During the 1930s, the majority of the rural United States did not have electricity. The existing providers of electricity did not feel it was feasible or profitable to run electric lines to rural areas. On May 11, 1935, President Franklin Roosevelt signed Executive Order No. 7037 which established the Rural Electrification Administration (REA). In 1936, the REA was passed and the lending program began. It provided money in the form of loans to electrify the rural United States. Investor-owned utilities were not interested in the federal loans to serve rural, low-populated areas in the United States.
However, farmer-based cooperatives were turning in loan applications. Rural Americans had joined together to form these cooperatives. REA realized electric cooperatives were going to be what it took to make rural electricity happen. In 1937, REA drafted the Electric Cooperative Corporation Act, a model law that could be adopted to form the operation of not-for-profit, member-owned electric cooperatives.