12/11/12 Reconstruction Finance Corporation ‑ Wikipedia, the free encyclopedia

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Reconstruction Finance CorporationFrom Wikipedia, the free encyclopedia

The Reconstruction Finance Corporation (RFC) was an independent agency of theUnited States government, established and chartered by the US Congress in 1932,Act of January 22, 1932, c. 8, 47 Stat. 5, during the administration of PresidentHerbert Hoover. 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 tobanks, railroads, mortgage associations and other businesses. The loans were nearlyall repaid. It was continued by the New Deal and played a major role in handling theGreat Depression in the United States and setting up the relief programs that weretaken over by the New Deal in 1933.[1]

Contents1 History 1932-19412 World War II3 Disbanding4 See also5 References6 Bibliography7 External links

History 1932-1941The Reconstruction Finance Corporation spent $1.5 billion in 1932, $1.8 billion in1933, and $1.8 billion in 1934. Then it dropped to about $350 million a year. On theeve of World War II (August 31, 1939), it greatly expanded to build munitionsfactories, disbursing $1.8 billion in 1941. The total loaned or otherwise disbursed bythe RFC from 1932 through 1941 was $9.465 billion.[1]

Hoover appointed Atlee Pomerene of Ohio to head the agency in July 1932. Hoover's

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reasons for his surprising reorganization of the RFC included: the broken health andresignations of Eugene Meyer, Paul Bestor, and Charles Gates Dawes; the failure ofbanks to perform their duties to their clientele or to aid American industry; thecountry's general lack of confidence in the current board; and Hoover's inability tofind any other man who had the ability and was both nationally respected andavailable. (Shriver 1982)

The RFC was bogged down in bureaucracy and failed to disburse much 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 thepublication of the names of the recipients of loans beginning in August 1932 (at thedemand of Congress) significantly reduced the effectiveness of its loans to banksbecause it appeared that political considerations had motivated certain loans.Partisan politics thwarted the RFC's efforts, though in 1932 monetary conditionsimproved because the RFC slowed the decline in the money supply.

Starting in 1933, President Franklin D. Roosevelt kept the agency, increased thefunding, 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)

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

World War IIPresident Roosevelt merged the RFC and the Federal Deposit Insurance Corporation(FDIC), which was one of the landmarks of the New Deal. Oscar Cox, a prime authorof the Lend-Lease Act, general counsel of the Foreign Economic Administration

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An identification nameplateon a motor formerly ownedby the Defense PlantCorporation

joined as well. Lauchlin Currie, formerly of the Federal Reserve Board staff, was thedeputy administrator to Leo Crowley.

The RFC established eight new corporations, andpurchased an existing corporation. The eight RFCwartime subsidiaries are Metals Reserve Company,Rubber Reserve Company, Defense PlantCorporation, Defense Supplies Corporation, WarDamage Corporation, U.S. Commercial Company,Rubber Development Corporation, PetroleumReserve Corporation. These corporations wereinvolved in funding the development of syntheticrubber, 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 ropeproducts) were produced primarily in south Asia, which came under Japanesecontrol. Thus, these programs encouraged the development of alternative sources ofsupply of these essential materials. Synthetic rubber, which was not produced in theUnited States prior to the war, quickly became the primary source of rubber in thepost-war years.

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

The Petroleum Reserves Corporation was transferred to the Office of EconomicWarfare, which was consolidated into the Foreign Economic Administration, whichwas transferred to the Reconstruction Finance Corporation and changed to the WarAssets Corporation. The War Assets Corporation was dissolved as soon aspracticable after March 25, 1946.

DisbandingRFC was "abolished as an independent agency by act of Congress (1953) and wastransferred to the Department of the Treasury to wind up its affairs, effective June,

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1954. It was totally disbanded in 1957."[2]

In 1991, Rep. Jamie L. Whitten (D-MS) introduced a bill to reestablish the RFC, butit did not receive a hearing by a congressional committee[3] and he did notreintroduce the bill in subsequent sessions.

See alsoResolution Trust CorporationFederal Emergency Management Agency

References1. ^ a b Sprinkel, Beryl Wayne (October 1952). "Economic Consequences of the Operations

of the Reconstruction Finance Corporation". The Journal of Business of the University ofChicago 25 (4): 211–224. JSTOR 2350206 (http://www.jstor.org/stable/2350206) .

2. ^ "Reconstruction Finance Corporation" (http://www.encyclopedia.com/doc/1E1-ReconFin.html) . The Columbia Encyclopedia (Sixth ed.). Encyclopedia.com. 2008..http://www.encyclopedia.com/doc/1E1-ReconFin.html. Retrieved October 9, 2010.

3. ^ Whitten, Jamie L. (March 19, 1991). "H.R.1462, Reconstruction Finance CorporationAct of 1991" (http://thomas.loc.gov/cgi-bin/query/z?c102:h.r.1462:) . Library ofCongress. http://thomas.loc.gov/cgi-bin/query/z?c102:h.r.1462:. Retrieved June 29, 2012.

BibliographyBarber, William J. (1985). From New Era to New Deal: Herbert Hoover, the Economists,and American Economic Policy, 1921-1933. Cambridge: Cambridge University Press.ISBN 9780521305266.Butkiewicz, James L. (April 1995). "The Impact of a Lender of Last Resort During theGreat Depression: the Case of the Reconstruction Finance Corporation". Explorations inEconomic History 32 (2): 197-216. doi:10.1006/exeh.1995.1007(http://dx.doi.org/10.1006%2Fexeh.1995.1007) . ISSN 0014-4983(//www.worldcat.org/issn/0014-4983) .—— (July 19, 2002). "Reconstruction Finance Corporation"(http://eh.net/encyclopedia/article/butkiewicz.finance.corp.reconstruction) . In Whaples,Robert. EH.Net Encyclopedia.

http://eh.net/encyclopedia/article/butkiewicz.finance.corp.reconstruction. Retrieved

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http://eh.net/encyclopedia/article/butkiewicz.finance.corp.reconstruction. RetrievedAugust 5, 2009.Jones, Jesse H.; Pforzheimer, Carl H. (1951). Fifty billion dollars: My thirteen years withthe RFC, 1932–1945. New York: Macmillan. OCLC 233209(//www.worldcat.org/oclc/233209) . detailed memoir by longtime chairmanKoistinen, Paul A. C. (2004). Arsenal of World War II: The Political Economy ofAmerican Warfare, 1940–1945. Lawrence, KS: University Press of Kansas.ISBN 9780700613083. shows how RFC financed many war plantsMason, Joseph R. (April 2003). "The Political Economy of Reconstruction FinanceCorporation Assistance During the Great Depression". Explorations in Economic History40 (2): 101–121. doi:10.1016/S0014-4983(03)00013-5(http://dx.doi.org/10.1016%2FS0014-4983%2803%2900013-5) . ISSN 0014-4983(//www.worldcat.org/issn/0014-4983) .Nash, Gerald D. (December 1959). "Herbert Hoover and the Origins of theReconstruction Finance Corporation". The Mississippi Valley Historical Review 46 (3):455-468. doi:10.2307/1892269 (http://dx.doi.org/10.2307%2F1892269) . ISSN 0161-391X (//www.worldcat.org/issn/0161-391X) . JSTOR 1892269(http://www.jstor.org/stable/1892269) .Olson, James S. (1977). Herbert Hoover and the Reconstruction Finance Corporation,1931–1933 (1st ed.). Ames, IA: Iowa State University Press. ISBN 9780813808802.—— (1988). Saving Capitalism: The Reconstruction Finance Corporation and the NewDeal, 1933-1940. Princeton, NJ: Princeton University Press. ISBN 9780691047492.Shriver, Phillip R. (1982). "A Hoover Vignette". Ohio History 91: 74-82. ISSN 0030-0934 (//www.worldcat.org/issn/0030-0934) .Vogt, Daniel C. "Hoover's RFC in Action: Mississippi, Bank Loans, and Work Relief,1932-1933 (1985). Journal of Mississippi History 47 (1): 35-53. ISSN 0022-2771(//www.worldcat.org/issn/0022-2771) .White, Gerald Taylor (1980). Billions for Defense: Government Financing by the DefensePlant Corporation During World War II. University, AL: University of Alabama Press.ISBN 9780817300180.‹The template Cite video is being considered for deletion.›

Strange, Eric, prod. (1999). Brother, Can You Spare a Billion? The Story of Jesse H. Jones(Color and black and white video). Houston, TX: Houston Public Television.

External linksOral History Interview with Hubert F. Havlik(http://www.trumanlibrary.org/oralhist/havlik.htm) , Truman Presidential

12/11/12 Reconstruction Finance Corporation ‑ Wikipedia, the free encyclopedia

6/6en.wikipedia.org/wiki/Reconstruction_Finance_Corporation

Library, June 20, 1973.Records of the Reconstruction Finance Corporation(http://www.archives.gov/research/guide-fed-records/groups/234.html)

Retrieved from "http://en.wikipedia.org/w/index.php?title=Reconstruction_Finance_Corporation&oldid=524545821"Categories: Reconstruction Finance Corporation Herbert HooverGovernment agencies established in 1932 New Deal agencies1957 disestablishments Defunct agencies of the United States governmentGovernment-owned companies of the United StatesAgencies of the United States government during World War II

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