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By Root 988 0

Administration (REA), established by the Roosevelt administration in 1935, two years after the TVA was under way, didn't directly involve itself in social engineering; it had the more straightforward mission of delivering electricity to rural people across the country. "We were all feeling our way along," recalled the second administrator of the REA, John Carmody. Morris Cooke, Carmody's predecessor, envisioned that the REA would distribute low-interest government loans directly to power companies. With the money, the utilities would extend their lines to provide widespread electric power to the countryside, and in return for the favorable interest rate, they would reduce their excessively high charges to rural customers.

But the private utility companies were still unable to see the potential in farm kilowatts, especially in the precarious economic years of the early 1930s. By that time, most of the electric utilities in the United States were inextricably bound up with large holding companies—a model initiated decades earlier by Samuel Insull, who, while bringing electricity to suburban Chicago neighborhoods, also systematically bought up controlling interests in the small, outlying utility companies in the area and combined them with other assets. Holding companies were attracted to the stability of the utility companies, which they could use to guarantee other, often riskier investments, but such a practice linked the financial security of utilities with these other investments. Not only were the large holding companies more volatile than separate utilities, but their reach also extended across large geographical areas.

During the stock market crash of 1929, the enormous losses suffered by large holding companies compromised the financial health of utilities. Economically fragile utility companies were not just a liability for stockholders. Since the utilities were now less creditworthy, it cost them more to borrow money, and this cost was passed on to consumers. In 1935, in an effort to bring stability and control to the utility industry, President Roosevelt signed the Public Utility Holding Company Act (PUHCA), which strictly regulated the size and type of companies that could hold stock in utilities. Among other things, the legislation limited the amount of debt such companies could accrue, allowed the government to set electricity rates, and mandated that utilities sell power to everyone in exchange for being granted exclusive control over a given service area.

Even with such regulations in place, utility companies failed to extend electric service to rural parts of the country, so Cooke began a program that established rural cooperatives like that in Alcorn County and other TVA communities. Farmers and farm wives ran the co-ops together. Members kept the books, read their own meters, and engaged in troubleshooting when things went wrong. The REA loaned rural districts money not only for lines but also for wiring of individual houses, and the Roosevelt administration, knowing it wouldn't be feasible to extend the lines for light alone, created a federal credit agency, the Electric Home and Farm Authority, which subsidized the purchase of refrigerators, stoves, and hot water heaters, all of which would increase household electricity usage at the same time it modernized rural living. Where feasible, communities might construct small electric plants, but most of the time they purchased power wholesale from existing utility companies.

By 1938 the REA had financed about 350 projects in 45 states. "Initially ... the REA benefited a relatively small group of people—primarily those farm families in the middling ranks ... and those who lived in rural areas that had a critical population mass," notes historian Katherine Jellison. It would be decades before the most isolated and poorest communities would see power lines come through. A co-op might encompass several small towns and include stores, Grange halls, gas stations, schools, and other town buildings as well as the surrounding farms. Typically, a co-op constructed