As a Pew Research Center report stated last fall, “The Great Recession of 2007-2009 triggered a sharp, prolonged decline in the wealth of American families, and an already large wealth gap between white households and black and Hispanic households widened further in its immediate aftermath.”
In 2016, the median net worth of white households was $171,000, according to the Pew report. This is compared with black household wealth of $17,100 and $20,600 for Hispanic households.
But there is a back story to black wealth that is not well known. So it is fitting in the month we celebrate black history that I select for the Color of Money Book Club “Black Fortunes: The Story of the First Six African Americans Who Escaped Slavery and Became Millionaires,” by journalist Shomari Wills (Amistad, $26.99).
“African Americans who achieved wealth were often attacked, demonized or swindled out of their wealth,” Wills writes. “The black elite in their first decades of existence survived assassination attempts, lynchings, frivolous lawsuits, and criminal cases all meant to destroy or delegitimize their wealth.”
Wills’s ancestors had money. They owned land, stocks and businesses.
“The creation of black wealth is an important but overlooked subject in the economic and social history of the United States,” he says. “I believe black millionaires are important in part because they disrupt stereotypes of black economic impotence.”
Some of the black entrepreneurs profiled in the book include Robert Reed Church, who escaped slavery during the Civil War to become one of the largest landowners in Memphis; Annie Turnbo Malone, who developed the first national brand of hair-care products; and O.W. Gurley, a teacher who built an all-black community in Tulsa that became known as the “Black Wall Street.”
The stories of the entrepreneurs who achieved great wealth facing incredible obstacles are inspiring. And, as an added bonus, “Black Fortunes” shatters some myths.
Myth No. 1: Blacks are inherently bad with money.
No, we cannot get over that slavery thing. Racial discrimination has contributed — and still does — to the wealth gap. As Wills points out, racism then and now has affected African Americans’ ability to achieve economic stability.
“In the modern history of America, spanning the Jim Crow era to present day, blacks are often smeared as financially inept and incapable of providing for themselves,” Wills writes. “Disparities in wealth and income are stubborn problems in the United States, but the higher rates of poverty among blacks are often distorted to create the perception that poverty is ubiquitous among African Americans.”
Myth No. 2: Madam C.J. Walker was the first black millionaire. Walker was an amazing business executive and is often touted as the first black millionaire. She was not the first, according to Wills.
“She was one of the first African Americans to flaunt and claim her wealth openly and fearlessly,” he writes.
It was William Alexander Leidesdorff, the offspring of a Danish sailor and a Caribbean woman, who first earned the title. He built an import-export business, and at his death in 1848, his estate was worth more than $1.4 million. That would be $38 million in today’s dollars, Wills estimates.
Myth No. 3: Money equalizes everything. A consistent thread in Wills’s research is how often 19th- and early 20th-century black entrepreneurs had to use white people to conduct business. Despite their financial acumen, they needed proxies to execute certain transactions.
Wills said his great-great-uncle John Drew had to hire a white broker to perform stock trades.
Myth No. 4: Blacks do not invest. Blacks may not have as much money in the stock market as whites, but they have had a rich history of investing. Their investment of choice has been real estate.
Real estate played a huge role in minting the fortunes of the black business executives — women and men — featured in the book.
“Since Reconstruction, black people have, on average, invested a larger percentage of their net worth in real estate than any other group,” Wills points out.
There is a good reason real estate was preferred.
For African Americans, owning land — after toiling tirelessly over it as slaves and then as sharecroppers — was, and still is, a symbol of their liberation, he writes.
This book about black economic empowerment is a fascinating read of fortunes gained and lost.
I am hosting an online discussion about “Black Fortunes” at noon Eastern time on Feb. 22 at http://washingtonpost.com/discussions. Wills plans to join me to answer your questions. Please join us.