This week's guest author is Michael Holzman.
Whenever three respectable negroes, heads of families, shall desire to settle on land . . . the inspector of settlements and plantations will... afford them such assistance as he can to enable them to establish a peaceable agricultural settlement... so that each family shall have a plot of not more than forty acres of tillable ground... Special Field Orders, No. 15, General William Tecumseh Sherman.
This was the promise of emancipation toward the end of the Civil War. The failure to fulfill that promise has implications to the present day. In the 1860s, the "respectable negroes" did not get the 40 acres of land along the Georgia and South Carolina coast, on Hilton Head and other islands, where land now goes for half a million dollars an acre. Nor did they get a mule. Neither were their descendants three or four generations later eligible for federally guaranteed mortgages under the National Housing Act of 1934, the "underwriting manual" of which required redlining: The Valuator should investigate areas surrounding the location to determine whether or not incompatible racial [i.e. Black] and social groups are present, to the end that an intelligent prediction may be made regarding the possibility or probability of the location being invaded by such groups.
Having made that investigation, the "valuator" would turn down the loan application. Nor did they receive federally guaranteed mortgages under the World War II GI Bill. As a consequence, while nearly 70% of White families own their own homes, just 41% of Black families do so (down from 46% in 2000). And as a consequence of that, of generations of housing discrimination and redlining, while the median net worth of White households in 2013 was $192,500; the median net worth of Black households was $11,000. The former has increased by over $50,000 since the Great Recession, while that of the Black households has decreased by $5,600--34%.
Because of the curious system of school funding in the United States, home ownership and household wealth are crucial to the quality of education provided to children. School districts, in general, are funded by means of property tax and income tax, state and federal. Nearly uniquely to the United States, compared to the rest of the developed world, the overwhelming share of that funding is local, from property tax. Districts where property is expensive receive more in taxes than districts in which property is less expensive. The wealthy districts are able to provide the children of their wealthy property owners with better educations than those provided to the children of districts where households have lower incomes and live in less valuable housing. A Connecticut judge, Thomas G. Moukawsher, has recently found that in that state, one of the wealthiest in the nation, "in struggling cities the neediest are leaving schools with diplomas but without the education we promise them... children rising from elementary school to high school without knowing how to read, write, and do math well enough to move up." And yet they do move up and then receive pieces of paper called diplomas. This situation is not peculiar to Connecticut. Nationally, if a student makes it to grade 12, they have more than a 90% chance of graduating. But, according to the National Assessment of Educational Progress, NAEP, at grade 12 less than a quarter of students eligible for National Lunch Programs (those with family incomes under $45,000), read at grade level, as compared to 45% of those with higher family incomes. Among Black students, just 13% of those eligible for National Lunch Programs (half of Black families) in grade twelve read at grade level, as compared to 49% of White students from families with higher incomes. As a consequence of this lack of equitable educational preparation, just 20% of Black adults have a bachelor's degree or higher, compared to 31% of White adults.
Probing further into this situation Judge Moukawsher found that his "state spends millions of dollars on schools without any binding principle guaranteeing that education aid goes where it's needed. During the recent budget crisis, this left rich schools robbing millions of dollars from poor schools." That is rather extreme. The routine, normal, course of events is for states to allow a situation where districts serving poor students have less funding than those serving richer students and where, within districts, schools serving poor students receive fewer resources than those serving richer students. On the other hand, perhaps Judge Moukawsher is right. The normal situation is one in which the rich rob the poor. Cutting through the usual static that "money doesn't matter," the Judge holds that "Gaps in school resources are grappled [connected] to gaps in school results."
School funding, and therefore educational opportunities and outcomes, vary with family income and wealth (that is, in most cases, home ownership and the value of those homes). Although there is a strong prejudice that the economic situation of a family is a matter of individual characteristics--some people work hard, others do not, etc.--as a matter of fact and historic record families living in poverty are concentrated in a number of particular groups: American Indians living on reservations, recent unskilled emigrants (for example Sicilians in the early 1900s, many Hispanics today), Appalachians, and the descendants of enslaved Africans. While 15% of White families with children under 18 years of age live in poverty, more than twice that percentage, 33%, of similar Black families live in poverty. The median income of White households is now $57,000 a year, while that of Black households is $35,000 per year, well below the eligibility cutoff for National Lunch Programs in the schools.
Two important factors for the continuing relative poverty of the descendants of enslaved Africans are inferior educational opportunities and outcomes, and lack of opportunities to acquire wealth through home ownership, the great motor of White family wealth accumulation. These factors are causally linked. If Black families had equal opportunities for home ownership in neighborhoods where the general rules of real estate value applied, then the schools in those neighborhoods would be funded on the same basis as those attended primarily by White families and, ultimately, educational outcomes would become more equal. Given that the National Housing Act of 1934 has long since been amended so as to give equal access to home financing and that "redlining," the practice described in the 1936 underwriting manual of restricting financing in Black neighborhoods, has also long since been made illegal, why is it that Black home ownership lags so far behind that of White Americans?
The answer seems to be that banks and other lending institutions break the law. All across the country they "redline" Black (and Hispanic) neighborhoods and "reverse redline" them, targeting them for predatory lending practices, such as the notorious sub-prime loans. For example, CitiMortgage and its parent, CitiGroup, Inc., are being sued in a variety of jurisdictions for just this kind of illegal practice. According to a complaint by the City of Los Angeles now in the courts "Citi engaged in redlining . . . by refusing to extend mortgage credit to minority borrowers in Los Angeles on equal terms as offered to non-minority borrowers. Citi engaged in reverse redlining . . . by extending mortgage credit on predatory terms to minority borrowers in minority neighborhoods in Los Angeles on the basis of the race or ethnicity of its residents."
What can be done to fulfill the promise made by General Sherman over 150 years ago?
Citi, founded in 1812 as the City Bank of New York, is, perhaps, following the example of Georgetown and Brown universities in exploring its archives for involvement with slavery and considering ways that it might make amends to the descendants of enslaved Africans whose sufferings it may have facilitated and from whose labor it may have benefitted. However, given the practices described in the Los Angeles and similar lawsuits, and the fact that it is contesting those in court, it may be that the bank and its components, such as CitiMortgage (headquartered in a St. Louis suburb near Ferguson) need encouragement. One model ready at hand is the campaign to end the Apartheid regime in South Africa. After all, no one need bank at Citi or apply for a mortgage to CitiMortgage.
One idea might be that Citi--and other banks engaging in similar practices of redlining, reverse redlining, and benefitting from centuries of returns on investments originally made in the slave trade--might give preferential consideration and preferential terms on loan applications from descendants of Africans enslaved in this country. Another would be that those banks make significant investments in the infrastructure and schools in neighborhoods they had helped blight through their illegal loan practices. And another would be to provide college scholarships to Black students and tutorial support for those still restricted to schools offering few educational opportunities.
Those are a few suggestions. It is likely that the bankers at Citi, which has as its mission to "responsibly provide financial services that enable growth and economic progress," will be able to think of others.
Michael Holzman is a writer and historian. His most recent books are The Chains of Black America: The Hammer of the Police; The Anvil of the Schools and Pax 1934 - 1941 (a novel), forthcoming. He can be reached at: michaelholzman42@gmail.com
Eric J. Cooper is the founder and president of the National Urban Alliance for Effective Education, a nonprofit professional development organization that provides student-focused professional development, advocacy and organizational guidance to accelerate student achievement. He can be reached at e_cooper@nuatc.org. He tweets as @ECooper4556.