Chicago on the Make

by Andrew J. Diamond

  Even if its founder and boss was not alive to see it, Dearborn Park suggested that the Daley machine seemed to have finally achieved what it had been aspiring towards since the late 1950s—a system that produced patronage capital without any of the bothersome politics that usually comes with it. Dearborn Park would bring in a handsome sum in annual tax revenues for the city, and some serious injustices had been committed in its development: minority-owned contractors had been left out, and, given the project’s design, it was difficult to deny the allegations made by various black community groups that it was, in the words of the Chicago Defender, “a white-only fortress to protect the financial district from blacks.”41 And yet the city was in a position to collect on the financial advantages of the project without having to deal with any of this negative political fallout. In fact, the fallout was not “political” per se because the project was a seemingly private venture, and the notion of private accountability had yet to be incorporated into the idioms and tactics of oppositional politics in the neoliberal city.

  While, as this chapter has shown, the divisive tendencies of the politics of identity played an important role in undercutting the reformist challenges of the late 1960s, the story would be incomplete without a consideration of how the new neoliberal political order of the global city disoriented the forces of reform and transformed the battleground of political confrontation. Suggestive in this sense was a 1978 Defender editorial on the Dearborn Park issue that began by asking, “What is the obligation of the private sector toward solving racial inequality? Is financial profit the sole criterion for determining action or inaction? Should banks and independent retailers and manufacturers be required to solve the problems they helped to create?” In the text that followed, not a single elected or appointed city official was named as accountable, and the only political response to be recommended, if the “bankers, retailers, and manufacturers” did not live up to their “sense of social responsibility,” was a consumer boycott.42 The role of this privately driven development in reinforcing racial inequalities thus represented an early example of a phenomenon that sociologist Lawrence Bobo has referred to as “laissez-faire racism”: a system in which “modern racial inequality relies on the market and informal racial bias to re-create and in some instances sharply worsen, structured racial inequality.”43 The incoherent and ultimately weak response of the black community in the face of this situation was symptomatic of the power of the neoliberal order to depoliticize the very forces that were reinforcing racial and social inequalities in the city.44

  Moreover, since Dearborn Park was not financed with federal funds, opposition could not even rally around the affirmative action requirements established by Lyndon B. Johnson’s Executive Order No. 11246.45 Such mobilizations for greater minority representation in the city’s construction workforce had occurred in 1969 and 1970, when the Coalition of United Community Action (CUCA), an umbrella organization including Jesse Jackson’s Operation Breadbasket and some sixty other black community groups, forced work stoppages at several Loop construction sites to demand more blacks be admitted into the overwhelmingly white Chicago Building Trades unions. Marshalling the brawn of the three most fearsome street gangs—the Vice Lords, Blackstone Rangers, and Black Gangster Disciples—CUCA managed to shut down several sites, forcing the city to agree to the 1970 Chicago Plan to integrate the city’s construction industry.46 Yet, as the Dearborn Park controversy revealed, the solution was far from satisfactory, and with an increasing number of smaller firms getting into the construction business—contractors who did not do enough government-sponsored business to be covered by affirmative action requirements—it would become increasingly harder for blacks to press their claims for more employment opportunities. Moreover, with the pullback of federal funds from the construction market, minority-owned businesses were in the process of losing their legal basis for demanding their rightful share of the pie.

  Although Daley began to lose support in minority communities around this time, the persisting lack of financial clout in black and Latino Chicago by the early 1970s prevented this rancor from ever loosening Daley’s hold on power. The presence of strong minority-owned businesses in black, Mexican, and Puerto Rican communities could have helped bring the kind of employment opportunities, political capital, and leadership that would offer an alternative to the meager patronage resources the Daley machine was funneling to them to buy out just enough support. But during the 1970s, Mexican and Puerto Rican Chicago had not yet arrived, and black Chicago was moving in the other direction, with some of its older former centers of commercial activity turning into ghost towns and new ones slow to develop. Revolution was for radicals; bread and butter drove politics in the Windy City. And all the investment capital that was flowing into Chicago was not buttering much bread outside the Loop and its surrounding middle-class residential neighborhoods. Few working-class Chicagoans were qualified for the highly skilled jobs in the rapidly growing FIRE sectors, and while there was plenty to go around in the booming construction sector, the machine and the unions had already fixed the game so as to exclude those most in need of the work. By the time Daley died of a heart attack at the age of 74, the patronage model of machine politics he had championed for more than two decades seemed to have become as natural a feature of the world around him as the air he breathed. There was still work to be done in order to keep the city clean, safe, and ready for business, but the corporations were driving things now, and why would anyone raise any objections to what they were doing for the city?

  Ironically, it was at this very moment, when its opposition seemed at its weakest, that the traditional machine system finally began to fall apart. Although Daley had coasted to victories in his final two mayoral elections in 1971 and 1975, his final half-decade in office was ridden with headaches, defeats and scandals. First, due to the 1969 ruling of a federal court in the Gautreaux case, which found the Chicago Housing Authority guilty of discriminating against blacks for decades in the location of housing projects, the city, it seemed, would now have to abandon its practice of building low-income housing in African American neighborhoods. Then, another federal court decision threw a wrench into the cogs of the machine when the U.S. Supreme Court upheld a lower court’s ruling in the Shakman case that average city workers could not be fired based on their political affiliations. Beginning around this time, moreover, a series of corruption scandals revealed in sensational fashion the extent to which the machine had been misallocating and at times stealing public funds. In 1972 an investigation by the Chicago Tribune into the city’s use of its $53 million antipoverty grant from the federal government’s Model Cities program found that nearly half of the money was being spent on bogus administrative costs that lined the pockets of machine cronies. The following year, a story broke in the local press proving that the city had offered a contract worth nearly $3 million dollars to an Evanston insurance firm after Daley’s son John had joined it, and then in 1974 Daley’s longtime right-hand man on the city council, Tom Keane, was convicted of using his political influence to purchase parcels of tax-delinquent land and then sell them back to the city at above-market prices. The police department was not spared from the blowup. In 1973, Police Superintendent Conlisk announced his resignation amidst two sets of allegations: the first involving a number of his officers shaking down tavern owners and the second, and more serious, revolving around complaints that Chicago policemen were guilty of a pattern of physical and verbal abuse against blacks. To make matters worse, this latter criticism came from former Black Belt machine loyalist Ralph Metcalfe, who, after winning William Dawson’s vacated seat in the U.S. Congress, began distancing himself from Daley. Each day seemed to bring a new scandal. And yet, through it all, deals kept getting made, buildings kept getting built, and Daley kept getting elected.

  Although Richard J. Daley would have felt out of his element in discussions about telecommunications capacities, subcontracting, or the vagaries of global financial markets, his pa
tronage instincts told him that what was good for John Hancock, Chase, and Sears was good for Chicago, and what was good for Chicago was good for him and his friends. Daley gazed at the conservative backlash he had helped create and understood that it meant that the well of federal government resources was about to run dry, especially after Democrats had given up the White House. And he knew from experience that Chicagoans, like Americans elsewhere, were getting increasingly irritable about paying their taxes; in 1962, he had seen voters reject his $66 million city bond issue because they did not want to pay higher property taxes to fund urban renewal and improve the city’s sewer system. The new sponsors of tax revenues and patronage capital were the transnational corporations whose headquarters were bursting into the skyline, and his early understanding of the fact that he needed to do all in his power to make sure they did not leave his proud city once again made Daley the right man for his time and place. He had been unwittingly greasing the wheels of neoliberalization every step of the way—turning over the job of charting the city’s future to a cabal of developers and businessmen in the 1950s, working tirelessly to create an urban environment and business infrastructure that would attract private capital downtown while many of the city’s working-class neighborhoods decayed throughout the 1960s, and using generous public subsidies to keep that capital within the Loop in the early 1970s. Municipal governance during these decades had become progressively unhinged from any notion of the public interest and increasingly aligned with the interests of corporate capital, which, for Daley, were synonymous with the interests of all Chicagoans. Daley’s unwitting genius not only told him what needed to be done but also how to get it done in the new age of globalization. Back in the 1950s when Daley was sinking tax dollars into new technologies to sweep the streets and sidewalks of the dingy, downtrodden Loop, he seemed somewhat compulsive; now, it all seemed to make perfect sense. Daley’s patronage instincts led him to the idea that attracting private capital was the new game to win, and his near-obsessive concern about Chicago’s image gave him the right idea of how to win it. In an age when the telecommunications industry was rapidly making place, in a geographical sense, less important, it was necessary for cities to brand themselves as good places to do business, and part of this branding involved projecting to the world an image of a city on the rise—a city that people were proud to be part of. And a city on the rise was certainly not a city in the throes of fiscal crisis, which Chicago, in some sense, really was in the 1970s, even if nobody seemed to know it. And nobody knew it, Chicago journalist David Bernstein has revealed, because Daley’s finance people were using a number of “budgetary gimmicks” to hide mounting deficits. They had the city borrowing to pay off past debts and then using the new funds for operating expenses rather than for debt repayment, all in the name of keeping up the appearance of financial health.47 Yet again, Daley was on the cutting edge—this time of the debt-financed modus operandi and accounting sophistry of the future.

  But as gifted as Daley was at making his city a highly competitive player in the new global economy, other factors that had little to do with the machine conspired in Chicago’s favor in the 1970s. An outgrowth of the city’s historical role as the financial, marketing, and insurance center of the Midwest agro-industrial complex was its development of long-standing markets in agricultural commodities futures—namely, the Chicago Board of Trade (CBOT) and the Chicago Mercantile Exchange (known as the Merc, or CME).48 For farmers worried about fluctuating crop prices, futures contracts traded on these markets offered a guarantee that they could sell their harvest at a fixed price within a designated window of time in the future; these futures contracts were also attractive to speculators gambling on commodity price changes. For most of the 1960s, Chicago’s commodities exchanges experienced some difficulties as a result of stock market declines and a lack of investor interest in contracts for commodities like pork bellies, Idaho potatoes, lumber, and shrimp. But things changed dramatically in 1969, when commodity trading had its most active year in the history of the exchanges, and then again in 1972, when the CME introduced the first futures market in foreign currencies. The idea was the brainchild of none other than Milton Friedman, a founding member of the famed Chicago School of economics at the University of Chicago, which, in the early 1970s, was engaged in replacing Keynesianism with monetarism—a theory that correlated unemployment and inflation rates to changes in the supply of money. Monetary policy, Friedman argued, could have prevented the Great Depression, and it was now the only prudent way to ensure economic growth while stabilizing inflation. Around the same time he was educating the famed “Chicago Boys” on how to bring such free market magic to Chile, Friedman accepted a consulting deal from the CME to investigate the possibility of doing business in foreign currency futures. Having determined that the end of the Bretton Woods system in 1971 would bring about an enormous need for a futures market in which increasingly volatile currency valuations could be hedged so as to minimize risk, Friedman recommended that the CME take the lead in establishing this exchange in Chicago.49 The CME took his advice to the bank, extending the idea to gold futures in 1974, Treasury bills in 1976, and Standard & Poor’s stock index futures in 1982. Meanwhile, the CBOT was carving out its own niche in protecting investors against increasingly sharp fluctuations in interest rates by offering futures on mortgage-backed certificates in 1975 and U.S. Treasury bonds in 1977.

  The combined effect of these exchanges on Chicago’s financial sector was staggering. In 1972, for example, the CME recorded $66.1 billion worth of transactions and the CBOT tallied $123 billion worth, and each day the two exchanges combined made margin deposits of well over $300 million into Chicago banks. “Can we fully evaluate what this means for Chicago?” asked Leo Melamed, chairman of the CME, before an audience of Chicago management professionals in 1973.50 But the answer was not forthcoming—in part because nobody really knew the answer, and in part because most sensed that the truth behind the answer was hardly comforting. The previous year, the first one after the closing of the stockyards, 48 million head of cattle worth some $20 billion were exchanged on the CME with scarcely a single cow turd dropping on Chicago soil. In the 1970s, sublime sums of money began traveling to Chicago from all over the world as figures and codes transmitted through telecommunications pipelines into the control centers of skyscrapers, but like the millions of phantom cattle being herded through the city, all this wealth never left a trace in large swaths of the black South and West Sides. Meanwhile, as Milton Friedman sat in his office in Hyde Park concocting the ideological justifications that would naturalize all of this, he was seldom out of earshot of the wailing sirens in the neighboring Woodlawn ghetto, just across the Midway, where unemployment and homicide rates were rising much faster than the stock indexes.

  THE BLACK MESSIAH IN “BEIRUT ON THE LAKE”

  Some very odd things were happening in Chicago in March 1983. In a city that had not elected a Republican mayor for fifty-six years, in a city in which Republicans occupied a starring role, along with Jews and blacks as the butt of barroom jokes in some white working-class precincts, Democrats were volunteering in droves to work in the Republican mayoral campaign. The first sure sign that Chicago had been turned upside-down came during the annual St. Patrick’s Day parade, an event that traditionally served as a ritualistic reaffirmation of the bonds of solidarity and loyalty that held the Democratic Party together. Each year the city colored the Chicago River fluorescent green with gallons of dye, and the machine’s leading figures paraded by the party’s rank and file wearing green ribbons and leprechaun hats; in election years, as this one was, the parade took on an even greater significance, with the party using the occasion to showcase its ticket. But 1983 was a year that broke with precedent in a number of ways. First, the Democratic Party’s mayoral candidate, Harold Washington, who had recently prevailed in a hard-fought primary, did not march at the front of the procession, as was tradition, and when he arrived before the heart of the crowd, one heard
not the usual enthusiastic applause but an intermingling of hushed tones and deflated, seemingly forced cheers. Then, in a truly strange state of affairs, the same crowd greeted the Republican mayoral candidate, Bernard Epton—an anti-machine reformer, a rich guy, a Jew, a resident of Hyde Park, a graduate of the University of Chicago, a composite of all of the qualities that should have rankled the sensibilities of South Side Irish machine loyalists—with a rousing show of support. In one episode later reported in the Chicago Tribune, a woman called out to Epton and when he turned to look, she opened her coat to reveal a bright green shirt emblazoned with the phrase, “Vote Right, Vote White.”51

  What had upset the natural order in Chicago was the fact that a black man born and raised in Bronzeville—a former member of the Illinois House and Senate who had managed to get himself elected to the U.S. House of Representatives in 1981—was, in all likelihood, going to be elected Chicago’s next mayor. Normally, the Democratic primary was the mayoral election, with the general election a mere technicality, and Harold Washington began preparing his transition team soon after his startling victory in a three-way race against the incumbent mayor Jane Byrne and the future mayor Richard M. Daley. The Chicago political scene had already been shaken up in 1979 when Byrne had upset Richard J. Daley’s successor, Michael Bilandic, to become Chicago’s first female mayor and the first in any major U.S. city. This was a tremendous feat in an era still touched by the contentious feminist challenges of the 1960s and 1970s; Illinois, it should be pointed out, was one of the fifteen states that had refused to ratify the Equal Rights Amendment. Yet Byrne’s gender was never really a major issue. By contrast, faced with the possibility of a black man in the top office at City Hall, white Chicago, with the exception of the Lakefront liberal wards around Hyde Park, became gripped by racist hysteria. Addressing a Byrne rally on the Northwest Side days before the primary, Edward Vrdolyak—Tenth Ward alderman, chairman of the Democratic Central Committee, and close advisor to Jane Byrne—summed it up in one of the more notorious public expressions of unabashed racism outside the Jim Crow South: “A vote for Daley is a vote for Washington. It’s a two-person race. It would be the worst day in the history of Chicago if your candidate . . . was not elected. It’s a racial thing. Don’t kid yourself. I’m calling on you to save your city, to save your precinct. We’re fighting to keep the city the way it is.”52 Because of Vrdolyak’s stature, this was big news, but Vrdolyak and many Chicagoans seemed puzzled when his remarks became material for political scandal; for weeks such expressions had been circulating around street corners, taverns, precinct headquarters, and kitchen tables in much of white Chicago—especially on the city’s Northwest and Southwest Sides.53