Two weeks later, Roosevelt made the point more succinctly in his Second Inaugural Address:
"I see one-third of a nation ill-housed, ill-clad, ill-nourished. . . . The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”
FDR then worked behind the scenes with lawmakers and administration officials on the housing bill. Issues such as financing of projects, caps on costs per unit, and the staffing and governance of the proposed housing authority were sorted out in conferences held at the White House. With the major concerns of various Congressmen—including Rep. Steagall—resolved, the bill finally went to a vote. President Roosevelt signed the Wagner-Steagall Housing Act into law on September 1, 1937.
The new law established the United States Housing Authority (USHA) that provided $500 million in loans for low-cost housing projects across the country. Under the new law, the USHA acted as aloan granting agency to state and local housing authorities to build low-cost housing in both small and large urban areas.The USHA was empowered to advance loans amounting to 90% of project costs, at low-interest and on 60-year terms.By the end of 1940, over 500 USHA projects were in progress or had been completed, withloan contracts of $691 million.The goal was to make the program self-sustainablethrough the collection of rents: one-half of rent from the tenants themselves, one-third paid by contributions from the Federal government; and one-sixth paid by annual contributions made by the localities themselves.During World War II, the USHA was instrumental in planning and constructing housing for defense workers.
A Redline Around Housing Assistance
These initiatives stabilized the housing market and provided a pathway to homeownership for generations of Americans. But government mortgage rules were also used to deny loans to African Americans and keep them in segregated neighborhoods. The HOLC created color-coded “residential security” maps of hundreds of metropolitan areas. The color coding indicated places that were deemed safe to issue mortgages. Communities with significant African American populations were included in areas coded in red for “high risk.” These maps inspired the term “redlining”—describing a policy of refusing to make federally-insured mortgages in such areas.
In 1935, the FHA issued anUnderwriting Manualthat set standards for federally backed mortgages. It endorsed the redlining of Black residential areas and indicated that mortgages should not be provided to Black families seeking to move into white neighborhoods—since the FHA maintained this would reduce property values. As theManualnoted, “incompatible racial groups should not be permitted to live in the same communities.” The result was federal approval of residential segregation and denial of opportunities for Black citizens to accumulate generational wealth through home ownership.
Redlining Map of Poughkeepsie, New York and its Suburbs, March 1938
This redlining map of Poughkeepsie was among the hundreds of “Residential Security Maps” of urban areas created by the Home Owners’ Loan Corporation (HOLC). The maps indicated mortgage lending risk by neighborhood type, including residential, commercial, and industrial areas.
Residential districts were marked with different colors to indicate the level of risk in mortgage lending. Streets and neighborhoods that included minority (especially African American) and immigrant populations were often marked in RED as “Fourth Grade” or “Hazardous”—the riskiest category for federally insured homeowner loans. For example, in the BLUE area marked B3 on this map there is a small sliver of RED along Glenwood Avenue. Notes that accompany the map explain why:“Glenwood Avenue, which is shown in red, was an old Negro settlement before this area was built up.”Similarly, in the BLUE area marked B2 Pershing Avenue appears in RED. The mapmaker’s notes indicate:“Pershing Avenue (marked in red) has a number of negro families. Houses on this street are very poor and of little value.”
To Franklin Roosevelt, adequate housing was not just a need, but a right. The Wagner-Steagall Housing Act of 1937, along with other New Deal housing and mortgage initiatives, brought greater economic security to hundreds of thousands of Americans. In his January 11, 1944 State of the Union address, FDR declared a “second Bill of Rights” that included “the right of every family to a decent home.”
