More 'What Would Jesse Do?'

I’ve been plugging away at this 1956 biography “Jesse H. Jones, The Man and The Statesman” by Bascom N. Timmons. It’s a good read. The other book I found, James S. Olson’s “Saving Capitalism, The Reconstruction Finance Corporation and the New Deal” looks like it’s going to serve me more as a reference book. The author spent twenty years writing it in a foreign language, Economics.

I haven’t laid hands on Jones’ own book yet, but I’m intrigued by the title, “Fifty Billion Dollars.” I found a chart that converts the value of the dollar over the centuries. If $50 billion is what Jones disbursed in the 30’s, that would compare to $819 billion today. So far, so good.. That is both a comfort and a caution to me as I look at the “Troubling Recovered Assets Program.”

Jones and the RFC lent all that money out over thirteen years. Most of that was repaid with interest, which more than covered any losses. This without taking into account the public good that was the object of all this financial activity. For example, in 1933, when the RFC started making loans for rural electrification projects, 11% of American farms had electricity. Twenty years later, 95% of farms had power. This is huge. When Robert Caro and his wife moved to the Texas hill country in the 1960’s so they could interview surviving acquaintances of LBJ, they got so that could tell the age of the women by their posture, because women of a certain age were no longer stooped from a lifetime of carrying buckets of water.

The RFC had broad authority, and good relations with the congress to whom it answered. The RFC directors operated by consensus, and if they couldn’t agree that an enterprise was worthy, that loan would not be made. If the RFC directors didn’t have confidence in a company’s management, they had the power to appoint new board members and vote in new management.

Jones wrote this to Vice-President John Nance Garner (yeah, the “bucket of warm spit” guy) in 1934. “Railroad executives are always reluctant to allow any sort of government interference. That is perfectly all right as long as they do not have to come to the government for money.” Bankers and executives still spouted their free-market capitalist dogma, but they tended to quiet down when it was pointed out that their entities were insolvent.

I’ll wind up this installment with a story about Jones’ dealings with Richard S. Reynolds, of the Reynolds Metals Company (as in Reynolds Wrap) from Timmons’ book.

“In the negotiations Jones did not deal with Reynolds until the final stages. Sam Husbands and others worked out the details. Husbands and Reynolds went together to Jones for his approval of the completed plans.

“After Jones had examined the papers very carefully, Reynolds addressed him jokingly:

“You have got some hard traders here, Mr. Jones. They made me scrape the bottom of the barrel for collateral and I have given more security for these loans than I ever gave a bank. I hear you are a harder trader than any of them. Is there anything else you want?”

“Yes,” Jones responded. “We want one more thing. We want an Oklahoma guarantee.”

“What is an Oklahoma guarantee?” Reynolds entreated.

“Well,” answered Jones, “when I was a young man in the lumber business out there, a farmer would go to an Oklahoma country bank for a loan. He would be required to mortgage his prospective crop, a mule or two, and maybe a milch cow or anything else he had. After this was done he was handed a note with all the customary printed conditions, and before affixing his signature he was asked to insert in his own handwriting one more line which read: ‘And if I don’t pay this note I am a son of a bitch.’ “