(This is the second installment of a three-part essay. The first part is here.)
Big Engines that Couldn’t
Although Hoover’s Reconstruction Finance Corporation (RFC) was “more largely a banker’s loan bank than anything else” (Ebersole 1933, 477), financial institutions were never the only firms eligible for its support. Railroads were an important exception from the start, though they were so mainly because financial institutions, commercial banks, and insurance companies especially, were railroads’ main investors. Thanks to New York and other state regulatory authorities’ inclusion of many railroad bonds among permissible investments for the banks and insurance companies they regulated, by 1932 those bonds made up 16 and 23 percent, respectively, of bank and insurance company assets (Mason and Schiffman 2002, 3).
Read the rest of this post →