Chris has a master's degree in history and teaches at the University of Northern Colorado.
Racism and the New Deal
The Great Depression was rough for everyone. That's true regardless of race, creed, or sex. When we picture lines of people waiting for food, millions without work, and miserable living conditions, those images are largely accurate.
The federal government, largely under the leadership of President Franklin D. Roosevelt, tried to resolve these issues using a sweeping series of reforms and policies collectively called the New Deal.
The New Deal was meant stabilize the economy, create jobs, and protect people from economic catastrophes in the future. In many ways it was successful, but was it successful for everyone?
History has often ignored the fact that many New Deal policies were implemented unevenly. This was particularly true in the South, where Southern Democrats held a lot of power, power which rested upon racial segregation. FDR needed Southern Democrat support, and so racist policies of segregation found their ways into the New Deal. This was especially evident in housing.
Housing Policies of the New Deal
FDR had a lot of ideas about creating a secure future for Americans. He oversaw the development of the American welfare system, social security, and federal unemployment insurance. However, one area that was always of extreme importance to him was home ownership. FDR believed that owning a home was the single greatest thing Americans could do to ensure lasting economic security.
To that end, FDR made housing issues a top priority within his New Deal programs. Like other parts of the New Deal, he authorized the creation of a series of bureaucratic agencies to oversee housing reform.
One agency was the Home Owners' Loan Corporation (HOLC), created in 1933 to reform the home refinancing process and prevent foreclosures. The other big agency was the Federal Housing Administration, created in 1934 to standardize quality construction and insure loans for home building.
Together, these agencies streamlined the processes of homebuilding and home buying, standardized lending practices and worked to make homeownership a reality for millions of Americans.
Housing and Segregation
So far, these programs sound pretty nice, and to many Americans they were very beneficial. However, the same agencies that promoted homeownership for some actually worked to deny it to others.
Infused with segregationist mentalities from Southern Democrats, these New Deal housing agencies were built around the concept that homeownership was something designed to protect white Americans, not all Americans. Therefore, the top priority of the HOLC and FHA was to secure and safeguard white homeownership.
In the racist attitudes of segregation, racially mixed neighborhoods were seen as a direct threat to the stability of white homeownership. The belief was that the property value of a neighborhood would drop precipitously once African Americans or people of other non-white ethnicities began moving in.
Since the goal was to use homeownership as a way to protect white families, the HOLC and FHA actually increased racial segregation in terms of living patterns, and institutionalized it within federal standards.
It is worth noting that no research was actually conducted by the government on the link between black residents and a decrease in property value. It was just assumed that having integrated neighborhoods would devalue property.
Private studies, however, actually found the exact opposite. Black families tended to be willing to pay more to get into a nice neighborhood, which actually increased property values throughout that community.
So, how did agencies like the HOLC and FHA promote segregation through homeownership? To put it simply, they just didn't offer the same loans, mortgages, or payment plans to people of different ethnicities.
In essence, a white man and black man of the same age and earning potential could apply for a house in the same neighborhood, but only the white man was likely to be approved. The black man was forced to take a house in a community with more black people, or more likely, to stay confined to inner-city apartments and housing.
To streamline this process, the HOLC and FHA often relied on a tactic called redlining, which denied services or loans to residents of certain, non-white areas. Picture a map of a city. Now use the latest census data and other forms of demographics to identify the neighborhoods in that city that are predominantly non-white. Draw a red line around that neighborhood. Anybody within that line automatically does not qualify for a housing loan or mortgage, or only qualifies with a cripplingly high interest rate.
That's redlining. It was a policy designed to limit home ownership opportunities, particularly to new neighborhoods, to white Americans. Everyone else was denied the opportunity to get out of the inner cities or older neighborhoods, and so a system of segregated housing became institutionalized within federal agencies.
Redlining defined the new migration and housing trends of the era, segregating communities and establishing patterns of living that remained unchanged for decades. In fact, the demographic composition of many American cities and suburbs to this day are defined by the legacies of redlining and other segregationist policies. In fixing the Great Depression for some, the government created issues for others that would span generations.
During the Great Depression, President Franklin D. Roosevelt greatly emphasized the importance of home ownership as part of his New Deal programs, a sweeping series of reforms and policies.
The federal agencies streamlining the home-buying process were the Home Owners' Loan Corporation and the Federal Housing Administration. However, they were built on the segregationist attitude that integrating neighborhoods was a threat to property values, and therefore the very concept of homeownership as an economic safety net.
Through policies like redlining African Americans and other non-white groups were denied mortgages and housing loans available to white Americans. White Americans moved out of the cities and into new neighborhoods, while non-white families were stuck inside the cities or older neighborhoods.
Thus, the federal government managed to segregate housing across the country. Even as the Great Depression ended, something just as depressing became ingrained in American society.
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