Rural Electrification Act (1936)

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Rural Electrification Act (1936)

Andrew R. Klein

The Rural Electrification Act (49 Stat. 1363) was one of the most important pieces of legislation during the era of President Franklin D. Roosevelt's New Deal. It allowed the federal government to make low-cost loans to non-profit cooperatives (farmers who had banded together) for the purpose of bringing electricity to much of rural America for the first time.

President Roosevelt set the stage for the act's passage on May 11, 1935, when he issued an executive order that created the Rural Electrification Administration (REA). The REA was part of a relief package designed to stimulate an economy still in the grip of the Great Depression. On May 20, 1936, Congress passed the Rural Electrification Act, making the REA's promise of long-term funding for rural electricity a reality. In particular, the act permitted the president to appoint an administrator for the REA who was

authorized and empowered to make loans in the several States and Territories of the United States for rural electrification and the furnishing of electric energy to persons in rural areas who [were] not receiving central station service; ... to make or cause to be made, studies, investigations, and reports concerning the condition and progress of electrification of rural areas in the several States and Territories; and to publish and disseminate information with respect thereto.

The act addressed a serious need. When President Roosevelt created the REA, only 10 percent of rural Americans had electricity. This lack of power prevented farmers from modernizing their facilities. It also forced some people to live in unhealthful conditions. Many rural Americans, for example, lived in inadequately heated homes with poor sanitation. Most farmers had no running water and little means to store their food.

Nevertheless, privately owned utility companies, which provided power to most of the country, were not eager to serve the rural population. These companies argued that supplying rural areas with electricity was not profitable. The lack of attention from private companies led farmers to form non-profit cooperatives to implement electrification even before the REA. But, without the government's assistance, these organizations lacked the technical and financial expertise they needed to succeed.

Creation of the REA changed the way that cooperatives worked. Most significantly, the government aided farmers by granting their cooperatives low-cost loans. Through these loans, the cooperatives could acquire the necessary generation and distribution facilities to supply their farms with electrical power. The REA also helped farmers develop assembly-line methods for electrical line construction with uniform procedures and standardized types of electrical hardware. The result was that more and more rural Americans could afford electricity. By 1950, 90 percent of American farms had electricity.

On October 28, 1949, Congress made an important amendment to the Rural Electrification Act that permitted the further modernization of rural America. This amendment authorized the REA to make loans for the purpose of furnishing and improving rural telephone service.

The REA no longer exists in its original form. With the reorganization of the United States Department of Agriculture (USDA) in 1994, the REA became the Rural Utilities Service (RUS). In addition to helping provide rural areas with electric and telephone service, the RUS took over the USDA's water and sewage programs and helped more than 20,000 rural communities obtain modern water systems.

See also: Federal Powers Acts; Tennessee Valley Authority Act.