The harnessing of electric current has shaped nearly every aspect of modern life. In the early nineteenth century, advances by Alessandro Volta, William Nicholson and Anthony Carlisle, Sir Humphry Davy, Hans Christian Ørsted, Michael Faraday, and Zénobe-Théophile Gramme paved the way for widespread use of electricity in everyday life. In 1879, Joseph Swan and Thomas Edison separately demonstrated their inventions of an incandescent bulb, but it was Edison more than any other individual who recognized the potential for a new industry selling electric power.

In economics and economic history, the role of electricity in modern life receives most of the attention it deserves, for two reasons: first, because of its contribution to economic growth—often summarized under the moniker “general-purpose technology”—in which electricity led to the reorganization of the factory floor and household production, transformed the demand for labor and other inputs, and ultimately fueled rising living standards across the twentieth century; and second, because of the industry's unique characteristics, which present policymakers at all levels of government with considerable challenges, starting from the point of generation and ending with consumption by households or firms. Yet, attention to these issues has overshadowed the mix of economics, politics, and policy that gave rise to the particular form of the electricity industry that exists in a given country at a given point in time.

In the United States, the electric power industry as currently constituted grew out of the country's overlapping markets and political jurisdictions, long-standing policy and partisan debates, natural endowments, and technological prowess. In Selling Power: Economics, Policy, and Electric Utilities before 1940, John Neufeld masterfully tells the story of the industry's development from its founding in the late nineteenth century until World War II. In so doing, Neufeld provides an exemplary history that uses economics to understand the evolution of the industry, never ignores the role of politics, and provides a framing that makes insights from the past relevant for today.

From the industry's founding, Neufeld traces a path that starts with an early, disruptive change: the switch from direct current to alternating current. Direct current had been Edison's choice and he relied on its properties in his design for the industry's infrastructure. As the industry's first mover, and because of technological hiccups in the development of alternating-current equipment, Edison enjoyed initial success. However, the alternating-current model would eventually come to dominate the industry because of its ability to facilitate transmission over distance and greater efficiency in generation.

Edison's early contribution to the industry was his conception of an entire system for providing electricity and his recognition of the substantial investment this would entail. From the start, the establishment of the Pearl Street station in New York City in 1881 reflected the looming importance of securing financing for the future growth of the industry; Edison targeted as his first customers the individuals and firms at the country's financial center. Although Edison would be out of the industry and on to other ventures by the end of the nineteenth century, the pursuit of financing remained a powerful force shaping the structure and growth of the industry.

The expansion of electricity utilities during the Progressive Era meant that the industry would not be able to escape the pervasive skepticism of private enterprise. Neufeld describes two forms that this skepticism took in practice. The first was municipal ownership, in which local government took over responsibility for producing and distributing electricity. The second was regulation, initially at the local level through the granting of franchises and later at the state level through the establishment of commissions. While noting the drawbacks—both real and theoretical—Neufeld positively assesses the impact of state regulation, which helped to balance the benefits and costs of monopoly supply and also removed some of the potential for local corruption.

Progressive Era skepticism of the electricity industry reached its pinnacle during the 1920s, with attention focused squarely on the prevalence and practices of public-utility holding companies. These companies held controlling shares in many utilities, while producing no (or little) electricity and serving no (or few) customers directly. There were benefits to holding companies: Neufeld emphasizes access to financing, managerial expertise under certain conditions, and efficiency gains associated with large integrated networks. Yet, a report by the Federal Trade Commission (FTC) released in 1935 confirmed the view (in the eyes of critics) that the costs were still greater.

In 1935, the Public Utility Holding Company Act (PUHCA) was passed with the goal of restructuring the industry in light of the FTC's findings. Neufeld's assessment is worth quoting directly: “PUHCA drastically changed the structure of the electric utility industry, but the change was reactionary, not innovative. It sought to return the industry's structure to that which existed at least fifteen years previously” (p. 154). Other New Deal policies were more innovative. Here, Neufeld emphasizes the incentives the federal government provided to cooperatives for extending service to rural communities, which worked, and its new role as a regulator—although an assessment of its performance in this role awaits a new history for this later period.

The great achievement of Selling Power is in telling the story of a historically important industry while bringing together the major themes in economic history over the last several decades. Neufeld touches on the forces behind and the impact of technological change, the financing of large investments, the challenges faced by regulators and antitrust authorities in overseeing a sprawling and complex set of actors, and the role of policymakers and politicians in balancing competing interests while charting a path to the future. The history of the electricity industry shows that the tension between technology, finance, regulation, and politics can produce many benefits for society. At the beginning of the twenty-first century we face new challenges—in electricity, telecommunications, transportation, and elsewhere—for which the experience of our recent past will be a useful guide. Neufeld's book helps to ensure, at least initially, that we are headed in the right direction.