How America Widened the Racial Wealth Gap Through Slavery
Introduction
“The American people owe a special debt to black Americans,” wrote conservative reparations advocate Charles Krauthammer (2001), “There is nothing to compare with centuries of state-sponsored slavery followed by a century of state-sponsored discrimination.”
This injustice not only destroyed Black wealth in the United States but also created immensely large gains for white individuals at the same time. Even though nearly 160 years ago, the United States policymakers attempted to address the inequalities, in regards to the racial wealth gap, they were unable to make a difference.
When the Civil War ended in 1865, Union General William Tecumseh Sherman had promised several million previously slaved individuals land they would possess and cultivate in order to encourage an economic future for themselves. Simply put, almost four million freed slaves were promised a mule and 40 acres of land.
Unfortunately, Andrew Johnson, reneged on this deal when he became the 17th president of the United States as President Abraham Lincoln’s successor. Instead of obtaining 40 acres and a mule, freed slaves began their new life without the land they had been promised. This land would have been worth approximately $3.1 trillion today.
The following graph illustrates how Black Americans have about one-seventh the wealth of White individuals today.
Slavery’s Impact on Black Wealth Today
While slavery greatly damaged the wealth of Black Americans, it also increased the wealth obtained for white individuals. These next four numbers explain a significant portion of that story.
$42 Trillion
In 1860, slavery was an immensely large wealth generator for white individuals as slaves were valued at about $1,000 on average per person. In total, the economic value of slaves at the time was roughly $4 billion. That representation of wealth made slaves more valuable than all of the railroads, factories and banks in the United States combined. As such, in today’s currency, slavery was estimated to contribute almost $42 trillion to the wealth of white slaveowners, with inflation and compound interest not included.
Not only did slaves help their owner accumulate wealth, but they also helped them increase it. Meanwhile, slaves lost out on an estimated $20.3 trillion in wages for their labour, as they fueled the cotton economy that enriched everyone from businessmen, banks, and insurers.
$200 Million
The Black community’s wealth was systematically demolished after the Civil War. Nearly $200 million in properties and businesses was obliterated when the Tulsa massacre of 1921 shocked the nation, approximately displacing 10,000 Black Tulsans.
This was not an isolated attack. There were more than 100 such attacks after the Civil War, and thousands of lynchings of black Americans occurred as well, right into the 20th century.
75% of Housing
The creation of the modern mortgage reflects New Deal-era policy and is directly responsible for the rise of the American middle class and its entrance into the housing market.
The government ruled racially diverse neighbourhoods as being “highly risky” based almost entirely on their racial composition. This made it hard to acquire a loan for Black families. Today 75% of White families own homes, compared to less than half of Black families.
270 Million Acres of Land
The Homestead Acts, enacted in 1862, helped mostly White citizens build wealth by providing them with 270 million acres of land mostly stolen from Native Americans and distributed to settlers for settlement in the American West. Today, the numbers of descendants of those early homesteaders are estimated to be about 48 million individuals.
Conclusion
America has gradually broken racial barriers since the Civil War and they have made significant progress, such as electing a black president and passing the Civil Rights Act. However, there is still a long way to go as the racial gap is still prominent. This past year, particularly with the murder of George Floyd, it is important to recognize the significance of fighting for racial justice as the racial wealth gap is the legacy of American slavery.
