Who Segregated America?

Recently long-listed for the National Book Award for nonfiction, Richard Rothstein’s The Color of Law is an accessible and powerful account of how metropolitan America became racially segregated ...

Recently long-listed for the National Book Award for nonfiction, Richard Rothstein’s The Color of Law is an accessible and powerful account of how metropolitan America became racially segregated during the 20th century. Rothstein contends that whenever the government recognized, certified, protected, tolerated, supported, or ignored discriminatory practices—by money lenders, private businesses, tax-exempt institutions, or housing developers—it effectively produced and reproduced racial segregation.

But Rothstein doesn’t convincingly explain why the government remained committed to racial residential segregation for decades. If government was the tool by which segregation was created, who—or what—was the hand that wielded it?

Curiously, The Color of Law ignores the obvious answer: capitalism. The book’s focus on law and policy shifts attention away from surplus value and patterns of extraction and exploitation, instead of focusing on these dynamics as an integral part of America’s democratic, law-making system. We might well view residential segregation as the domestic expression of the racial capitalism of the 20th century.1

Viewing residential segregation as a pivotal chapter in the global history of racial capitalism permits—indeed, demands—a critique of government policy and the state more generally. This perspective recasts the “private” as more than individual choice, belief, and action, allowing us to explore the racial character of the relationship between the state and private capital. It also forces us to attend to what that relationship meant to real estate agents, white homeowners, local law enforcement, black public housing tenants, and insurance company executives.2 With government as the vehicle, and capitalism in the driver seat, suddenly the racial segregation of the past century makes dreadful sense.

Rothstein claims that the role of government in residential segregation has been “forgotten.” If in the 1970s “the truth of de jure segregation was well known,” today, he laments, “we have suppressed our historical memory.” Although government complicity in producing racial segregation across the United States might be forgotten by some, a deep roster of urban historians has certainly told it.3 Hip-hop is littered with similar accounts that attribute inequality to the government. As Rakim declared in the 1992 song “What’s Going On?”:

My neighborhood don’t look so good
I’ll find a way out … yeah, I would if I could,
But the government is doing a project …
So I live in the projects.

Indeed, we might ask, of both Rakim and Rothstein, what is the ideological work achieved through pinning inequality solely on government?

In The Color of Law, “government” becomes a neat container, a broad catchall term. All told, Rothstein argues that up until 1975 or so, “racially explicit policies of federal, state, and local governments” were deliberately, systemically, and forcefully designed to segregate black from white. We learn that the Federal Housing Administration (FHA) was the national amplifier of previously local racial zoning ordinances and restrictive covenants. Through the nation’s public housing program, moreover, local and federal governments purposefully sought “to herd African Americans into urban ghettos.”

His argument rests on a contrast between private action and “government” action. In this narrow schema, anti-black racism articulated by white families and real estate agents, the purportedly objective language of risk used by bankers to deny African Americans mortgages, and the supposed cultural preferences of black Americans all fall into the category of “private practices,” only “a small part” of a more multifaceted and consequential government project.

However, emphasis on the government alone, much less on individual personalities and sheer expediency, does not adequately address the question of why the government segregated metropolitan America. Government policies were essential to residential segregation, but largely because it chiefly relied on a crucial phase of American racial capitalism.


What the Nazis Learned from America

By Jessica Blatt

The racial capitalism of the 20th century was partially founded upon contractual restrictions and public-private partnerships, both of which were permeated through and through, to paraphrase Cedric J. Robinson, by racialism.4 The racial capitalism that underlay residential segregation was expressed at two levels.

The first was at the level of ideas; specifically, ideas concerning the asset values of blackness and whiteness. During the 1920s, the National Association of Real Estate Boards published zoning manuals and circulated a code of ethics that instructed realtors to abide by the idea that different racial groups living together were “detrimental to property values,” as Rothstein correctly notes. Scholar Jennifer S. Light has pointed to a concept of race that included nationality, but the association between blackness and lower property values remained a durable pattern of racial thought among government officials and real estate brokers.5 Frederick Ecker, who led the Metropolitan Life Insurance Company for much of the 20th century, felt ethics and zoning ordinances were insufficient: shared ethics should be supplemented by deed restrictions limiting sales to African Americans.

Ideas flowed between government and private capital. Amy E. Hillier has shown how the Home Owners’ Loan Corporation (HOLC) built on the antecedent ideas of lenders and realtors to effectively institutionalize the “common practice” of refusing loans to areas with African Americans.6 The remarkable “Mapping Inequality” project further reveals how HOLC recruited local real estate agents in the 1930s to create color-coded maps that graded neighborhoods to determine which areas were safe bets and least fit for housing loans.7 Black people living in or near white neighborhoods were understood by FHA officials and real estate brokers as diminishing property values, a serious concern because white property owners who experienced diminished property values might increase the FHA’s losses in the event of a default. FHA officials proclaimed that such decisions were objectively rooted in “the cold facts and the elements of risk,” to quote one official.

Emphasis on the government alone does not adequately address the question of why the government segregated metropolitan America.

But the agency either did not have the evidence to confirm the link between integration and property values or else ignored evidence that property values sometimes increased when black people moved into neighborhoods in transition.

That the ideas concerning blackness and property were similar among government officials and private capital can be attributed to the sort-of revolving door between government and the private sector. The federal government recruited developers and approved their loans to finance construction of racially segregated suburbs. During the 1940s, the FHA contracted with brokers to facilitate the resale of repossessed property—but only if they refused to sell to African Americans. By the early 1960s, Erle Cocke brought his experience as the former president of the American Bankers Association to bear on his role as chairman of the Federal Deposit Insurance Corporation. Speaking in defense of the asset value of whiteness, Cocke deemed it appropriate for federally insured banks to deny mortgages to upwardly mobile African Americans on the grounds that, as neighbors, their presence would diminish white property values.8

Where ideas concerning race and property were insufficiently implemented, law enforcement defended the asset value of whiteness. During World War II Culver City’s air raid wardens went door-to-door to remind white suburbanites not to sell to African Americans and to seriously consider becoming party to racially restrictive covenants. The legal eclipse of restrictive covenants in the 1948 Supreme Court decision Shelley v. Kraemer meant that law enforcement would have to defend the asset value of whiteness through other means. Indeed, the late 1950s saw entanglements between local police, the FBI, and the US Attorney General. Together, they investigated how an African American teacher managed to move into the Elmwood district of Berkeley, California. When no crime could be conjured, the FHA did the policing work itself: it restricted the white owner who had rented the house to his African American colleague from obtaining government-insured mortgages in the future.

The second level at which racial capitalism was expressed was government guarantees. Relations between the state and private capital were not always cordial. During the 1940s, the real estate lobby fought intensely against public housing. Though it lost when Congress passed the Housing Act of 1949, providing for up to 810,000 additional public housing units, the real estate lobby did win strict income restrictions on eligibility.

Those limits set in motion concurrent processes of racial capital accumulation. The real estate industry continued to provide homes for white middle-class Americans. Meanwhile municipal bond financiers invested in racial inequality by purchasing and reselling debt tied to the construction and operation of public housing projects. Many insurance companies also refused to issue mortgages in integrated neighborhoods, but as the major purchasers of public housing bonds, that refusal did not stop them from collecting tax-exempt interest income.

Segregation restricted housing options, a fact to which landlords responded by greedily overcharging African American tenants. As whites continued to move to the suburbs and African Americans searched for inner-city housing, landlords and absentee owners—crucially, white and black alike—fit African Americans like sardines into subdivided rental properties.9 The racially inflected housing shortage allowed landlords to “wax fat off the poor,” as San Francisco’s leading African American newspaper put it in July of 1960.10

Real estate agents willing to sell homes at inflated prices on installment plans to African Americans profited from the exclusion of a precarious black middle-class from public housing projects and suburbia. Though lacking guarantees in a conventional sense, in the event that black owners missed a payment, contract sales ensured that brokers could seize the asset and repeat the process.

By midcentury, the nexus of racial ideology, state power, and private capital produced a vexing problem for municipal officials and property owners. Black people were seen as detrimental to white property values. The continued denial of housing opportunities to black people throughout American cities and suburbs often meant the spatial compartmentalization of poor, working-class, and middle-class African Americans in select corridors, often in close proximity to downtown business districts.

Urban renewal offered a solution: cities could use federal financial tools to clear out dense segregation. Absentee owners were promised fair market value as compensation for the expropriation of their blighted rental property, and the peddlers of debt profited from the monthly sales of bonds and short-term notes offered by redevelopment agencies from around the country. Indeed, what James Baldwin called “Negro removal” was profitable in more ways than one.

In short, codified protections for white homeowners betrayed the durable ideological belief that black people diminished white property values. Developers of, and lenders on, white suburban property were guaranteed against loss. Government guarantees for landlords, bankers, real estate brokers, wealthy individuals, and institutional investors made excluding African Americans from the single-family housing market safe and profitable.


What Next for Detroit?

By Thomas J. Sugrue

Richard Rothstein concludes by answering a number of frequently asked questions, one of which concerns the case for reparations, or as he prefers it, “remedies.” He hopes the book will help create “a national political consensus” on how segregation occurred, without which no remuneration is possible. He maintains that pinning segregation on the government might allow interest groups to build a legal argument to push governments to “adopt equally aggressive policies to desegregate.” Remedies might include, but are not reducible to, monetary payments.

In these ways Rothstein goes further than journalist Ta-Nehisi Coates who essentially conceives of reparations as a largely symbolic historical reckoning with the afterlives of slavery.11 Still, Rothstein stops short of groups such as the Black Youth Project 100, which has called for budgetary line items at all levels of government “to include cash, land, and economic development,” among other forms of payments for “generational oppression.”12 Rothstein proposes guarantees and subsidies to African Americans and calls for negating restrictive ordinances to improve black access to housing, education, and employment. There are differences in what reparations could look like, but undergirding the case is the assertion that the government is guilty and must pick up the tab.

And yet the prevailing discussion around reparations drives home the limits of blaming government and excluding capitalism from accounts of residential segregation. We might reasonably resist the gravitational pull of analyzing reparations in monetary terms, but to the extent that reparations take the form of government expenditures, we should reckon with how the government would generate enough revenue to finance those expenditures. Governments do so by taxing and borrowing. However, recent work by Sandy Brian Hager has shown how the 1 Percent has waged a successful tax revolt since the 1980s. Moreover, the federal government perpetually borrows at a time when debt is perceived as bad and austerity the antidote.13

If government is responsible for funding reparations, who would ultimately pay for it? When the rapper Nas mused in the song “Black Zombie,” “We run and we ask for reparations, then they hit us with tax,” he brilliantly implied that poor, working class, and middle-class African Americans might be the ones paying for their own reparations.

The point is not to let government off the hook. Instead, we might learn from groups like the Reparations at UChicago Working Group who have demonstrated the direct links between slavery and private institutions.14

As part of the case for reparations, we might ask which mortgage banks, nonprofit trade organizations, and insurance companies demonstrably profited from segregating America? Which corporate descendants denied black applicants? Which tax-exempt private institutions actually promoted segregation and bankrolled the defense of restrictive covenants? To obviate regressive compensation and working-class rage among non–African Americans, those serious about securing reparations as redress for residential segregation might first locate this history in the annals of racial capitalism. icon

  1. Cedric J. Robinson establishes the indispensable interpretation of the intertwined processes of race and capital in Black Marxism: The Making of the Black Radical Tradition (University of North Carolina Press, 2000). Capital does not accumulate without relations of racial inequality and, as historian Peter James Hudson has recently explained, racism is “contingent on the shifting regimes of capital accumulation.” See Hudson, “Racial Capitalism and the Dark Proletariat,” in “Forum I: Race, Capitalism, Justice,” special issue, Boston Review, January 13, 2017.
  2. The outlines of such an approach can be found in Walter Johnson, “To Remake the World: Slavery, Racial Capitalism, and Justice,” in “Forum I: Race, Capitalism, Justice,” special issue, Boston Review , January 13, 2017.
  3. There are too many outstanding works to cite, but to start see Thomas J. Sugrue, The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit (Princeton University Press, 1996).
  4. Robinson, Black Marxism, p. 2.
  5. Jennifer S. Light, “Nationality and Neighborhood Risk at the Origins of FHA Underwriting,” Journal of Urban History, vol. 36, no. 5 (2010), pp. 634–71.
  6. Amy E. Hillier, “Redlining and The Home Owners’ Loan Corporation,” Journal of Urban History, vol. 29, no. 4 (2003), pp. 396–98; Paige Glotzer, “Exclusion in Arcadia: How Developers Circulated Ideas about Discrimination, 1890-1950,” The Journal of Urban History, vol. 41, no. 3 (2015), pp. 479–94.
  7. Robert K. Nelson, LaDale Winling, Richard Marciano, Nathan Connolly, et al., “Mapping Inequality,” American Panorama, ed. Robert K. Nelson and Edward L. Ayers (accessed August 28, 2017).
  8. Erle Cocke Sr., Headed FDIC, American Bankers,” Washington Post, October 9, 1977.
  9. N. D. B. Connolly, A World More Concrete: Real Estate and the Remaking of Jim Crow South Florida (The University of Chicago Press, 2014), pp. 163–180.
  10. “Goodbye Slums, Hello Corruption,” The Sun-Reporter, July 23, 1960.
  11. Ta-Nehisi Coates, “The Case for Reparations,” The Atlantic, June 2014.
  12. Black Youth Project 100 (BYP100), “Agenda to Build Black Futures,” pp. 13–17.
  13. Sandy Brian Hager, Public Debt, Inequality, and Power: The Making of a Modern Debt State (University of California Press, 2016), pp. 6–7.
  14. Caine Jordan, Guy Emerson Mount, Kai Parker, “A Case for Reparations at the University of Chicago,” Black Perspectives, May 22, 2017.
Featured image: “Colored” water cooler in streetcar terminal, Oklahoma City, Oklahoma ca. July 1939. Photograph courtesy of Jared Enos / Flickr