"The truth will set you free. But first it will piss you off."

Gloria Steinem

Friday, January 24, 2014

Blaming the Federal Government Some More (Third in a Series)

     In my previous post, I briefly outlined what I termed the “overseas decision” made by the Federal Government after the end of World War II and how it had devastating consequences for our urban areas, dependent as they were on heavy industries.  Foreign competition in basic heavy industry would have wreaked essentially the same havoc on our industrial cities and towns if it had been the only challenge they had to face.  As it came to be, however, by the time foreign competition began to undercut our traditional industries, our urban areas were already in the grip of disinvestment, and had been for some time.  The biggest blows to urban America came from the Federal Government’s home-focused decision.

     That decision was that the men who had won the war deserved Federal help returning to civilian life.  Rather hard to fault, no?  These were the men who had been wrenched from their civilian lives to fight in far-off corners of the world, and who had survived.  Surely they deserved some help in establishing a normal life?  Besides, the nation’s leaders had a very unpleasant historical lesson to learn from, one they had not forgotten.
     Many of them had been the young Progressives who had seen how World War I had ended their era, and how World War II had done the same to the New Deal.  They remembered how badly the U.S. government handled the end of the first war, abruptly canceling contracts with heavily-invested businesses and failing to assist the transition of the Doughboys back to civilian life, to name but two examples.  The young men so shabbily treated after WW I were the older, desperate men, many unemployed since the start of the Depression, who with their families descended on the nation’s capital in July, 1932 in what is known to history as “The Bonus March.”  Some 20,000 veterans and their families set up camps along the Anacostia River.  Their goal was, by today’s standards, rather modest; they simply wanted an earlier redemption of certificates each veteran had been issued.  On July 28, upon order of President Hoover, local units of the army under the command of General Douglas MacArthur physically drove everyone from their tent city, burning it in the process.  MacArthur, disregarding an order from President Hoover to cease, employed both cavalry and tanks, the latter commanded by the then Major George Patton, to complete the rout.  Four were killed, and over 1,000 wounded.  That incident, and the whole ugly controversy over the treatment of our World War I veterans were fresh in the minds of our leaders.  They knew that the number of soon-to-be-veterans was exponentially larger than in 1918, making the potential problem exponentially worse.  They were determined not to make the same mistake twice.

     Several actions were taken to fulfill this decision, but the best-known result was The Serviceman’s Readjustment Act, better known as the “G.I. Bill.”  FDR signed it into law on June 22, 1944 (more than a year before the end of the war, keep in mind).  The Serviceman’s Readjustment Act significantly changed the course of our nation’s history.   The Act had several provisions, such as government loans for education, which in the coming decades transformed higher education in America from an elitist privilege to every man’s possibility.  That alone is quite a story, but the provision most relevant to our tale was that guaranteeing mortgages for the enormous number of veterans and their families seeking to settle down and establish—or resume—a peacetime routine.  Veterans, armed with such mortgage guarantees, could obtain one with no down payment.  Between 1947 and 1957, veterans’ loans accounted for almost 50% of new mortgages.  In all, fourteen million home loans were guaranteed by the Federal Government under the original Bill.  These were the loans that fueled the growth of the American suburbs. 

     The G.I. Bill was not the only government incentive for homeownership.  The Federal Government was anxious to avoid a return to depression, and knew that the returning veterans would need jobs to avoid such a future.  We had another ace to play, and the government did not hesitate to play it.  It was the same ace that had been America’s greatest contribution to winning the war.  When all is said and done, the decisive Allied advantage over the Axis and Japanese forces had been the productive capacity of the United States.  We could equip our own armies, supply our allies, and replace what both lost in combat; our enemies could not.  The principles of how to standardize design and build in huge quantities had been learned during the war, and the production capacity remained when peace arrived.  The government realized that putting that productive capacity toward peacetime goals would provide jobs for the returning veterans. 

     The manufacturing approach that had contributed so much to the war effort was turned toward solving the housing shortage, in a manner largely determined by further actions of the Government.  The Federal Housing Act of 1949 offered builders financial incentives to build large, and they responded, producing enormous developments of single-family residences outside the cities.  The housing industry, previously populated by a great many small businesses that built from one to perhaps a dozen homes at a time, became dominated by major firms that employed mass-production techniques on a large scale.

     The most successful of these was William J. Levitt.  He was among the first to realize the potential the G.I. Bill offered to those who were willing to think big.  The new families crowded on the nation’s campuses and in its cities pursuing their G.I. Bill-sponsored educations would soon become families seeking a place to live, under conditions very different from what they had endured so far in their lives.  With their mortgages guaranteed under the G.I. Bill, they would constitute an enormous market for new housing.  Levitt’s organization of the house building process produced towns named after him, first on Long Island and then in New Jersey and north of Philadelphia, and inspired many imitators.  Utilizing their war experience, Levitt and others applied mass production techniques to house construction.  In 1950, this mass-production approach built 1.95 million houses, and continued to produce them at the rate of over one million per year despite a steady increase in the size and furnishings of suburban tract housing.  Very few of these new homes were built in cities or towns, of course; there was no space, and mass production requires space.

    By 1953, Levitt and others were building over one hundred thousand homes each month from coast to coast, while automobiles, an absolute necessity to live in those homes, were selling at the rate of one half million per month.  Thus did William J. Levitt and others, with a substantial boost from the Federal Government, create a new version of “The American Dream,” and make it accessible to anyone.  They made the price so low that all you needed was a job, it seemed.  And an automobile, of course.  The mass-produced automobile enabled the mass-produced suburbs.  Together they symbolized America’s unprecedented post-war prosperity.  Together they also produced the recurrent image of that prosperity: cars jammed together during the “rush hour,” entering or leaving the city.   Initially this was into the cities—where the jobs were—in the morning and out of them in the afternoon to home (As a historical footnote, William Levitt, who had perhaps more to do with the rise of the “rush hour” than any other single individual, was one of those commuters, but in the opposite pattern.  His office was on Long Island, but he continued to live in his substantial apartment in Manhattan).

    The enormous growth of the suburbs came at the expense of the cities.  The G.I. Bill stimulated a migration of people, and a reorientation of America itself.  For our cities, the outflow of people was greater than the inflow, by a substantial margin.  By 1960 more people lived in suburbs than in cities.  Eighteen of America’s twenty five largest cities declined in population from the end of the war to 1980.  Our mid-size cities and smaller urban communities broadly followed this disturbing pattern, losing more people than they gained. 

    That’s what happened, but why did this happen?  Why didn’t the government-guaranteed loans that fueled the growth of the suburbs not also fuel regrowth in our cities and towns?  Why, in fact, did the exact opposite happen?

     Future posts will develop and explore this topic, but we must be careful; the path to understanding is strewn with both red herrings and hot-button issues, far too often in combination.  For now, let’s just accept that the Federal Government intended only good to flow from its decisions, and certainly did not plan the disinvestment of our urban areas that followed (sorry, conspiracy buffs).  It laid the groundwork, but the blame for what resulted cannot really be laid at the foot of the Federal Government alone.  We have to probe deeper, at local governments, private institutions and ultimately at the attitudes of the American people themselves during this period.  Be warned: it is not a pretty story, but it is one that must be confronted and understood for what it was, and what it did.

Stay tuned.