Taylor on Pietila, 'Not in My Neighborhood: How Bigotry Shaped a Great American City'

Antero Pietila. Not in My Neighborhood: How Bigotry Shaped a Great American City. Chicago: Ivan R. Dee, 2010. xiii + 320 pp. $28.95 (cloth), ISBN 978-1-56663-843-2.

Reviewed by Keeanga-Yamahtta Taylor (Northwestern University) Published on H-1960s (June, 2011) Commissioned by Ian Rocksborough-Smith

Baltimore's Bigotry: Racial Capitalism and the Political Economy of Urban Change

Former Baltimore Sun reporter Antero Pietila’s Not in My Neighborhood is an important book on the economic causes for the rise and persistence of residential segregation--and the mass exodus of whites--in modern American cities throughout the twentieth century. This focus on the political economy of residential segregation marks a departure from the bulk of recent historical writing on the rise of white suburbs and black cities that has looked primarily, if not exclusively, at things like “whiteness” as the psychological and cultural motivation of whites for leaving American cities while paying little attention to the condition of the cities--and their black populations--that were left behind. While white attitudes are not unimportant, they do not fully explain the racial configuration of modern American cities or the persistence of residential segregation despite the laws banning racism in the sale and rental of property.

Pietila’s story is primarily about Baltimore, but it is also the more general story of how residential segregation and the exclusion of African Americans from conventional lending practices created the conditions for predatory lending and real estate practices in black communities. Together, this led to hyper-exploitation in African American communities; gross profiteering for some; and neighborhood dilapidation and deterioration for the black communities that were bilked excessively by what became popularly known as the “black tax”--the added costs paid by African Americans for inferior housing (p. 171). The conditions for exploitation were established by the federal government when the Federal Housing Administration color coded primarily black and urban communities--and anyone who lived in proximity to them--and marked them as “undesirable.” That undesirability meant that black and urban housing would not be federally insured, which in effect strangled those areas from receiving the investment needed for development and growth. This policy decision, more than anything else, would seal the fate of central cities for decades to come. Moreover, as a result of the color coding, what would become popularly known as “redlining,” a two-tiered system of home financing was established and codified in federal policy. Determined by the Home Owners’ Loan Corporation (HOLC) policy, redlined neighborhoods in their view evidenced “detrimental influences in a pronounced degree [with an] undesirable population” and, as such, “some mortgage lenders may refuse to make loans in these neighborhoods and others will lend on a conservative basis.” HOLC said, “we do not mean to imply that good mortgages do not exist or cannot be made in the Third and Fourth grade areas, but we think they should be made and serviced on a different basis than in the First and Second grade areas.” Pietila concludes, “a two-tier lending industry was born. Banks served well-to-do white areas; blacks had to get financing from speculators at harsh terms” (p. 70).

The effects of the two-tiered financing system were multiple. The first is that it resulted in blacks paying more for inferior housing. The combination of continuing black migration into the cities with residential segregation meant that African Americans could only find housing in deteriorating black urban communities. Landlords recognized this and often raised rents as high as they possibly could knowing full well that there was absolutely nothing blacks could do about it because there was nowhere else to move. Pietila cites an Urban League study from 1946 that showed blacks were paying an average of 170 percent over prewar levels and 75 percent above what was, then, the current market level. 

Second, segregation was an incentive to let black neighborhoods deteriorate. Landlords armed with the knowledge that blacks could not move into white areas and that the fear of “black invasion” into white areas kept city officials from enforcing building codes in black neighborhoods, landlords made no pretense at maintenance or investment in black areas. If blacks did not like the conditions in their neighborhoods then where were they to go? In fact, the lack of the government’s oversight of black neighborhoods’ conditions, combined with the growing market for black housing, led to a further deterioration of conditions when landlords looked to rent any space at all in black neighborhoods. In Baltimore in the 1950s, more than forty-seven thousand units of housing did not have indoor bathrooms because landlords converted them into rooms for rent. Instead they built outhouses in the backyards known as “crappers.” Similarly, this same dynamic served as a disincentive for building new properties in black areas, which explains, in part, why there was a persistent shortage of affordable low-income housing in these segregated areas. Why undertake the expense of building new properties when blacks were “willing” to pay for broken down, uninhabitable units? It was the free market at its finest. Studies in multiple cities found that despite the deplorable conditions of black housing in every American city, it was often more expensive than the good apartments and houses leased and sold to whites. 

Finally, the creation of a black housing market whose exclusion from conventional lending markets was sanctioned by the federal government gave rise to particular forms of predatory lending in black communities. While these predatory lending instruments would come in many different forms, one of the most exploitative was the “land-installment contract” (p. 99). In effect, it was essentially buying a house on an installment plan. Beryl Satter has written, in her important book Family Properties: Race, Real Estate and the Exploitation of Black Urban America (2009), extensively on the impact of contract buying in home sales in black Chicago, where the practice went on for much longer, but it is a little studied area of the political economy of racism in urban America. Houses sold on contract were more expensive than houses that could have been bought through conventional financing. Interest rates were high and blacks did not actually own the house, or take possession of the title, until the final contract payments were made. Moreover, if a family were to miss a single payment over the life of the contract, they could be evicted as if they were only a tenant and lose any and all equity they had invested in the property. Because of the higher cost of the contracts, many black homeowners in Chicago and Baltimore had to take on more tenants exacerbating the problems of neighborhood overcrowding and deterioration. The ability to make untold profits from black communities literally changed the face of American cities in a way that resonates with struggles over urban housing and racial equity today. 

Pietila looks at the phenomenon of white flight from American cities, such as Baltimore, not in cultural or psychological terms, but as a result of two intersecting factors. The first is the primacy of homeownership in American society in the postwar period, which was particularly important in a country with a weak welfare state. Buying a house was the largest investment any American family would make in their lifetime. Moreover, the weakness of the welfare state meant that the ability to own a home would be the determining factor in one’s retirement, the ability to take care of one’s parents, the ability to send their children to college, and a host of other material benefits. Real estate speculators, derisively known as “blockbusters,” played on both racial fears and economic insecurities to convince white homeowners to sell low while reselling to blacks at prices well beyond the actual value of the home. This phenomenon is what fueled “white flight” out of the cities. It was huge business, and in Baltimore the group of real estate speculators who were most adept at getting the whites to leave were known as the “Forty Thieves”--a cartel of real estate companies that colluded to artificially inflate the prices of houses being sold to African Americans (pp. 100-101). The ability to make untold profits from black communities established an exploitative dynamic where “leading banks had reached the conclusion that racial change [white exodus from an urban neighborhood when blacks moved in] was good for the economy: it kept banks profitable, suburban builders humming, and the real estate industry busy” (p. 201).

There are other interesting subplots to Pietila’s provocative story about Baltimore. Most urban stories on housing discrimination and segregation are focused on the urban North or midwestern cities like Chicago. Pietila’s story reminds us that the first cities blacks migrated to from the rural South were southern. This is why the first practices of racial zoning were in southern cities like Louisville, Baltimore, Winston-Salem, and beyond. The 1917 Supreme Court case banning this practice led northern real estate agents to conceive of more “color blind” practices to restrict the spatial mobility of African Americans. Pietila also begins an interesting, if undeveloped, discussion of how eugenics shaped real estate practices and public policy in the early part of the twentieth century as both were still being developed. As early as 1924, the National Real Estate Board mandated for membership into its organization a ban on selling a home or property to a race that would imperil property value. As Pietila argues, “racial separation became a cornerstone of real estate activity” (p. 53). The racial exclusivity was not just a reaction to the racial politics of the day but it also became plainly evident that racial separation helped create value in the dilapidated and deteriorating neighborhoods that housed African Americans.

Finally, Pietila introduces a little discussed phenomenon in a Baltimore context but something that developed in other cities as well--a three-tiered housing market made up of blacks, whites, and Jews. According to Pietila, “the prejudice against Jews was so strong that ... in Baltimore an additional market tier emerged to cater to Jews who were prohibited by private agreements or custom from living in certain neighborhoods. The three tiered market was so pronounced that even in the early 1970s a separate multiple-listing service sold suburban homes in areas open to Jews” (p. xi). A widespread presence of Jews preceded the migration of blacks into Baltimore and other American cities that had sizeable Jewish populations. As Jews were able to move beyond the initial ghettoes they settled in, new African American migrants replaced them. Despite anti-semitism in the real estate market, Jews were still, largely, able to find new housing in outlying suburban areas, unlike African Americans. They were also able to secure financing through conventional means unlike African Americans. All of this meant that as neighborhoods were changing from Jewish to black, Jews leaving the city were able garner high prices from blacks desperate for more housing. This dynamic, which Pietila explores at length, created tensions between the two groups that would be exacerbated when some Jews became pillars in predatory home financing schemes that targeted African Americans--particularly in Baltimore. Interestingly enough, the worst offenders of anti-semitism and anti-black racism were large Jewish real estate companies that profited off the racism against both groups. 

Pietila’s book is an important addition to a growing body of scholarship that highlights the economic relationships of economic exploitation that were the pretext for urban segregation and deterioration.

Printable Version: http://www.h-net.org/reviews/showpdf.php?id=31354

Citation: Keeanga-Yamahtta Taylor. Review of Pietila, Antero, Not in My Neighborhood: How Bigotry Shaped a Great American City. H-1960s, H-Net Reviews. June, 2011. URL: http://www.h-net.org/reviews/showrev.php?id=31354