Greendale was settled in 1939 as a public cooperative community in the New Deal Era. Construction of the new town would create jobs and thus help stimulate the national economic recovery following the Great Depression.
Greendale, which provided good housing at reasonable rents for moderate income urban families, was one of three "greenbelt" towns planned beginning in 1935 under the direction of Rexford Guy Tugwell, head of the United States Resettlement Administration, under authority of the Emergency Relief Appropriation Act. The two other greenbelt towns are Greenbelt, Maryland (near Washington, D.C.) and Greenhills, Ohio (near Cincinnati). The greenbelt towns not only provided work and affordable housing, but also served as a laboratory for experiments in innovative urban planning. Greendale's plan was designed between 1936 and 1937 by a staff headed by Joseph Crane, Elbert Peets, Harry Bentley, and Walter C. Thomas for a site that had formerly consisted of of farmland.
Construction began on Greendale in July 1936 by the U.S. Department of Agriculture, and, despite a movers strike, the first courageous families moved in on April 30, 1938. The original downtown included a Village Hall, several businesses, and 572 living units in 366 buildings, each with an average of of space for lawns and gardens. The village included a tavern, movie theater, volunteer fire station, newspaper office (The Greendale Review), schools, cooperative market and beautiful stone carvings by Alonzo Hauser. The Farm Security Administration originally appointed Mr. Hauser to create the carvings for the village. Henry A. Wallace, who was at the time was the United States Secretary of Agriculture, toured the village upon its completion.
All of the property was owned by the government and then rented to families, based on income, housing need and family size. Income requirements were specific: a minimum annual income of $1,200 and a maximum of $2,700. Some exceptions were made for those with special skills such as medical doctors and other professionals. To prevent too rapid expansion, all new development was tightly controlled by Greendale residents through various homeowners associations, as well as the green belt of parkways surrounding the village.
In 1950 the Public Housing Administration gave Greendale residents the right to purchase their homes from the government. The transfer of ownership from the government to the people was largely complete by 1952.