Reconstruction Finance Corporation

(RFC)

   The RFC was established by Congress in 1932 after the recommendation of Herbert Hoover to “provide emergency financing facilities for financial institutions,” and to “aid in financing agriculture, commerce, and industry” to counter the effects of the Great Depression. Its primary concern was to halt the run on banks and restore faith in the financial system to encourage a revival of industry. It was initially headed by Charles Dawes and was described by some as a “rich man’s dole.” Before the end of the Hoover administration, the RFC had lent $1.5 billion to banks, mortgage loan companies, railroads, insurance companies, and agricultural credit organizations. President Franklin D. Roosevelt expanded the RFC’s role as a major funding agency supporting other New Deal agencies, and it was grouped with other agencies as the Federal Loan Agency in 1939. It survived in various forms and was involved in financing a number of war-related activities involving the purchase and sale of vital war materials. Its capital stock, originally $500 million, was reduced in 1948 to $100 million. Revelations of various financial irregularities and misuse of funds involving members of the Democratic Party in the 1950s led to its dissolution in 1954.