The Legacy of New Deal Housing Reform
Talk for the New Deal Center, Roosevelt University
Center for New Deal Studies

October 21, 1999

Gail Radford
Associate Professor of History
State University of New York at Buffalo

When Anna Eleanor Roosevelt wrote a few months ago asking me to come here today and speak about the legacy of New Deal housing reform, I was honored and also pleased. I looked forward to making a contribution to putting affordable housing back on the public agenda.

This issue hasn't been getting much coverage in the 1990s, with the exception of the upbeat accounts that appear periodically in the media noting the destruction of a high-rise public housing project somewhere in the country. These stories have a typical format: dramatic photos of high-rise towers being dynamited, accompanied by illustrations of plans for charming rowhouse developments that will supposedly replace the hateful old public housing. What the news reports rarely mention is that there isn't even an intention to construct the same number of units as are being destroyed, let alone the resources to do so. Therefore, getting rid of the wretched old public housing buildings means that many tenants wont have anyplace to live that they can afford. Since this issue is usually mentioned obliquely if at all, the chipper tone to the stories is preserved.

Of course, one reason these stories are popular is that they play into the notion that the New Deal concept of affordable housing failed. Perhaps the real truth, however, is that the New Deal vision was never tried. This afternoon I want to talk to you about what that vision actually was and what it means for us today.

In this presentation, I will start by explaining the kinds of housing initiatives that were made in the early New Deal. Next, I will explain the way our federal policy actually worked out. Finally, I will discuss the implications for public policy today, in other words, how we can draw on the full New Deal housing legacy.

I

To start with the historical background: during the Great Depression, there were a variety of proposals put forward for dealing with housing questions. The most expansive and creative was the one I highlighted in my book. Supporters called it the modern housing program. Modern housing advocates included urban planners, architects, and trade union leaders. These were people who had broken with the standard American assumption that for-profit real estate activity would be able to provide for the shelter needs of all Americans, including low-income urban families.

Paradoxically, it was during the big economic expansion and building boom of 1920s that many policy oriented intellectuals gave up on that assumption. Chicago was a center for this kind of analysis. This was a city with a tradition of social surveys, where reformers had been regularly collecting data on working class living conditions since the turn of the century. Edith Abbott, who headed the School of Social Service Administration at University of Chicago, was one of the leading reform-minded researchers. When even the prosperity of the twenties failed to make any real difference in the housing conditions of low-paid factory workers, Abbott concluded that the crux of the problem was that small incomes simply couldn't pay the actual costs of decent urban shelter. Unless wages went up, the government had to enter the picture in some manner to make up the difference. This became a widely shared view.

Based on this analysis, modern housing advocates came up with a plan for changing the American system of housing provision. The plan had two parts. The first had to do with design, and the second with money.

With regard to design, much of the inspiration came from Europe. During the 1920s, social-democratic governments in Europe built significant amounts of low-rent housing for working families. On the Continent, young architects used their housing commissions to try out new building techniques, new materials, and new aesthetic styles. This was when the modern movement in architecture really got off the ground. In Britain, architects were more staid with respect to architectural styles, but they were pioneers when it came to large-scale site design. It was the British who developed the garden city idea and the greenbelt concept.

American urbanists and design professionals drew on these ideas and mixed them with a homegrown tradition of planned communities. They developed plans for what today would be called clustered developments of townhouses and garden apartments set within large landscaped sites. The idea was to create a residential neighborhood that would combine the advantages of suburban living with the amenities of the city. Denser building patterns were favored in order to cut costs, but also to limit sprawl. Individual living units were to be smaller than upscale suburban homes, they they wouldn't be minimal. The goal was for modern housing to be of a quality that would appeal to the middle third of the income scale. In some ways it would provide a superior alternative to upscale private development, because neighborhoods would be quiet and green like the suburbs, but there would be a variety of services, things like daycare, recreation programs, libraries, clinics, and cafes, all within easy walking distance. Thus, modern housing would compete in terms of the quality of life dimension, as well as price.

The financial aspect of the modern housing proposal had to do constructing these new kinds of neighborhoods with public subsidies and then organizing them into a large noncommercial housing sector. Proponents wanted the housing to stay out of the speculative market in order to assure permanent affordability. This was why they didn't want to just sell the units at below-market rates. Because, if one does that, all the public money that goes into subsidies only guarantees a one-time windfall for a few lucky families. When these families sell their residences at market rates, it is likely that the housing will be more expensive for the next occupants. Indeed, the better planned and more desirable the housing is, the more this will be true.

Of course, as we all know, one of the big things people want out of owning their own homes is the ability to control their personal environment. Its a reasonable human desire. I myself have just escaped from living in an apartment house where the landlord seemed determined to bake us. He bought a fancy new furnace a couple of years ago, and we couldn't convince him that it made the place too hot. You have no idea how unpleasant it was to have to keep your windows wide open the windows in the middle of winter, in Buffalo! It is this kind of situation that makes people want to own their own place. Modern housing advocates wanted residents in subsidized housing to have more control than is typically available to private or public tenants. This was why they envisioned a role for local non-profit developers, labor unions, and consumer cooperatives. They believed that these kinds of groups would allow residents real input into decisions about design and maintenance.

You may be thinking that this plan that I've just sketched out was some sort of utopian dream that had no real constituency or chance of adoption. In fact, ideas associated with this approach were very much in the air in the early 1930s. Some of them were even put into practice in the first federal housing program of the New Deal, administered by the Public Works Administration (PWA). During its four years of operation, from 1933 to 1937, the PWA Housing Division built approximately 55 housing developments around the country. The complexes contained a total of 25,000 units of housing.

Several of these developments have been praised for their high design standards. Many had a lively social life. For example, in Philadelphia, the Hosiery Workers Labor Union sponsored a apartment complex that included a swimming pool and an auditorium, where tenants held meetings, took art classes, and put on plays. It also had an outstanding day care facility that early tenants remembered fondly decades later. In Chicago the PWA Housing Division built three developments: the Jane Adams Houses, located near Hull House on the Near West Side, Trumbull Park Homes in South Chicago, and the Julia Lathrop Homes on the Near Northwest Side.

An acquaintance of mine in Chicago, an architectural historian, who is very sensitive to good design, but not so concerned with affordable housing, has spoken to me on several occasions about how basically attractive he finds the Jane Addams Houses. He has told me repeatedly about how he wishes the complex could be refurbished and re-landscaped, because it would make such good middle-income housing. I'm always a bit queasy when he brings this idea up, because I'm not enthusiastic about the idea of depriving low-income families of affordable housing in favor of people with more money. But, actually, his reaction says something very positive about the way the Jane Addams Houses were built, and points to a key part of the modern housing program. This was its conception of a unified program, one that would serve moderate income people, as well as those with low-incomes.

The advantage of a unified program is that its more politically viable. Programs aimed only at the poor lack the political consistency they need to keep them well funded. During conservative periods, programs that are targeted to people with little political clout tend to get cut back or even abolished. By contrast, unified programs that roll low-income people in with everyone else, programs such as Social Security and Medicare. have demonstrated a lot of staying power.

II

The ideas I've just sketched out constituted the early New Deal vision. Now I want to describe what actually happened. To put the story in a nutshell, instead of a unified program, what we got was a two-tier federal housing policy. On the one hand, the really successful housing programs that came out of Congress in the 1930s were aimed at restructuring, regulating, and subsidizing the private market. Agencies like FHA, Fannie Mae, and the Federal Savings and Loan Insurance Corporation supported single-family homebuilding and homeownership. Although it wasn't created in the 1930s, I should mention that the mortgage interest deduction is another of these mechanisms. Currently this provision of the tax code amounts to a $53 billion tax subsidy for homeowners. These programs work indirectly, but they are very powerful. Whereas developers and the financial institutions involved in real estate were literally prostrate in early 1930s, the New Deal programs that I've just mentioned restructured the market such that we got the enormous suburban building boom in the 1950s.

Meanwhile, we got a lower tier of federal housing policy that involved directly subsidized publicly owned housing. This is what we've come to know as public housing. Senator Robert Wagner, working with modern housing advocates originally put forward a public housing bill that would have continued the spirit of the PWA programs. Unfortunately, Wagner's bill didn't pass until 1937. This was right at the moment that conservatives were shutting down the reform phase of the New Deal. The result was that many of the best features were stripped out of the legislation. For example, the provision for non-profit groups to participate was eliminated. Also, penurious limits on construction costs were enacted, ensuring that public housing would present the grim, no-frills character that today we associate the projects. Conservatives would only allow publicly owned housing to exist if it was made into the option of last resort.

When we evaluate this policy framework, we have to acknowledge that the top-tier did result in a lot of good-quality housing. Much of it was affordable to moderate income families. This is certainly obvious to me, since I grew up in a 1950s tract house in Southern California that my parents purchased with through a Veterans Administration mortgage program.

But there were disadvantages to the policy direction we took. For example, it consistently favored suburban development, much of which resulted in poorly planned sprawl. Not always, however. A few farsighted, socially responsible individuals, such as Philip Klutznik, used the market-support programs to build real communities, such as Park Forest. Unfortunately, Philip Klutznik not the norm. The typical developer more closely resembled the person who built the street I grew up on: an isolated cul-de-sac off a four-lane highway that bordered some deserted farmland in an unincorporated part of Los Angeles County. Although our house was affordable and comfortable, the larger environment was decidedly bleak.

Another problem is the way our housing programs have become skewed in favor of the wealthy. The best example is the mortgage tax deduction. As you remember, I mentioned that this tax subsidy totals $53 billion a year? Well, this program is not only expensive, its highly regressive, in that people who can afford the biggest mortgages get the most. To give you a sense of what I mean, we are currently giving tax subsides of $12 2 billion a year to people who make over $200,000.

But of all the drawbacks of the path we took in housing, probably the most serious is that it never solved the problem of affordable housing for low-income people. Presently, we are in the midst of an economic expansion with low unemployment. But a lot of the jobs that have become available pay low wages. According to HUD statistics, 2/3 of very low-income households are spending at least half their income on housing. Meanwhile, for a variety of reasons, the stock of affordable housing keeps shrinking. Since the 1970s, we've lost over 2 million units that low-income people can afford. These trends are going to continue unless we do something.

III

So far, I've described the vision of the early New Deal and I've sketched out the direction our policies actually took. As I've explained, these policies have had successes, but they have had serious drawbacks. Currently, the negatives seem to be outweighing the positives. So now would seem to be a propitious moment for us to revisit some New Deal ideas that we've lost track of. I would venture that we can gain inspiration from considering the two general features of the modern housing program.

First, modern housing advocates wanted to support design innovation. American architects have been putting forward exciting alternatives for new kinds of housing and neighborhoods for several decades. We need to fund more of these plans. Many of these design ideas, incidentally, are aimed at providing more manageable living spaces for new forms of families, such as single professional women with children, rather than only low-wage people.

Second, modern housing advocates wanted to create a vibrant non-commercial housing sector. They wanted this sector to be able to offer appealing, affordable, and ecological housing options to a broad sector of Americans. One of the stumbling blocks for modern housing in the 1930s was how few groups had any experience with housing development. Today we have over 2,000 community development corporations around the country with expertise in building and managing low-rent housing. On the whole these groups have done a tremendous job with the resources available. But they are under funded. Over the last ten years these organizations have only been able to construct around 35,000 units. Just as Edith Abbott realized in 1920s in Chicago, housing for low-income people needs public subsidies. The private sector, even the non-profit private sector, simply cant do it alone. Think of the possibilities if we could direct even some portion of our $53 billion dollar tax-subsidy program into grants and low-interest loans to non-profit developers!

In conclusion, I want to say that I believe that the New Deal was one of the most creative moments in our history. Numerous good ideas were put forward for improving our society. Many of these ideas were institutionalized. Some failed politically. But either way, they left us a legacy of possibilities for using government to address social problems. I hope my remarks today will convince you that, even if some parts of federal housing policy have proved disappointing, the legacy of early New Deal housing reform is still a rich resource for American life.