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The Real Estate Industry Lobby and Public Housing in the 1930s

Urban reformers in the late-nineteenth and early-twentieth centuries had long pointed with horror to the unsanitary and inadequate conditions in which millions of Americans lived, particularly in large cities. But it took the severe economic crisis of the Great Depression to force the federal government to intervene directly in the housing market, and even then the response was often only half-hearted. In the 1930s, access to public housing was highly desirable, and early residents preferred their new homes, which offered bright and well-appointed alternatives to their previous substandard residences. The sharpest criticisms of public housing, however, came from builders and realtors who feared competition and argued that public housing was too appealing and would decrease home ownership. The most influential of the anti-public housing lobbies was the National Association of Real Estate Boards (NAREB). In this 1935 report to the board, NAREB president Walter S. Schmidt argued against public housing on economic and ideological grounds.

One of the distinguishing marks of our American civilization is a widespread ownership of land which is the bulwark of a democratic form of government. It was to obtain such a stake in land that the founders and early settlers of our country were motivated to endure the hardships involved in building this civilization. Wise federal action should tend to protect and stimulate private ownership. The necessities of the emergency should not cause government to take such action as will discourage ownership by setting up petition which individuals cannot meet, or by setting tenement occupancy so attractive that the urge to buy one’s own home will be diminished.

Housing should remain a matter of private enterprise and private ownership. It is contrary to the genius of the American people and the ideals they have established that government become people to its citizens. This is not true of countries in which certain classes of people have been submerged for generations, and in which it is practically impossible for members of great sections of population ever to come into possession of their own homes. Sound conclusions, therefore, cannot be based on policies followed abroad. Very serious repercussions to our national life will follow if government continues its policy of direct action in becoming landlord to masses of its people, and the same can be said of its becoming the holder of mortgages on the homes of its citizens. The ultimate result will be that we will find government supporting the citizen instead of the citizen supporting government.

There is sound logic in the continuance of the practice under which those who have initiative and the will to save acquire better living facilities and yield their former quarters at modest rents to the group below. The movement might well be accelerated by Federal help. A means to this end might be supplied by the following plan: that arrangements be made with mortgage lending institutions whereby loans up to eighty or eighty-five per cent of value will be granted, that the federal government advance twenty-five or thirty per cent of the total mortgage at an interest rate of two or three per cent with the provision that a major portion of the differential in interest rate would apply to amortize the Government’s advance.

Source: Walter S. Schmidt, “Report Concerning Certain Federal and Private Activities in the Field of Real Estate and Housing,” made to the Board of Directors of NAREB, Detroit, 30 May 1935, NAREB Files, Chicago, quoted in Timothy McDonnell, S. J., The Wagner Housing Act: A Case Study of the Legislative Process (Chicago: Loyola University Press, 1957), 138–9.