This is a transcription of this speech made for the convenience of readers and researchers. One draft of the speech exists in the Senate Speech file of the John F. Kennedy Pre-Presidential Papers here at the John F. Kennedy Library. Page images of the draft can be found here.
Twenty-five years ago, the vision and determination of a small group of men brought into being the Rural Electrification Administration. It was born in a land where less than 10 percent of the farms had any electric lights - where there were no telephones on the farms - where power equipment for farming was almost unknown - and where every farm task was a back-breaking manual operation.
Today, as we celebrate the Silver Jubilee of the REA, we have considerable cause for satisfaction. Ninety-seven percent of all of the farms in America enjoy electric service. Rural telephone lines span the nation. The man who once could milk 8 to 12 cows a day can handle five times that many in an electrified dairy barn. For the whole farm family, the burdens have been lightened - the darkness and drudgery have been lessened - the recreational opportunities have been expanded.
There are those who say that now the fight for rural electrification is over - that the battles of the twenties and thirties have been won - that it is time to be content with the progress that has been made.
But I do not agree with these sentiments. And I am sure none of you do. From the record of the past 25 years, we know that we have only been in an age of consolidation - now the age of change and challenge are upon us. In the last 15 years we have seen the farmer’s consumption of power nearly quadrupled - from 90 kilowatt hours monthly to 350 kilowatt hours monthly. The next 15 years should see it doubled again. This means more efficient farming - higher farm income - and better living standards.
Moreover, there are still vast unserved areas. There are still homes without telephones. There are still farms without the benefits of electric power. Much more needs to be done.
For 25 years we have successfully repelled every attack upon the REA program. But it is an ironic fact that its very success now places it in jeopardy.
It is said that private utilities can now do the job. But private utilities will not run an electric line where there are only two consumers to the mile. Private utilities want the cream, not the skim-milk areas. Private utilities are necessarily more interested in serving their stockholders than in serving the nation’s farms.
The critics of REA continue their attack with a call for the use of "private sources" for REA funds. The greatest threat to REA is no longer represented by those who cry "socialism" at every mention of public power and REA. The more subtle, more dangerous attack is launched by those who profess to be its friends - those who praise its success and conclude that now it should be financed by private investment bankers.
But this argument completely misunderstands the nature and the purpose of the REA program. Congress did not pass this program to implement any banking theory. Their primary concern was with the farms of America - the economic health of our rural communities - and the modernization of our farm homes.
Finally, and of most critical importance today, there is the effort to saddle REA with high interest costs. The current drive to raise the 2 percent rate of interest on REA loans is not an isolated operation. For over a year now, we have been urged to remove the ceiling on government bond interest rates, to encourage higher rates on commercial loans, and to reduce the supply of money. A whole new emphasis on tight money and high interest has stifled our economic growth, retarded construction of our schools, promoted small business failures, and weakened our economy. The effort to raise REA interest rates is part and parcel of this same tight money, high interest rate policy - a policy which is already hurting REA co-ops and their members by forcing up the price they must pay for their homes, for their farm machinery, and for every other item they buy - particularly those they buy on the installment plan.
The REA co-ops of this country cannot fight the battle only to hold down their own interest rates. They must join the fight against high interest and tight money all along the line.
The proposal to charge REA co-ops 5 percent for their loans is only one phase of that fight. But it is an important one. If we can hold the line on REA interest rates, we can hold it elsewhere - and reverse these tight money policies that are robbing both farmers and consumers alike.
A 5 percent interest rate on REA loans would more than double the present rate. It would make expansion more difficult just when the new demands for power are at a peak. It would increase costs to the farmer at a time when existing costs have already squeezed rural income to an 18-year low.
A typical loan at the increased rate would add over one and one-half mills a kilowatt hour to the cost of power. It would add about $20 million to the cost of wholesale power purchased by rural electric co-ops. It would virtually destroy the feasibility of many loan applications.
Higher interest rates would prevent telephone and electric service to many areas - when no other method for providing this service exists. Private companies will not - quite understandably - service uneconomical areas. The current 2 percent interest charge makes it possible for the co-ops to service all areas - not just those that permit profitable private operation.
Finally, and perhaps more important, an increase in the interest rate on REA loans would virtually destroy REA’s generation and transmission program. Often the only way to get power to a co-op is to build new transmission lines and new generating capacity. If this cannot be done, the co-op must accept whatever terms the private power suppliers offer - and that usually means higher power costs and less dependable power sources.
The 2 percent rate was not considered too high when the Treasury was selling notes at one and one-half percent. Nor is the two and one-half percent interest rate the Treasury now pays upon civil service retirement funds considered too low - or the three percent the Treasury pays upon GI insurance trust funds.
The REA loan is not just another banking transaction. It is an investment in expanded energy resources - it is a step toward full equality between urban and rural America - it is assistance toward labor parity between the various segments of the economy. It benefits both the farmer who receives the loan and the industries from which he buys. There is a tendency to forget that the farmer is also a consumer.
Careful studies have shown that every dollar loaned to REA causes purchases of home electrical equipment of over $4. The average farm served by REA spends over $2500 for electrical appliances and electrical equipment. The demand generated by REA has been the source of industry and employment - not only in Wisconsin, but in Massachusetts and all parts of the country.
Even the private power companies find REA co-ops are among their best customers. In the past 10 years, the co-ops have purchased some 500 million dollars worth of power from private companies, and in the next few years, their purchases will increase to an annual rate of 100 million dollars a year. The private power lobby ought to think twice about destroying the efficiency of these costumers.
In short, the role of REA is as vital now, and will be in the years to come, as it has ever been in the past. We must resist every effort made to raise the interest rates, reduce government lending power or restrict operations. We must not be deceived by misleading propaganda or irrelevant theories.
For now, more than ever before, we need the leadership and vision of men like George Norris and Franklin Roosevelt. The challenges of the sixties - the challenges of REA in the nuclear age - demand more than just a consolidation of past gains. We need to be re-dedicated to the philosophy of growth - to the spirit of public responsibility for developing electric energy - and to the benefits conferred upon the entire nation by one of the greatest programs ever formulated in the thirties - the program of REA.