Electricity's Role In The Great Depression: A Historical Perspective

During the Great Depression, electricity was commonplace in American cities, but 90% of rural homes did not have access to it. In 1935, President Franklin D. Roosevelt issued an executive order creating the Rural Electrification Administration (REA) to bring electricity to rural areas. The REA was part of Roosevelt's New Deal programs aimed at addressing the economic and social issues caused by the Great Depression. Through the construction of dams, power plants, and transmission lines, the New Deal sought to provide cheap electricity to rural communities and boost the economy. By 1945, ninety percent of rural homes had electricity, transforming the lives of farming families and integrating them into the American economy.

The Rural Electrification Administration (REA)

In 1935, 90% of rural homes in the United States lacked electricity. This was due to the failure of the market to deliver affordable electricity to rural areas, as well as the unwillingness of electricity companies to create power infrastructure in sparsely populated regions. As a result, rural Americans were effectively excluded from the American economy.

To address this issue, President Franklin D. Roosevelt created the Rural Electrification Administration (REA) on May 11, 1935, through Executive Order 7037. The REA was one of many New Deal proposals aimed at addressing the high unemployment rates caused by the Great Depression. Roosevelt's New Deal programs focused on modernizing America through the construction of dams, canals, tunnels, reservoirs, power plants, and other infrastructure projects.

The REA specifically targeted rural electrification by providing federal loans for the installation of electrical distribution systems in isolated rural areas. The funding was channelled through cooperative electric power companies, which purchased power wholesale and distributed it through their own transmission and distribution lines. This rural cooperative model had been successfully employed by Giant Power in Pennsylvania and was governed by a board of directors elected from its residential customers.

The REA also recruited a group of mostly female workers who travelled the nation, demonstrating the benefits of electrification to rural communities. These women, known as electrification agents, showcased the labour-saving power of electric appliances and taught rural Americans how to use electricity.

By 1939, the REA's efforts had resulted in over 400 cooperatives, and 25% of farms had electricity. Gross production per agricultural worker increased by 30% by the 1940s, and by 1945, 90% of rural homes had electricity. The REA continued to expand, including initiatives for rural telephone lines, broadband, and other modern telecommunications. Today, about 99% of the nation's farms have electric service, thanks to the transformative impact of the REA.

Electric cooperatives (co-ops)

During the Great Depression, electricity was commonplace in American cities, but it was largely unavailable in farms, ranches, and other rural places. In 1935, 90% of rural homes in the United States didn't have electricity. To address this issue, President Franklin D. Roosevelt issued an executive order creating the Rural Electrification Administration (REA) in May 1935. The REA was part of the New Deal, a vast array of federal programs addressing a broad spectrum of social and economic issues.

The REA recognized the potential of co-ops in achieving its goals and began helping farmers organize and form electric co-ops. The Rural Electrification Act of 1936 provided federal loans for the installation of electrical distribution systems in rural areas, and the funding was channelled through cooperative electric power companies. These member-owned cooperatives purchased power at wholesale prices and distributed it using their own transmission and distribution lines.

The electric co-ops faced initial challenges in acquiring members, as farmers were concerned about the financial risks of taking government loans. However, REA representatives assured them that the electrical equipment itself would serve as collateral. Membership fees were also a hurdle, as they required a substantial sum during the Great Depression. Despite these challenges, the number of co-ops grew, and by 1939, there were over 400 co-ops in operation.

The work of the REA and the electric co-ops had a transformative impact on rural communities. By 1945, 90% of rural homes had electricity, and agricultural productivity increased significantly. The electric co-ops empowered rural Americans by providing them with access to electricity, improving their quality of life, and connecting them to the broader economy.

The New Deal

In 1935, 90% of rural homes in the United States did not have electricity. Two years later, President Franklin D. Roosevelt issued Executive Order 7037, creating the Rural Electrification Administration (REA) to bring electricity to rural areas. The REA was part of a series of federal programs under Roosevelt's New Deal, which aimed to help America recover from the Great Depression.

The REA specifically targeted the issue of rural electrification, which was important for economic recovery. Due to sparse populations in rural areas, electricity companies did not see the financial incentive to create power infrastructure, effectively shutting rural Americans out of the American economy. The REA provided federal loans to finance the construction of electricity generation and transmission in these areas. REA crews travelled through the countryside, bringing electricians who wired houses and barns for the newly available power.

The REA also recruited a group of mostly female workers who hosted travelling events to demonstrate the benefits of electrification to skeptical rural Americans. These "electric circuses" showcased the labor-saving power of electric appliances, such as refrigerators, toasters, and vacuums. By 1939, there were over 400 co-ops and 25% of farms had electricity. The Rural Electrification Act was passed in 1936, providing further support for rural electrification. By 1945, 90% of rural homes had electricity, transforming the lives of farming families and contributing to increased agricultural productivity.

Dams and power plants

During the Great Depression, President Franklin D. Roosevelt's New Deal programs included the construction of major dams and power plants to provide thousands of long-term jobs and inexpensive electric power. The Rural Electrification Administration (REA), created in 1935, aimed to bring electricity to rural America, which was largely without power at the time. The REA provided federal loans for the installation of electrical distribution systems in isolated rural areas, and recruited female workers to educate rural Americans about the benefits of electrification.

Some of the world's largest dams were constructed during the Great Depression, including the Hoover Dam, which was completed in 1935, and the Grand Coulee Dam in Washington state, which is now one of the top producers of hydroelectric power globally. The construction of these dams was a massive undertaking, involving thousands of workers and costing over 100 lives. The Hoover Dam alone used 3,250,000 cubic yards of concrete, enough to pave a two-lane highway from San Francisco to New York.

The Bonneville Dam in the Pacific Northwest was another significant project, providing much-needed work relief during the Depression. Completed in 1937, the dam stands at 122 feet and initially produced over 86,000 kilowatts of power. The Grand Coulee Dam, on the other hand, faced funding challenges due to its remote location and the lack of understanding of its benefits outside of Central Washington. It was only through Roosevelt's New Deal program that the necessary funding was secured, recognising the dam's potential for long-term employment and economic stimulus.

In addition to the construction of dams, power plants were also built during the Great Depression as part of Roosevelt's vision for a modern America. These power plants, along with the dams, played a crucial role in providing inexpensive electricity to rural areas, boosting local economies, and transforming the lives of Americans who gained access to labour-saving electric appliances.

Economic recovery

The Great Depression was a period of economic decline that began with the stock market crash of 1929. By 1933, when President Franklin D. Roosevelt took office, the unemployment rate had climbed to 25% of the workforce, or over 12 million people. Roosevelt responded with the New Deal, a vast array of federal programs addressing social and economic issues. The New Deal aimed to put the unemployed back to work on public projects that would benefit society, such as the construction of major dams, which provided thousands of long-term jobs and developed untapped natural resources. The New Deal also included the Rural Electrification Administration (REA), which brought electricity to rural areas, and the Federal Housing Administration (FHA), which established modern housing construction standards to make homes ready for electrical consumption.

The REA was created in 1935 to provide federal loans for the installation of electrical distribution systems in isolated rural areas. At that time, 90% of rural homes in the United States didn't have electricity, and rural Americans were effectively shut out of the American economy. The REA recruited mostly female workers who travelled the nation, demonstrating the life-changing possibilities of electrification. By 1939, there were over 400 co-ops and 25% of farms had electricity. Gross production per agricultural worker increased by 30% by the 1940s, partly due to electrification.

Other New Deal programs that contributed to economic recovery included the Works Progress Administration (WPA), which hired the unemployed to work on government building projects, and the National Recovery Administration (NRA), which sought to stabilize consumer goods prices. Roosevelt also created the Tennessee Valley Authority (TVA), which constructed dams and power plants in depressed areas, and brought electricity to rural areas for the first time. The Civilian Conservation Corps (CCC) provided jobs to unemployed youths while improving the environment.

In addition to these programs, currency devaluations, monetary expansion, and increased government spending contributed to economic recovery. The rise in the stock of gold in 1933-34 also played a role, as it raised the value of gold holdings by 69%. However, recovery was interrupted by another recession from May 1937 to June 1938, caused by a decision by the Federal Reserve to increase reserve requirements. World War II also played a role in completing the return to full employment, though it was not the main impetus for recovery.

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