Episode 4 of a 12-part series:
As the Great Depression deepened in the 1930s, the housing industry faced three inter-related problems — bank failures, home mortgage defaults, and weak demand for new home construction. Unfortunately, in responding to the unprecedented crisis, the housing policy of the New Deal reform era and the years of World War II strengthened the exclusionary housing policies African Americans, Jews and other minorities faced in Oak Park (1).
On a hopeful note, many Oak Parkers thought about the possibility of racial justice in our community, a counterpoint to the brutal racial order in America, and foreshadowing the generation that would follow in the ’60s. These villagers engaged with African American political and cultural leaders who came to Oak Park and prompted discussions about the Black freedom struggle at more open-minded churches like the First Methodist Church and First Congregational Church (now First United Church of Oak Park). W.E.B. DuBois, “the father of the Black protest movement,” and Ida Wells-Barnett, the courageous journalist who documented the scourge of unchecked racist lynching, spoke to large Oak Park audiences. Paul Robeson, the brilliant actor, singer, Olympian and outspoken civil rights activist, performed at a fundraiser for the Infant Welfare Society at OPRF High School (2).
At the same time, the village witnessed a revolution in white home financing and mortgage relief from new federal policies sponsored by the New Deal Democratic Party-controlled Congress. The legislation was morally flawed — institutionalizing white racism for the next 40 years. The laws created the Federal Housing Authority (FHA) and the Home Owners Loan Corporation (HOLC). Each radically changed home ownership financing of pre-Depression America, but only for white, Christian Americans. Both precipitously widened the racial wealth gap in America (3).
In the 1920s down payments for home mortgages were near 50 percent and repayment periods were unbelievably short — from 3-10 years (4). Until largely wiped out during the Great Depression, the Black, Latinx and white working classes were often only able to finance home purchases through the hundreds of ethnically centered building-and-loan associations, which provided cooperative, community-based financial services that mainline banks refused to offer (think George Bailey in It’s a Wonderful Life). But by the ’30s these community-centered organizations had largely disappeared (5).
The HOLC and the FHA stepped in to insure new home financing and bail out homeowners facing foreclosure. In making case-by-case decisions, they used a protocol that came to be called “redlining.” Oak Park realtors, working with federal authorities, created color-coded maps of the village. The maps assessed financial risk based on the proximity of minorities, whom most of white America saw as undesirable. Financial institutions used these maps to enforce draconian limitations on making mortgages available to Blacks, Jews and other minority applicants in areas housing officials deemed unstable and risky. From 1934 to 1968, 98 percent of all FHA-insured loans went to white buyers as the federal government underwrote $120 billion in mortgages (6).
Redlining deepened the scourge of racist financing for Black home buyers. Imitational racism forced Blacks into “contract buying,” where housing prices doubled, even tripled their actual value, as real estate speculators drained capital from minority neighborhoods (7). Frequently, before a family could complete multiyear contracts, often for minor issues, buyers would be foreclosed, wiping out all equity. According to a research team based at Duke University, contract-buying drained minimally $5 billion from the Black community in the Chicago area (8).
Redlining also worked to harm the Jewish community in Oak Park. Using federal records, Oak Park historian Michael Zmora outlined how a former village board president and local real estate agents constructed the color-coded maps used by banks to approve or reject financing. These actions were the legally approved, consciously exclusionary, and discriminatory actions of village civic and business leaders, not simply the consequence of personal bias.
The village board president in the late-’30s was president of the Real Estate Board and the Zoning Commission consisted of members from the real estate ranks. These representatives of Oak Park’s elite wrote the reports for the HOLC and the FHA that were the official guidelines for determining home-loan risk (9).
The HOLC report with its color-coded map targeted the northeast section of the village with a yellow color and a C- rating, just above the lowest red color designation. The report noted that Northeast Oak Park “was a changing area due to Jewish infiltration” and that the possibility of a new synagogue would bring more Jewish migrants. It went on to state that the rating was also informed by concern about possible racial change (10).
In 1940, the village took one more antisemitic action. Officials blocked the construction of a new synagogue planned by the Jewish residents.
Source citations can be found in the online version at oakpark.com/Viewpoints.
1. A ‘Forgotten History’ Of How The U.S. Government Segregated America, https://www.npr.org/2017/05/03/526655831/a-forgotten-history-of-how-the-u-s-government-segregated-america.
2. Stan West, Peggy Tuck Sinko, Frank Lipo, Yves Hughes Jr., Suburban Promised Land: The Emerging Black Community in Oak Park, Illinois, 1880-1980, 2009.
3. Ira Katznelson, When Affirmative Action was White: The Untold History of Racial Inequality in the 20th Century, 2013.
4. U.S. Department of Housing and Urban Development, https://www.huduser.gov/portal/pdredge/pdr_edge_message_past_articles.html
5. Lizbeth Cohen, Making a New Deal: Industrial Workers in Chicago,1919-1939, 2013.
6. Richard Rothstein, The Color of Law: A Forgotten History of How Our Government Segregated America, 2018.
7. Beyrl Satter, Family Properties: Race, Real Estate, and the Exploitation of Black Urban America, 2009.
8. The Samuel Dubois Cook Center on Social Equity, The-Plunder-of-Black-Wealth-in-Chicago.pdf, https://www.npr.org/local/2019/05/30/728122642/contract-buying-robbed-black-families-in-chicago-of-billions.
9. Michael Zmora, http://www.chicagojewishhistory.com/media/2567/98132_CJHS-2024_Fall_Quarterly_webVersion_New.pdf
10. Ibid, Zmora