Early New Deal: 1933 NIRA
Roosevelt as described in the last chapter was not an urban reformer—certainly not a community developer. His tendencies overlapped CD’s planned community wing, but his primary mission in 1933 was to get America back to work (Abrams, 1965, pp. 71–3). To that end, he would work with just about anybody—as evidenced in this inclusion of the proto-CED wing of the US Chamber. What came out of that process was the National Industrial Recovery Act of 1933 (NIRA). Although housing was a small part of the legislation, federal inclusion of housing as a job creation initiative radically altered the path of housing and inner-city slum clearance—not to mention directly supporting a first-ever federally funded Planned Cities program.
Title II authorized $3.3 billion to the Public Works Administration (PWA) to fund local work relief projects to provide public jobs for the unemployed. A provision injected by New York Senator Wagner made eligible “low-cost housing and slum clearance” projects to limited-dividend corporations and direct loans and grants to states and localities to build public projects. Also included in the legislation was $25 million to a Division of Subsistence Homesteads (later transferred in 1935 to the Resettlement Administration) “to redistribute overbalance of population in industrial centers.” Each Act’s bottom-line goal was to “increase employment quickly” in the building trades, which were among the hardest hit by the Depression.6 Housing, under NIRA, was a public works job-creation program “designed to reduce unemployment and restore purchasing power by employing workers in the construction trades and from the building supplies industry.”7
The limited-dividend program was copied from Hoover’s proposed 1932 initiative. Upon release, the Reconstruction Finance Corporation attracted 600 applications for proposed projects; only one (New York City’s Knickerbocker Village) was actually built. The second release from the PWA’s Housing Division attracted 500 applications—only seven projects were funded. All completed projects housed whites only and built on vacant land (no slum clearance). The first to open its doors was Philadelphia’s Carl Mackley Houses (1935). Each was a three-floor Modernist style home. Hillside followed the Radburn designs and was developed by Clarence Stein and Henry Wright.8 Like previous limited-dividend projects, the limited-dividend approach resulted in high-quality apartments that were too expensive for workers.
Most limited-dividend projects went to Planned Community CD developers. Harold L. Ickes, head of the PWA, suspended the limited-dividend program after only a few months in operation (in February 1934): “The results were disappointing. In the end only seven housing projects, with roughly three thousand units, were erected, about three-quarters of them in the outer boroughs of New York City” (Fogelson, 2001, p. 339). Like the RFC before it, the PWA [limited dividend] program was impractical during the Depression. Most applicants could not bring to their project even the modest 15% equity required by the law, and the limited profit requirement proved too burdensome to attract significant interest from private developers.9
The program, however, was the first federal housing initiative.
What Ickes wanted was better achieved by having the PWA directly build its own housing, in neighborhoods it had cleared. After February 1934, the PWA acquired the land, let out the contracts for slum clearance and construction (private builders), and owned and operated the completed housing. These PWA publicly owned housing projects built between 1933 and 1937 were multi-family, four story, low density, no elevator, low cost and organized around large open spaces on inner-city superblocks (formed from several city blocks). Fifty-one projects in 36 cities were completed; 21 housed blacks and six included segregated apartments for whites and blacks. One-third of its units were rented to blacks. Thousands were employed in the units’ design and construction. They housed over 22,000 families, and slum clearance removed 10,000 substandard units—at a cost of $130 million (Wright, 1981, pp. 222–39). The first to be completed was the 604-unit Techwood Homes in Atlanta (1936). Chicago constructed the most units (2414). Importantly, a major goal for Ickes’s PWA projects was to “seek out some of the worst slum spots on the municipal maps and abruptly wipe them out with good low-rent housing” (Ickes, 1934, p. 16).10 Ickes, in other words, placed slum clearance on an equal par to housing construction.
Ickes triggered a discussion within inner-city public housers regarding the role of slum clearance relative to the construction of public housing. Most public housers, like Edith Wood and Mary Simkhovitch, assumed the two activities were inseparable: “Slum clearance would not only eliminate the blight, but its replacement with new low-income housing would allow the poor to continue to live near the places of their employment” (Wood, 1936, p. 20). Local public housers preferred, to the extent possible, new construction (on vacant land) to slum clearance—the latter increased construction cost and delayed opening new units. The underlying tension between slum clearance and housing was if the latter came first, where would those displaced go? At this juncture one sees a profound distrust of replacement housing built using the profit motive by conventional private real estate developers. The lack of an effective HEDO (the limited-dividend company clearly not up to the task), the apparent distrust of community developers of used, “hand-me-down” housing alternatives provided by dynamics of neighborhood succession, and the strong almost rigid preference for government-owned replacement housing (and vice versa with the private sector) left little room for compromise—even during the thirties when neighborhood change and slums did not present a compelling racial dimension.
Opposition to Ickes’s approach came from Lewis Mumford’s RPAA Planned Community wing. Catherine Bauer, for example, believed that slum clearance only benefited the real estate industry, which would sell land at inflated prices.11 New housing built on cleared land would “force the dispossessed tenants … to move into some neighboring run-down district and crowd it more thickly than it was before” (Bauer, 1933, pp. 730–31). Mumford stated that: “if we wish to produce cheap dwellings, it is too raw land we must turn … The proper strategy is to forget about the slums … When we have built enough good houses in the right places, the slums will empty themselves”12 It was slum clearance, however, and federal eminent domain that spelled the end of the Ickes’s PWA program.
Ickes based his federal power to condemn local land under the authority of NIRA. A federal district court in (1935) United States v. Certain Lands in the City of Louisville (Kentucky) threw it out the window, stating it was not a proper (federal) “governmental function to construct buildings in a state for the purpose of selling or leasing them to private citizens for occupancy as homes.”13 Ickes never appealed the decision; from then on he built only on vacant land or land acquired without condemnation. It was clear to federal decision-makers that if slum clearance was to occur, it would have to be done by local agencies empowered by state authorization and judicial confirmation. Local housing authorities needed to be established post-haste. The initiative to create local housing authorities was already underway.
Ohio was the first state to approve legislation enabling its municipalities to clear slums, build and manage public housing (1933). The legislation, drafted by Ernest Bohn, “set up independent housing authorities that might move more expeditiously outside the confines of the municipal bureaucracy.” The housing authority was the public houser’s HEDO, and seldom has a HEDO been so easily created. There are several reasons: the essence of a HEDO confronting a physical development/ redevelopment agenda is that it possesses tools such as tax abatement, eminent domain, tax-exempt and revenue-bond issuance, and the right to own and manage property for a public, judicially approved public purpose. The port authority provided the model and the boilerplate. Since the property in question was to be government owned, lease/back or write down was not required.
Governance of housing authorities was usually dominated by private public housers, sprinkled with municipal officials. Public housing not being a central concern of thirties’ mayors or council leaders, political attention focused on intermittent controversies or elector opportunities presented, that is a degree of autonomy usually accompanied a housing authority. Of course, some mayors took more interest than others. The relatively rapid expansion/diffusion of housing authorities created the nucleus for a profession—and the need to write the proverbial instruction manual for public housing redevelopment. In 1933 the NAHO, a professional association for public housing officials, was established to provide technical assistance and to advocate housing policy. In 1934 at a Baltimore Conference the NAHO published “A Housing Program for the United States,” asserting that housing to be “essentially a local matter” with planning and management to reside at the municipal level. The federal government’s role was to provide a subsidy to the tenant for construction and rent. At the request of Ickes, in December 1934 FDR sent a letter to each governor requesting they approve legislation similar to Ohio’s. Senator Wagner translated the NAHO report into a bill dropped into the 1935 congressional hopper. It saw the light of day as the Housing Act of 1937. By 1938, 30 states, the District of Columbia and Hawaii passed such legislation, and nearly 50 communities had established housing authorities.14
The Housing Act of 1937
The 1937 Housing Act (aka the Wagner–Steagall Act) created the Federal Housing Administration which became a forum and a vehicle for the NAHO’s public housing proposals. Any resistance to NAHO/public housers (aside from conservative Congress) coalesced under Herb Nelson, NAREB’s executive director. It was not Nelson’s (or the real estate industry’s) finest hour—he lost badly. Critical to Nelson’s defeat was that the local business community had not yet focused on slum clearance and housing projects. The 1937 Housing Act was a public houser near-total victory, and proved to be the high water mark of CD-advocated public housing and slum clearance. Roosevelt in his second inaugural address provided rare, but general, support for the housing initiative: “I see one-third of a nation ill-housed, ill clad, ill-nourished”. The 1937 Housing Act created a federal public housing program to remove unsafe and insanitary housing conditions found in inner-city slums, replacing them with government-owned and supported public housing for low-income families.
The Act empowered the US Housing Authority to make loans/grants to newly created local housing authorities for the purpose of clearing slums and building low-rent housing. The law required a one-for-one demolition to new construction ratio. This requirement, introduced by Massachusetts Senator David Walsh—a strong proponent of slum removal through “demolition, condemnation and effective closing” of substandard units—highlights public houser determination that “slum clearance should remain a goal of public housing and not merely an afterthought.” By 1939 the program was extended to smaller cities (under 25,000), causing a new rush to establish local housing authorities. In 1939, 205 new local housing authorities were created—adding to the existing number. In the same year, NYC opened two projects (Red Hook and Queensbridge) that totaled almost 5600 units—the latter being the largest funded by the 1937 Act.15
Unlike NIRA, employment and job creation were not the primary objectives of the program. The 1937 Housing Act triggered an intensified interest in state legislation (tax abatement, bond-issuance, eminent domain and real estate ownership) to establish/ empower municipal/county housing authorities that made slum clearance and municipal-owned housing possible.
Under the Act … local authorities were invited to borrow money through bond issues; with the proceeds they were to acquire sites, clear them, and put up houses. The federal government would enter into “contracts” with local housing authorities … [and] would agree to pay enough money for the interest on the bonds and the amortization of the principal. Operating expenses … would come out of current rents. (Friedman, 1966, p. 648)
The Act essentially changed the role of the federal government from builder and owner (PWA) to banker. Over the five-year period the Act was authorized and funded (1937–42) more than 370 housing/slum clearance projects were successfully constructed by local housing authorities. Despite the one-for-one demolition clause, Nathan Straus, director of the United States Housing Authority (USHA), believing that a lesser ratio would increase supply of housing, thereby reducing rents, provided deferments upon request by local housing authorities. To reinforce that position, he appointed Catherine Bauer (of the Planned Communities wing) to head the process. Approximately, 100,000 new units were constructed and a bit more than 70,000 destroyed 16
While housing unit design continued along a “Modernist” or “International” motif, housing/slum clearance/housing projects came in two styles. In small cities and suburbs they were low-rise row houses whose residents were:
submerged [by the Depression] middle class and the projects were literally stepping-stones to middle class life and a home of one’s own. We may take as an archetype … Middletown Gardens in Delaware County, Indiana—a 112 unit low-rent, housing community built on an 80 acre outlying tract … [where by 1944] one-quarter of the families were able to own their own homes. (Friedman, 1966, p. 652)
Land in the Big Cities, however, was too expensive to follow this model:
The cost squeeze meant the end of low-rise, “home-style” housing projects. The buildings turned into towers [generally six stories] … twenty or more in New York and Chicago. Costs and the enmity of the outside world squeezed the buildings into the heart of the slums. The ratio of Negroes to whites increased radically. (Friedman, 1966, p. 652)
For the record, these 1937 Housing Act slum clearance and housing projects played a significant role in Hirsch’s Making of the Second Ghetto. The Act had a noticeable impact on community development. Obviously the two community development housing wings were elevated. Their status may not have matched chamber prominence or visibility, but for the first time professional employment in a semi-autonomous housing agency offered a paycheck; experience (real estate, property and construction management, tenant selection, relocation services, legal, budgetary, leadership); a body of knowledge; access to municipal decision-making; a role in the local policy system; and a cutting-edge strategy that promised to transform the Big Cities of the North and Midwest—if not the nation. With national and state professional associations in place, coupled with a friendly federal agency, local housing authorities were not totally dependent on municipal taxes and municipal oversight.
If the Philadelphia Housing Authority is a useful guide, the range of activities beyond slum clearance, housing construction and management included: planning both project and comprehensive, studies of poverty, building condition, neighborhoods, housing markets, public relations and program education. Within each project a set of services, not dissimilar from those offered by the early settlement houses and community centers, could be found. Boards of directors were recruited from sympathetic elements of the local business community, providing a two-way linkage into the local power establishment and a series of shared experiences/relationships that would prove important in later years. Community development had forged a niche from which future economic development would follow.
This burst of low-rent public housing did not last long. By the end of 1940, clearly threatened by imminent wars, funds were reduced; in 1942 federal funds attached to the 1937 Housing Act ceased. Chicago’s almost 1700-unit Ida D. Wells project, completed in January 1941, was the last 1937 Act project to open. Not to worry, however: a new federal housing program had already been established to continue federally driven local housing and slum clearance. Those 1937 Housing Act projects already in construction were transferred to the new program. Indeed, the USHA’s first re-jiggered defense housing project—Pensacola’s 200-unit Moreno Court, opened in November 1940— took just 87 days to build.
Ron W. Coan 