RECONSTRUCTION FINANCE CORP.

The Reconstruction Finance Corp. (RFC) was a U.S. government agency established by Congress on January 27, 1932, to provide financial aid to railroads, financial institutions, and business corporations during the Great Depression (1929–1939). In July 1932, with the passage of the Emergency Relief Act (ERA), the scope of the RFC was enlarged to include aid to agriculture and farms, and financing for state and local public employment works. The RFC, acting as a domestic federal bank, contributed greatly in the recovery effort to climb out of the Depression. During World War II (1939–1945), the RFC was expanded greatly to finance the construction and operation of war plants and to make loans to foreign governments.

The RFC was intended to be an independent, nonpolitical agency. As years passed, RFC funding grew. It began to assume the responsibility for disbursing huge sums of money, and began to become involved in politics. By 1948 congressional investigations of the RFC revealed widespread corruption; in 1952 it was reorganized. As a result of Eisenhower's efforts to limit government involvement in the economy, the RFC was dismantled under President Dwight D. Eisenhower (1953–1961). The RFC Liquidation Act terminated all of its lending powers. By 1957 its remaining functions had been transferred to other agencies.

The RFC was a useful agency during the Great Depression and World War II, as well as during post-World War II recovery in the United States, but by the late 1940s the RFC had outlived its financial stabilization function.

See also: Great Depression