By late 1935, Cooke realized that neither private utilities nor municipalities could lead the effort to electrify rural America. He would have to work with the farmers themselves, and there was one logical unit of coordination that he could tap. Farmers had long formed cooperatives to further their collective interests. In 1935, there were over 10,700 unique co-ops, with membership exceeding three million. These co-ops were collectively owned by farmers, who were both customers and shareholders. Co-ops could harness farmers’ bargaining power when buying equipment, or defray the cost of marketing products like milk and eggs. A handful of them even did electrical work, like the Alcorn County Electric Power Cooperative in Mississippi, but before the REA, these were the exception.
In 1936, Congress passed the Norris-Rayburn Act, establishing the REA as an independent agency. By then, they had a plan for vastly expanding the network of rural electrical cooperatives. Co-ops would apply to the REA for 20-year loans at 2.88%. The REA would make sure their plans were feasible, and connect successful applicants with contractors, engineers, and advisors. The REA stayed in touch with cooperatives at every stage — they reviewed construction plans, helped audit their books, and coordinated their purchases. They even ran correspondence accounting courses and management training programs to help farmers run their cooperatives more efficiently. But in the end, the heavy work would fall to the farmers.
The average electrical co-op was small, about 800 members, and covered an area of approximately 300 square miles. Their core staff was also minimal: one manager, one bookkeeper, and a board of directors numbering no more than 15. Hardly any of them had prior experience in construction or electrical work. Armed with financial, technical, and legal assistance from the REA, co-ops still had to figure out how to help members struggling in the wake of the Great Depression make their payments. Like Cooke, they embraced a flexible, outcome-oriented approach. Often, cooperatives allowed members to pay dues in labor. Some groups bargained with local utilities, who furnished the necessary line construction in return for guaranteed minimum monthly bills. Others reversed that scheme, opting to construct the line themselves, and then sell it to the utility to operate. The right method was whatever worked.
By 1936, just one year after the creation of the REA, farmers had installed more than 25,000 miles of rural lines. By mid-year, the REA had authorized 104 projects — 66 of which were operated by cooperatives. As Cooke anticipated, these lines were built at a much lower cost than the utilities had estimated.
