In light of the recent report that shows that during this current recession the already-wide racial wealth gap has grown even more wide, I thought it would be appropriate to post a series I wrote in 2007 when I was a contributing editor for the Black Agenda Report. Regrettably, the information is just as prescient now as it was then.
In Part 1 I dealt with the fortunes of Black America from Jamestown to the beginnings of Jim Crow. In Part Two, I address, primarily, Blacks and their relationship to the New Deal programs.
The Great Depression, FDR & the "Old" New Deal
Many people have often hailed FDR's New Deal programs as a shining example of progressive social programs that got the working poor back on track and created a more robust middle-class after the Great Depression. Ira Katznelson, however, in his book When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-Century America paints a different picture. In it he states that it was during the administrations of Franklin Roosevelt and Harry Truman that such great progressive policies as Social Security, protective labor laws and the GI Bill were adopted. But with them came something else that was quite destructive for the nation: what he called affirmative action for whites (I like to say continued affirmative action for whites).
Southern members of Congress ensured that national policies would not disturb their region's racial status quo.
During the 1930s and 1940s, southern members of Congress controlled the gateways to legislation, policy decisions dealing with welfare, work and war. They used this considerable control to either exclude the vast majority of African Americans or treat them differently from others. Between 1945 and 1955, the federal government transferred more than $100 billion to support retirement programs and fashion opportunities for job skills, education, homeownership and small-business formation. Together, these domestic programs dramatically reshaped the country's social structure by creating a modern, well-schooled, homeowning middle class. At no other time in American history had so much money and so many resources been targeted at the generation completing its education, entering the workforce and forming families.
Additionally, Katznelson asserts that most Blacks were left out of all this. Southern members of Congress used occupational exclusions and took advantage of American federalism to ensure that national policies would not disturb their region's racial status quo. Farmworkers and maids, the jobs held by most Blacks in the South, were denied Social Security pensions and access to labor unions. Benefits for veterans were administered locally. The GI Bill adapted to "Southern sensibilities" by accommodating itself to segregation in higher education, to the job ceilings that local officials imposed on returning Black soldiers and to a general unwillingness to offer loans to blacks even when such loans were insured by the federal government.
Of the 3,229 GI Bill-guaranteed loans for homes, businesses and farms made in 1947 in Mississippi, for example, only two were offered to black veterans. Katznelson further asserts that "at the very moment a wide array of public policies were providing most white Americans with valuable tools to gain protection in their old age, good jobs, economic security, assets and middle-class status, Black Americans were mainly left to fend for themselves. Ever since, American society has been confronted with the results of this twisted and unstated form of affirmative action." (I will be discussing affirmative action more completely in another section in this essay).
Of the 3,229 GI Bill-guaranteed loans for homes, businesses and farms made in 1947 in Mississippi, for example, only two were offered to black veterans.
Jim Powell in his publication, FDR's Folly, further illustrates this dream deferred for Black folk called the New Deal. For example, the Agricultural Adjustment Act of 1933 authorized the secretary of agriculture to inflate prices by reducing farm acreage. This meant white farm owners were paid to let their land sit idle, often resulting in the eviction of sharecroppers and tenant farmers, a significant number of whom were African American. Powell reports that reduced acreage particularly affected sharecroppers, whose estimated annual cash income fell from $735 in 1929 to $216 in 1933. The Department of Agriculture, moreover, paid farmers to destroy crops and slaughter livestock. This occurred while millions of Americans went hungry (this was just the sort of thing that John Steinbeck protested against in his 1939 novel The Grapes of Wrath).
Southern states, home to the nation's poorest citizens yet full of dependable Democratic voters, received less New Deal spending than comparatively richer Western states, whose voters perhaps required additional persuasion to support Democratic candidates. Powell cites one study showing that states with a higher percentage of black residents and a lower per capita income received fewer New Deal dollars than richer, whiter states. Thus Blacks were directly injured by New Deal policies; then ignored when it came time to dispense New Deal dollars.
The National Industrial Recovery Act (NIRA), in effect from June 1933 until a unanimous Supreme Court declared it unconstitutional in May 1935 (in Schechter Poultry Corp. v. United States), was considered the hallmark of the New Deal. In addition to creating the Works Progress Administration, the NIRA authorized the National Recovery Administration (NRA), which organized cartels, fixed wages and prices, and, under section 7(a), established the practice of collective bargaining, whereby a union selected by a majority of employees exclusively represented all employees.
Blacks were directly injured by New Deal policies; then ignored when it came time to dispense New Deal dollars.
While such compulsory unionism is routinely celebrated as a milestone for the American worker, many African Americans saw things differently. The NAACP's publication The Crisis, for example, decried the monopoly powers granted to racist unions by the NRA, noting in 1934 that "union labor strategy seems to be to obtain the right to bargain with the employees as the sole representative of labor, and then close the union to black workers." Members of the Black press took up the charge, attacking the NRA, rechristening it the "Negro Removal Act," "Negroes Robbed Again," "Negro Run Around," and "No Roosevelt Again."
There was another narrative at work during this time as well. European immigrants were learning that whiteness was more than skin color. It was the privilege of opportunity and above all, exclusive. There was this very standard narrative of the European mobility model. We came here with nothing. We worked hard. We, pulled ourselves up by our bootstraps. And it's offered up as proof of the openness of the American economic order. Left out of the bootstrap myth of European ethnics was access to opportunities closed to non-whites. Roosevelt's New Deal reforms offered many Americans a path out of poverty.
The New Deal's Social Security measure gave at least some protection to 30 million citizens, but it excluded farm workers and domestics, most of whom were non-white. Many unions locked Blacks and Mexicans into low paying jobs, or kept them out all together. Perhaps the best example of how European ethnics would finally gain the full benefits of whiteness, to the exclusion of others, would come with an innovation in housing at the end of World War II.
It was a time when hundreds of thousands of GIs came home ready to start families, but had no place to live. FHA came to the rescue by insuring long term, low monthly payment mortgage loans. Home ownership was made possible for additional millions of families and stimulated a tremendous volume of construction. Veterans needed homes for families. They turned to the revolutionary New Deal housing program. It would, however, racialize housing, wealth, and opportunity for decades, in ways few could have imagined.
The FHA underwriters warned that the presence of even one or two non-white families could undermine real estate values in the new suburbs
In the 1930's the federal government created the Federal Housing Administration, whose job it was to provide loans or the backing for loans to average Americans so they could purchase a home. In order to purchase a house in America prior to 1930s, you had to pay 50 percent of the sales price up front. The new terms of purchasing a home was that you put 10 percent or 20 percent down, and the bank financed 80% of it - not over five years but over 30 years at relatively low rates. This opened up the opportunities for Americans to own homes like ever before. The average person could own that home.
Almost a million Black GIs came home after WWII. They had fought for the country in segregated ranks. They returned hoping for equality and at least a small slice of the American pie. For many, that slice was (potentially) a new home for little money down and some of the easiest credit terms in history. The FHA underwriters warned that the presence of even one or two non-white families could undermine real estate values in the new suburbs. These government guidelines were widely adopted by private industry. Race had long played a role in local real estate practices. Starting in the 1930's, government officials institutionalized a national appraisal system, where race was as much a factor in real estate assessment as the condition of the property. Using this scheme, federal investigators evaluated 239 cities across the country for financial risk.
So those communities that were all white, suburban and far away from inner-city areas, they received the highest rating. And that was the color green. Those communities that were all Black or in the process of changing, they got the lowest rating and the color red. They were "redlined." As a consequence, most of the mortgages went to suburbanizing America, and it suburbanized it racially (this practice is still with us).
Between 1934 and 1962, the federal government underwrote 120 billion dollars in new housing. Less than 2% went to non-whites.
This racial logic adopted the principle that an integrated neighborhood was a bad risk - a financial risk; that an integrated neighborhood was likely to be an unstable neighborhood socially. Unstable socially translated into unstable economically. For example, in the 1940's, when the white residents of Eight Mile Road in Detroit were told they were too close to a Black neighborhood to qualify for a positive FHA rating, they built a six foot wall between themselves and their Black neighbors. Once the wall went up, mortgages on the white properties were approved. Between 1934 and 1962, the federal government underwrote 120 billion dollars in new housing. Less than 2% went to non-whites.
The administration of Franklin Roosevelt's New Deal increased poverty and joblessness among Blacks; empowered discriminatory labor unions; and when the Supreme Court overturned Lochner v. New York (the right of the individual to contract their services), removed an effective legal tool to challenge segregation laws and other racist state actions.