The Color of Money

by Mehrsa Baradaran

  Binga State Bank, 71, 72-74, 92, 304n17, 305n27 Birth of a Nation, 65-66 Black banking and banks: study of, 1-2; origin of, 2, 12-16, 288n15; impact of, 2-3, 83; support for, 4, 100, 204-206, 327n38; theory of, 4; effectiveness and demise of, 4-6,

  7-8, 275-276; and disadvantage of blacks, 9; Freedmen’s Savings Bank, 22-32; pride through, 32-33; affiliation with black institutions,

  40-44; private, 44-46; black business and, 51-52, 85-86, 89-90, 97-98, 294n140; Great Migration and rise of, 69-71; in Chicago’s black belt, 71-75; in New York, 75-81, 306nn45,49; trust in, 84-86; Great Depression’s impact on, 86-87; failure of, 88-97, 99-100, 241-243; criticism of, 98-99, 200-204; mortgages provided by, 113-116; civil rights and, 116-122; New Deal’s impact on, 122-125; King on, 159; demand for, 181; black leaders’ support for, 191-192; black capitalism and, 196-205; CRA’s impact on, 234; challenges facing, 243-245, 268-273, 278-279; profitability of, 265-266; noneconomic appeal of, 266-267; revival of, 276-277; preservation of, 279; and eliminating wealth gap, 279-280;

  Black banking and banks (continued) unrecognized, 304n7; need for, 354n172

  Black business: support for, 47-51, 97-99, 100, 191-192, 222, 263, 327n38; black banking and, 51-52, 85-86, 89-90, 97-98, 294n140; growth of, 51-52, 294n140; black churches and, 52-53; challenges facing, 53-54; types of, 54-56; in Durham and Tulsa, 56-63; and black nationalism, 82-83; civil rights and, 121-122, 128-130; King on, 158-159; Malcolm X on, 161; Nixon on, 165; demand for,

  181-182; renewed emphasis on,

  192; success of, in late 1960s, 193-194; as solution to black problems, 299n52; exclusivity of, 300-301nn74,75,77; sales volume of, 318n121; engagement in, 337n35 Black capitalism: as political diversion, 3; support for, 4, 204-214, 220-222; and wealth gap, 6-7; Nixon and, 164-166, 176-184; and failed attempts at integration, 166-171; proposed plans for advancement of,

  171-176; black power and, 178, 188-190; focus on small businesses, 184-185; and Minority Bank Deposit Program (MBDP), 185; and affirmative action, 186; participation in, programs, 187-188; results of, 188-192; and class tensions,

  192-193; banking and, 194-196; black banking and, 196-205; criticism of, 200-204; as remedy for systemic exclusion, 206-207; change in purpose of, 222-226; revitalized under Clinton, 226-228; Buckley on, 329n77. See also Community capitalism “Black Capitalism" ad, 177 Black churches, 12, 40-43, 52-53, 271-274 “Black codes," 18-22, 288n11 Black colleges and universities, 275 Black Enterprise, 192 Black institutions, 40-44, 55-56, 275, 297n4. See also Black banking and banks; Black business; Black churches Black insurance companies, 55-56, 297n4

  Black leaders, 46-54, 114-122, 191-192, 298-299n35-37 Black Lives Matter, 248 Blackman, Courtney, 196 “Black Manifesto," 172 Blackmon, Douglas, 131 Black Money Matters, 276-277 Black nationalism, 81-83, 161-162,

  172-173, 178, 205-206 Black Panthers, 161-162, 188-189, 331n115

  Black poverty: black banking and, 8; and wealth gap, 141-146; and creation of ghettos, 156; and segregation, 171; government intervention and, 215-216; and War on Drugs, 216-217; and crime in ghettos, 217-219; perpetuation of, 219-220; and support for black capitalism, 220-222; Trump on,

  248

  Black power movement: genesis of, 159-162; white backlash against,

  164; black capitalism and, 172-173, 178, 188-190; communism and, 208; free-market dogma and opposition to, 212-213 Black Star Line, 82 Bobo, Lawrence, 250 Boycott movement, 128-129 Boyd, Robert B., 198-199 Boyd, William K., 58 Bradford, William, 244 Bradley, Joseph, 37 Branch, Taylor, 136 Brimmer, Andrew, 200-202, 203-204, 333n182 Broadway Federal Bank, 273-274, 317n94 Brophy, Al, 282 Brown, Michael, 248 Brown, William Garrott, 34 Browne, Robert S., 201 Bruce, Roscoe C., 80 Bryan, Williams Jennings, 35 Buckley, William, 180, 329n77 Buford, Sharnia, 242 Burge, Moses, 33-34 Burns, Arthur, 200-201 Burrell, Berkeley G., 172 Bush, George H. W., 217-218 Butler, John, 297n4, 301n77 Butler, Marion, 295n156 Butterfield, G. K., 249

  Cameron, Simon, 28 Capital, 10-11, 13-14, 26-27, 51, 89,

  243-244, 309nn116,119. See also Money multiplier effect Capital export, 245, 345n138 Capitalism, 10-11, 206-214. See also Black capitalism; Community capitalism; Free-market economy Capitol Savings Bank, 44-45 Caplovitz, David, 144, 150, 322n57 Capra, Frank, 126-127 Carmichael, Stokely, 159-160, 171, 189, 208, 325n122 Carnegie, Andrew, 47 Caro, Robert, 68 Carson, Ben, 255

  Carter, Jimmy, 215, 219, 220, 337n36 Carver Federal Savings Bank, 116-118, 269-271, 277, 353n166 Chandler, John W., 19 Chelsea Exchange Bank, 77-79 Chicago Clearinghouse, 72-73 Chicago’s black belt, 71-75, 114, 129,

  259

  Citigroup, 270

  Citizens Federal Savings and Loan Association (CFS Bancshares), 118-119

  Citizens Trust Bank, 52, 86, 300n67, 308n107

  City of Richmond v. Croson (1989), 223-224

  Civil rights: pursuit of, 21-22, 280; black banking and, 115-116, 117-121; black business and, 121-122; early days of, 127-129; World War II’s impact on, 130; presidential support for, 134-136; scope of movement, 136-141; and economic exploitation, 142-150, 153-154, 157-160, 208-210; ineffectiveness of laws, 155; failure of movement, 162-163; and failed attempts at integration, 166-171; opposition to laws, 210-212; rewriting of era, 215 Civil Rights Act (1875), 37 Civil Rights Act (1964), 135, 137 Civil War, South’s changing view of, 64 Clansmen, The (Dixon), 65 Clark, Kenneth, 142, 175, 301n79 Clay, William, 194 Cleague, Albert, 208 Cleaver, Eldridge, 188-190, 327n128 Clinton, Bill, 3, 218-219, 226-231, 256

  Cloward, Richard, 320n20 Coates, Ta-Nehisi, 40, 254 Cold War, 131-132

  Collateralized debt obligation (CDO), 236, 341n106 Color line, 90-93, 105-106, 107-110, 310nn123-125 Commerce: black participation in,

  11-12, 15-22, 33-35, 206-208, 211, 288n11; and threat to majority groups, 60-62. See also Black business Common stock, 266 Communism, 131-132, 207-208 Community banking, 4, 123, 124, 127 Community capitalism, 3, 228-235 Community Development Bank

  (CDB), 174

  Community Development Banking Act (CDBA, 1994), 229, 230-231 Community Development Corporation

  (CDC), 174

  Community Development Financial Institutions (CDFI), 229, 230-232, 340n81

  Community Reinvestment Act (CRA), 232-235, 256-257, 341nn100,103 Community resources, disparity in,

  109-110

  Community Self-Determination Bill, 174-176

  Community self-help, 3-4, 99, 188 Conant, James B., 321n28 Confiscation Acts, 289-290n35 Conklin, William R., 307n75 Consumer credit market: New Deal’s impact on, 112-114; in ghettos, 142-150, 238-239, 322n57, 342nn112,114,116; integration of, 150-151; and wealth gap, 315n56 Contract selling, 110-111, 114, 261, 314n41

  Contract set-asides, 184-185, 221, 223-224

  Contreras-Sweet, Maria, 270-271 Convict leasing, 20-21, 131 Cooke, Henry, 26, 27, 28, 30 Cooke, Jay, 26, 27, 29 Coolidge, Calvin, 86 Cooper, Robert Patrick, 265, 266, 267, 351n124 Cooperative banks, 35 CORE plan for community development, 173-176

  Cotton market, 19-21, 34-35, 295nn151,152 Countrywide, 258 Crack cocaine, 216-217 Credit cards, 112-113 Credit shortages, 34-35, 67-68, 103, 110-112, 289n16, 289n21, 314n47 Credit unions, 148-149 Crime, 155-156, 160, 194, 214, 217,

  250-251, 296n180, 335n8 Cross, Theodore, 181-182, 188, 206 Cruse, Harold, 208 Cunningham, Michael, 276 Cuomo, Andrew, 227 Curry, Tim, 267

  Darrow, Clarence, 74 Darwinism, social, 64-65, 68 Davis, Frank, 321n26 DeArmond, David A., 37 Debt bondage, 33-35 Debt collection, 261, 262 Debt cycle, 111-112, 145, 199 DeGioia, John, 281 Dehlenford, Robert, 183 Dehumanization of blacks, 37, 64-65, 68 Delaney, Martin, 307n84 Demand deposits, 88-89 Department of Housing and Urban Development (HUD), 167-168,

  254-255, 347nn46,52 Deposits, as liabilities, 88-89 Deprivation, exploitation and, 110, 237 Disinvestment, 245, 343n138 Division of Negro Affairs, 86, 132 Dixon, Thomas, 48-49, 65 Dodd-Frank Act (2010), 267 Donovan, Shaun, 254-255 Douglass, Frederick: on wealth, 14; on freed slaves, 15; and Freedmen’s Savings Bank, 23, 29-30, 292n89; on black banking and racial pride, 32-33; suggests alliance between yeomen and freedme
n, 35; on impact of racism, 284; on political position of blacks, 295n155; on Fourteenth and Fifteenth Amendments, 296n166 Douglass National Bank, 71, 75 Douglass State Bank, 319n94 Dred Scot v. Sandford (1857), 15 Drugs, 216-217, 335n7 Du Bois, W. E. B.: on Reconstruction, 17; on Fifteenth Amendment, 22; on

  impact of savings bank mismanagement, 31; on black banking, 31-32; on sharecropping, 34, 295n152; on black enterprise, 46-47, 49-50, 57, 58-59, 97-98; on social Darwinism, 64; on failure of Binga State Bank,

  73; on Garvey, 82; on Great Depression, 97; on color line, 105; on poverty in wealthy country, 111; as communist, 208; on American democracy, 285; on economic slavery of black farmers, 291n72; on Southern police system, 296n180; on Washington, 299n37 Dukakis, Michael, 217-218 Dunbar National Bank, 79-80, 197, 307nn75,80 Durham, North Carolina, black business in, 56-59, 62-63 Durham Textile Mill, 59

  Economism, 213 Economy. See Black business;

  Commerce Ehrlichman, John, 180, 214 Eisenhower, Dwight D., 133, 319n136 Ellsworth, Scott, 60 Equal credit laws, 149-150 Equal Employment Opportunity Office (EEOC), 186 Equal Opportunity Act (ECOA, 1974), 149 Essentiality doctrine, 242 Evolutionary theory, 64-65, 68 Executive Order 11458, 180, 225 Executive Order 11625, 225 Executive Order 8802, 127 Exploitation: of black labor, 10, 20-21, 66, 172; in Chicago real estate,

  71-72; through black banks and businesses, 98, 121; deprivation and, 110, 237; in mortgage lending, 110-111, 114, 258-260; of black community, 130, 142, 147, 160-161, 209-210; segregation and, 140; civil rights and economic, 142-150, 153-154, 157-160, 208-210; and debt collection, 145

  Fair Credit Reporting Act (FCRA,

  1970), 149 Fair Housing Act (FHA, 1968), 166-167, 170, 219, 254-255, 347nn46,52 Fannie Mae, 106, 235, 236 Farley, Rawle, 205

  Farmer, James, 159 Federal deposit insurance, 123, 124 Federal Deposit Insurance Corporation (FDIC), 103, 123, 124, 241-242, 263-264

  Federal Emergency Relief Administration (FERA), 102 Federal Farm Loan Act (1916), 67 Federal Housing Administration (FHA), 106-109, 112-113, 115, 122-123,

  126-127, 313nn19,20,28, 326n15 Federal National Mortgage Association (FNMA, Fannie Mae), 106, 235, 236 Federal Reserve, 67, 320n23 Federal Trade Commission (FTC) study, 144 Ferguson, E. C., 65 Ferguson, Missouri, 248-249 Field order 15 (1865), 16 Fifteenth Amendment, 22 Financial Crisis Inquiry Commission,

  255-256

  Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA,

  1989), 224-226, 244, 264-265,

  338n53 First Atlanta Bank, 282 First National Bank, 26, 29, 45 Fitzhugh, F. Naylor, 171 Florence, Franklin, 175 Foner, Eric, 17 Foohey, Pamela, 274 Ford, Gerald, 219, 220 Forman, James, 160, 172, 355n8 Foster, Mike, 224

  Fractional reserve banking, 88, 94 Franklin, John Hope, 192-193 Fraternal societies, 12, 15-16, 40-44, 297n14

  Frazier, E. Franklin: on Freedmen’s Bank and black progress, 32; on black churches and business, 53; on black debt, 112; on black enterprise and civil rights, 121-122; on integration following emancipation, 290n49; on rise of black banks, 294n140; on black crime, 296n180; on Washington, 299n37; on black racial inferiority, 316-317n90 Frazier, Garrison, 15 Freddie Mac, 235

  Freedmen’s Bureau, 3-4, 16, 17, 22, 291n72

  Freedmen’s Bureau Act (1865), 16, 17-18

  Freedmen’s Bureau ring, 28-29 Freedmen’s Savings and Trust Company (Freedmen’s Savings Bank), 22-32, 267, 292n89, 293nn98-100,110, 294n120

  Freedom National Bank (FNB), 196-199, 241-243, 342-343n123 Free Labor Bank, 23 Free-market economy, 16-22, 66,

  206-214, 222, 239-240. See also Black capitalism; Capitalism; Community capitalism Friedman, Milton, 210-211 Fulp, Bernard, 199, 200 Funeral homes, 54-55, 303n79 Funnye, Clarence, 197

  Gandhi, Mahatma, 140 Garvey, Marcus, 81-83, 116 Gaston, A. G., 46, 54-55, 118, 119-121 Georgetown University, 281 Ghediplan, 173

  Ghetto Economic Development and Industrialization Plan (Ghediplan), 173

  Ghettos: improvement of, 4, 5;

  immigrant departure from, 6; causes of, 69-70, 156, 210; Garvey on segregation and, 81; black nationalism and, 83; neighborhoods swallowed up by, 91; rental market within, 92; and New Deal, 104-106; housing prices in, 110-111; civil rights and black businesses in, 128-130; and black poverty, 141-142, 321nn26,28; economic trap of, 142-150, 209-210, 219, 260, 322n57; and eliminating wealth gap,

  150-155; and War on Crime,

  155-156; Malcolm X and economy of, 160-161; and plans for black economic advancement, 173; pathology of, 175; criminal enterprises in, 194; as risky business venue, 203-205; as isolated economy, 205-206; drugs and crime in, 217-218; Reagan’s plan for, 222; economic potential of, 227-228, 339n63; and community capitalism, 228-232; and subprime lending and consumer credit market, 237-239, 257-260; and capital export, 245; and reparations program, 282-283; etymology of term, 304n5

  Giannini, Amadeo, 125, 126 GI Bill, 126-127, 138, 318n110 Gingrich, Newt, 335n8 Ginnie Mae, 235 Glaude, Eddie, 253, 255 Goldberg, Arthur J., 321n28 Goldman Sachs, 270 Goldwater, Barry, 212, 213-214, 334n204, 335nn209,211 Gordon, Robert, 311n142 Gore, Al, 228

  Government Accounting Office (GAO), 183, 264-265 Government National Mortgage Association (GNMA), 235 Government securities, 203, 204, 243,

  244-245, 333n182 Government-sponsored enterprises (GSE), 235, 348n68 Graham, Phil, 233

  Grand United Order of True Reformers,

  41-42, 297n6 Grant, Michael, 275-276, 354n172 Gray, Freddie, 249 Great Depression, 73-74, 80, 86-87, 96-97

  Great Migration, 69-71, 109-110, 314n34

  Great Society, 151-152, 156, 157 Greenspan, Alan, 209-210 Griffith, D.W., 65 Groove, Gregory G., 272

  Hacker, Jacob, 355n6 Haiti, 19

  Hamilton, Alexander, 4, 13, 14, 94 Harlem: banks in, 75-81, 196-199, 241-243; civil rights and black businesses in, 128-130; impact of 2008 financial crisis on, 269-270; real estate renaissance in, 270 Harlem Freedom National Bank, 192 Harlem Labor Union, 128-129 Harlem Renaissance, 80, 82, 316n90 Harmon, Lindsay, 311-312n155 Harris, Abram, 13, 28, 31, 98-99,

  124-125, 130, 311n139 Harvest of American Racism, The,

  156-157 Hayden, John T., 333n165 Henderson, Vivian, 258 Herrnstein, Richard, 251 High-cost lenders, 110-111 High-interest mortgages, 237

  Hirsch, Arnold, 336n21 Historically black colleges and universities (HBCUs), 275 Hoffman, Frederick L., 56, 301n87 Hogan, Larry, 249

  Home appraisals, standardized, 105 Home loans. See Mortgages Homeownership, 9, 253-254, 282-283 Home Owners Loan Corporation (HOLC), 105 Homestead Act (1970), 116 Homicide, 217 Hoover, J. Edgar, 188 Hope, John, 50, 51, 53-54 Horton, Willy, 218 Host group dominance, 62 Housing prices: segregation’s impact on, 90-93, 308-309n110; in ghettos, 110-111 Howard, Oliver Otis, 17 Hoyt, Homer, 91 Hudgins, William, 175 Hughes, Langston, 69 “Human Dignity" speech, 178 Humphrey, Hubert, 130-131, 176 Hyman, Louis, 146, 313n20, 315n56, 342n116

  Ickes, Harold, 104, 312n13 “I Have a Dream" speech, 139-140 Immigrant banks, 5-6, 125-127 Innis, Roy, 165, 171, 173-174, 328n54 Installment loans, 112-113, 144 Insurance companies, 55-56, 297n4 Integration: failed efforts for, 166-171, 254; of banks, 194-195, 332n145; opposition to, 219; impact of, 285; Nixon on, 327n33 Interracial marriage, 283-284 Irons, Edward, 115, 175, 204-205, 328n48 Isolation index, 219, 317n104

  Jackson, James A. “Billboard," 86,

  99-100

  Jackson, Jesse, 191-192, 215, 228, 249 Jackson, Kenneth, 108 Jacob, John, 148 Jacobson, Beth, 258 James v. Valtierra (1971), 170 Javits, Jacob, 147, 148 Jefferson, Thomas, 4 Jewish shop owners, 130 Jim Crow laws, 38-39, 45-46, 53-54, 134, 311n142. See also Segregation

  John Birch Society, 334n205 Johnson, Andrew, 17-18, 22, 135,

  290n46

  Johnson, Lyndon, 135-136, 151-154,

  156, 157, 166-167

  Katznelson, Ira, 312n1

  Kempton, Murray, 242

  Kendi, Ibram, 155

  Kennedy, Joe, 238

  Kennedy, John F., 134-135

  Kennedy, Robert, 176

  Kennedy, Ted, 231


  Kerner Commission, 156-157

  Killer Mike, 276

  King, Coretta Scott, 119

  King, Martin Luther Jr.: on mass

  unemployment, 1; on black banking, 2, 119; on disadvantage of blacks, 9, 22, 138; Gaston and, 120; activism of, 134, 137; partnership with LBJ, 135; assassination of, 136; on segregation, 137, 140; “I Have a Dream" speech, 139-140; “The American Dream" speech, 140-141; on riots, 142-143; on War on Poverty, 152; on black poverty and enterprise,

  157-159; as domestic enemy,

  207-208; legacy of, rewritten, 215; confused legacy of, 224; Trump on, 248; on need for societal changes, 320n18; holiday celebrating, 335n2 Kinzer, Robert H., 30 Knight, Frank, 98 Knights of Labor, 35 Kuhn, Clifford, 52

  Ku Klux Klan, 16-17, 49, 65, 82, 303n125 Kwak, James, 213

  Labor regulation, 101-103 Lafon, Thomy, 289n16 Land grants, 16-18, 22, 283, 290-291n53 Landownership, 15-18, 22-23, 25, 27, 291n54

  Law enforcement, 248-249, 262 Lee, Robert E., 64 Leovy, Jill, 217 Levy, Jonathan, 28 Lew, Jack, 253

  Liabilities, as vulnerability of black banks, 88-89 Libertarianism, 211-214, 334n205 Liberty Bank, 265 Lincoln, Abraham, 23

  Lindsay, Arnett: on Freedmen’s Savings Bank, 30, 31, 294n114; on Wage Earners Savings Bank, 42; on black banks in New York, 76; on Dunbar National Bank, 79; on success of black banks, 87; on residential loans, 92; on black banking, 304n10, 311n136 Little, Earl, 82-83 Little, Louise, 82-83 Litwack, Leon F., 288n9 Loan modifications, 274 Louisville, New Orleans, and Texas Railroad v. Mississippi (1890), 38 Low-income housing, 104-106, 168-170

  M&F Bank, 268, 273, 274 Macey, Jonathan, 341n100 Madison, James, 10 Mafia, 194

  Maisel, Sherman, 194 Malcolm X, 3, 4, 83, 160-161, 178, 325n123 Marable, Manning, 9, 193 Marriage, interracial, 283-284 Marshall, Thurgood, 223 Marshmallow experiment, 251-252, 346n37 Marx, Karl, 207 McAdams, Doug, 143 McAdams, Richard, 280 McCarthy, Joseph, 147 McColl, Hugh, 240 McKissick, Floyd, 171, 172, 328n54 McKnight, Gerald, 158 McLaurin, Dunbar S., 173, 328n48 McLaurin, Thomas, 277 Mechanics and Farmers Bank, 7-8, 57-58, 268 Meese, Edwin, 224 Meier, August, 299n52 Menino, Thomas M., 272 Metcalf, George, 326n15 Miller, Brad, 255 Miller, Geoffrey, 341n100 Mining, 20-21