Abstract: The Long-Term Interest Rate, John Maynard Keynes, and the Creation of U.S. Housing Policy

Judge Glock


Most researchers who have looked at housing policy in the early New Deal have focused on the influence of real estate interest groups in urging federal support for incipient suburban development. This paper will argue, first, that New Deal housing policy emerged mainly out of a change in economic thinking among a subset of American institutionalist economists who had close contacts to the Roosevelt administration; second, that this intellectual change had an important influence on the thought of John Maynard Keynes; and third, that Keynes himself had a direct impact on developing this strand of thought and then lobbying directly for a change in U.S. housing policy. The tie between all of these economists and policymakers was a concern with how the government and central bank could control the long-term rate of interest. While ideas about long-term debts have received relatively little attention from historians of monetary thought, this paper hopes to show that attempts to manipulate them were crucial in the development of both the discipline of economics and U.S. policy.