What President Trump Can Do With The American System 2.0 - Flipbook - Page 11
American System Case Study: The Reconstruction Finance Corporation
The Reconstruction Finance Corporation (RFC) was a quasi-public corporation established in 1932 to deal with the crisis of the Great Depression. The RFC was owned by the
federal government, which appointed the corporation’s executive o昀케cers and board of
directors, but was sta昀昀ed by professionals recruited outside of the civil service system,
and its borrowings and expenditures were independent (o昀昀-budget) of the federal government budget. Thus, RFC expenditures did not increase budget de昀椀cits. The RFC was
empowered to make loans and 昀椀nance projects without Congressional approval. The
initial funding for the RFC came from the sale of $500 million worth of stocks and bonds
to the United States Treasury. To obtain more capital, it sold $1.5 billion in bonds to the
Treasury, which then sold them to the general public. Over the period from 1932 through
1941, the RFC loaned or otherwise disbursed about $9.5 billion. By the time the RFC was
dissolved in 1957, it was “in the black” and had repaid all of its loans from the federal
government, as well as other creditors. A full discussion of the myriad of projects and
initiatives which the RFC undertook is beyond the scope of this pamphlet, but during the
Depression years, the RFC built an unparalleled economic juggernaut, 昀椀nancing rural
electri昀椀cation, water management, dams, bridges, etc., much of which was accomplished
through collaboration with state and local authorities. The RFC was a public credit institution and it worked. It built up the productive power of the economy and helped to
create a skilled workforce, without costing the nation a penny.
Norris Dam construction, 1936. Tennessee Valley Authority historic collection (image cropped, CC BY 2.0).
Promethean Action
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