Reconstruction Finance Corporation

Reconstruction Finance Corporation (RFC), former U.S. government agency, created in 1932 by the administration of Herbert Hoover. Its purpose was to facilitate economic activity by lending money in the depression. At first it lent money only to financial, industrial, and agricultural institutions, but the scope of its operations was greatly widened by the New Deal administrations of Franklin Delano Roosevelt. It financed the construction and operation of war plants, made loans to foreign governments, provided protection against war and disaster damages, and engaged in numerous other activities. In 1939 the RFC merged with other agencies to form the Federal Loan Agency, and Jesse Jones, who had long headed the RFC, was appointed federal loan administrator. After Jones became (1940) Secretary of Commerce, Congress transferred (1942) the RFC to his department. When Henry Wallace succeeded (1945) Jones, Congress removed the agency from Dept. of Commerce control and returned it to the Federal Loan Agency. When the Federal Loan Agency was abolished (1947), the RFC assumed its many functions. After a Senate investigation (1951) and amid charges of political favoritism, the RFC was abolished as an independent agency by act of Congress (1953) and was transferred to the Dept. of the Treasury to wind up its affairs, effective June, 1954. It was totally disbanded in 1957. RFC had made loans of approximately $50 billion since its creation in 1932.

Bibliography

See J. H. Jones, Fifty Billion Dollars (1951).

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Reconstruction Finance Corporation (RFC)

U.S. government agency established (1932) to provide loans to railroads, banks, and businesses. The RFC was an attempt by Pres. Herbert Hoover to counter the early effects of the Great Depression by rescuing institutions from default. It was widely used by Pres. Franklin Roosevelt in the New Deal and to finance defense plants in World War II. After the war, the RFC's powers and functions were gradually transferred to other agencies.