Much of this story revolves around the connections between the U.S. government and suburban development. Many recent American presidents have expressed a desire to please suburban voters—the "Forgotten Americans," in the words of President Richard Nixon; and some, like Presidents Nixon, Ronald Reagan, and Bill Clinton, have done so by supporting federal policies that favored the country's middle-class homeowners. Contemporary political candidates have also sought to win support from the suburbs; many vying for the presidency, including Bob Dole, John Kerry, John McCain, and Hillary Clinton, have campaigned in suburban neighborhoods as well as in cities. In addition, since the 1970s, the United States Army and Navy have set up informational booths—and, in recent years, flight-simulators—in suburban malls, parking lots, and outside high schools in an attempt to attract young, patriotic men and women willing to fight for their country in exchange for a decent salary and college funding. And in many suburban neighborhoods across the country, residents proudly display the American flag atop their front porch.
But beyond these somewhat superficial links between "suburbia" and the federal government is a history of connections that reveal how the suburbs have been shaped and influenced by the U.S. government—and vice versa.
The United States government has long been invested in housing standards and neighborhood design. Since the early twentieth century, it has contributed to the planning and construction of residential dwellings and has facilitated the growth of towns as well as local transportation networks. The government's earliest contributions to housing and transportation development served wartime industries during the First World War. New industrial workers needed decent and affordable housing near factories and manufacturing plants for at least the duration of the war. The U.S. Housing Corporation was created as a solution to this seemingly temporary problem.
After the war, some sought to improve on the Corporation's work. Herbert Hoover, serving as Secretary of Commerce in the early 1920s, created the Division of Building and Housing within the Department of Commerce in order to establish home construction standards for electrical wiring, plumbing, flooring, roofing, and appliance installation. These federal codes helped American businesses by compelling homebuilders, landlords, and homeowners to purchase new materials, strengthening the economy and improving the nation's homes. Later as president, Hoover signed the Federal Home Loan Bank Act, which established a credit reserve for mortgage lenders that increased available funds for aspiring homeowners. The legislation was largely ineffective, however, since only those people wealthy enough to make mortgage payments qualified for home loans. In other words, those Americans most in need of loans could not obtain them.
Then, in 1929, the Great Depression hit the nation and it hit hard, crippling the American economy and forcing millions out of work and, thus, out of their homes. For the first time since the emancipation of slaves, millions of Americans were unable to secure decent housing for themselves and their families. Entire communities of homeless citizens were compelled to make do with whatever materials they could find—cardboard, tar-paper, tin. Some made homes of old trolley cars, grain silos, and chicken-coops. One entrepreneur from Omaha even sent out a newspaper advertisement about his "Big Ice Box," which he proposed, at 7 x 17 feet, could be "fixed up to live in."13 (Some inhabitants nicknamed these makeshift neighborhoods "Hoovervilles" because they blamed their plight on President Hoover, who led the nation during the first two years of the Great Depression.)
On a quest to stabilize the economy during hard times and to ensure the future of the country, leaders sought more permanent solutions to the nation's housing needs. Some delivered plans based on the earlier World War I model, that is, the health of American business depended on proper housing for workers—and even more importantly during the Great Depression—consumers. Others were more concerned about simply sheltering the men, women, and children who had lost nearly everything. Everyone agreed, however, that decent, affordable housing and better access to homeownership would provide the foundation for a stable society.
Elected in 1932, President Franklin D. Roosevelt set out to reduce the pain of the Great Depression by putting Americans to work—the surest way, he believed, to stimulate the economy. But his New Deal programs were aimed at accomplishing much more than reducing the nation's unemployment rate.
With the stock market crash in 1929, banks and private lenders, anxious to protect themselves from certain financial ruin, scrambled to collect on all sorts of loans and debts, including mortgages—large loans issued to homebuyers and property holders. Hundreds of thousands of people, unable to pull themselves out of debt, lost their houses, farms, and small businesses. It was a disaster years in the making. Before the 1930s, most mortgages were short-term; that is, borrowers had just a few years to repay loans. Often, however, interest rates on loans were extremely high and, so, each month borrowers could only afford to chip away at accumulated debt on the loan's interest, rather than the loan debt itself. Thus, even those who somehow managed to diligently pay on the interest owed could make no dent in the actual amount of money borrowed. Once the term of the loan had expired, the borrower usually owed the full sum of the original mortgage loan—or more! Few were able to make the payments, families were forced to move, and lenders repossessed or resold the property.
Through the creation of the Home Owners' Loan Corporation (HOLC), President Roosevelt hoped to buffer Americans from this fate and to assist prospective homebuyers in protecting themselves from mortgage foreclosure. Created in June 1933, during the first months of his presidency, Roosevelt managed to reform old bank policies that left Americans in a bind. The HOLC refinanced restrictive home loans, and instituted long-term mortgage payment plans with more manageable monthly payments to be spread out over a much longer period of time—in many instances, for 20 more years than the usual short-term loan. By the late 1930s, the HOLC had provided nearly one million low-interest, long-term loans, making it one of the most successful of all President Roosevelt's New Deal programs.
For the HOLC to guarantee a safety net to American homebuyers, it had to create a new national standard for appraising the monetary value of real estate. It was up to the Corporation to decide how different sorts of properties—a single-family home, a small farm, a large ranch estate, an empty lot—in various regions of the country should be valued. In deciding what variables to include in that evaluation, the HOLC took its cues from contemporary divisions in society. Property values were often linked to the race, religion, and ethnicity of a community's inhabitants. And as a result the HOLC did not offer loan assistance to most African-Americans, Jews, and immigrants, depriving many of the opportunity to own property—the essence of the "American Dream."
The creation of the HOLC, then, was a significant first step in protecting American property holders, but it also set a dangerous precedent for the future of mortgage lending and community development. It would ultimately lay the groundwork for explicit discrimination in the real estate industry, and the growing ethnic, racial, and class divisions between old urban communities and new suburban housing developments.