In the 1930s, electricity was widely available in cities but largely unavailable in farms, ranches, and other rural places. The impact of the Depression had revealed in stark terms the disparity in standards of living between city dwellers and rural residents. Congress responded to this problem, initially by providing funding for electrical service to rural areas and providing resources to make water available where droughts and water shortages had adversely effected rural residents. In the first attempt by the U.S. government to bring power to rural areas of the country, Congress passed the Rural Electrification Act in 1936. The law was proposed by Representative John E. Rankin and Senator George William Norris. The act signed into law by President Franklin Delano Roosevelt.
The Act established the Rural Electrification Administration (REA), with a provision of ten years. The REA was authorized to offer loans to companies willing to supply electricity to rural areas not already served by any other company. The U.S. government promised low-interest rates and tax credits to companies willing to construct and operate power generating plants and transmission lines to supply electricity to rural areas. Rural cooperatives emerged as the primary borrowers of REA funds, and by the end of 1936 approximately 100 companies in 26 states had received loans from the REA. A 1944 amendment to the Act increased loan terms from 25 to 35 years and made the REA a permanent public administration. In 1949, further amendments made rural telephone companies eligible to receive loans under the Act. In 1994, the Rural Electrification Administration was renamed the Rural Utilities Service (RUS), but the agency retained the same primary mission.