The urban renewal program had its shaky origins in the Housing Act of 1949, but it did not get under way in a serious fashion until 1954, when the Eisenhower administration made several changes in the law. Our analysis of the events leading up to this legislation and the subsequent amendments reveals a conflict between two contending forces, one of which was rooted in local growth machines. The other was the liberal-labor coalition.

The liberal-labor coalition was concerned with creating more housing for the poor. This concern manifested itself in terms of programs for public housing, subsidized housing, and the rehabilitation of slums. The coalition was opposed by downtown business interests, who were concerned with protecting real estate values and creating more space for the expansion of businesses and other large institutions. There was some overlap in the two camps, created by the many liberal planners who also shared some of the business perspective and the few farsighted businesspeople who were willing to grant the need for some housing programs within an overall urban renewal program. But at their cores the two groups were fundamentally opposed. The prohousing group saw the business interests as "the reactionary real estate lobby," which was embodied in the U.S. Savings and Loan League, the Mortgage Bankers Association, the National Association of Real Estate Boards, and the real estate committees of the Chamber of Commerce of the United States. Those in the real estate lobby called the public housing advocates "the housers" and often claimed their programs were socialistic or communistic.

The first federal legislation related to this conflict, the Housing Act of 1937, was a redevelopment program for low-income housing that provided federal aid to municipal housing authorities. While modest in size, there were 200,000 people living in these federally aided projects by 1941, and there was vigorous opposition to this liberal initiative from the real estate interests. Not only did it ignore their interest in downtown expansion, but it posed a mild threat to real estate values because the administrator of the housing authority preferred to build public housing on vacant land. By building outside of slum areas, the liberal director of the United States Housing Authority, a wealthy real estate owner from New York who knew the business well, was trying to deflate land values. As he later wrote:

It would indeed have been a betrayal of a public trust to allow the USHA program to become a means of bailing out owners of slums at "values" of three, five, or ten dollars a square foot when such fictitious values arose out of use of property in a manner which was dangerous to the health of tenants and detrimental to the well-being of the community. The USHA program accordingly was planned to enable local authorities to build some of their projects on low-cost land outside of slum areas.

It was about this time that downtown business interests and real estate developers, with the aid of economists and planners, began to develop their own plans for the inner city, partly to counteract the liberal housing program but also to find a way to clear expensive land for their own growth plans. As urban analyst Jeanne Lowe writes in her colorful history of urban renewal, which sometimes becomes an encomium to the pioneers in urban renewal:

Business interests, particularly downtown property owners and realtors, wanted a clearance and rebuilding program that would be on a more "economic" basis -- that would allow private entrepreneurs to participate as developers; permit reuses other than public housing, especially in centrally located slum areas; and let cities reap the higher tax returns which private developers promised. Equally important, these interests had come to accept the fact that in order to assemble land for feasible rebuilding, local government's power of eminent domain would be required to eliminate hold-out prices.

Even with the power of eminent domain, however, it was likely that the high cost of slum land would make it too expensive for those who wanted to renew and expand downtown areas. The answer to this financial problem was provided in the early 1940s by two economists, Alvin Hansen and Guy Greer. Their work was part of the large-scale postwar planning already under way in 1940-1942 under the auspices of three national-level policy-planning organizations, the Council on Foreign Relations, the Committee for Economic Development, and the smaller and more liberal National Planning Association. From the point of view of these organizations, urban renewal was one of several spending programs that might be utilitized if economic depression returned after the war.

The general Greer-Hansen proposal for redeveloping the cities was very similar to one developed at the national level by planners at the Urban Land Institute, the national-level policy- planning organization of the real estates interests, but with one major difference. Hansen and Greer suggested that the federal government might have to pay much of the cost for buying and clearing the land instead of merely granting long-term loans, as in the Urban Land Institute plan. Local government was to pay the remainder of the cost, which was set at one-third when the act was passed several years later. The land would then be leased (under the Hansen-Greer plan) or either leased or sold (under the Urban Land Institute plan) to private developers at a lower price than the government had paid, a lower price that supposedly reflected the true earning power of the land when re-developed. In other words, small property holders, mortgage holders, and slumlords would be bought out at a handsome price by the government, and the bigger real estate interests would be able to obtain the land at a reduced price that supposedly was necessary if they were to make a reasonable profit with nonslum structures. The difference was to be absorbed by the ordinary taxpayer.

Greer and Hansen realized that the new plan might be viewed by some as "a bail-out of the owners of slum properties and the lending institutions that held the mortgages." They therefore argued that "the social and economic mess" that had been left by "past generations" was something for which "society as a whole can be held mainly to blame." This rather general argument was not appreciated by the U.S. Housing Authority administrator:

The high profits obtained from slum properties, the dogged insistence of slum-owners on their right to maintain housing which flagrantly violates human decencies, the high returns derived from this method of operation, and the high capitalized value placed on the properties -- these are typical conditions throughout the country. In view of the facts, the thesis that society is to blame for slum conditions and that there is moral justification for using the taxpayer's funds to bail out owners of the slums is hardly tenable.

The conservative real estate interests had different reservations about the program, but they were tempted by it. They were opposed in principle to federal interference, and they feared the guidelines that might be tied to any federal handouts, but they decided they could live with the basic proposal if certain changes could be made and the emphasis on housing kept to a minimum.

The Hansen-Greer proposal was included in new legislation introduced into the Senate in 1943, and a slightly different bill was introduced later in the same year by the Urban Land Institute. Hearings on the ideas contained in the two bills were first held in 1944-1945 before the Special Subcommittee on Post-War Economic Policy and Planning. In the legislative struggle that ensued, the prohousing interests were able to place a great emphasis on housing construction by introducing the requirement that residential areas that were cleared had to be returned to predominantly residential uses, with PREDOMINANTLY being eventually defined as over 50 percent. This requirement was vehemently opposed by the real estate lobby, but it was unable to have it removed. The lobby thus worked to block passage of the bill and was successful in doing so until 1949.

The bill as finally passed contained two important concessions to the real estate interests. They were introduced as amendments early in 1948 by a moderate Republican, Senator Ralph Flanders of Vermont, a major industrialist who was also one of the top leaders in the Committee for Economic Development. The first change mandated that federal money be given to the local community in one lump sum, which made it more difficult for federal agencies to monitor the local program in any detail. The second change allowed city-cleared land to be sold as well as leased to private developers. This concession, which had been part of the original Urban Land Institute proposal, was essential to leaders of the growth machine because it made it possible for private entrepeneurs, rather than the city, to realize the gains from long-term increases in land values. Liberals and moderates, fearing fiscal crisis for the cities, wanted to give them a more secure financial basis by letting them share in the profits of ownership, but the conservatives wanted no part of such a plan. They wanted all the profits, and they wanted city officials dependent upon them.

Because the final bill still contained the strong emphasis on housing, the defeated real estate lobby moved to block its implementation through its strong influence with the Appropriations Committee in the House. It also suggested to local leaders that they lobby for passage of state legislation that would allow them to set up local redevelopment agencies that could compete with local housing authorities for federal grants. This plan by the Urban Land Institute, created in the mid-1940s, had been developed in anticipation of a possible defeat at the hands of the liberals at the national level.

The outbreak of the Korean War also contributed to the delay in starting the program, diverting money and attention away from the program. Then, too, developers were very leery that protests might flare up over programs that were going to tear down people's houses with no guarantee of where and when new ones would be completed. The result, as Lowe recounts, is that very few urban renewal programs of any consequences were in process by 1954. Put in this national context, Dahl's emphasis on local leadership in explaining delays in the New Haven program up to that point is muted considerably. "Redevelopment proved doggedly slow in getting started," Lowe writes, "in spite of the apparently attractive opportunity that Title I (of the Housing Act) presented to private enterprise and the cities themselves... The pertinent fact here is that by 1954, few municipalities had been able to take a redevelopment project beyond its initial planning stage."

The advent of the Eisenhower Administration in 1952 raised the possibility that the real estate interests could change the law to their liking, and their opposition to the program began to soften. The first step in this process was the creation of a presidential commission in 1953 that was dominated by bankers, savings and loan officials, and real estate and development leaders. When their suggestions, in the form of a commission report, were brought to Congress, there was little or no protest from any business groups, although conservative southern congressmen continued to register their disagreement.

The key change suggested by the commission was to create an exception to the rule that residential areas had to be restored to predominantly residential usages. The new provision allowed another 10 percent of urban renewal grant monies for a given project to be used for non- residential uses. The commission also proposed that the program should encompass slum prevention as well as slum clearance. In practical terms, this made it possible for a plan to encompass areas that were not run down by claiming they would become slums if they were not part of the redevelopment program.

The combination of these two provisions freed local growth machines to move ahead with their plans. Requests for money burgeoned, and numerous programs got under way. The gradual enlargement of the exception rule made the program even more attractive. It was increased to 20 percent in 1959, to 30 percent in 1961, and to 35 percent in 1967. The real estate lobby had won a complete victory over the housers even though it took them a long time to do so. As urban sociologist Scott Greer succinctly summarized the legislative struggle between 1937 and the early 1960s, "the slum clearance provisions of the Housing Act of 1937 have been slowly transformed into a large-scale program to redevelop the central city."

As one part of its report to President Eisenhower, the Commission on Urban Renewal and Housing also suggested that implementation of the urban renewal program should be aided by "the formation outside of government of a broadly representative national organization to help promote and lead this dynamic program for renewal of the towns and cities in America." This new group was formed in November, 1954, as ACTION, the American Council to Improve Our Neighborhoods, and it included bankers, corporate executives, and real estate developers as well as urban planners and housing experts from major cities across the country. Its ambitious program included a research division that would amass all available information on how to carry out a good program, a national advertising campaign that would "arouse individual action against the threat of home and neighborhood decay," and a technical assistance program that would provide trained personnel to both citizens and governmental groups.

Four days after the founding of ACTION, the Advertising Council announced a new national campaign to be called "Action on Slums." The aim of the campaign was to "stimulate the rehabilitation or rebuilding of depressed areas." At the same time, various real estate and home- building associations were conducting their own campaigns under such slogans as "Build America Better," "New Face for America," and "Better America, Inc."

As one small aspect of the ACTION program, in an attempt to give people the feeling that something was happening and that they should become involved, the organization hired writer Jeanne Lowe in 1957 to be its public information officer. This work took her to various cities. It was not long before she had visited New Haven and written an article for the October, 1957, Harper's Magazine entitled "Lee of New Haven and His Political Jackpot." As might be expected, it was an enthusiastic endorsement of what was happening in New Haven, proof that there was no political danger in creating an urban renewal program. There was great emphasis on Mayor Richard C. Lee's leadership qualities. It began:

Richard C. Lee of New Haven is the first city Mayor in the country to make urban renewal the cornerstone of his political career. Today, as a result, this twice-defeated candidate for a once semi-ceremonial job in a second-rate city is apparently assured of re-election next month for his third term... Mayor Lee has struck political paydirt in an unpromising issue.

Five paragraphs later, Lowe notes that "what redevelopment needed was an example like New Haven's, which other cities have watched with envy and which Housing Administrator Cole has called 'spectacular, imaginative, exciting, comprehensive -- a model for urban renewal in the cities of America.'" ACTION made a movie about the New Haven story and adopted the city as its ideal example of an urban renewal program.

The legislative successes and image-building efforts of local growth machines, then, were not without outside help. Leaders within the national corporate community had given their considerable support through the opinion-forming process. But their interest in New Haven as a model city remains something of a mystery as yet.

Several different studies of urban renewal programs in specific cities reveal the predominant role of local business interests. Social scientists Timothy K. Barnekov and Daniel Rich, through questionnaires and interviews in 33 cities, found that downtown associations, chambers of commerce, and small committees of top business leaders have been highly active in the urban renewal programs in most of these cities. They conclude that "these data suggest that it is inaccurate to conclude that businessmen have been hostile or indifferent to urban renewal, or that they lack the sustained organization to promote redevelopment."

Case studies of urban renewal programs in such major cities as Pittsburgh, Philadelphia, Chicago, San Francisco, and Atlanta shed light on how local growth machines dominate local programs even though there are wide differences in how this is accomplished. In Pittsburgh, one of the first cities to undertake urban renewal, it was one family, the Mellons, that spearheaded the program through a coalition known as the Allegheny Conference. Founded in 1943, the Allegheny Conference developed a close working relationship with local government and the Democratic Party that was considered the basis for its success. Because of the great wealth and influence of the Mellons, urban renewal was possible in Pittsburgh even before federal monies were available. Although few cities could emulate Pittsburgh in this regard, the Allegheny Conference nevertheless became the model for Philadelphia, Baltimore, Syracuse, Saint Louis, and other cities in the "formation of public-private partnership."

Philadelphia became a case worthy of study because it created a strong urban renewal program despite the absence of a super-wealthy family. It therefore had to develop a deeper and more broad-based leadership coalition that spent most of the 1940s drawing plans and changing the structure of local government. One of the key steps in this process was the formation in 1948 of an organization called the Greater Philadelphia Movement. It was composed primarily of downtown business leaders, but there were minority group representatives and a labor official among its 35 members who were considered essential symbolic representatives. Not least among its efforts was support for the election of a reform Democratic mayor who was more responsive to the program than his conservative Republican predecessor had been. The Philadelphia model was one that New Haven specifically tried to emulate in its programs.

A detailed study of Chicago's first urban renewal project is of interest because it showed the central role that can be played by a major university -- in this case, the University of Chicago -- when it has direct ties to both the downtown business community and the Democratic political machine. In Chicago, the university provided aid to various planning and citizens' groups in the formative years between 1949 and 1953 and became even more open in its participation after that time. Utilizing its trustees connections to city government, it lobbied vigorously for the first city project to be located in the area surrounding the university. In 1959 trustees and administrators from the University of Chicago convinced the Eisenhower administration to amend the urban renewal legislation so that new university construction could be counted as part of the city's one-third contribution to the project costs.

Urban renewal in San Francisco also showed strong downtown business involvement, but there was a different relationship with government. The process began with a group of business leaders who started meeting regularly in 1945 to plan the revitalization of the city and then formalized themselves as the Bay Area Council and the San Francisco Program for Urban Renewal in 1948. However, the plans were carried out by a strong redevelopment administrator who was often at odds with the city council and received minimal support from the mayor's office. Instead of a coalition between downtown business and the mayor, as in many cities, there was a coalition between business and the Redevelopment Agency.

The best and most detailed case study of an urban renewal program concerns the city of Atlanta between 1950 and 1970. Written by political scientist Clarence Stone, it is of special interest because it was designed with the controversy between Hunter and Dahl clearly in mind. It redresses Hunter's lack of detail on government decision making by showing how city officials functioned to aid cohesion in business groups and to discourage and fragment neighborhood groups.

In the course of his study, Stone arrived independently at a position similar to that expressed by Molotch. Land values and growth are the key issue in community politics, and urban renewal is "part of a general struggle over the control of land." Stone came to this conclusion because he found that urban renewal in Atlanta was based on the desire to expand the central business district into the land occupied by low-income black neighborhoods that were also in the process of expanding.

The growth machine's concern for urban renewal was expressed through the Central Atlanta Improvement Association. Members of this group involved themselves with government through membership on the City Housing Authority and a Citizen's Action Committee on Urban Renewal that was jointly financed by business and government, and through informal contacts with the mayor, who was himself a former downtown businessman. Responsibility for specific government plans was lodged in an Urban Renewal Planning Committee composed of commissioners from the Housing Authority and elected officials from the city council's Committee on Urban Renewal. The mayor stayed in the background as much as possible, and responsibility for the program was insulated from him so that he would not become the center of any political controversies over it.

In tracing the history of the program, Stone finds immediate contrasts to New Haven. Whereas neighborhood resistance to the New Haven program did not appear until the 1960s, after Dahl had completed his study, it appeared almost immediately in Atlanta. A tentative plan floated in 1950 was protested by residents in the white neighborhood that would be most affected, and a black newspaper editorialized that there was a danger of urban renewal becoming "Negro removal," a phrase that was to be made famous in the 1960s by the fiery speeches of Malcolm X.

Atlanta also suffered delays in getting its program under way when the Georgia Supreme Court in 1954 ruled that the state's enabling legislation on urban renewal was unconstitutional. The legislation had to be re-written and was not passed until 1957. Such legal challenges, which were often initiated by ultraconservatives concerned with the implications of the program for the rights of private property, were not uncommon in other cities and states, but only cities in California suffered these delays into the 1960s.

Stone studied several specific decisions from both the formative years of the program, 1954- 1962, and the more protest-laden years of 1962-1969. He found that the downtown business community was overwhelmingly successful in achieving its major objectives during its first phase. Its only setback was a partial one of little direct interest to it: Sites for low-income housing that it had agreed to as the price for black leadership support were blocked by a middle- income white neighborhood.

In the second phase the downtown business interests were successful in obtaining land for a stadium, a civic center, and the expansion of a downtown university while quietly vetoing the repeated requests of specific neighborhoods for public housing. This second phase was highlighted by black demonstrations and protests, actions that should have met with great success, Stone notes, if pluralistic theorists are right that "the prizes go the interested and active." For a time, it did look as if they were going to be successful. In early 1966 a neighborhood group was able to save one-half of its area from plans for urban renewal clearance. The outbreak of relatively mild civil disorder in two other black neighborhoods in September 1966 galvanized the city into promises for larger recreational and fix-up programs for neighborhoods. In November 1966 the mayor announced a goal of 17,000 new units of low and moderate income housing, with 9,800 of those units to be completed within two years. By the end of 1966, Stone reports, the program seemed to be changed rather dramatically:

The change had come abruptly. As late as the 1965 Declaration of Policy in the city's Workable Program document, Atlanta's urban renewal program was explained primarily in terms of the "encouragement of economic expansion," physical planning and development, and "the overall economic ability of the City to support... urban development and renewal activities." By the close of 1966 the urban renewal program was completely recast; neighborhood improvements, grass-roots participation, and expanded supply of standard housing for low and moderate income families appeared to be central elements in a new renewal policy.

However, the policies did not change after all. As protest receded, the promises went unfulfilled. City officials stalled and delayed as they fought with neighborhood groups and as the groups within neighborhoods began to argue with one another. Only a few thousand of the 17,000 promised housing units were built. City officials blamed neighborhood opposition for this failure. Stone suggests that lack of business support was even more important, for the business leaders had made it clear that they preferred low-income housing to be built outside the city limits. Also left unmentioned by city officials was the opposition of real estate interests to any government involvement in the construction and management of housing.

Stone sees these results as a direct contradiction to the general theory of pluralist politics that Dahl derived from New Haven. Poor citizens do not have what Dahl called the "slack," or extra resources, to invest in politics when they feel their interests are threatened enough to make politics worthwhile. Despite sustained protests and other efforts, blacks in Atlanta were not able to induce politicians and government officials to forward their interests. Instead, the link between the business community and city hall, based upon common values, organizational ties, and campaign finance, proved more durable. Between 1956 and 1966 one-seventh of the people in Atlanta were moved out of their homes to make way for expressways, urban renewal, and a downtown building boom that drew nationwide attention throughout the 1970s.

On the basis of the studies on Atlanta and other cities, it would seem that Dahl's findings in New Haven represent a unique case. However, there are also problems with the adequacy of Dahl's analysis. The comparative studies raise three basic questions about it. First, the fact that businessmen and university officials were active in most cities makes it doubtful that those in New Haven would be the only ones who would be hesitant about the possibilities of the program. Second, the fact that most of the programs picked up steam only after changes were made in the urban renewal law in 1954 makes it less likely that the election of a new Democratic mayor in New Haven in November 1953 was the key to the local program. Third, the fact that many cities developed large urban renewal programs without an energetic mayor leading the way suggests that other factors may be more basic in the competition for urban renewal funds.

It is clearly time to reconsider the New Haven study, for it is the most credible challenge that has been offered to the idea that downtown business leaders are the most powerful people in their communities. More generally, it is one of the few systematic, empirical investigations concerned with overall power at either the local or national level that ever has been made by a pluralist. If it could be shown that there are serious defects in what is generally considered to be the best pluralist study to date, it would suggest that careful scrutiny of the more casual instances and anecdotes pointed to by pluralists to support their position might reveal similar problems of method and findings.

SOURCE: Excerpted from "Who Rules America Now?" by G. William Domhoff, 1983, publ. by Prentice-Hall, Inc. (pgs. 173-184)