Rural Electrification Administration Created to Bring Power to Farms Private Utilities Refused to Serve

President Roosevelt creates the Rural Electrification Administration (REA) by executive order on May 11, 1935, establishing a federal program to extend electricity to rural areas that private utility companies had refused to serve. At the time of REA’s creation, only 10 percent of American farms have electric power—private utilities deem rural service unprofitable due to low population density and limited ability of farmers to pay high rates. The REA represents a direct federal challenge to private utility monopolies’ claim that they alone can efficiently provide electrical service.

Morris Cooke, the REA’s first administrator, initially attempts to work with private utilities to extend rural service, but the companies show little interest in serving customers they consider unprofitable. Cooke then shifts strategy to support the creation of rural electric cooperatives—non-profit, member-owned utilities that would build distribution systems using REA loans at low interest rates. This cooperative model allows farmers to pool resources and bring electricity to their communities without depending on profit-seeking private companies. The Rural Electrification Act of 1936 provides statutory authorization and establishes the REA as a lending agency that finances cooperative electrification.

Private utility companies fiercely oppose the REA and rural cooperatives, viewing them as government-subsidized competition threatening their monopoly territories. Utilities lobby state legislatures to restrict cooperative formation and expansion, engage in “spite lines”—hastily built extensions into territories cooperatives plan to serve to claim them first—and fund propaganda campaigns against public power. Despite this opposition, the REA proves remarkably successful: by 1939, rural electrification rises from 10 percent to 25 percent; by 1950, over 90 percent of American farms have electricity. The REA demonstrates that public investment can achieve what private markets refuse to provide, while also showing that non-profit cooperative models can effectively deliver essential services—lessons that utility and corporate interests work to suppress in subsequent decades.