The Rise of Federal Credit Programs

This chapter assesses the expansion of credit programs in the New Deal, showing that it was the key moment when credit support came fully into its role as a multipurpose tool of statecraft. The New Deal credit programs mattered because they helped a fractured political system continue to function. Their appeal rested in how credit programs circumvented the nation's deepest, most intractable fissures. Credit programs allowed government officials to promote specific markets without meeting the various demands of central planning. They could be justified on many grounds and framed as consistent with free-market ideals. Equally important, they could be removed from the budget. The latter characteristic did not please the most stalwart of fiscal conservatives, but it did create more options for maneuvering around them. The chapter then considers how the Reconstruction Finance Corporation—the financial giant that funded much of the New Deal—and the housing programs served as the institutional centers for the development of U.S. credit policy.