The Racist Story That Helps Explain Our Current Wealth Gap – Center for Public Integrity

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Do you know the history of discrimination in your community?

We dug into Waterloo, Iowa, for a podcast about the country’s racial wealth gap. What we saw included two types of real estate racism that took place from coast to coast in the United States. Both erected barriers to wealth creation that still hurt people today, especially black families, decades after the practices were outlawed.

It is much easier than before to see the local impact of one of these practices, known as redlining. This means you can also dig.

A federal agency called Home Owners’ Loan Corp. ranked neighborhoods in more than 200 cities nationwide during the 1930s, declaring some neighborhoods suitable for mortgage investment and some “unsafe”. These were colored red on HOLC maps – for reasons that included the race of the people living there.

“Redlining has directed public and private capital toward native-born white families and away from African-American and immigrant families,” concluded a team of researchers from four universities, including the University of Richmond, who put the maps together. in line.

These maps highlighted the country

To find out if your community has been highlighted by HOLC, visit the universities website Mapping Inequalities website. You’ll see not only the cards, but also the justifications federal employees gave for their grades.

Local bias in real estate and long loans Prior HOLC. The researchers found that the agency cards reflects this reality more than they created – and that the Federal Housing Administration was the real federal driver of discriminatory lending.

Why don’t we look at the FHA redlining charts? Because few survived.

“They had been destroyed after being noticed by a Washington official on duty in the Detroit regional office,” Lynne Sagalyn of Columbia University wrote in his 1980 thesis.

You can see the 1938 Map of Chicagowith different colors denoting grades A through D, which Wenfei Xu, a postdoctoral fellow at the University of Chicago, delved into during an article on the repercussions over several decades. Thomas Storrs, Doctor of History. student at the University of Virginia, found an FHA map of Greensboro, North Carolina, with a literal red line across – drawn in pencil – that appeared to be the demarcation between areas where the agency was lending and not lending .

Most FHA cards still around from the redlining period do not have color-coded notes or red lines. Instead, the demographic and other data embedded in these maps “provided the tools for redlining and dividing cities,” said Storrs, co-author of a Agency Discriminatory Lending Document 2021.

But HOLC maps are much more readily available and clear. And they tell an important story about historical patterns of segregation, discrimination and investment blocking – as well as their current consequences.

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Researchers found that even today, residents of Baltimore neighborhoods were classified as “declining” or “unsafe” in the 1930s. live shorter livesfor example, and that babies born in California’s gated neighborhoods have worst health outcomes. The demarcated areas of the country have declining homeownership rates and home values. And most today are communities of color.

In Waterloo, we found that nearly half of the city’s Black residents live in census tracts where the predominant level was “declining” or “unsafe,” compared to 20% of white residents. Great disparities in income and home ownership plague the city.

The federal Home Owners’ Loan Corp. created discriminatory maps for cities across the country in the 1930s, including this one for Waterloo, Iowa. (Source: Mapping inequalities)

“Fifty years after the Fair Housing Act, we’re still grappling with this,” said Jerry Anthony, an associate professor at the University of Iowa who has studied segregation in the state as well as loan discrimination. “We still haven’t made any meaningful progress.”

Downtown Waterloo, Iowa, circa 1907. (Photo by FJ Bandholtz, courtesy of Library of Congress.)

Hidden restrictions in land records

Another practice used in Waterloo to enforce segregation: covenants filed in land records to restrict who could move in based on their race.

It was common throughout the countryalso – FHA recommended their use. But there is no website where you can check them all.

So if you want to know if a racial covenant has been filed for your own home, you’ll probably need to check your property records for evidence of restrictions. The houses most likely to have them were built in the first half of the 20th century.

In some places, however, someone has already taken steps to find several or all of the local alliances.

In the Minneapolis area. In washington d.c. In the Saint Louis region. In King County to Seattle.

“Most shocking is the ‘Aryans only’ restriction placed on a Clyde Hill subdivision,” the University of Washington’s Seattle Civil Rights & Labor History Project wrote on its website. “This racial concept, favored by [Adolf] Hitler, was written in the acts until 1948.”

And the influence went both ways: Hitler used American race laws as a model for Nazi Germanysays James Q. Whitman of Yale Law School.

Colin Gordon, a history professor at the University of Iowa, coordinated the cataloging of wedding rings by students in two counties in Iowa. Luckily for us, one of them was Black Hawk County, where Waterloo is.

“Fifty years after the Fair Housing Act, we are still struggling with this.”

Jerry Anthony, associate professor at the University of Iowa

Finding the documents is usually tricky, requiring a search of deed books, Gordon said. But the Black Hawk Registrar’s Office has filed all of the covenants as “miscellaneous” records, which makes things much simpler.

The result Mapping Segregation in Iowa the project shows the underlying documents, often with bland language that resembles a current homeowners association rulebook until you get to wording like this: “No race or nationality other than the Caucasian race shall use or occupy any building or land, except that this covenant shall not prevent occupancy by servants.”

There’s also a map that lets you see these restrictions spreading through Waterloo from 1914 to 1950 like a contagion.
A University of Iowa team students compiled racial covenants in Black Hawk County, Iowa. The records date from 1914 and spread particularly rapidly in the 1940s. (University of Iowa)

“It’s a response to the Great Migration,” Gordon said. The first pacts in Waterloo were made by white landlords living near an area where black migrants from the South, seeking a better life, moved to work on the railway. It was an effort, he said, “to seal the borders.”

After that, developers of new housing estates and residents of other neighborhoods followed suit.

In 1948, the United States Supreme Court declared judges could not enforce the documents but people could still join – which they did. The Fair Housing Act finally made this, and redlining, illegal in 1968.

Even if the discrimination stopped after that, which it did not, those past practices would still matter today. They defined for decades which neighborhoods received public investment, mortgages and other resources. If you lived elsewhere, it was much more difficult – if not impossible – to accumulate the modest wealth of the middle class. It meant less to pass on to children and grandchildren.

“You have an intergenerational disadvantage,” Gordon said.

And that’s why we dug into this story (and more) for a podcast about the current racial wealth gap and one woman’s efforts to close it in Waterloo.

Moritz Kuhn, professor of economics at the University of Bonn in Germany, was part of a research team that showed how the wealth gap between black and white Americans has changed over time. Measured in dollars, it has not decreased over the past 60 years. He grew up.

Kuhn said the “radically different” wealth positions of black and white Americans immediately after the Civil War, the result of not just slavery but country decisions on who to compensate for him, is enough to create a lasting gap on its own.

Then redlining, restrictive covenants and other discriminatory actions piled up.

“The situation we see today is still largely inherited from 150 years ago,” Kuhn said.

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