In “Crabgrass Frontier,” Kenneth T. Jackson discusses the influence that the government had on housing in the 1920s. He mentions how the government encourages businesses to abandon old structures before their useful life is at an end by permitting greater tax benefits for new construction than for the improvement of existing buildings. This is how the government was subsidizing the acceleration rate at which economic activity was spread to new locations. I find this method to be interesting because the modern government does the same thing with investments, such as taxing capital gains and dividend income less than the income tax rate so that more people would invest their money in the markets. This makes it seem like the government, both of the past and current, is able to manipulate the economy and living conditions through certain economic incentives to the public.
Another interesting point was that the first federal housing effort in the United States was to help in the war efforts in 1918. Rather than start as the result of a conscious effort to help the poor or to increase reform spirit, it was done to help provide industrial workers who produced weapons for the European conflict with homes. This makes it less surprising that Americans did not view government intervention in a positive light until the Great Depression in 1929.
Under President Roosevelt, there were several laws passed to help the condition of the American housing market that was in its worst condition in American history. Times like this in American history show when and how a government can be helpful to Americans when they really need it. For example, the Home Owners Loan Corporation introduced, perfected, and proved in practice the feasibility of the long-term, self-amortizing mortgage with equal payments spread over the term of the debt. This new development helped homebuyers get a fair loan that they can pay off over time.
The changes that took place, which allowed homebuyers to buy the house without as much stress as they would have before were drastic improvements. For example, by establishing minimum standards for home construction, provided homebuyers with the satisfaction that their investment would be free of gross structural or mechanical deficiencies. The fact that there were inspections done to supervise the implementation of the law makes it seem like the government really believed that these changes were necessary and needed to be enforced.
The most surprising thing for me was that the FHA was helping the building industry against the minority and inner-city housing market, and its policies were supporting the income and racial segregation of suburbia. That was the first time that the federal government embraced the discriminatory attitudes of the marketplace. The FHA exhorted segregation and covered it up as public policy. This is very surprising to me because I would have never imagined for a government administration to clearly conduct discriminatory practices in public works. Overall, the move from the inner-city neighborhoods to the suburbs was caused in large part by the government’s influence on the American public through its loan system.
