Rural electrification was a New Deal success story because it had a tireless promoter in President Franklin Delano Roosevelt and a brilliant tactician in Morris Llewellyn Cooke.
Cooke, who would become the first administrator of the Rural Electrification Administration in 1935, had studied rural electrification since the 1920s, first in Pennsylvania and then in New York during FDR’s governorship there.
The president brought Cooke to Washington in 1933, but he had to cool his heels for months while other New Deal programs took up all the air in the Oval Office. Finally, Secretary of the Interior Harold L. Ickes gave Cooke the green light to write a national rural electrification proposal to present to the president.
The result was the “12-Minute Memo,” a succinct, forceful policy document made even more appealing by water-color illustrations of bright red barns and a dramatic black-and-white striped cover designed to stand out amid a sea of government paperwork.
Cooke noted that more than 5 million of the 6 million farms in the U.S. were “entirely without electric service,” and private utilities won’t take on the problem. “[O]nly under Government leadership and control is any considerable electrification of ‘dirt farms’ possible.”
In “How [to] Make the Start,” one of the shortest of the memo’s 14 sections, he says the government could spend $25,000 or $50,000 on a survey, but a $100 million investment “actually to build … rural projects would exert a mighty influence.”
And this could be done without stepping on the toes of established utilities.
“This plan calls for entering territory not now occupied [Cooke’s italics] and not likely to be occupied … by private utilities.”
The next six sections—“Source of Power for Rural Services,” “Distribution Lines,” “Large Use the Key to Lower Rates,” “Rates,” “Distance Between Farms” and “Financing of Lines”–are the heart of Cook’s proposal, and they make the economic case for federal rural electrification.
Cooke argues that sufficient power supply could come from contracts with private utilities, local diesel plants or hydropower.
“The electric current itself [retail], in any case, can be made available to the rural population at a figure considerably below what is charged for it on existing rural lines.” He assumes 2 cents or less per kilowatt-hour.
Distribution lines could be built for $500 to $800 a mile, and this cost could be amortized in 20 years at an interest rate of 4 percent. Cooke does not say much about transmission.
He asserts in “Large Use the Key to Lower Rates” that farmers “must learn to substitute [electricity] for human labor” to make rural electrification economically viable. Otherwise high rates would be a disincentive to electrify. This was why for decades, co-ops had power use advisors on staff and why in the early 1950s, NRECA created the cartoon character Willie Wiredhand, a play on the idea that electricity was the new hired hand on the American farm.
Cooke’s proposal also established the consumer-density standard of three consumers per mile of line (REA loan applications that did not meet this minimum were not approved) and predicted the emergence of consumer-owned local providers of electricity: “farmers’ mutuals operating without profit.”
These homegrown utilities “should receive Federal and/or State aid in the form of expert engineering, accounting and management advice, as farmers are now advised by experts in farm management….”
He also envisioned REA itself and its loan program. Such a federal agency would employ “socially minded electrical engineers, who, having standardized rural electrification equipment, will cooperate with groups within the several states in planning appropriate developments.” Where federal financing was needed it would be self-liquidating.”
“The ‘12-Minute Memo’ was the document that convinced Ickes and FDR of the desirability and ‘do-ability’ of rural electrification,” NRECA says in its 1984 photo book about rural electrification’s first 50 years, The Next Greatest Thing.
The memo led directly to the executive order FDR signed on May 11, 1935, creating REA.
Source: The Next Greatest Thing