Origins of State Housing Policy in Canada: the Case of the Central Mortgage Bank

Abstract

In the literature, Canadian federal housing policy is most often considered to be a post‐Second World War phenomenon and to have been effectively initiated, at least in an institutional sense, with the establishment of Central Mortgage and Housing Corporation (chmc) in 1945 (Bettison, 1975; Hatch. 1975; Rose, 1980). It is generally accepted that the state was led to intervene in the private housing market as a result of an unprecedented demand from returning servicemen. This demand was heightened by increasing levels of disposable income and exacerbated by reduced levels of housing production during the war. In this scenario. the state is seen to have been responding to a specific market crisis; the response resulted in the creation of various agencies, most notably cmhc, and in National Housing Act amendments, virtually all of which took place in the post‐war era. The ‘market‐crisis’ perspective to the study of federal housing policy tends to overlook the initiation of state monetary and credit system management during the 1930s and its implications for the form of state intervention in housing during the 1940s and beyond. I wish to make a case here for pushing back the study boundaries to at least the early 1930s in conjunction with a brief examination of the Central Mortgage Bank (cmb). The argument is that the essential ‘actors’ in the determination of housing policy at the federal level (i.e. the Department of Finance, the institutional lenders [particularly the insurance companies], and the provinces) came to be delineated in the 1930s around the issue of debt management in the wake of widespread mortgage default, especially in the rural districts of the prairie provinces. The cmb, although never becoming active, is seen here as the first substantial collaboration between the state and finance capital in the area of residential mortgage lending practices. It represents an additional facet of state monetary and credit system management that proceeded apace with the formation of the Bank of Canada in 1935.

Housing Policy Retrenchment: Australia and Canada Compared

“…First, there was the focus on the flow of resources into the housing system. In both countries, offi cials analysed the flow of credit into housing which in turn became one of the fl ows that central banks considered when they were developed in Canada and Australia during the late 1930s (Belec, 1984;Linklater, 1992). As the Royal Commission appointed to inquire into the Monetary and Banking Systems at present in operation in Australia (1937, p. 252) noted, "the system which we contemplate is one in which a strong central bank regulates the volume of credit, and pays some attention to its distribution".…”

Class formation, conflict and housing policies

“…The exclusion of co-operatives from federal housing assistance reflected a process of state formation geared to intensive accumulation in the housing sector, and Canadian economy. In the wake of the economic crisis of the 1930s, including a wave of mortgage defaults and the collapse of the construction industry, capitalists, state officials, labour and leftwing groups demanded programmes to stabilize the economy, credit system and housing sector (Chouinard, 1986;Wolfe, 1984;Belec, 1984;Horn, 1980;Palmer, 1984). Negotiations with finance capitalists for a central mortgage bank began during the 1930s.…”