ePub Saving Capitalism ePub

by James S. Olson

This is the second book in Olson's series about the Reconstruction Finance Corporation (RFC), which takes the RFC through its heydey in the early New Deal and into the beginning of its operations in World War II. Once again Olson proves his point that the RFC was infinitely more central to recovery from the Depression than most historians credit. Almost every acronymomic agency or program created by Roosevelt had its genesis or its funding in the RFC, from the FERA, PWA, WPA, CWA, FDIC, HOLC, FHA, to Rural Electrification and the Export-Import Bank. Although many of these agencies and programs died with Roosevelt, many have continued to survive and expand up to today. As Olson points out, the RFC both symbolized and supported the rise of a permanent "state capitalism" in the postwar period.

Jesse Jones, the Houston publisher and Democratic mastermind who ran the organization throughout the Depression, is the central figure in this story. He lobbied to continually increase the authority of his Corporation in Congress, and provided special loans and handouts to members who voted for more authorizations. Within a year of his ascension to power he was said to have a line of congressmen outside his door every morning asking for favors. Beyond these obvious goodies, the RFC garnered congressional approbation because its loans could be held off the books of the federal budget and continuously expanded without seeming to expand the deficit. Like Fannie Mae in later years (which itself arose from the RFC's Mortgage Loan Division and received its starting capital from RFC), it became a never-ending political honeypot.

Yet, as Olson shows, some political efforts to direct the agency to particular loans proved costly. The railroads were in a state of permanent decay and hundreds of millions the RFC directed towards them, mainly in an attempt to shore up life insurance company investments, went up in smoke. The loans also possibly delayed the consolidation in the railroad industry that commissioners at the ICC thought the companies needed to survive in the long-term. More tragically, the RFC expanded from bank financing to direct business loans, and proved woefully inadequate at the job. For years Jesse Jones attacked bankers for not loaning their excess reserves to businesses fast enough, railing that they had to "do their part for recovery," but when he was given the opportunity in the RFC renewal act of 1934 to direct his own loans at business, he found few credit-worthy customers for his millions. Despite his jawboning, he came to take the position of bankers that the problem of the Depression was not one of credit supply, but of business demand.

This book shows that the operations of the RFC during the Depression were much more extensive than are typically discussed in histories of the era, and the policies Olson describes provide many valuable lessons for the federal government's contemporary attempts to poke and prod the credit market back to recovery.

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ISBN
Book Title
Book Author
PublisherPrinceton University Press
Release date 01.02.1988
Pages count246
eBook formatHardcover, (torrent)En
File size3.5 Mb
Book rating4 (2 votes)
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