The Great Depression and the New Deal was the key moment in the central economic, political, and social development of the twentieth century America. It provides a key turning point in American development and its fingers and traces can be found in all subsequent developments within the century. That is not say that changes wrought in the 1930s and 1940s came out of nowhere, they built upon developments of the Progressive Era. The remainder of this essay will use the example of the mortgage and housing market as an lens for how the New Deal was the turning point of twentieth century American political, African-American, and economic history.
Our story begins in the Progressive Era and the 1920s which saw the rise, for the first time, of mortgage and housing “professionals” in the form of real estate agents and urban planners. It is important to note that these men and women incorporated the racist thinking and segregation of this era into their understanding of the housing market but they did not do so in the racist language of the day but, instead, in a “social scientific” discourse of rights and credit-worthiness. Thus the racism imbedded in Progressive Era urban planning was implicit rather than explicit. It did not seek to segregate blacks because of their blackness but because of their lack of “creditworthy” behaviors. While the influence of these professionals was limited in these earlier years this implicitly racist discourse of the mortgage and housing market would have important consequences down the line [Creech]
The Great Depression and the Deal period prove to be the turning point in this story in several respects. The New Deal saw for the first time a massive entry of the federal government into housing and mortgage market. The new agencies established by the New Deal were staffed by the mortgage and housing professionals of the Progressive Era and their students. These professionals brought wrote into New Deal and post-War policies the implicitly racist discourse of Progressive Era. This would link up with two other important developments which came out of the New Deal. [Creech]
The Great Depression and the New Deal saw the expansion of the definition of “whiteness” to include previously stigmatized groups – such as Catholics, Jews, and southern and eastern Europeans. This expansion was largely brought about by the collapse of immigrant cultural institutions in the Great Depression which brought immigrants into consumption of mainstream American cultural life for the first time. Thus through the Depression, New Deal, and War years there was a gradual expansion of “whiteness” as these new groups “earned” their whiteness. [Cohen] Being white in America became less WASPy and more expansive but still excluded African-Americans.
The final important development of the Great Depression and the New Deal was the gradual development of a shift in American liberalism from a more reformist impulse to a “rights-based liberalism” that sought to work within the capitalist system and improve society through consumption. This gradual shift grew out of the opposition of business groups and Southern Democrats, the failure of earlier cartelization in the New Deal, the very “by-the-seat-of-your-pants” nature of New Deal reform, and the battle against statist fascism during the War. Gradually the idea of reshaping the capitalist economy fell away and was replaced by the idea of “consumer’s republic” which sought to promote prosperity and equality through consumption and articulated this reform through a “rights-based” discourse. [Cohen, Brinkley]
Looking at these changes through the lens of the mortgage and housing markets we have the making of a perfect storm that explains both the massive growth of the middle class in the rest of the twentieth century, with the continued discrimination and inequality faced by African-Americans, and the backlash to attempts to further reform American society. In the post-War “consumer’s republic” there was a massive expansion of the middle class and a suburbanization that drew this middle class out of the urban centers. Built on the implicitly racist discourse of credit worthiness, this prosperity extended to the more expansive class of “whites” while still largely excluding African-Americans. Despite the continued privileged nature of “whiteness” in this new post-War prosperity, most of the new white middle class did not see their position as the result racial privilege but as a “right” and as something they’d earned. This was encouraged by the implicitly racist discourse of the housing and mortgage market and the “rights-based liberalism” of the post-War years. Property, in the post-War world, had become “colored.” [Creech; “When Affirmative Action Was White”]
While this was developing, African-Americans were increasingly able to also draw on the nature of “rights-based liberalism” to attack racial privilege and segregation. Increasingly explicit racism in American culture and society came under attack and, after much struggle, began to fall away by the 1960s and 1970s. Yet, the implicit nature of the racism built into the very structure of the post-War “consumer’s republic” by the New Deal remained unchallenged. [Stein] Americans saw the privileges afford to whiteness, at the expense of blackness, as not a racial discrimination but as a product of “market forces.”
Thus through our lens of the mortgage and housing market we can see that the nature of the “backlash” of the 1960s and 1970s was not the result of cultural excesses of the 1960s – hippies, feminists, Black Panthers et al. – but baked into the very nature of the New Deal order itself. Because of the implicit nature of the racism of the mortgage and housing market, middle class whites saw African-American attempts at integration not as attacks on segregation but an attempt to usurp unearned privileges and rights. [Creech] Thus the backlash was present from the very beginning, not just in the 1960s but in the late 1940s and 1950s – at the very grassroots of post-War white society. [Sugrue, Creech]
The same insights can applied to other aspects of American life. Let’s take the general labor market, for example. By the 1960s, African-Americans and racial liberals were largely successful in leveraging “rights-based liberalism” in attacking explicit racism in the American labor market. Yet, the implicit nature of racism in the post-War economic structure remained largely unchallenged. Thus when African-Americans inequality continued after Great Society racial reform, whites began to see, not the continuation of discrimination, but the “failure” of African-Americans to “preform” in the so-called “free market.” [Stein] Thus we get the idea that problems facing African-Americans were not largely structural but caused by a “culture of poverty.” [Sugrue, Stein] Here is more fuel for the backlash.
All of this taken together we see the key role played by the New Deal in the twentieth century. The economic, political, and ideological restructuring of those years set the tone and limits of the rest of the century – for better and for worse. While the New Deal did not emerge out of the ether – it built on legacies of the Progressive Era – the 1930s and 1940s are the key fulcrum from change in twentieth century America. The “rights-based liberalism” which emerged out of the New Deal and War years helped power the Civil Rights Movement, the Women’s Rights Movement, the Gay Rights Movement, and many other reform efforts which have reshaped the nature of American life in the twentieth and twenty-first centuries. Simultaneously, by failing to address the implicit nature of discrimination in many aspects of American economic life and society, it has helped power the backlash and conservative politics that also help shape modern American life. The changes wrought by the New Deal explain both the massive prosperity of American life and its continuing inequalities. We are still, today, living in a world very much shaped but its legacies.