How Housing Discrimination Created the Idea of Whiteness

Segregationist policies divided Chicago—and America. Those ideas impacted blacks as well as “probationary whites,” setting the stage for stories like “The Case for Reparations” today.

Robert Taylor Homes   Photo: Nancee E. Lewis/Chicago Tribune

One of the faded threads in Chicago’s long history of cultural change is the small Great Migration of Appalachians to the city during the mid-20th century. It paralleled the Great Migration, and occurred for parallel reasons—migration out of a region of historic, unfathomable poverty reinforced by a system of wage slavery.

These were white Americans, distinguished from the dominant culture in Chicago neither by skin color nor language, and sharing much the same ancestry as established ethnic groups in the city.

Yet it was no barrier to discrimination. Appalachians flooded into the impoverished “hillbilly jungle” of Uptown, where they were tarred with the same pathologies applied to poor migrants throughout American history: a propensity for violence, alcoholism, dissolute family structures, laziness, and dependence on the state. As late as the 1960s they were organizing for better living conditions and schools, an effort that was easily turned away. There’s not much left of their legacy; no one really knows where they ended up.

I was thinking about this history while reading Ta-Nehisi Coates’s epic Atlantic cover story “The Case for Reparations.” Coates has been mining the historical and sociological legacy of the city to make his case. It’s a good place to ground it. Not just because of the city’s intense segregation or its history of redlining; many American cities could serve. Coates’s colleague Alexis Madrigal finds the legacy of segregationist policies where he lives in the East Bay, across the way from San Francisco. Coates could have chosen Baltimore, his hometown, which passed an explicit segregationist ordinance in 1910, as Carl Nightingale writes in Segregation: A Global History of Divided Cities.

[Baltimore mayor] Mahool’s office was quickly besieged by letters from across the country, and even as far away as the Philippines, demanding copies of the ordinance. Authorities in dozens of cities, from Richmond to Atlanta to New Orleans to St. Louis, passed copycat legislation. The state of Virginia passed a law allowing its cities to divide their territories into “segregation districts,” thus prefiguring key provisions in South Africa’s Natives (Urban Areas) Act by 11 years.

But Coates chose Chicago, and I’m not surprised. As Nightingale told me, Chicago was a “lab” for segregation in the 20th century. The FHA policies that Coates describes in detail—"a racial policy that could well have been culled from the Nuremberg laws,” to borrow one of his sources—have their intellectual and economic origins in the city.

Is Chicago peculiarly racist? It is the city that Martin Luther King said Missippians should come to to “learn how to hate,” but it’s a difficult, impossible, and possibly dumb question. What is clear from history is that the timing of history is important. The rise of the real estate industry as a concentrated, numbers-driven lobby; the invention of 20th century sociology and its rich history at the University of Chicago and Northwestern; the intersection of modern sociology with modern economics at the same institutions; all these occurred as Chicago’s black population swelled. (This intersection of history also means that Chicago is the “known city,” in Richard Wright’s phrase—its evolution has been exhaustively documented, perhaps more so than any city in the world.) And they occurred after previous migrations of ethnic groups, groups we now think of as white but were considered “not quite white,” as historian Elaine Lewinnek told me.

Those immigrant groups faced their own forms of discrimination. The FHA laws detailed in Coates’s piece, and the emergent patterns of housing economics that fed into the creation of those laws, also discriminated against “probationary” whites, who had their own history of violent territorial conflict in the city well before the Great Migration swelled Chicago’s population.

It’s an important aspect of the city’s history, and the country’s history. One common reaction to the idea of reparations, either in Coates’s formulation or many others, is that other ethnic groups have been discriminated against. It’s important to acknowledge not because it invalidates Coates’s argument, but because it’s foundational to the history he describes, particularly in Chicago.

One list, from an obscure yet tremendously influential economic text about Chicago, is the best lens into this discrimination, and the hierarchy of “race” in Chicago in the early 20th century.

This is from One Hundred Years of Land Values in Chicago by the realtor-turned-economist Homer Hoyt. It’s the kind of book title that makes one’s eyes glaze over before even opening the cover, but the work, coming from Hoyt’s Ph.D. thesis in land economics at the University of Chicago, is an epic product of laborious data-digging in the trenches of the city’s public records: “an innovative analysis of that city’s rhythms of growth from 1833 to 1930,” as the Encyclopedia of Urban History describes it. More importantly: “It became the basis for Hoyt’s later work, specifically the research he did while at the FHA on the difficultites of securing mortgages in inner cities and his writings on economic base analysis and the importance of export industries to local and regional economies.”

Plucking that one list from the book runs the risk of making Hoyt look like an abject racist. But Hoyt was data-driven, and his purpose in compiling that list was to not to say anything in particular about those races, but to document patterns of residential values (emphasis mine).

Part of the attitude reflected in lower land values is due entirely to racial prejudice, which may have no reasonable basis. Nevertheless, if the entrance of a colored family into a white neighborhood causes a general exodus of the white people, such dislikes are reflected in property values. Except in the case of negroes and Mexicans, however, these racial and national barriers disappear when the individuals in the foreign nationality groups rise in the economic scale or conform to American standards of living. Hence, the classification given below applies only to members of the races mentioned who are living in colonies at standards of living below those to which most Americans are accustomed. While the ranking given below may be scientifically wrong from the standpoint of inherent racial characteristics, it registers an opinion or prejudice that is reflected in land values; it is the ranking of races and nationalities with respect to their beneficial effect on land values.

The highlighted part is tremendously significant. Note that Irish and Germans are at the top of the list. Had Hoyt’s book been written fifty, or even twenty years before, they likely would have been lower. As Lewinnek described to me, German and Irish immigrants were relegated to the periphery of the city after the Great Fire by the “fire limits,” prohibitions on the construction of inexpensive wooden houses that effectively pushed working-class homeowners out of the city center; Chicago Germans were at the forefront of briefly successful protests against the fire limits.

More of a surprise are the Irish. Discrimination against the Irish in Chicago is well-documented, going back to the city’s birth as a metropolis. In their extraordinary biography of Richard J. Daley, American Pharaoh, Elizabeth Taylor and Adam Cohen detail the once-similar experiences of blacks and Irish in the city.

If white Chicago as a whole turned a cold shoulder to the new black arrivals, Daley’s Irish kinsmen were particularly unwelcoming. The Irish and the blacks had much in common. Ireland’s many years of domination at the hands of the British resembled, if not slavery, then certainly southern sharecropping—with Irish farmers working the land and sending rent to absentee landlords in England. The Irish were dominated, like southern blacks, through violence, and lost many of the same civil rights: to vote, to serve on juries, and to marry outside their group…. Much of the early difficulty stemmed from rivalry between two groups relegated to the lowest levels of the social order. As early as 1864, a mob of four hundred Irish dockworkers went on a bloody rampage against a dozen blacks they regarded as taking jobs from unemployed Irishmen. The Chicago Tribune—whose WASP management had little affection for Irish-Catholics—argued that this kind of anti-black violence was particularly the province of Irish-Americans. “The Germans never mob colored men from working for whoever may employ them,” the Tribune declared. “The English, the Scotch, the French, the Scandinavians, never molest peaceable black people. Americans never think of doing such a thing….”

70 years later, the Irish had risen to the top of Hoyt’s racial hierarchy, but violence—organized, or at least semi-organized gang violence—would play some role in this. Daley was a member of the Hamburg Athletic Club, which Cohen and Taylor describe as “part social circle, part political organization, and part street gang,” one of many throughout the city, and whose traces can still be found throughout its neighborhoods. The clubs had ties to machine politicians, doing their bidding at election time: “Clubs like Hamburg also served as the first rung of the Democratic machine,” the authors write. According to Frederic Thrasher’s pathbreaking sociological study of Chicago gangs, athletic clubs made up 302 of the city’s 1,313 gangs in 1920s Chicago.

Ragen’s Colts, another notorious athletic club based in Canaryville, were the namesake of alderman Frank Ragen, and “a hangout for the south side’s toughest gangsters,” according to the Tribune. The Colts, according to Lewinnek, were also a driving force behind the 1919 race riot. “Two to three hundred members of Ragen’s Colts targeted one block of Shield’s Avenue in Canaryville where nine black families lived alongside whites. The gang systematically worked from corner to corner, entering houses, throwing furniture out of windows, and setting fires behind them,” Lewinnek writes in The Working Man’s Reward. This, from “the youngest cog in Chicago’s political machine.”

This not to condemn the descendents of these probationary whites for the sins of their forefathers, or to set up a black-white binary. As Lewinnek and many other historians have revealed, the dynamics of “racial” discrimination were extraordinarily complex; Chicago’s Irish were not set up in conflict exclusively against blacks. Even Chicago’s Appalachians, as historically “American” as any uniquely identifiable group, were not invulnerable as far into the century as the late 1960s.

It’s more to point out how discrimination, visited upon one group, is often wielded by that group against another percieved as a threat. And it is not fully a matter of emotion or group identity in an abstract sense; it can be a matter of locking in economic gains achieved against a history of discrimination. Lewinnek, like Coates, is focused on the importance of housing as wealth and social stability for cultural groups, but labor was also a flashpoint, as the Tribune’s condemnation of the Irish in 1864 demonstrates. The 1919 race riot took place in the shadow of the stockyards, in part because blacks, migrating from the economic and legal repression of the South, had been used as strikebreakers in many local industries. One group seeking the dream of a house and a job was perceived as a threat to the houses and jobs of prior immigrants, carved, as Lewinnek vividly details, out of a mean and dirty city.

And they were not necessarily wrong to perceive this, at least by a certain point, which is where the role of the federal government, the focus of so much of Coates’s piece, emerges. Hoyt’s book, written at a critical turning point in the city’s evolution, reflects how discrimination becomes a fait accompli. “Racial prejudice,” though it “may have no reasonable basis,” drove down property values. Prejudice, then, became the basis for risk assesment, and the basis for the government securitization of mortgages.

Hoyt was not the only Chicago economist dividing up the value of city land by race. Frederick Babcock was a second-generation real-estate appraiser and the author of the 1924 book The Appraisal of Real Estate, which, Carl Nightingale writes, “mixed homespun observations about the racial dynamics of neighborhoods into a thick batter of theoretical language and mathematical formulas.” A decade later Babcock became the chief appraiser of the FHA and “enshrine[d] racial segregation within FHA policy. He did so by importing racial theories of property values from the streets of Chicago into the relatively obscure and unscrutinzied bureaucratic reaches of the federal executive branch.”

Between the publication of his book and his move to the FHA, Babcock’s Chicago peers began to take a more sophisticated, “scientific,” approach to real estate and the evolution of the city. Babcock began with an extremely simple ring model: a central business district, an “apartment district,” and a “residential district,” each more difficult to appraise than the last. This model was superseded by Ernest Burgess’s legendary zonal theory, five concentric circles meant to identify a universal urban form: the Loop, slums, working-class housing, good apartments and residential hotels, and single-family homes. “The effects of Burgess’s zonal model linger in widespread assumptions that cities expand in rings,” Elaine Lewinnek writes, “that the outer ring is most prestigious, and that single-use spaces are most stable.”

Hoyt would develop his own “sector theory” that, reasonably, would include transportation; his model of Chicago does faintly resemble the city we know today, certainly more than the Chicago models that immediately proceeded it. But all the models shared one thing: a pattern that develops on a “biotic, subconscious level,” in the words of Walter Firey. “Tradition, politics, and cultural values were recognized only as ‘complicating’ factors, not primary causes: ‘interesting minor variations’ to Burgess, ‘certain extraordinary factors’ to Hoyt,” Lewinnek writes.

Both Babcock and Hoyt would end up at the FHA by the mid-1930s, Babcock as an underwriter and Hoyt in the economics and statistics unit, and carried with them these models, which would then be used to divide the country.

Hoyt developed a grading system, from A through D, to assess risk. “A” grade areas featured “no residents of a race other than white nor of a nationality on a lower economic scale than the old American stock” and “no factories or stores… mixed in with residences.” “D” grade areas featured “an intermixture of races and nationalities” and “a mixture of residential, industrial and commercial buildings.” The FHA would insure long-term mortgages in “A” grade areas, 20 years at B, 10 years at C, and none in D-rated areas. As grades decline, interest increases, compounding the risk identified by the FHA.

The maps evince a distaste not only for the mixing of races, but of uses. Racial theories prevalent during the era influenced the primitive schematics developed by sociologists and economists. “The ecological theories of Burgess and other Chicago sociologists were part of a forceful feedback loop,” Lewinnek writes, “drawing on the wider culture, adding a patina of scientific academic authority, and quickly becoming a part of Chicago’s culture.

From a bureaucratic standpoint, sectors, zones, and grades were simply efficient. Northwestern professor Jennifer Light, who has written extensively about civic models, observes the savings:

Reviewing the “Major Reasons for FHA Rejections” in the program’s early years, a 1939 article in Insured Mortgage Portfolio indicated how Hoyt’s alternative strategy for location rating generated substantial time savings at insuring offices around the U.S. “About half of all ‘location’ defects—that is, deficiencies of the neighborhood—leading to FHA rejections of applications” were identified on “preliminary examination,” meaning the use of mortgage risk district maps reduced by 50 percent the need for appraisals in the field.

In Chicago, “D” grades were concentrated on the South and West sides; “A” grades on the far Northeast side, the South side near the lakefront, and the far Northwest and Southwest corners, somewhere in between the concentric circles identified by early University of Chicago researchers and the patterns of racial and economic segregation familiar today.

This desire to aggregate the city by race and use incentivized not just segregation but racial division. As Hoyt observed, “racial” divisions between European ethnic groups could disappear as their members ascended the economic scale. Given this power, “probationary” whites, with their own long histories of discrimination in their home countries and in the city, had reason to build alliances. “Several of the immigrant groups that earlier had struggled to be accepted among white Chicagoans soon united in an effort to keep nonwhite residents from moving into their neighborhoods,” Light writes.

The law gave them the tools to build these alliances into the form of the city. Nathan William MacChesney, a Chicago lawyer and member of the Chicago Plan Commission, developed the infamous “Standard Form, Restrictive Covenant” in 1927 on behalf of the Chicago-based National Association of Real Estate Boards. It forbid:

1. The restriction that no part of said premises shall in any manner be used or occupied directly or indirectly by any negro or negroes, provided that this restriction shall not prevent the occupation, during the period of their employment, of janitors’ or chauffeurs’ quarters in the basement or in a barn or garage in the rear, or of servants’ quarters by negro janitors, chauffeurs or house servants, respectively, actually employed as such for service in and about the premises by the rightful owner or occupant of said premises.

2. The restriction that no part of said premises shall be sold, given, conveyed or leased to any negro or negroes, and no permission or license to use or occupy any part thereof shall be given to any negro except house servants or janitors or chauffeurs employed thereon as aforesaid.

By the late 1940s, restrictive covenants covered much of the city with the explicit encouragement of the FHA, hemming in the Black Belt and artificially inflating real-estate prices in the black community.

Vigilantes reinforced the legal divisions with an “era of hidden violence,” in the words of Arnold Hirsch. In a two-year period, he documents attacks on 46 black homes, including 29 arson-bombings, resulting in three deaths. A three-day riot in 1947, incited by the placement of black veterans in a CHA project, drew a mob of 1,500-5,000, one of several such incidents of mob violence in the late 1940s and early 1950s that involved staggering numbers of participants yet drawing very little media coverage.

This combination of legal and extra-legal measures created a profoundly distorted market that turned into its own form of economic violence. One of the strongest parts of Coates’s piece is his account of contract buying, one of the few options left open to black Chicagoans.

Ross was not really a homeowner. His payments were made to the seller, not the bank. And Ross had not signed a normal mortgage. He’d bought “on contract”: a predatory agreement that combined all the responsibilities of homeownership with all the disadvantages of renting—while offering the benefits of neither. Ross had bought his house for $27,500. The seller, not the previous homeowner but a new kind of middleman, had bought it for only $12,000 six months before selling it to Ross. In a contract sale, the seller kept the deed until the contract was paid in full—and, unlike with a normal mortgage, Ross would acquire no equity in the meantime. If he missed a single payment, he would immediately forfeit his $1,000 down payment, all his monthly payments, and the property itself.

As housing in black and blockbusted neighborhoods increased in price on terribly risky terms, housing in FHA-favored neighborhoods was made affordable through government subsidy. Beryl Satter, whose Family Properties is a major source for Coates, describes the straightforward economics of that New Deal program:

Created by Congress in 1934, the FHA offered insurance for the mortgages that banks and savings and loan institutions granted to home purchasers. It thereby helped inaugurate a new era of cheap and easy credit. Because banks faced so little risk with an FHA-insured loan, their interest rates on mortgage loans dropped from 6 to 8 percent to 4 percent. They made mortgage loans that covered 90 percent of a building’s sale price, rather than the previously typical 50 to 70 percent. As a result, from 1939 onward it was often cheaper to buy a new home than to rent. At a time when city rents were approximately $50 a month, one could purchase a new $5,000 home in the suburbs for a down payment of $550 and mortgage payments of $29.61 a month.

The divisions created and encouraged by the FHA built wealth in white areas and destroyed wealth in black areas. But they also reinforced definitions of “white,” literally inviting groups to ally with each other against blacks—groups that were at economic risk as probationary whites under the FHA’s own models.

Allegiances built under those conditions, including the CHA riots at midcentury, further strengthened segregation in the next era of housing, when the city began its most intense period of public-housing construction. “Beginning in 1950, site selection for public housing proceeded entirely on the grounds of segregation,” Coates writes. “By the 1960s, the city had created with its vast housing projects what the historian Arnold R. Hirsch calls a ’second ghetto,’ one larger than the old Black Belt but just as impermeable. More than 98 percent of all the family public-housing units built in Chicago between 1950 and the mid‑1960s were built in all-black neighborhoods.”

Unlike many of the examples in Coates’s piece, the results of Chicago’s intensively segregated public-housing projects are quite well known, and still visible in the landscape today as they come down, and their former residents add to the net domestic outflow of population.

Coates argues that “America was built on the preferential treatment of white people—395 years of it,” and makes a case built on the foundations of Chicago history. A frequent response, one I certainly expect to his piece, is that waves of immigrants to the city that are now lumped in as “white” faced discriminatory treatment and their own exceptional barriers to housing, wealth, education, and employment. That’s true and it needs to be acknowledged, not least because that discriminatory treatment created a climate of fear, which led to further discrimination, both legal and extra-legal. It also created and expanded definitions of whiteness, cultural as well as official, within that fearful climate.

It also doesn’t invalidate Coates’s argument. The timing of these policy decisions was crucial. When I spoke with Elaine Lewinnek about this history, in particular the changing definitions of whiteness, she emphasized that the color line was hardening between the World Wars. One example she gives is building and loan societies, essentially a form of microlending imported from Europe and concentrated among Chicago’s European immigrants. The institutionalization of lending practices after the Great Depression closed off this avenue as the Great Migration increased the black population in Chicago; the more professional structures that took its place were more easily segregated.

“One way for blacks to evade the racism of the mortgage industry might have been to set up their own mortgage companies, but that path was extraordinarily difficult,” Beryl Satter writes. “The Mortage Bankers Association was an all-white organization; African Americans were barred from both the national organization and its local subsidiaries. Since mortgage banker training courses were open only to members of the MBA, blacks were excluded from these courses as well.” Satter goes on to detail the struggles of a black real estate agent who persisted against these barriers, finding one—out of 241—white-operated savings and loans that would loan to a black homebuyer in a white neighborhood.

This history is also important because it emphasizes one of the barriers to reparations, or however you want to think of it. The actions of government and the academy that fed into it worsened existing conditions and strengthened hardening lines.

A bitter irony is that some of the worst offenses occured during what was, otherwise, a successful expansion of the middle-class in an economically devastated country through well-designed government intervention: the New Deal. Ira Katznelson, another historian Coates references, has a recent book, When Affirmative Action Was White, about how racial discrimination found its way into a broad swath of policies in the New Deal and beyond. Segregationist policies in World War II were critically significant; the war and the opportunities provided for veterans were a step up the ladder for many young men, including members of my own family. And it further broadened the concept of whiteness, as Katznelson writes:

The war proved to be a particularly important junction for white ethnic Americans, chiefly the children of Catholic and Jewish newcomers who had arrived in the United States from the 1880s until the closing of the immigration gates in 1924. Military training, wartime service, postwar benefits, and integration into a common American purpose brought many of these newcomers into their first robust contact with the white and mainly Protestant America from which they had lived at a physical and symbolic distance.


If, for Jews and Catholics, the war marked the first moment of full inclusion via the pathway of military service and benefits, for blacks, the war was the last moment of formal exclusion from equal citizenship by the federal government. At this critical juncture, the social and political impossibility of integration precluded black gains on these terms. The opening of new opportunities for white ethnic religious minorities did not unsettle dominant social practices the way full black inclusion surely would have. As a result, though the military did offer African Americans tangible gains, these trailed the advantages presented to other outsiders by a dramatic margin.

This period, from the end of the Great Depression until the post-World War II period, was the greatest period for middle-class wealth-building in the nation’s history. But policy and culture shut African-Americans out of much of that gain, even as previously marginalized groups got in on this last great government-driven expansion of wealth.

The relationship of the FHA, New Deal, and World War II policies to wealth divisions also presents a barrier to the concept of reparations—not one that necessarily invalidates it, but one that proponents of them in whatever form have to grapple with. Government and its handmaidens in academia created many of these problems, or at least made them worse by enshrining them in sociology and law, engendering a skepticism towards active policy that lingers today.

Whiteness is the other side of the reparations story. The recent history Coates documents drew Americans into a broad, toxic definition of white. Elaine Lewinnek calls it “the mortgages of whiteness": “an implicit, often unfulfilled promise that white people might profit from homeownership as long as they could keep blacks away from their neighborhoods.” Pure, simple racism, the kind handed down over generations in America unquestionably played a role in the scars of the 20th century, but so did fear: the fear of relative newcomers pitted against each other in what was set up by the government as a zero-sum game.

This is part of why, I think, Coates is more interested in a dialogue over reparations than any specific policy: “a national reckoning that would lead to spiritual renewal.” That reckoning has been slow to come because it is fearsome, the kind that builds over centuries, but it’s the kind of fear that begs for a reckoning.




Comments to this blog are moderated. We review them in an effort to remove foul language, commercial messages, and irrelevancies.

Submit your comment