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  • Alex Horn

How the Federal Government Purposefully Divested from Black Communities

On Saturday, September 3rd, 2022, a routine water sample taken in the Harlem Park neighborhood in Baltimore tested positive for e.coli. A day later, two more samples taken in the Sandtown-Winchester neighborhood—just north of Harlem Park—tested positive, one for e.coli and the other for total coliform. By Monday, the Baltimore City Department of Public Works declared a Required Boil Water Advisory for 1,500 homes and businesses in Harlem Park and Sandtown-Winchester, and a Precautionary Boil Water Advisory for a large swath of West Baltimore. On September 9th, the Boil Water Advisory ended and the water was declared safe, but this was not an isolated incident. On September 15th, Mississippi’s Governor announced the end of a 50-day boil water advisory for the whole city of Jackson, but local organizers still encouraged residents to be cautious. With Jackson being nearly 80% Black, and Sandtown-Winchester and Harlem Park being 93% Black, these are not just natural disasters, rather they are indicative of a larger pattern of disinvestment in Black communities and segregation of urban areas, all of which spearheaded by the federal government.

Before the Great Depression and the New Deal of the 1930s, housing and mortgages looked very different from how they are today. If you wanted to buy a home and didn’t have the cash upfront, you would pay 50% down on a mortgage and pay off the whole house in just 5-7 years. Needless to say, homeownership was unattainable for most Americans, with just 45% of people living in the United States owning their home in 1920. Then the Great Depression hit, and to encourage more spending Franklin D. Roosevelt enacted the National Housing Act of 1934, creating the Federal Housing Administration (FHA). The FHA insured mortgages in the United States and created the mortgage we now know today—5-10% down, and repayment over 30 years.

There was a catch, however. Insuring every single mortgage that came to the federal government would have been very risky, and so they had to devise a plan to protect themselves. So the FHA created “residential security maps” of over 200 cities—mostly in the North and the Midwest—to determine the safety of lending in particular neighborhoods. The main factor used in the creation of these maps was the race of the people living in that neighborhood. For example, lending in Sandtown-Winchester, Harlem Park, and other surrounding neighborhoods in Baltimore was considered “hazardous” due to a “Negro concentration”. The FHA’s own underwritng manual said “If a neighborhood is to retain stability it is necessary that properties shall continue to be occupied by the same social and racial classes. A change in social or racial occupancy generally leads to instability and a reduction in values.” As one ‘50s housing activist asserted, “the FHA adopted a racial policy that could well have been culled from the Nuremberg laws,” making itself “the protector of the all white neighborhood.” This practice would become known as ‘redlining’, due to the red shading used on the maps to designate “hazardous” neighborhoods, and redlined cities are just as segregated—if not more so—than they were in the early 20th century, and redlined communities are still systematically divested from.

Segregation and disinvestment was not just an urban concept, as segregation formed the foundation of the suburbs, and this segregation was just as well spearheaded by the federal government. After World War II, millions of veterans came back with a guaranteed mortgage with no down payment from Veterans Affairs, so with this plus the FHA mortgages, the demand for homeownership skyrocketed. Thus, the federal government gave out low-cost loans to developers to build housing, but there was something particularly unique about these neighborhoods—they were all in the suburbs. The suburbs existed before this time, but in the late ‘40s and early ‘50s suburban growth exploded, with the suburbs growing 10 times faster than cities in 1950. This was in part egged on by the surge in automobile ownership, allowing people to commute farther, but also because money from the FHA required these homes to be built in the suburbs. This federal funding also had another condition—that restrictions would be placed in the deeds of these homes forever preventing people of color from buying these homes. Perhaps the most infamous example of one of these racially exclusive developments is Levittown, NY. Levittown—receiving extensive federal funding—explicitly declared that its homes could not “be used or occupied by any person other than members of the Caucasian race.” Levittown homes cost just $8,000 (or $450 as a veteran) in the late ‘40s, and now these homes are worth over $450,000, increasing in value at well over four times the rate of inflation, and Levittown today is still just 1% Black. By the late ‘50s, just 2% of homes nationally built with federal funding were occupied by people of color.

Just a week after Martin Luther King Jr. was murdered, Lyndon B. Johnson signed the Fair Housing Act prohibiting housing discrimination, but the damage had already been done. The federal government did nothing to repair the harm it caused, and so cities still remained segregated, Black people were still systemically barred from homeownership, and Black neighborhoods still suffered from disinvestment. The median white household has a net worth ten times that of the median Black household. Black communities in the United States are still chronically disinvested by the public and the private, leading to hyper-poverty and dispossession. The cities of today were not made by accident, rather, the residential segregation and disinvestment in Black communities was created through explicitly purposeful actions by the federal government, and there has been no attempt from the federal government to repair this harm.


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