke, REA tried at first to partner with private power companies, already well equipped to construct the needed infrastructure and deliver the service. Very quickly, however, when private industry proved unable or unwilling to abide by REA terms, the agency adapted its program to work with rural cooperatives as the recipients of REA loans.
Initial progress of the REA program was slow, but by the end of the 1930s many new cooperatives had formed to take advantage of the agency loans to build electrical distribution systems in rural areas. These cooperatives were generally made up of farmers who owned and operated them. Through a combination of publicity, educational services, and engineering and organizational advances, REA aggressively pursued its goal of full electrification of the countryside. Most of its success was achieved after World War II (1939–1945), when a booming American economy, freed from the constraints of the Depression, made possible large REA budgets for its loan program. This funding, however, simply fueled a program that had been fully developed by the late 1930s.
- February 13, 1934:
- Morris L. Cooke submits a proposal, "National Plan for the Advancement of Rural Electrification Under Federal Leadership and Control with State and Local Cooperation and as a Wholly Public Enterprise," to Secretary of the Interior Harold Ickes. This document proposes a new federal bureaucracy, a Rural Electrification Agency, within the Department of the Interior.
- April 8, 1935:
- President Franklin D. Roosevelt signs the Emergency Relief Appropriation Act of 1935, which lists rural electrification as one of eight categories of projects intended to provide employment for unemployed workers.
- May 11, 1935:
- President Roosevelt issues Executive Order 7037, creating the Rural Electrification Administration.
- May 20, 1935:
- President Roosevelt appoints Morris L. Cooke as the first REA Administrator.
- July 22, 1935:
- Presidential Letters 104 and 105 approve the first four REA loans.
- August 6, 1935:
- President Roosevelt issues Regulation No. 4, establishing REA as a lending agency and giving it wide authority to set lending policy.
- May 21, 1936:
- President Roosevelt signs into law the Rural Electrification Act, making REA a permanent agency with statutory (legal) authorization.
- February 23, 1937:
- John M. Carmody, a believer in "scientific management," succeeds Cooke as REA Administrator.
- July 1, 1939:
- The REA, no longer independent, becomes part of the Department of Agriculture.
- September 26, 1939:
- Harry Slattery succeeds Carmody as REA Administrator.
By the late 1950s the combined efforts of REA and private industry had essentially completed the job of rural electrification. The modernization of rural America profoundly changed the lives of rural people and contributed to the establishment of American agriculture as the envy of the world. The standard of living rose dramatically. Although much of the rural population moved to the cities, farms vastly increased their production. Through the availability of abundant electricity, new industries sprang up in rural areas, further diversifying and decentralizing the American economy. In the end, REA, a product of the Depression, contributed to prosperity in the United States to an extent far beyond the expectations of its founders.
The Status of Rural Electrification in the Early 1930s
At the beginning of the 1930s electricity, at least for lighting, was an accepted part of American life in cities. Most farmers and others in rural America, especially in the Midwest and South, however, were still living much as they and their ancestors had lived in the nineteenth century. More than 90 percent of rural homes still used kerosene lamps for lighting and had no powered pumping systems to make possible running water and indoor bathrooms. Except for the already widespread use of automobiles and tractors, farmers and their families relied on manual labor and animal power to do their daily work.
Despite general agreement that this was a serious problem, Americans disagreed about how to solve it. President Herbert Hoover (served 1929–1933) was solidly in favor of electrification and wanted to improve the lives and productivity of all Americans, including the farmer. He also believed, however, that private enterprise should, and would, accomplish this objective. This was the view of those who hung onto faith in the marketplace as the primary solution. Very influential among this group were the electric companies and the holding corporations that owned them, for which decisions were driven mostly by the desire to maximize profits. These private companies, whose focus was electric power for industry, did not believe that most farmers could afford to pay what it would cost to deliver power to them at profitable rates. On the other side of the question were those who observed that rural electrification, which they saw as a social and humanitarian issue, was proceeding far too slowly in the hands of the electric companies. This camp was supported by "progressives," who believed that government should assert its authority into the field of electrification to bring about important social changes.
Among the leading proponents of public authority over rural electrification was Morris L. Cooke, who had been involved very directly with public power projects in Pennsylvania since 1923. Franklin D. Roosevelt, a progressive elected as governor of New York in 1928, envisioned a hydroelectric plant on the St. Lawrence River that would supply power for both cities and rural areas. To accomplish this he worked to pass a bill in 1931 to create the New York Power Authority and appointed Cooke, a highly respected expert on public power issues, as a trustee. For Cooke this appointment was well timed. President Hoover, still favoring private electric companies, in that same year had rejected his proposals for a national plan to implement rural electrification for the improvement of farm efficiency and the creation of badly needed jobs across the country.
The most important outcome of Cooke's work with the New York Power Authority was a detailed study of the costs of rural electrical service. Utility companies previously had insisted that electrical lines in rural areas cost about $2,000 per mile, but no systematic and public analysis of distribution costs had ever been done. Cooke had little confidence in what he suspected were figures inflated by the power companies to justify their inattention to rural service. The Cooke study team, after scrutinizing and itemizing all possible expense items, concluded that construction costs should be between $300 and $1,500 per mile. This result, published in 1933, demonstrated the feasibility of rural electric service and encouraged the proponents of rural electrification, which was growing as a social and political issue.
Roosevelt made rural electrification an issue in the 1932 presidential campaign when he declared in a speech given in Portland, Oregon, that electricity "… is no longer a luxury. It is a definite necessity … It can relieve the drudgery of the housewife and lift the great burden off the shoulders of the hardworking farmer …" (Brown, Electricity for Rural America: The Fight for the REA, p. 34). As a result Cooke, although a Republican, publicly announced his support for Roosevelt, the Democratic candidate. When Roosevelt won the 1932 presidential election, Cooke had an unparalleled opportunity to realize his dream of electrifying rural America.
The Formation of the Rural Electrification Administration (1935)
During the first two years of the New Deal in 1933 and 1934, Cooke worked as a consultant for the Public Works Administration (PWA) and served as an advisor to President Roosevelt on conservation and electrical power. The PWA provided jobs to build roads, tunnels, bridges, dams, public buildings, and hydroelectric power projects. He strongly advised that the government take action to spur rural electrification. Roosevelt supported the cause in principal, but delayed the creation of a federal program because he did not have a plan of action that he believed would work. At the same time, pressure was building for some form of federal action. Representing the farmer, both the American Farm Bureau Federation and the National Grange (a fraternal organization of farmers) in 1934 passed resolutions urging the government to act. In 1934 both North Carolina and South Carolina had applications pending before the PWA for federal funds to institute state-operated power systems to serve rural areas. Both states lobbied strongly for immediate action.
At the same time, a working example of an effective program for rural electrification had just sprung up. The Tennessee Valley Authority (TVA), a federal agency created in 1933 to develop hydroelectric power on the Tennessee River, had set up an experimental cooperative for publicly developed rural electrification. A cooperative is a private, nonprofit enterprise locally owned and managed by those it serves, and incorporated under state law. The experimental cooperative was the Alcorn County Electric Cooperative in northeastern Mississippi, a very economically depressed region with many tenant farmers. Although only 1.5 percent of Mississippi farmers had electricity and the common wisdom of electric companies was that such people were too poor to make electric service profitable, the success of this cooperative was dramatic. Once power lines had been extended from the town of Corinth, Mississippi, to the surrounding rural area, the cooperative began delivering electricity bought from the TVA at wholesale rates. Rural homeowners, with the help of a new federal loan program, the Electric Home and Farm Authority (EHFA), immediately began buying electrical appliances, which greatly pleased town merchants. Farmers began using even more electricity than city dwellers, helping to pay for the cost of building the rural lines. The success of the Alcorn cooperative and the TVA in promoting rural electrification was the final element that tipped the scales in favor of a New Deal program.
With the encouragement of Secretary of the Interior Harold Ickes, Cooke prepared a public plan that proposed a "Rural Electrification Agency" inside the Department of the Interior. Submitted to Ickes in February 1934, this ambitious plan involved the use of cooperatives that would employ low-interest, long-term federal loans to construct lines in areas not already served by electric companies. This was a huge area, since 90 percent of American farms at that time did not have electric service. The new agency would also provide low-cost federal loans to consumers for home appliances, as the EHFA had, to encourage electricity consumption and bring electric rates down. Although the Roosevelt administration reacted favorably on a verbal level to Cooke's plan, it took no action on it in 1934. As Chairman of the Mississippi Valley Committee (MVC), Cooke directed the preparation of the MVC report filed in October 1934. A multi-faceted study of the natural and human resources of the Mississippi Valley, this report recommended the use of cooperatives supervised and financed by the federal government to implement rural electrification, but in addition recommended a federal appropriation of $100 million for the purpose. Again the administration did not take immediate action.
Cooke, however, had only a few months to wait. The eagerness of national farm organizations and state governments, the recent positive experience of the Alcorn Cooperative, and the 1934 planning documents prepared under Cooke's direction and influence convinced President Roosevelt in early 1935 that the time was right to act. In January of that year, in his annual message to Congress, Roosevelt proposed a massive relief program to create jobs. This idea became the Emergency Relief Appropriation Act of 1935 (ERAA), which was approved by Congress on April 8 and included an allocation of $100 million (the very amount proposed by the MVC report in 1934) for rural electrification. The President, on May 11, 1935, with Executive Order No. 7037, created the Rural Electrification Administration (REA), an independent agency with an Administrator empowered to "initiate, formulate, administer, and supervise a program of approved projects with respect to the generation, transmission, and distribution of electric energy in rural areas." An executive order, which has the force of law, is a directive issued by the President regarding the operations of the Executive Branch of the federal government. He appointed Cooke as the first REA Administrator on May 20, the same day on which Cooke, eager to begin work, met with power company representatives to discuss how to move ahead with the REA program. This meeting, although representing a triumph in the long struggle to institute a federal program, began what was to be a difficult search for a practical means to achieve the long-sought goal of rural electrification.
How To Do It: Cooperatives Emerge as the Solution
Cooke's first challenge as REA Administrator was to find a way to implement the directives of Executive Order 7037. As part of a program to put people to work, REA had to follow the order that "in so far as practicable, the persons employed under the authority of this Executive Order shall be selected from those receiving relief" (Brown, p. 47). More specifically the REA, operating as a relief agency would, was required to spend a quarter of its funds directly on labor, with 90 percent of the workers coming from unemployment rolls. This requirement was applied to all relief agencies, but Roosevelt had not anticipated the difficulty of finding suitable workers for constructing power lines. Such work demanded skilled laborers, most of who were already employed. Another problem was the condition that a large part of REA funds had to go toward equipment and material. As a result the REA had very little flexibility in its budgets for directly tackling specific projects which each have their own unique needs. Cooke very quickly recognized these obstacles and convinced Roosevelt to issue orders setting up REA as a lending agency rather than a relief agency. This freed the REA from the constraints associated with relief spending and made it an exclusive source of loans to any organizations building rural power projects.
Despite his proposals to electrify rural America through the use of cooperatives, Cooke still believed that the power companies, already well equipped and experienced in building power transmission lines, could be convinced to participate in the REA program by its low interest rates and an appeal to the companies' ethic of public service. At first this approach seemed to make progress. The May 20, 1935, meeting between Cooke and the industry representatives was friendly and seemed to indicate a spirit of cooperation. The companies agreed to study ways by which they could work with the REA to develop rural electrification. Cooke was ready to make loans to private companies to finance the construction of rural lines. Beneath the surface, however, fundamental differences existed that doomed hopes for practical cooperation. The power companies still did not believe that rural service would be immediately profitable and did not want the federal government to dictate terms and control rates. Cooke and the REA required that the companies accept some sacrifices as well as active government leadership to ensure that all farmers, rich and poor, would receive electric service.
The cooperation bubble burst on July 24, 1935, when the industry committee met with Cooke and submitted a letter with its conclusions on the use of REA loans. The committee proposed to make use of most of the available REA funds for 1935–1936 to build rural lines at an estimated cost of $1,356 per mile. The response greatly disappointed Cooke, not only because of this relatively high cost estimate, but also because the report reflected the same industry attitudes that had resulted in the existing snail's pace of rural electrification. The letter asserted that reduced electric rates to households would not create increased demand for electricity and a profitable situation for the power companies. Despite the positive experience of the EHFA and the TVA with rural electric service to households, the committee response reflected a continuing industry fixation on serving larger electricity consumers and a lack of faith that service to smaller household users through area coverage could be made profitable.
The July 24 meeting was a turning point for the REA. No longer did it appear that the private power industry was a viable solution to the rural electrification problem. Although Cooke was still willing to make loans to individual electric companies if they agreed to federal terms, few loan applications from that sector arrived at the REA office. Contributing to this situation was a deteriorating relationship in 1935 between the power companies and the federal government due to the government's battle to break up the holding companies that owned and controlled the power industry. Holding companies are simply companies that purchase and gain control of various manufacturing or other kinds of companies, or in this case private utility companies. One holding company may own a number of supposedly competing utilities. In addition one holding company might be owned by another creating multiple layers of ownership. Each of these layers drew money from the profits made by the utility companies they owned to pay for their "management services." This practice kept the costs of power high for consumers and often led to monopolies since competing companies were actually under the same management direction of a holding company. Because of these growing business arrangements, public opinion against private utilities was growing rapidly in the early 1930s and government officials wanted to take legal action to break up the layers of holding companies.
If private companies would not make use of REA funds for rural electrification, who would? The remaining options were municipal utilities, publicly owned by city residents, and rural electrical cooperatives similar to the Alcorn Cooperative in Mississippi. Cooke, always mindful of the need to keep his options open, met with municipal power representatives on May 25, 1935 (only four days after meeting with private power company officials). They agreed to hold a joint meeting on November 7–8, 1935, which was attended by 152 delegates from 17 states. The municipal representatives very quickly demonstrated that they would not be practical partners. The city dwellers did not exhibit a concern for rural problems, worried about possible rate increases if they extended service into the countryside, and expressed concerns that rural expansion would bring adjacent cities into conflicts about jurisdiction over intervening territory. There was even anxiety about possible legal disputes between cities and state legislatures. The final blow to any hope for municipal utilities as the prime mover of rural electrification came when Cooke rejected a loan application from Wisconsin Power and Light, a public utility that had displayed unusual interest in rural electric affairs. In Cooke's view, this application did not adequately address the issues of affordable rates and area coverage. Its rejection discouraged further loan requests from public utilities.
That left the cooperatives as the only remaining solution. As evidenced by the plans put forth by Cooke and his staff in 1934, Cooke looked favorably upon cooperatives. After all, the Alcorn Cooperative had been a huge success. The Alcorn Cooperative involved both urban and rural areas and was supervised by the TVA, so it was not a perfect model for purely rural electric cooperatives that would need to form at the grass-roots level. Furthermore, farmers were well experienced at forming and running cooperatives for marketing their products, but those tasks did not require high levels of technical expertise as electrical cooperatives would. Although others in the REA preferred the cooperatives as the solution, Cooke worried that the average farmer would not have the technical, managerial, and legal skills to handle the complexities of setting up and running a rural electrical cooperative successfully. After all, establishing successful local electrification programs was key to the long-term success of the REA.
At a Glance What is a Co-op?
A rural electric cooperative is a nonprofit enterprise owned and managed by those it serves, and incorporated according to state law. Each member, regardless of the amount of electricity they use, has one vote in co-op decisions.
Generally, profits are not allowed; income and expenses ultimately should be equal. In many cooperatives, money saved after paying expenses is considered capital that can be given back to individual members. Boards of directors decide how to dispose of this capital.
The bylaws of most cooperatives require one annual meeting of members. At that time, the co-op consumers elect a Board of Directors from the membership. Board members elect officers, and then the officers hire a manager to run the co-op's affairs. The manager supervises employees and in turn must answer to the board. The board in turn must answer to the members, who can vote to remove directors.
Organized in this way, the co-op serves the interests of those who comprise it, primarily the average farmer or rural resident.
Despite his reservations, Cooke and his staff, while still negotiating with power companies, met with representatives of agricultural marketing cooperatives on June 6, 1935. In the meetings participants discussed the obstacle of technical expertise and the REA offered to provide services that the farmers could not, including designing appropriate electrical transmission systems to meet their needs. The meeting participants were encouraged by the success of the Alcorn Cooperative and were ready to try their hand at rural electric cooperatives to take advantage of the REA program. Other meetings were held that summer with consumer nonprofit organizations, the American Farm Bureau Federation, the Grange, the national Association of Master Plumbers, and other groups with some interest in rural electrification. Cooke came away from these discussions feeling that cooperatives were a viable option (although power companies were still his first choice) as REA loan recipients. He sent Boyd Fisher, head of the REA Development Section and a strong proponent of cooperatives, into the field to promote co-ops at the local level. He also encouraged farmers to request information about setting up co-ops. These activities prompted many farmers to feel that working with REA would finally satisfy their long yearning for electrical service.
By late 1935 it became evident that applications from private industry and public utilities would not be received in anything approaching sufficient numbers. Cooke and the REA were obliged to depend on cooperatives as the only remaining solution. The REA approved loan applications from 11 proposed co-ops early in November 1935. The terms were very favorable to the applicants: 3 percent loan interest and a payback period of 20 years. Co-op participants could obtain low-interest loans from EHFA for wiring homes and buying electrical appliances. The co-ops would then buy their power from a private power company, a municipal utility, or the Federal Reclamation Service.
This was the beginning, albeit a very small one, of the close relationship between the REA and rural electric cooperatives that ultimately achieved great success. The slow pace of progress in 1935, however, discouraged proponents of rural electrification and prompted a rethinking of the temporary and limited status of the REA. This rethinking in 1936 led to the establishment of REA as a permanent agency with legal authority created by Congress.
REA Becomes a Permanent Agency (1936)
Cooke knew by October 1935 that the REA would need to be a permanent federal agency if it was to be truly effective. As a temporary agency set up by executive order, the REA had to compete with other offices in the Executive Branch for funds allocated by Congress. Although Congress had set aside $100 million in April 1935 for construction of rural power lines, this money was under the control of President Roosevelt, who ultimately dispensed only $14 million to the REA. Cooke had agreed with Roosevelt that the allocated funds should be spent slowly until the REA more clearly specified its policy and procedures. It had taken months to decide that cooperatives should be the main recipients of REA loans. By early 1936, once that decision was made and loan applications began arriving in larger numbers, the Roosevelt funding allotment for the REA proved to be an obstacle to the speedy pursuit of the REA program. There just wasn't enough money to fund all the eager and qualified applicant co-ops.
Cooke had a powerful ally in Senator George Norris of Nebraska, a long-time supporter of rural electrification and a strong force behind the establishment of the TVA. Cooke and Norris had shared an interest in rural electrification for a generation and no doubt closely coordinated their efforts in the push to set REA up as a permanent agency. The effort began when Cooke suggested on October 14, 1935, in a report to the National Emergency Council, that the REA was so important that it should be made permanent. Soon thereafter, on October 24, Senator Norris wrote a letter to Cooke emphasizing the importance of rural electrification to the nation, suggesting that REA be made a twin agency of the TVA and asking what it would take to speed up the rural electrification process. Cooke released the Norris letter to the press and wrote a formal response, approved by President Roosevelt and dated November 14, 1935, indicating that with $1.5 billion of public and private money over 10 years, half of all rural homes could be electrified. The letter also pointed out that the long delay in realizing rural electrification was due to excessive line construction charges to farmers, high electric rates that discouraged electric usage, and the power company policy of extending their monopoly while providing service only where it was judged profitable. All of these issues would be addressed by the REA.
This exchange of letters made the front pages of newspapers and spurred a national campaign for rural electrification. The National Grange at their annual convention in November 1935 and the Farm Bureau at their annual convention in December endorsed this campaign. Farmers wrote letters to Senators and Representatives urging congressional action. Senator Norris introduced the REA bill to the U.S. Senate on January 6, 1936, and Representative Sam Rayburn of Texas agreed to introduce a similar bill in the House of Representatives on the same day. The proposal called for an appropriation of $100 million per year for 10 years, amounting to $1 billion, and loans at an interest rate of three percent or less and repayable within 40 years. Only public cooperatives and municipalities would be eligible for REA loans. Negotiations reduced the proposed appropriation to a total of $420 million and the payback period to 25 years.
After little opposition the Senate approved the bill on March 5 and sent it on to the House, where it encountered much more opposition. It became necessary during committee hearings on March 12–14 to alter the interest rate provision, making 3 percent the minimum rate allowed, and to include private electric companies among the possible borrowers. Even then, the bill cleared the committee by only one vote and was vigorously debated by the full House of Representatives. Only the skillful diplomacy of Sam Rayburn, a democrat from Texas, made possible its approval by the House. Conservatives argued that the creation of a permanent REA would further bloat the federal bureaucracy and take another step toward socialism (government ownership of business and property). They reasoned that it was wrong to place so much power in the hands of one person, the REA Administrator; that power companies could be ruined by REA intervention in their business; and that farmers were not technically competent to manage electric cooperatives successfully and would not be able to pay back their loans to the government. Rayburn argued that the government was obliged to help farmers who had not been served by the electric companies and that rural people were so motivated to get electricity that they would do whatever necessary to manage their coops successfully. He pointed out that other agencies handling large amounts of money had not become socialist and that REA was designed to empower local and regional public groups, not the Washington bureaucracy. In addition he emphasized that the electric companies were also allowed to apply for REA loans.
More About… "Spite" Lines
In the early years of the REA competition often arose between rural cooperatives and private utility companies over the same customers. Private companies did not like to see co-ops taking over areas that might otherwise prove to be profitable. One strategy frequently followed by these companies involved the use of "spite lines," which were transmission lines built quickly after the formation of a cooperative in some of the paths where the co-op planned to build. Spite lines usually were located to serve the most prosperous customers and siphon away cash that the coop would need to become self-sufficient. With only the poorest farmers left to serve, co-ops would not be able to organize successfully.
For example a Louisiana power company built line extensions in a spoke-like pattern from a central point, but did not connect the homes between the lines. Because REA policy was to serve only those areas without existing private service, the local cooperative then could not sign up enough customers in its area to make the effort worthwhile. Sometimes companies ran private lines into uninhabited areas to prevent any future co-op from forming.
Usually spite lines were built only after the companies learned about a group's plans to form a cooperative. REA tried to help by sometimes purchasing a private company's lines. In one case REA Administrator Carmody learned that a company was about to start construction at midnight Sunday to disrupt a Michigan co-op. He sent an REA crew to begin construction at midnight Saturday, in that way serving notice to the company that their tactics would not work.
Observers did not fail to see the irony in companies furiously working to serve rural areas that previously they had ignored. Companies argued that market conditions had changed to make the rural areas profitable, but critics responded that the private companies had only just realized what others had been telling them for years.
Progressives objected to the inclusion of the electric companies, who they believed had badly mis-treated farmers in the past. Rayburn was not fond of the companies, either, but realized that the bill would not pass the House if they were excluded. He sympathized with the power company opponents, but argued that the job of rural electrification was so huge that it made sense to include all possible partners in the enterprise. Rayburn won the confidence of his colleagues and the House approved the Norris-Rayburn bill. But to become law it still had to pass the conference committee, where the two versions of the bill approved by the Senate and the House had to be reconciled.
In the conference committee Senator Norris himself was the greatest objector. He vigorously opposed the House amendments raising the interest rate above 3 percent and allowing private electric companies to participate. For a time it appeared that a decision on the bill would be deadlocked and the bill would die for lack of compromise. Both Rayburn and Cooke went to work soothing feelings and diplomatically suggesting ways around the standoff. Norris felt that in case the average interest rate in the Unites States went up, giving the farmer a break on the interest rate was justified. Cooke suggested tying the interest rate to the rate paid by the United States on its obligations or on U.S. bonds. At the time the interest rate was 3 percent but could fluctuate. He also told Norris that it made little difference if private companies were allowed to submit loan applications, because REA would require area coverage, which the private companies were unlikely to accept. Finally Norris accepted the compromise, which the Senate and House approved on May 11, 1936. President Roosevelt signed the Rural Electrification Act of 1936 into law on May 21 and nominated Morris Cooke to be the first Administrator of REA as an independent agency established by Congress. Senate confirmation of Cooke in his new post followed quickly on May 26.
As established by the Rural Electrification Act of 1936, REA finally had the funding and the authority to carry out a rural electrification program that could work. Cooperatives across the U.S. were destined to play the major role in bringing electric power to the countryside. Applications from many new co-ops set up for this purpose streamed in from many states and territories. Realizing the dream of widespread rural electrification, however, demanded more than passing laws and setting up programs. It required finding ways to assist rural people in forming and managing co-ops, in actually getting the power lines built, and in other essential tasks. This last but difficult step of implementation was the final element that would assure the success of the REA program.
Developing a Program That Worked
The "new and improved" REA officially began operation at the beginning of the fiscal year on July 1, 1936. The principal challenge from the beginning was to speed up the process of cooperative formation and the submittal and approval of loan applications. Cooke was acutely aware of this and realized that the job of administrator would be very demanding. As he was already 64 years old, approaching retirement, and preferred innovation to administration anyway, he immediately began a search for someone to replace him as REA administrator. As his successor, he chose John M. Carmody, whom he appointed Deputy Administrator on August 1, 1936. With experience as a coal company manager and magazine editor, Carmody had a reputation as an able administrator with innovative ideas on how to manage organizations. Although he did not become REA Administrator until February 1937 when Cooke finally resigned, he effectively ran the REA from the time when he started with the agency since Cooke had been busy with special tasks for President Roosevelt.
Carmody was faced at the start with a flood of loan applications that were taking too long to be reviewed. Although plenty of money was available for the purpose, few farmers were being connected to the power grid. All participants in the program, including farmers, lawyers, and REA staff, were trying to figure out how to make the system work. Most loan applications were improperly drawn up and could not be funded. When Carmody stepped in, he very quickly informed farmers that it was up to them to organize the co-ops properly, and that people at the local level had to take the initiative.
This was no easy task for rural people who had never done anything of the kind; to them, the process was daunting. To become eligible for an REA loan, farm families had to organize and incorporate according to the laws of their State. They then had to convince the REA that their project would run properly and that they would be able to pay back the loan. They also had the tasks of hiring lawyers, electing officers, and persuading their neighbors to join them. In addition they had to retain engineers to design transmission line systems. Other problems included learning how to pass resolutions as permitted by their own bylaws, arranging to buy electric power at wholesale rates, calculating costs, and maintaining proper records. Record maintenance would help them to determine whether the system they designed would earn enough to pay off the loan, and how to work with commissions and state legislatures. In the beginning few states had laws that specifically permitted electric cooperatives, so in 1937 REA staff drew up a model law that states followed over the subsequent years to specify how co-ops could be legally formed and regulated.
This is only a single example of the many ways the REA worked to assist local groups in getting their areas electrified. Although at first the agency was reluctant to provide active assistance to prospective borrowers, it soon became obvious that without hands-on REA help at the local level, the program would not achieve its goal of rapid rural electrification. The REA hired many lawyers to find answers to legal questions that had not been asked before. REA staff had written over nine hundred legal opinions by the end of 1938, amounting to nearly an entire new body of law. They settled such issues as whether electric transmission lines in Minnesota could be considered property for tax purposes, whether a town in Louisiana could build lines beyond the city limits to serve rural residents, and whether a co-op in Illinois could use highway rights-of-way to string lines. They also defended the interests of rural people against persistent efforts by private electric companies and even state agencies to prevent them from organizing cooperatives or building their construction projects.
The REA hired not only lawyers but also engineers, accountants, and other experienced professionals that could go out into the field and give practical advice to prospective borrowers on all phases of their projects. REA field staff worked directly with individual cooperatives rather than with State or regional organizations. Truly the agency was assisted by the Depression because it was able to hire very skilled and experienced staff at low government salaries. In turn the REA provided much-needed jobs to these skilled and experienced workers. These people were very effective at instructing farmers, eager to receive electricity, in all the many facets of organizing and operating a successful electric co-op. Beyond that, the REA also worked with co-ops to show people how to use electricity. For example home economists worked with wives and daughters while engineers showed farmers how electric motors could help with farm work. The most visible expression of REA involvement at the local level was the Demonstration Farm Equipment Tour, also called the "REA circus." From 1938 until 1942 this traveling show used a tent big enough for one thousand people to exhibit the proper uses for electrical household and farm equipment. Thousands of people in 20 states viewed this exhibition.
Carmody's industrial experience and passion for efficiency produced benefits both in the REA office and in the construction of transmission lines. To clear up the logjam of loan applications that faced his office when he arrived, he hired an expert in automobile assembly lines to design an assembly line for loan applications. He set targets and deadlines for processing applications and held weekly production control meetings. Through standardization, short-cuts and increased volume, the REA reduced the average time between loan approval and construction contract from 36 weeks in 1936 to 12 weeks in 1939.
In the field a serious challenge was the cost of building electric transmission lines. REA engineers worked to bring down this cost by employing more efficient materials and construction methods. This effort involved many innovations such as new, high-strength wires permitting longer spans between poles, lowering the number of poles per mile from 30 to 18. Cross-arms were eliminated from poles and wires instead were attached one above another on a single pole. The REA standardized poles, hardware, transformers, and electrical wires and used large-scale bidding and mass construction to bring down costs. Construction crews adopted assembly-line principles in building transmission lines. Instead of having one crew perform all tasks, specialized crews followed one another on the line, including crews for staking, holedigging, equipment, hardware, pole-guying, wire-stringing, transformer-hanging, and so forth. Contractors were highly motivated to find solutions to problems they met in building the lines. Using these approaches the REA was able to reduce the per-mile construction cost from $1,500 to $2,000 before the REA program to $941 by the end of 1936 and to less than $825 by 1939. This cost reduction greatly encouraged rural electrification by making it more affordable for the co-ops.
The electrification program involved not only building transmission lines to homes and farms, but also loans for wiring buildings, purchasing electrical appliances, and even installing plumbing systems. Coops set up group plans to minimize costs for their members. Ways were found for even the poorest people to benefit. For example the "Arkansas Plan," widely adopted in the South where the poorest farmers lived, permitted families living in one-to three-room houses to pay only $1.89 per month for their coop membership, electrical service, wiring the house, and an iron and radio. Farmers with no money were allowed to work on REA crews in exchange for obtaining electrical service for their homes.
The dedication of the REA and the rural cooperatives combined with the improved efficiencies in all facets of the process greatly accelerated the electrification of rural areas. From 1936 to 1939 the miles of line in operation under the REA program rose from four hundred to 115,230 and the number of consumers served increased from 693 to 268,000. The total amount of loans advanced climbed from $13.9 million in 1935–1936 to $227.2 million in 1939. This was the defining period for the REA, in which its program gained the momentum that in later years carried it to the completion of its appointed task.
More About… When the Lights Came On
To rural residents receiving electricity for the first time, it was a miracle that they remembered for the rest of their lives. Families remembered the date as they did births and marriages. In many homes that first night, the lights stayed on all night long to allow people time to admire the insides of their dwellings. Celebration was the order of the day. At one place in Texas ranchers dug a "grave" and cast their kerosene lamps into it. A Missouri woman paid little attention to the lights when they came on. She ran to the kitchen, however, to examine her new refrigerator—when the little light came on, she broke down with tears of joy. A woman more than one hundred years old wrote a letter to REA, thanking the agency for her electric lights. For the first time in her life, she said, she felt she had been born too soon.
To many people, electricity was still a mystery. A storekeeper in Georgia bragged to his customers for a month about his new electric light, until he learned that this was only the cash register night light. When he was shown how to turn on the rest of the lights, he was so amazed he didn't know what to say. A housewife wrote the REA Administrator to ask how to turn off her bedroom light; she had not been told she had a switch. The wife of a co-op director refused to bake with her new electric range, as she had won the blue ribbon at the county fair ten years in a row for her angel food cake, cooked in her wood range using very precise techniques. Her husband convinced her to try an experiment: she baked two cakes at one time, one with the wood range and the other in her new electric oven. She entered both in the county fair and won the blue ribbon with the cake from the electric oven.
Some were fearful. A woman in Kentucky waited weeks before turning on her new electric iron, and her neighbor would not touch the switches without the protection of a potholder. According to another story, one person kept all sockets plugged so as to prevent the electricity from leaking out.
The novelty of electric appliances was a special pleasure. When one farm family got their radio, they placed it in the open kitchen window, aimed it at the fields and turned up the volume. For a full week, the men working in the fields demanded that they hear the radio while they worked.
In the early twentieth century most rural Americans were without electrical power at a time when most city dwellers had already begun to forget what life had been without it. Although this inequity was recognized early, many assumed that market forces would naturally lead to rural electrification without any government intervention. It was only when private enterprise clearly had failed to light the countryside that progressive activists succeeded in establishing an effective federal program that ultimately resulted in that accomplishment.
Adoption of Electrical Power in America
Thomas Edison designed and built the first central electrical power plant in the world in New York City in 1882. Early electrical systems were small, low-powered, and served small numbers of preferred customers. Importantly for practical reasons electric power was limited primarily to cities in the first decades. Even so, electrical systems sprang up very early in cities of all sizes across the United States. For example the first electrical power plant built in Eugene, Oregon, appeared in 1887, three thousand miles away from New York City but only five years later. Electric lights, another Edison invention, were the first use for electricity.
The use of electricity spread steadily in American cities, so that by the early 1920s, half of all urban homes were electrified, and all of those had at least some electric lights. Much of this development was done by private industry, although municipal utilities, publicly owned by city residents, played a major role as well. During the 1920s a large number of American homes, primarily those in the top 20 percent of the income scale, modernized through the adoption of such electrical inventions such as full electric lighting, appliances for heating and cooling, and power tools. By 1929 most electrified homes had electric irons, half had radios, more than a third had vacuum cleaners, and almost a third had clothes washers. By contrast as late as 1935 only 10 percent of U.S. farms were electrified. The benefits of electrical power for industry and homes were accepted facts by the 1920s. Cities had been served first because dense concentrations of many customers made producing and supplying power profitable to them. Unfortunately for those who lived outside of cities, power companies did not believe that there was much money to be made by delivering electricity to the countryside. Prospective customers were widely scattered and generally not well-to-do.
Early Efforts by Private Industry to Power the Countryside
Even before most people in cities had electrical service, private industry gave some thought to rural electrification. In 1911 the National Electric Light Association (NELA), representing the private power industry, discussed the subject at its annual meeting. A committee was appointed to ask the U.S. Department of Agriculture to print a special bulletin about uses of electricity on the farm and to request that the Census Bureau tally the number of farms already using electricity. No other action was taken to promote rural electric service, which was not surprising, because at that time electricity in rural areas was still considered a luxury.
In 1923 the NELA took another look at the matter and formed the Committee on the Relation of Electricity to Agriculture (CREA), a cooperative program with the American Farm Bureau Federation and state agricultural colleges. The strategy of the CREA was to demonstrate the many uses and advantages of electricity and thereby to convince the farmer to order the service. Campus farms financed by private power companies conducted experimental demonstrations of farm uses, including some large-scale experiments involving rural customers, and published the results in farm publications. These experiments were valuable in achieving technological progress and sharing the information with farmers, but they did not tackle the main obstacle confronting rural electrification, which was the cost of electricity. At that time, rates for electricity were highest for those who used the least amount, so farmers of modest means faced a significant cost hurdle unless they used, and could afford, larger amounts of electricity to bring the per-unit rate down. Not only that, but they would have to pay the cost of building the transmission lines to their farms, wiring their buildings, and buying the lights and electrical equipment, a significant investment. Few rural residents could afford to do that on their own, especially when it was not clear that they would increase their profits as a result.
Critics of the private power industry pointed out that cost was the primary obstacle to rural electrification. They urged more serious efforts to address this issue, including some sacrifice and a long-term perspective on the part of the power companies. They did not accept the private industry estimates of the cost of constructing power lines because they were unreasonably high. The power companies argued that they had to make a profit to stay in business and provide their service.
More About… Life on the Farm Without Electricity
Until electricity came to the countryside, life on the farm in its basic form had changed little since the Middle Ages. Farmers depended on tools that their ancestors had used for centuries or even for thousands of years, such as the wheel, the lever, the block and tackle, and the plow. Toil and drudgery were accepted as unavoidable companions. Power for most uses came from the muscles of people and their animals. Kerosene lamps and candles supplied illumination at night, so bedtime came not long after dusk.
Women cooked on wood stoves and washed clothes by hand outside on washboards in an outdoor kettle heated over a fire. One report indicated farmers' wives spent 20 days more each year washing clothes than city women who owned electric washers. Ironing clothes was particularly burdensome, requiring use of the "sad iron" heated on a wood stove. Most people had no indoor plumbing or toilets. Water for cooking and washing had to be hauled into the house in buckets from an outside well or a nearby stream. A U.S. Department of Agriculture study in 1919 reported that pumping and carrying water alone took an average of 10 hours per week for a family. Sanitation was poor as it was much work to clean the house let alone one's body.
Storing food was done in ways unchanged since ancient times. Farm families kept smokehouses, root cellars, and icehouses. Milk, butter, eggs, and fresh fruit were kept in a well or springhouse. Meat was dried, smoked, and salted. Food spoilage and lack of fresh produce caused numerous health problems such as dysentery from bacterial contamination and pellagra, resulting from vitamin deficiency, which caused chronic fatigue, skin lesions, and mental illness. Poor nutrition also caused problems in pregnancy that resulted in stillbirths, deformities, and impaired intelligence.
Gasoline engines became common on the farm after World War I (1914–1918). Gasoline-powered tractors made plowing much more efficient. Gasoline engines could pump water and even power an electrical generator to run a few lights. Automobiles made it much easier to deliver farm produce to market. Gasoline engines, tractors, and automobiles, however, were expensive and needed frequent repair.
Successful Rural Electrification Programs in Other Countries
American advocates of public power (electric power provided by public agencies or cooperatives) pointed to other countries as evidence that rural electrification under the right conditions could be accomplished quickly. Rural cooperatives in Europe and Canada had put some countries far ahead of the United States in electrifying rural areas. By 1930, in some countries, 90 percent of farms had electrical service compared to only 10 percent in the United States. A well-known case was Sweden, where rural cooperatives had formed to buy power from the state and distribute it among members. By 1936, 50 percent of Swedish farms were electrified. With large government subsidies to cooperatives, France had reached 71 percent electrification by 1930. The German government offered easy credit terms to cooperatives and reached the 60 percent level by 1927. Other examples were Finland (40 percent), Denmark (50 percent), Czechoslovakia (70 percent), and New Zealand (35 percent). Higher population densities in European rural areas made it less expensive to establish rural electrical systems than in the United States and people in other countries were more willing to accept government subsidy programs to help pay for it.
One of the most visible and successful foreign programs was just across the Canadian border, in Ontario, where the government helped pay the cost of transmission lines in rural areas and made loans to rural people for buying appliances. With this assistance, rural customers could more quickly increase their electrical usage and bring down the rates they had to pay. By the late 1920s, 27 percent of farms in southern Ontario were connected to the power grid, nearly three times the American average. This program encouraged rural electrification advocates in the United States and provided a model alternative to the American reliance on private industry to solve the problem. Private industry saw the Ontario program as a threat to their interests and strongly criticized it. Despite this criticism the Ontario experience influenced the state of Washington, with its plentiful hydroelectric power, to authorize rural Public Utility Districts in 1930. These districts were public agencies organized to distribute power in specific areas.
Opposing Visions: Giant Power Versus Super Power
The slow pace of rural electrification in the 1920s prompted action on the part of some important political leaders who regarded this as an issue of social justice rather than simply a matter of economics. One of these leaders was Pennsylvania Governor Gifford Pinchot, a well-known conservationist, who wanted to use the authority of the state to promote social welfare. He felt that the power companies were irresponsible in their electric rate structures and in their failure to provide service to rural areas. Encouraged by the examples of Ontario and the European countries, Pinchot wanted to establish a Pennsylvania statewide public power system that would rectify these problems. To study the issue and plan for such a system, he set up the Giant Power Board in 1923 and appointed as its director the former director of the Philadelphia Department of Public Works, Morris L. Cooke.
In 1914, in his position with the City of Philadelphia, Cooke filed suit against the Philadelphia Electric Company to lower its electric rates. The Philadelphia Electric Company was the power provider throughout the city and one of the country's largest power companies. At that time, Cooke knew very little about electrical engineering and had a very small staff. Nevertheless in 1916 Cooke won the case, securing a large out-of-court settlement for the city, and in the process developed a reputation as an innovative reformer. He was a natural choice for Pinchot and Giant Power.
The Giant Power concept was to bring electric power to every household in the state, urban as well as rural, at reasonable rates through a public approach rather than through reliance on private industry. Pinchot and Cooke paid special attention to rural residents, who had mostly been denied access to electricity. They also had grander goals: they assumed that what would work for Pennsylvania would also work for the United States as a whole, so they saw this as a critically valuable task. The Giant Power Board studied all aspects of electrical service, including farm service, city gas supply, water power development, mine-mouth electric generating plants (utilizing coal as fuel at the source rather than transporting it), public utility generation, high-voltage transmission, and other related matters. Planning emphasized total system design across the state rather than incremental growth based on increased sales. Cooke visited Wisconsin and Ontario to see examples of rural electrification programs. Projecting electric rates for rural areas, however, was a difficult problem. Cooke felt that rural rates could fall below city rates because farmers had more potential uses for electric power than city homes, but on that point his colleagues disagreed.
In February 1925 the Giant Power Board delivered its report to the Pennsylvania legislature with recommendations for legislation. The Board proposed strong state regulation and planned development of energy resources. It recommended creation of a new Giant Power Board to oversee the program. New generating plants would be located near coalmines and would also be required to recycle mining wastes. All transmission lines would be interconnected to facilitate the procurement and distribution of power across state lines, which would require the approval of Congress. The state Public Service Commission would have power over the activities of electric companies, even to the point of setting a standard valuation of $1.00 for each share of company stock. This was to create a basis for setting standard electricity rates. Power companies would have to justify why they should not serve particular areas. All potential customers in a given area, regardless of their projected usage, would have to be served. The plan recommended legislation permitting farmers to form electrical power cooperatives if companies refused to serve them. The Board assumed that private industry would do most of the line building and service providing.
The private utility industry strongly opposed the Giant Power proposals and developed a plan of its own to accomplish the same ends. Their proposal, called SuperPower, was national in scope and similar in many ways to Giant Power. It also proposed systematic development of energy resources, including even tidal power on the coastlines, and interconnecting distribution systems across the country for greater efficiency and the elimination of local shortages. Super-Power, however, called for no increase in the level of government regulation, leaving the state public utility commissions to oversee the companies as they had been but without exercising strong control. Regulation of share prices and the matter of rates were not mentioned. No plan was put forth to encourage rural electrification, which was considered important, but less so than providing for industry. Pinchot referred to SuperPower as designed to achieve "profit for the companies" and Giant Power as "a plan to bring cheaper and better electric service to all those who have it now, and to bring good and cheap electric service to those who are still without it" (Brown, p. 28).
An intense public debate, focusing on Giant Power and SuperPower, ensued about rural electrification. "Progressives" like Pinchot and Senator George Norris saw a need to establish social justice through government intervention in key areas, not only with regard to electrical power, but also labor, agriculture, conservation, and consumer rights. But the forces behind SuperPower were stronger and included then Secretary of Commerce Herbert Hoover, the banking and mining industries, the U.S. Chamber of Commerce, the private electric industry, and the press. This conservative force staunchly protected the prerogatives of free enterprise against government control. In the end the proposals of Giant Power were too bold to be passed in those times, and the legislature voted them down. The ideas behind SuperPower remained dominant and plans for bringing electrification to rural areas were pushed back.
Although the failure of Giant Power discouraged proponents of public rural electrification at that time, the Giant Power study and proposals were not forgotten. Their work spread recognition of the fact that farmers were potentially even greater users of electricity than city dwellers. It also made clear that areas with low population density might need assistance to receive electrical power because they could not afford to do it themselves. The Giant Power study also established Morris Cooke as the leading proponent of rural electrification, increasingly seen as an essential element in improving the lives of farm families. It would take a decade of time and an economic depression to change the conservative climate and make possible a government program that would achieve rural electrification. Later, when Cooke became Administrator of the Rural Electrification Administration (REA), Giant Power proposals formed the basis for REA policies. Cooke even brought some of the former Giant Power employees on board as the first REA staff members.
The issues and controversies surrounding the formation and operation of theREA illustrate the variety of viewpoints present in the United States in the twentieth century. Some saw the issue from the standpoint of their ideologies, whether conservative or progressive. Others, including the owners and managers of private utility companies, many dedicated reformers such as Morris L. Cooke, and rural residents who yearned for electricity by any possible means viewed the matter pragmatically and in the context of their individual and group interests.
After World War I, when Americans began to view electricity as a necessity of modern living, rural people increasing felt left out and wherever possible voiced their desire to receive electric service. From their ranks came such notable political leaders as Senator George Norris of Nebraska and Representative Sam Rayburn of Texas, who had grown up in impoverished farm families.
Those farmers who could afford to pay for electrical service, ten percent or less than the total number of farmers, with the exception of the West, where large farms and ranches were more common, did so early on. Most, however, lacked the capital to invest in electrical service and thereby increase their productivity and improve their lives. Therefore, they were locked into what appeared to be a hopeless hand-to-mouth existence. They lacked the technical knowledge and economic understanding required to lift themselves out of the situation, and they looked to political leaders to find a solution.
Be Pragmatic and Make a Profit
Viewing things from the other end of the pragmatic spectrum were the private utility companies and their owners, the holding companies. They existed in order to make profits for their owners and stockholders, giving lip service to the notion of public responsibility. From their standpoint, they could not afford to spend money building transmission lines into the country and hooking up scattered farms without seeing how they could assure a return on their investment.
Their reluctance to take such a risk was reasonable in the context of the times, when the economics of electric power were still poorly understood and the dynamics of the power market were still unpredictable. Still their profit-driven attitude provided insufficient incentive to look beyond approaches with which they were comfortable. Their primary interests were their stockholders, not the public, especially not those who were not already their customers.
Reform the Industry
Reformers such as Morris Cooke were driven by the ethic of public service and looked for solutions wherever they could be found, regardless of ideology. The best indicator of this fact is that Cooke looked first to private industry to provide service to rural areas, both in the Giant Power plan and in the first year of searching for an operation plan for the REA. His lawsuit against the Philadelphia Electric Company made him appear to be an enemy of private industry, but in fact he spent years trying to work with industry to achieve rural electrification before finally aligning himself with public cooperatives.
In political battles Cooke sought allies wherever they could be found to achieve his desired ends. For ideological purists this was unethical behavior, but for Cooke it was the most ethical behavior because it resulted in public good.
The Ideological Divide
Ideologies in the first half of the twentieth century were divided between traditionalists, or conservatives, who believed in the American ideal of self-reliance and private enterprise, and progressives, who believed in public solutions to important issues of social justice. Many Americans had always distrusted government and believed that free citizens could achieve anything. Large corporations that arose in the late nineteenth century and later felt they represented this tradition, although in many cases the interests of the corporation differed dramatically from the interests of the public at large. For many representing the private power companies, the struggle to defend their prerogatives in choosing which customers to serve and what prices to charge was part of the battle to protect the American way of life. Political leaders such as Herbert Hoover saw the issue in the same way.
On the other side of the ideological divide were the progressives, whose philosophical descendants later in the century would be labeled "liberals." Prominent names in this camp were George Norris, Gifford Pinchot (Governor of Pennsylvania in the 1920s), and Franklin D. Roosevelt. In their way of thinking the concentration of wealth in corporate hands was a threat to American values of justice and equal opportunity. For them, rural electrification was essential to preserve the agrarian foundation of American moral strength. From the time of Thomas Jefferson (served 1801–1809), rural America had been considered the source of democratic values and of individual leaders of moral character, but rural impoverishment threatened this keystone. Progressives believed that unrestrained free enterprise, especially in the hands of huge and powerful corporations, could have dire consequences for the country and its people. They worked to exert public control over essential industries and services and to achieve important social goals through the actions of government. For them, rural electrification was a mission that fit their definition of social justice.
The rural electrification program as established by REA in the 1930s continued through the following decades and achieved its goals. Its effects on American life in the 1930s were quite modest, because at the end of the decade most rural people were still not served with electric power, but in later years its benefits were remarkable.
The REA through the 1990s
During World War II the program of the REA, which had been moved into the Department of Agriculture in 1939, continued at a slower pace because money and materials were diverted to the war effort. To a substantial extent, the agency assisted borrowers to provide for military needs such as the production of aluminum. The electrification of farms served also to improve the production of food, a highly valued wartime commodity. A conscious effort was made to assist borrowers who could produce more food by using electricity.
With the end of the war approaching, Congress in 1944 extended indefinitely the REA's loan authority (which would have expired in 1946) by the Department of Agriculture Organic Act, otherwise known as the Pace Act. This legislation also liberalized credit terms by lowering the interest rate to two percent and stretching the payback period to 35 years. By this time the rural electrification program had proven itself beyond doubt and was primed for the post-war push to complete the job of rural electrification.
After the war Congress appropriated large sums of money for REA loan programs. Between 1945 and 1959 the number of consumers served by REA-financed systems grew from 1,287,347 to 4,653,502. Although 55 percent of American farms lacked electrical service in 1944, less than 5 percent were unconnected only 15 years later. In 1956 the number of active borrowers began to decline as more cooperatives finally paid off their loans and fewer new borrowers were added, fulfilling the REA's original purpose. After several more decades of servicing its loan program, Congress discontinued REA in 1994 and its functions assumed by the Rural Utilities Service.
The Benefits of Electrification
The most obvious effects of rural electrification were on the lives of the people. The electric light brightened homes and eliminated dark corners. Kerosene lanterns were joyfully abandoned. Children no longer had to be reminded countless times a day to be careful around the lanterns. This had an immediate effect on leisure time, which grew by two to four waking hours a day. It became possible to play outdoor sports and read at night. Rural schoolchildren, more interested in homework, greatly improved their grades. Electric lights cut in half the time needed to do farm chores with a lantern.
Even more popular than electric lights was indoor plumbing, made possible by electric pumps. Indoor faucets reduced one-half hour of labor per day that had been spent hauling water. Indoor bathrooms erased the outdoor privy. Electric clothes washers saved 20 days per year that had been spent manually scrubbing laundry outdoors. The electric iron, generally the first electric appliance obtained, needed no hot stove as its heat source, was light, kept an even temperature, and was very cheap to operate. The refrigerator permitted a healthier diet and reduced food poisoning while eliminating the need to haul ice.
Electricity promoted other health benefits as well. By the late 1940s the U.S. Public Health Service concluded that electric lighting was good for eyesight and encouraged cleanliness. It also reduced home accidents, which caused injury to five million people each year. Half of all home accidents were the result of insufficient illumination. Dim light also caused depression, but brightly-lit homes improved people's mood. Indoor plumbing helped prevent disease caused by polluted water and promoted better family hygiene. Comforts in the home promoted health in an intangible but real way.
After the iron, the radio was the most popular electrical device. It had practical benefits in bringing useful information about weather, markets, meetings, and other news. Radio entertainment brought joy to people's lives and helped lessen the cultural differences between city and countryside. Ironically, the radio, by bringing a view of the wider world to young people, encouraged them to leave the farm and find satisfaction in the city. This result was unanticipated by those who thought electricity would keep more young people on the farm by bringing the benefits of the city to them.
A very important benefit of electricity to the farmer was the use of electric motors to power a wide assortment of chores. It was much more efficient and less expensive to operate saws, grinding wheels, drill presses, and other equipment this way than by hand. In fact farmers found that the cost savings more than paid for the new electrical equipment. Electricity became a new hired hand that milked cows, sawed wood, warmed pigs, hatched eggs, bred chicks, sharpened scythes, and drilled holes. Electric motors also began pumping water for irrigation. All of these improvements helped farms become much more productive. Yet another outcome of electrification was the diversification of agriculture, especially in the South, where cotton had been the principal crop. With electrification farmers were more easily able to establish dairies and raise poultry, both of which became important components of Southern agriculture. These changes in turn raised southern living standards more dramatically than elsewhere. An influential agricultural magazine reported in 1956 that living standards since 1940 had more than tripled in the South compared with an increase of a little more than two times the standard of living for the entire country, largely because of electrification. The world-renowned productivity and standard of living of the American farmer that was a fact of life at the start of the twenty-first century could not have been possible without rural electrification.
Electrification of the countryside served more than farmers and farm families, however. It permitted decentralized industrialization of the countryside. Previously, mills and factories had been concentrated near power sources such as waterfalls, coalfields, and municipal electrical systems, but now they could be set up almost anywhere. Packing plants began using electricity for all parts of their production assembly lines, further promoting agricultural output.
Improved productivity, standards of living, education, communication, and economic diversification in rural areas brought about by electrification greatly reduced the economic and cultural differences between city and country people. At the same time improved farm efficiency, which meant that fewer people could produce much more food, made possible the migration of rural dwellers to the cities. The fact that the United States, at the beginning of the twenty-first century, was seen as a largely urban country is an indirect outcome of rural electrification.
Ironically the success of REA programs in promoting the use of electric power resulted in such an increased demand that power shortages began to appear as early as the late 1940s. Producing electricity to meet the booming demand required building hydroelectric dams and coal-fired and nuclear power plants whose environmental consequences began to be widely recognized in the 1960s and 1970s. The benefits of electrification are obvious when the lives of rural Americans before and after the REA are compared. As often occurs with the adoption of new technology, however, these twentieth century benefits have led to unanticipated problems that must be solved by the people of the twenty-first century.
John M. Carmody (1881–1963). John Carmody was Administrator of REA in the critical period from 1937 to 1939 when the agency developed the programs and practices that ultimately fulfilled the longstanding goal of complete rural electrification. Born in Towanda, Pennsylvania, Carmody was educated in business and held executive positions in the steel, garment, and coal industries. His first government job was to direct a study for the United States Coal Commission in 1922. For six years he edited Coal Age and Factory and Industrial Management magazines. He acquired international experience in the period of 1927 to 1931 on a survey of industrial development of the Soviet Union for the McGraw-Hill Publishing Company. In 1933 the Roosevelt Administration brought him to Washington, DC, where he held a variety of positions, including the Chairmanship of the Bituminous Coal Labor Board, memberships with the National Mediation Board and the National Labor Relations Board, and Chief Engineer of the Civil Works Administration.
Morris Cooke selected Carmody to replace him as REA Administrator because of Carmody's reputation as a man who would not give in under pressure and a strong manager who emphasized efficiency. In only three years at the REA Carmody hired numerous specialists, devised a highly efficient system of loan application processing, and developed an aggressive program of assistance for farmers in forming and managing rural cooperatives. Carmody's influence developed an agency pattern that persisted for decades and resulted in essentially complete electrification of rural areas by the late 1950s.
Carmody resigned in 1939 when the REA, an independent agency, was shifted to become a part of the Department of Agriculture. He felt this move marked the end of the REA's autonomy. After this, President Roosevelt put him in charge of all major federal relief agencies. He held other government posts in the 1940s and 1950s and died on November 10, 1963, at the age of 82 after a hip injury and ensuing complications.
Morris L. Cooke (1872–1960). Morris Cooke was a principal leader of the rural electrification movement whose reputation as a tireless and systematic reformer won him the admiration of President Roosevelt and appointment as the first Administrator of the REA. Cooke was born in Philadelphia and educated at Lehigh University. After training as a mechanical engineer, he set up a consulting firm in Philadelphia that did work for electric power utilities. Cooke's career as an advocate of public power began after he was appointed Director of the Philadelphia Department of Public Works in1911. In 1916 he won an important lawsuit for the city against the formidable Philadelphia Electric Company to reduce that company's electric rates. The reputation gained in that episode earned him the attention of Gifford Pinchot, Governor of Pennsylvania, who in 1923 appointed him to head the Giant Power Board, which thoroughly studied the subject of electrical power generation, transmission, and use. Giant Power in 1925 submitted to the Pennsylvania legislature a detailed plan for a public statewide power distribution system that would provide service to all, including rural residents. Although the plan was voted down, the study elevated Cooke to high regard among those who championed rural electrification.
Cooke's experience caused Franklin Roosevelt, then Governor of New York, to appoint Cooke to the New York Power Authority, where he directed a study of the costs of rural electrical service. This study was a milestone because it demonstrated that a rural power distribution system could be constructed for significantly less than the private power industry had estimated. Subsequently, after Roosevelt became President and initiated the New Deal, he chose Cooke as administrator of the new Rural Electrification Administration, which incorporated the ideals and knowledge Cooke had developed during his career as an advocate for public power and rural electrification. Under Cooke the REA became a lending agency for rural cooperatives and one of the most successful New Deal agencies, ultimately succeeding in the task of electrifying the countryside.
Cooke, an innovator rather than administrator, left the REA in 1937 and served the Roosevelt Administration in other posts. His last government job was as Chairman of the Water Resource Policy Commission, to which President Truman (served 1945–1953) appointed him in 1950. He remained active in public affairs until he died in 1960.
George Norris (1861–1944). George Norris, as Senator from Nebraska, vigorously promoted rural electrification and was instrumental in the establishment of both the REA and the Tennessee Valley Authority (TVA). Born in Sandusky County, Ohio, Norris grew up in a very poor farm family, where he learned first-hand how difficult rural life could be. He taught school and studied law, completing his education at Valparaiso University, in Indiana, and earning admission to the bar in 1883. He moved to Nebraska in 1885 and later became a county prosecuting attorney. He was elected to a district judgeship in 1895 and re-elected in 1899. In 1902 he was elected to the U.S. House of Representatives and served five successive terms. He became Senator from Nebraska in 1912.
During his decades in Congress, Norris championed the causes of ordinary Americans, especially farmers. He particularly espoused public power and pushed for controls on private utility companies. In the 1920s he fought for federal development of the Muscle Shoals hydroelectric project on the Tennessee River. The federal government had built this system of hydroelectric dams and factories during World War I to manufacture munitions for the war effort. While some felt that the project should be turned over to private industry for development, Norris saw an opportunity to provide cheap power to poor Southern farmers as well as city people. He opposed Henry Ford's offer to purchase the project for $5 million and deliver the power to private manufacturers and in 1922 recommended that the federal government distribute the power to states, counties, and municipalities within a three hundred mile radius. This proposal later evolved into the TVA, established as a New Deal program in the 1930s.
Norris was a close associate of Morris L. Cooke and in the 1920s lobbied strongly in favor of the Giant Power proposals in Pennsylvania. Nominally a Republican, he saw his loyalties to the people rather than the Party. He supported New Deal policies that he saw as beneficial to farmers. He was a major supporter of the REA and introduced the bill to the Senate that ultimately passed to create an independent REA financed by congressional authorizations.
After leaving the Senate in 1942 Norris died on September 3, 1944, in his adopted state of Nebraska.
Gifford Pinchot (1865–1946). As governor of Pennsylvania, Gifford Pinchot created the Giant Power Board, which conducted a study of electrical power systems that greatly influenced later decisions regarding ways to achieve rural electrification. Born in Connecticut Pinchot graduated from Yale University in 1889 and then studied in France, Switzerland, Germany, and Austria. He specialized in forestry and in 1896 became a member of the commission that developed a plan for American forests. He moved up in government offices responsible for forests and became the first head of the Forest Service in the Department of Agriculture. In this position, which he held until 1910, he became a principal leader of the conservation movement and subscribed to the progressive ideology. This ideology held that government action was sometimes needed to assure the public good. He teamed up with Theodore Roosevelt to found the independent Bull Moose Party in 1912. After leaving the federal government, Pinchot became state forester of Pennsylvania in 1920. This led to his election as governor of Pennsylvania, an office he held from 1923 to 1927 and from 1931 to 1935.
While serving as governor of Pennsylvania, Pinchot set about asserting state authority in the areas of capital and business and in promoting social welfare. Since he believed that private utility companies were setting unreasonably high rates and by not providing rural service were unresponsive to the needs of the public, he created the Giant Power Board under the direction of Morris Cooke to study the matter and propose solutions. Although the forward-looking (and in the climate of the times, even radical) proposals of the Giant Power Board were not approved by the Pennsylvania legislature, the Giant Power study and proposed plan formed a strong basis for a continuing fight nationwide to bring electric service to rural areas.
Sam Rayburn (1882–1961). As a leader in the U.S. House of Representatives, Democrat Sam Rayburn was instrumental in the passage of the bill that created the REA as an independent agency authorized by Congress. Rayburn was born in Tennessee, but moved to northeastern Texas at that age of five with his family, who bought a cotton farm. One of 11 children, he experienced the privations of a poor Southern farmer. He nevertheless worked his way through East Texas College and studied law at the University of Texas. After practicing law for a time, he was elected as a U.S. Representative in 1912 and remained a member of Congress until he died in 1961. During his long tenure there, he became a powerful leader, well known for his abilities to achieve consensus and compromise. In 1936, when it became clear that the REA could not become an effective agency within the Executive Branch, where it had to compete for funding with other Executive offices, Rayburn agreed to lend his assistance. He saw the REA as a way to help farm families improve their standard of living. While Senator Norris introduced a bill in the Senate to establish an independent REA by statutory authority of Congress, Rayburn introduced a similar bill to the House and guided it through the legislative process. When faced with a dispute between those who wanted to exclude private power companies from REA programs and those who felt that the private companies were essential partners, Rayburn urged that there was a place for both private and public participants in rural electrification. His experience with the personalities involved and his skills as a parliamentarian proved effective in securing enough votes for passage in the House and in finding a compromise between the Senate and House versions of the bill.
Rayburn became Speaker of the House in 1940 and presided over the 1952 and 1956 Democratic Party National Conventions.
Electricity Can Improve the Lives of Farmers…
Gifford Pinchot, political and conservation leader and governor of Pennsylvania, saw the American farm as a traditional source of American strength and stability. He was concerned that the farm sector of the population was falling behind the urban sector in terms of opportunity. This excerpt is from a speech (Speech of Gifford Pinchot Before Naitonal Electric Light Association) he delivered on May 21, 1924. It was printed in the Morris L. Cooke Papers, and reprinted in Clayton Brown's Electricity for Rural America: The Fight for the REA, 1980, p. xvi.
Only electric service can put the farmer on an equality with the townsmen and preserve the farm as the nursery of men and leaders of men that it has been in the past.
…And the Lives of All Americans
Herbert Hoover, as Secretary of Commerce, was among those who believed that electrical power was a key to improving the lives of all Americans. He made the following statement to the Super Power Conference on October 13, 1923 (also from Brown, p. 28).
Every time we cheapen power and decentralize its production, we create new uses and we add security to production; we also increase the production; we eliminate waste; we decrease the burden of physical effort upon men. In sum, we increase the standards of living and comfort of all our people.
The Importance of Electricity
The personal significance of electrification on the American farm is poignantly communicated by this poem written by an anonymous housewife and printed in 1938 in "REA Co-op Message," Bulletin [July 1938]; (quoted in Brown, p. 75).
When you and I were seventeen, it was different on the farm … Sure we had running water, but we had to run out to the pump with a pail to get it. Blue Monday got its name from the way the womenfolk felt at the end of the washday. We didn't have radio, electricity is required to power them. Now things are different—since the high line went in. There is just as much to do on the farm as ever, but it is a lot easier to do it.
Need for Helping Cooperatives
John M. Carmody, who succeeded Cooke as REA Administrator, recognized that farm people themselves had to take the initiative in forming cooperatives that could qualify for REA loans. This was not an easy task, as farmers generally were inexperienced in such forms of organizing. Carmody and the REA encouraged and assisted farmers in this enterprise. His understanding of the problems involved is expressed in this quote from a radio address sponsored by the National Grange in 1937 and reprinted in the Rural Electrification Administration's Annual Reports, 1935–1956, (p. 10):
Much as the farmers have wanted electricity—and they have wanted it; they have seized it wherever it has been made available at reasonable terms—they have not seen the way clear to overcome the obstacles presented by the necessity of an organization for financing, promotion, construction, and operation. One doesn't go into a retail store and buy a package of electricity over the counter.
The anticipation and excitement of farm people who were soon to be connected to the power grid was remarkable. They typically did all they could to prepare for the coming of electricity. The following quote from a letter written to the REA by the superintendent of a Michigan project, from the REA's Annual Reports, 1935–1956, (p. 22), describes this phenomenon.
If you were here, I could take you to hundreds of homes completely wired, with fixtures hung and bulbs in place, ready for the 'zero hour' when the lines will first be energized. I could take you to homes where electric ranges, electric refrigerators, radios, and even electric clocks are installed and ready for operation.
The First Day of Electricity
People at the beginning of the twenty-first century find it difficult to imagine the feelings of farm families when their homes were supplied with electrical power for the first time. For those who lived through it, this was one of the most memorable experiences of a lifetime. The following narrative is by a dairy farmer in Kentucky who was a boy when this event took place. It is from the REA's Annual Reports, 1935–1956, (p. 23).
We kept a lantern hanging beside the kitchen door … Winter mornings I'd take that lantern and head for the barn. It would be so dark out you'd think you were in a box with the lid shut. We always had at least a dozen cows to milk, and just my Dad and me to do it.
I had a lot of other chores to do before I went to school … that made me late to school some mornings. I'd fill the wood box beside the kitchen stove and I'd bring in a bucket of water. Sometimes the pump would be frozen solid and I'd have to thaw it out before I could pump the water.
Soon as I'd get home from school I had chores to do, and then an early supper, and after that I'd get at my homework. I'd study by a kerosene lamp in the kitchen, up close to the stove. We all spent most of our time in the kitchen during the winter.
We'd heard that the Government was going to lend us money to get lights, but we didn't believe it until we saw the men putting up the poles. Every day they came closer, and we realized it really was going to happen. So Dad went ahead and had the house wired.
It was almost two months later before they finished the job and turned on the power. I'll never forget that day—it was late on a November afternoon, just before dark. All we had was wires hanging down from the ceiling in every room, with bare bulbs on the end. Dad turned on the one in the kitchen first, and he just stood there, holding onto the pull-chain. He said to me, 'Carl, come here and hang onto this so I can turn on the light in the sitting room.'
I knew he didn't have to do that and I told him to stop holding it, that it would say on. He finally let go, and then looked kind of foolish.
- As a thought experiment, imagine a typical day in your life without electricity. List all the ways in which your life would be different and what that would mean to you.
- Follow your home's electricity back to its source. Where does your electricity come from, how is it generated, distributed, and transmitted? Who sends your electric bill and how is your electric payment used?
- Explore the history of electric service in your community. When and how did electricity first become available? What were the first uses and who were the first users? Describe the process whereby electricity became an accepted part of everyday life where you live.
Brown, D. Clayton. Electricity for Rural America: The Fight for the REA. Westport, CN: Greenwood Press, 1980.
Cooke, Morris L. "The Early Days of the Rural Electrification Idea: 1914–1936," American Political Science Review, June 1948.
Rural Electrification Administration. Rural Lines, USA: The Story of the Rural Electrification Administration's First Twenty-five Years, 1935–1960. Washington, DC: U.S. Department of Agriculture, Rural Electrification Administration (Miscellaneous Publication No. 811), 1960.
Stone, Norman F. Bountiful McKenzie: The Story of the Eugene Water & Electric Board. Eugene, OR: Parkstone Company, 1986.
Tobey, Ronald C. Technology as Freedom: The New Deal and the Electrical Modernization of the American Home. Berkeley: University of California Press, 1996.
Cooke, Morris, ed. What Electricity Costs. New York: New Republic, 1933.
Garwood, John D. The Rural Electrification Administration, An Evaluation. Washington, DC: American Enterprise Institute, 1963.
Muller, Frederick. Public Rural Electrification. Washington, DC: American Council Public Affairs, 1944.
Person, H. S. "The Rural Electrification Administration in Perspective," Agricultural History, 24 (April 1950): 70-89.
Richardson, L. K. Wisconsin REA: The Struggle to Extend Electricity to Rural Wisconsin 1935–1955. Madison: University of Wisconsin Experiment Station, 1961.
Rural Electrification Administration. Annual Reports, 1935–1956.
Slattery, Harry. Rural America Lights Up. Washington, DC: National Home Library Foundation, 1940.
"Rural Electrification Administration 1934-1941." Historic Events for Students: The Great Depression. . Encyclopedia.com. (January 19, 2019). https://www.encyclopedia.com/education/news-and-education-magazines/rural-electrification-administration-1934-1941
"Rural Electrification Administration 1934-1941." Historic Events for Students: The Great Depression. . Retrieved January 19, 2019 from Encyclopedia.com: https://www.encyclopedia.com/education/news-and-education-magazines/rural-electrification-administration-1934-1941
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