Back Story to the Neoliberal Moment

Abstract

In scholarship on race and housing, Black poverty is used to explain the overrepresentation of African Americans in substandard housing. This practice has masked how many African Americans were actually able to afford comparable homes to whites in the housing market, but the existence of a “dual housing” market created a captive Black market where more was paid for inferior housing. Blacks are estimated to have paid tens of thousands of dollars more for substandard housing—payments popularly known in Black communities as “race taxes.” This practice would be counted as a factor in Black rebellions in the 1960s.

Keywords:

• “dual housing”
• housing
• political economy
• poverty
• segregation

Notes

“Family Properties: Race, Real Estate, and the Exploitation of Black Urban America,” p. 276.

“Dr. King Carries Fight to Northern Slums,” Ebony Magazine, April 1966, 94–102.

“Nixon to Aid Blacks,” Wall Street Journal, March 31, 1969; “U.S. Supports Negroes on Blockbusting Losses: Enters Chicago Case for Home Owners' Reimbursement of Exorbitant House Costs,” Los Angeles Times, March 29, 1969.

“Wells Fargo Fined for Racist Policies,” Wells Fargo Watch, July 12, 2012. http://wellsfargowatch.blogspot.com/2012/07/wells-fargo-fined-for-racist-policies.html (accessed January 1, 2013). Thomas Perez, “an African-American wholesale customer in the Chicago area in 2007 seeking a $300,000 loan paid on average $2,937 more in fees than a similarly qualified white applicant. And these fees were not based on any objective factors relating to credit risk. These fees amounted to a racial surtax. A Latino borrower in the Miami area in 2007 seeking a $300,000 paid on average $2,538 more than a similarly qualified white applicant. The racial surtax for African Americans in Miami in 2007 was $3,657.”

Beryl Satter, Family Properties: Race, Real Estate, and the Exploitation of Black Urban America (New York: St. Martin's Press, 2009).

“Nixon Bid To Aid Blacks,” The Wall Street Journal, March 31, 1969.

Warren G. Magnuson, “How the Ghetto Gets Gypped,” Ebony Magazine, September 1968, p. 116.

National Bureau of Economic Research; Census website on historic rates of homeownership. See also William J. Collins and Robert A. Margo, “Race And Home Ownership: A Century-Long View,” Explorations in Economic History, 38, no. 1 (January 2001): 68–92; “Historical Census of Housing Tables Ownership Rates,” United States Census Bureau, http://www.census.gov/hhes/www/housing/census/historic/ownrate.html (accessed October 1, 2012).

L. L. Woods, “The Federal Home Loan Bank Board, Redlining, and the National Proliferation of Racial Lending Discrimination, 1921–1950,” Journal of Urban History 38, no. 6 (April 9, 2012): 1036–1059, doi:10.1177/0096144211435126.

Kenneth T. Jackson, Crabgrass Frontier: The Suburbanization of America (New York: Oxford University Press, 1985); Thomas J. Sugrue, “Crabgrass-Roots Politics: Race, Rights, and the Reaction Against Liberalism in the Urban North, 1940–1964,” The Journal of American History 82, no. 2 (1995): 551–578, doi:10.2307/2082186.

Antero Pietila, Not in My Neighborhood: How Bigotry Shaped a Great American City (Chicago: Ivan R. Dee, 2010).

Ibid.

Ibid., 70.

Ibid.

Douglas S. Massey and Nancy A. Denton, American Apartheid: Segregation and the Making of the Underclass (Cambridge, MA: Harvard University Press, 1993), 52.

Rose Helper, Racial Policies and Practices of Real Estate Brokers (Minneapolis: University of Minnesota Press, 1969), 204; Arnold R. Hirsch and Raymond A. Mohl, Urban Policy in Twentieth-Century America (New Brunswick, NJ: Rutgers University Press, 1993), 74–75.

Ibid.

Hirsch and Mohl, Urban Policy in Twentieth-Century America, 85.

Arnold R. Hirsch, Making the Second Ghetto: Race and Housing in Chicago 1940–1960 (Chicago: University of Chicago Press, 1998); Martha Biondi, To Stand and Fight: The Struggle for Civil Rights in Postwar New York City (Cambridge, MA: Harvard University Press, 2003); Robert O Self, American Babylon: Race and the Struggle for Postwar Oakland (Princeton, NJ: Princeton University Press, 2003); Thomas J. Sugrue, The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit (Princeton, NJ: Princeton University Press, 2005); Thomas J Sugrue, Sweet Land of Liberty: The Forgotten Struggle for Civil Rights in the North (New York: Random House, 2008); Lizabeth Cohen, A Consumers’ Republic: The Politics of Mass Consumption in Postwar America (New York: Knopf: Distributed by Random House, 2003); Calvin Bradford and Dennis Marino, University of Illinois at Chicago Circle, Redlining and disinvestment as a discriminatory practice in residential mortgage loans (Washington, DC: U.S. Department of Housing and Urban Development, 1977); Philip Ashton, “Advantage or Disadvantage? The Changing Institutional Landscape of Underserved Mortgage Markets,” Urban Affairs Review 43, no. 3 (January 1, 2008): 352–402; Kevin Fox Gotham, Race, Real Estate, and Uneven Development: The Kansas City Experience, 1900–2000 (Albany: SUNY Press, 2002); Ann B. Schnare, “Trends in Residential Segregation by Race: 1960–1970,” Journal of Urban Economics 7, no. 3 (May 1980): 293–301, doi:10.1016/0094-1190(80)90002-9; Daniel R. Kerr, Derelict Paradise: Homelessness and Urban Development in Cleveland, Ohio (Amherst: University of Massachusetts Press, 2011); Massey and Denton, American Apartheid.

Woods, “The Federal Home Loan Bank Board, Redlining, and the National Proliferation of Racial Lending Discrimination, 1921–1950.”

Papers of Lyndon Baines Johnson: File Group170, Folder: Department of Urban Housing and Development, LBJ Library Box 256 Problems, Summary, the Douglas Commission Report.

Ibid.

Hirsch and Mohl, Urban Policy in Twentieth Century America.

“Confessions of a Block-Buster,” The Saturday Evening Post, July 14,1962. In possession of the author. See Amanda I. Seligman, Block By Block: Neighborhoods and Public Policy on Chicago's West Side (Chicago: University of Chicago, 2005), 151–153.

David L Mason, From Building and Loans to Bail-Outs: A History of the American Savings and Loan Industry, 1831–1989 (New York: Cambridge University Press, 2004). http://site.ebrary.com/id/10131647 (accessed October 7, 2012)

Preston H Smith, Racial Democracy and the Black Metropolis: Housing Policy in Postwar Chicago (Minneapolis: University of Minnesota Press, 2012).

Lisa A. Danielson, “Installment Land Contracts: The Illinois Experience and the Difficulties of Incremental Judicial Reform,” University of Illinois Law Review 1986 (1986): 91; Ray D. Henson, “Installment Land Contracts in Illinois: A Suggested Approach to Forfeiture,” DePaul Law Review 7 (1958 1957): 1; Grant S. Nelson and Dale A. Whitman, “Installment Land Contract—A National Viewpoint,” Brigham Young University Law Review 1977 (1977): 541; John Mixon, “Installment Land Contracts: A Study of Low Income Transactions, with Proposals for Reform and a New Program to Provide Home Ownership in the Inner City,” Houston Law Review 7 (1970 1969): 523; Lynne Beyer Sagalyn, “Mortgage Lending in Older Urban Neighborhoods: Lessons from Past Experience,” Annals of the American Academy of Political and Social Science 465 (January 1, 1983): 98–108; Hirsch, Making the Second Ghetto, 29–33; Sugrue, The Origins of the Urban Crisis, 39–47. The practice of contract buying was largely unregulated because in contract sales the title of the house did not change hands until the final contract payment was made, thus there are very few official records documenting the extent of their use. Because of this limited paper trail, there has been no academic study of their impact on African American communities even though they were widely used in cities like Philadelphia, Houston, Cincinnati, Albany, Portland, Rochester, Detroit, and Baltimore. Chicago is an exception. The combination of activism and litigation against the use of LICs in Chicago at the end of the sixties created an enormous archive detailing both the mechanics of the contract buying system as well as the grassroots efforts to undo it. Moreover, the CBL movement was covered widely in the local media from 1968 through 1970 creating the kind of documentation that is missing from other cities. Some scholars have alluded to these contracts in general discussions about exploitative conditions created by residential segregation, but none have explored the collusive relationship between housing speculators, real estate moguls, and local savings and loans associations and their collective effort to keep Blacks locked out of the wider, white housing market while using the LICs to trap them in poor neighborhoods and laden with debt.

Satter, Family Properties.

Pietila, Not in My Neighborhood.

Ibid.

Sagalyn, “Mortgage Lending in Older Urban Neighborhoods,” 98.

Ibid., 102.

Ibid., 364.

A sweetheart deal is a sale or an agreement in which one party in the deal presents the other party with very attractive terms and conditions. The terms of the sweetheart deal are usually so lucrative that it is difficult to justify turning down the deal.

Sagalyn, “Mortgage Lending in Older Urban Neighborhoods,” 360–364.

Ibid.

“Jet – Google Books,” http://books.google.com/books?id=HVsDAAAAMBAJ&pg=PA6&lpg=PA6&dq=%22John+L.+Waner%22++HUD&source=bl&ots=8DKg5hTM5g&sig=n2oN_CRrhtcBKo-dFdNdPP_3PAU&hl=en&ei=cLZzTM2_BIq5ngeY27y7CQ&sa=X&oi=book_result&ct=result&resnum=1&ved=0CBIQ6AEwAA#v=onepage&q=%22John%20L.%20Waner%22%20%20HUD&f=false (accessed August 24, 2010).

Chicago Commission on Human Relations City of Chicago, “Mortgage Availability for Non-Whites in the Chicago Area: A Report,” April 1963, 6.

Chicago Commission on Human Relations City of Chicago, “Buying and Selling Real Estate in a Racially Changing Neighborhood,” June 1962, 2. In possession of author.

Chicago Commission, “Mortgage Availability,” 4.

Chicago Commission, “Buying and Selling,” 5.

Alfred Avins, Open Occupancy versus Forced Housing Under the Fourteenth Amendment (New York: Bookmailer, 1963), 271–272. In a survey of loan officers, several explained that they were reluctant to offer mortgages to Blacks because “family stability [is] of prime importance to financing a non-white house. Several officers of associations commented on the disruptive influence of Negro marital problems on home financing, and one [survey] said that because non-white families were less stable, particular attention should be devoted to this aspect of the applicant.”

Ibid., 275.

Chicago Commission, “Buying and Selling,” 9.

Enoch P. Waters, “Urban League says Chicagoans Paid Huge ‘Color Tax,‘” Atlanta Daily World, May 25, 1961.

Federal Home Loan Bank Board, Branching in the Savings and Loan Industry: Economic Analysis and Federal Policy Review, Extended Summary, Excerpts and Conclusions from the Full Study (Washington: The Board, 1976).

“How the Ghetto Gets Gypped,” Ebony Magazine, September 1968, 112–118.

Thomas A. Dutton, “The Colony Over-the-Rhine,” The Black Scholar 37, no. 3 (October 1, 2007): 14–27; Stokely Carmichael and Charles V. Hamilton, Black Power: The Politics of Liberation in America (New York: Vintage Books, 1992).

Alex Poinsett, “The Economics of Liberation,” Ebony Magazine, August 1969, 150.

Stanley Scott, “Negro Ghettos Teeming with Discontent,” Chicago Defender, September 12, 1966.

United States. Fair Housing Act of 1967, hearings before the Subcommittee on Housing and Urban Affairs of …, 90-1 on S. 1358, S. 2114, S. 2280, August 21, 22, and 23, 1967, p. 84–87.

Carmichael and Hamilton, Black Power, 17.

Carmichael and Hamilton, Black Power.

United States. Kerner Commission and Tom Wicker, Report. (New York: Bantam Books, 1968), 274–278.

United States. Kerner Commission and Tom Wicker, Report.

Whitney Young, Jr., “Measuring Ghettoes,” Amsterdam News, October 9, 1965.

Phil Warden, “Negroes Pay Color Tax—King,” Chicago Tribune, December 16, 1966.

Warren G. Magnunson, “How the Ghetto Gets Gypped,” Ebony Magazine, September 1968, 121.

William K Tabb, The Political Economy of the Black Ghetto (New York: Norton, 1970); Carmichael and Hamilton, Black Power; Satter, Family Properties; “The Political Economy of Black Housing: From the Housing Crisis of the Great Migrations to the Subprime Mortgage Crisis—Free Online Library.” http://www.thefreelibrary.com/The+political+economy+of+black+housing:+from+the+housing+crisis+of...-a0224711356 (accessed August 24, 2010); Robert L. Allen, Black Awakening in Capitalist America; an Analytic History (Garden City, NY: Doubleday, 1969); Dalton Conley, Being Black, Living in the Red: Race, Wealth, and Social Policy in America (Berkeley: University of California Press, 1999). In two of the most influential books of the 1960s, Black Awakening in Capitalist America (A Guide to Black Power in America) and Stokely Carmichael and Charles Hamiliton's Black Power, both clearly identify the “race tax” as a demonstration of the “colonial” status of African Americans in the United States. In explaining the existence of the disparity in prices paid between African Americans and whites, Carmichael and Hamilton write: “because the Black community has been the creation of, and dominated by, a combination of oppressive forces and special interests in the white community … nothing meaningful [is done] about institutional racism. … The groups which have access to the necessary resources and ability to effect change benefit politically and economically from the continued subordinate status of the Black community,” 22.

League of Women Voters of Illinois Current Agenda for 1965–1967, “Minority Group Housing: The Problem,” undated, p. 6, Box 235, Folder 2134, Richard J. Daley Library, University of Illinois at Chicago, Martin Bickham Papers, Hereafter RDLUIC-MBP.

“U.S. Supports Negroes on Blockbusting Losses: Enters Chicago Case for Home Owners’ Reimbursement of Exorbitant House Costs,” March, 29, 1969, Los Angeles Times.

Satter, Family Properties, 320–340.

“Nixon Bid to Aid Blacks,” Wall Street Journal, March 31, 1969.

quoted in John C. Tucker, Trial and Error: The Education of a Courtroom Lawyer (New York: Carroll & Graf Publishers, 2003), 265–274.

Satter, Family Properties, 322.

Francis E. McClennand, “The Contract Buyers Case: A Jurors Notes,” Undated. In possession of the author. This was a seventy-page diary kept of the trial proceedings in the CBL case.

James M. Scott, “Land Development and Racism in Fairfax County, VA,” The Washington Suburban Institute, 1970.

Leonard Downie, Mortgage on America (New York: Praeger, 1974).