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The Racial Wealth Gap and the Problem of Historical Narration

From articles in the liberal press to histories of the “Frontiers of Wealth” during “America’s First Gilded Age,” the recent engagement with questions of inequality in the United States has broadened to include wealth alongside that of income disparities. Of course, scholars have long explored the relationship between the two: how income derived from ownership of bonds, stocks, and other assets can fortify and augment wealth and how intergenerational wealth offers a cushion to ease disruptions in household income. Nevertheless, the social, political, and economic consequences for middle class families whose homes were foreclosed following the 2007–2008 financial crisis, the subsequent dosages of austerity that compounded the woes of poor Americans, and the collection of rents of various sorts by the “billionaire class,” in the words of Senator Bernie Sanders, have elevated the wealth gap in political discussions about inequality.

There are two problems with much of this analysis, and the one feeds back on the other. The first is a debatable chronology of the wealth gap. Some, such as Sanders, identify the mid-1980s as the watershed for the “enormous transfer of wealth from the middle class and the poor to the wealthiest people in this country.” Taking in his sight wealth inequality in “rich countries,” the economist Thomas Piketty has identified the 1970s as the pivotal starting point. Both interpretations miss the earlier epochs in this history of distribution.

Relatedly, underlying these accounts are implicit archetypes of deracialized middle class and poor Americans getting the short end of the stick while a deracialized wealthy elite collects the spoils. Though strong on explaining the expanding wealth gap, their histories miss how changes over the last fifty years, whether under the guise of such metanarratives as neoliberalism, financialization, or post-industrialism, compounded the deeper history of racial disparities in wealth. Indeed, one wonders whether it is the growing wealth gap amongst white Americans that has forced pundits to engage with wealth disparities.

Exploring the racial wealth gap upsets this chronology. In a recent joint report, “The Asset Value of Whiteness,” researchers Amy Traub, Laura Sullivan, Tatjana Meschede, and Tom Shapiro took up the important task of centering the racial wealth gap and debunking popular narratives that marshal dubious causal explanations—lack of savings, more educational attainment, and the like—to either explain away or offer individualized solutions to racial disparities in wealth. The authors argue that policies associated with the New Deal welfare state are the historic underpinnings of the contemporary racial wealth gap. By setting the clock, so to speak, in the 1930s, they conclude that past policies such as Federal Housing Administration guarantees and the G.I. Bill continue to haunt black and Latino/a households and reward white Americans in the present.

However, this account misses much earlier chapters: those not explicitly centered on federal policy, but around dispossession through a compact between white settlers and capital backed by state power. A much longer story would necessarily engage with enslaved black bodies as wealth-generating assets and the incredibly violent history of expropriation and coercion; what historian Sven Beckert, obliquely building off the insights of W.E.B. Du Bois, Eric Williams, and Walter Rodney, has succinctly called, “war capitalism.” What follows instead is a short history of the racial wealth gap in the years between 1870 and 1930, during a moment of new forms of state-capital arrangements.

In addition to refining the chronology, I make a subtle, but consequential, analytical pivot.  Most analyses of the racial wealth gap focus primarily on disparities in the acquisition of wealth. Hence they use the language of amassing, inheriting, accumulating, references to “inherited poverty,” and claims that black people are “late comers” to acquiring wealth. But we should also think about the racial wealth gap in terms of racial disparities in the defense of wealth: the relative ability to defend wealth from expropriation, whether through violence, state-sanctioned seizure, and sometimes both. After all, what good is wealth if you can’t defend it? I suggest we think about the relation of the first (accumulation, amassing, and acquisition) to the second (the defense of wealth in the form of real property). How could the inability to defend wealth amassed lead to the widening of the gap?

From mortgage foreclosures to Indian removal, the mechanisms of indigenous dispossession were many. However, dispossession took on a different character during the late nineteenth and early twentieth centuries. Aiming to break apart reservations, the Dawes Act endowed the president with the power to “allot reservation lands to individual heads of families.” Lands would be “ineligible for sale” for 25 years. Theoretically, these rules governing the sale of land might prevent the further alienation of Indian lands. As Ronald Takaki has shown, though, “giving Indians what they already owned, their land, the Dawes Act also took lands away from them.” The federal government authorized the sale of “surplus” lands to white settlers such that in 1891, according to one estimate, Indian land reductions totaled more than 17.4 million acres.

Legislation passed in 1902 declared that upon the death of the owners of allotted lands, those lands had to be sold at a public auction by their heirs. One government official anticipated that, lacking the capital to repurchase land in a public auction whose bidding rules and norms were hardly obvious, “it will be but a few years before all the Indians’ land will have passed into the possession of the settlers.” Indeed, some 775,000 acres of “inherited land” was sold between 1902 and 1910. In effect, the heirs could not insulate their landed wealth from sale. Patterns of racial thinking that treated Indians as unproductive cultivators of land had become institutionalized in the form of racial differences in rules governing how inherited wealth was to be treated. Indian lands were somehow different from the wealth that elite Bostonians had passed down, and the Brahmins’ reliance on trustees to manage old wealth was not replicated elsewhere.

In 1913, California legislators passed the Alien Land Act, which restricted or prohibited aliens ineligible for U.S. citizenship from owning land. Washington State passed a similar law in 1921 and, as historian Mae Ngai has observed, so did seven other states.

The attempt to dispossess Japanese landowners in Washington precipitated all kinds of maneuvers to safeguard their wealth. Some landowners placed their land deeds in the names of Japanese-American adults with citizenship rights. Others placed the deeds in the names of their American-born children. If those children were not of age, still others placed the deed in trust with local lawyers. Those lacking “similar means of escaping the law,” as one journalist noted, “were stripped of their property rights.” Indeed, the number of Japanese farms in Washington fell from 699 in 1920 to 246 in 1925.

If wealth takes the form of real estate, the plundering of the African American commercial district during the Tulsa Race War of 1921 and destruction of black-owned theaters and cafés exemplifies the centrality of the destruction of black wealth to the makings of the racial wealth gap. Black women such as Mabel Little, who, with her husband, owned their home and rental properties, and who saw the destruction of her beauty salon. All told, the white mob torched more than 1,250 houses and damaged property to the tune of $1.5 million (roughly $18.7 in buying power in 2017).

African American J.B. Stradford had accumulated considerable wealth through the ownership of rental properties, among other sources. After the Tulsa Race War and upon witnessing the destruction of that wealth, he fled to Chicago where he tried to recover $65,000 in insurance from the American Central Insurance Company. The confluence of Stradford’s precarious legal standing in the court of law and the ability of insurers to rely on a “riot clause” to avoid paying insurance claims meant that despite amassing wealth, “none of the riot victims” were able to defend, much less recover, the loss from the destruction of wealth.

By way of conclusion, I want to offer a few analytical points about studying the history of the racial wealth gap. Though an important, perhaps essential part of the puzzle, this history cannot be reduced to a story of white settlers, white people, and white capital expropriating the wealth of black, brown, and indigenous people. As Alexandra Harmon has persuasively shown, during the 1890s, the “most aggressively acquisitive” tribal citizens “ran roughshod over friends and neighbors” and “proved highly capable of manipulating the allotment process and the state legal system to their economic advantage.” Intra-wealth inequality—not just racial disparities in wealth between indigenous and white people—mirrored larger trends during this period. Wealth “generated or acquired by members of the southern tribes was also collecting in a small number of large pools.”

Nor can this history be reduced to how black people have suffered disproportionately, a simple observation that elides the obvious economic achievements of many black people. It is not enough, though, to highlight the accumulation and dispossession of wealth by and from men like J.B. Stradford and Pleasant Porter, the latter of which “amassed wealth in business and in ranching on tribal lands.” Instead, we might ask how the larger political economy of racial capitalism in general, and the flourishing of segregated enclave economies in particular (Jim Crow), allowed for the amassing of wealth? What were the different techniques used by New York City’s bourgeoisie and the Boston Brahmins to defend their wealth? Did African Americans, Japanese, and indigenous people have similar techniques at their disposal, and what do those circumscribed options reveal about the makings of the racial wealth gap?

Engaging with these questions might allow for greater theorization about the relationship between the different epochs in the history of the racial wealth gap and the relationship between the first (“war capitalism”), the second described in this essay (state-capital dispossession), and the third (the racial welfare state).

Destin Jenkins is currently a postdoctoral fellow at The Charles Warren Center for Studies in American History at Harvard University. In 2018 he will begin a tenure-track position as the Neubauer Family Assistant Professor of History at the University of Chicago.