"What we need most now, as always, is a fairness of attitude toward one another, a willingness to work together for the good of all." --Jesse H. Jones
The Great Depression: Setting the Scene
The Great Depression was an economic crisis of a magnitude never before seen in the United States. During this time, stock prices plummeted, 9,000 banks went out of business, 9 million savings accounts were wiped out, 86,000 businesses failed and wages decreased by an average of 60%. The unemployment rate, previously at 9%, rose to 25%, which left almost 15 million people without jobs.
The country's slide into the Great Depression -- with increasing unemployment, falling production and prices -- continued throughout President Hoover's term of office from 1929 to 1933.
The problems were compounded since the United States, unlike Europe, had no effective system of unemployment insurance to protect against job loss. It was toward the end of his term that Hoover created the Reconstruction Finance Corporation, a federal agency that would later become key in stabilizing the shaky credit situation that threatened all sectors of the national economy.
Jesse Jones: Helping America Heal
In the 1920's, prior to the Great Depression, Jesse Jones embarked on the most ambitious phase of his building career. He filled the city's Main Street with its tallest buildings, its most ornate theaters and its grandest hotels.
As the decade came to an end, Jones continued to expand his empire, completing a 35-story art deco building in 1929 that would be home to the Gulf Oil Company and his National Bank of Commerce. Shortly after the building opened, the stock market crashed and the nation plunged into the Great Depression.
When it became apparent that two failing Houston banks were about to bring down all the others, Mr. Jones called the city's leading businessmen to his office to work out a plan that would allow the stable banks and several local companies to rescue the two faltering banks. As a result of Jones' leadership, no banks in Houston failed during the Great Depression. His work did not go unnoticed.
Jesse Jones' business and financial acumen were called upon during the depths of the Great Depression when President Herbert Hoover asked him to serve on the board of the newly created Reconstruction Finance Corporation (RFC). This federal corporation, whose creation was initiated by Hoover, had capital of $500,000,000 and authority to borrow three billion more from the Treasury and from private sources.
When Hoover first made his bold, imaginative proposal to bring the still-powerful credit of the United States to the support of individual institutions, he believed that it would be used primarily by smaller banks and financial institutions and by the railroads. He anticipated that the RFC's major contribution would be to stop deflation in agriculture and industry. Jones, however, was convinced that President Hoover had been too optimistic in thinking that the big banks and industries would not need assistance. In this, he was soon proved correct. Not only did Bank of America, the nation's biggest banking chain, need cash to meet withdrawals, but the greatest railroad system in the United States was also in deep trouble.