African Americans have never needed to subscribe to dominant myths because they were born into a harsh reality of oppression, marginalization, and prejudice. The creation of myths is a privilege of power; as African  Americans have never exercised power in the United States to any great degree, they have not been able to generate the kind of galvanic, power-enhancing myths that entrench white dominance.

Such myths, however, are seldom consciously constructed. They develop over time, serving the needs of those who come to believe in them in various different ways. As successive generations of white people are raised under these myths, they lack the wider perspective on American history necessary to understand the nature of racial oppression. In blunt terms, they have been brainwashed. People who have been brainwashed tend not to be held responsible for their beliefs.

This is not to suggest that white people are in any way unaccountable for racist actions; I simply mean to point out that such acts take place against a wider context of unconscious myth-making that has existed right from the start of American history. As such myths have been unconsciously imbibed by successive generations of white Americans, it becomes difficult for most African Americans to feel much in the way of hatred towards their oppressors.

Having spent much of my education studying African American history, this quote strikes me as quite straightforward. Baldwin is pointing out something that is obvious to minority Americans: "American history" tends to overwhelmingly be, by default, "white American history." Some mention is made of African American contributions here and there, but atrocities committed against non-whites are either minimized or omitted altogether.

This makes African Americans less prone to believe other Great American Myths, such as the ones listed: their ancestors were all freedom-loving heroes, America is the greatest country ever, and that Americans are "invincible in battle and wise in peace." African Americans are aware that most of their ancestors were slaves, so the notion that (white) American ancestors were "freedom-loving heroes" isn't swallowed as gospel. African Americans, as well as other minorities, tend to be more aware of the discrepancy between the mythological history taught in your standard history courses and the truth, so they're less likely to just believe what they're told on that front (at least, according to James Baldwin). 

When you're aware of how brainwashed your fellows are when you know better, you tend to view them as children, in a sense, who are limited in their ability to understand the world. You also understand what those limitations are where they stem from. This book was published in 1963, at the outset of the Civil Rights Movement and when American involvement in Vietnam was on the rise. Muhammed Ali would later famously refuse to be drafted into the Army to fight in Vietnam (and be convicted and stripped of his heavyweight title because of it). Among other reasons for refusing to go fight, this one stands out: "Why should they ask me to put on a uniform and go ten thousand miles from home and drop bombs and bullets on brown people in Vietnam while so-called Negro people in Louisville are treated like dogs and denied simple human rights?" This is an example of what Baldwin is talking about. 

Baldwin points out that these understanding leaves African Americans with the tendency to see most whites as victims of their own brainwashing. People don't, strictly speaking, brainwash themselves. However, we are (still) taught "American history" in such a way that it glorifies our nation and ancestors, which perpetuates the very myths Baldwin writes of here. We over, over the course of generations, slightly mad victims of our own brainwashing.