page_title: Jesse H. Jones
section_title: Reconstruction Finance Corporation
hierarchical_section_title: Jesse H. Jones / Political activities / Reconstruction Finance Corporation
caption_attribution_description: English: Money experts. When Jesse Jones, center, chairman of the RFC, appeared before the Senate Banking and Currency Committee Wednesday to urge continuation of the RFC, he faced outstanding experts on banking matters. On the left of the pictures is Sen. Duncan Fletcher.
context_page_description: Jesse Holman Jones was an American Democratic politician and entrepreneur from Houston, Texas. Jones managed a Tennessee tobacco factory at age fourteen, and at nineteen, he was put in charge of his uncle's lumberyards. Five years later, after his uncle, M. T. Jones, died, Jones moved to Houston to manage his uncle's estate and opened a lumberyard company, which grew quickly. During this period, Jesse opened his own business, the South Texas Lumber Company. He also began to expand into real estate, commercial building, and banking. His commercial building activities in Houston included mid-rise and skyscraper office buildings, hotels and apartments, and movie theaters. He constructed the Foster Building, home to the Houston Chronicle, in exchange for a fifty percent share in the newspaper, of which he acquired control in 1926.
  Jones's participation in civic life and politics began with the Port of Houston and the Houston Ship Channel. He led a group of local bankers in buying public finance bonds and was later appointed to serve as the Chair of the Houston Harbor Board. He led a local fundraising effort on behalf of the American Red Cross in support of servicemen in World War I.
context_section_description: After President Hoover signed the Reconstruction Finance Corporation (RFC) bill in 1932, the Republican chose Jones as one of the three to serve on its first board of directors. When Hoover sought advice from ranking Democrats about candidates for the board, Jones was the sole recommendation of House Speaker John Nance Garner. The Hoover RFC was an ambitious program. Upon opening, the RFC had 300 staff positions available. Soon it conveyed hundreds of millions in loans, including $300 million (equivalent to $4,400,000,000 in 2016) to the railroads, $90 million to prop up the Chicago bank of Charles Dawes, and $65 million to Bank of America. However, Hoover sold the RFC as a program to assist smaller institutions. Bank of America retired its loan with the RFC, paying interest and principal within two years. Other loans were not successful. Jones opposed a loan to the Missouri Pacific, concerned that the taxpayers would be stuck with their bill. Without Jones's support, the RFC board approved $23 million for the railroad, but it did not prevent the company from failing the next year.
  In 1933, President Franklin Delano Roosevelt made him the Chairman of the RFC, while also expanding the RFC's powers to make loans and bail out banks. This led some to refer to Jones as "the fourth branch of government." The next year, Congress issued an additional $850 in loans, after which President Roosevelt intimated to Jones that he would have the authority to invest the new appropriations and reinvest revenue from loan repayments.
  Jones criticized Hoover's execution of the RFC as too little and too late. Congress and the new president, Franklin D. Roosevelt, created a new Emergency Banking Act on March 9, 1933. President Roosevelt announced a "bank holiday," a moratorium on banking activity while federal bank inspectors examined the books in order to determine which financial institutions were viable. After the bank holiday, all financially sound banks would resume business. For persons who were unable to access their accounts, another part of the act authorized the executive branch to reorganize failed banks in order to free up frozen assets. The RFC was empowered to invest financial institution through their preferred stocks. Seventy percent of America's banks reopened after just six days. Jones's task as the new chair of the RFC was to reopen another 2,000 banks. He began with the reorganization of two of Detroit's largest banks by collaborating with Alfred P. Sloan of General Motors. They formed a new bank with matching investments from the RFC and General Motors, but more significantly, the RFC covered the deposits of the 800,000 frozen accounts from both failed banks with a loan of $230 million (equivalent to $3,500,000,000 in 2016).
  In the first three years of the Roosevelt Administration, the RFC had issued $8 billion in loans; however, these outflows were offset by $3.5 billion in revenues, including interest payments and repayments of principal. In 1939, Roosevelt appointed Jones to be the new Federal Loan Administrator while taking away his title as RFC chair.
caption: Jesse Jones, center, as Chairman of the Reconstruction Finance Corporation in 1935
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