One hundred years ago this week, one of the worst incidents of white violence in American history led to the death of as many as 300 Black people in Tulsa, Oklahoma, and an unfathomable amount of property destruction with intergenerational consequences. White anger over the false accusation of a Black teenager led to a violent mob destroying over 35 blocks of the Greenwood neighborhood otherwise known as “Black Wall Street,” leaving thousands of people homeless and numerous businesses destroyed over an 18-hour period from May 31 to June 1 of 1921.
It’s estimated that $1.8M of economic damage was caused, as entire blocks were razed that contained Black businesses from law offices to cabarets. One might learn about this history and see it as a momentary tragedy. But this underestimates the full story, which was the destruction of massive intergenerational wealth and opportunity.
First, a dollar went much further back in those days—$1 in 1921 had the purchasing power of $149 in today’s dollars. This means that those $1.8M of damage, which we might otherwise perceive as tragic, but relatively small, was equivalent to $27M in today’s dollars. The median home price in Tulsa is $173,000, such that one can think of this as equivalent to the destruction of 156 homes today.
Second, these are assets that would’ve been passed down and re-invested. Its impossible to know how the Black community of Tulsa would’ve leveraged these assets over the past one hundred years, but to take a very simple measurement, lets imagine those $1.8M had been invested in the simplest way possible—sitting in the S&P 500 index. $1.8M invested in 1921 would be starting at an extreme low-point in the market given the depression of 1920-1921, that of course only got worse after the 1929 market crash and start of the Great Depression. And yet, by 2021, this $1.8M would’ve grown to $45B.
These startling figures make a strong case for the concept of reparations. There is no way to bring back a life, or a community, or provide dollar-for-dollar compensation given simply the depth of harm caused through both the destruction of value and broken promises to Black communities throughout US history. (For instance similar calculations have been made that if the 1865 pledge of 40 acres and a mule had been kept, this would be the equivalent of over $6.4T in wealth today). But that doesn’t stop the US from taking a more proactive stance towards addressing historic harms—as it did recently in approving debt relief for farmers of color as part of Congress’s overall economic relief package. While some have criticized this relief as “discriminatory” against white people, the Secretary of Agriculture Tom Vilsack made clear that this is not about providing privileges to people of color, but “address[ing] systemic discrimination in U.S.D.A. programs” that have been well-documented throughout US history, particularly as it relates to finance.
The Tulsa Massacre was unfortunately just one of over 25 riots by white mobs against Black communities between 1917 and 1923 that killed over 1,100 people—and destroyed an unknown amount of Black property in the process. In only rare circumstances has the government provided compensation to address the long-term financial consequences of historic harms—for instance, in Rosewood, Florida, a fund was created for descendants of the affected families in the 1923 Rosewood Massacre. In April of 2021 the House Judiciary Committee voted to bring HR 40, The Commission to Study and Develop Reparation Proposals for African-Americans Act to the full House, the most progress such a bill has made since its original introduction 30 years ago. The bill would create a 13-member commission to examine what a pathway to restorative justice for African-Americans could look like, a critical next step in moving the country towards a more comprehensive reckoning with the truth and grave consequences of its past.
In the meantime, even without their rightful, historical wealth base to build on, Black communities have been making sure investment dollars are available to rebuild Black Wall Street, and in general support thriving Black-owned businesses throughout the country. Take, for instance, Collab Capital, an Atlanta-based firm with three Black founders that recently closed its first $50M fund designed to serve Black entrepreneurs, and Impact America, funding businesses that intend to close the racial wealth gap and build a more equitable society.
As always, capital markets are able to fill gaps that the government can or will not. And yet, when it comes to addressing historic racial harm, neither public nor private markets can ignore the consequences of inaction. It’s time to move with increased urgency to rebuild Black wealth in America.