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Speaker 1: When you start looking into the racial wealth gap. There's

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Speaker 1: a moment in US history towards the end of slavery

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Speaker 1: that's inescapable. It's eighteen sixty five, during the final months

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Speaker 1: of the Civil War and Union General William took him

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Speaker 1: to Sherman and his army had just marched across Georgia

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Speaker 1: to capture Savannah, and he issues a field order that

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Speaker 1: sets aside land in South Carolina, Georgia, and Florida for

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Speaker 1: freed slaves that they would own and live and work on.

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Speaker 1: This is known as forty acres and a mule. It's

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Speaker 1: often talked about is something that could have changed the

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Speaker 1: trajectory of the racial wealth gap today, if it ever

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Speaker 1: actually happened. After President Abraham Lincoln was assassinated, his successor

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Speaker 1: Andrew Johnson famously rescinded the offer. He lacked all of

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Speaker 1: Lincoln's capacity for greatness. He was deeply, deeply racist. He

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Speaker 1: couldn't have cared less about the fate of the former slaves,

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Speaker 1: and he restored white supremacy as quickly as he could.

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Speaker 1: That's Eric Fohner. He's a professor emeritus of history at

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Speaker 1: Columbia University in New York and has written several books

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Speaker 1: on Civil War era history. He says this moment was

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Speaker 1: a huge missed opportunity for building black wealth. By some estimates,

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Speaker 1: that land would have been worth as much as three

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Speaker 1: point one trillion dollars today. But it wasn't the end

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Speaker 1: of the conversation about giving an economic future to former slaves.

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Speaker 1: During reconstruction after the Civil War, um former slaves and

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Speaker 1: some white allies insisted that genuine freedom required some kind

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Speaker 1: of economic base, and that in an agricultural society that

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Speaker 1: meant owning land. In eighteen sixty six, a Congressman named

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Speaker 1: Thaddeus Stevens proposed an amendment to a bill that would

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Speaker 1: have confiscated all the land from plantation owners, split it up,

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Speaker 1: and given it to former slaves and the people who

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Speaker 1: fought for their freedom. We especially insist that the property

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Speaker 1: of the chief rebels should be seized and used for

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Speaker 1: the payment of the national debt caused by the unjust

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Speaker 1: and wicked war they instigated. The whole fabric of Southern

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Speaker 1: society must be changed, and never can it be done

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Speaker 1: if this opportunity is lost. One reason to redistribute the

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Speaker 1: land was political. The Republicans in Congress wanted to dilute

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Speaker 1: the economic power of Southern landowners. But there was another

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Speaker 1: reason too. You needed to break up the plantations and

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Speaker 1: distribute the land. This was the only way that African

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Speaker 1: Americans would avoid being economically dependent on their former owners.

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Speaker 1: They wouldn't really then be free. Johnson may have been president,

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Speaker 1: but Congress at that time was run by radical Republicans

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Speaker 1: like Stevens, who are rapidly passing laws to expand the

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Speaker 1: rights of black people. They passed the thirteenth, fourteen, and

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Speaker 1: fifteenth Amendments that abolished slavery, granted citizenship to anyone born

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Speaker 1: in the US, including slaves, and gave black men the

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Speaker 1: right to vote. Congress debated the land issue, but never

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Speaker 1: took it up seriously. The economic revolution did not go

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Speaker 1: as far as the political revolution. Congress did not pick

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Speaker 1: up the banner of forty acres in the mule. It

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Speaker 1: was considered too unprecedented, you know, you know, it was

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Speaker 1: just not something that was part of the American tradition

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Speaker 1: in some ways. I know you asking today, how long

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Speaker 1: would it take somebody that thing? How long we're predator

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Speaker 1: flying the pigeons for men. I come to say to you,

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Speaker 1: good afternoon, however, difficult for MoMA, however frustrating the how

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Speaker 1: it will not be long true. A hundred years later,

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Speaker 1: Martin Luther King Jr. Would lead a civil rights revolution

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Speaker 1: not seen since reconstruction. The movement would help end segregation

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Speaker 1: and laws that made it almost impossible for black people

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Speaker 1: to vote. But even after those victories, he would talk

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Speaker 1: about the problem they did in solve. Economically, the negro

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Speaker 1: is worth worse off today than he was fifteen and

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Speaker 1: twenty years ago, and so the unemployment rate among whites

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Speaker 1: at one time was about the same as the unemployment

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Speaker 1: rates among negroes, but today the unemployment rate among negroes

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Speaker 1: is twice That's Martin Luther King Jr. Is the Other

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Speaker 1: America speech at Stanford University in April nineteen sixte But

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Speaker 1: we must see that the struggle today is much more difficult.

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Speaker 1: It's more difficult today because we are struggling now called

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Speaker 1: genuine equality. It's much easier to integrate a lunch counter

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Speaker 1: than it is to guarantee a livable income and a

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Speaker 1: good follow job. Economic justice was next on King's gender,

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Speaker 1: but he was never able to achieve it. A year later,

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Speaker 1: he was assassinated in Memphis, the data shows that the

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Speaker 1: median white family has ten times more wealth than the

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Speaker 1: average black family. One of the drivers of that wealth

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Speaker 1: gap is redlining, the practice of mortgage lenders denying loans

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Speaker 1: to people based on the race or where they live.

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Speaker 1: We have lived at these and tim nditions for many

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Speaker 1: years that he followed years. I feel that the way

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Speaker 1: to bring about equality of black people in the systems

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Speaker 1: quality white people. Now, don't interrupt. You have Dandue Kate

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Speaker 1: all and black people the cap at the bottom of

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Speaker 1: the economic letter, the bottom of the holding letter, the

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Speaker 1: bottom of the educational letter. I was prepared to try

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Speaker 1: to get used to having a colored family in the

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Speaker 1: block when I there's another one across the street, and

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Speaker 1: pretty soon I'll be one next door, and before you

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Speaker 1: know what, those peaks are gonna start looking like Harlow. Well.

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Speaker 1: I don't want to live in a colored slum. I

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Speaker 1: don't want to live in a colored slock. Welcome back

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Speaker 1: to the Paycheck. I'm Jackie Simmons and I'm Rebecca Greenfield.

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Speaker 1: Last time we discussed what wealth is, white matters and

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Speaker 1: how you get it. Today we're going to talk about

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Speaker 1: the four hundred plus years of history that lead to

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Speaker 1: America's wealth gap. If you want to look at the

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Speaker 1: origins of the racial wealth gap, there's a pretty good

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Speaker 1: place to start. Two d fifty years of unpaid labor.

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Speaker 1: That's going to create a pretty large gap between the

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Speaker 1: people who are slaves and the people who are owners.

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Speaker 1: That's Eric Phoner again. Slavery not only robbed black people

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Speaker 1: of wealth, but black people's labor and bodies created a

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Speaker 1: huge amount of wealth for white people. To understand the

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Speaker 1: enormity of this, Phoner says, there's a stat that he

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Speaker 1: always used to tell his students when teaching them about

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Speaker 1: the history of the wealth gap. The economic value of

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Speaker 1: the four million slaves was an average of a thousand

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Speaker 1: dollars per person, or about four billion dollars altogether. The banks, railroads,

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Speaker 1: and factories in the United States all put together, were

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Speaker 1: worth about three and a half billion dollars. Not only

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Speaker 1: was all of this wealth in the hands of white people,

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Speaker 1: but a lot of it was in the hands of

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Speaker 1: white people who had a strong economic interest in keeping

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Speaker 1: black people enslaved or at the very least economically subservient.

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Speaker 1: The history of wealth generation in the US is filled

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Speaker 1: with figures like these that help us understand the enormity

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Speaker 1: of the racial wealth gap. We asked our colleague Katarina

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Speaker 1: Surviva in economics reporter at Bloomberg, is she could do

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Speaker 1: the math to show not just the losses endured by

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Speaker 1: black people, but the huge economic gains created for white people. Hey, Katerina,

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Speaker 1: welcome to the paycheck. Hi, thanks for having me. So,

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Speaker 1: if we're going to go back into US history to

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Speaker 1: look at the wealth gap over time, where do we start? Okay,

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Speaker 1: for our purposes today, we're going to start with pre

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Speaker 1: Civil War America. But before we do that, I'm going

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Speaker 1: to give you four numbers to hold in your head.

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Speaker 1: Can you do that? Yeah? Totally? Okay? Forty two trillion dollars,

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Speaker 1: two hundred and seventy million, two hundred million and seventy five.

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Speaker 1: You got that? Yeah, forty two trillion million, two hundred

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Speaker 1: million and seventy five, You got a jackie. Great. We'll

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Speaker 1: start with the first number, forty two trillion dollars, that

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Speaker 1: four billion dollar figure that Eric Fohoner talked about that

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Speaker 1: would amount to as much as forty two trillion dollars

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Speaker 1: in today's money. That shows you just how much wealth

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Speaker 1: was created for slave owners. So in the high end,

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Speaker 1: that's like double the entire U. S economy today exactly,

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Speaker 1: and that doesn't include all the lost wages and income

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Speaker 1: that black people never got for their free labor. The

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Speaker 1: US used enslaved labor for almost two hundred and fifty years.

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Speaker 1: Thomas Kramer, a professor of public policy at the University

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Speaker 1: of Connecticut, calculated that from the founding of the country

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Speaker 1: in seventeen seventy six to the end of slavery in

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Speaker 1: eighteen sixty five, that amounted to twenty trillion dollars in

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Speaker 1: today's money. And it's also important to understand that owning

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Speaker 1: slaves didn't just make white people rich, it helped them

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Speaker 1: get richer. I called up a couple economists and historians

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Speaker 1: to have them help me with some of this math.

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Speaker 1: If you own slaves, that was an asset on which

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Speaker 1: you could gain leverage to buy more stuff. And that's

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Speaker 1: how you get rich, is you have assets that produced

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Speaker 1: wealth and then you can get more credit based on

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Speaker 1: those assets. That's Marisa barader On, a law professor and

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Speaker 1: associate dean at the UC Irvine School of Law and

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Speaker 1: the author of The Color of Money, Black Banks and

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Speaker 1: the Racial wealth gap. She brings us to the second

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Speaker 1: way we can look at wealth created by slavery. It

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Speaker 1: wasn't just slave owners who profited, it was everyone connected

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Speaker 1: to the slave economy, which, at this point in US

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Speaker 1: his street was most people. Cotton was by and far

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Speaker 1: the largest export at the time. Big banks like JP

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Speaker 1: Morgan and Lehman Brothers got rich financing its trade. There

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Speaker 1: were literally slave backed securities. The entire economy of some

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Speaker 1: southern towns down to the smallest shopkeepers, depended on the

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Speaker 1: cotton trade. So are we coming to another one of

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Speaker 1: your numbers. No, So I really wanted to find an

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Speaker 1: exact number for this, and I asked a bunch of people.

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Speaker 1: But it's really hard to quantify this because slavery was

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Speaker 1: just such a big part of the U. S. Economy.

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Speaker 1: One of the things most people agree on, though, is

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Speaker 1: that the U. S would probably not be the world's

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Speaker 1: biggest economy today without its slave history. Okay, but when

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Speaker 1: slavery is abolished, what happens to that four billion dollars

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Speaker 1: of slave labor? Right, So they lost those human assets

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Speaker 1: and that was a massive loss in wealth. But a

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Speaker 1: recent study found that within a generation, the grandsons of

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Speaker 1: slave owners recovered all that wealth. The researchers attributed to

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Speaker 1: a few things. A network of professional relationships that allowed

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Speaker 1: them to start new businesses, and they created a legal

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Speaker 1: environment that allowed them to continue to exploit black labor.

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Speaker 1: After the Civil War, there was some talk about how

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Speaker 1: to set black people up for their free lives and

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Speaker 1: shore up some of these differences. That forty acres and

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Speaker 1: a mule promise, as we know, that never happens, and

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Speaker 1: there was something else going on in the middle of

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Speaker 1: America that had big implications for the wealth gap. That

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Speaker 1: condition of the denial of the forty acres was accompanied

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Speaker 1: by a situation in which one and a half million

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Speaker 1: white families received a hundred sixty acre land grants in

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Speaker 1: the western part of the United States. That's William Garritty,

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Speaker 1: better known as Sandy, an economist at Duke University, who

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Speaker 1: I talked to about this. What he's talking about are

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Speaker 1: the Homestead Acts, and here's my second number. The Acts

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Speaker 1: were a series of bills that were meant to encourage

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Speaker 1: settlement of the American West by giving away two hundred

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Speaker 1: and seventy million acres of land largely stolen from Native Americans.

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Speaker 1: So at this point black people are free. Are they

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Speaker 1: able to get any of that? It's complicated. The original

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Speaker 1: Homestead Act was passed in eighteen sixty two, when most

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Speaker 1: black people were still enslaved. There was a Southern Homestead

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Speaker 1: Act in eighteen sixty six that was open to black applicants,

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Speaker 1: but the land prices were often still too expensive, so

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Speaker 1: the vast majority of this went to white people. It's

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Speaker 1: hard to quantify the value of the land today, but

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Speaker 1: the social scientists Trina Shanks estimates that forty eight million,

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Speaker 1: mostly white Americans today are descendants of these original homesteaders.

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Speaker 1: But there were some black families like mine who were

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Speaker 1: able to acquire land. Yeah, but the economic hardships of

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Speaker 1: the post Civil War period, the fact that plantation owners

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Speaker 1: now had to pay for their labor, only increased racial

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Speaker 1: resentment towards black people in the South. This led to

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Speaker 1: the Jim Crow Laws that severely limited black people's freedoms,

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Speaker 1: what jobs they could do, if they could own property,

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Speaker 1: where they could live, which kept them poor and in

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Speaker 1: many cases indebted to their former owners. Here's Eric Fohoner Again,

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Speaker 1: Blacks found themselves locked into the lowest rooms on the

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Speaker 1: latter in what was now the poorest region in the

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Speaker 1: United States anyway, so they were at the bottom of

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Speaker 1: the bottom was very difficult to move up from there.

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Speaker 1: Plus that was accompanied by violence towards anyone who bucked

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Speaker 1: the racial norms, like black people who accumulated any kind

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Speaker 1: of wealth. One of the most egregious incidents was the

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Speaker 1: Tulsa massacre of that destroyed a black neighborhood that was

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Speaker 1: so prosperous in its businesses and home ownership that it

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Speaker 1: was known as Blackwall Street. In one day, thousands of

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Speaker 1: white rioters, including police officers, burned down hundreds of homes

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Speaker 1: and businesses, displacing ten thousand black Tulson's. They even used

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Speaker 1: World War One bomber planes to burn the city. And

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Speaker 1: that's where we get to my next number. Two hundred

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Speaker 1: million dollars. That's how much wealth was destroyed in Tulsa

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Speaker 1: in today's dollars. But it wasn't an isolated incident. Sandy

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Speaker 1: Daty says there were around a hundred of these attacks

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Speaker 1: from the end of the Civil War into the nineteen forties.

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Speaker 1: Hundreds of thousands of Americans were members of the Ku

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Speaker 1: Klux Klan, and there were around three thousand lynchings between

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Speaker 1: eighteen seventy and nineteen forty. So slavery itself created a

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Speaker 1: multi trillion dollar wealth gap, and the period after slavery

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Speaker 1: didn't do much to close it because of things like

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Speaker 1: the Homestead Acts and all this recial violence. Yeah, that's right,

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Speaker 1: and none of that includes the one thing most people

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Speaker 1: can trace their wealth back to home ownership. There were

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Speaker 1: two important policies that brought homeownership to the masses in

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Speaker 1: the twentieth century. In the presence of senators, congressmen, and

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Speaker 1: the heads of veterans organizations, President Roosevelt signs g I

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Speaker 1: Joe's Bill of Rights. The penns will become valuable souvenirs

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Speaker 1: of the occasion that guarantees a returning soldier a year

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Speaker 1: of employment, insurance, guarantees of loans up to two thousand dollars,

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Speaker 1: and helps pay for the completion of his schooling in

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Speaker 1: The National Housing Act created a system where the US

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Speaker 1: government for the first time guaranteed mortgages, and then the

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Speaker 1: g I Bill helped veterans returning from World War Two

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Speaker 1: access low interest loans to help cover certain expenses like homes.

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Speaker 1: You no longer needed a pile of money to buy

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Speaker 1: a house. This not only allowed many more people to

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Speaker 1: own homes, but because people could leverage these assets to

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Speaker 1: take out a loan to start a business or pay

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Speaker 1: for their kids college education, it became a huge way

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Speaker 1: to build more wealth. Black people were almost entirely left

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Speaker 1: out of this, and it did not accidentally leave out

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Speaker 1: people of certain races. It did so explicitly um methodically.

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Speaker 1: What Mare Separadoron is talking about is redlining. Now that

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Speaker 1: the government had a vested interest in making sure its

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Speaker 1: loans got paid back, it came up with a system

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Speaker 1: for assessing risk to do just that. It created maps

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Speaker 1: that deemed certain neighborhoods safe bets and others so risky

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Speaker 1: that banks wouldn't readily lend to people looking to buy there.

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Speaker 1: And this system, more than anything, was based on racism.

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Speaker 1: So when those f H. Mottain makers went out to

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Speaker 1: survey risk for the mortgage market, they were protecting the

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Speaker 1: insurance fund and they were creating a risk map across

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Speaker 1: the country. You were going to go into a neighborhood,

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Speaker 1: You're gonna look around and say, is this a good neighborhood?

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Speaker 1: It is a bad neighborhood, And so you look at

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Speaker 1: these forms and they say, you know, there's a lot

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Speaker 1: of quote unquote lower races in this neighborhood. And this

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Speaker 1: was called redlining because they literally color coded so called

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Speaker 1: high risk, predominantly black neighborhoods. Read so black people were

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Speaker 1: either denied mortgages or they could only get very high

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Speaker 1: rate loans. So in some ways it becomes a self

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Speaker 1: fulfilling prophecy. When you're stuck in a so called undesirable

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Speaker 1: zip code, it's difficult to upgrade or even improve your

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Speaker 1: lifestyle exactly. And this had huge implications for the wealth gap.

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Speaker 1: Most Americans wealth today comes from homeownership. This systemic exclusion

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Speaker 1: of black people from buying many of the country's most

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Speaker 1: desirable homes and from affordable loans is the reason we

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Speaker 1: have such a large racial wealth gap today. Nearly seventy

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Speaker 1: of white family's own homes, while less than half of

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Speaker 1: black families do. That was my last number. And you

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Speaker 1: might be wondering why I'm stopping before we get to

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Speaker 1: the civil rights era. That's because while the civil rights

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Speaker 1: movement had a lot of success in ending legal segregation,

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Speaker 1: there was much more resistance to fixing the housing problem

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Speaker 1: and other economic issues. That directly contributed to the wealth gap.

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Speaker 1: Do you think a Negro family moving here will affect

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Speaker 1: the community as a whole? Definitely? In what way? I

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Speaker 1: think that? Well, the property values will immediately go down

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Speaker 1: if they are allowed to move in here in any numbers.

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Speaker 1: Can you give a basis for that judgment? Yes, we

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Speaker 1: used to live in Washington, d c. And we saw

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Speaker 1: a very good example of that there. For years, various

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Speaker 1: bills languished in the House and Senate until April of

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Speaker 1: the day after Martin Luther King Jr. Was assassinated. President

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Speaker 1: Lyndon Johnson sent a letter to Congress urging the passage

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Speaker 1: of the Fair Housing Act, and less than a week later,

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Speaker 1: the bill finally passed. Now with this bill, the voice

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Speaker 1: of Justice speaks again. It proclaims that fair housing for

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Speaker 1: all all human beings who live in this country is

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Speaker 1: now a part of the American way of life. This

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Speaker 1: law and others later on make discriminatory practices like redlining illegal,

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Speaker 1: But they were weak and they didn't correct for the

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Speaker 1: decades of damage already done. In nineteen sixty seven, white

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Speaker 1: families had five times the wealth of black families. Today

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Speaker 1: they have seven times the wealth That's why Martin Luther

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Speaker 1: King Jr's words still ring true. It is a cruel

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Speaker 1: jest to say to a bootless man that he ought

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Speaker 1: to lift himself by his on bootstraps. And the fact is,

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Speaker 1: millions of Negroes, as a result of centuries of denial

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Speaker 1: and neglect, been left bootless. They find themselves impoverished aliens

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Speaker 1: in this affluent society. And that is a great deal

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Speaker 1: that the society can and must do if the negro

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Speaker 1: is to gain the economic security that he needs. Now,

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Speaker 1: one of the answers, it seems to me, is a

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Speaker 1: guaranteed annual income, a guaranteed minimum income all families. A

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Speaker 1: confluence of things put the country on track for today's

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Speaker 1: racial wealth gap, and the legacy of these moments continues

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Speaker 1: to play out. For the next couple of episodes, we're

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Speaker 1: going to dig into how black people are still being

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Speaker 1: left out of major vehicles for wealth building. First up, land,

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Speaker 1: So here this farmer have received it farm operating on

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Speaker 1: a hundred fifty seven thousand dollars. He hadn't even done

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Speaker 1: the paperwork, the correct paperwork on the loan, and I

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Speaker 1: was pretty much begging and pleading for five thousand dollar

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Speaker 1: operating loan, and he had this conversation with Farmer Earl

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Speaker 1: as though I wasn't visible before we go. We have

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Speaker 1: a request for you. Experts estimate that closing the racial

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Speaker 1: wealth gap would take around thirteen trillion dollars, give or

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Speaker 1: take a trillion or two. That works out to about

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Speaker 1: three hundred thousand dollars for every Black American. We'd like

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Speaker 1: to know what would you do with that three hundred

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Speaker 1: thousand dollars? How might it change your life? How might

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Speaker 1: your life stay the same? Record a voice momo with

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Speaker 1: your answers to these questions and email it to me

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Speaker 1: at Our Greenfield at Bloomberg dot net, or call and

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Speaker 1: leave us a voicemail at six or six three to four,

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Speaker 1: three four and nine. Oh thanks for listening to the Paycheck.

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Speaker 1: If you like the show, please rate, review, and subscribe

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Speaker 1: wherever you get your podcasts. This episode was hosted by Me,

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Speaker 1: Rebecca Greenfield Emmy Jackie Simmons. Today's episode was edited by

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Speaker 1: Rebecca Greenfield and reported with the help of Katarina Surviva

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Speaker 1: in Lenan Newin. Our producers are Magnus Henrickson, Lindsay Cratowell,

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Speaker 1: and Ethan Brooks Our original music is by Leo Sidgen.

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Speaker 1: Francesco Levi is Bloomberg's Head of Podcasts. Special thanks to

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Speaker 1: Toefer Foreheads. We'll see you next time. Who a