Black Wall Street
Black Wall Street is a story that is often told in the politically and economically progressive circles of African-American communities. In the early 1900’s the oil boom provided African-Americans like other Americans the hope and promise of economic prosperity. But segregation, an American reality, that had very little to do with region and was quite simply an entrenched American policy and fact caused many of the black migrants to settle in the northern end of town under the strict lash of residential segregation.
The African-American community again demonstrating a strength and resilience not their own, began to build in the face of stark and sometime brutal government and nongovernmental social, political, and economic oppression. The black entrepreneurial spirit again raised its head and these leaders began to take advantage of the entrepreneurial opportunities that strict segregation provide them. They created an impressive business ecosystem “that included banks, hotels, cafes, clothiers, movie theaters, and contemporary homes. Greenwood residents enjoyed many luxuries that their white neighbors did not, including indoor plumbing and a remarkable school system that superiorly educated Black children.”
This community was destroyed by pure evil intent in the form of racial terrorism. The vast majority of black economically prosperous business centers located in every major city with substantial black population, were not destroyed by mob violence, but by government policies that drove private business decision making using urban renewal and redlining policies to systematically build wealth for working and middle class whites and to deny and starve black working and middle class residents of capital. Let’s be clear the government built the “Hood.”
In 1933, faced with a housing shortage, the federal government began a program explicitly designed to increase — and segregate — America’s housing stock. Author Richard Rothstein says, “the housing programs begun under the New Deal were tantamount to a “state-sponsored system of segregation.” The government’s efforts were “primarily designed to provide housing to white, middle-class, lower-middle-class families,” he says. African-Americans and other people of color were left out of the new suburban communities — and pushed instead into urban housing projects.
The term “redlining” comes from the development by the New Deal, by the federal government of maps of every metropolitan area in the country. And those maps were color-coded by first the Home Owners Loan Corp. and then the Federal Housing Administration and then adopted by the Veterans Administration, and these color codes were designed to indicate where it was safe to insure mortgages. And anywhere where African-Americans lived, anywhere where African-Americans lived nearby were colored red to indicate to appraisers that these neighborhoods were too risky to insure mortgages.
The Current Impact of Redlining
Today African-American income on average are about 60 percent of average white income. But African-American wealth is about 5 percent of white wealth. Most middle-class families in this country gain their wealth from the equity they have in their homes. So this enormous difference between a 60 percent income ratio and a 5 percent wealth ratio is almost entirely attributable to federal housing policy redlining implemented through the 20th century.
In 1968 the Fair Housing Act was passed that allowed African-Americans to effectively purchase homes anywhere in the United States, but this law was an empty promise the damage had been done. Those homes are no longer affordable to the families that could have afforded them when whites were buying into those suburbs and gaining the equity and the wealth that followed from the government sponsored policy of “Redlining”.
Alternative Finance for Underserved Communities of Color
Are acutely aware that most small businesses and startups struggle to get access to capital and underserved communities of color receive extremely small amounts of funding from traditional funding sources. So, instead of protesting and complaining maybe small businesses and small real estate developers should begin to implement different methods of finding and deploying capital. We are going talk about 6 different types of investing alternatives that are on the cutting edge of new capital formation for underserved communities of color.
Local Investment Clubs
A traditional investment club is a small group of individual investors who come together to learn, share investing experiences, and help each other become more successful investors. Clubs provide education, camaraderie and buying power, plus the confidence of knowing you don’t have to go it alone. Clubs can also choose not to pool investment dollars and instead simply come together to discuss investment ideas and analysis.
Local investment clubs will have a focus on investing in local businesses and local real estate development in underserved communities using crowdinvesting to allow the club members the ultimate reward derived from local crowdinvesting to be owner, customer and brand advocate all at the same time. Again this is a way to build wealth in underserved communities.