Freedom to Discriminate

How the Nation's Realtors Created Housing Segregation and the Conservative Vision of American Freedom

Gene Slater

• Publisher: Heyday
• Year: 2021
• ISBN:
  9781597145442
• Topic: Social Sciences
• Subtopic: Discrimination & Race Relations
• Index: Social Sciences

A landmark history told with supreme narrative skill, Freedom to Discriminate uncovers realtors' definitive role in segregating America and shaping modern conservative thought. Gene Slater follows this story from inside the realtor profession, drawing on many industry documents that have remained unexamined until now. His book traces the increasingly aggressive ways realtors justified their practices, how they successfully weaponized the word "freedom" for their cause, and how conservative politicians have drawn directly from realtors' rhetoric for the past several decades. Much of this story takes place in California, and Slater demonstrates why one of the very first all-white neighborhoods was in Berkeley, and why the state was the perfect place for Ronald Reagan's political ascension. The hinge point in this history is Proposition 14, a largely forgotten but monumentally important 1964 ballot initiative. Created and promoted by California realtors, the proposition sought to uphold housing discrimination permanently in the state's constitution, and a vast majority of Californians voted for it. This vote had explosive consequences—ones that still inform our deepest political divisions today—and a true reckoning with the history of American racism requires a closer look at the events leading up to it. Freedom to Discriminate shatters preconceptions about American segregation, and it connects many seemingly disparate aspects of the nation's history in a novel and galvanizing way.

Part One.

Limiting Individual Freedom for the Common Good: Early 1900s–Early 1920s

To grasp why in 1961 the realtors’ national president declared “forced” housing “the greatest challenge facing America”¹—and why for realtors this was not hyperbole but simple truth—requires understanding the physical, economic, and racial world realtors had helped create. America’s realtors in the 1960s were agents not only of individual clients but of the system of real estate their predecessors established long before.

The beliefs that drove the realtor movement were set at the very beginning. These deep-seated assumptions—about organizing real estate, rooting out fraud, and creating segregation, all in the name of the public good—remained at the heart of all their views, and gave their vision of freedom in the 1960s its distinctiveness and effectiveness. Realtors, over time, changed the language they used to defend these deep values, but the purpose of their arguments remained the same.

Later realtors could talk about, and ardently believe in, “freedom” in ways that directly contradicted their prior actions—could sanctify owner rights after decades of using racial covenants to limit them—because freedom had never been a core value of realtors to begin with.

The realtor movement, from the beginning, sought to limit personal liberty in real estate for the common good. “The idea that every man’s house is his castle is too deep-rooted in our institutions,” it was lamented in the National Real Estate Journal in 1910. “[W]e have carried this abhorrence of interference with personal liberty to an unwise extreme.”² Precisely because freedom had not been something realtors had spoken about or defended, Spike Wilson and other 1960s leaders could define freedom in the way that best suited them: not as the individual freedom to do what one wanted, but as the freedom to maintain the social traditions and order that realtors had long established.

At the heart of early realtor values was the fact that early realtors were progressive reformers. Citing Teddy Roosevelt, they ardently applied progressivism to real estate. No one embodied these progressive values more than William May Garland, who helped found the Los Angeles Realty Board, became the only man to serve twice as the realtors’ national president, and led realtor efforts for the federal government in World War I. Similarly embodying the idea of private business for the public good, the two leading realtors who created the first racially restricted developments, Duncan McDuffie of Berkeley and J. C. Nichols of Kansas City, were nationally lionized champions of city planning. Civic awards, mountain peaks, and public fountains are still named after these leading realtors. Each sought to limit “selfish individualism” in real estate by restricting the freedom of brokers, owners, and buyers. Organized segregation began not in the name of individual freedom but in the name of civic progress and the good of the community.

1.

Progressive Reformers of Real Estate

In public estimation, the representations of real estate men must be taken as the fisherman. [Given the] misleading advertising of property, one sometimes wonders how the little truth crept in among the untruths.

Speaker at a real estate congress, 1894¹

If a man under a cloud or down and out cannot go into the real estate business, where in God’s name can he go?

U.S. Supreme Court, 1922²

What could be done about the lack of trust in real estate and real estate men? This was the problem William May Garland wanted to solve when he invited a handful of Los Angeles’s other leading brokers to his downtown office on a spring day in 1903. The gathering in Garland’s office that would change the course of real estate in Los Angeles and California was unusual in several respects. These men were rivals, competing head-to-head for clients and properties. They prided themselves on their independence, their freedom to do business as they wanted. Nor was there a deal to discuss. Garland, a famously busy broker and considered “a human dynamo,”³ did not need any folders on the table.

What Garland wanted to address was the real estate business itself. However honest each of these men strove to be, real estate man was a synonym for shark, shyster, scoundrel. One need only glance at recent headlines: a broker attempting extortion, another proffering fictitious checks, yet another forging the signature of a federal land agent, others suing each other over disputed commissions. The most glaring involved women and children. On a downtown sidewalk, a respected woman surgeon slapped a broker’s face for trying to defraud her of the title to a lot. Another broker fraudulently transferred the property of orphaned children. A third was sentenced to ten years in San Quentin for “cheating a poor woman out of all the money she had.”⁴ With such stories so commonplace, how could the public trust any real estate man?

The problem of fraud was endemic. The Wild West, realtors later called the real estate business of the early 1900s.⁵ In a world of almost perfect freedom, virtually no rules, and unlimited competition, anyone could call himself a broker. No “integrity, capital, experience or education” was required,⁶ only a willingness to hustle. Commissions were negotiable, and one dealer often undercut another at the last moment. Brokers did not disclose to their client when they were buying the property for themselves. Many worked on a net basis; the lower the asking price the broker convinced the seller to set, the fatter the broker’s commission. On the bustling streets outside Garland’s office, salesmen solicited like streetwalkers, asking newcomers and passers-by if they wanted a homesite at a bargain. With little premium on the truth, deception was often the norm.

Nowhere was fraud more widespread than in Los Angeles, the fastest-growing city in the country and one built on growth itself, where real estate hustlers and promoters descended on waves of newcomers “like flies upon a bowl of sugar.”⁷ Townsites had been marketed as fictitious harbors, and oranges “stuck on Joshua trees in a desert tract advertised as the only region in Southern California in which the orange was indigenous.”⁸ Subdividers sold staked-out lots with little flags to mark streets that might never materialize. Even the most established subdividers, some of Los Angeles’s biggest businessmen, had just opened a Hollywood subdivision complete with hotel, bank, and lavish improvements by planting Sold signs on almost half the lots, none of which had been sold, and dumping building materials to suggest that eager purchasers had already begun construction.⁹

In a business where all these practices were perfectly legal, with no standards, codes of ethics, or fiduciary obligations, brokers, buyers, and sellers could pursue their individual self-interest in almost any way they wanted. The commodity in short supply in real estate at the beginning of the twentieth century was not freedom but trust.

William May Garland

The erosion of public trust affected each of the men Garland had invited, no matter how reputable they were. In fact, the more concerned they were with their reputation and integrity, the more affected they were. “Petty jealousies and cut-throat competition with real estate men in general disrepute abounded,” Garland later said. No one was more concerned about his reputation than Garland. He had come to real estate not as a salesman or promoter but as an auditor. The son of a minister from a small island off the coast of Maine, Garland had worked for a bank in Chicago before coming to Los Angeles in 1890 as auditor of an early cable car company. Because such companies made their money less from the fare box than by buying and subdividing the hilltops their cable cars made accessible, Garland became an expert on lot sales. He soon established his own real estate firm, acting as principal sales agent for Henry Huntington’s Pacific Electric Railway, which developed streetcar lines and property throughout the city.¹⁰ One of the leading brokers in the city, he knew that his only real asset, the source of all his future business, was his reputation. Yet given the business he operated in, how could he or any other leading brokers protect their reputations?

This issue of trust was more than personal; it went to the public’s confidence in real estate itself. Garland was best known to the general public for his red-and-white semaphore advertising signs predicting (accurately, it turned out) Los Angeles’s population to triple by the end of the decade, from 100,000 to 300,000.¹¹ The signs read, “The Lesson: Buy Los Angeles Realty.”¹² The climate of fraud and deceit threatened the growth and property sales these men’s business depended on.

But how could the men around this table create trust in real estate? “The most dastardly, outrageous frauds were frequently perpetrated, and no effort was made by the better class of real estate men to stop them,”¹³ Garland chided. How could they change the real estate business itself?

For if Garland had asked them here together, it was not to share complaints. Practical as well as farsighted, Garland was known for taking on responsibilities. His stately face, hair carefully parted down the middle, and impeccable dress and demeanor belied his energy. At thirty-seven, about the same age as the others, he already displayed the combination of pragmatism and idealistic vision, flair for public relations, organizational talent, and belief in cooperation that would later enable him to lead Los Angeles’s successful effort to obtain and conduct the 1932 Olympic Games. Garland was fond of quoting Edmund Burke, British statesman-philosopher and, like Garland, a reformer committed to social stability: “Men cannot act with effect unless they act in concert; they cannot act in concert unless they act with confidence; they cannot act with confidence unless they are bound together by common opinions, common affections and common interests.”¹⁴ As Garland put it, “zeal, perseverance, cooperation and optimism,” if supported by the pride of community accomplishment, could transform the city.¹⁵

As the streetcars rattled by down below—the very sound to these men of the city’s bustling growth and the opportunities in its real estate—Garland’s challenge reverberated in the room. If the most established brokers wanted to turn the public trust to their advantage and to that of the city as a whole, how much were they willing to change the way they worked? In an industry known for fierce competition, could they find an ongoing way to cooperate?

Garland turned to Herbert Burdett, a newcomer to Los Angeles he had invited to the meeting. Burdett had run local newspapers in mining towns in Colorado before becoming a publicist for the real estate board in Denver, one of the first in the country.¹⁶ A dark-haired, mustachioed, sharp-featured, sharp-tongued man who hoped to be, and became, the nascent LA board’s secretary, Burdett explained not the details, which board members in each city would need to work out, but the concept of a real estate board.

A local board of any type would require major changes in the way its members practiced real estate. Because all members would have to be governed by the same rules of conduct, they would have to give up something all brokers prized—their independence, their freedom to do business as they pleased. Otherwise, any board would fail. Several early boards elsewhere, Burdett had to admit, had already sputtered and fallen apart.

In the lore of California realtors, the meeting in Garland’s office became legendary. The Los Angeles Realty Board (LARB) that these men founded a few weeks later ultimately became the largest in the country. ...