Restitution for American Slavery
A forensic economics approach
Sibylle Scholz, Chrissi Jackson
Descendants of African American slaves have never been compensated for one of the worst crimes against humanity. The lost wages suffered by slaves, and the asset value of slaves to the slave holders are well over one trillion US dollars in today’s money. Equally important is the value of the promise of land to freed slaves, commonly know as 40 acres and a mule.
The word restitution is used deliberately meaning the recovery and return benefits obtained through improper means. Slavery in the United States was particularly abominable because it was chattel slavery, meaning that people were the property of owners and bought and sold as property.
A common argument against reparations for American slavery is that it was legal then. But at the Nuremberg trials, where Nazis were brought to justice, the US prosecutor Robert H. Jackson said that common law recognizes rules of conduct and this is sufficient to establish guilt and judgments of wrong doings. In the case of slavery, Europe tacitly permitted slavery in the colonies, but slavery was prohibited in Europe and Africa, and for Natives in the Americas. It was widely recognized that chattel slavery and permanent slavery was morally wrong and this is sufficient to establish guilt and judgments of wrong-doings in the United States.
In the United States slavery ended with the Confiscation Acts and Emancipation Proclamation in 1863 and the 13th Amendment made slavery illegal in 1865. The Civil War started in 1861 and ended in 1865 and many slaves fought in it. After Abolition, Special Field Order No. 15 of the US Army in 1865 confiscated 400,000 acres of land along the Atlantic coast of Florida, Georgia and South Carolina and approximately 18,000 freedmen where settled there. They were each given 40 acres but on a temporary basis. They were to receive a mule, left over from the war. This coined the expression “40 acres and a mule.” At the end of Reconstruction in 1877 most of that land was given back to the original White owners.
The Southern Homestead Act of 1866 was designed to make 40 acres available to Freedmen. This transition went along as well as it could while Federal troops oversaw this plan. But in 1877 troops retreated and these arrangements disintegrated. Census data does not separate White and Black farmers until 1900 but W.E.B. Du Bois estimated that Black farmers owned 3 million acres in 1875 and 8 million in 1890. The peak year, from census data, shows 12 million acres in 1910 fully owned by 175,290 non-whites and partially owned by 43,177 non-white farmers. Roughly this is 60 acres per farm. Because of the rising prices in cotton, many farmers did very well initially, but as Jim Crow laws set in, farm operating contracts became more difficult and this, together with a general collapse of all farming led, to widespread abandonment of Black owned farms. Today, there are 45,000 Black owned farms.
In the early 20th Century there was the Great Migration, when about 6 million Afrodescendants left the South. In 1863, over 90% lived in the South and this held true until about 1900. The majority of the population in South Carolina and Mississippi were African Americans, and more than 40 per cent in Georgia, Alabama, Louisiana and Texas, and this changed drastically with the migration to the North.
The 1910 agricultural census shows that there were over 3 million farms in the South farming 354 million acres. This is down by 7 million acres from the 1900 census, and today, the South farms 270 million acres. Maps of this census show that almost all farms in the South were less than 80 acres, except for areas around Savannah.
The census of 1910 does not distinguish between sharecroppers and tenants, and lists 670,000 Black tenant farmers and 1,200 Black farm managers cultivating 27 million acres. This amounts to 40 acres per farm. Sharecropping existed well into the 1950s. Sharecroppers represent the potential of how much land Black farmers would have been able to cultivate if they had been able to own land.
In 1910, there were a total of 890,000 Afrodescendants cultivating a total of 39 million acres. The total population of Afrodescendants was 10 million. After 1910 there was a steady decline of Afrodescendant farmers as they moved to the North during the Great Migration in the ensuing decades. Based on this data from 1910, when agriculture was the main economic activity and when the majority of the population in the South was Black and rural and applying a 2017 average value of Southern Agricultural land of 3,200 US dollars, the total value of that land is 125 billion US dollars in 2017 dollars. This dollar value represents damages suffered by those sharecroppers and are agricultural assets that were denied to the Black community.
The lack of the opportunity to accumulate assets means that these families remain in poverty. Poverty programs only address income and thus asset poverty persists. This of course is true for Whites as well, but for Blacks, asset accumulations is much more difficult. For instance, in 2010, 1.25 billion US dollars from the U.S. Department of Agriculture (USDA) was paid to African American farmers through the settlement of the Pigford v Glickman case. The Pigford case is a 1999 class action discrimination suit that showed that the USDA was biased when making loans or farm assistance available at the county level between the years 1983 and 1997. African American farmers were either denied or had to wait longer for loan approvals. In agriculture especially, timely availability of credit is imperative to run a farm successfully. Receiving credit for seeds is meaningless if the time for planting has already passed. About 2,000 farmers were in that first claim and two options were offered: Track A provided a settlement of $50,000 and relief from loans and tax liabilities. By showing evidence of greater damage, farmers could apply for Track B claims for larger amounts. But there were numerous problems implementing the payments, and only 31% of Track A and 169 eligible Track B claimants. Eventually there were a total of 15,645 farmers who received $1 billion US dollars in cash, debt relief and other credits under Track A. An additional 17,000 farmers, received $1.2 billion US dollars in 2010 under what is referred to as Pigford II. These two settlements are the largest settlements to date to African American farmers, but they are specifically for discrimination of access to farm credits and only cover the period between 1983 and 1997.
In 1910, there were 6.7 per cent Afrodescendants who farmed. Using this percentage, an opportunity cost of assets can be calculated for the African American community today. The 2010 census recorded 43 million self-identified African Americans and the 2014 estimates by the Census Bureau is 47 million. Later projections are not available yet. Using the 2010 census and 6.7 per cent, yields 2.9 million, and 3.2 million for the 2014 projections. Estimating damages from these numbers yields 367 and 403 billion US dollars based on the value of agricultural land in the South in 2017.
The total damages are estimated between 453 and 489 billion US dollars in lost asset accumulation opportunities suffered by Afrodescendants. These estimates represent the restitution. Other researcher have calculated restitution using wages, or the actual value of slaves.
Several economists have looked at what the total value of slavery to the economy was before Abolition. On the one hand, slavery was unpaid labor. On the other hand, slaves were like capital that had a value in the market. In addition to that, researchers looked at the value of the promise to have access to land after Abolition.
Larry Neal and economist at the University of Illinois, Champaign/Urbana looked at wages between 1620 and 1840 and compounded these at 3 per cent. His estimates for lost wages during that period are 1.4 trillion in 2016 US dollars. It shows how much white farmers benefited from slavery. Richard Vedder and economist at Ohio University estimated a similar number, 5 to 10 trillion US dollars as an accumulated gain in wealth for white Southerners.
Tim Worstall, a journalist, used the market value of an enslaved person, and then calculated a total wealth of having slaves, as an asset, at a compounded 1 per cent to be about 1.75 trillion US dollars, or about 40 thousand US dollars to each Afrodescendant today. But slaves had different prices depending on their skill levels as either artisans or domestics, or if they were known runaways or had physical impairments. Women commanded a higher price than men for obvious reasons.
Samuel Williamson, economist at Miami University calculated an average price for slaves of between 300 US dollars in 1804 and 800 US dollars in 1860. He then calculated a labor income value of owning a slave, of about 140,000 US dollars in 2016 US dollars. Williamson uses the inflation rate calculator at a website called measuringworth.com. Here the average annual inflation rate is 2.2 per cent for the period between 1860 and 2016. Theoretically, using the value of a slave is more appropriate for calculating reparations than lost wages. This approach uses slaves as an asset. But after Abolition this asset disappeared. Pikkety developed a graph reproduced below as Figure 11, which illustrates the changing nature of wealth.
Thomas Craemer a sociologist at the University of Connecticut, used Field Order No. 15 and the Reparations Bill that was passed in the U.S. House of Representatives in 1866. Both decrees speak of 40 acres to each freedman. He then attached an average price of $3,020 per acre in 2015, and multiplied this by 3,953,760 slaves from the 1860 census. This yielded a number of 486 billion US dollars. Prices per acre vary hugely from State to State, so this might be overstated. Furthermore, Field Order No. 15 states that “three respectable Negroes, heads of families ….. shall have a plot of not more than forty acres of tillable ground.” In other words, the intention of Field Order No. 15 was not to give 40 acres to each slave, but rather to a portion of such individuals that would be able to conduct agricultural production on 40 acres. Also, Reparations Bill H.R. 29 which was introduced by Senator Thaddeus Stevens states that “each male who is the head of a family …. or each widow who is the head of a family…” shall receive 40 acres. In other words, the promise was not 40 acres for all slaves, but rather land for a family unit of perhaps four or five, which would be necessary to successfully till 40 acres.
Agriculture is an inherently risky endeavor. If the harvest is poor, credit payments are difficult to make. If the harvest is more than usual, prices drop and the benefit of a large harvest are depressed. If credit is not given in a timely manner, planting cannot happen in a timely manner and production is compromised. This happens to all Black farmers even today. Farming was particularly hazardous for Blacks because of lynchings and the burning down of farms, which resulted in thousands of acres of farm losses. This practice was called “whitecapping.” Also, we know from anecdotal evidence collected by Raymond Winbush, that Black farmers were cautious to not be “too successful” for fear of having their farms taken away. The prevalence of this behavior makes comparing Black and White productivity of farms difficult and problematic.
Brent Gloy showed that rates of return for farming can vary greatly. In 1973 it was 28 per cent, but on average, over the period of between 1960 and 2016 it was 7 per cent. The standard deviation he calculated was 6.4 per cent, demonstrating the riskiness of the business. Since the 1970s, agricultural land values increased three and four fold due to increased productivity and export subsidies for all kinds of agricultural products. Other subsidies, such as favorable credit, made farming less risky and a coordinated effort to store food and distribute the surplus to Africa and other areas with food shortages through the Agricultural Trade Development and Assistance Act, PL 480, meant farming in more marginal lands became profitable.
Using “40 acres and a mule” as the basis for calculating restitution to descendants of American slaves, an amount of 453 to 489 billion dollars was estimated. This amount is similar to the asset gap between Blacks and Whites.