[Chp.1: REA Background][Chp. 2: Investor Owned Competition][Chp. 3: Va. Rural Elec. Coops]

Of all the changes to occur in the state during the New Deal years, perhaps none affected Virginians' lives more dramatically than the arrival of electrical power in the many rural areas of the state. Economically, electricity allowed for greater automation and mechanization of agricultural units. In the social sphere, it altered the way people lived in their own homes. With electricity, work and leisure activities inside the home no longer depended on daylight. Radio connected rural listeners to the larger world as never before. Refrigeration allowed for the safe storage of perishables. And household appliances created both new opportunities and new burdens for the women of the Commonwealth, for the time-saving elements of a washing machine or a vacuum were offset by the expectation that women regularly make use of these appliances. Electrical power, thus, thoroughly affected all aspects of people's lives. As Franklin Roosevelt declared in one speech, "Cold figures do not measure the human importance of electric power in our present social order. Electricity is no longer a luxury, it is a definite necessity."1 The coming of electricity, of course, was as transformative an event on Virginia farms as it was elsewhere in the Union. And as elsewhere, the process of wiring the rural areas proceeded rapidly after 1935. In 1934, only 7.6% of Virginia farms had electricity; by 1950, more than 90% did. One area of the state which experienced the revolutionary effects of electrification was the rural Piedmont of Central Virginia. Much of the effort to bring electricity to this area centered on Nelson County, where in 1937 citizens organized the Central Virginia Electric Cooperative in Lovingston, the county seat, in order to bring service to Nelson and several other counties in the region.2

REA Background: The CVEC's story begins not in Lovingston or Nelson County but in Washington with the creation of the Rural Electrification Administration. The REA was established to devise a long-term solution to the seemingly intractable problem of extending electricity to rural Americans. Between 1910 and 1935, the number of farms with electricity had risen only from two percent to eleven percent. Since Teddy Roosevelt's presidency, rural electrification was a much discussed and worried about issue. Roosevelt himself wrote that the "growing monopolization of water power" by private interests threatened pricing electric power beyond the means of most farmers. "The farmers above all should have...power, on reasonable terms, for cheap transportation, for lighting their homes, and for innumerable uses in the daily tasks on the farm."3 As Roosevelt had feared, private power providers proved unwilling to incorporate rural America in their future plans throughout much of the 1910s and 1920s. They believed that the capital expended in wires, poles, transformers, and labor to bring power to rural areas, which they estimated at $2,000 per mile, would be unjustified given that the low population density of rural communities denied the companies the efficiencies of serving many customers in a small area. Thus, in the few instances when they did service rural residents, private utilities required the customers to share the cost of establishing service by demanding large deposits--$500-$1,000--for the cost of the line and by charging much higher kilowatt per hour rates than in urban areas ($.09-$.10 for rural denizens, $.04-$.05 for urban dwellers).4

The private companies' policies also hinged on the belief that rural Americans had little need or desire for electric power. Therefore, the companies felt justified in charging higher rates in rural areas, for it was the only way they believed they stood a chance to make a profit by serving low-usage customers. In fact, the high rates themselves rather than a reluctance or lack of interest in electricity and the appliances it powered prevented more farm families for signing up for service. Private providers were among the last to figure this out. Among the first were appliance manufacturers, who readily advertised products such as refrigerators, motors, and electric plows in rural areas . For example, twenty percent of General Electric's magazine ads in 1925 appeared in publications which catered to farming families, such as Southern Agriculturalist and Farm Life. Thanks to efforts such as these, the pace of rural electrification accelerated in the early 1920s. As well, this change was part of the general modernization and mechanization of the American farm during that decade. Just as electrical lines became more common in rural areas, so too did automobiles and telephones. Nonetheless, because of the high cost of electricity, cars and phones were far more common on farms than electricity; thirty-three percent of farms had a car and forty percent had a telephone, but less than ten percent had electric power by the end of the 1920s.5

Rural electrification remained stalled in the early 1930s. With eleven percent of its farms electrified in 1935, the United States was far from a world leader in bringing electricity to rural residents; Germany, France, Holland, Denmark, New Zealand, and Tasmania all had higher levels of rural electrification than America. The situation, however, soon would change as a result of government intervention. The creation of the TVA in 1933 first suggested that Franklin Roosevelt's administration had an interest in power issues. By 1935, the idea of creating an agency which would specifically promote rural electrification had a broad array of supporters: farmers who wanted the power for themselves; anti-trusters keen on breaking the private utilities' stranglehold on power; and liberals and New Dealers who saw nothing wrong with such broad governmental intervention in economic matters. Roosevelt concurred with much of these sentiments. He also felt that electrification was an important social program which could vastly improve rural Americans' lives as well as believed that rural electrification could become an important relief program given the amount of labor extending service to farms would require. Thus, on May 11, 1935, Roosevelt issued Executive Order 7037 creating the REA as a temporary agency. The order gave the REA $100 million to spend in one year toward the goal of expanding the number of rural Americans with access to electric power (the passage of the Norris-Rayburn Act the following year extended the REA's term from one year to to ten years).6

The new agency immediately faced a serious dilemma as a result of the relief component of its mandate. While the executive order required the REA to draw ninety percent of its labor from unemployment rolls, the very nature of the work of stringing lines and setting poles required a considerable amount of skilled labor, much more than the relief lists could provide. Consequently, one of the REA's first and most important decisions was that rather than building and operating rural electrification systems, it instead would function as a lending agency which provided the capital to those willing to take on such work. From the perspective of REA Administrator Morris Cooke and other agency officials, the REA could most quickly fulfill its mission by offering financing for private utilities to expand into rural areas since these companies already had the skilled labor, technological know-how, and infrastructure in place to effect rural electrification.

Investor Owned Competition: Persuading private power companies to work with the REA, though, proved a difficult and ultimately futile endeavor on the part of the REA. Administrator Cooke sought to impress upon the companies that the federal government had no interest in taking over the utilities or in competing with them. His goal, summarized the New York Times after interviewing him upon his appointment as administrator, was "Cooperation with private utilities, continued regulation by utilities commissions, but not government ownership or control of power companies." As 1935 progressed, the issue of rates emerged as the primary obstacle to REA-private utility cooperation. In the summer of 1935, the utilities proposed to seek REA loans for building 280,000 miles of new lines to reach 300,000 previously unserved rural Americans. At an estimated cost of $963 per mile of line, the utilities put the project's total price tag at more than $113 million. Cooke balked at the industry proposal on the grounds that the proposed rate structure was too high and would thus be beyond the means of most farmers. Cooke unsuccessfully tried to convince the utilities that by keeping rates low and making power affordable for rural people they still would be able to turn a profit because of the many uses of electricity on the farm. The private executives rejected Cooke's argument out of hand. Not only did they believe that the REA's three percent loan rate, which was not much lower than the prevailing commercial rates, would make it difficult enough to make money from rural electrification, but they were leading proponents of the position that farmers had few uses for electricity. Thus, lowering rates, in their view, only would push their companies deeper into the red.7

With private companies hesitant to work with the REA on terms that it deemed acceptable, the agency reluctantly began to search for new partners in late 1935. It was a result, then, of the failure of REA-private utility cooperation that allowed farmer-run cooperatives to emerge as a central player in the REA's plans. The coops became the leading proponents of rural electrification in the 1930s; without them, the REA would have had difficulty carrying out its work. Unlike private utilities, the cooperatives were founded on the principle of ensuring their customers low rates and establishing themselves over broad areas. Additionally, cooperatives were not unknown to most rural Americans, for they had long history among farming people. Many rural residents, therefore, were immediately willing to join a cooperative in order to obtain power.

With private utilities on the sidelines, the cooperatives became the primary recipients of REA loans. Creating a cooperative, though, was not a quick process. Cooperatives were organized when citizens came together to apply for REA moneys. Once they had founded the cooperative, these citizens would then try to reach out to other people from as wide an area as possible in effort to persuade them to join the coop. After the cooperatives had determined, based on the location of its members, where it wanted to bring service, it submitted a loan application and maps of proposed lines to the REA for approval. If the REA then approved the proposal, it released funds to the cooperative. Using the REA loan, the coops then constructed and maintained lines and power stations for electrifying rural areas. The private companies were not completely uninvolved in the process, for the cooperatives had to come to them to purchase power, allowing the companies an opportunity to make a profit from such transactions Still, the cost of such purchases for the coops were kept as low as possible, as the companies were required to sell the power at wholesale rates. The cooperatives also minimized their expenses in a variety of other ways as well, such as by typically not paying for rights of way, utilizing a unique cyclometer which allowed customers to record their own meter readings and then send their payments through the mail, using prefabricated pole tops in the construction of lines, and setting poles 400 feet, rather than 200-250 feet, apart. Such cost-saving measures reduced the average national per mile cost of cooperative lines to $970, well below the $2,000 per mile cost predicted by private industry. Finally, after the cooperatives had obtained the power, they then sold it to their customers at affordable rates, using their income to pay off the REA loans. To further reduce the cost to the customer, the REA persuaded manufacturers to develop "lighting packages" with enough fixtures for a six-room house, a product which sold for the relatively low price of $18. At the end of the year, any surplus which the coop maintained was used to upgrade equipment, expand the coverage area, or allow for "refunds" to the membership.8

Virginia Rural Electric Cooperatives: In Virginia, as in the rest of the nation, the joint effort of cooperatives and the REA electrified large sections of the countryside. By 1939, twenty-one percent of Virginia's farms, triple the number four years earlier, had electricity, more than in any other southern state except for Texas and North Carolina. By mid-1941, that figure stood at thirty percent, not far below the national average of thirty-five percent. The success of the cooperative movement in Virginia was not preordained. In fact, until the state legislature passed the Electric Cooperatives Act, cooperatives were not legal entities in the Commonwealth. The law passed despite the objections from private power providers in the state, who complained that cooperatives were the first step toward the socialization of electricity. With the state's blessing, in January 1936 the Virginia Electric Cooperative in Bowling Green in Caroline County became the first of Virginia's sixteen coop's to be established in the 1930s.9

The Central Virginia Electric Cooperative in Lovingston was the sixth coop created in the state. Like other cooperatives, the CVEC was totally dependent upon the REA in its first years for the financing necessary to make electrification a reality. Likewise, the CVEC also had to fend off challenges from a private utility--in this case, the Appalachian Electric Power Company--which sought to win customers in the cooperative's intended service area. The CVEC, though, was able to maintain the integrity of its service area and the loyalty of its member-customers. This small, citizen-run organization, based in an isolated, one-street hamlet, was the catalyst for and the key player in the electrification of large sections of the Piedmont of Central Virginia. The CVEC held its first organization meeting on September 20, 1937, at Lovingston High School, the day that the State Corporation Commission officially chartered the coop to operate in ten Central Virginia counties. The meeting was attended by interested citizens, including the six men who had applied for the state charter. L. C. Dawson of Afton, S. T. Rodes of Nellys Ford, G. H. Whitehead of Roseland, James Sites of Gladstone, F. R. Moon of Warminister, and Fred J. West of Faber were all made directors of the new cooperative at the meeting. James H. Rogers of the Virginia Farm Board addressed the meeting, explaining how the REA worked, stressing the necessity of cooperation among the co-op members, and discussing, in the words of the minutes-taker at the meeting, "the rights of farmers to have electricity and why they should have it." As the last order of business, the assembled residents considered what to name the coop. After rejecting such names as the Rockfish Valley Electric Cooperative, the James River Electric Cooperative, and the Hub Electric Cooperative, they settled upon the Central Virginia Electric Cooperative, a name which reflected their views that the Nelson County-based organization would be an appropriate vehicle for bringing electric power to farmers and rural residents throughout the Piedmont. 10

Over the next three months, the newly born cooperative set out to attract residents in the era to become members and to develop precise plans for servicing its customers. As in other cooperatives, residents paid a $5 membership fee and agreed to terms which stated that "As soon as electric energy shall be available" they would purchase "not less than the minimum amount of electric energy which shall from time to time be determined by the Board of Directors." Members also agreed to give the CVEC "the necessary rights, privileges and easements to construct, operate, replace, repair and perpetually maintain on the property owned or occupied" by the member the coop's lines and equipment. The coop almost immediately began pursuing a $100,000 REA loan. As the board's application made clear, the CVEC would use the federal funds to construct 129 miles of line in Albemarle, Amherst, Appomattox, Nelson, and Rockbridge Counties in order to bring service to 400 customers. As well, the loan would be used to build a 150 KVA substation at Afton, with lines to Forks of Buffalo, and a second 150 KVA substation at Appomattox, with lines to Bent Creek and east along the James River to Howardsville. In late December 1937, the REA approved the loan, allowing the CVEC to borrow $100,000 at a rate of 2.88% to be paid off in twenty years. Construction began in the spring of 1938, as the CVEC asked the REA, which retained final authority over such decisions, to award the construction contract for the project to the Perkins-Barnes Construction Company of Blackstone, which had bid $99,780.18 for the work.11

Through the spring and summer of 1938, the CVEC was preparing for the arrival of electricity in the area. Construction continued at a feverish pace, as the contractors roamed over the 129 miles setting poles and stringing lines. In July, the board applied for a $10,000 installation loan from the REA. Because of their members' unfamiliarity with electricity and electric appliances, the REA sought the funds to help acclimate them to their new lifestyle. As the board explained, the CVEC would use the new loan to "initiate and carry out a plan to assist such of its customers as may desire assistance to wire their premises and to install therein plumbing appliances and fixtures." The board also contracted that summer with the Westinghouse Electric Supply Company for $4,769.48 worth of meters. Finally, on September 16, 1938, the CVEC energized its first lines from Afton to the store of H. L. Foster. Worried that nearby residents were unaware of the dangers of electrical lines and transformers, the board asked the contractor "to hook-up a light bulb at the transformer near Farrar's store on Rt. 151 so people would know the line was hot."12

The CVEC grew in popularity and expanded its service area during the rest of 1938 and 1939. Before the first line had been energized, the coop amended its charter so that it had authority to operate in twenty-seven counties--from Albemarle to Rockingham, Augusta to Prince Edward--instead of the ten listed in its original charter. In September 1938, the coop requested $100,000 for the construction of substations and ninety-two miles of line in Albemarle, Buckingham, Fluvanna, Goochland, and Louisa Counties. And in April 1939, for its most ambitious project yet, the board authorized seeking a $212,000 for 166 miles of new line in Albemarle, Amherst, Appomattox, Buckingham, Cumberland, Fluvanna, Louisa, Nelson, and Prince Edward Counties. The CVEC's membership rolls grew just as quickly as its service area. By September 1938, approximately six hundred new members had signed-up over the preceding several months. The board was acutely aware that expanding the CVEC's membership base was crucial to its success. Consequently, it always seemed to be engaged in a membership drive. To help with one campaign in late 1939, the board authorized that the CVEC obtain, presumably from the REA, 1,700 pamphlets on "The Importance and Meaning of Membership"; 500 "Member-Maker Folders"; 50 "Prove It for Yourself" cost calculators; and 500 "Dollars in Your Pocket" wiring folders. The membership campaigns paid off, for in July 1940, less than two years after its founding, the CVEC counted more than 1,400 members.13

The success of rural electric cooperatives nationwide in the 1930s did not go unnoticed by private power providers. That the citizen-run enterprises had managed to electrify broad swaths of the countryside without going bankrupt impressed the private utilities and piqued their interests anew in rural electrification. Beginning in the late 1930s, these companies used a variety of strategies to challenge the REA-funded cooperatives for customers. In some instances, they battled in court with the cooperatives over their rate structures. At other times, they won rulings from state commissions prohibiting cooperatives from building lines within a mile of existing lines or in communities of more than 1,500 people, both violations of the REA's guidelines. The most devious tactic private utilities employed to gain access to rural customers was to erect "spite lines" into wealthier rural areas that lay within, or very close to, a cooperative's intended service area. This type of action threatened the cooperative's ability to stay solvent because it typically needed access to these wealthier customers in order to cover the costs of serving poorer ones. That is, for a coop to remain financially viable it needed to cover a large geographic area so that the cost of serving lightly populated areas and poorer customers could be offset by bringing service into better off communities or sections which were more densely populated. By building a "spite line" to customers who were likely to allow the provider to turn a profit, the private companies prevented the cooperatives from achieving the area coverage that was so vital to their success. Such actions, which were also known as "skimming the cream," infuriated the targeted cooperative and the REA, especially because usually the private companies' efforts were so transparent. Though the companies claimed their efforts were justified because serving farms only had recently become profitable, their critics more persuasively contended that, in reality, they now had awakened to the possibility that there was profit to be made in rural electrification.14

Cooperatives in Virginia had problems with "spite lines" and skimming of the cream." The state's first coop, the Virginia Electric Cooperative, clashed with the Virginia Electric Power Company when Vepco sent a "spite line" through its service area in Caroline County. Much to Vepco's surprise, the REA intervened and temporarily suspended all its work in the state, a move which potentially could have cost the Commonwealth millions of dollars. The REA's actions prompted the State Corporation Commission to persuade Vepco to change its plans and to pledge not to interfere with the cooperative's work.15 The CVEC had similar difficulties in Amherst County with the Appalachian Electric Power Company. Although the exact cause and nature of the dispute between the two power providers is unclear, extant records suggest that Appalachian Power, after learning of CVEC's intention to erect lines in Amherst, laid plans to beat the coop to the area. When, in turn, the CVEC's board of directors discovered that it had been targeted by the private utility, they contacted Mr. Judd, the assistant to the REA administrator, to request that the agency "arrange for early construction on the Amherst end of the project and to rush the allotments for the Faber and Gladstone-Howardsville spurs." The REA seemed to respond favorably to the coop's request for fast action, for it immediately made several crews of staking engineers available to the coop. Nonetheless, it is unclear precisely how the crisis was resolved. What can be ascertained is that Appalachian Power's efforts adversely affected the CVEC, for the board of directors agreed in October 1938, a month after the first mention of the crisis in the board's minutes, to ask the REA for a written guarantee to go along with its verbal assurances that the agency and not the coop would absorb "any loss on the Amherst extension at the time of the controversy with the Appalachian Electric Power Company."16

The CVEC, like the other Virginia cooperatives, continued to have problems with Vepco and the Appalachian Power Company into the 1940s. In particular, the cooperatives complained that the private utilities kept wholesale prices too high and that their service was very erratic, leading to frequent power outages. To solve this problem, eleven of the cooperatives came together in 1948 to form a "super cooperative," the Old Dominion Power Cooperative. This new organization sought and received a $14 million dollar loan from the REA--the largest the agency ever had authorized--to build a generation and transmission system to supply power to the member coops. As planned, the power would come from dams built in Virginia and North Carolina. The cooperative, though, quickly became embroiled in a dispute with the State Corporations Commission because Vepco urged the commission not to charter the new coop on grounds that it would not provide cheaper power nor would provide members with better service. While the commission agreed with Vepco and denied the charter, it was a victory of sorts for the cooperatives because the threat of a new "super cooperative" prompted VEPCO to significantly lower its rates and improve its service to the cooperatives.17

1 Nye, Electrifying Rural America, 304 (quotes).

2 Heinemann, Depression and New Deal in Virginia, 125-127; Allen James Berry, "Rural Electric Cooperatives" (M.A. Thesis: University of Virginia, 1951).

3 Berry, "Rural Electric Cooperatives in Virginia," 9-10; Roosevelt quoted in Nye, Electrifying America, 288.

4 Stauter, "The Rural Electrification Administration, 1935-1945," 2-3 (quote); Brown, Electricity for Rural America, 3-6.

5 Nye, Electrifying America, 287-289; Ronald C. Tobey, Technology as Freedom: The New Deal and the Electrical Modernizatiion of the American Home (Berkeley, Ca.: University of California Press, 1996), 93, 47-48 (quotes).

6 Nye, Electrifying America, 287-289; Stauter, "The Rural Electrification Administration, 1935-1945," 9-16.

7 Stauter, "The Rural Electrification Administration, 1935-1945," 24-40 (quote), Brown, Electricity for Rural America, 47-51.

8 Brown, Electricity for Rural America,, 68-69; Heinemann, Depression and New Deal in Virginia, 125-126; Berry, "Rural Electric Cooperatives in Virginia," 137-139; Nye, Electrifying America, 314, 318.

9 Heinemann, Depression and New Deal in Virginia, 126; Berry, "Rural Electric Cooperatives in Virginia," 131-134; "Electric Cooperatives Act of 1936," reprinted from Acts of Assembly, Session 1936 [Senate Bill No. 251][Chapter 442], in Virginia Pamphlets, vol. 71 (Richmond, Va.: State Corporation Commission of Virginia, 1971), 3.

10 Central Virginia Electric Cooperative (hereafter cited as CVEC), "Annual Report," 1967, in the author's possession; "Order of State Corporation Commission," 22 September, 1937, 1; "Certificate of Incorporation of the Central Virginia Electric Cooperative," 20 September 1937, 6-9; and "Minutes of Organization Meeting of all R.E.A. Signers," 21-22, all in Central Virginia Electric Cooperative: Minutes of Board of Directors' Meetings. (hereafter cited as Minutes), Central Virginia Electric Cooperative, Lovingston, Virginia (note: page numbers refer to handwritten numbers in Minutes book).

11 CVEC, "Annual Report," 1967; "First Meeting of Incorporators and Members," 28 October 1937, 10-12; "CVEC Application for Membership,"' 13-14; "CVEC: Special Meeting of Members," 29 December 1937, 47-51; "CVEC: Special Meeting of Board of Directors," 14 April 1938, 71-80; "Special Meeting of Board of Directors," 3 May 1938, all in Minutes. The decisions to extend service from Appomattox to Bent Creek and to the Canody Store were not made until the 14th of April and the May 3rd meeting, just as construction was getting underway.

12 "CVEC: A Special Meeting of the Board of Directors," 20 July 1938, 96-106, Minutes; CVEC, "Annual Report," 1967 (quote).

13 CVEC, "Annual Report," 1967; "Certificate for Amendment to the Charter of the Central Virginia Electric Cooperative," 19 August 1938, 2-3; "CVEC: Special Meeting of Board of Directors," 6 September 1938 (124-153), 22 October 1938 (164-175), 3 April 1939 (193-210), 20 June 1939 (226-231), 8 December 1939 (293-296), 8 March 1940 (8-36), Minutes.

14 Berry, "Rural Electric Cooperatives in Virginia," 139-141; Brown, Electricity for Rural America, 68-73; Stauter, "The Rural Electrification Administration, 1935-1945," 29-30 (quote).

15 Berry, "Rural Electric Cooperatives in Virginia," 139-141; Heinemann, Depression and New Deal in Virginia, 126-127.

16 "CVEC: Special Meeting of Board of Directors," 6 September 1938, 124-153; "CVEC: Regular Meeting of the Board of Directors," 7 October 1938, 160-163 (quote).

17 Berry, "Rural Electric Cooperatives in Virginia," 144-149.