The desperate problems of the American banking system in the eight months which elapsed between the nomination of Franklin D. Roosevelt in Chicago on July 1, 1932 and his inauguration in March of the following year also saw the natural turning point of the Depression. In fact, by June 1932, the RFC had reversed the tide of bank misfortune. Before the Corporation's creation in January 1932, bank failures had amounted to $200,000,000 a month while, in the months that followed, the amount fell to $10,000,000.
Following his inauguration, President Roosevelt expanded the RFC's powers and made Mr. Jones its chairman. The RFC grew to become America's largest corporation and the world's biggest and most varied banking organization.
It had been given almost unlimited authority by Congress to distribute funds in the fight against the Great Depression. In rescuing financial institutions, the Corporation loaned and invested nearly $4,000,000,000. About one-third of these disbursements went to pay depositors some part of their lost funds in banks which had closed. Another third were loans to help banks remain open. The remaining third was employed to lay a new and solid foundation for the whole commercial banking structure by investing government money in the preferred capital of banks, trust companies and insurance companies. A radical idea for the time, and an example of the great reach of the RFC, banks were eventually able to reacquire their stock, thus ending government ownership.
During the Great Depression, Jones disbursed more than $10 billion through the RFC to banks, mortgage agencies, railroads, rural electrification projects and public works programs. The Federal Housing Administration (FHA), the Federal National Mortgage Association ("Fannie Mae") and the Export-Import Bank are only a few of the many enduring agencies created by Jesse Jones and the RFC. Because of Jones' masterful management, all the funds allocated for these massive recovery efforts were returned to the United States treasury -- along with a $500 million profit.
Today, our nation is dotted with thousands of public works -- bridges, aqueducts, tunnels, dormitories, toll highways, recreation centers, water and sewer systems and many other improvements -- which were financed by the RFC during the depths of the Great Depression as self-liquidating works projects. This provided tens of thousands of jobs on the projects themselves, while indirectly creating employment in the supply and transportation companies which hired to support the work.
Jordan A. Schwarz, the author of The New Dealers (1993) comments, "Jones the Democrat was the New Deal's banker for twelve critical years. Aside from the President, he was the single most powerful man in the New Deal, deriving his power from the billions of Reconstruction Finance Corporation dollars he controlled, the financial policies he influenced, the esteem politicians and the press bestowed upon him and the reluctance of putative enemies to cross swords with him."