The arrest of Fred Trump during a Ku Klux Klan (KKK) rally in New York City in 1927 came to light during the 2016 election campaign, but no one grasped its full historical significance. This article sets this contentious episode within the larger history of the Klan and the racial contests that scarred life in the interwar metropolitan fringe to produce a new account of how racially segregated communities were formed. The article finds a decade-long contested process of overlapping layers, driven by debates over race and national identity; tense relationships between community groups; the political machinery of city, state and federal governments; competition between civic groups for access to services; and all set against a turbulent speculative world of interwar real estate. The article argues racially redlined communities were created by a decade-long grassroots battle fought from below just as much as they were imposed from above by political decision-makers.