Some people have suggested taking a vacant piece of property and building it up for colored occupancy, but there is the biggest hubbub raised when any such attempt is made. People complain: "You will ruin this whole neighborhood! You will ruin the street car line! Everything out in that neighborhood will be ruined all along the street, because if you build up a colored neighborhood in any one particular location nobody else will want to go out that way." So that I have come to the point where I say there is no solution. I can't do anything. I'd have been willing to put in a million dollars in property anywhere where there would have been a chance to get 5 per cent return on my money. There isn't any use in doing a thing that isn't economically sound. I wanted to bring this up to show that I had given it some thought, and that I am very desirous of having somebody make a suggestion that is feasible so that something can be done.
The difficulty of disposing of loans in a district inhabited by Negroes was touched upon by a loan expert from the Chicago Trust Company, which handles such loans. The trouble, he thought, centers on the character of the property and of the district, rather than on the fact that the property happened to be owned or occupied by Negroes. He said that even Negro investors object to property in such a district for the reason that it is old, little in demand, and generally a poor risk. He suggested the possibility of small mortgage bond issues with separate notes. This would save the expense of printing the bonds, which is considerable at present prices, and the investor would be afforded the same security. He also suggested having "baby" bonds printed in standard form, so that they could be simply filled in, thus saving expense.
Another real estate broker who had dealt in mortgages of South Side Negroes for a number of years declared that the average mortgage buyer seems to prefer those on new bungalows where the margin of security is less than that on property in the Negro district. Since the bungalow's cost of construction was less, the chance of revenue under adverse circumstances would be less. He maintained that a ten- or twelve-room apartment house in the Second Ward (South Side) affords a better margin of security than the ordinary cheap bungalow, and that it was therefore a question of educating mortgage buyers on the question of security. The best evidence on this, he maintained, would be the number of foreclosures. He had never had to foreclose with Negroes in the fifteen years of his experience. In that time only two contracts had been forfeited, both because of disputes between the heirs and the buyers. His firm had, however, made new contracts when illness or other adverse circumstances had halted payments, thus allowing the buyers to start over again. Means had also been taken to see that buyers paid their taxes, in which process they had required education. White people must be depended upon to buy the Negro's loans. Very few Negroes buy loans. Their tendency, he said, is to invest in a home earlier in their career than the white people, and they buy as soon as they have accumulated enough to make the initial payment.
According to a bank appraiser's opinion Negroes do not understand values, and they are often led to purchase a building at much more than its worth. In consequence the amount of loans they need is much greater than it ought to be. He had not found, however, that the Negroes allow their property to deteriorate unduly. A different situation had been found where white people lease to Negroes.
According to some real estate dealers, there are cases where houses are allowed to deteriorate, where the payment has been larger than the purchaser could carry conveniently. But "after he has taken care of the payment and has his deed, he will give attention to the improvement of the house." Others agreed that the Negro mortgage debtor is quite as reliable as a white debtor of the same class.
The president of the Cook County Real Estate Board suggested that one means of creating a market for Negro loans would be the passage of the "Home Loan Bank Bill." Its provisions are that no loan would be made in excess of $5,000, but loans would be made up to 80 per cent of the fair value of the property. Many of the loan houses, he declared, do not consider small loans, a fact confirmed by the Commission. He cited one house that will not consider a loan of less than $500,000. For this reason he suggested that this business should be handled by the building and loan associations, since they do business on a smaller margin of operating cost and he regarded them as the proper media for finding suitable markets for Negro mortgages.
Involved in the plan for funding the Negro's loans was the question of segregation. It has been maintained that not much financing could be expected from white people unless boundaries were allotted to the Negroes, so that investors in loans would know definitely what to expect. Opinions, of course, differed on segregation. It was admitted that a spreading out of the Negro population in Chicago is to be expected, that Negroes can hardly be expected to remain in the districts in which they have hitherto virtually segregated themselves. But the opinion was also given that their tendency is to remain among and near their own people.
IV. FINANCIAL RESOURCES OF NEGROES
The chief concern of investors, brokers, and real estate dealers is as to the ability of Negroes to meet obligations. There is a common belief, not shaken even by the satisfactory experiences of those who have dealt with them, that Negroes have no financial resources, and are thriftless and improvident. Inasmuch as a large part of the present housing difficulty hinges upon this point, the Commission made inquiries as to the thrift of Negroes. A group of large banks in the "Loop" and in neighborhoods of Negro residents were asked to give their experiences with Negroes as depositors and investors. In spite of contrary opinion it appears that the resources of Negroes in Chicago are astonishingly large. In the summer of 1920 in one of the South Side banks operated by white men Negroes had deposits of $750,000. One banker told of a Negro banker who sold among the Negroes a bond issue of $150,000 on an old building on Wabash Avenue, paying solicitors 10 per cent commission to make sales. The savings deposits in his bank recently had grown very materially. It was his experience that only a few Negroes buy bonds. They only inquire casually about them.
The sales manager for bonds at a large savings bank, however, told of the sale of $3,000 worth of bonds to a Negro woman who paid for them from a roll of bills of $10 to $50. Another "downtown" broker told of a Negro porter in a "Loop" hotel, who recently loaned $6,000 through his firm.