From the spring day in 1935 when President Franklin Delano Roosevelt signed an executive order creating the Rural Electrification Administration (REA) to the waning days of Harry Truman’s presidency in the winter of 1953, electric co-ops could count on the support of the man behind the big desk in the Oval Office of the White House. But soon after Dwight D. Eisenhower moved in, it was clear the honeymoon was over.
Starting in January, Ezra Taft Benson, the Republican president’s secretary of agriculture, put pressure on REA Administrator Claude Wickard not to make generation and transmission loans. Then in mid-March, he fired him with two years left on his 10-year term.
The man who replaced Wickard, Minnesota Lieutenant Governor Ancher Nelsen, took great pride in being part of the Eisenhower team and was determined to do his bit toward “cleaning up the mess in Washington,” Clyde Ellis wrote in A Giant Step (1966), his seminal history of NRECA’s early years.
That “mess” was all the New Deal (Roosevelt) and Fair Deal (Truman) laws and programs, such as REA, that the stridently pro-business White House deplored. Nelsen started by appointing one of his cronies, a St. Paul public relations man named Fred Strong, as his deputy. “Strong’s hatchet was sharp, and soon the agency was in turmoil,” Ellis wrote. Good career men were fired, demoted, or transferred. Others became so fearful or disillusioned that REA became “a subdued and overcautious agency.”
Nelsen forced co-ops to sign “partnership” agreements for power supply with investor-owned utilities as a loan requirement. He turned REA’s rural telephone program into a slush fund for profit-making companies, pushing co-ops aside.
Nelsen resigned in 1956 to run for governor of Minnesota (unsuccessfully) and was replaced by Dave Hamil, a Colorado rancher who was speaker of the state’s house of representatives. His appointment proved to be a tactical mistake by the Eisenhower administration because he worked hard to keep politics out of REA and won the respect of Ellis and the agency’s co-op borrowers.
By the end of his first year in office, Ellis recounted, Hamil had approved $300 million in loans—the biggest total since the Truman administration had financed a near-record amount of generation and transmission projects.
Hamil also ignored Nelsen’s “partnership” requirement and was in favor of co-ops serving the industries that sprung up in their service territories. This made the power companies furious and spurred their sympathizers in the administration to action.
According to Ellis, they devised a plan to wreck REA that included these steps: Cut REA loan budgets to the bone; more than double the 2 percent interest rate; force co-ops to seek financing on Wall Street; reduce the REA administrator to a figurehead; and undermine the co-ops’ confidence in NRECA.
That July, the administration sent proposed interest-rate legislation to Congress, and the following January, the president, in his budget message, requested only $150 million in REA loan money, while acknowledging the need was twice that amount.
Congress ignored the budget request and gave the co-ops the money they needed. The interest-rate legislation stalled after NRECA embarrassed the administration by revealing a series of memos showing that Secretary Benson’s office was illegally using federal funds to lobby against REA.
While this was playing out in 1958 and 1959, Ellis and his staff battled Benson on another front. In July 1957, they learned that all REA loan applications were being screened by a politically motivated aid in the secretary’s office before Hamil saw them. This was, in NRECA’s view, a direct violation of REA’s charter as an independent agency within the Department of Agriculture.
NRECA complained to Minnesota Senator Hubert H. Humphrey, a strong champion of rural electrification. Early in 1958, he and Representative Mel Price of Illinois introduced legislation known as the Humphrey-Price Bill in co-op circles. Its sole purpose was to restore the REA administrator’s full loan-making authority.
This was the first gust of wind in a legislative storm that raged for more than a year—the biggest battle in NRECA history up that point.
On April 8, 1959, the Senate passed the bill by a 60–27 vote after a two-day debate. The following week, the House passed it 254–131. But trouble was not long in coming. On April 27, Eisenhower announced he would veto the bill.
As hard as Ellis and his staff and co-ops around the country worked to get the necessary two-thirds vote in each house that would override the veto, the White House prevailed. Co-ops would have to wait until John F. Kennedy moved into the Oval Office to feel supported again.
For Ellis, the 1960 election ended “the terrible years of Eisenhower.”
“He just never did seem to comprehend what the rural electrification program was all about.”