The Reconstruction Finance Corporation (RFC) was an independent agency of the United States government chartered during the administration of Herbert Hoover in 1932. It was modeled after the War Finance Corporation of World War I. The agency gave $2 billion in aid to state and local governments and made loans to banks, railroads, farm mortgage associations, and other businesses. The loans were nearly all repaid. It was continued by the New Deal and played a major role in handling the Great Depression in the United States and setting up the relief programs that were taken over by the New Deal in 1933. (Sprinkel 1952) Independent agencies of the United States government are those that exist outside of the departments of the executive branch. ... Herbert Clark Hoover (August 10, 1874 – October 20, 1964), the 31st President of the United States (1929–1933), was a world-famous mining engineer and humanitarian administrator. ... The War Finance Corporation was created by an congressional act of April 5, 1918, to give financial support to industries essential to the WW1 war effort and to banking institutions that aided such industries. ... Wikiquote has a collection of quotations related to: New Deal For other uses of old Deal and The New Deal, see New Deal (disambiguation). ... ]The Great Depression was a decade of unemployment, low profits, low prices, high poverty and stagnant trade that affected the entire world in the 1930s. ... Wikiquote has a collection of quotations related to: New Deal For other uses of old Deal and The New Deal, see New Deal (disambiguation). ...

It dispersed $1.5 billion in 1932, $1.8 billion in 1933, and $1.8 billion in 1934. Then it dropped to about $350 million a year. On the eve of World War II it greatly expanded to build munitions factories, dispersing $1.8 billion in 1941. The total from 1932 through 1941 was $9.465 billion.(Sprinkel 1952)

Hoover appointed Atlee Pomerene of Ohio to head the agency in July 1932. Hoover's reasons for his surprising reorganization of the RFC included: the broken health and resignations of M. Eugene Myers, Paul Bestor, and Charles Gates Dawes; the failure of banks to perform their duties to their clientele or to aid American industry; the country's general lack of confidence in the current board; and Hoover's inability to find any other man who had the ability and was both nationally respected and available. (Shriver 1982) Atlee Pomerene (December 6, 1863 _ November 12, 1937) was a Democratic politician from Ohio. ... Charles Gates Dawes (August 27, 1865–April 23, 1951) was the 30th Vice President of the United States. ...

The RFC was bogged down in bureaucracy and failed to disperse many of its funds. It failed to reverse the growth of mass unemployment before 1933. Butkiewicz (1995) shows that the RFC initially succeeded in reducing bank failures, but the publication of the names of the recipients of loans beginning in August 1932 (at the demand of Congress) significantly reduced the effectiveness of its loans to banks because it appeared that political considerations had motivated certain loans. Partisan politics thwarted the RFC's efforts, though in 1932 monetary conditions improved because the RFC slowed the decline in the money supply. The Politics series Politics Portal This box:      Bureaucracy is a concept in sociology and political science referring to the way that the administrative execution and enforcement of legal rules are socially organized. ...

Starting 1933 Franklin Delano Roosevelt kept the agency, increased the funding, streamlined the bureaucracy, and used it to help restore business prosperity, especially in banking and railroads. He appointed Texas banker Jesse Jones as head, and Jones turned RFC into an empire with loans made in every state. (Olson 1988) Franklin Delano Roosevelt (January 30, 1882–April 12, 1945), 32nd President of the United States, the longest-serving holder of the office and the only man to be elected President more than twice, was one of the central figures of 20th century history. ... Jesse Holman Jones Jesse Holman Jones (also known as Jesse H. Jones) (April 5, 1874 – June 1, 1956) was a Houston, Texas politician and entrepreneur. ...

The RFC also had a division that gave the states loans for emergency relief needs. In a case study of Mississippi, Vogt (1985) examined two areas of RFC funding: aid to banking, which helped many Mississippi banks survive the economic crisis, and work relief, which Roosevelt used to pump money into the state's relief program by extending loans to businesses and local government projects. Although charges of political influence and racial discrimination were levied against RFC activities, the agency made positive contributions and established a federal agency in local communities which provided a reservoir of experienced personnel to implement expanding New Deal programs.

World War II

President Roosevelt merged the RFC, Board of Economic Warfare (BEW), and the Lend-Lease Office together under the direction of Leo Crowley, former head of the Federal Deposit Insurance Corporation (FDIC), which was one of the landmarks of the New Deal. Oscar Cox, a prime author of the Lend-Lease Act, general counsel of the Foreign Economic Administration joined as well. Lauchlin Currie, formerly of the Federal Reserve Board staff, was the deputy administrator to Crowley. The Office of Administrator of Export Control was established by Presidential Proclamation 2413, July 2, 1940, to administer export licensing provisions of the act of July 2, 1940 (54 Stat. ... The Lend-Lease program was a program of the United States during World War II that allowed the United States to provide the Allied Powers with war material without becoming directly involved in the war. ... The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency created by the Glass-Steagall Act of 1933. ... The Lend-Lease program was a program of the United States during World War II that allowed the United States to provide the Allied Powers with war material without becoming directly involved in the war. ... The Foreign Economic Administration (FEA) 1940-47 The Office of Arms and Munitions Control established in the Department of State to administer provisions of Joint Resolution 67 (49 Stat. ... Lauchlin Currie in 1939 Lauchlin Bernard Currie (October 8, 1902 – December 23, 1993) was a Canadian-born economist from New Dublin, Nova Scotia, Canada, a U.S. economist, and an alleged Soviet Agent. ... The Federal Reserve System is headquartered in the Eccles Building on Constitution Avenue in Washington, DC. The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central bank of the United States. ...

The RFC established eight new corporations, and purchased an existing corporation. The eight RFC wartime subsidiaries are Metals Reserve Company, Rubber Reserve Company, Defense Plant Corporation, Defense Supplies Corporation, War Damage Corporation, U.S. Commercial Company, Rubber Development Corporation, Petroleum Reserve Corporation. These corporations were involved in funding the development of synthetic rubber, construction and operation of a tin smelter, and establishment of abaca (Manila hemp) plantations in Central America. Both natural rubber and abaca (used to produce rope products) were produced primarily in south Asia, which came under Japanese control. Thus, these programs encouraged the development of alternative sources of supply of these essential materials. Synthetic rubber, which was not produced in the United States prior to the war, quickly became the primary source of rubber in the post-war years.

From 1941 through 1945, the RFC authorized over $2 billion of loans and investments each year, with a peak of over $6 billion authorized in 1943. The magnitude of RFC lending had increased substantially during the war. Most lending to wartime subsidiaries ended in 1945, and all such lending ended in 1948.

The Petroleum Reserves Corporation was transferred to the Office of Economic Warfare, which was consolidated into the Foreign Economic Administration, which was transferred to the Reconstruction Finance Corporation and changed to the War Assets Corporation. The War Assets Corporation was dissolved as soon as practicable after March 25, 1946. TIts The Office of Administrator of Export Control was established in the United States by Presidential Proclamation 2413, July 2, 1940, to administer export licensing provisions of the act of July 2, 1940 (54 Stat. ...

Bibliography

• Barber, William J. From New Era to New Deal: Herbert Hoover, the Economists, and American Economic Policy, 1921-1933. (1985).
• Butkiewicz, James L. "The Impact of a Lender of Last Resort During the Great Depression: the Case of the Reconstruction Finance Corporation." Explorations in Economic History 1995 32(2): 197-216. Issn: 0014-4983
• Jones, Jesse H. Fifty billion dollars;: My thirteen years with the RFC, 1932-1945 (1951) detailed memoir by longtime chairman
• Paul A. C. Koistinen. Arsenal of World War II: The Political Economy of American Warfare, 1940-1945 (2004)
• Mason, Joseph R. "The Political Economy of Reconstruction Finance Corporation Assistance During the Great Depression." Explorations in Economic History 2003 40(2): 101-121. Issn: 0014-4983 Fulltext in Ingenta
• Olson, James S. Herbert Hoover and the Reconstruction Finance Corporation, 1931-1933 (1977).
• Olson, James S. Saving Capitalism: The Reconstruction Finance Corporation and the New Deal, 1933-1940. Princeton U. Press, 1988. 246 pp.
• Shriver, Phillip R. "A Hoover Vignette," Ohio History 1982 91: 74-82. ISSN: 0030-0934
• Beryl Wayne Sprinkel. "Economic Consequences of the Operations of the Reconstruction Finance Corporation." The Journal of Business of the University of Chicago Vol. 25, No. 4 (Oct., 1952), pp. 211-224 online at JSTOR
• Vogt, Daniel C. "Hoover's RFC in Action: Mississippi, Bank Loans, and Work Relief, 1932-1933." Journal of Mississippi History 1985 47(1): 35-53. Issn: 0022-2771
• Gerald Taylor White, Billions for Defense: Government Financing by the Defense Plant Corporation During World War II (1980)

• video: Strange, Eric, prod. "Brother, Can You Spare a Billion? The Story of Jesse H. Jones." (1999) Color and black and white. 57 min. Distributed by Houston Public Television, Houston, Tex.

External links

• Article on the RFC from EH.NET's Encyclopedia
• Oral History Interview with Hubert F. Havlik, Truman Presidential Library, June 20, 1973.