Rural Electrification Act - 1937

President Franklin D. Roosevelt

It took a declaration from Congress to allow Americans in rural areas of the United States to be given access to electricity.

In 1935 around 90 percent of people who lived in urban centers had access to central electricity, in contrast to only 10 percent of people living in rural areas. The United States was unique among Western countries in this respect—in that same year nearly 95 percent of rural French and 85 percent of rural Danish families had central power.

As part of President Franklin Delano Roosevelt’s New Deal, and the support of Representative John E. Rankin and Senator George William Norris, the Rural Electrification Administration (REA) was created. A year later, on May 20, 1936, the Congress passed the Rural Electrification Act. At that time, electricity was commonplace in cities but it was only after the Rural Electrification Act and formation of cooperatives, did the countryside get electricity, decades after urban dwellers.

Part of the basis for the decision to enable the Act, was to reduce the high unemployment rate. It also resulted in an astonishing revolutionization of the farming industry as well as the overall productivity for rural Americans.

In 1882, with J.P. Morgan funding his efforts, electricity pioneer Thomas Edison, opened the United States’ first central power plant in lower Manhattan—the Pearl Street Station. Several decades later, farmers and other rural Americans still had no electric service, as it was thought to be economically unfeasible; at the regulated rates of power companies. Lines cost $1,500 to $2,000 a mile, until the late 1930’s when REA cooperatives were formed and lowered costs. However, it was not as simple as it sounds. For one instance, Congressman Lyndon Johnson worked the levers of power in Washington, D.C. so the REA would agree to provide a much-needed loan to an electric cooperative, to build the nearly 2,00 miles of power lines in parts of Texas. Would-be Senator Johnson promised to continue such efforts.

On the other end however, it cost rural folks $5 to buy a cooperative membership, which was hard to come by in those days (during the Great Depression). They felt joining a cooperative amounted to mortgaging their farms. The government encouraged rural Americans to form cooperatives and borrow low-interest federal money to build necessary distribution lines. Even so, few people, if anybody, could foresee the power demand that would develop once electricity became available in the countryside.

Amendments to the Act were later added, one of which was in 1949 – when the act allowed loans to telephone companies wishing to extend their connections to unconnected rural areas.