RECONSTRUCTION FINANCE CORPORATION

(>RFC) U.S. government agency established by Congress on Jan. 22, 1932, to provide financial aid to railroads, financial institutions, and business corporations. With the passage of the Emergency Relief Act in July 1932, its scope was broadened to include aid to agriculture and financing for state and local public works. The RFC made little use of its powers under the Herbert Hoover administration but was more vigorously utilized during the New Deal years and contributed greatly to the recovery effort. During World War II the agency was enormously expanded in order 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, and during its early years it operated without much interference. As the functions of the RFC grew, however, and as it began to assume responsibility for disbursing huge sums of money, it tended to become involved in politics. Beginning in 1948 various congressional investigations of the RFC revealed widespread corruption, and, on the recommendation of the Senate Committee on Banking and Currency, the agency was reorganized in 1952. The RFC was finally dismantled under the Dwight D. Eisenhower administration, which sought to limit government involvement in the economy. The 1953 RFC Liquidation Act terminated its lending powers, and by 1957 its remaining functions had been transferred to other agencies.