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Here’s Some History to Help Understand the Racial Wealth Gap

Wednesday, January 27th, 2016
A company of 4th Regiment U.S. Colored Troops, (USCT) Infantry/Wikimedia

William Spriggs Next month is Black History Month. We will hear stories about black Americans and their successes in this country against the barriers (slavery, Jim Crow, poll tax just to name a few) thrown in their paths. Yet for every success story, there is still the nagging fact that the median net wealth of white households is 12.2 times greater than that of black households.

Because of well-documented gaps in unemployment rates, earnings, poverty and wealth, black working people are sometimes falsely seen as “bystanders” to America’s economy.  Unbelievably, there is a tendency to observe the gaps in economic success and blame African Americans for being disengaged and not trying to respond to clear economic realities; a lack of investment in education, skills, training and personal saving. This is patently absurd.

African Americans are fully aware of the barriers they face to success, and have been steadfast to struggle to remove them.  Indeed, Dr. Martin Luther King Jr. was assassinated during a campaign by black sanitation workers in Memphis, Tenn., to exercise their right to organize, strike and demand fair wages; a key theme of American worker advancement during the first 80 years of the last century and one repeated this past Dr. King Holiday by airport workers demanding a living wage.

The difference in wealth does not grow smaller when comparing white and black households headed by college graduates, or when controlling for differences in income.  Because the easy answers like education and income differences don’t explain the wealth gap—which measures accumulated savings over multiple generations—the fall back is often to blame the savings’ behavior of blacks.  And, here, old stereotypes of African Americans being profligate can easily substitute for documentation. But taking a closer look at history tells us the real story.

Those early years after emancipation are key in addressing the deep history of African Americans as their own agents.  During the Civil War, African American leaders, most famously, Frederick Douglass, campaigned hard to have black soldiers officially sworn into the fight to end slavery.  With issuing the Emancipation Proclamation, Lincoln also finally signed on that in 1863 not only would slaves in the rebellious states be free, but African American men would join the United States Army and Navy in quelling the Southern revolt.  Close to 180,000 black men signed-up as official members of America’s Armed Forces to defend the Constitution of the United States against all enemies foreign and domestic.  They became the largest paid workforce of African American men to that point in America’s history.

The issue quickly arose as to where could they deposit their paychecks?  A few fledgling efforts were made to start banks.  And, that effort culminated with the establishment of the Freedmen’s Savings and Trust by Congressional act in March 1865; the Freedmen’s Bureau bank.  Recently the U.S. Department of Treasury and Secretary Jack Lew dedicated an annex to honor the Freedmen’s Bureau Bank.

By 1870, the bank operated 37 branches throughout the South, with African Americans trained as branch managers.  In all, almost 70,000 African Americans made deposits in the bank, reaching savings of about $57 million.  Those facts stand to clearly demonstrate the efforts of a people, subject to slavery, freed with nothing from their previous labors to start anew having built wealth for others for free.

But, fate would intervene.  The accumulation of those savings came during a period when the federal government still stood in the way of restoring the South’s old hegemony of white southern planters.  And, it came when the nation’s banks were still conservative following the uncertainties of the Civil War.  Southern banking laid prostrate, devastated by the collapse of the Confederacy and the meaningless holdings of Confederate dollars, and the long mystery of the disappearance of the gold reserves that backed that currency on its desperate journey south from Richmond, Virginia in April 1865 as Robert E. Lee surrendered the fighting cause at Appomattox Court House under the vigilant eyes of 2,000 black men in seven units of the United States Colored Troops.

By the start of the 1870’s, the expansion west made possible by the Homestead Act and transcontinental railroad—both enacted during the Civil War—restored the nation’s prosperity and financial zeal.  The result was over speculation in railroading.  In Europe, financial pressures mounted from the Franco-Prussian War.  Germany refused to continue issuing silver coins.  This resulted in plummeting silver prices, and the eventual move by the United States to go from backing its currency in silver and gold, to use only the gold standard.  This led to the collapse of investments in silver mines in the western United States.  The result was a global financial collapse that swept Europe and the United States in 1873.  With it came the collapse of the U.S. banking system.

Sound familiar?  And, that collapse decimated the Freedmen’s Savings and Trust as well.  At a time of general financial collapse and no Federal Deposit Insurance Corporation—a creation learned from the Great Depression—many depositors lost their savings.  The millions in savings of the newly free went away, too.  Not too different than the 240,000 homes that disappeared from the African American community after the financial collapse of 2007.

In 1876, a compromise to resolve the Presidential election resulted in the removal of federal protection of African Americans in the South.  The end of reconstruction meant the restoration of southern white hegemony and the evisceration of voting rights for African Americans, the protection of the access to many occupations and the limiting of their equal access to education.  This too sounds familiar.

To accurately measure history, it takes measuring all the hills and valleys right.  Dedicating a building to the Freedmen’s Savings and Trust allows us to properly assess the toil and efforts of African Americans.  It shows the hard work and industrious nature of a determined people.  It reminds us of the mountains of betrayal as well.

This blog originally appeared in aflcio.org on January 22, 2016.  Reprinted with permission.

William E. Spriggs is the Chief Economist for AFL-CIO. His is also a Professor at Howard University. Follow Spriggs on Twitter: @WSpriggs.

Southern Gulag: How 20th Century Slave Labor Undermined the US Labor Movement

Wednesday, September 3rd, 2008

Let us talk this Labor Day about slave labor in the United States. No, not the antebellum kind before the Civil War but the slavery that persisted well into the 20th century, the slavery that was integral not only to the southern economy but slaves owned by northern corporations and used to break strikes and keep the South a union-free reserve. And I don’t mean some metaphorical slavery, but, as Douglas Blackmon writes in his recent Slavery by Another Name, the slavery of brutal forced labor, whips, death and sexual rape of black women–in many ways worse than that of the older form of slavery.

The author is not a leftwing journalist but Atlanta bureau chief of the Wall Street Journal, but what he documents is seven decades of a southern gulag- and I use the word “gulag” deliberately for what his story shows is that the U.S. had within its borders as brutal a regime of degradation as the worst that Stalin could dish out. This southern gulag involved millions of black workers enslaved through a combination of capitalist employers, farm owners and a legal system that promised a brutal fate for anyone defying their de facto masters. And it is a key story for understanding the ultimate weakness of the overall U.S. labor movement, since having a deunionized Southern region was an essential tool in disciplining Northern workers who feared loss of jobs to a region without labor rights. That is the story that Blackmon tells. I urge every person to go out and read the book, but the following gives the highlights (or lowlights if you will).

Blackmon notes, as Reconstruction ended, white state governments rightrealized “that the combination of trumped up legal charges and forced labor as punishment created both a desirable business proposition and an incredibly effective tool for intimidating rank-and-file emancipated African Americans and doing away with their most effective leaders.” (p. 55)   Every state in the South soon had laws allowing the leasing of prisoners.

Slavery Worse Than Old Slavery: Those convicted of these trumped up crimes – from vagrancy to “illegal voting” to using obscene language —  would be sold like slaves to farms or industrial concerns that could whip them and work them like antebellum slaves.  In fact, their conditions, as Blackmon provocatively argues, were usually worse, since sheriffs leasing out convicts to pay court fees “had no reason for concern about how they were treated by their new keepers or whether they survived at all.”  Those renting a slave were quite willing to work a leased convict to death.   In the first two years that Alabama leased prisoners, 20 percent died.  Within three years, 45 percent were killed.(58)  In the mines using the slave convicts, death was constant, with week after week of “dead black corpses” dumped into shallow graves.(327)

The culture of slave labor permeated most industries even for ostensibly free blacks.   Free laborers who applied for jobs with the Southern Railway would instead find “guards with shotguns and dogs patrolling the perimeters of the worksites” and leather straps  to beat men who tried to flee and assisted by county sheriffs who would return fleeting African Americans to the camps.(300)  And the degradations of older forms of slavery extended to women caught in its nexus as well:

“At the lumber camps in southern Alabama, women seeking the freedom of their men were simply arrested when they arrived, chained into their cells, and kept to serve the physical desires of the men running the camps…And the laws of the South were interpreted explicitly to ensure that the rape or coercion of a black woman by a white man would almost never be prosecuted as a crime.”(305)

Such slave labor was a key revenue source for state and county governments.   In the 1880s, leasing convicts added up to more than 10% of state budget for state of Alabama. (95)  By 1903, payments to the state from convict leasing was nearly equal to 25 percent of all taxes collected rightin Alabama.(112)

From key mining concerns to lumber mills to steel companies, fortunes in the south were built on such leasing of slave labor.   In Atlanta, James English, a mayor of Atlanta in 1880, would build a network of industries, from Coal to brickmaking to the Georgia Pacific Railroad to the First National Bank of Atlanta based on convict slaves he bought and sold.   Just one example cited by Blackmon is that prisoners just in English’s brickyard in 1907 produced $1.9 million in profit.(342)

While official state reforms were supposed to restrict the system in the 1910s and 1920s, it actually ballooned after World War I, especially at the county level and would last until World War II.

The Permeating Effects of Convict System on Southern Black Population: The southern slave system did not end with the tens of thousands of blacks officially convicted and sold under the system.  Far larger numbers of African Americans were threatened with convictions and “voluntarily” would “confess judgment” and agree to work without compensation to pay a bond to the white landlord–turning them back into conscripted labor in the fields subject to shackles and the lash.(67-68)

Since any black person could be falsely accused and sent to the worst of situations–the slave mines – they were a tool for de facto enslaving most of the black population of the South:

“The reality of incarceration in the slave mines became so ubiquitously understood for African American men that landlords and local sheriffs – equipped with almost unchecked powers of arrest and conviction and enormous financial interest in providing labor to the mines and other enterprises – could make almost any demand upon any black man.  More often than any other that demand was that they remain on the land of specific white farmers, living lives of supposedly voluntary serfdom”  or face the worse fate of the mines.(332)

Blackmon’s estimates that about half of the 4.8 million African-Americans living in the Black Belt region of South in 1930 lived in “some form of coerced labor.”(375)

Blackmon marvels at the ignorance that allows a time period in the South to be characterized by the almost benign term of “Jim Crow,” when it was such a packed horror house of slavery, death and degradation.  For black workers, the southern gulag’s legacy was one of generations of stolen wealth, broken families and racist ideology.

The Effects of the Southern Gulag on U.S. Labor Movement: One key fact Blackmon emphasizes is that the convict slave system was completely integrated into the most advanced industrial concerns of the region, including mines and other companies soon owned by Northern capitalists and corporate holding companies.   And everyone recognized that:

“Coal mines, timber camps, and farms worked by imprisoned men couldn’t be shut down by strikers, or have wages driven up by the demands of free men.”

White miners would launch a strike against the Tennessee Coal, Iron & Railroad company in 1904; in response, the company shut down some of the free mines and opened two more mines using convict laborers–defeating the strike. (293)  This was a company that was soon bought by Wall Street investors from the North and supplied steel rails to the Union Pacific and Southern Pacific Railroads, and in the economic crisis of 1906, would be merged into U.S. Steel–with that Northern company becoming “the largest  customer of the Alabama slavery system.”(295)

When the United Mine Workers organized more than ten thousand free miners in Alabama in 1908, slave convict labor was crucial to maintain operations during strikes.   Almost all were in jail for incredibly petty crimes, such as riding a freight train without a ticket.(313)   At the pitch of struggle, 7000 white miners joined by 500 free black miners were on strike (many of the latter initially brought into the mines as strikebreakers).     Coerced farm tenants, themselves de facto debt slaves to landlords, were forced by farm owners to come into the mines to help break the strike.  “Trains loaded with black farmworkers from the Black Belt pulled into Birmingham every day.”

The united strike by white and black workers led to mine owners leading an “aggressive campaign to divide the union along racial lines” with a black union leader arrested and then lynched.  Alabama Governor Braxton Comer told union leaders that officials were “outraged at the attempts to establish social equality between black and white miners” and that he would not tolerate “eight or nine thousand idle niggars in the State of Alabama.”  He called the strike a threat to white supremacy and used armed military units to finally break the strike.(326)

The whole system reached its zenith as industrial concerns worked with local law enforcement and agricultural owners to smash black resistance and labor union organizing, with the system:

“knitting together the interests of capitalists, white farmers, local sheriffs and judges, and advocates of the most cruel white supremacy–all joined and served by an unrelenting pyramid of intimidation.”(330)

The Legacy of the Southern Gulag for Labor: When unions would finally succeed in organizing nationally in the 1930s, that organizing was still nearly impossible in the South.  Economically, the South would become a region where unionized firms could threaten to move to break unions in the North and, politically, it would remain a political bastion of anti-union voting to support anti-union legislation such as the Taft-Hartley Act in 1947.    To this day, racial divisions are still promoted by employers to block union organizing drives.

Many conservative analysts try to explain the weakness of labor unions and social democracy in the U.S. through a whole range of culturalist explanations about the U.S. working class.  Racism is often cited but as Blackmon’s book makes clear, one incredibly key but almost completely unmentioned factor is the southern gulag that destroyed free labor in a whole region of the country–with the full cooperation of northern capitalists who recognized the economic and political usefulness of a non-union region of the country to undermine labor in the rest of the nation.

Blackmon began his book wondering how U.S. companies would stack up if compared to the German corporations who relied on Jewish slave labor during World War II.   The answer from his book is that the U.S. corporate elite still has much history to answer for, history which unlike in Germany or the Russia, is barely even acknowledged.

About the Author: Nathan Newman is a lawyer, policy analyst and longtime labor activist, having started as a union organizer twenty years ago and has since worked as a policy researcher and labor lawyer. Currently, he is Policy Director for the Progressive States Network, a nonprofit that supports state legislative campaigns for economic and social justice. Newman has a Ph.D. in Sociology from UC-Berkeley and a law degree from Yale Law School and has been published in a range of academic and popular journals, including Working USA, The American Prospect, the Employee Rights and Employment Policy Journal, MIT’s Technology Review and he is a regular columnist for the Progressive Populist. He is also the author of the 2002 book, Net Loss: Internet Prophets, Private Profits and the Costs to Community. He can be contacted at nathan@nathannewman.org. All views expressed at Today’s Workplace are those of Nathan Newman and do not necessarily reflect those of Progressive States Network.

This post crossposted at TPMCafe.

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