The Color Tax: Resources
What does it mean to say a home was bought “on contract?”
African American families who hoped to buy into the American Dream and own a home in the mid 20th century often faced barriers caused by discriminatory lending practices and what later became known as redlining. Predatory contract buying became the only way Blacks could “buy” into the real estate market, even though, as many found out later, they were not actually homeowners with equity and the other benefits of homeownership.
Under these schemes, unsuspecting buyers made regular payments directly to the seller instead of to banks. But the terms of these contracts were often highly exploitative. These contracts often included high interest rates, excessive down payments and little or no legal protections for the buyers. In addition, many of the homes had been bought by speculators for well below the price they were later sold to African Americans. The entire scheme left many Black families susceptible to extreme exploitation and at risk of losing their homes and investments.
Read More:
The Contract Buyers League
The Contract Buyers League (CBL) was a grassroots organization formed in 1968 by residents of North Lawndale, a neighborhood on the Westside of Chicago. After Black residents in the neighborhood realized that many of them had been steered into rent to own housing schemes– and were not actually homeowners accumulating equity as they had been led to believe– they banded together to fight the exploitative practices of the predatory sellers. These contract home sales were typically sold by investment companies at prices significantly higher than white residents paid for similar properties. The Black working class leaders of the CBL were assisted by a coalition of college students, a Jesuit Seminarian named Jack Macnamara and others who raised awareness about how hundreds, if not thousands, of Black families in Chicago had been preyed upon by unscrupulous realtors, banks and other speculators. The tenants then set out to have their contracts renegotiated.
CBL activists tried a number of tactics as they sought justice. They started by confronting the sellers with the hopes of renegotiating the original contracts. When that didn’t work, they turned their sights on financial institutions that supported the realtors. Those companies included: Sureway, F&F Investment Co and Ames. In some cases, according to reports in the Chicago Tribune, CBL activists showed up at the homes of owners of these companies believing media reports would push the companies to renegotiate the inequitable terms. CBL members also staged demonstrations that mirrored the efforts of civil rights activists in the south who were fighting Jim Crow discrimination.
When these efforts didn’t work, the CBL organized what they called a “payment strike”: Hundreds of families who had been sold the rent-to-own contracts banded together and put their monthly payments in escrow rather than paying them to the contract owners.
The strike led to tense confrontations with law enforcement in the early 1970s, but largely accomplished its stated goal: hundreds of Black buyers in Chicago had their contracts renegotiated to fairer terms.
Read More:
What does it mean to say a home was bought “on contract?”
African American families who hoped to buy into the American Dream and own a home in the mid 20th century often faced barriers caused by discriminatory lending practices and what later became known as redlining. Predatory contract buying became the only way Blacks could “buy” into the real estate market, even though, as many found out later, they were not actually homeowners with equity and the other benefits of homeownership.
Under these schemes, unsuspecting buyers made regular payments directly to the seller instead of to banks. But the terms of these contracts were often highly exploitative. These contracts often included high interest rates, excessive down payments and little or no legal protections for the buyers. In addition, many of the homes had been bought by speculators for well below the price they were later sold to African Americans. The entire scheme left many Black families susceptible to extreme exploitation and at risk of losing their homes and investments.
Read More:
The Plunder of Black Wealth in Chicago
When The Color Tax was completed in 2019 it came with a report, quantifying the scope of the plunder of African Americans through land contracts.
Family Properties
The Color Tax is based on Beryl Satter’s book which has been described as “part family story and part urban history —a landmark investigation of segregation and urban decay in Chicago” — and cities across the nation.
The Women of the Contract Buyers League
The Contract Buyers League was a multi-racial group made up of men and women who were determined to unwind years of exploitation at the hands of contract sellers. But it’s possible that the group may never have gotten off the ground if not for the community’s Black women. As Rutgers historian Beryl Satter points out in The Color Tax, at a North Lawndale community meeting in the late 1960s Ruth Wells was the first person to publicly acknowledge that she was living on contract, expressing not only anger but weariness over how hard she had to work in order to keep up with her bills. Jack Macnamara, the Jesuit Seminarian who helped found the CBL describes Wells as a brave woman who never backed down from the fight. In a 2016 interview with The Chicago Reporter, Jack Macnamara recounts a confrontation with her contract seller, Moe Forman in 1967. “Ruth had to do all the talking,” he said. “She went to challenge him and she was just ruthless. He was an idiot himself. During the course of the meeting, his hand was shaking. So, she took that as a sign from God. When he wouldn’t renegotiate according to the formula, we started picketing his office.”
In addition, women like Ethel Weatherspoon, Emma May and many others went door to door to recruit other contract buyers to join the effort, organized phone drives and directly confronted the contract sellers in their offices.
Who was Mark Satter?
The history of the fight against contract selling in Chicago is a story of “allyship.” Working class Black Chicagoans came together with Catholic seminarians, Jewish activists, white college students, and the local chapter of the Black Panther Party, among others, to fight predatory speculators. Prominent among these allies was Mark J. Satter, a trailblazing civil rights attorney who fought contract buying and its pernicious effects on Black families. Satter was born in 1916 on Chicago’s West Side. The child of working-class Jewish immigrants, he came of age in a family and community that struggled during the Great Depression. This experience left him with a lasting sense of responsibility for the economically impoverished.
Starting in the late 1950s, Satter embarked on a one-man crusade against exploitative contact sellers. In speeches, newspaper articles, and radio broadcasts, he attacked banks for refusing loans to qualified Black buyers while happily granting mortgages to exploitative contract sellers. He called for the creation of a loan fund of $50 million to lend to African Americans. This would “result in an immediate return to the Negro community of the fantastic sums now being drained” by speculators, he argued. He asked the state of Illinois to revoke the license of any broker who “engages in the consistent practice of speculation.” He attacked the fundamental injustice of a system in which the price of a property was based on the race of the buyer.
Satter fought other predatory debt schemes as well, including wage garnishment. Merchants lured working class people to buy overpriced, high interest items on credit, and then garnished their wages when they missed their payments. Some continued collecting their customers’ wages long after the original debt had been repaid. Satter demanded the outlawing of wage garnishment, because it allowed one person to labor, and another to collect that person’s wages.
In 1965, the Nation of Islam’s newspaper Muhammad Speaks lauded Satter as the “Clarence Darrow of the Bankrupt.” But as another columnist noted, Satter’s position as “the patron saint of Chicago’s poor” meant that he had “more poor clients than dollars.” Because Satter publicized attorneys’ role in facilitating predatory contract selling, he was ostracized by his fellow lawyers. The conservative press smeared him as a slumlord because he owned several properties, one of which was fined $25 for a defective plumbing fixture. Meanwhile he struggled to provide for his family and to maintain his properties.
At the age of sixteen, Satter had been diagnosed with a dangerous heart murder. In 1965, when he was 49 years old, he underwent open heart surgery. He died a few weeks later, on July 12, 1965. The Chicago Daily News obituary summed up his fighting spirit. “Satter was the kind of man who made enemies – big and comfortable ones, not poor and weak ones. He probably never made a lot of money out of law, but he brought a special dignity to the profession.”
Written by Beryl Satter. For more on Mark J. Satter’s life and struggles, see her book Family Properties: Race, Real Estate, and the Exploitation of Black Urban America, from which all above quotes are taken.
The Contract Sellers
Moe Forman
The Chicago Tribune wrote in 1973: “If there has been a Mr. Big in Chicago’s West Side slum operation, it has been Moe Forman. Forman apparently used his intimate knowledge of Lawndale and its financial institutions to help build the biggest individual slum empire in the city’s history.”
Lou Wolf
Al Berland
Childhood friend of Lou Wolf. Berland, Wolf, Forman and others —controlled up to two thousand buildings in Lawndale
Lou Fushanis
“Fushanis, a former used car salesman, a tavern owner, and a restaurant owner, turned his attention to real estate, opening the Friendly Loan Corporation, and, along with Berland and Wolf, was buying up properties in Lawndale in the 1950s,” writes Beryl Satter in her groundbreaking book, Family Properties.
Contract Selling in Other American Cities
While Chicago in many ways was the epicenter of contract selling in the US during the middle of the 20th century, it wasn’t the only place this practice thrived. Click the resources below for more information about the experiences of African Americans living under the stranglehold of contract selling in other Northern locales.
Land Contracts In the 21st Century
The contract buying that was rampant in the mid 20th century in Chicago has reemerged into contemporary real estate transactions in cities across the country.