Farms are factories as well as homes; therefore the electrification of rural America means more than comfort and convenience. It means profit to farmer, to utility, to appliance manufacturer.
Electrifying the Countryside
This company will not oppose such associations seeking to build lines in areas where we are financially unable to offer our own service to farmers, but, on the contrary, we will assist them in every way we can. Instead of refusing to sell them electricity to operate their cooperatively owned lines, we have already filed with the Georgia Public Service Commission a rate schedule under which we will sell electricity to the cooperatives at a wholesale price for resale to their members. This schedule is almost identical with the rate applicable to municipalities buying corresponding amounts of power.Even allowing for a factor of salesmanship in this, perhaps only those who have closely followed the development of the power industry in this country realize what a right-about-face in attitude and in practice such a rural electrification project by a privately owned power company represents. To show how it has come about, it is necessary to sketch in the background of the present scene.
Though rural power uses of electricity began thirty-five years ago on an irrigated farm in California, the 1930 Census showed that only one tenth of American farms had central station service. One of the barriers to the development of farm electrification has been the rural line extension policy of many of the utilities. The power company has persisted in regarding the farmer not as a potential power customer, but as a small domestic consumer. Rates for domestic consumption have been notoriously high. Larger industrial consumers have been able to set up their own plants if power companies refused to give them favorable wholesale rates, and since the utilities needed the volume of industrial business, large consumers have rarely have difficulty in obtaining equitable rates. But the house holder, who can not economically generate his own energy, has had to pay what was asked or do without electricity. Generally, in the cities, he preferred to pay, often at rates so high that they limited his use of electricity to lighting. A lamp advertisement in 1927 asserted that while only 21 percent of the energy generated the preceding year was used for lighting, this form of consumption nevertheless had provided 64 percent of the industry's revenues!
In addition to paying for the energy he used, the farmer was expected to advance to the power company most or all of the costs of construction. Since utility company ideas as to what constituted sound rural lines have been rather fancy, such costs were prohibitive for most farmers. A convention of the old National Electric Light Association agreed that rural service was practicable only where lines were being extended from one well settled community to another and farms Could be picked up incidentally enroute. In effect this meant that scores of counties classed by our Census as 100 per cent rural could never hope to enjoy the advantages of electricity.
Here we have one of the factors responsible for the uneven progress of industry and agriculture. Compared with the factory, the farm has suffered from antiquated machinery and outmoded techniques. A limited and inferior standard of living has been the farmer's reward for years of backbreaking toil. The promise of continued drudgery and the absence of modern comforts have helped drive from the farm to the city those who were most free to travel but who were at the same time most needed in rural communities--the young people. To correct, at least in part, the unbalance between rural and city life, like many another worthy cause, meant a lot of uphill work. Yet all of us who studied the problem believed that an opening inevitably would come for a serious; well-ordered effort to extend to the farm the benefits electricity has made possible to town dwellers in this country and to both urban and rural families in many other lands.
Such an opening came through the Emergency Relief Act of 1935. With the problem of unemployment still acute and the position of agriculture and industry impaired, rural electrification offered projects which would at once provide jobs, stimulate manufacturing, and aid the farmer. Accordingly the Congress earmarked a substantial sum for this work, and the President, by an executive order dated May 11,1935, Created the Rural Electrification Administration. A year later, the Congress passed the Norris-Rayburn Act, the purpose of which is to insure a ten-year integrated program for electrifying American farms. To that end, it authorizes appropriations of $410 million.
Essentially the REA is a financing agency. A large part of its work, both as an emergency agency, and as an agency charged with responsibility for a long term plan, consists in allocating funds for the construction of rural lines. These funds are not grants, but loans, made to private companies, to public agencies or to cooperatives, to be repaid within twenty-five years, with interest computed at approximately the prevailing rate for government obligations.
The details of the ten-year program will be better understood if we glance back over the accomplishments of the experimental year as an emergency bureau. First, the fundamentals of a technique for evaluating projects have been evolved. Second, over one hundred rural electrification projects have been approved, embracing 13,200 miles of rural distribution lines to serve 53,000 customers in thirty-two states. Some of these lines are already energized and many others are under construction. Third, suggested specifications for economical rural line construction have been prepared and distributed by REA engineers. A campaign for improving farm life through greater utilization of electricity has been undertaken. New groups desiring to set up cooperatives have been given legal and technical assistance. Last, but most important, REA has helped modify the whole outlook for rural electrification. To the utilities, REA has shown that there is a mine of hidden profit in rural electrification if they will operate on a comprehensive scale. The scheme of the Georgia Power Company has already been cited. Similarly, three New York companies plan to construct over 7000 miles of rural lines in that state. The Electrical World recently estimated that 20,282 miles of new rural lines were built during 1935, and that the current year would add more than 35,000 miles. To farmers throughout the country, REA has been a rallying point where their need of electricity might be effectively voiced, as the large proportion of farmer-initiated comparative projects amply demonstrates.
A typical cooperative project grew out of a letter from a county agent in Henderson County, Kentucky, who wrote that a few local farmers were interested in securing electricity, and asked information and advice about a construction loan.
A field man sent by the REA development section made a rapid survey of Henderson County conditions. To a meeting which followed there came, not the few farmers expected, but nearly a hundred, with their leaders, and the president of the State Farm Bureau Federation.
When the REA plan was outlined, the farmers learned that tenants as well as landlords could secure electric power and that, as security for the government loan, a lien is placed on the government financed power line and its revenues, not on the farmer's property. They learned that money allocated for building a line covers its entire cost, including a service line to each farmhouse served; that a cooperative group must be incorporated, and that a project must be deemed self-liquidating by REA to secure a loan.
Local interest grew rapidly. Prospective customers signed for service. A marked map of the territory was submitted to the REA engineers. After much correspondence between the Henderson County Rural Electrification Association and REA to Clarify all details of the scheme, an allocation of $190,000 was made. The amount covers the building of 153 miles of highline (at a cost of $1150 a mile) and three small sub-stations. This line cost, decidedly higher than the REA average, is accounted for by the large number of customers to the mile--7.8--requiring separate transformers and motors, and by difficult physical conditions. The Henderson Municipal Plant is to supply electricity for these rural lines. The retail cost to each customer probably will be approximately $4.25 for the first 100 kwh. Additional power consumed will be cheaper.
The experience of the first year of REA has been especially valuable in demonstrating the desirability of a long term, carefully planned program. Under the line extension polices generally in practice until recently, the more prosperous farms in a given area ultimately received electric service, while the less prosperous farms by that very fact became more isolated, less able to bear the expense of the extension. The result was a haphazard rural system of finger-like lines, with great pockets of unserved areas between and beyond them. Obviously a system planned in advance to cover a given area thoroughly would have been far more satisfactory to the consumers and in the long run to the companies.
The gratifying results of such planned electrification in many European countries are common knowledge. Less familiar, perhaps, is the story of electrification in New Zealand. With a large number of dairy and stock farms, and an average population density of fifteen people to the square mile--three less than the state of Nebraska--New Zealand offers a good basis for Comparison with rural America. The government there instituted a widespread electrification plan in 1918, dividing the entire country into fifty-five electric power districts. Forty such districts have already begun operation, thirty-nine of them in predominantly rural areas, supplying cheap and abundant electricity to farms. Steady expansion built on sound beginnings has already brought electric service to two thirds of New Zealand's rural population, and the operations as a whole show a good reserve margin.
Under its ten-year program, REA hopes to bring electricity to another million American farms. Its emphasis will be on loans for distribution lines, in order to continue cooperating as far as possible with existing producers of electric energy.
Each of the REA activities has widespread implications. Insistence on progressive construction standards, coincident with efforts of some utilities, has led the industry to admit that sturdy and efficient rural lines can be built under widely varying conditions for approximately $950 a mile. The accepted figure until recently ranged from S1600 to $2400 and upward. Electrifying an entire area and the application of competitive bidding and large scale buying methods to REA projects have furthered construction economy.
But the rural line, once built, cannot vitally affect farm life unless the farmer is able to make use of the energy it brings. In the past many farmers who felt that they might scratch together enough cash for an extension hesitated to do so because they could not also meet outright the expenses of wiring their homes and barns and purchasing equipment. The Tennessee Valley Authority and some of the private companies of the South-east have shown that the way to successful operation is through low rates inducing high consumption. But high consumption demands appliances--appliances whose cost is not a drain on but a supplement to farm income and farm comfort. A new feature of the REA plan is provision for financing house wiring and the purchase and installation of electrical appliances, and modern plumbing equipment. Loans so used will be limited to a period not exceeding two thirds of the assured life o6 the equipment, with interest at approximately the prevailing rate for government obligations.
This part of the REA program widens the social and economic significance of the rural lines. By opening up a new and extensive market for electrical and plumbing manufacturers and trades, through interesting the farmer's purchasing power, REA gives labor and industry a large share in its program. Electrical and plumbing supply agencies will be eager to discover what equipment the farmer really needs, and the market will be large enough to encourage the development of new types of apparatus. The farmers will reap the benefits of group wiring and plumbing installation by contract. Often the cooperative will be found to be helpful in purchasing the new equipment, since it has already proved highly satisfactory in other undertakings.
In the construction and operation of lines; as well as in the utilization field REA welcomes cooperative action. It will continue to do this in the belief that cooperative undertakings are enterprise in the best sense of the word. To foster and assist cooperative groups, REA will offer advice through the various departments. Suggestions as to organization, methods of accounting, home demonstration projects, engineering practices, will be at the disposal of these groups. As the program broadens, neighboring cooperatives may find it economical and effective to pool their efforts and statewide cooperatives, such as exist today in Indiana and Ohio, will develop. The immediate and tangible results will be to bring electricity to a large proportion of American farms, to stimulate employment and manufacturing, and to raise living standards in rural communities. The intangible values--building self-reliance and training leaders in every community--should prove no less satisfying.
Not through the mechanism of cooperatives alone, however, does REA hope to bring forward leaders in the rural electrification movement. An integral part of the ten-year program will be the training of student engineers for this type of work. Properly qualified young men having a public point of view will be given opportunity to do practical field work in connection with REA projects. They will, of course, be paid for their services, while at the same time they will be acquiring first-hand experience in a most promising branch of electrical enterprise.
Another important way in which REA seeks to contribute to electrical progress is through stimulating research. Its own efforts will doubtless be confined to immediate practical problems, such as the attack on reducing line costs. Similarly, REA will work toward increasing line efficiency, integrating small systems into something like a "grid," and giving farmers the results of experiments and demonstrations in electrifying farm operations. Electrical manufacturing corporations like General Electric and Westinghouse are already well equipped to carry on other types of research as are also certain of the government bureaus. The company laboratories have the facilities for experimenting with new equipment for better and cheaper generation, transmission, and distribution of electricity. Various government agencies arc qualified to test equipment and to investigate the value of electricity for such purposes as heating, sterilizing, and fertilizing soil. Numerous experiments on the effect of artificial light on plant growth are already under way. Electric heating and air cooling of greenhouses with a single type of apparatus may soon prove practicable. Insect and pest control, sterilization of feed, and innumerable other applications of electricity to agriculture are in various stages of experimentation. REA will cooperate with public and private groups engaged in such research. Thus it hopes to become a clearing house for new suggestions as they go to the laboratory and for new applications after their value has been tested. So far we have considered the ten-year electrification plan as a thing in itself. Actually, however, it is part of the comprehensive program envisioned in the National Resources Board report. Farm electrification, by providing an essentially new market for almost unlimited quantities of power, makes its contribution to the justification for development of our great water resources for public hydroelectric projects. Modern engineering science has made the multiple purpose dam a reality. Such a dam may impound flood waters, provide irrigation and water supply reservoirs, regulate stream flow, and generate electricity.
But in areas where we do not ordinarily build great dams--the lands of little headwater streams--rural electrification can also make a significant contribution to the solving of flood and land use problems. Hundreds of tiny upstream dams, automatically controlled by electricity, might be so developed as to regulate stream flow. Waters that usually rush off the land can be held by improved farming practices such as strip cropping and contour plowing. The same methods retard erosion and so lessen the dangers of exhausted land and of silt-destroyed dams. REA carefully studies the land use problems of its project areas, to avoid setting up lines in marginal or submarginal regions from which the population should, and doubtless will, move. But electricity can do as much toward intensifying agriculture for us as it has done for France, so that smaller areas will become capable of supporting more people. This means that we shall be able gradually to withdraw unsuitable lands from cultivation. It means, too, that scattered farms, with their disproportionate expense to county, state and federal governments for schools and roads, will tend to be eliminated.
Improved living conditions will partly check migration from farm to farm and from farm to city. Conservation of the soil will go hand in hand with the establishment of a permanent farm home, the constant improvement of which will then become a source of pride. It is even possible that with the advent of cheap and abundant power throughout the countryside, industry itself may show a tendency to decentralize. Whether this occurs or not, electricity will add immeasurably to the comfort, convenience, and profit of farming. In so far as it contributes to the social and economic stability of our agriculture, the rural electrification movement in America may well claim a national victory.