The Color of Money: Black Banks and the Racial Wealth Gap

by Mehrsa Baradaran

The truth was that segregated communities could not segregate their money. In fact, black banks, which were created to control the black dollar, became the very mechanism through which black money flowed out of the black community and into the mainstream white economy.

For blacks, the path toward wealth was closed by segregation, government policies, and economic reality.

Black capitalism, as it turned out, meant capitalism only for blacks.

When the Emancipation Proclamation was signed in 1863, the black community owned a total of 0.5 percent of the total wealth in the United States. This number is not surprising; slaves were forbidden to own anything, and the few freed blacks living in the North had few opportunities to accumulate wealth. What is staggering is that more than 150 years later, that number has barely budged—blacks still own only about 1 percent of the wealth in the United States.19