Summary
The building societies came through the depression with substantial funds. The new government in 1931 introduced a policy of cheap money, which was devised essentially to assist the older industries. This came to be the catalyst in promoting the new speculative house builders. These new builders expanded quickly, they channelled funds from the societies to new home owners as it became essential for the societies to lend their depositors funds to the customers of the house builders rather than suffer a loss in income by buying government securities.
The Housing (Financial Provisions) Act of 1933 was an attempt by the government and the building societies to use some of their funds to build houses for rent. They had hoped to lend to local authorities, secured against government guarantees, who would build homes for rent, the Act was unsuccessful.
The British banks had entered the 1930s with strong balance sheets but they did not see their role in society as lenders to house buyers, they were even reluctant lenders to their own staff for that purpose.
It was the building societies who had the funds, the government did not have the financial resources to build the homes needed. Those houses being built with subsidies were too expensive for the lower-paid workers to afford. The major available market for house-building was for the low-cost home where there was a good demand from workers employed in the new factories and a lack of existing accommodation either to rent or to buy. The building societies were becoming the major source of capital for house buyers at the expense of the friendly societies, insurance companies and statutory and local authorities. The largest societies were headed by strong individuals who wished to see their societies grow, to the detriment of the small ones. Together with the speculative builder they expanded into the largely untapped market for the low-cost home. This movement to house the lower paid matched the attitudes of the building society management which were in symphony with the working classes. The next chapter shows how quickly the societies were able to expand the market for the small low-cost house.
The government was so grateful to the societies for assuming their role in financing working-class houses that forty-two government MPs, including the Prime Minister, the Rt. Hon Stanley Baldwin, wrote to the Building Societies' Association in 1937 to thank them for their great works; the letters were published in the form of a pamphlet by the Building Societies Association. |
