The Color of Law: A Forgotten History of How Our Government Segregated America

by Richard Rothstein

Calling itself the Peninsula Housing Association of Palo Alto, the co-op purchased a 260-acre ranch adjacent to the Stanford campus and planned to build 400 houses as well as shared recreational facilities, a shopping area, a gas station, and a restaurant on commonly owned land. But banks would not finance construction costs nor issue mortgages to the co-op or to its members without government approval, and the FHA would not insure loans to a cooperative that included African American members. The cooperative’s board of directors, including Stegner, recommended against complying with the demand that the cooperative reconstitute itself as an all-white organization, but the membership, attempting to appease the government, voted in January 1948 by a narrow 78–75 margin to compromise. The co-op proposed to include a quota system in its bylaws and deeds, promising that the proportion of African Americans in the Peninsula Housing Association would not exceed the proportion of African Americans in California’s overall population. This concession did not appease government officials, and the project stalled. Stegner and other board members resigned; soon afterward the cooperative was forced to disband because it could not obtain financing without government approval. In 1950, the association sold its land to a private developer whose FHA agreement specified that no properties be sold to African Americans. The builder then constructed individual homes for sale to whites in “Ladera...