Reconstruction Finance Corporation
Aspen Times Weekly
The role of government in moderating recessions has been a subject of debate for generations. The American Recovery and Reinvestment At of 2009 has been characterized by conservatives as wasteful spending. That opinion bolsters their conviction that Roosevelt’s Depression-era spending was a cause of, rather than the solution to, stalled economic growth. A case study of Reconstruction Finance Corporation (RFC) funding in Aspen is unlikely to alter anyone’s revisionist history, but those Depression dollars certainly stimulated the local economy.
Begun by Herbert Hoover, the RFC loaned money to banks to prevent their failure, and to state and local governments to expand money supply. Roosevelt increased funding to the RFC to keep the railroads running and to recapitalize banks. The RFC spent $10 billion between 1932 and 1942, priming bank loans to businesses big and small.
Aspen’s Herron brothers applied for RFC funding in 1942 through First National Bank of Glenwood Springs. Their three loans at a 4 percent interest rate totaled $21,000 ($336,000 in today’s dollars), a sufficient amount during Depression days to start a business. The Herrons secured a lease of the dormant Smuggler Mine from owner David Hyman. They planned to work the upper levels of the mine for zinc and lead, which were vital to the war effort. They confined their mining to areas that had not been flooded when Hyman had turned off pumping in 1918. Entire sections of ore veins had not previously been mined because, although their lead and zinc content was high, profitable silver content was low. They also planned to mill dump material that had been processed using less-efficient methods.
Reopening a mine does not cost as much as starting from scratch. The Herrons dug no shafts or tunnels. Most of what they needed was already there or could be scrounged from other non-producing mines. They did, however, need to construct a mill. Their building featured doors and windows, some of stained glass, that they pulled from Aspen’s abandoned houses. Inexpensive black tarpaper coated the outside walls. Corrugated tin (77 sheets at the unbelievable price of 40 cents a piece) formed the roof.
Building the mill and daily operations funneled RFC dollars through many local suppliers. That RFC loan paid Blain Bray Lumber for wood, cement, sand and pipe. The Herrons bought second-hand lumber from Harry Brown. They purchased coal from the Koch Lumber Company. Other items were acquired from Tompkins Hardware and Sardy’s Supplies. They even bought a mule from A. J. Caley for $50.
That RFC money flowed to local service providers: a blacksmith, three different assayers, the local insurance agent and the electric and water companies. Fuel and equipment repairs were spread among garages: Brand’s Garage run by A. J. Bishop, Radar Motor Company, Continental Oil, Conoco Service Station and Ray Moulton Phillips 66. Lumber was delivered from seven different local providers.
Specialized mining and milling equipment, like conveyor belts, milling jig screens, a jaw crusher and electric motors, arrived from distant Denver suppliers. The most expensive item was a used, one-and-a-half yard shovel that cost $2,600. After the operation ceased, that shovel served as a popular playground item for children of the 1950s. The rusting giant sat on the Smuggler dumps for years.
The loan provided a $550 bi-monthly payroll. A small operation compared to previous enterprises, the resurrected Smuggler employed many trades-people and miners who had lost their jobs.
Examining the requisitions of the Herron Brothers’ operation, it becomes evident that they spread their spending throughout the community. A moderate RFC loan – which was paid off long before it was due – affected Aspen’s economy. Depression stimulus spending also included WPA and CCC projects that provided additional employment and business income for the town.
Having heard many Aspen Depression-era stories, I asked my father, “Just how bad was it?” His answer, not original, was “It was a Depression only if you didn’t have a job.” Aspen had its share of Roosevelt-haters even then, but no one argued that his spending was wasted.