Carrie Cunningham

Author of Meaning Train: Essays on Religion and Politics

A promise of prosperity: good American leaders and the racial wealth gap

The wealth gap between African Americans and whites has been a distressing element of American life since the end of slavery. African Americans have been afflicted with debt and a segregated economy since the post-Reconstruction era to the advent of ghettos in the 1960s to today.

One aspect that has helped African Americans has been the creation of African American banks. Though they have been fraught with slow progress in creating capital, they nonetheless offer hope for social and economic justice. American leaders from Booker T. Washington and W.E.B DuBois to Martin King, Jr. and Malcolm X to Joe Biden have and will labor to make them a critical component of African American economic success and vitality.

Banks are a central part of Americans’ lives. With savings and credit, citizens have built economic security for every part of their existence. From education to home buying and to garnering property and creating businesses, banks are a conduit to economic prosperity. The American predicament is that African Americans have been marginalized in the American economic experiment. African American banks struggle to compete and have to have more capital to flourish.

One solution is for African Americans to strive for economic self-determination. By collecting more resources into African American banks, African Americans can rise up from economic subjugation and savor economic accomplishment. Government, which has often been skewed to assist whites, can help African American banks.

African American banking advocates, who are suffused with good intentions and a care for the plight of African American people, have been met with struggle and pride. In her book, “The Color of Money,” Mehresa Baradaran delineates the trajectory of African American banks from the end of the 19th century to today. Baradaran, recently chosen as an economic adviser for President Joe Biden, speaks to the mixed success of African American banks, yet she adamantly thinks they should be conserved and preserved.

Booker T. Washington and W.E.B. DuBois labored for African American economic freedom in a post-Reconstruction era stained by a Jim Crow economy in which newly freed slaves were relegated to working as convict leasing labor or sharecroppers. While they had divergent views of how to advance African Americans, they both adhered to the value of African American banks. Similarly, Martin Luther King, Jr. and Malcolm X fought for racial and economic justice in a period of staggering poverty and lack of opportunity in northern ghettos. Like Washington and DuBois, they too believed in different ways to address racial oppression, and they too advocated for the creation of African American banks. The following is a summary of the periods these great leaders lived in and an explanation of their messages of how to achieve African American economic autonomy.   

Despite hopes of Reconstruction creating civil and economic freedom for newly-freed slaves, the human rights project was eventually dashed. White supremacists regained their leadership of the South. The precious Reconstruction Constitutional amendments guaranteeing freedom and suffrage were extinguished. Black Codes denied political rights and economic opportunity.

In economic terms, African Americans were mired in de facto slavery. Convict leasing labor ordered African Americans to pick cotton under the threat of prison or violence. Moreover, sharecropping made a situation of debt peonage. Sharecroppers bought land and tools for farming and when they sold the resulting crop to white landlords, they did not make a profit and were inundated in debt.

Washington was for a segregated South and thought African Americans could rise via hard work and thrift. He believed in a gospel of Christian prosperity that promulgated free market capitalism, including banks, and the idea of pulling oneself up by the bootstraps. He particularly supported the North Carolina 1907 Mechanics and Farmers Bank. When African Americans controlled their economic lives, they could achieve equality and defeat Jim Crow, he thought.

DuBois had a different approach for black progress. He was for integration and wanted African Americans to obtain their legal rights as outlined in the Constitution. He created the National Association for the Advancement of Colored People to achieve these goals.

He concurred with Washington about the creation of African American banks even though he thought they were not a whole panacea for assuaging the African American struggle. He wrote a book about the accomplishments of African American businesses and banks. He urged African Americans to keep investing in African American enterprises even when they faltered.

The backdrop to King’s and Malcom X’s toil was the economic privation of the ghettos. African Americans in the ghettos were overwhelmed with crippling poverty, cash-strapped and substandard schools, a dearth of affordable housing and an absence of capital for starting businesses. The glaring reason for the economic deprivation was the lack of access to bank credit markets. Because of a lack of wealth, borrowing for African Americans was onerous. When African Americans could not pay for loans due to factors like job losses and low wages, banks could not make profits and interest rates increased exorbitantly. The Fair Credit Reporting Act of 1970 outlawed race and gender discrimination in lending, but lenders circumvented it by using zip codes to deny loans.

All this meant that African Americans were stymied from achieving the American Dream. The inability to buy homes via mortgages was particularly hard. Homes can be a great source of capital  accretion that can be passed down through generations.

King is an American hero. He stood for nonviolent civil disobedience and spurred the creation of the 1964 Civil Rights Act and the 1965 Voting Rights Act which removed Jim Crow segregation and guaranteed suffrage for African Americans respectively. We should all exhibit good gratitude for his great moral deeds.

Once legal rights had been attained, King expanded his message to include economic justice. He wanted a poor people’s campaign for African American and whites, and he floated the idea of an economic power march. In his last good speech, I have been to the mountaintop, he called for a bank-in movement. The concept was for African Americans to place their assets in African American banks.

Malcom X is a compelling  figure in comprehending the latter half of the civil rights movement in which the concept of black power was ascendant. Malcom X saw himself as the leader of the masses in ghettos. He was familiar with the adversity of crime, unemployment and poverty. Like Marcus Garvey, he was against integration and did not want to deal with whites or wealthy African Americans. His speeches conveyed the crux of his message, namely that African Americans had to create their own economy in ghettos, which he saw as colonies. African Americans must control their own banks and businesses, he said.

Today, African Americans endure many of the afflictions as in the 1960s ghettos. Lending discrimination is still rampant. African Americans earn less than whites and have less wealth than whites by wide margins. Moreover, with coronavirus, African Americans businesses have been adversely affected as compared to white business.

The history of African American banks and businesses has been full of advancement and heartbreak. Each generation since Reconstruction has grappled with how to nurture African American economic self-determination. The hope is real as is the despair.

Which brings us to President Joe Biden. He has the chance to build African American banks and businesses for the new millennium. His policy suggestions are good.

He has proposed increased investing in Minority Depository Institutions and Community Development Financial Intuitions, which are lenders in African American neighborhoods. Moreover, he has called for public and private investments in new small businesses and funding allocations for home ownership and access to affordable housing.

These measured are a good start and more are probably on the horizon.

Biden has said he wants to include everyone in the economy. In particular, he wants African Americans to have a place at the American table. We must expunge systemic racism and forever change our hearts and minds, he said.

It is all about race and creating racial peace and advancement is good.