COVID-19 and the 'race tax'

The plunder of black wealth has a lot to do with why blacks are dying disproportionately

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By Michael Romain

Editor

The first time in her life that Liz Abunaw visited a predominantly black neighborhood in Chicago was in September 2016 — a few months before the election of Donald Trump. She had taken the 66 bus into Austin for an errand, but the address seemed so far west that Abunaw, a native of upstate New York, thought she was going to O'Hare.

"I get off the bus at the corner of Chicago and Laramie and I'm like, 'What is this?' This does not look like the neighborhood near O'Hare," Abunaw said an interview I conducted with her in February for an oral testimony project the newspaper is developing in coordination with AustinTalks and Austin Coming Together. It was a few months before COVID-19 became the leading cause of death in the United States, hitting African Americans particularly hard.

"I get off the bus and I realize I need cash," Abunaw said. "I'm a cheap person. I really hate corner store ATMs and check cashing places, because they take all your money."

But there was no Chase bank branch anywhere within walking distance. Nor was there a grocery store, where she might have been able to get cash back while purchasing an item. She had no choice but to spend the $4 fee at a nearby ATM.

"I think it was at that moment I realized that living in that neighborhood, it costs you not having resources," said Abunaw, who at the time was working for Microsoft and living in a condo in West Town. "Everything costs more. That makes no sense. I see single family houses here. There are homeowners here. Where do you go to the bank? Where do you go to the grocery store? This is absolutely ridiculous."

Abunaw would go on to found Forty Acres Fresh Market, which hosts popup produce markets and delivers fresh fruits and vegetables to residents on the West Side and in the west suburbs, including Oak Park.

The name of her business evokes Union General William T. Sherman's famous Field Order 15, which promised freed slaves a mule and up to 40 acres of land confiscated from their former masters. In 1865, Congress turned Sherman's field order into the Freedman's Bureau Act, which provided "that each negro might have forty acres at a low price on long credit."

But unlike the Homestead Acts — a series of laws passed from 1850 into the 1930s that allowed whites to claim land owned by the federal government as their own — the federal government never made good on the promises codified in the Freedman's Bureau Act. The land given to the slaves was eventually returned to their former masters, who then built the Jim Crow system in the South.

While Congress was attempting to get the Freedmen's bill passed into law, President Andrew Johnson said that the bill "was advantaging blacks over whites and that it was time for blacks to fend for themselves," according to Mehrsa Baradaran's "The Color of Money: Black Banks and the Racial Wealth Gap."

"'It is earnestly hoped that instead of wasting away, they will by their own efforts, establish for themselves a condition of respectability and prosperity.' Johnson claimed that the laws of capitalism and free trade would allow the freemen to accumulate land without any special help from the state," Baradaran writes.

By the way, Johnson said this while whites were benefitting from the Homestead Acts, while "the government was in the process of confiscating and distributing millions of acres of land for railroad expansion" and while "banks were also being supported by public taxes in order to induce them to extend credit to the South."

Blacks could not have land, Baradaran explains, not only because it was "politically unpopular," but also because the government was controlled by powerful interests whose wealth was dependent on the cheap black labor needed to grow cotton, which was still an extravagant source of national dynamism even after the Civil War.

There is a direct line of descent from the cotton economy that made blacks into slaves and sharecroppers, to the finance economy that has made blacks into sub-prime borrowers and salient targets for COVID-19. At every inflection point along that historical continuum, blacks have been a source of wealth for white society to exploit.

Moreover, and this is critically important, the very remedies that, at certain points in history, more enlightened whites have proposed to address the exploitation have themselves been tools for further exploitation and predation.

Take, for instance, the Freedmen's Savings Bank. Founded in 1865, pamphlets promoting the bank at the time described it as "Abraham Lincoln's Gift to the Colored People." But the bank wasn't actually a bank in the traditional sense.

Instead of lending to freedmen in order for them to grow businesses or purchase property, Baradaran explains, the bank simply collected the freedmen's savings and served as a "teaching institution" designed to "instruct freed slaves about American values and 'to instill into the minds of the untutored Africans lessons of sobriety, wisdom, and economy.'"

Within a decade of its founding, the bank had collected more than "$75 million of deposits by more than 75,000 depositors, an amount that would be approximately $1.5 billion today." Despite freedmen comprising virtually all of the depositors, they were not represented in the bank's management. And they had no say in how the money was invested.

In 1870, the bank's managers persuaded Congress to "amend and deregulate its charter," effectively turning it into a private investment bank. But soon after deregulation, instead of investing the deposits of those freed slaves into black businesses or property that would allow African Americans to begin wealth-building after two centuries of slavery, "the bank managers" — the very people who were preaching the value of financial sobriety and wisdom to the freed slaves — "began speculating in real estate and then, quite simply, a close ring of managers with unfettered discretion plundered the savings of the freedmen."

Those investments began to unravel in the Panic of 1873, which precipitated the bank's free fall. In March 1874, "in a last ditch effort to save the bank," the trustees made Frederick Douglass its president. After lending the bank "$10,000 of his own money to cover the bank's illiquid assets," Douglass quickly figured out the ruse and alerted Congress to the bank's insolvency, declaring "that he 'could no longer ask [his] people to deposit their money in it.'"

The bank was shut down for good in 1874, but not before "more than half of accumulated black wealth disappeared through [the bank's] mismanagement."

Aren't Lindsay, the author of the 1929 book The Negro as a Business Man, said "what is most lamentable is the fact that only a few of those who embezzled and defrauded the one time liquid assets of this bank were ever prosecuted."

Just as white bank managers benefited from a system that exploited the wealth of freed slaves, white homeowners have benefitted from what Baradaran calls a "Jim Crow credit market," wherein blacks (even professional blacks) would be relegated to urban ghettos full of renters and dilapidated houses, cut off from the long-term, low-interest mortgages that made the American Dream of a white picket fence realizable even for blue-collar whites. What's more, as sociologist Dalton Conley has stated, housing in white communities is worth more "precisely because it is not Black housing."

In her book Race for Profit: How Banks and the "Real Estate Industry Undermined Black Homeownership," Keeanga-Yamahta Taylor reminds us that "In the strange mathematics of racial real estate, Black people paid more for the inferior condition of their housing. They referred to this costly differential as a 'race tax.'"

Race taxes abound in American society, as Abunaw learned during her first trip to Austin in 2016. And in a pandemic, the taxes increase. The CTA may have suspended transit fees during the pandemic, but having to rely on a city bus to go to work as a frontline worker is still a form of double taxation. And blacks are disproportionately exposed to those risks precisely because of the color of our skin.

Framed in this way, some recommendations and proposals for confronting the race-based inequities that COVID-19 has only exacerbated sound trite and a bit condescending.

For instance, the New York Times Editorial Board, recognizing the problem of residential segregation as a main factor in mass social inequity, argued in a recent piece that the only viable solution is to build more affordable housing in affluent neighborhoods for low-income people to rent.

When I read that Times editorial, I thought of the promise of Forty Acres and of the Freedmen's Savings Bank.

If I'm an African American who was born and raised in Austin, and I know, if not consciously then intuitively, that I was born with a debt burden and a tax burden that was created for the sake of another group's wealth, how am I to take the New York Times telling me that the "only viable solution" for bettering the lot of the place and the people I love is persuading some unknown entities to build affordable rentals in affluent neighborhoods?

The bigwigs must do better than this.

Contact:
Email: michael@austinweeklynews.com Twitter: AustinWeeklyChi

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