For most of America's history when government accepted responsibility for providing low income housing, it was at the local level particularly by county government. Orphanages, poor farms and veteran's homes were occasionally supported by the state but most often they were financed, owned and operated strictly by county government. County homes, usually county farms, remained the typical method used to provide housing for the homeless and needy until 1935.
In the United States, government assisted affordable housing was first proposed in the first half of the 20th century to address concerns about the growth of slums in the nation's cities where overcrowding and deterioration of properties were occurring. during the Great Depression the conditions in the cities got worse. More and more families had to resort to living in makeshift shelters in slums. the Federal government began to play a permanent role in housing policy during the 1920's. The Federal government's involvement in housing began shortly before the Great Depression.
During his two terms as Secretary of Commerce in the administrations of Presidents Coolidge and Harding, Herbert Hoover rallied for homeownership. Hoover believed in policies that did not involve direct assistance. This was the prevalent way of thinking in American society at that time. As Secretary of Commerce, Hoover created an organization called Better Homes in America which helped to lower the costs of new homes, increase construction of homes, enforce new building codes, publish manuals for home buyers on financing and create zoning laws for residential neighborhoods.
In an effort to bring the economy out of a severe depression and house millions of homeless during the Great Depression Herbert Hoover instituted the use of home loan discount bank. In 1932, the Federal Home Loan Bank Act created the Federal Home Loan Banking System. These new banks created a new supply of loans that would be used specifically to buy and refinance mortgages. since the banking industry had collapsed and credit was virtually nonexistent at that time, Hoover thought the discount banks would relieve home and farm property owners by creating a new source of credit and mortgages other than failing banks. As the economy worsened many critics called for direct assistance to families to aid in finding adequate housing and employment. However Hoover held to his early philosophy of self-reliance.
After Hoover, the Roosevelt administration ushered in the New Deal policies that would revive the economy. Housing reformer of the New Deal era firmly believed that by providing affordable and adequate housing, thereby improving one's environment, the ills of the slums created from the Great Depression would be cured1 2 3 4