The New Deal and Black Ghettoization

I have been watching the old PBS documentary series (in that Ken Burns style but I don't think by Ken Burns) and found this an interesting story of government policy fail that I had never heard much about.  Much like segregated train and bus service, racial redlining that is commonly blamed on private enterprise in fact began as government policy

Government policies began in the 1930s with the New Deal's Federal Mortgage and Loans Program. The government, along with banks and insurance programs, undertook a policy to lower the value of urban housing in order to create a market for the single-family residences they built outside the city.

The Home Owners' Loan Corporation, a federal government initiative established during the early years of the New Deal went into Brooklyn and mapped the population of all 66 neighborhoods in the Borough, block by block, noting on their maps the location of the residence of every black, Latino, Jewish, Italian, Irish, and Polish family they could find. Then they assigned ratings to each neighborhood based on its ethnic makeup. They distributed the demographic maps to banks and held the banks to a certain standard when loaning money for homes and rental. If the ratings went down, the value of housing property went down.

From the perspective of a white city dweller, nothing that you had done personally had altered the value of your home, and your neighborhood had not changed either. The decline in your property's value came simply because, unless the people who wanted to move to your neighborhood were black, the banks would no longer lend people the money needed to move there. And, because of this government initiative, the more black people moved into your neighborhood, the more the value of your property fell.

The Home Owners' Loan Corporation finished their work in the 1940s. In the 1930s when it started, black Brooklynites were the least physically segregated group in the borough. By 1950 they were the most segregated group; all were concentrated in the Bedford-Stuyvesant neighborhood, which became the largest black ghetto in the United States. After the Home Owners Loan Corp began working with local banks in Brooklyn, it worked with them in Manhattan, the Bronx, and Queens.

The state also got involved in redlining. (Initially, redlining literally meant the physical process of drawing on maps red lines through neighborhoods that were to be refused loans and insurance policies based on income or race. Redlining has come to mean, more generally, refusing to serve a particular neighborhood because of income or race.) State officials created their own map of Brooklyn. They too mapped out the city block by block. But this time they looked for only black and Latino individuals.

The academics interviewed in the series argued that nearly every black ghetto in the country was created in the 1930's by this program.


  1. rxc:

    Another progressive initiative that didn't quite produce the results intended. Unless, of course, the intent was to generate ghettos, which was clearly NOT what Saint Franklin intended...

    I wonder how long this will be up at the PBS site before someone realizes what it says about the government programs that PBS normally idolizes, and makes it disappear. After all, this is a site for the children...

  2. Mark:

    What I find ironic is the Democrats, the party of the non-racists!, cling to the outdated laws of the early 20th century that were racially motivated like Bacon-Davis and the Wagner Act. The truth is, discrimination and racism CANNOT exist without governmnet intervention.
    If you are a racist and would only hire X types of people, you would not be able to compete with a competitior if they hired both X and Y types of people because they could hire the same qualfied Y's cheaper becaus ethe first competitor resisted.
    So, what to do if you are a racist society and want to keep it that way? You go to the governemnt and get them to pass "prevailing wage laws" and other such legislation that locks in the wage rates and prohibits competiton from lower wage producers.
    That we still have such laws in the 21st century is sad.

  3. Herman:

    Also the Davis–Bacon Act of 1931

  4. Captain:

    Could you tell me what the 'series' is you are watching?

    I recall a series on the New Deal many years ago but can't find anything on he site.

  5. sean2829:

    Mark Faber of the Gloom and Doom report had a similar observation about the government's messing with real estate in the last 15 years. He points out that minorities and the poor probably got worst loans as the housing bubble came to a crescendo and were the most likely to be foreclosed. Now that the government has insisted that lending hold to stricter guidelines, people at the low end of the economic scale are locked out of the mortgage market. The houses they used to own are now being scooped up by wealthy investors and rented back to these same low income people. For the investors, money is so cheap that it's easy to make a profit on today's renters.

  6. SamWah:

    Wowwwwwwww. PBS itsownself told the truth about Dems and Government colluding to do this to blacks.

  7. Vic Kelley:

    They were neighborhoods before coloreds moved in. They became ghettoes when coloreds moved in. I don't support what the government did. I hate it. But don't blame government for the conduct of those colored residents.