Reconstructive Finance Corporation (RFC)

Federal agency established by Helbert Hoover in 1932 to help American industry by lending government funds to endangered banks and corporations, which Hoover hoped would benefit people at the bottom through trickle-down economics. In practice, this strategy provided little help to the poor. 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.