"The truth will set you free. But first it will piss you off."

Gloria Steinem

Friday, June 6, 2014

Many Fled, Some Fought, but a Few Profited (Tenth in a Series)

My recent posts in this series have offered reasons why residential segregation was the theme of the automobile suburbs, and why it pretty much worked.  My previous post introduced the idea that the influx of African Americans into our cities also spurred further residential segregation within the cities themselves, as “white flight” took its toll.  As we turn our attention from how African Americans ended up in our northern cities to what happened to them on arrival, let’s pick up from where we left off by understanding that while the phrase “white flight” describes a reality, it doesn’t describe the whole reality.  Some whites who felt threatened by the influx did not flee, but defended their neighborhoods with methods ranging from employing the law to ignoring it.  Regardless of their tactics, the net result was a loss, not just for those they opposed, but for themselves as well.  You can say they have only themselves to blame, but that would be ignoring the existence and importance of a crucial third group, much smaller in size, but huge in influence: those who realized they could profit from the conflict, and profit even more by intensifying it.  They succeeded in enriching themselves, and in the process further solidified the racial segregation in our cities while removing the tax base upon which those cities depended.  They won because everyone else lost.  That’s why I focus on them, not those whose desires and fears they exploited.

Keep in mind that I said “further solidified” because our cities always have been residentially segregated, and I’m not just talking about the ones in the South.  African Americans were present in the north from early colonial times.  As either individual servants—or slaves—they were easily overlooked, and rarely counted accurately.  As long as they were few in number, this worked; once there got to be more of them they were harder to ignore.  Southern communities realized this quite early, of course, but while total population growth in the northern cities greatly exceeded that of African Americans, it could be largely ignored.  The Great Migration and the opening of the automobile suburbs put an end to that.  This is when a great many heretofore settled and content middle class white people actually had to confront the issue of race much too closely. 

Some may flee and some may fight, but a few will always profit.  An unholy combination of real estate speculators, bankers and other types that tend to benefit when the general populace suffers saw how racism plus proximity equaled fat profits for them.  Some of them resolved that if African Americans could not be kept out entirely, then they were to be directed to specific neighborhoods; others realized how to profit from it.  First on the list of neighborhoods in their lens was, of course, were those so unfortunate as to already have African Americans living in them.  As proximity was the prime motivator of “white flight,” those already-existing neighborhoods tended to expand.  This was not left to chance, however.

I have previously introduced you to “Restrictive Covenants” as a primary (but not the only) means by which the political/financial power structure ensured that the new automobile suburbs would be white.  Now it’s time for three new phrases that help to describe the means by which racial segregation was maintained and even reinforced in the cities affected by both The Great Migration and White Flight.  It was an impressive achievement, considering the huge numbers of people involved.  Of course huge numbers of people moving meant equally huge profits for those who subscribed to Ayn Rand’s dictum that morality has no place in a market economy, and who were positioned to profit as much from economic crisis as from economic prosperity.

This semi-alliance that saw profit in population turnover had a huge legal advantage; the National Housing Act of 1934, in attempting to manage real estate risk, allowed banks to outline whole neighborhoods as being “insufficiently secure” for investment capital.  From this grew the practice of “Redlining” neighborhoods, allowing banks to legally refuse to make loans to aspiring businesses—or residences—within those areas.  This quickly caused the flow of that vital ingredient of capitalist enterprise to those neighborhoods to dry up, while spurring the flight of what capital still remained to other locations.  Loans to bring in and to sustain industry and commerce—those all-important contributors to the tax base—became virtually unavailable within redlined neighborhoods.  This condemned these neighborhoods—as well as all those within them—to decline and decay.

A closely related practice (sometimes so intertwined with redlining as to be inseparable) was “Mortgage Discrimination,” specifically on the basis of race or ethnicity.  This was also widespread and openly practiced within the financial community at least until the 1970s.  Unlike redlining, which focused on a neighborhood, mortgage discrimination focused on individuals and thus had to be disguised to a greater extent, for obvious reasons.  The two interacted, of course, and African American families applying for a mortgage were much more likely to be denied one, particularly if it was for the "wrong" neighborhood.  This added residential mortgages to the industrial and commercial ones being carefully directed to specific neighborhoods and denied to others, thus completing the trifecta of disinvestment.

It should surprise no one when I mention that those neighborhoods most subjected to the combination of discriminatory practices so carefully developed by our financial sector almost always housed not just the poorer people, which were disproportionately black anyway, but also numerous middle class neighborhoods that had the bad luck to also house African Americans.  Luck had nothing to do with it, of course.  That is where the real conspiracy came in, and it was all about the Benjamins.  The emotional resistance of frightened white people in redlined districts (or those nearby) could turn a profit for the right people in any number of ways.

“Block Busting” is my third phrase, and probably the most well known of the three.  It’s one of the very best business strategies ever developed, because it was always guaranteed to turn a profit for the middleman. Both sides in a real estate transaction paid him regardless, so the key was volume, and nothing drives volume like fear.  Please keep in mind that African Americans were by no means the first ones to find themselves playing the villain in this particular melodrama.  My book What Killed Downtown? Norristown, Pennsylvania, From Main Street to the Malls, describes how a prominent real estate agent, motivated by the ethnic discrimination he had experienced as an Italian, resolved to do exactly what local residents feared most: move Italians into every neighborhood in town.  By the by, his idealism, plus the fear of Italians moving into the neighborhood, produced good profits.

These policies and practices effectively divided our cities into those neighborhoods that were protected and those that were not.  The story simply gets worse from there.  By the 1960s, the effects of this perfect storm of happenstances—government policies, romanticism and racism, all undergirded by a transportation revolution—were becoming obvious everywhere.  The Federal Government responded by passing new Acts designed to combat the ills caused by the post-war Acts.  I will discuss these in future posts, because many perceive the cures to have been worse than the disease.

But it wasn’t only the large cities that saw such directing of the African American influx, or the effective, if not formal, redlining of its neighborhoods.  If you live in a town of any size, aren’t there one or more “black neighborhoods”?  Size is definitely a factor here; redlining neighborhoods in large cities was commonplace (my use of the past tense doesn’t mean it has ended), but much smaller towns the size of Norristown and Pottstown certainly saw it on a substantial scale.  The smaller the town, the less opportunity for residential segregation, but it was practiced whenever possible.

So, rather than focus your anger on one side or another of this tragic dispute, how about those who simply exploited it for personal gain?  They are the ones to blame for the fact that everyone but them lost, with the collective loss to the community the greatest of all.  Most important, understand that such people are still very much with us.  There are still ways to leach wealth and capital from urban areas, and there are still people doing just that.  Redlining, mortgage discrimination and block busting may (or may not) have disappeared, but those who would eat the the vitals of our towns and cities in total disregard of the human consequences are still with us.  That's why I periodically remind you of Slumlords.  The more things change...