Cooperatives and the REA

Delta-Montrose Rural Powerline Association linemen

http://www.dmea.com/content/co-op-history

During the 1930’s, unemployment was high, at times over 20%. President Franklin Roosevelt made a lot of Executive Orders during his time as President to try to help the United States of America climb out of the worst depression it had encountered. On May 11, 1935, Executive Order No. 7037, was signed to establish the Rural Electrification Administration (REA). (Mayberry, 2010). This promised not only the creation of jobs, but electricity to the 90% of rural Americans who, so far, had been left in the dark.

As we know from my earlier posts, the REA was extremely successful, and life-changing for millions of Americans. But enforcing the Executive order didn’t quite go as planned.

The REA was set up to give loans to utility companies so they could extend their services to the rural areas. The utility companies had little interest in taking such a risk: they weren’t sure the investment would be worth it. These rural areas were spread hundreds of miles apart, which meant bringing electricity to each rural home was exponentially more expensive than bringing electricity to homes within the city. For a few months, it looked like the REA would be a failure.

It wasn’t. Applications to apply for REA loans came instead from farmer-based cooperatives. The farmers were willing to take the risk because they knew how much electricity would change their lives. According to “The Electric Cooperative Story,” (n.d.), two years after Roosevelt’s Executive Order that established the REA, the REA drafted the Electric Cooperative Corporation Act, to ensure that these consumer-owned cooperatives could operate and be approved for the REA loans.

It didn’t take long for the cooperatives to build lines that brought electricity to farms across the United States. By 1953, more than 90% of rural Americans had power through electricity, and today over 99% of farms have service. (The Electric Cooperative Story, n.d.). Most of the farms today without electricity abstain by choice.

Even though the process of bringing electricity to Rural farms was different than initially planned, it is likely that the farm-based cooperatives strengthened communities and brought more appreciation for electric service, since it was the farmers themselves who had to work to ensure the power lines reached them.

References

Mayberry, A. (2010). Utility Co-op Connection. Rural Cooperatives, 77(2), 11-23.

The Electric Cooperative Story. (n.d.) America’s Electric Cooperatives. Retrieved from https://www.electric.coop/our-organization/history/.