The Southwestern Historical Quarterly, Volume 94, July 1990 - April, 1991 Page: 166
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Southwestern Hzstorcal Quarterly
versity Press, 1988. Pp. xi+246. Acknowledgments, notes, selected
bibliography, index. $30.)
The Reconstruction Finance Corporation (RFC) was established by
the Hoover administration in early 1932 as a vehicle to respond to an
escalating collapse of the nation's financial structure and what was per-
ceived to be a lack of credit to stimulate the economy. It was modeled
on the War Finance Corporation which had been highly successful in
increasing the credit needed for the rapid development of war indus-
tries during World War I. But it was not the absence of available credit
that was causing the crisis in 1932; it was more a loss of confidence in
the economy's future. Thus, the RFC failed to even slow the slide to-
ward the Great Depression.
But, in spite of this, when the administration of Franklin Roosevelt
came to power, it kept the RFC and made it a part of the administra-
tion's overall program to restore the economy. It was not only one part,
James Olson clearly demonstrates, but a fundamental part. The RFC
was equal to, or surpassing, such long-recognized important programs
as the AAA, NRA, and PWA. Olson examines the role of the RFC as
providing financial assistance to private institutions to keep them from
collapsing, in line with the original design of the agency. He also de-
scribes the expansion of those activities by providing financial backing
for new public programs, from TVA and PWA to the FHA, in ways the
original designers of the agency never dreamed. Additionally, he delin-
eates the RFC's funding of the labyrinth of New Deal programs de-
signed to assist farmers, homeowners, and consumers directly rather
than through support of business.
The man in charge of this New Deal experiment was a Houston
banker, Jesse Jones, who, according to Olson, "completely dominated
the RFC and was the central figure in the New Deal promotion of state
capitalism during the 1930s" (p. 42). While a fiscal conservative, Jones
had no reservations about the use of government money in the econ-
omy as long as its use was to underwrite capitalism. His willingness to
use RFC funds in inventive projects was to a large degree motivated by
a provincial's distaste for Wall Street investors and large corporations.
Jones relished using his power to open a chance for new businesses and
different regions to share in the blessings of capitalism.
While no one could accuse Jones of populist sympathies, it was this
hostility toward the financial establishment that provided a common
ground with many New Deal Reformers and especially several of his
fellow Texans who held populist views. Sam Rayburn, Marvin Jones,
Wright Patman, Maury Maverick, and Lyndon Johnson appear fre-
quently in the book as do their more conservative colleagues, John
Nance Garner, Hatton Sumners, Fritz Lanham, iTom Connally, and
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Texas State Historical Association. The Southwestern Historical Quarterly, Volume 94, July 1990 - April, 1991, periodical, 1991; Austin, Texas. (texashistory.unt.edu/ark:/67531/metapth101214/m1/190/: accessed May 24, 2017), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting Texas State Historical Association.