Coates argued that debt peonage and sharecropping created unfair disadvantages to submit African American farmers to the control of the landowners, who profited from the cheap labor. For the African American farmers living in debt peonage, their employers decided whether the farmers were in debt or not and often deemed they were in debt. Furthermore, any farmer “refusing to work meant arrest under vagrancy laws and forced labor under the state’s penal system” (Coates). Thus, the landowners trapped African American farmers into a cycle of debt and forced labor. Additionally, in the practice of sharecropping, the landowners benefited from the income inequality that occurred when splitting profits. For example, “if the cotton was selling for 50 cents a pound, the Ross family might get 15 cents, or only 5” (Coates). With debt peonage and sharecropping, the landowners kept their labor costs low and enjoyed a higher profit margin from the crops they …show more content…
“In 1934, Congress created the Federal Housing Administration (FHA),” which insured private mortgages. When the federal government backed the loaners’ investments on house mortgages, this caused “a drop in interest rates and a decline in the size of the down payment required to buy a house” (Coates). As stated in lecture, while the federal government could cover some bad bets, a majority of loans made had to be good to outweigh the bad ones. Consequently, to calculate the risk of home buyers defaulting on their loans, the “FHA adopted a system of maps that rated neighborhoods according to their perceived stability” (Coates). On the maps, the green areas with an “A” rating marked the neighborhoods that were “excellent for [FHA] insurance” and “lacked a single foreigner or Negro” (Coates). In contrast, the red areas with a “D” rating outlined the neighborhoods that were ineligible for FHA backing since African Americans lived in those areas (Coates). Coates argues that even though these discriminatory practices do not exist today, the African American community still suffers economically from those consequences. For example, “the income gap between black and white households is roughly the same today as it was in 1970.” As mentioned in lecture, the segregation of the 1930s assisted in forming the ghettos of