The Federal Housing Administration, created to stabilize the housing market in the aftermath of the Great Depression, played a major role in the construction of racial ghettos in Chicago, Illinois. The successor to the Home Owner’s Loan Corporation, the FHA differed by not providing direct loans (as did HOLC), and having an objective to “insure long-term mortgage loans made by private lenders for home construction and sale.”1 The FHA helped to create racial ghettos in cities such as Chicago by instituting blatantly racist policies in the FHA Underwriting Manual of 1938 as well as the underwriting manuals of later years. The FHA’s policies also trickled down to affect local housing markets on the level of individual actors; private lenders, homeowners and sellers, and real estate agents were forced to adhere to the guidelines of the underwriting manual to qualify for FHA mortgage insurance. Because of this, landlords and homeowners resisted accepting African Americans as their neighbors, fearing a decline in property values. Since the FHA granted risk ratings to areas based on their racial make-up, this was not an unfounded fear; African Americans’ presence in a neighborhood meant that the FHA would refuse to grant mortgage insurance, making it difficult for private lending organizations to grant loans to anyone, white or black, who might choose to live in a racially mixed area. Among other tactics, racially restrictive covenants, and indirect support of racially discriminating zoning laws were all used to deter African Americans from cohabiting with white neighbors. Further, individual actors in the Chicago housing market took advantage of African American’s vulnerable position, often bamboozling them in business deals that left them without the means to move or improve their locations. African Americans were thus restricted to certain racially homogenous neighborhoods. Another FHA policy contributing to the construction of ghettos was the long-standing refusal to grant insurance for home-improvement mortgages to African Americans2. Even when the FHA began insuring loans in Chicago for home improvement in 1934, they maintained the right to determine the term of the note “entirely on the discretion of the financial institution.”3,.With no way to leave or improve their neighborhoods, African Americans were stuck in racially distinct and physically deteriorating neighborhoods. The result, as history shows, was the emergence of racial ghettos in Chicago. The racial ghettoization of African Americans in Chicago is representative of quintessential, but often ignored, aspect of the American experience: the placement of marginalized groups into a liminal state, an in-between condition experienced spatially, emotionally, and socially. Indeed, Victor Turner defines the liminal state as “an interstructural state in social dynamics” that may be experienced as a “physical, mental, or emotional condition.”4 Turner defines liminality in relation to the initiation rites of tribe societies, but the concept of liminality is applicable to American society as well. Effectively, a liminal state is a stopgap for transitioning peoples; in this case, American society forced the liminal period onto Chicago’s black community.
1 Jackson, Kenneth T.. Crabgrass Frontier. New York: Oxford University Press, 1985: 204
2 FHA Business For Year Is 8 Million. 1935. The Chicago Defender (National edition) (1921-1967), September 1, http://www.proquest.com/ (accessed December 1, 2010).
3 THE HOUSING ACT. 1934. The Chicago Defender (National edition) (1921-1967), October 6, http://www.proquest.com/ (accessed December 5, 2010). &
THE HOUSING LOAN. 1934. The Chicago Defender (National edition) (1921-1967), September 1, http://www.proquest.com/ (accessed December 3, 2010).
4 Turner, Victor Witter. The Forest of Symbols; Aspects of Ndembu Ritual. Ithaca, NY: Cornell UP, 1967. Print: 94-98.