I spent the last week interviewing men and women, and the children of men and women, who bought their homes on contract in Chicago during the 1950s. Contract buying sprang up in Chicago after the federal government effectively refused to insure mortgages for the vast majority of black homeowners, even as it was insuring the mortgages of white homeowners, and encouraged banks to redline black and integrated neighborhoods. The import of mid-20th century housing policy -- along with private actions (riots, block-busting, contract lending, covenants) -- has been devastating for African Americans.
Buying on contract meant that you made a down-payment to a speculator. The speculator kept the deed and only turned it over to you after you'd paid the full value of the house -- a value determined by the speculator. In the meantime, you were responsible for monthly payments, keeping the house up, and taking care of any problems springing from inspection. If you missed one payment, the speculator could move to evict you and keep all the payments you'd made. Building up equity was impossible, unless -- through some Herculean effort -- you managed to pay off the entire contract. Very few people did this. The system was set up to keep them from doing it, and allow speculators to get rich through a cycle of evicting and flipping.
I spent some time talking to a 90-year-old man who'd come up from Mississippi. His family had been reduced to sharecropping after the county government took their land. "In Mississippi, there was no law," he told me. There was no law in Chicago either. The gentleman purchased his home for $26,000. He later found out that the deed-holder had purchased the same home -- only weeks before -- for $9,000.
Above is a picture I took of a chart showing how the scheme could work. The chart was produced by activist lawyers in the late 60s trying to demonstrate the effects of contract buying. There are four columns "Documented Price Paid By Speculator," "Documented Price Change To Negro Buyer," "Markup," "Approximate Additional Interest," and "Total Additional Charges." In that chart you can literally see black wealth leaving one neighborhood and migrating to another. It was not just legal. It was the whole point.
Jim Crow -- Northern or Southern -- is usually rendered to us as an archaic system in which people irrationally decide to separate from each other just based on skin color. There's a reason that so many of us remember Martin Luther King's line about little white boys and little black boys holding hands. It's comforting to us. Less comforting is that fact that Jim Crow amounted to the legal pilfering of resources from the black communities to advantage white people across generations. In Mississippi, it meant the right to reduce someone to sharecropping, or to benefit politically from their census numbers while not giving them any representation, or to tax them for services they did not enjoy equal access to. In Chicago, it meant the legalized theft of black wealth by white agents.
It is very hard to accept this -- the wealth gap is not a mistake. It is the logical outcome of policy and democratic will. From the streets of Cicero on up, the point was to imprison black people in the black belt and then exploit them. The goal was pursued through public policy, private action, and open terrorism. The goal was accomplished.