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Reviewed by:
  • Selling Power: Economics, Policy, and Electric Utilities Before 1940 by John L. Neufeld
  • Robert Lifset (bio)
Selling Power: Economics, Policy, and Electric Utilities Before 1940. By John L. Neufeld. Chicago: University of Chicago Press, 2016. Pp. 336. Hardcover $60.

Neufeld has written a history of the structure of the electric utility industry from its earliest days to 1940. As an economist, he is focused on the nature of the business and the political and policy contexts in which it operates.

Of particular interest to historians of science and technology, Neufeld examines the technical aspects of electricity production, but because this examination is not followed by an explanation of how the technology influenced the shape of the industry, it feels superfluous. [End Page 976]

Neufeld covers all the expected topics: Thomas Edison and the battle between AC and DC current; the struggle between private and public ownership; the emergence of state regulatory commissions; the debate between Giant and Super Power; Samuel Insull and the rise of public utility holding companies; the reforms of the New Deal and the death of public utility holding companies; the Tennessee Valley Authority and the expansion of federal hydroelectric dams; and rural electrification.

This book is at its best in explaining how electric utilities priced the electricity they sold (the theory and intentions behind different pricing models) both before and after the rise of state regulation and recognized monopolies. The book also does a wonderful job describing how public utility holding companies worked—how they made it easier to acquire financing but were also used to undermine state regulation to defraud customers and investors.

The heart of this book covers the significant changes that took place in the 1930s. Holding companies were killed, and in an effort to address the problems identified by an intensive Federal Trade Commission report, new federal regulation and supervision were placed with the Federal Power Commission. The Tennessee Valley Authority began building dams and buying private utilities. It was enough for the president of the Edison Electric Institute (an industry trade group) to declare that his industry had been singled out for destruction because "the President has an obsession on the subject" (p. 220).

The truly innovative changes during the New Deal came with hydro-power and rural electrification. Neufeld found that private utilities were unwilling to extend service to rural areas not because it was uneconomic but because rural electrification would not quickly pay for itself. Private companies were unwilling to take the same risks they had undertaken for residential and urban customers. When private utilities proved unwilling to work with federal government on rural electrification, the Rural Electrification Administration (REA) turned to rural cooperatives. As a result, the number of cooperatives distributing electricity rose significantly in the 1930s. REA engaged in significant oversight and supervision of the cooperatives while also lending considerable technical and legal expertise. There would not be much of an electrical cooperative movement in the United States without REA.

Much of the material found in this book has been covered before, but Neufeld's command of economics and his deep reading of the primary sources produce a work notable for its willingness to render judgements. Was state regulation of electric utilities a success? Yes, but it was significantly flawed. Were Giant and/or Super Power workable? No. Did the Public Utility Holding Company Act (with its infamous 'death sentence' clause, which rendered illegal any holding company owning non-contiguous electric utilities that spanned beyond a single state) go too far? No. Did [End Page 977] TVA make a difference to the economic well-being of the region it served? Not much. Was it necessary? It would have been extremely difficult and highly unlikely to create an integrated system of hydroelectric dams over a large service area absent the federal government. Did farm electrification require the Rural Electrification Administration? No. Rural electrification could pay for itself. But private utilities became risk averse as they became monopolies. REA threatened this, prodding many private utilities to extend service to rural areas.

Selling Power is a welcome addition to the growing scholarship on the history of electrification.

Robert Lifset

Robert Lifset is an associate professor of history in...

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Additional Information

ISSN
1097-3729
Print ISSN
0040-165X
Pages
pp. 976-978
Launched on MUSE
2018-12-19
Open Access
No
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