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Published online by Cambridge University Press: 14 October 2011
During the past two decades, sociologists, political scientists, and historians have been increasingly interested in the development of modern states and their administrative structures. By focusing on specific policies and government agencies, these scholars have provided various frameworks for understanding the growth of the American state in the twentieth century, especially during the New Deal and the 1940s. One issue that has received scant attention, though, is housing policies. Public housing, federally insured home mortgages, and tax policies that privileged home owners were significant state interventions that profoundly affected economic relationships and the formation of social policy. Housing policies therefore need to be seen as part of larger economic and political developments.
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5. Abrams, Future of Housing, 241–243; TNEC, Monograph No. 8, 82; TNEC Hearings, part 11, 14 July 1939, 5397, 5398; Congressional Record, 72 Cong., 1 sess., 6 July 1932, 14664; Fahey, John H., “The Federal Home Loan Bank Board,” Housing Yearbook, 1937 (Chicago, 1937), 14Google Scholar. To become a member of FHLBS, a thrift initially had to purchase only $1,500 of the capital stock of the Home Loan Bank in its region. This was eventually lowered to $500. See FHLBB, Second Annual Report, 1. Interest rate calculations are given in Rosenman, Dorothy, A Million Homes a Year (New York, 1945), 11.Google Scholar
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9. Abrams, Future of Housing, 247–248; Federal Home Loan Bank Review (December 1943), 61; TNEC Hearings, part 11, 14 July 1939, 5382; Fahey, “The Federal Home Loan Bank Board,” 13; FHLBB, Ninth Annual Report (Washington, D.C., 1941), 24Google Scholar; FHLBB, Tenth Annual Report, 2; Marvell, Federal Home Loan Bank Board, 23. Even Fahey admitted in 1942 that FHLBS had “not yet been called on to face the test of functioning successfully under the shock of a protracted economic crisis,” leaving Abrams among others to wonder if it would actually aid home owners in the event of another emergency. Fahey, , “The Federal Home Loan Bank Administration, 1942,” Housing Yearbook, 1943 (Chicago, 1943), 64Google Scholar. The inability of federal housing policies to insure economic stability and their role in creating inflationary pressures are discussed in Grebler, Leo, “Stabilizing Residential Construction — A Review of the Post-War Test,” American Economic Review 39, no. 5 (September 1949), 898–910Google Scholar; Hearings Before the Joint Committee on the Economic Report (Anti-Inflation Program as Recommended in the President's Message of November 17, 1947), 80 Cong., 1 sess., 25 November 1947, 166–168.
10. “Home Owners' Loan Act of 1933,” Public Law 73–43; TNEC Hearings, part 11, 14 July 1939, 5382; Roosevelt, Message to Congress, April 13, 1933, in Rosenman, Samuel I., ed., The Public Papers and Addresses of Franklin D. Roosevelt, vol. 2 (New York, 1938), 135Google Scholar (hereafter cited as Public Papers); Congressional Record, 73 Congress, 1 sess., 27 April 1933, 2506; Colean, A Backward Glance, 22.
11. TNEC Hearings, part 11, 14 July 1939, 5386; Roosevelt, “The Home Owners Loan Act is Signed,” in Public Papers, vol. 2, 233–237; U.S. Senate, Document No. 74 (The Home Owners' Loan Corporation), 73 Cong., 1 sess., 6 June 1933, 1–3; U.S. House of Representatives, Report No. 55 (Loans to Home Owners), 73 Cong., 1 sess., 25 April 1933, 1–2; TNEC, Monograph No. 8, 84–85; Marvel, Home Loon Bank Board, 24. See also Harriss, C. Lowell, History and Policies of the Home Owners' Loan Corporation (New York, 1951), 1Google Scholar; Wendt, Paul F., Housing Policy: The Search for Solutions (Berkeley, Cal., 1962), 149–150Google Scholar; Keith, Nathaniel S., Politics and the Housing Crisis Since 1930s (New York, 1973), 24–25Google Scholar; Olson, James S., Saving Capitalism: The Reconstruction Finance Corporation and the New Deal, 1933–1940 (Princeton, N. J., 1988), 45, 95.Google Scholar
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14. Abrams, Future of Housing, 246; Congressional Record, 73 Cong., 1 sess., 27 April 1933, 2483; Congressional Record, 73 Cong., 1 sess., 5 June 1933, 4984; Westerfield, Money, Banking, Credit, 1068. Other Congressmen who publicly supported direct loan provisions included Representatives Ralph Lozier (D-Missouri), John MacCormack (D-Massachusetts), Andrew May (D-Kentucky), Marion Zioncheck (D-Washington), and Senators Sam Bratlon (D-New Mexico) and Lynn Frazier (R-North Dakota). See Congressional Record, 73 Cong., 1 sess., 27 April 1933, 2504–2505; 26 April 1933, 2570; Congressional Record, 73 Cong., 1 sess., 5 June 1933, 4975, 4981. Examinations of Congressional politics during the New Deal can be found in Patterson, James T., Congressional Conservatism and the New Deal (Lexington, Kentucky, 1967)Google Scholar; Porter, David L., Congress and the Waning of the New Deal (Port Washington, N.Y., 1980).Google Scholar
15. Abrams, Future of Housing, 246; TNEC Hearings, part 11, 29 June 1939, 5044; 14 July 1939, 5404; FHLBB, Sixth Annual Report, 70; Roosevelt, “The Home Owners Loan Act Is Signed,” in Public Papers, vol. 2, 233. Initial data on HOLC operations confirm that adjustments represented mortgage debt relief of only 6.4 percent The average purchase price of HOLC mortgages was $3,027, while average indebtedness before refinancing was $3,233. See Fahey, “The Federal Home Loan Bank Board,” Housing Yearbook, 1937, 11. The growing sophistication of appraisal practices can be traced by comparing Fisher, Ernest, Principles of Red Estate Practice (New York, 1923), 114–132Google Scholar, to Babcock, Frederick M., The Valuation of Real Estate (New York, 1932), 129–156Google Scholar. The influence of HOLC's appraisal policies on the Federal Housing Administration can be seen in FHA, Underwriting Manual (Washington, D.C., 1938)Google Scholar, part II, sections 6, 8, 9. Also see Babcock, Frederick M., “Influence of the Federal Housing Administration on Mortgage Lending Policy,” Journal of Land & Public Utility Economics 15, no. 1 (February 1939), 1–5CrossRefGoogle Scholar; Weiss, Marc, “Richard T. Ely and the Contribution of Economic Research to National Housing Policy, 1920–1940,” Urban Studies 26, no. 1 (February 1989), 122–123CrossRefGoogle Scholar. Abrams remained skeptical that real estate appraisal could ever become an exact science, arguing that the term “‘value”’ had become “a concept increasingly divorced from reality.” See Abrams, Future of Housing, 394–395.
16. Beney, M. Ada, Wages, Hours, and Employment in the United States, 1914–1936 (New York, 1936), 28–33Google Scholar; Weiss, “Marketing and Financing Home Ownership,” 115; Abrams, Future of Housing, 246. Wage figures given in the above study do not account for the millions of individuals who were unemployed during the Depression. One study made of the 530 families who lived in Sunnyside Gardens (a Queens housing development) indicated that before the Depression, 22 percent of family income was used for housing, while that figure had jumped to 44 percent by 1933. See U. S. Senate, Hearings Before a Subcommittee of the Committee of Banking and Currency on S. 1317 (Home Owners' Loan Act), 73 Cong., 1 sess.,20 April 1933,27Google Scholar. An interesting suggestion on how mortgage premiums could be adjusted to reflect economic circumstances can be found in Wickens, David L., “Adjusting the Mortgagor's Obligation to Economic Cycles,” Law and Contemporary Problems 5, no. 4 (Autumn 1938), 617–624.CrossRefGoogle Scholar
17. Abtams, Future of Housing, 246–248; Colean, A Backward Glance, 23; Fisher, Ernest M., “Speculation in Suburban Lands,” American Economic Review 23, no. 1 (March 1933), 161Google Scholar; Herbert D. Simpson, “Real Estate Speculation and the Depression,” Ibid., 163–167. For an early attempt to establish periodicity in real estate fluctuations, see Maverick, Lewis A., “Cycles in Real Estate Activity,” Journal of Land & Public Utility Economics 8, no. 2 (May 1932), 191–199CrossRefGoogle Scholar. HOLC, having liquidated all of its holdings, was dissolved in 1951. See Harriss, History and Policies of the Home Owners' Loan Corporation, 6.
18. “National Housing Act,” Public Law 73–479; Abrams, Future of Housing, Chapter 17; Roosevelt, “Recommendation for Legislation to Provide Assistance for Repairing and Construction of Homes,” in Public Papers, vol. 3, 232; Eccles, Mariner, Beckoning Frontiers: Public and Personal Recollections (New York, 1951), 148Google Scholar; Colean, A Backward Glance, 37. For Congressional acknowledgment that the bill was essentially an attempt to revive the building trades, see U.S. House of Representatives, Hearings Before the Committee on Banking and Currency on H.R. 9620 (National Housing Act), 73 Cong., 2 sess., 18 May 1934, 11; 28 May 1934, 137 (hereafter cited as Hearings on National Housing Act); Congressional Record, 73 Cong., 2 sess., 12 June 1934, 11191, 11194, 11198, 11205, 11210, 11222; 13 June 1934, 11383; Congressional Record, 73 Cong., 2 sess., 16 June 1934, 11973, 11981.
19. Hearings on National Housing Act, 28 May 1934, 122; 31 May 1934, 225, 249; U.S. Senate, Hearings Before the Committee on Banking and Currency on S. 3603 (National Housing Act), 73 Cong., 2 sess., 18 May 1934, 109; 19 May 1934, 152; 22 May 1934, 254, 258, 271, 276–278; 23 May 1934, 294; 24 May 1934, 421–422, 424; Congressional Record, 73 Cong., 2 sess., 16 June 1934,11975; Eccles, Beckoning Frontiers, 148, 153, 155; Colean, A Backward Glance, 30, 50; Ewalt, Josephine Hedges, A Business Reborn: The Savings and Loan Story, 1930–1960 (Chicago, 1962), 144Google Scholar. In addition to interest, borrowers also had to pay a 1 percent (later reduced to ¼ - ½ percent) insurance premium that covered the operating costs and reserve requirements of FHA. For an early version of the National Housing Act that omitted national mortgage associations and key elements of mortgage finance, see U.S. House of Representatives, Report No. 1922 (National Housing Act), 73 Cong., 2 sess., 4 June 1934, 1–4. The U.S. Savings and Loan League, along with the sympathetic support of John Fahey, was able to convince policymakers to include the provision in the National Housing Act dealing with federal deposit insurance for savings and loans.
20. Abrams, Future of Housing, 224, 226–229; FHA, Second Annual Report (Washington, D.C., 1936), 4Google Scholar; Fahey, “The Federal Home Loan Bank Board,” 6; Rosenman, A Million Homes a Year, 29, 264–265. While Abrams' concerns over FHA loan policies are difficult to evaluate precisely, his general reluctance to support positive assessments of FHA's influence on mortgage financing has received support from subsequent analyses of federal housing programs. Charles Haar argued that FHA interest rate ceilings might have provided an “excuse for lenders to charge at those rates,” while during periods of credit contraction, FHA policy seemed “unable to prevent a jump in interest rates on home mortgages.” Paul Wendt asserted further that FHA and VA programs had not demonstrably lowered interest costs during the immediate post-World War II period. FHA proponents also believed that its lower down payment requirements had been a significant spur to home ownership, though Henry Aaron concluded that these reductions did not significantly lower monthly mortgage premiums. As Abrams himself pointed out (after examining mortgage data for the West Coast), there was often a direct relationship between large down payments and the likelihood of defaults. See Abrams, Future of Housing, 225–226; Charles Haar, Federal Credit and Private Housing, 65; Wendt, Paul F., The Role of the Federal Government in Housing (Washington, D.C., 1956), 15Google Scholar; Saulnier, Halcrow, and Jacoby, Federal Lending and Loan Insurance, 361; Aaron, Henry J., Shelter and Subsidies: Who Benefits from Federal Housing Policies? (Washington, D.C., 1972), 8Google Scholar4; President's Conference on Home Building and Home Ownership, vol. 2 (Washington, D.C., 1932), 56Google Scholar. For a general discussion of FHA's effects on mortgage financing, see Frederick M. Babcock, “FHA Mortgage Risk Rating System,” Housing Yearbook, 1937, 90–96; and Babcock, “Influence of the Federal Housing Administration on Mortgage Lending Policy,” 1–5.
21. Abrams, Future of Housing, 224–225; Post, Langdon W., The Challenge of Housing (New York, 1938), 243, 246Google Scholar; Taylor, James S., “The Division of Building and Housing,” in Halbert, Blanche, ed., The Better Homes Manual (Chicago, 1931), 760, 765Google Scholar; Gries, John M. and Taylor, James S., How To Own Your Own Home (Washington, D.C., 1923), vGoogle Scholar; Tinkham, George Holden, “The Urgent Need for a Federal Bureau of Housing and Living Conditions in the Department of Labor,” American City 22, no. 3 (March 1920), 222–223Google Scholar; Hawley, Ellis W., “Herbert Hoover, the Commerce Secretariat, and the Vision of an ‘Associative State,’ 1921–1928,” Journal of American History 61, no. 1 (June 1974), 125CrossRefGoogle Scholar; Stein, Rose M., “More Home or More Mortgages?,” The New Republic (September 7, 1932), 90Google Scholar; Chase, Stuart, “The Case Against Home Ownership,” Survey Graphic 27, no. 5 (May 1938), 267Google Scholar. See also “The Second New York Own-Your-Home Exposition,” Building Age, 42, no. 6 (June 1920), 50–52Google Scholar; Holden, Arthur C., “The Home Sales Racket,” Survey, 68, no. 17 (December 1, 1932), 651–653Google Scholar; Lewis, Charles F., “Large-Scale Rental Developments as an Alternative to Home Ownership,” Law and Contemporary Problems 5, no. 4 (Autumn 1938), 602–6CrossRefGoogle Scholar07; Weiss, “Marketing and Financing Home Ownership,” 109; Leach, William, Land of Desire: Merchants, Power, and the Rise of a New American Culture (New York, 1993), 369Google Scholar. Hyperbolic statements by business interests suggested the validity of Chase's emphasis on the role “sentiment” and “emotion” played in home ownership appeals. In the midst of the Depression, Frederick Ecker, President of Metropolitan Life Insurance Company, opined that “too much cannot be said about the value of stimulating home ownership because of its effect upon good citizenship and upon the strengthening of family ties.” Several years later, the U.S. Savings and Loan League declared that “the privately owned home is the safeguard of American liberties.” See Frederick Ecker, H., “Own Your Own Home?,” Review of Reviews 35, no. 2 (February 1932), 30Google Scholar; U.S. Savings and Loan League, “Government Ownership of Homes,” reprinted in U.S. House of Representatives, Report No. 3139 (U.S. Savings and Loan League), 81 Cong., 2 sess., 31 October 1950, 626 (hereafter cited as Report No. 3139). The “Better Homes” movement began in 1922 and its national office was in Washington, D.C. With close ties to the federal government, the Better Homes movement sponsored “Better Homes Weeks,” during which local committees set up exhibits on remodeling and construction methods, home improvement contests, and demonstration houses. See Ford, James, “How National Attention Was Directed to Better Homes,” American Civic Annual, 1929 (Washington, D.C., 1929), 37–43Google Scholar; Huchison, Janet, “The Cure for Domestic Neglect: Better Homes in America, 1922–1935,” in Wells, Camille, ed., Perspective in Vernacular Architecture, II (Columbia, Missouri, 1986), 168–178.Google Scholar
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37. Leon Keyserling to Abrams, March 24, 1945, Reel 26, AP; Abrams, “The Threat to Public Housing,” 50; Abrams, Future of Housing, 216. The importance of consumption in the early post-World War II period is discussed in Conference on Economic Progress,Consumption: Key to Full Prosperity(Washington, D.C.,1957).Google Scholar
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