What Is the Housing Act of 1937?
The Housing Act of 1937, formally known as the United States Housing Act of 1937 and often called the Wagner-Steagall Act, was a landmark piece of federal legislative acts in the United States. It established the nation's public housing system by authorizing federal subsidies to local public housing agencies (PHAs) for the construction and operation of low-income housing. This act falls under the broader financial category of housing policy, aiming to address housing shortages and substandard living conditions for low-income families, particularly during the economic hardship of the Great Depression.
History and Origin
The origins of the Housing Act of 1937 are rooted in the widespread housing crisis of the 1930s. Prior to this act, the federal government's involvement in housing was primarily focused on stabilizing the mortgage market through initiatives like the Federal Housing Administration (FHA), established by the National Housing Act of 1934. However, these efforts did little to address the pressing need for decent, affordable housing for the poor and those living in slums17.
Spearheaded by Senator Robert Wagner of New York and Representative Henry B. Steagall of Alabama, the Wagner-Steagall Act marked a significant shift in federal housing strategy. President Franklin D. Roosevelt signed the bill into law on September 1, 193716. The act created the United States Housing Authority (USHA) within the Department of the Interior, which provided loans and annual contributions to local public housing agencies to build and manage public housing projects. A key provision of the act, intended to avoid competition with the private real estate market, required that for every new unit of public housing constructed, an equivalent substandard dwelling unit had to be demolished15. This "one-for-one" rule aimed to improve housing quality without increasing overall supply14.
Key Takeaways
- The Housing Act of 1937 established the framework for federally funded public housing in the United States.
- It authorized federal subsidies to local public housing agencies for the development and management of low-income housing.
- The act created the United States Housing Authority (USHA) to administer federal funds and oversee local housing projects.
- A controversial provision required the demolition of an equivalent number of substandard homes for each new public housing unit built.
- The legislation aimed to provide safe and sanitary dwellings for low-income families and stimulate employment during the Great Depression.
Interpreting the Housing Act of 1937
The Housing Act of 1937 represents a pivotal moment in American social welfare policy, signifying a federal commitment to addressing housing insecurity as a matter of national welfare13. Its passage underscored the recognition that market forces alone were insufficient to provide adequate housing for all citizens. The act's emphasis on local control, however, meant that implementation varied significantly across the country, with local authorities determining project locations, designs, and tenant eligibility. This decentralized approach, while intended to grant flexibility, also had profound implications for patterns of residential segregation. The ability of localities to make these operational decisions often resulted in public housing projects being concentrated in disadvantaged areas and, in many instances, reinforced existing racial segregation12.
Hypothetical Example
Imagine a city in the late 1930s facing a severe housing crisis, with many families living in overcrowded and unsanitary conditions. Under the Housing Act of 1937, this city could establish a local public housing authority. This authority would then apply to the newly formed United States Housing Authority (USHA) for federal loans and annual contributions. Once approved, the local authority could acquire land, demolish existing dilapidated structures (to meet the one-for-one replacement rule), and then construct new affordable housing developments. For instance, if 50 substandard tenements were cleared, the city could build 50 new, modern public housing units, providing safe and sanitary homes for dozens of low-income families, thereby improving living conditions and contributing to community development.
Practical Applications
The Housing Act of 1937 laid the groundwork for the extensive public housing system that evolved in the United States. Its principles guided federal involvement in housing for decades. Today, while the specific mechanisms have changed, the legacy of the Housing Act of 1937 is evident in the continued role of local housing authorities in managing federally subsidized rental assistance programs, such as Section 8 housing choice vouchers (which originated as an amendment to the Housing Act of 1937 in 1974)11. The act served as a form of economic stimulus, creating construction jobs and injecting government spending into local economies during the Great Depression, contributing to infrastructure development10.
Limitations and Criticisms
Despite its foundational role in U.S. housing policy, the Housing Act of 1937 faced significant limitations and criticisms. One major critique stems from the power it granted to local governments, which often perpetuated and intensified racial segregation. The federal government's hands-off approach to local implementation allowed communities to choose project locations that reinforced existing discriminatory housing patterns, including those shaped by practices like redlining8, 9. This contributed to the concentration of poverty and racial minorities in specific areas, leading to what some describe as segregated neighborhoods and discriminatory lending practices7.
Furthermore, the "one-for-one" demolition rule, while intended to protect the private market, often led to the displacement of residents from cleared "slum" areas, creating new challenges for those displaced. Critics also argue that the act's strict income limits for residents inadvertently stigmatized public housing as a refuge for the most marginalized, rather than fostering mixed-income communities6. The low per-unit cost limits imposed by the act also contributed to the construction of basic, no-frills units, predominantly in disadvantaged urban areas, rather than high-quality housing5. The act's legacy is thus a complex one, viewed as both a crucial step toward addressing housing poverty and a contributor to the issues of concentrated poverty and segregation, which later policies like urban renewal also sought, with mixed results, to address.
Housing Act of 1937 vs. National Housing Act of 1934
While both the Housing Act of 1937 and the National Housing Act of 1934 were New Deal-era responses to the Great Depression's impact on housing, they addressed different aspects of the crisis. The National Housing Act of 1934 primarily focused on stimulating the private housing market by creating the Federal Housing Administration (FHA). The FHA's main role was to insure mortgages, thereby making homeownership more accessible by reducing the risk for lenders and encouraging the construction of new homes and the repair of existing structures4. It largely benefited middle- and higher-income individuals who could afford homeownership.
In contrast, the Housing Act of 1937 specifically targeted the housing needs of low-income families who could not access the private market. Its core purpose was to provide federal funds for the development and operation of public housing projects, directly addressing the shortage of decent, affordable rental units for the poor3. The 1934 act focused on mortgage finance and homeownership, while the 1937 act centered on direct provision of rental housing for the economically disadvantaged, establishing the foundation for the nation's public housing system.
FAQs
What was the primary goal of the Housing Act of 1937?
The primary goal was to provide decent, safe, and sanitary housing for low-income families and to eliminate slums by providing federal financial assistance for the construction and maintenance of public housing projects.
What agency was created by the Housing Act of 1937?
The Housing Act of 1937 created the United States Housing Authority (USHA), an agency responsible for administering federal loans and subsidies to local public housing agencies for housing development.
How did the Housing Act of 1937 impact segregation?
The act's reliance on local control for site selection and tenant policies inadvertently allowed and, in many cases, reinforced existing patterns of racial segregation. Local public housing authorities often sited projects in already segregated neighborhoods, contributing to concentrated poverty and racial isolation.
Is public housing still managed under the original Housing Act of 1937?
While the core principles of federal support for affordable housing persist, the administration and programs have evolved significantly since the original Housing Act of 1937. Key amendments and new legislation, such as the Housing and Community Development Act of 1974 (which introduced Section 8 vouchers), have modified and expanded the scope of federal housing assistance2.
What was the "one-for-one" rule in the Housing Act of 1937?
The "one-for-one" rule mandated that for every new public housing unit constructed with federal funds, an equivalent substandard dwelling unit, often in a slum area, had to be demolished1. This policy was intended to prevent public housing from competing with the private housing market and to ensure a net improvement in housing quality rather than just an increase in quantity.