Jesse Jones, Capitalism and the Common Good

By Steven Fenberg

The article in the Spring 2012 Jones Journal traced Jesse Jones’s early life from his family’s tobacco farm in Tennessee to his emergence as Houston’s preeminent developer, up to his entry on the national stage, where he would eventually become the most powerful person in the nation next to President Franklin Roosevelt.

Jesse Jones’s development of Houston and the Ship Channel, his determination to simultaneously build his businesses and his community, and his embrace of government appealed to President Woodrow Wilson. The President offered “Mr. Houston” ambassadorships and cabinet positions, but Jones declined so he could build his businesses and his city. World War I changed his mind.

When President Wilson asked Jones to organize battlefield and home front medical aid through the American Red Cross, he moved to Washington, D.C., and recruited thousands of nurses and doctors for the battlefields, organized hospitals, canteens and ambulance networks throughout Europe and established rehabilitation centers in the U.S. for wounded soldiers. Jones, called “big brother to 4 million men in khaki,” was also an early advocate for women. His Houston Chronicle had endorsed women’s right to vote since 1915, and in Washington Jones lobbied President Wilson to give Army nurses military rank, a status they finally won in 1920, along with the right to vote.

Jones accompanied President Wilson to the Paris Peace Conference and stayed after to help reorganize the Red Cross from loosely confederated local societies into the international relief agency it is today. An impatient business colleague in Houston begged him to return, but building his community, whether local or international, took precedence over material gain, and Jones replied, “Am not willing to leave what I am doing here for a money consideration.” After he had completed his mission, he returned to Houston, embarked on the most ambitious phase of his building career and married Mary Gibbs Jones, a doctor’s daughter from Mexia, Texas, who had attended college when few women at that time finished high school.

During the 1920s, Jones filled Houston’s Main Street with the city’s tallest office buildings, its grandest hotels and its most ornate movie theaters. As the Democratic National Committee’s finance chairman, Jones erased the Party’s persistent debt and captured the 1928 national convention for Houston — the first major political convention to be held in the South since before the Civil War and one of the first to be widely received over the radio. The convention put Houston on the map and filled up Jones’s buildings. From early on, he knew he would prosper only if his community thrived.

Jones completed Houston’s tallest building, a 35-story Art Deco tower for the Gulf Oil Company and his National Bank of Commerce, right before the nation plunged into the Great Depression. When two tottering Houston banks were about to fail and bring down the rest, Jones gathered the city’s business leaders and hammered out a rescue plan. He explained to an opponent of the plan, “I believe that all we have done, are doing and must continue doing is necessary for the general welfare, and we cannot escape being our brother’s keeper.” As a result of Jones’s leadership, no bank in Houston failed during the Great Depression. Other cities were not so fortunate.

In 1932, President Herbert Hoover created the Reconstruction Finance Corporation (RFC) to make government loans to desperate banks, insurance companies and railroads, and Jones accepted the President’s invitation to join the bipartisan board. Willing for government to be a catalyst when required, Jones complained Hoover’s RFC was “too timid and slow.” With great relevance now, Jones later observed, “A few billion dollars boldly but judiciously lent and invested by such a government agency as the RFC in 1931 and 1932 would have prevented the failure of thousands of banks and averted the complete breakdown in business, agriculture and industry.” President Franklin Roosevelt expanded the RFC’s powers and made Jones its chairman.

Like today’s TARP (Troubled Asset Relief Program), Jones and the RFC bought preferred stock in banks and recapitalized them, hoping the banks would lend the fresh money and revive the moribund economy. The bankers hoarded the cash instead and forced the RFC to become the nation’s lender of last resort. The RFC’s judicious loans saved millions of homes, farms, banks and businesses; built aqueducts, bridges, tunnels and schools; and developed the latest in high-speed diesel-electric trains. Contrary to some current commentary about the New Deal, the RFC in fact salvaged capitalism, benefiting every citizen and business in the nation, and remarkably made money for the federal government while doing so.

Roosevelt and Jones shifted the RFC’s focus from domestic economics to global defense eighteen months before the attack on Pearl Harbor. The RFC began financing and building the massive factories that would manufacture the tanks, trucks, airplanes and ammunition required to win World War II. Astonishingly, the RFC orchestrated the development of synthetic rubber from the lab to mass production in less than two years. Without such government initiative, the Allied forces would have been stuck in place and unable to fight.

After the war, the Joneses returned to Houston and focused on philanthropy through Houston Endowment, the foundation they had established in 1937. One year before Jones’s death in 1956, Houston Endowment donated $1 million to build Rice Institute’s Mary Gibbs Jones College so women for the first time could live on campus. In more recent years, Houston Endowment has donated more than $50 million to help establish and support the Jesse H. Jones Graduate School of Business. Since its inception, the foundation has donated more than $1.6 billion to Houston area nonprofit organizations and educational institutions to help fulfill the Joneses’ vision of a vibrant community where the opportunity to thrive is available to all.

Steven Fenberg is the author of Unprecedented Power: Jesse Jones, Capitalism and the Common Good, a biography recently published by Texas A&M University Press. (For information about “Unprecedented Power,” see Fenberg was the executive producer and writer of PBS’s Emmy Award-winning film Brother, Can You Spare a Billion? The Story of Jesse H. Jones, which was narrated by Walter Cronkite. He produces Houston Endowment’s annual report and makes frequent presentations about the foundation and Jesse Jones. 

Jones Journal - Fall 2012