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2 The Business of the Urban Housing Crisis The progress and stability of our free society have been firmly rooted in a harmonious and creative partnership of public and private actions, and the constructive cooperation of public and private institutions. —President Lyndon B. Johnson, speech at Government-­ Business Conference on Urban Problems, August 19, 1966 “Today, America’s citiesare in crisis. This clear and urgent warning rises from the decay of decades—and is amplified by the harsh realities of the present.”1 In February 1968, with this subtle allusion to the rebellions of the prior summer, President Lyndon Johnson began his nationally televised special address to Congress on the crisis in American cities. In the speech, titled “The Crisis of the Cities,” Johnson declared poverty and the dilapidated conditions of American cities “the shame of the nation” and vowed to undertake unprecedented action to “change the face of our cities and to end the fear of those— rich and poor alike—who call them home.” Even after all of the civil rights legislation he had shepherded through Congress, including the War on Poverty and the creation of the Department of Housing and Urban Development, Johnson observed that “almost 29 million people remain in poverty” and American cities continued to deteriorate. In a proposal Johnson called the Housing and Urban Development Act (HUD Act), he laid out an ambitious legislative program. He described the act as a “charter of renewed hope for the American City,”2 mapping a new direction in the ongoing battle against urban crisis. 56 The Business of the Urban Housing Crisis Later in the summer of 1968, this new direction would culminate in the passage of the HUD Act, which called upon Congress to approve legislation to build or rehabilitate 26 million units of housing, including 6 million units of low-­ income housing, all within ten years. It also approved a program to facilitate low-­ income and poor people in becoming homeowners. To accomplish these historic goals, the legislation called for unprecedented participation among bankers, real estate brokers, and homebuilders in an urgent effort to avert the spiraling urban crisis. Johnson and other Democrats proclaimed there were limits to what government could accomplish as they summoned what Johnson described as the “genius of private industry” to do what government, thus far, had been unable to achieve. Intended to fulfill ongoing demands for suitable and decent housing for all, the partnership between private enterprise and government agencies was, in some ways, a continuation of public-­private partnerships that had always been at the heart of American housing policies.3 The legacy of the Johnson administration is one of large government-­directed programs. The War on Poverty and the Great Society were considered the quintessence of “big government liberalism.” These public-­private partnerships, so essential to Johnson’s formulation of housing policy, complicate the history and popular conceptions of the Great Society as the “era of big government.”4 Though the Johnson welfare state would become a foil for conservative politicians to run against—and for the Democratic Party to run away from—for Johnson, private industry was central to constructing the Great Society.5 To create conditions conducive to the success of business while continuing to invest in areas that required a massive infusion of resources and development, state power was needed. This was especially true in cities across the country where banks and the insurance industry had written off the urban core as too “risky,” causing the development of urban housing for the poor and working class to stagnate. Subsidies, tax relief, and government guarantees could create the conditions for those institutions to reverse course and help stem the urban crisis. While leveraging state power in this way created pathways for business to capitalize on new ventures, including in housing, the dearth of good, affordable housing was a persistent problem that could easily be described as too big for government alone to solve. This chapter looks at how business came to shape Johnson’s housing agenda—specifically, the way that homeownership became the centerpiece of the most important housing legislation of the era. The Business of the Urban Housing Crisis 57 A “Public Interest Partnership” A 1960 Democratic National Convention report described the challenge of rebuilding “our cities and cop[ing] with explosive suburban growth.”6 Between 1960 and 1966, the white urban population decreased by 900,000 while the white suburban population increased by 10 million. A report from the National Committee Against Discrimination...


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