Four Numbers That Show the Cost of Slavery on Black Wealth Today
Nearly 160 years ago, U.S. policy makers almost started to address the wealth inequities created by slavery.
They didn’t make it very far.
At the end of the Civil War, Union General William Tecumseh Sherman promised some 4 million freed slaves land that they would own, live, and work on to build an economic future for themselves — also known as 40 acres and a mule. “Genuine freedom required some kind of economic base,” says Eric Foner, a professor emeritus of history at Columbia University, on episode 2 of The Pay Check podcast. “And in an agricultural society that meant owning land.”
Instead, after President Abraham Lincoln’s assassination, his successor, Andrew Johnson, reneged on the deal. Black Americans started their freed lives empty handed. By some estimates that land would have been worth as much as $3.1 trillion today.
The history of wealth generation in the U.S. is filled with figures like these that help us understand how White Americans have amassed almost seven times more wealth than Black Americans today.
On this week’s episode of the Pay Check, we do the math to show, not just the cost of slavery, and its legacy to Black people, but the huge gains created for White people. Here are four numbers that tell part of that story.
The racial wealth gap begins with slavery itself, which was a huge wealth generator for White Americans. The economic value of the 4 million slaves in 1860 was, on average, $1,000 per person, or about $4 billion total. That was more than all the banks, railroads and factories in the U.S. were worth at the time. In today’s dollars, that would come out to as much as $42 trillion, accounting for inflation and compounding interest.
Slaves didn’t just make slaveowners rich, they helped them get richer. “There were literally slave backed securities,” says Mehrsa Baradaran, author of The Color of Money: Black Banks and the Racial Wealth Gap. Slavery was also the engine driving the cotton economy, which enriched everyone from banks, shopkeepers, and insurers, too. Meanwhile, slaves lost out on an estimated $20.3 trillion in wages for their labor.
Just as Black people were being denied the land promised to them, the U.S. government provided another wealth-building stimulus to mostly White Americans. In 1862, the government enacted the Homestead Acts, a series of laws meant to help settle the American west. The federal government distributed 270 million acres of land mostly stolen from Native Americans to settlers. It’s estimated that 48 million Americans today are descendants of those original homesteaders.
What little wealth Black families were able to build after the Civil War was often destroyed violently. In the most egregious incident, the Tulsa massacre of 1921, mobs and police officers burned down what was then known as Black Wall Street, obliterating $200 million in homes and businesses and displacing 10,000 Black Tulsans.
Tulsa wasn’t an isolated incident. After the Civil War and well into the 20th Century, there were about 100 of these attacks, in addition to some 3,000 lynchings of Black Americans.
Owning a home is what most Americans can trace their wealth back to today. New Deal era policies created the modern mortgage, which allowed working-class Americans, for the first time, to enter the housing market.
Black families were left out in a big way because of the practice of redlining. “It did not accidentally leave out people of certain races, it did so explicitly,” says Baradaran. The government deemed predominantly Black neighborhoods “risky” based almost entirely on their racial composition, making it difficult for Black people to acquire loans.
Today 75% of White families own homes, compared to less than half of Black families.
©2021 Bloomberg L.P.