When reflecting on the progress African Americans have made, the reality is that when it comes to wealth — according to the paramount indicator of economic security — there has been virtually no progress in the last 50 years.
Based on data from the Federal Reserve’s Survey of Consumer Finance, the typical black family has only 10 cents for every dollar held by the typical white family.
Until the end of legal slavery in the U.S., enslaved people were considered valuable assets and a form of wealth. In the South, entrepreneurs and slave owners took loans out against the collateral value of their property in the form of people to fund new businesses.
The U.S. government has a long history of facilitating wealth for white Americans. From at least the Land Act of 1785, Congress sought to transfer wealth to citizens on terms that were quite favorable.
While the 1866 Homestead Act sought to include blacks specifically in the transfer of public lands to private farmers, discrimination and poor implementation doomed the policy. Black politicians during Reconstruction attempted to use tax policy to force land on the market, but this was met with violent resistance.
While blacks did make gains in wealth acquisition after chattel slavery ended, the pace was slow and started from a base of essentially nothing. Whites could use violence to force blacks from their property via the terrorism of whitecapping, where blacks were literally run out of town and their possessions stolen. This includes the race riots, as in Memphis in 1866 and Tulsa in 1921, which systematically destroyed or stole the wealth blacks had acquired, and lowered the rate of black innovation. Black wealth was tenuous without the rule of law to prevent unlawful seizures.
This trend remained stable for the next 50 years. In 1965, 100 years after Emancipation, blacks were more than 10% of the population, but held less than 2% of the wealth in the U.S., and less than 0.1% of the wealth in stocks. Wealth had remained fundamentally unchanged and structurally out of reach of the vast majority of blacks.
A complicit Federal Housing Administration permitted the use of restrictive covenants, which forbade home sales to blacks; redlining, which defined black communities as hazardous areas, directly reducing property values and increasing rates; and general housing and lending discrimination against African-Americans through the 20th and 21st centuries.
Moreover, blacks were largely excluded from the New Deal and World War II public policies, which were responsible for the asset creation of an American middle class.