the Great Depression of the late 1920s and early 1930s punched the average American. By 1933, a quarter of Americans were out of work, the average national income had fallen to less than half from what it had been a few years earlier and over a million Americans faced foreclosure on their homes.
One of the many programs of a new elected official Franklin D. Roosevelt created to stimulate the economy offered home buying assistance to Americans, but only white Americans. the Federal Housing Administration, operated by the New offerThe National Housing Act of 1934 encouraged homeownership by providing federal loan support, thereby securing mortgages. But from its inception, the FHA limited assistance to potential white buyers.
“The FHA had a manual that explicitly said it was risky to grant mortgages in predominantly black areas,” explains Richard D. Kahlenberg, Principal Investigator at the Century Foundation who written on housing segregation in the United States. “And so the federal homeownership subsidy went almost entirely to white people.”
Loan restrictions draw boundaries between neighborhoods
The aid program not only limited recipients to white Americans, it created and then strengthened housing segregation in the United States, effectively drawing lines between white and black neighborhoods that would persist for generations.
For example, in 1940, the FHA denied insurance to a private builder in Detroit because he intended to build a subdivision near a predominantly black neighborhood. The FHA only wanted to insure houses in white neighborhoods.
The builder responded by building a half-mile long and six-foot-high concrete wall between the Black Quarter and where he planned to build, tells historian Richard Rothstein in The Color of the Law: A Forgotten History of How Our Government Parted America. Assured that this wall would maintain racial segregation in the neighborhoods, the FHA then agreed to insure the houses.
A “New Deal” for White Americans
The FHA not only focused its aid on future white house owners, but its policies actively sought to insure mortgage loans in white neighborhoods that would remain white.
“If a [Black] family could afford to buy in a white neighborhood without government help, the FHA would refuse to insure future mortgages even to whites in that neighborhood because he was now threatened with integration, ” Rothstein writes in The American Perspective.
Many housing deeds made it clear that a house could only be sold to white people, explaining that this complied with FHA requirements. William Levitt, who developed the suburban communities of Levittown for the return The Second World War veterans, complied with the FHA by only selling to white veterans and creating acts that prohibited them from reselling their homes to black Americans.
Neighborhoods separated by walls, highways
Like the Detroit builder, developers have also tried to make their housing projects “less risky” by using barriers to separate them from predominantly Back neighborhoods. A common obstacle, says Kahlenberg, has become the highways, which still separate many predominantly white and predominantly black neighborhoods today.
In addition to discriminatory FHA practices, federal housing projects from the 1930s helped keep black Americans in neighborhoods with fewer education and employment opportunities than white neighborhoods.
“The existing models of segregation were carefully and deliberately designed – socially designed – by the government in the first place,” says Kahlenberg.
Redlining becomes a lasting legacy
The Fair Housing Act of 1968 sought to end these discriminatory practices, but did not completely end federal redlining – the denial of services such as race-based loans – or remedy the negative effects that decades of discrimination and segregation had already taken place on black Americans.
The term “redlining” comes from real red lines on maps who identified predominantly black neighborhoods as “dangerous”. Beginning in the 1930s, the government-sponsored Home Owners’ Loan Corporation and the Federal Home Loan Bank Board used these cards to deny loan and investment services to black Americans.
This lack of investment has had a deep and lasting impact on black neighborhoods, says Halley potter, Principal Investigator at the Century Foundation. “We see the legacy today when you look at the maps, housing values and demographic trends in our cities. “