Original Article from Public Banking Institute.
The proposed National Infrastructure Bank (NIB) now before Congress as HR 3339 is modeled after the Reconstruction Finance Corporation (RFC), which was instrumental in pulling the U.S. out of the Great Depression in the 1930s. Set up during the administration of Pres. Herbert Hoover and greatly expanded under Franklin D. Roosevelt, the RFC funded tens of thousands of projects over 80 years ago that still benefit us today.
Low-cost RFC loans were often augmented with complimentary New Deal relief programs such as the Works Progress Administration (WPA), the Public Works Administration (PWA), and the Civilian Conservation Corps (CCC). Reconnecting with the scale and utility of these historic projects can give us perspective on the potential of a national infrastructure bank in responding to the needs of the real economy and the environment of our local communities.
View several examples below and explore this map to find more New Deal projects throughout the country.
Video: This overview of the RFC was given by Author Steven Fenberg on a recent NIB webinar.
“When it opened in 1940, the Pennsylvania Turnpike made history as the first limited access superhighway in the nation. Constructed across and through 160 miles of rugged ridges and narrow valleys, the Turnpike was both an engineering marvel and precursor of the national interstate highway system. …
“The Turnpike Commission and Washington adopted a plan in which the RFC would purchase $40.8 million of the state’s Turnpike bonds, and the PWA would provide a grant of $29 million. With financing from New Deal funds, the state contracted private companies to do the work, and agreed to repay the debt with tolls paid by Turnpike motorists.
“From the standpoint of New Deal programs, the Pennsylvania Turnpike was an overwhelming success on two counts. It provided jobs to thousands of unemployed Pennsylvanians during the Depression. It also provided Pennsylvania the nation’s first modern, limited access superhighway, and served as a blueprint for the national interstate highway system.”
Explore more history on the Turnpike and its financing via the links below:
C&O CANAL NATIONAL HISTORICAL PARK
Via Living New Deal:
“Under the New Deal, the defunct Chesapeake & Ohio (C&O) Canal was acquired by the federal government and restored from Georgetown in the District of Columbia (where it enters the Potomac River) to Seneca MD, a distance of 22 miles. This laid the basis for the future C&O Canal National Historical Park.
“The canal ceased commercial operation in 1924, following on a major Potomac River flood, and the C&O company went into receivership. In 1938, the property was purchased for $2 million by the National Park Service (NPS), using funds provided by the Public Works Administration (PWA). The PWA had raised the money through the sale of its bonds by the Reconstruction Finance Corporation (RFC). The largest shareholder in the canal, the B&O railroad, was encouraged to sell in exchange for a loan from the RFC while the sale was pending in the courts handling the bankruptcy.
“Another $500,000 in PWA money went toward the canal’s rehabilitation by the Civilian Conservation Corps (CCC).”
San Pedro, California
POINT FERMIN PARK
Via Living New Deal:
“Point Fermin Park is located in the San Pedro district, on the bluff overlooking the Pacific Ocean. With the addition of the Wilder tract to this Park, we were able to use a great many R.F.C. [Reconstruction Finance Corporation] and Country Welfare men on improvements for the benefit of residents in San Pedro as well as visitors from Los Angeles. …
“Twenty one hundred and thirty lineal feet of new walks were built and lined with redwood curbing. In putting in these walks we had to move 2,882 cubic yards of dirt and 984 cubic yards was moved in general grading over approximately three acres. Seventy-seven hundred and fifty lineal feet of new water system were installed, and 1,739 lineal feet of stone wall built using rocks on the property.
“We were also able to do considerable landscaping such as moving 587 trees. We also planted 587 trees, 6,682 shrubs, and 11,133 flowering plants. New lawn area planted was 4 1/2 acres. Twenty three hundred and 8 feet of fencing were also built with the help of the unemployed labor.”
SUNRISE CIRCLE AMPHITHEATER, FLAGSTAFF MOUNTAIN
Via Living New Deal:
“The Sunrise Circle amphitheater was built between September 1933 and March 1934. It was constructed in a ‘natural amphitheater’ at the top of Flagstaff Mountain, which had been cleared of debris during the spring of 1933 as part of the Reconstruction Finance Corporation (RFC) work relief program. The CCC work features beautiful stone terracing and a small stage. It remains a popular attraction used regularly for events. It lies within the City of Boulder Open Space and Mountain Parks.”
Fort Worth, Texas
FORT WORTH BOTANIC GARDEN
Via Living New Deal:
“The park board agreed to the use of RFC labor for the construction of the garden and work commenced in February 1933. … Over 450 men worked on the construction of the garden. Most were unskilled laborers. Experienced stonemasons and carpenters were enlisted to train them. The garden was dedicated on October 15, 1933. It would be several months before the garden was planted with thousands of roses, most of which were donated.
“The next major project was the construction of a Horticulture Building in the northwest corner of the park. CWA labor was used to construct the stone building and greenhouse. In December 1934, the park board voted to allow the Fort Worth Garden Club to operate a garden center at the building. It also voted to change the park’s name to the Fort Worth Botanic Garden.
“In 1935, a cactus garden was constructed north of the rose garden (now a perennial garden). WPA labor was also used for road construction. Women employed through the NYA provided tours of the garden. Through the WPA and NYA, women created scrapbooks and reference materials on garden-related topics that were used in the garden center.
“The Fort Worth Botanic Garden has grown from its original 37.5 acres to encompass 109 acres of numerous theme gardens, greenhouses, and a large garden center with a conservatory. The original Horticulture Building is now known as the Rock Springs Building. It has been enlarged several times and houses offices for garden staff, a library, and a restaurant. The original section of the garden retains much of its historic integrity and was listed on the National Register of Historic Places in 2009.”
PBI’s Open Letter to Congress:
Why We Need a National Infrastructure Bank
According to the American Society of Civil Engineers, nearly $6 trillion is needed to bring America’s crumbling infrastructure into good repair. While debate rages in Congress over budget issues, HR 3339, the National Infrastructure Bank bill, can fill the infrastructure gap without requiring new federal spending or federal taxes. Modeled on the Reconstruction Finance Corporation that pulled America out of the Great Depression, it will be capitalized at $500 billion (leveraged to $5 trillion in loans) with debt-for-equity swaps (existing Treasury debt for non-voting shares with a 2% dividend).
In August, the Senate passed an infrastructure bill that included only $550 billion in physical infrastructure, and passage by the full Congress remains uncertain. The debt ceiling was raised on October 7 by $480 billion, sufficient to keep the lights on until December; but any forthcoming debt ceiling resolution is unlikely to cover the $6 trillion needed for physical infrastructure. Delays will mean increased infrastructure costs.
We urge Congress to pass HR 3339 now.