Although nearly 90 percent of urban dwellers had electricity by the 1930s, only ten percent of rural dwellers did. Private utility companies, who supplied electric power to most of the nation's consumers, argued that it was too expensive to string electric lines to isolated rural farmsteads. Anyway, they said, most farmers, were too poor to be able to afford electricity.
The Roosevelt Administration believed that if private enterprise could not supply electric power to the people, then it was the duty of the government to do so. Most of the court cases involving TVA during the 1930s concerned the government's involvement in the public utilities industry.
In 1935 the Rural Electric Administration (REA) was created to bring electricity to rural areas like the Tennessee Valley. In his 1935 article "Electrifying the Countryside," Morris Cooke, the head of the REA, stated that
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. [ footnote]Many groups opposed the federal government's involvement in developing and distributing electric power, especially utility companies, who believed that the government was unfairly competing with private enterprise (See the Statement of John Battle ). Some members of Congress who didn't think the government should interfere with the economy, believed that TVA was a dangerous program that would bring the nation a step closer to socialism. Other people thought that farmers simply did not have the skills needed to manage local electric companies.
By 1939 the REA had helped to establish 417 rural electric cooperatives, which served 288,000 households. The actions of the REA encouraged private utilities to electrify the countryside as well. By 1939 rural households with electricity had risen to 25 percent. The enthusiasm that greeted the introduction of electric power can be seen in the remarks of Rose Scearce.
When farmers did receive electric power their purchase of electric appliances helped to increase sales for local merchants. Farmers required more energy than city dwellers, which helped to offset the extra cost involved in bringing power lines to the country.
TVA set up the Electric Home and Farm Authority to help farmers purchase major electric appliances. The EHFA made arrangements with appliance makers to supply electric ranges, refrigerators and water heaters at reasonable prices. These appliances were sold at local power companies and electric cooperatives. A farmer could purchase appliances here with loans offered by the EHFA, who offered low-cost financing.
Rural electrification was based on the belief that affordable electricity would improve the standard of living and the economic competitiveness of the family farm. But electric power alone was not enough to stop the transformation of America's farm communities. Rural electrification did not halt the continuing migration of rural people from the country to the city. Nor did it stop the decline in the total number of family farms.