At the dawn of the 20th century, American finance looked modern—telegraphs, syndicates, Wall Street empires—but it had no brakes. In this episode of Built to Divide, host Dimitrius Lynch follows the chain reaction from the Panic of 1907 to the creation of the Federal Reserve, revealing how crises, central banking, and policy choices concentrated power at the top and quietly reshaped who gets to own a home in America.

We move from J.P. Morgan locking bankers in his library to stabilize markets, to the secret Jekyll Island meeting that birthed the blueprint for the Fed, to a global financial order built on austerity, gold, and central banks. Lynch unpacks how this shift—from robber barons to central bankers—centralized control over money and credit, setting the stage for a financial system that could either stabilize the economy or supercharge inequality.

In parallel, the episode traces a second, brutal story: the clash between slave labor and wage labor, the Civil War, broken promises like Special Field Orders No. 15, Reconstruction, the 13th and 14th Amendments, and the massive land giveaways of the Homestead and Railway Acts that seeded a two-track wealth system. That system was later hardened by Black Codes, Jim Crow, and the rise of the National Association of Realtors, whose restrictive covenants and ethics codes turned racism and class exclusion into standard practice.

As Lynch connects the Roaring Twenties, the Great Depression, Hoover’s homeownership gospel, and New Deal housing programs—HOLC, FHA, Fannie Mae—listeners see how federal support for mortgages expanded opportunity for some while redlining, racial covenants, and “good neighborhood” ideology locked others out. Housing was transformed into a mass wealth engine built on division.

This episode is a deep dive into how central banking, war finance, slavery, segregation, real estate professionalization, and federal housing policy fused into a system where housing isn’t just shelter or asset—it’s a sorting mechanism. If you want to understand why today’s housing market feels rigged, this chapter shows how the rig was built.

Episode Extras - Photos, videos, sources and links to additional content found during research.

Episode Credits:

Production in collaboration with Gābl Media

Written & Executive Produced by Dimitrius Lynch

Audio Engineering and Sound Design by Jeff Alvarez

At the turn of the 20th century, American finance ran on muscle and reputation.

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Telegraphs flashed prices across oceans.

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Syndicates moved capital from London to Wall Street.

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The system looked modern, but it had no shock absorbers.

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And in October 1907, one reckless bet exposed just how fragile it was.

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Frederick Fritz Augustus Heinz.

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A hard driving copper baron from Montana had joined forces with Charles W.

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Morse, New York's flamboyant ice king.

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Their circles sat on the boards of banks and trust companies all over town.

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When Heinz's brother Otto tried to corner United Copper stock with borrow money, the price

spiked and then collapsed.

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Cornering shares is an effort to obtain sufficient control of a particular stock,

commodity,

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human capital or other asset to reduce competition.

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On October 19th, 1907, the business and finance section of the Evening Star read, The

downward tendency of prices continued in most stocks in the opening dealings today.

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Those connected with the copper industry holding their conspicuous place in the decline.

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11am.

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The market was nervous and feverish and the copper stocks were under continued pressure,

amalgamated.

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Copper falling.

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3 points to 43 and 5 eighths, a low record for the movement.

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12 midnight, the market closed weak at the lowest.

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The sudden rebound put some prices over last night, but did not hold.

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Otto's plan backfired spectacularly.

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Depositors panicked.

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Banks linked to the Heinz's and Morse face runs.

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If that incident was the spark, in 1907, the tender lied in trust companies.

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Lightly regulated, fast growing, and less connected to safeguards that commercial banks

used.

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Knickerbocker Trusts, then New York's third largest trust,

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faced a run on October 22nd, 1907.

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It shut its doors by noon.

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Confidence cracked, rates on Wall Street loans shot up, more banks wobbled.

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Into that vacuum stepped John Pierpont Morgan, the most powerful banker in America.

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He had done this before.

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During the panic of 1893, he and the Rothschilds had lent the U.S.

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Treasury

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$65 million in gold to stop a run on the Federal reserves.

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Now, in 1907, he gathered New York's financiers inside his Madison Avenue library, locked

the doors and demanded balance sheets.

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All night, clerks tallied assets by candlelight.

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Morgan forced rival bankers to lend to one another, persuaded the Treasury to deposit

emergency funds, and even helped

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New York City sell bonds to keep paying its workers.

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When the brokerage Moore and Schlie nearly collapsed, its collateral, Tennessee Coal, Iron

and Railroad, or TCI, became Morgan's final puzzle piece.

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Over a single weekend, he engineered a sale of TCI to US Steel.

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Because that company already dominated the industry, the deal technically violated

antitrust law.

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By Sunday night,

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Envoys rushed to the White House.

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Theodore Roosevelt, the trust bluster himself, had no choice and agreed not to interfere.

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Markets steadied on Monday, but the message was chilling.

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The nation's stability depended on the will of one man.

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Congress, uneasy with that reality, passed the Aldrich-Briellen Act of 1908 to study

monetary reform.

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Its National Monetary Commission set out to design a system that could prevent the next

panic, or at least avoid handing salvation to another J.P.

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Morgan.

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Two years later, Senator Nelson Aldrich gathered six financiers for a secret retreat under

the pretense of a duck hunt.

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they boarded a private rail car to Jekyll Island, a secluded Georgia resort where

America's richest families built mansion-sized cottages.

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Among the party were Henry Davidson of J.P.

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Morgan & Company, Frank Vanderleip of National City Bank, Paul Warburg, a German-born

banker steeped in European central banking, and Benjamin Strong, one of J.P.

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Morgan's proteges.

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They drafted a plan that mirrored what Morgan had improvised in 1907, a central reserve

that could lend to banks in crisis.

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The Aldrich plan called for regional reserve banks to hold member reserves, issue flexible

currency, and discount loans, essentially a permanent lender of last resort.

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Politically, it was toxic.

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Progressives saw it as Wall Street's coup.

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When Woodrow Wilson took the presidency in 1913,

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He ordered his team, Congressman Carter Glass and Senator Robin Owen to rework the idea

under public oversight.

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They kept Warburg for technical guidance, but rebalanced power.

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A Washington-based board atop 12 regional banks to dilute New York's control.

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After months of hearings, the Federal Reserve Act passed Congress just before Christmas

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Wilson signed it that evening.

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The secret meeting on Jekyll Island hadn't created the Fed, but it framed the blueprint.

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Now, the United States had an institution to manage money and credit collectively, rather

than depending on the charisma or conscience of a single financier.

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The new system was government-born.

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but deliberately independent.

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Its governors served long, staggered terms.

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It drew no congressional appropriations.

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Supporters claimed that distance from politics would safeguard the dollar from electioneer

whims.

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Critics warned it insulated power from the people altogether.

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Either way, a shift had occurred, from the age of the robber baron to the age of the

central banker.

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Morgan's Library had been the command center of private finance.

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The Federal Reserve was meant to be its public successor and institutional conscience for

the market.

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But its independence also meant decisions on credit, interests, and liquidity would now

move behind closed doors in Washington boardrooms, not on factory floors or in city halls.

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The panic of 1907 ended

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when one man forced competitors to cooperate.

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The Fed's creation promised that next time the system itself would provide that

discipline.

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In practice, it didn't end boom or busts.

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It only changed who held the keys.

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Money still flowed upward only now through official channels.

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The government had learned to borrow the banker's brain and over time his ambitions.

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This moment was a hinge in American life.

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The rebuilt not on the shared prosperity, but on centralized control.

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The structure of modern finance, federal reserves, elastic currency, the illusion of

stability was in place.

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The same tools that could steady the economy could also amplify inequality, depending on

who used them.

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By 1913, the United States had institutionalized Morgan's power, embedding it in the state

itself.

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And with that foundation set, the country was poised to leverage this new machine to fund

wars, expand credit, and eventually shape the housing systems that would define the next

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century.

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I'm Demetrius Lynch, and this is Built to Divide.

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In episode one, we discussed the act of leveling that checked greed, how land went from

use and trade to exclusive title, fencing out the commons, how we normalize credit, bound

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it to the state, then extended it into the home.

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The introduction of industry, speculation, and status until the seeds of today's housing

logic took shape.

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If you haven't listened to that episode, I encourage you to go back and listen to all the

episodes of this series in order.

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Today, we'll examine how a clash between two systems of labor and production ripped the

country apart.

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In its wake, race, class, and inequality shaped everything from who controlled capital to

who could own a home.

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And we'll get into all of that after this break.

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By the mid-19th century, behind the Industrial Revolution and the growing financial

industry, the world was immersed in its next major evolutionary period.

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But in the United States, civil unrest and turmoil was erupting.

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There was an economic clash between two systems of labor and production, slavery being the

central defining element of that clash.

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the North industrialized rapidly.

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Factories, wage labor, railroads, and banking became dominant.

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Meanwhile, the South stayed agrarian and slave dependent, building crops of cotton, rice,

and tobacco.

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Northerners began to disagree with slavery for a few core reasons.

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Economically, they believed anyone should be able to work, earn wages, and move up

socially.

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Politically,

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Radical Republicans believed a slave-holding elite disproportionately dominated U.S.

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politics through the Three-Fifths Compromise, Senate balance, and pro-slavery presidents.

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Abolitionists like Frederick Douglass, William Lloyd Garrison, and Harriet Beecher Stowe

made slavery's cruelty impossible to ignore, attracting support from evangelical revivals

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of the early 1800s.

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who tied morality to reform movements like temperance and women's rights.

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Slavery came to be seen as sinful and unchristian by many northerners.

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And finally, violence and instability.

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The Fugitive Slave Act of 1850 forced northerners to return escaped enslaved people,

making them complicit.

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The violence and instability radicalized many, but some infamous

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Public occurrences began to tear the nation apart, notably an attempted slave revolt in

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Senate floor.

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After delivering an anti-slavery speech, Senator Charles Sumner, a white abolitionist, was

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The dispute began over a Kansas-Nebraska Act.

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a territorial policy that effectively repealed the Missouri Compromise, which prevented

the expansion of slavery.

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Sumner alleged that the intent was to spread slavery into free territories.

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Not in any common lust for power did this uncommon tragedy have its origin.

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It is the rape of a virgin territory, compelling it to the hateful embrace of slavery, and

it may be clearly traced to a depraved desire for a new slave state, hideous offspring of

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such a crime, in the hope of adding to the power of slavery in the national government.

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Sumner went on to verbally attack the authors directly.

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The senator from South Carolina has read many books of chivalry and beliefs.

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Himself, a chivalrous knight with sentiments of honor and courage.

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Of course, he has chosen a mistress to whom he has made his vows and who, though ugly to

others, is always lovely to him, though polluted in the sight of the world, is chaste in

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his sight.

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I mean, the harlot, slavery.

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For her,

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His tongue is always profuse in words.

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Let her be impeached in character or any proposition made to shut her out from the

extension of her wantonness.

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And no extravagance of manner or hardyhood of assertion is then too great for this

senator.

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Representative Preston Brooks did not appreciate that.

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He confronted Sumner in the Senate chamber and beat him severely on the head using a thick

cane with a gold head.

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Blinded by his own blood, Sumner staggered up the aisle and collapsed unconscious.

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Undeterred, Brooks continued to beat the motionless Sumner until his cane broke, then

continued to beat him with the remaining piece.

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As other senators attempted to help Sumner, Representative Lawrence Keat waved a pistol at

the crowd shouting, let them be!

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This event symbolized the polarization of the period.

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Sumner became a martyr in the North and Brooks a hero in the South.

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The two systems were incompatible and things were increasingly untenable.

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Each side feared the other would dominate national policy, impeding their lifestyle and

culture.

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11 states would ultimately secede from the Union.

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While later generations often debate

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states' rights as the cause of the Civil War, the states themselves left little ambiguity.

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Their own declarations of secession made clear that the preservation of slavery was the

central issue.

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Mississippi, 1861.

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Our position is thoroughly identified with the institution of slavery, the greatest

material interest of the world.

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Its labor supplies the product which constitutes by far the largest and most important

portions of commerce of the earth.

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A blow at slavery is a blow at commerce and civilization.

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Georgia, 1861.

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For the last 10 years, we have had numerous and serious causes of complaint

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against our non-slaveholding Confederate states with reference to the subject of African

slavery.

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A brief history of the rise, progress, and policy of antislavery and of the numerous and

determined efforts to abolish slavery in the southern states will fully justify the

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pronounced purpose of Georgia to dissolve her connection with the Union.

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Texas, 1861.

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In this free government, all white men are

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and of right ought to be entitled to equal civil and political rights.

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The servitude of the African race as existing in these states is mutually beneficial to

both bond and free and is abundantly authorized and justified by the experience of mankind

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and the revealed will of the almighty creator.

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South Carolina, 1860.

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A geographical line has been drawn across the Union and all the states north of that line

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have united in the election.

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Of a man to the high office of President of the United States, whose opinions and purposes

are hostile to slavery, he is to be entrusted with the administration of the common

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government because he has declared that that quote government cannot endure permanently

half slave, half free.

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The man elected to the high office of President of the United States was Abraham Lincoln.

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He aimed to maintain the union, but also wanted to limit the expansion of slavery.

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His election was the final straw for the South.

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International banks who had risen to power on funding wars stayed out of directly funding

the U.S.

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Civil War because it was too risky.

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While European interests entangled with Southern cotton,

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did provide indirect financial support, governments did not formally recognize the

Confederacy.

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The lack of funding forced Lincoln to innovate.

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His administration developed greenbacks, an emergency paper currency that was made up and

issued directly by the United States.

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Essentially an IOU, which promised an eventual payment in gold back coin.

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Abroad, especially in London, investors balked at the idea.

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Because the notes were not backed by existing gold or silver reserves, greenbacks traded

below gold, creating chaos in the market.

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To calm markets, Congress kept customs duties and federal bond interest payment in coin.

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Then, after the war, pledged coin repayment and set a path back to gold.

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This experiment led to the establishment of a national banking system and proved a new

concept.

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Washington could speculatively print money in emergencies.

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After about 18 months of war and heavy casualties, Lincoln strategically issued the

Emancipation Proclamation, undermining the Confederacy's slave labor force and

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simultaneously adding manpower to the Union army.

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About 180,000 Black men served by the end of the war.

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and it reframed the war as a moral fight against slavery, diminishing any full-throated

support for the Confederacy internationally.

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A few years later, near the end of the Civil War, military orders known as Special Field

Orders Number 15 were issued by General William Tecumseh Sherman, commander of the

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Military Division of the Mississippi of the United States Army.

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The order read in part,

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south, the abandoned rice fields along the rivers.

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For 30 miles back from the sea and the country bordering the St.

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John's River, Florida are reserved and set apart for the settlement of the Negroes now

made free by the acts of war and the proclamation of the President of the United States.

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The land, abandoned or otherwise, was confiscated as an act of war.

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As federal property,

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The order directed the land to be divided into parcels of not more than 40 acres and

settled by approximately 18,000 freed slave families and other black people living in the

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area.

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The families were granted possessory rights and the head of each family was expected to

eventually receive title to their property in writing.

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In the aftermath of the Civil War, the 13th Amendment abolished slavery and in conjunction

with the promise of land,

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to formally enslave people, freedom became symbolically tied to land.

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Now, as an aside, Robert Ardry, an American playwright, screenwriter, and science writer

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that, quote, man is a territorial animal.

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The urge to gain, maintain, and defend territory is a force that transcends cultures,

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and civilizations." He suggested that territoriality is a fundamental aspect of human

behavior, similar to other species, and that territorial disputes were linked to wars,

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housing markets, and urban segregation.

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Now there was much controversy around Ardry's work, largely criticizing that he saw humans

as innately evil.

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To whatever degree, in examining history,

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There appears to be some validity to at least an innate urge for some in that we see time

and time again a drive to acquire and guard territory at any cost.

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Now after Lincoln's assassination on April 14th, 1865, the rug was pulled as Vice

President Andrew Johnson took over the office as president and quickly reversed order

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number 15 by September that same year.

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See, Johnson was a Southern Unionist from Tennessee.

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While he hated the wealthy planter elite politically, he was also deeply racist.

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He didn't support racial equality and opposed giving freed people land or political

rights.

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He saw Reconstruction as a way to quickly bring white Southerners back into the Union, not

to transform Southern society.

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So he offered pardons to nearly all former Confederates

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who swore loyalty to the union moving forward.

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Johnson's leniency enraged Northern Republicans, fueling the rise of radical

reconstruction in Congress.

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Though bitterly contested, the 14th Amendment to the U.S.

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Constitution followed and was ratified in 1868.

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It was brought forth to address shortcomings of Reconstructionary.

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Considered one of the most consequential amendments, it addresses citizenship rights and

equal protection under the law, particularly for formerly enslaved individuals.

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It includes key provisions such as the Citizenship Clause,

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which grants citizenship to all persons born or naturalized in the United States and the

Equal Protection Clause, which prohibits states from denying any person equal protection

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of the laws, at least on paper.

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Yes, ownership of land was equated to freedom, but that opportunity didn't extend to

everyone.

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Back in 1862,

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The Homestead and Railway Acts issued land titles and fortunes across the United States,

taking land from indigenous people and doling out hundreds of acres of land to settlers.

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This transfer and denial of land seeded a two-track wealth system in the United States.

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Despite the 14th Amendment, new laws and systems would reinforce this divide.

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One example was black codes.

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restrictive laws designed to limit black Americans labor and economic and physical

mobility.

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While these codes granted certain basic rights, such as the ability to own property,

marry, make contracts and testify in court, they often restricted where black Americans

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could live or buy land.

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By the 1880s, these laws evolved into Jim Crow, formalizing racial segregation that began

in the South

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but soon spread nationwide as Black Americans fled in search of equality.

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Surprisingly, the rise of one organization and its use of contract law would become the

arbiter of who received ownership opportunities in the United States.

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By the turn of the 20th century, a population boom and a rapid urban migration had

transformed the American landscape and created chaos in the real estate market.

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There were no standard listings, few licensed brokers, and even less public trusts.

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In cities like Chicago, real estate exchanges began holding regular meetings to swap

listings, early experiments that would eventually evolve into today's multiple listing

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services, or MLS.

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In 1908, Chicago broker Edward Judd, president of the Chicago Real Estate Board, convened

120 delegates

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to found the National Association of Real Estate Exchanges, today's National Association

of Realtors.

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Its founders envisioned a new era of respectability, but their vision of professionalism,

like the society around them, drew sharp boundaries around who belonged.

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Figures like Edward A.

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Halsey set the tone for order and ethics.

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Charles N.

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Chadburn later coined the term realtor.

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and A.H.

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Frederick shepherded the organization through its early structure and growth.

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William W.

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Hannan, the first elected president in 1909, in his first address in the National Real

Estate Journal, established two major purposes for the organization, survival and

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influence.

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Organization today is an absolute necessity.

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The best interests of real estate men cannot be accomplished by isolation.

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Every known branch of human endeavor is organizing for self-preservation.

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for mutual protection and advancement and for a common good.

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The real estate man feels the pulse of the masses.

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He knows what they demand for the money they pay in taxes for the support and maintenance

of their city governments.

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He knows as well as any man, if not better than most, just what effect certain legislation

will have on real estate, values, and it is for him to guard against anything that will

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depreciate the value of property in his community.

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but the most notable member would have to be Colonel Nathan William McChesney, a prominent

Chicago attorney and the association's first general counsel.

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McChesney gave the new body its legal backbone.

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He drafted its charter, constitution, and bylaws, and later authored model real estate

licensing acts that shape state regulations nationwide.

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A decorated veteran and legal scholar,

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He embodied the progressive ideal of institutional authority.

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But McChesney is also known as the creator of racial segregation in housing.

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He wrote the standard form Chicago Restrictive Covenant, the template that

institutionalized racial segregation and property deeds across the city and inspired

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similar covenants nationwide.

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The National Association of Real Estate Exchanges was founded on a simple mission, quote,

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to unite the real estate men of America for the purpose of exerting effectively a combined

influence upon matters affecting real estate interests." It sounded harmless enough, but

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in the Jim Crow era, no issue shaped real estate interests more than race.

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What few have recognized, however, was that the association's early strategies would

harden not just racial boundaries, but class as well.

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To protect property values, the organization and its allies championed restrictive

covenants, private agreements written into deeds that dictated who could live where and

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under what conditions.

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They became the quiet blueprints of segregation, dividing cities block by block.

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Some covenants were bluntly racist, barring black, Asian, Jewish, or immigrant families

from entire neighborhoods.

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Others appeared race neutral,

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but were designed to separate by class instead, setting minimum home prices, lot sizes,

and architectural standards that working families simply couldn't afford.

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In Kansas City's Country Club District, developer J.C.

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Nichols required houses to cost at least $10,000, nearly six times the average annual

income.

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In Baltimore's Rowland Park, deeds demanded grand homes on oversized lots

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screened through company approved art juries.

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In Chicago and Los Angeles suburbs, advertisements boasted of highly restrictive tracts,

phrases that sold exclusivity and virtue.

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These restrictions didn't say no poor people, but minimum costs, single family only

zoning, and design vetoes made the message unmistakable.

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By the 1920s, protective covenants had become industry gospel.

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real estate boards across the country circulated templates and academic manuals like the

use of deed restrictions and subdivision development, framing them as best practices.

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Courts upheld class-based restrictions as legitimate tools for preserving value, even

after racially explicit clauses were struck down.

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Many of those economic restrictions still shape neighborhoods today.

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When racial zoning ordinances

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were outlawed in Buchanan v.

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Worley in 1917, developers simply turned to the private covenants to do the same work.

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And in Corrigan v.

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Buckley in 1926, the Supreme Court gave them the green light, ruling that such agreements

were private contracts, beyond constitutional reach.

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The result was a wave of racially restrictive subdivisions stretching from Baltimore to

Los Angeles.

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After Colonel Nathan William McJesney's standard form Chicago restrictive covenant

circulated through local boards, accelerating adoption, the association's code of ethics

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went further, instructing members that they should, quote, never be instrumental in

introducing into a neighborhood members of any race or nationality whose presence would

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clearly be detrimental to property values, end quote.

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It was an official national endorsement of segregation.

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By then, the organization had rebranded itself as the National Association of Real Estate

Boards, and its message had gone mainstream.

300

The same logic that defined what, quote, good neighborhoods were became the centerpiece of

the national own your own home campaign.

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As we discussed in effort, the US Labor Department

302

would soon adopt and federalize.

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What began as a professional code had evolved into government policy, mass marketed.

304

Segregation was structurally embedded into the American dream itself.

305

While laws, covenants, and red lines shut minorities and some working class families out

of ownership, another America glittered under gaslight.

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It was the age of the industrial titans.

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men whose fortunes would come to define capitalism itself.

308

Between the 1870s and early 1900s, the United States transformed from an agrarian republic

into the world's dominant industrial power.

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Railroads stitched the continent together.

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Steel framed its cities.

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Oil lit its streets.

312

Finance became its bloodstream.

313

Couched in the language of stability and national progress, a small circle of financiers

quietly rewrote the rules of money and ownership.

314

Families like the Ross Childs, Warburgs, Rockefellers, Morgans, Coons, Loaves, and the

Schiffs mastered the art of turning credit into empire.

315

What began as simple lending and liquidity evolved into a system of leverage and control.

316

By underwriting governments, monopolies, and railroads, they transformed debt into a new

form of dominion, profiting not from production, but from the pulse of money itself.

317

Through investment houses and interlocking trusts, they learned that paper, stocks, bonds,

and notes could command more power than factories or fields.

318

Their influence deepened when governments began to treat their credit systems as public

infrastructure.

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low interest rates inflated assets, high rates punished borrowers.

320

Either way, money flowed upward.

321

Over time, the financial elite shifted from funding industry to owning its arteries, land,

housing, transport, and even national debt.

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Let me say that one more time.

323

It bears repeating because it's a strategy that echoes through time.

324

The financial elite shifted from funding industry to owning its arteries, land, housing,

transport, and even national debt.

325

Policy became profit strategy.

326

Markets became managed ecosystems and wealth was no longer measured by what one built, but

by what one could control.

327

In that transformation, these financiers didn't just gain riches, they gained leverage

over nations, currencies, and the system of modern power.

328

Andrew Carnegie forged an empire of steel.

329

John D.

330

Rockefeller,

331

built standard oil so vast it refined nearly 90 % of the nation's crude.

332

JPMorgan consolidated the country's railroads and banks under his personal command.

333

Cornelius Vanderbilt controlled the tracks and shipping lanes that carried it all.

334

By 1915, the richest 1 % of Americans claimed 15 % of the nation's total income.

335

A concentration of power and privilege not seen before and not seen again until today.

336

Where we're eclipsing that feat with approximately 22 % of the nation's total income and

holding nearly 30 % of the nation's wealth.

337

But the public was beginning to see behind the curtain.

338

Each bank panic pulled it back a little further.

339

The crash of the trust companies in 1907, the liquidity droughts of 1910, 1914, and 1919.

340

Each one revealed the same pattern.

341

Speculators playing with leverage, banks gambling with deposits, and the public footing

the bill.

342

The new Federal Reserve, born in 1913, promised stability

343

but mostly provided cover.

344

Another layer between the creators that designed the system and the people living in its

shadow.

345

Then the show went global.

346

After a petition in 1920 signed by prominent politicians, including Herbert Hoover, who

347

presidential election, economists, and of course, businessmen and financiers, including

the same names,

348

Paul Warburg and JP Morgan, a conference was convened in Brussels amid Europe's wreckage

after World War I.

349

People of the world were exhausted, economically, socially, spiritually.

350

Entire currencies had collapsed.

351

Nations starved under debt.

352

The Brussels conference, assembled not officially by governments, aimed to rewrite the

rules of recovery.

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Most delegates were economists, businessmen, bankers, or central bank officials, not

elected leaders.

354

And that was the point.

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If the conference failed, nations could deny responsibility.

356

So, around mahogany tables and guilt chambers, the delegates agreed on the principles that

would define the next century globally.

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Fiscal discipline, free trade, and sound money.

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publicly that translated to responsibility.

359

In practice, it meant austerity, a set of political economic policies that aim to reduce

government budget deficits through spending cuts, tax increases, or a combination of both.

360

They called for the return of the gold standard and one resolution declared

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In countries where there is no central bank of issue, one should be established.

362

It sounded prudent, even moral, but beneath the rhetoric of discipline was a quieter

outcome, preservation of control.

363

Deflation was rebranded as virtue, austerity became sanctified, and when the world

followed suit, the very foundations of modern inequality were laid.

364

In America, that mindset found its champion.

365

When Calvin Coolidge stepped into office after Harding's sudden death, he embodied the

Brussels ethos.

366

Small government, hands off the markets, and he had his own twist.

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Low taxes.

368

Between 1920 and 1928, the top marginal tax rates plunged from 73 % to 25%.

369

Factories hummed, skyscrapers rose, and the roaring 20s

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dazzled with the illusion of endless prosperity.

371

Flappers, speakeasies, bottled teas, and the pulsing beat of jazz, especially for women

who embraced new social freedoms.

372

It was a decade that sold freedom through consumption.

373

It was the pinnacle of the Gilded Age.

374

Wealth pooled at the top like molten gold.

375

Vanderbilt's Fifth Avenue mansions shimmered with gold leaf ceilings and marble

staircases.

376

Alva Vanderbilt's Marble House in Newport was lined with 22-carat gilding modeled after

the Palace of Versailles.

377

Banquets and ballrooms glowed beneath gas-lit chandeliers as orchestras played to halls of

crystal and gold.

378

These were more than monuments.

379

They were declarations of divine prosperity to rival Europe's nobility.

380

On the backs of the powerless, they were celebrated as captains of industry.

381

But to many, they were the robber barons, monopolists who crushed rivals, exploited labor,

including children, and bent lawmakers to their will.

382

But prosperity was not universal.

383

Mechanization crushed farm incomes, unions were blunted, and wages stagnated beneath

record corporate profits.

384

By the end of the decade, the top 1 % owned more wealth than the bottom 42 combined.

385

For lower income earners, credit became the lubricant for survival.

386

Loans, installment plans, and speculation in stocks that always seemed to rise until they

didn't.

387

See, the thing about excess is that it never sustains itself for long.

388

A society built on imbalance where wealth pools at the top while the base is left hollow

cannot hold.

389

When a handful of individuals control the arteries of the economy, every beat depends on

their pulse.

390

Those at the bottom are left fragile by design.

391

However, when that base buckles, nearly everything is soon to follow.

392

By the late 1920s, the cracks had spread beneath the shine of the Gilded Age.

393

Speculation had replaced production.

394

Stock prices soared far beyond the value of what they represented.

395

The gap between rich and poor had stretched to its breaking point.

396

And then, in October 1929, it snapped.

397

Nations are perplexed and worried, this cousin and my trouble.

398

We're tied upside down, people are running around.

399

The United States needs proud, everywhere, everywhere, everywhere, everywhere.

400

The crash was more than a market correction.

401

was a reckoning.

402

Banks failed, businesses shuttered, and bread lines formed where banquet halls once

glittered.

403

The Great Depression that followed, lasting from 1929 to 1939, became the most severe

economic collapse in modern history.

404

Unemployment reached 25%.

405

Industrial output fell by half.

406

families lost homes, farms, and futures.

407

The same rails and banks that had once symbolized progress now carry bankruptcy notices

and foreclosures.

408

Keynesian and institutional thinkers argue it was a crisis of confidence, a collapse of

demand.

409

When panic set in after the crash, people stopped spending, investors stopped investing,

and money stopped moving.

410

Fear froze the economy.

411

and the spiral fed on itself.

412

Monetaires, on the other hand, point to the Federal Reserve.

413

They argue that what began as a typical recession turned catastrophic because the central

bank fell to act.

414

As banks collapsed and credit tightened, the money supply shrank dramatically, prices

fell, but debts did not, making what economists call debt deflation.

415

The cruel arithmetic

416

where every dollar owed grows heavier as the economy contracts.

417

Whichever theory one prefers, the result was the same.

418

The gilded world collapsed under its own weight.

419

The mansion stayed standing, but the illusion of stability did not.

420

The Great Depression exposed a truth that still echoes through every boom and bust, that

inequality doesn't just divide a nation, it weakens it.

421

Before the Great Depression, the gospel of homeownership wasn't just preached by

politicians.

422

It was sold by businessmen.

423

Nationwide campaigns urged banks to lend freely and Americans to buy boldly.

424

Backed by the Department of Labor, the movement framed the single-family house as the

moral foundation of prosperity.

425

That ideal had long roots in the American imagination.

426

From the Homestead Act of 1862 to Herbert Hoover's

427

Better Homes in America campaign, ownership was treated as proof of citizenship.

428

Hoover, who was eventually elected president of the United States in 1929, called home

ownership, quote, the foundation of a sound economic and social system, end quote.

429

By 1930, home ownership had crept up to 47.8%.

430

But the illusion of stability shattered months later.

431

when the stock market crashed.

432

Within four years, one in five mortgages had fallen into default and nearly 200,000 homes

433

By 1940, the home ownership rate had fallen back to 43%.

434

As the economy crumbled, architects and planners turned to design for answers.

435

The modernist movement led by figures like Le Corbusier,

436

and the Bauhaus school envisioned housing as a public good rather than a private luxury.

437

Corbusier's 1924 Radiant City proposed high rise dwellings surrounded by green space to

replace urban slums.

438

Others experimented with standardized prefabricated homes and attempt to make good design

affordable and efficient.

439

These ideas, though rarely built in their pure form, foreshadowed

440

the social housing projects that would follow in the 1930s and 40s.

441

When the crash gave way to collapse, the system that bound property, credit, and identity

broke completely.

442

Mortgages then required 50 % down and repayment within 10 years, shutting out most

Americans.

443

Desperate to stabilize the market, President Hoover created the Federal Home Loan Bank

444

but it barely slowed the wave of foreclosures.

445

As we discussed two decades earlier in 1913, the nation had tried to build a system that

safeguarded against just this kind of panic, the Federal Reserve.

446

Created to steady the flow of money and credit, the Fed was designed to keep trust from

collapsing when fear spread.

447

During the Depression, its reach was limited, but its existence mattered.

448

It offered the framework for liquidity, the promise that government could act as lender of

last resort.

449

Without that foundation, the sweeping credit interventions of the 1930s, the refinancing,

the loan guarantees, the mortgage insurance would have been impossible to fund or

450

coordinate.

451

The Fed provided a financial backbone to a forthcoming housing revolution.

452

A year later, Franklin Delano Roosevelt took office and remade housing finance from the

ground up.

453

The Homeowners Loan Corporation, or H-O-L-C, refinanced nearly a million failing

mortgages.

454

The Federal Housing Administration, or FHA, insured lenders making 20 to 30 year loans the

new norm.

455

And in 1938, the Federal National Mortgage Association, or Fannie Mae,

456

created a secondary market so banks could keep lending.

457

Together, these programs transformed housing from a privilege of the few into a national

economic engine.

458

But expansion still came with segregation that was systemic by this point.

459

Well done!

460

FHA's 1938 underwriting manual warned that, inharmonious racial groups threatened

neighborhood stability.

461

The HOLC's redlining maps translated prejudice into policy, denying credit to black and

immigrant neighborhoods.

462

Builders receiving federal support were, in practice, incentivized to exclude African

Americans entirely.

463

The federal government had followed the lead of the real estate industry, enshrining

segregation as fiscal policy.

464

Subsidized suburbs spread for white families, while public housing for others was

relegated to containment.

465

While divides over race deepened, the two-track wealth system that affects everyone

hardened in plain sight.

466

Mass produced by an industry built to profit from division itself, a new kind of divide

took root.

467

quietly and legally.

468

By the late 1940s, the image of a family framed by a white picket fence wasn't just

marketing, it was a boundary.

469

The home became both symbol and product, the centerpiece of a financial machine that would

reshape America's landscape and its identity.

470

What happens when a basic need turned aspirational dream becomes an investment to guard?

471

Next time.

472

on Built to Divide.

473

I appeared before the Congressional Committee, the highest representation of the American

people under subpoena, to tell what I knew of activities, which I believe might lead to an

474

attempt to set up a fascist dictatorship.

475

Thanks for listening.

476

Built to Divide is presented by Lines, my architecture and creative studio.

477

This podcast is produced in collaboration with Gable Media.

478

If you enjoyed the show, please tell a friend and rate and review it on Apple podcasts and

Spotify.

479

It really helps others find it.

480

And if you're looking for similar content, Built to Divide is part of the Gable Media

network where you can find even more like this.

481

Visit gablemedia.com.

482

That's G-A-V-L media.com.

483

And before I go, if you want to see additional photos, video clips and content that went

into this episode, you can visit me at lines.studio slash podcasts.

484

Talk soon.

485

In 1829, the North Portico, also by La Trobe, was added.

486

This was the view from Pennsylvania Avenue.

487

By 1840, one of the many storms broke concerning the decorating of the White House.

488

Congressman Ogle attacked President Van Buren, asking, will Americans support their chief

servants in a palace as splendid as the Caesar's?

489

Charles Dickens didn't find the White House quite that splendid.

490

He called it an English clubhouse.

491

With that uncomfortable air of having made yesterday, many times there wasn't enough money

for even minor repairs.

492

The paint peel from the walls and the building was known as the public shabby house.