Racism Isn’t the Only Cause of the Racial Wealth Gap
Black Americans emerged from slavery with almost zero wealth, and Schermerhorn vividly captures how tenuous the grip on wealth was for those few Black families who managed to acquire some. Near the end of the Civil War, the Union Army confiscated 400,000 acres of land from Confederate slaveholders in South Carolina, broke it up into 40-acre parcels, and granted it to escaped slaves. But in less than a year, President Andrew Johnson revoked the order, and hundreds of Black families lost their “forty acres and a mule.” By contrast, Congress passed the Homestead Act in 1862, which along with its successors seized 270 million acres of Western land from Native Americans, divided it into 160-acre tracts, and offered it to any white family willing to farm it. By 1934, 1.5 million families, nearly all white, had acquired farms through the program, none of it ever taken away.
For Black families who escaped the South, the story was not much different. Harriet Goings moved to Grand Rapids, Michigan, in 1873, when she was in her mid-twenties. She was born free to self-emancipated Black parents who escaped to Canada before the Civil War. Though the city was less than 1 percent Black, it was becoming a hub for furniture manufacturing and attracting droves of American job seekers. Harriet took a job as a hairstylist, and even though few white companies hired Black men, Harriet’s husband, Jack Adams, a refugee from South Carolina, established a successful masonry business in the city. Harriet and Jack were the first in a long line of ancestors able to pass down wealth to their children. They gave $9,500 to their daughter Sarah, who in 1923 bought a modest home with her husband in an all-white neighborhood.
It did not take long for things to turn south. White families nationwide did everything they could to keep Black families out of their neighborhoods. In the 1930s, “pioneering” Black families like Sarah Adams’s were typically charged 28 percent more than white families for homes in urban white neighborhoods. The Federal Housing Act of 1934 made matters worse, as an FHA manual told underwriters that, for a neighborhood to “retain stability,” it should be “occupied by the same social and racial classes.” Real estate firms created maps that outlined in red neighborhoods that were becoming predominantly Black, discouraging banks from lending in those communities. Homes like Sarah Adams’s plummeted in value. In 1936, her home was appraised at $2,200, roughly one-third of its value six years earlier; by 2000, the neighborhood’s home values had still not recovered.
