Timothy Mitchell has written that economics makes its own world, using society as a laboratory in ways that normalize risky experiments. This is perhaps nowhere more evident than in the energy industries, and John L. Neufeld’s recent history, Selling Power: Economics, Policy, and Electric Utilities before 1940, eloquently demonstrates how this has played out in the arena of electricity. Rather than a history of plucky inventors uncovering the mysteries of electricity while enterprising businessmen waited in the wings to market their discoveries, Neufeld presents the story of how interest in commercial application drove technological and institutional development in the electricity industry from the beginning. Subsequent debates about the rights of private industry and responsibilities to the public led to ongoing experimentation with electricity economics throughout the twentieth century—indeed, Neufeld argues, we are still trying to get it right.

Selling Power is an important reference for anyone studying electricity history. As Neufeld explores the institution building and politicking through which networked electricity created markets, sparked policy reform, and remade the built environment, he also provides an introduction to the history of corporate finance, the stock market, regulation, and theories of public utilities across the twentieth century. In doing so, the book delivers a powerful lesson on how institutions and politics shape and are shaped by large-scale technological systems. Fittingly, the main weaknesses of this otherwise sophisticated history stem from Neufeld’s assumptions about economics.

Neufeld’s book begins, as many electricity histories do, with Thomas Edison. In Neufeld’s eyes, however, Edison’s genius lay not in his role as inventor, but in his abilities as an “organizer and promoter” (18). Edison’s key contribution, Neufeld argues, was to model electricity on the gas-lighting business, a commercially successful utility model that gave customers flexibility, allowed companies to bill for individual usage, and thrived as a centralized networked system.

Of course, centralized for-profit power brought both benefits and dangers. Neufeld explains the subsequent history of American electricity as one of competing economic hypotheses, in which each era was an attempt to solve the externalities of the previous one. Fundamentally, his narrative revolves around three models of distribution—private investor–owned utilities, nonprofit public systems, and independent generators—which weave in and out of tension with one another throughout the twentieth century. Municipal franchise agreements, state regulation, and federal power policies further complicate the playing field.

The book adds particular insight into the holding company system that came to dominate the electricity industry before the 1930s. Holding companies were, essentially, economic institutions that helped electric utilities and their suppliers finance capital-intensive investments. They did so by consolidating operating utility stock in a parent company, which lent smaller utilities legitimacy through association, as well as providing technical and administrative support (usually for a fee). As Neufeld shows through a series of case studies, this system remained functional and lucrative as long as the electricity industry was in a state of continuous growth, but the repackaging of securities and the subsequent competition this culture of consolidation spurred led to a fragile financial bubble. As investor interest in the electricity industry grew, parent companies scrambled to incorporate more and more subsidiaries, leading to holding companies acquiring holding companies and everything being overvalued and recapitalized. By 1929, the majority of electricity generated and sold in the United States created largely fictitious profits for seven super-holding companies in a “crazy quilt” geography of disconnected operating utilities (115).

Like Edison light bulbs, holding companies are a stock character in American electricity history, but they rarely get the attention Neufeld pays them as nuanced organizations. While he acknowledges that this highly leveraged system encouraged risky financial decisions that hurt the American public after the market crash of 1929, he also explains what holding companies could do that independent generating utilities could not.

Namely, holding companies coordinated network integration across large geographic regions. As Neufeld explains in his introductory chapter and touches on repeatedly throughout the book, in a capitalist political economy, networked electricity performs best as a single-ownership system. Because electricity cannot be stored, and transmission lines are expensive to build and maintain, those interested in marketing electricity as a commodity face unique challenges. It is prohibitively expensive to duplicate infrastructure, and it is most reliable to connect generation facilities so that they can provide backup supply at times of varying performance or demand. As Neufeld observes, however, “recognition that monopoly supply of electricity was needed joined the realization that monopoly power could be used to exploit customers and discourage the efficient use of electricity” (245). While other industrializing nations addressed this challenge by nationalizing their power systems, the already formidable community of American power magnates instead encouraged regulation at the state level. State regulation protected private utilities from destructive competition within their service area but discouraged network integration at a regional scale and beyond. The rise of holding companies subsequently solved key problems that regulation created for the private electricity industry: they eliminated the cost-accounting risks private companies faced in connecting infrastructure across protected service areas, and they bypassed prohibitions against electricity sales across state lines.

Yet the goal of holding companies was never to build coherent regional electricity networks. It was to build financial empires. Ultimately, it was in this attempt at economic world-making that Neufeld places their demise, sealed by the Public Utility Holding Company Act (PUHCA) of 1935. But while PUHCA ended the financial reach of particular holding companies, the economic experiments of the 1920s largely defined the rules of engagement for future electricity systems. As the federal government became more involved in extending electricity networks, Neufeld shows, it used the holding company system as both a foil and a model. This institutional influence led to federal interventions that also obsessed over the commodity pricing of electricity, as Neufeld documents through such politics as President Roosevelt introducing the Tennessee Valley Authority (TVA) as a “corporation clothed with the power of government but possessed of the flexibility and initiative of a private enterprise” (175). It is perhaps this convergence that leads Neufeld to conclude that electricity has not been a space of conflicting economic ideologies so much as it has been a game of getting the incentives right, a perspective that at times can read uncomfortably as pro-privatization.

Despite Neufeld’s largely nuanced reevaluation of the historical role of different electrical institutions, from holding companies to the TVA, there are some assumptions he does not question, largely related to the desirability of economic efficiency and its relationship to the public interest. The primacy of economic theory as an analytical framework drives the book’s narrative organization as well, and readers coming to this book from environmental history and other “energy humanities” fields may find the introduction and conclusion frustrating. Rather than situating the book in previous energy scholarship, Neufeld’s introduction is a primer in electricity generation and the economics of large-scale electricity systems—a helpful reference that he makes good use of throughout the book, but jarring if one is expecting the introduction to outline the book’s argument. Likewise, his conclusion mainly summarizes how the industry has changed since 1940.

This combination makes the book at times read more like a textbook than a historical monograph. While not a grave flaw, it does reveal Neufeld’s ideological orientation within the current politics of energy studies. Other historians have been less convinced, for example, that electricity as currently provided is a “necessity of life” (259), interpreting the electricity industry as rather constructing inequitable cultures of consumption with now-evident environmental and social externalities.^{Footnote 1} While Neufeld notes that faith in continual growth in the electricity industry has led to some bad investment decisions, he does not question the fundamental desirability of increasing energy usage as a part of the American way of life. The paradoxes of such assumptions are perhaps most visible in Neufeld’s treatment of federal interventions in rural electrification. Neufeld assesses the TVA and other federal programs as innovative interventions that “revealed a serious flaw in the existing structure of the electric utility industry, and [whose] creation eliminated that flaw” (203)—primarily because they created competition for building distribution lines to rural areas. By conflating success with market expansion, however, he fails to interrogate the influence of electrification on broader agricultural economics. As cultural historians of electricity have pointed out, the impact of mid-twentieth-century electrification programs on rural economies was not purely positive. “In practice,” as David Nye summarized it in Electrifying America, “new agricultural technologies that increased efficiency only aggravated the problems of chronic overproduction, low prices, tractored-out farms, and roads full of Okies heading for California.”^{Footnote 2}

Finally, the book has a tendency to cite economic practices of the present as valid metrics for judging the rationality of historical actors. This seems antithetical to the aims of other recent electricity histories, which use the changing economic cultures and contingent relationships of the past to denaturalize present institutional norms.^{Footnote 3} Given the time and detail Neufeld lavished on the motivations behind bygone institutions and proposals, I only wish he had indulged more in the historical counterfactuals and broader political economic analyses that other recent electricity histories have so provocatively raised.

Nonetheless, Selling Power remains a valuable exploration of the highly experimental and hotly contested path of electricity economics within early twentieth-century American political economy. By example, it makes a compelling invitation for more detailed historical attention to infrastructure financing and regulation.