Unlike their counterparts in cities, rural residents were expected to advance the financing for the necessary infrastructure to the firm supplying electrical power from a distant location.
R.E.A. loans furnished the incentive for ruralelectric cooperatives to form and connect to the existing electrical network at rates comparable to the national average.
R.E.A. cooperatives quickly became one of the largest capital investment projects of the New Deal, and low-cost financing for construction of electrical supply infrastructure was the key provision of the program (Brown, 1980, p 41).
The REA was created (1935) by executive order as an independent federal bureau, authorized by the Congress in 1936, and later (1939) reorganized as a division of the U.S. Dept. of Agriculture.
To implement those goals the administration made long-term, self-liquidating loans to state and local governments, to farmers’ cooperatives, and to nonprofit organizations; no loans were made directly to consumers.
In 1949 the REA was authorized to make loans for telephone improvements; in 1988, REA was permitted to give interest-free loans for job creation and ruralelectric systems.
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