My quick post on prefab housing and some of your comments got me thinking more on homes and houses in the 1930’s. The 1950’s, though the prices were much cheaper than today and one got quite a bit for their money, for the most part had similarities to some of today’s mortgages. Though it was just the building blocks to the current crisis, the home and getting one became the ‘American Dream’ then.
Really, prior to that, getting a home was not very easy for the lower and working middle classes. Here in 1933 most home mortgages are very short term, three to five years. There were really no such things as amortization loans (with percentage time tables and interest being paid in large part while little principal is paid over a longer period of time), or balloon mortgages.
Now in the Beginning of the Depression, much like our current Recession, there was a banking crisis that resulted in many lenders needing to retrieve due mortgages. There was no refinancing as such, and many borrowers, now unemployed, were unable to make mortgage payments. Thus many homes were foreclosed upon causing the market to plummet. Now, the collected homes by the bank have almost now asset as the housing market plummeted. So, really very few homes were built or being purchased. Prior to that, in the boom of the 1920’s, homes much like into 1933 would have been paid for outright or a very short term loan would have been issued.
Now, in 1934, the National Housing Act was passed. This formed the Federal Housing Administration, or FDA and was part of the New Deal program. It was created to regulate the rate of interest and the terms of mortgages that it insured. This now allowed many more people who before could never had even considered home ownership a possibility. It put to work many people in construction and my magazines after 1934 do seem to be fraught with more home construction adverts.
By 1938, only four years after the beginning of the Federal Housing Association, a house could be purchased for a down payment of only ten percent of the purchase price. The remaining ninety percent was financed by a twenty-five year, self amortizing, FHA-insured mortgage loan.
Thus mortgages begin to look a bit more familiar, though not until after the War in the 1950’s do we see the move to longer loans. And it is interesting to note that up until the 2008 crisis, FHA and HUD was a self-supporting government agency. But, after the increased lending put out (70% to he 40% of the later Depression) the FHA/HUD had to go to the government for help. And eventually government losses from the FHA could reach $100 billion.
The similarities of the Failing Banking and the increase in housing, as was done in 2006 to ‘recover’ from the failing Markets, are rather similar. However, what scares me a bit is that those in the Depression were quite different than we were in many ways. Many people in 1930’s still lived an agricultural life. 30% of all Americans were living on rural and farm homesteads. Though we are familiar with the dustbowl saga of the Grapes of Wrath, this was particular to a specific region and also greatly affect the migrant farmer. There were many coastal families who did better than their urban neighbors by growing their own food. And those on the fringe of such agriculture also had the potential to barter and trade with farmers. For, back then, Farm families grew and raised a variety of crops and animals. Today, many farms are large and grow one crop and are often own and subsidized by large corporations that hold the purse strings and the rights to the crops, such as Monsanto corp.
I worry about us today, as most families think of food as the stuff available at grocery stores or cheap at restaurants. I am not sure, were we ever to be hit by high prices or even a sudden stop in food imports (alas much of the food we eat is grown outside the U.S.) we would fare well. We are no where near the hardships those faced during that time, yet we are also only at the beginning of a great move downwards I feel. And we are less prepared.
Another aspect that rather scares me is the competition for jobs. In the job loss of the 1930’s Americans did not have to compete with outsourcing. Jobs were lost for a variety of reason, but none of them were due to their simply being moved overseas. Such things, as Boeing in Kansas which has provided jobs for over 80 years, is not closing plants there. Though it is said to be more competitive, what it really means is that its new plants opening in China simply offer cheaper labor. Such a divisive act as production leaving the country, but still continuing to happen, was not a problem faced by the jobless of the Depression years.
And finally, we were much more a contained country in 1930. The global world of exports and imports were only just gaining real steam during the Depression. And the affect of European markets and countries did not hinge as intrinsically on our own economy as they do today. We have much to lose when nations like Japan are facing bankruptcy and the European Union is dealing with its countries facing their own financial stress.
Much of the bad moves that began in the speculations of the 1920’s were meant to be dealt with in the Depression and indeed the banking and Wall street were begun to be restructured then. However, since then such safe gaps put in place have long since been reversed or simply new laws made to replace during the 80’s to today. I get worried when I think of what a Depression in our own century could look like.
I recall, as my 1955 project moved forward I began to see it as the real entrance, an almost portal, to our modern world. Endless invention, advertising, media and the increase in house buying and general consumerism. Now, only a few weeks in, I am beginning to see the 1930’s laying the groundwork for the inevitable fall we are currently heading to.
Those heady days of happy post WWII 1950’s seemed to but able to be maintained but a decade. Perhaps, it was our own desire to turn blind eyes at the changing world and to not ask or question. I am wondering how I am going to feel and what I am to discover after this year of 1930’s. In many ways I am frightened and want to turn away. I want to focus on the home and recipes, and surely I shall do as that is important at any point in life. We must eat, we must have homes and we must have a warm hearth to rest our fevered brows, even when that hearth is sometimes a shack, car, or tarpaper house.
I remember as I delved deeper into the 1950’s and how we got there I began to feel rather Alice in Wonderland and that I had fallen into the rabbit hole and followed the instructions on the little bottle, “Drink Me” and there was no going back. However, I cannot, for it is simply my personality, only look at the good. I must and will understand all that was happening then because even a quiet little middle class homemaker would have heard the world creeping into her haven of the home on the kitchen wireless. Or saw, on her way to marketing, the bread lines and the families looking empty eyed and lost as their possessions were loaded into trucks bound for no where. A home full of furnishings and dreams headed for uncertainty.
We shall take this journey together, but I am afraid I must have some of the bad in order to better appreciate much of the good. I will close with this quote from Benjamin Roth’s Depression Era Diaries and let you ponder if it does indeed sound familiar.
“Everybody is living a hand to mouth existence and struggling under a burden of debt.”
-Benjamin Roth Great Depression: A Diary
