Department of Economics

University of Delaware

Working Paper #2006-09

Eugene Meyer: From Laissez Faire to the Keynesian Revolution

James L. Butkiewicz 

ABSTRACT

While federal financial intermediation in widely accepted, federal provision of finance was not one of the original powers of the federal government.  Federal financial intermediation began during WW I through the War Finance Corporation (WFC).  When the Wilson administration wanted to end the program after the war, one man, Republican Eugene Meyer fought to extend the life and expand role of the WFC.  During the Great Contraction, Meyer, now Governor of the Federal Reserve Board, worked to temporarily revive the War Finance Corporation in the form of the Reconstruction Finance Corporation (RFC).  However inadvertent to Meyer’s intentions, the RFC and related programs and agencies became the vehicles for a vastly expanded role for direct federal government finance during the New Deal years and to the present.