Changes

==Origins==

==Origins==

The RFC was Hoover's most important attempt to deal with the depression. It was proposed by Hoover and created by Congress in January 1932. The collapse in the value of  assets combined with demands from panicky depositors to get their money out meant that many banks that were otherwise solvent, hoarded their money and refused to make loans.  It was much like the [[Financial Crisis of 2008]]. The RFC could make loans to banks, insurance companies and railroads. The Emergency Relief and Construction Act of  July 21, 1932, enlarged its power to allow for loans to state government and to farm agencies. The immediate aim was to restore confidence in  financial institutions generally and encourage them to start lending again, prevent ruinous bankruptcies that would further destabilize the shaky economy, and--hopefully-- revive the economy  through the restoration of credit.  The RFC was capitalized at $500 million (comparable in size to $75 billion in 2009), provided by the  federal government, and it was empowered to sell $3.3 billion (comparable to $500 billion in 2009) of debentures. Through  the end of the Hoover administration $2.2 billion was actually loaned to authorized  borrowers (comparable to $350 billion). The RFC saved many railroads, banks, and insurance companies. Democrats limited its effectiveness by overly stringent security requirements for loans and by the decision of Congress to require public disclosure of borrowers, which virtually forced a bank to admit publicly it was in trouble.  

The RFC was Hoover's most important attempt to deal with the depression. It was proposed by Hoover and created by Congress in January 1932. The collapse in the value of  assets combined with demands from panicky depositors to get their money out meant that many banks that were otherwise solvent, hoarded their money and refused to make loans.  It was much like the [[Financial Crisis of 2008]]. The RFC could make loans to banks, insurance companies and railroads. The Emergency Relief and Construction Act of  July 21, 1932, enlarged its power to allow for loans to state government and to farm agencies. The immediate aim was to restore confidence in  financial institutions generally and encourage them to start lending again, prevent ruinous bankruptcies that would further destabilize the shaky economy, and--hopefully-- revive the economy  through the restoration of credit.  The RFC was capitalized at $500 million (comparable in size to $75 billion in 2009), provided by the  federal government, and it was empowered to sell $3.3 billion (comparable to $500 billion in 2009) of debentures. Through  the end of the Hoover administration $2.2 billion was actually loaned to authorized  borrowers (comparable to $350 billion). The RFC saved many railroads, banks, and insurance companies. Democrats limited its effectiveness by overly stringent security requirements for loans and by the decision of Congress to require public disclosure of borrowers, which virtually forced a bank to admit publicly it was in trouble.  

==Operations==

==Operations==

The RFC advanced $2 billion in loans to  state and local governments and to banks, railroads, farm  mortgage  associations, and other businesses, funding, for example, the construction of the original Hayden Planetarium. [[Thomas G. Corcoran]] received a placement in the Reconstruction Finance Corporation when Hoover was President.  

The first leaders were M. Eugene Myers, Paul Bestor, and Charles Dawes. In summer 1932 Hoover put Atlee Pomerene in charge. Roosevelt turned to flamboyant Houston banker [[Jesse Jones]].

The RFC also had a division that would give the states loans for emergency relief needs.

The RFC advanced $2 billion in loans to  state and local governments and to banks, railroads, farm  mortgage  associations, and other businesses, funding, for example, the construction of the original Hayden Planetarium.  

The RFC was bogged down in bureaucracy and failed to disburse many of its funds. It failed to stem the tide of mass unemployment of the [[Great Depression]]. The failure of the RFC helped to lead to the election of [[Franklin Delano Roosevelt]].

The RFC played a major role in creating the system of work relief in the states that was continued and expanded by the [[New Deal]]. Hoover and Roosevelt used the RFC to pump money into the state's relief program by extending loans to businesses and local government projects. It established a federal agency in local communities which provided a reservoir of experienced personnel to implement expanding New Deal programs.<ref> Daniel C. Vogt, "Hoover's RFC In Action: Mississippi, Bank Loans, and Work Relief, 1932-1933." ''Journal of Mississippi History'' 1985 47(1): 35-53. 0022-2771  </ref>

==New Deal==

==New Deal==

During the [[New Deal]] era, the Reconstruction Finance Corporation was given a blank check appropriation by Congress and authority to borrow money. It borrowed twenty or more billions. The RFC would buy the stock of a new corporation and lend it money, as much as­ ten, fifty or a hundred million dollars, billions in some cases. Thus the Executive branch was able to bypass the Constitutional power afforded to Congress. <ref>''The Roosevelt Myth'', Book 3, Ch. 4, [http://www.rooseveltmyth.com/cgi-bin/framed/2767/book/fdrmyth_Chapter_Four___Toward_the_Precip.htm ''Toward the Precipice''], John T. Flynn, Fox and Wilkes, 1948.</ref>

During the [[New Deal]] era, the Reconstruction Finance Corporation was given a blank check appropriation by Congress and authority to borrow money. It borrowed twenty or more billions. The RFC would buy the preferred stock of an old railroad or a new corporation and lend it money, as much as­ ten, fifty or a hundred million dollars, billions in some cases.  

==World War II==

==World War II==

*[[War Assets Administration]]

*[[War Assets Administration]]

==Further reading==

==Further reading==

* Jones, Jesse H. ''Fifty Billion Dollars: My Thirteen Years With R.F.C.'' (1951)

* Jones, Jesse H. ''Fifty Billion Dollars: My Thirteen Years With R.F.C.'' (1951), by the long-time head

* Olson, James S. ''Herbert Hoover and the Reconstruction Finance Corporation, 1931-1933'' (1977).

* Olson, James S. ''Herbert Hoover and the Reconstruction Finance Corporation, 1931-1933'' (1977).