Changes

==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 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.  

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.  RFC dispersed $1.5 billion in 1932, $1.8 billion in 1933, and $1.8 billion in 1934. Loans and subsidies reached $10.6 billion by 1935 (in 1934 the entire GDP was $65 billion). 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.<ref>  Sprinkel (1952)</ref>

 

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.<ref> Olson 1988</ref>. The RFC was almost closed down when it was reinvigorated to deal with the recession on 1937, and again in 1940 when Roosevelt advocated the "Arsenal of Democracy" plan to expand munitions production.

 

The RFC 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.

 

Roosevelt encouraged states to set up public authorities that would borrow money from RFC or [[PWA]] for major projects. Many states did so. About half of Pennsylvania's fifty municipal authorities received federal assistance. Between 1933 and 1935, the state of New York created fifteen authorities (compared to 5 previously). Eleven New York authorities sold bonds to the RFC or PWA, and seven received federal grants. Loans funded the Lower Colorado River Authority (a Texas cousin of TVA), the state-owned spa at Saratoga Springs, NY, the Pennsylvania Turnpike, the Hayden Planetarium, the Seattle Street Railways, and scores of rural electrification and irrigation districts. In New York state, [[Robert Moses]]'s empire of highway, bridge, tunnel, and park authorities were heavy borrowers. Moses focused on

self-liquidating projects (tolls or user charges were used to pay off construction debts.) Moses gave high priority to the [[Triborough Bridge]] project, and drafted the state legislation establishing an authority to build it. Financing the initial costs of the bridge, including approaches and connections, was shared with New York City. <ref> Annmarie Hauck Walsh, ''The Public's Business: The Politics and Practices of Government Corporations.'' (1978) p. 28, 212 </ref>

==World War II==

==World War II==