Reconstruction Finance Corporation

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The Reconstruction Finance Corporation (RFC) was an Independent agency of the United States government chartered during the administration of Herbert Hoover in 1932. The agency advanced $2 billion in loans to state and local governments and to banks, railroads, farm mortgage associations, and other businesses, funding, for example, the construction of the original Hayden Planetarium.

The RFC also had a division that would give the states loans for emergency relief needs.

The RFC was bogged down in bureaucracy and failed to disperse many of its funds. It failed to stem the tide of mass unemployment of the Great Depression. The failure of the RFC helped to lead to the election of Franklin Delano Roosevelt.

[edit] World War II

President Roosevelt merged the RFC, Board of Economic Warfare (BEW), and the Lend-Lease Office together under the direction of Leo Crowley, former head of the Federal Deposit Insurance Corporation (FDIC), which was one of the landmarks of the New Deal. Oscar Cox, a prime author of the Lend-Lease Act, general counsel of the Foreign Economic Administration joined as well. Lauchlin Currie, formerly of the Federal Reserve Board staff, was the deputy administrator to Crowley.

The RFC established eight new corporations, and purchased an existing corporation. The eight RFC wartime subsidiaries are Metals Reserve Company, Rubber Reserve Company, Defense Plant Corporation, Defense Supplies Corporation, War Damage Corporation, U.S. Commercial Company, Rubber Development Corporation, Petroleum Reserve Corporation. These corporations were involved in funding the development of synthetic rubber, construction and operation of a tin smelter, and establishment of abaca (Manila hemp) plantations in Central America. Both natural rubber and abaca (used to produce rope products) were produced primarily in south Asia, which came under Japanese control. Thus, these programs encouraged the development of alternative sources of supply of these essential materials. Synthetic rubber, which was not produced in the United States prior to the war, quickly became the primary source of rubber in the post-war years.

From 1941 through 1945, the RFC authorized over $2 billion of loans and investments each year, with a peak of over $6 billion authorized in 1943. The magnitude of RFC lending had increased substantially during the war. Most lending to wartime subsidiaries ended in 1945, and all such lending ended in 1948.

Nathan Gregory Silvermaster, who headed an extremely large group of Soviet agents working in the U.S. Government during World War II, was transferred, along with the rest of the division from the Treasury Department's War Asset's Administration into to the Reconstruction Finance Corporation, where it became the War Assets Corporation.

The Petroleum Reserves Corporation was transferred to the Office of Economic Warfare, which was consolidated into the Foreign Economic Administration, which was transferred to the Reconstruction Finance Corporation and changed to the War Assets Corporation. The War Assets Corporation was dissolved as soon as practicable after March 25, 1946. Presidential aide and Soviet spy, Lauchlin Currie headed the office during this time.

[edit] Notes

Robert J. Hanyok, Eavesdropping on Hell: Historical Guide to Western Communications Intelligence and the Holocaust, 1939-1945. Ft. Meade, MD: National Security Agency, Center for Cryptologic History, 2005; "Currie, known as PAZh (Page) and White, whose cover names were YuRIST (Jurist) and changed later to LAJER (Lawyer), had been Soviet agents since the 1930s. They had been identified as Soviet agents in Venona translations and by other agents turned witnesses or informants for the FBI and Justice Department. From the Venona translations, both were known to pass intelligence to their handlers, notably the Silvermaster network."
United States. National Counterintelligence Center. A Counterintelligence Reader. NACIC, no date. vol. 3, chap. 1, pg. 31.