The Case For Reparations Has Been Made, And Yet Justice Has Not Prevailed — Can That Change?

Jumping right in, the question of whether there should be a path towards reparations has a growing chorus, a shout-it-from-the-rooftops, absolutely resounding yes! Actually, that’s not true at all.
The Reuters/Ipsos poll from June 25th, 2020 asked whether the United States should use “taxpayer money to pay damages to descendants of enslaved people in the United States,” and only 1 in 5 respondents agreed. This came after a month of protests that flooded hundreds of towns and cities with millions of citizens outraged by the death of George Floyd and the inequities of racial injustice. The country was in lockdown at home, there were very few social distractions, and this formed a perfect storm for a prodigious rise in an engagement towards a single cause for racial justice. And yet, even with all of those conditions, the needle barely moved from its historical average.

How can this be? Why would a clear majority reject the notion of reparations during a period of heightened awareness? For some reason, there was a disconnect. I believe the key lies in the way the question has always been framed.

Since the Civil Rights Act of 1964, following decades of blisteringly in-depth work from scores of lawyers, activists and intellectuals making the case for reparations, from the floors of Congress to the U.S. Court of Appeals, justice has not found its way into the hands of those for whom they fight. This is because the counter-argument has always been how unfair it would be on the taxpayer and the complications of tracking the descendants of slavery.

Some have redirected the attention away from slavery and towards the injustices of the 20th and 21st centuries. These points have been brilliantly argued, but again when the taxpayer is brought into the fold, it hits a wall.

Others, mainly activist lawyers, have kept their focus on the descendants of slavery, but took the burden away from the taxpayer. Instead they filed lawsuits against corporations that were linked directly to commerce during slavery. This moved through the judicial system only to be dismissed by the Supreme Court in 2016.

In 1999, a landmark case between German corporations on one side, and the governments of Israel and the United States on the other, settled an agreement to award reparations to forced-labor victims of the Holocaust. This case was not settled in the courts. It was settled in the court of public opinion, with the corporations succumbing to the pressure of ‘moral responsibility’.

I believe by looking at all of the above lessons and cases, we can adopt a new approach. We will harness the best ideas and methods, and strive to clear a path for justice.

To begin, we shift the focus from slavery to only damages inflicted upon black Americans for the past 80 years. These include housing discrimination, predatory lending and a generation of mass incarceration through the private prison industry. Next, don’t ask the taxpayer to pay. Ask the corporations who inflicted the damages to pay; specifically a handful of major financial institutions that profited from creating racially biased conditions that caused extreme economic hardship for generations of black Americans. The final but most crucial part is not to move through the halls of Congress or through the judicial system, but through the court of public opinion.

The endgame is to have these corporations invest a considerable allocation of money into the communities that they have targeted, plundered and profited from for over 80 years.
It would be exactly that — an investment, not a handout. The specifics of this plan will be laid out further in this essay.

To be clear, I am not proposing that the battle to secure reparations for slavery should discontinue. This is something that can best be settled by the United States government. It is separate from the proposal I endeavor to make.

To make my case, I will lay out the decades of legal work, the court losses, and the successful win of the Holocaust case that will act as our guide.

PART ONE: The Debt Owed Beyond Slavery

In 2000, Randall Robinson’s, The Debt: What America Owes Blacks, was published. It’s a scorching, unrelenting and impassioned plea for white Americans to begin making reparations for the racial discrimination of the 20th century. It was a national bestseller.

In 2010, Michelle Alexander’s, The New Jim Crow, entered the American bloodstream. Since it was first published it has been cited in judicial decisions and has been adopted in campus-wide and community-wide reads. It shone a light on the huge disparities in the incarceration rates for black Americans during the 1980’s and 1990’s. It spent close to 250 weeks on the New York Times bestseller list.

In 2014, Ta-Nehisi Coates penned a breathtaking, 10 chapter essay in The Atlantic, “The Case for Reparations — Two hundred fifty years of slavery. Ninety years of Jim Crow. Sixty years of separate but equal. Thirty-five years of racist housing policy. Until we reckon with our compounding moral debts, America will never be whole.”

Despite all of these arguments, Republicans and Democrats have continued to oppose reparations. The lawmakers have remained stuck on not fully understanding how it will work. They continue to state that, “too much time has passed,” or “no one is alive from that time, so why should we pay?” In fact I’ll let Republican Senate Majority Leader Mitch McConnell, who criticized the idea of reparations in 2019, say it in his own words:

“I don’t think reparations, for something that happened 150 years ago, for whom none of us currently living are responsible, is a good idea. We’ve tried to deal with our original sin of slavery by fighting a civil war, by passing a landmark civil rights legislation. We elected an African American President. We’re always a work in progress in this country, but no one currently alive was responsible for that.”

Asked about reparations during a 2019 Democratic Presidential debate, progressive Senator Bernie Sanders asked: “What does that mean? … I don’t think anyone’s been very clear.”

Mr. Coates was invited to testify at a congressional hearing on Capitol Hill on Juneteenth, 2019.
He pointed to the list of injustices from convict leasing, to vagrancy laws, from redlining, to electoral theft and reminded Majority Leader McConnell that he was very much alive throughout much of the continued campaign that treated blacks as second-class citizens.

Coates said: “And so for a century after the civil war, black people were subjected to a relentless campaign of terror, a campaign that extended well into the lifetime of Majority Leader McConnell. It is tempting to divorce this modern campaign of terror, of plunder, from enslavement.”

At that same hearing, the argument against paying the debt can be summed up by Rep. Mike Johnson of Louisiana (R):

“Putting aside the injustice of monetary reparations for current taxpayers for the sins for a small subset of Americans from many generations ago, the fair distribution of reparations would be nearly impossible, once one considers the complexity of the American struggle to abolish slavery. We have an obligation to acknowledge any monetary reparations might be recommended by the commission created by H.R. 40, would almost certainly be unconstitutional on their face, the reason for that is a legal question, the legal question is the Federal government can’t constitutionally provide compensation today to a specific racial group, because other members of that group, maybe several generations ago were discriminated against and treated inhumanely.”

This is a roadblock put up by the Congressman, not just for agreeing or disagreeing with reparations, but for not even supporting the idea to fund the bill H.R. 40, which would create a commission to study and develop reparation proposals to address the persistent wealth gap between white Americans and black Americans.

For three decades, beginning in 1989, Rep. John Conyers of Michigan, (D), would introduce H.R. 40 legislation on the floors of Congress. It never received the votes to fund the commission. After the Congressman stepped down in 2017, Rep. Sheila Jackson Lee, of Texas, (D), took up the responsibility. She continues to press the case.

This argument opposing reparations continues to be the philosophical mantra from many members of Congress, effectively proposing the unfairness to the current day taxpayer, and the injustice of paying the debt to a specific racial group.

Where does this leave the fight? Well, for many the fight down this same path remains the same.
The H.R. 40 bill will continue to be introduced on the floors of Congress, and more books will be published, like the most recent one published in April 2020, by Professor William A. Darity Jr., From Here to Equality. It’s an exhaustive study in which he arrives at several proposals with significant dollar amounts of compensation, to be funded by the taxpayer.

Let’s now take a look at the other avenues taken by several lawyers and activists. They believed the best approach towards a victorious outcome would be through the courts and the role American corporations played during slavery.

PART TWO: Let The Corporations Pay

In 2002, descendants of 19th-century African-American slaves filed nine lawsuits seeking reparations from corporations in various U.S. federal courts. The plaintiffs alleged that the defendant corporations (financial, railroad, tobacco, insurance, and textile companies), or their predecessors, had ties to the trans-Atlantic slave trade and were unjustly enriched from the labor of African-American slaves. It was a claim of violations of human rights. This idea stemmed from the fact that while slavery may have been legal in some southern states in America, it was a violation of customary international law.

Edward Fagan, an attorney for the plaintiffs, explained: “The issue is: Should companies be allowed to retain profits that they made from illegal activities, unlawful activities, and never account for those profits and never give back to the affected communities?”

Claiming to represent all of the United States’ 35 million African-Americans, New York slave reparations activist Deadria Farmer-Paellmann compiled a growing list of American companies, 19 in all, that, she said:

“Unjustly profited from the crime of slavery in various ways. We are going to finally hold corporations accountable for the crimes against humanity that they’ve committed against my ancestors,” Farmer-Paellmann said in 2002.

Bruce Nagel, an attorney representing Farmer-Paellmann added:

“This is a case that targets corporate America. It targets those companies that we can prove were built on the backs of African slaves, that were built on the sweat and labor of African slaves that was never paid for, and we say 150 years later, pay for it.”

In 2004, the federal district court in Chicago dismissed the claims, but kept the door open to the plaintiffs, suggesting that if they wished to, they could take another stab and file a different claim. Needing no more prompting, they switched their strategy and filed a new claim, a conventional legal claim for property and personal injury.

The suggestion was that the defendants, (the corporations), had willfully acted in ways that stole property from two sets of victims, first, the slaves themselves, by being denied property rights from the value of their labor, and second, the descendants, (the plaintiffs), and others living today, had been denied the inheritance of those property rights. They added a further complaint, alleging that the corporations had willfully defrauded their consumers, on the grounds that they were not transparent with them, regarding their predecessor’s connection to slavery. Thus they continued to embark in sales and services that their consumers may not have purchased, and may have boycotted, had they been given the facts.

In 2005, the claims were dismissed once again by The Federal District Court of Chicago. In December 2006, the U.S. Court of Appeals for the 7th Circuit upheld the dismissal of the plaintiffs’ claims with respect to the stolen property argument. It was a far reach for the courts to accept either of the two arguments that the plaintiffs chose to make. Either they were suing on their own behalf, or on behalf of the estates of the slaves whose property was originally stolen. If they were suing on their own behalf, the court deemed it would take extraordinary measures for them to prove they had suffered from injuries inflicted on their descendants. And if they were suing for the estates of the long-deceased slaves, they would have to prove their connection to that estate, and whether they would have a rightful inheritance claim. In addition, if they were even able to prove a direct linkage to the stolen property, they would have to then prove the value of that property, and if that value would have increased, or perhaps it would have lost value due to any circumstances that could arise in a 150-year period.

With regards to the consumer fraud claims, the claimants were alive and well, and active as consumers. So the courts saw that questions remained as to whether the plaintiffs were defrauded by the defendants’ alleged failure to show transparency with their predecessors’ direct linkage to the slavery economy.

Overall, the final decision to dismiss came down to the separation of powers theory, invoking a well-established doctrine of federal jurisdiction, and that it was a “political question” that should be sent back to Congress. U.S. District Judge Charles R. Norgle said the plaintiffs’ claims “are beyond the constitutional authority of this court.”

The idea for that decision was that it may be morally right to award reparations, but it is Congress’ role to assume that moral responsibility and to make it law. It is not the job of the courts to award reparations until that law has been written.

The end of the road came in May 2007, when the plaintiffs petitioned the U.S. Supreme Court to hear their appeal of the 2006 Court of Appeals decision. The Supreme Court denied the plaintiffs’ petition in October 2007, declining to hear the case, agreeing it was not the role of the courts.

So far, I’ve laid out the roadblocks. The taxpayer continues to be protected. And the corporations have won in the courts by cases being dismissed before they’ve gone to trial.

And now we turn to the final arena where the fight could be won.

Part Three: The Court of Public Opinion

In December 1999, a multi-lateral agreement between the governments of Israel and The United States on one side, and the German government and several hundred German corporations on the other side, finally reached a settlement of $5.2 billion. It took 55 years to achieve the goal of seeking reparations for injurious crimes committed against peoples who had been subject to slave and forced labor during the Holocaust and World War II.

When the lawsuits were first filed in the U.S. courts in 1998, the defendants (the corporations) argued that the legal responsibility of the payments lay with the German government. In turn, the German government, who had already been paying into an existing reparations program, did not wish to reopen and supplement that program.

The appetite to address these grievances changed with the political climate in Germany. Gerhard Schroeder’s Social Democrats won the general election in 1998. In the past, Schroeder had been instrumental in encouraging Volkswagen to settle a forced labor case brought in Germany. As soon as he took national office, he entered into the negotiations, and along with the pressure from the U.S. government they finally brought the corporations to the negotiating table.

The plaintiffs in the range of 1.7 million survivors of an estimated 12 million victims who had suffered at the hands of the German war machine, were now aging. An intense pressure was mounted from the United States and Israel to award these reparations to the survivors in an effort to provide not just the monetary compensation but also an acknowledgement, specifically from the corporations, that their predecessors were guilty of these heinous crimes.

The German corporations could have fought the plaintiffs, and most likely could have won. Many of the plaintiffs had been slaves in now defunct German companies, and many of the corporations were not subject to the jurisdiction of U.S. courts. However, the German corporations ultimately succumbed to the public pressure to assume a ‘moral responsibility.’ They agreed to pay damages, thereby setting a standard for good corporate citizenship.

Stuart E. Eizenstat, the lead negotiator for the Holocaust victims, (and former U.S. Special Envoy), had this advice for the fight for reparations in America:

“Because slavery took place so long ago, the nexus of injury is too distant to hold later generations responsible for individual reparations. It is both impractical to try to match descendants with millions of deceased slave laborers, and it greatly complicates the ability to sustain public support.”

He pointed out that in the German case they narrowed their focus to the living victims, and not to the heirs and descendants of the 10.3 million victims who had died.

“We made the very tough decision in our mediation that we had to cut it off at some point,” Eizenstat said. “There wasn’t enough time. The difficulty of trying to track down the heirs of 10 million slave-enforced laborers would have taken so long that the people we would have tried to benefit would have long since died.”

His advice for lawyers trying to bring American corporations to the negotiating table was this:

“I don’t think they can get very far in the court of law. If they want to succeed, it will be in the court of public opinion.”

I will now highlight which specific American financial institutions are the most culpable. There are not many that have been involved in every aspect of the most deeply destructive programs. In fact there are only three. Although these are banks with predecessors that date back to before the Civil War, we are not using that as our focus.

The Three Banks:

J.P. Morgan Chase: Ranked by S&P Global as the largest bank in the United States and the seventh largest bank in the world. Assets: $2.6 trillion

Bank of America: Bank of America serves about 66 million consumers and small business clients worldwide. Assets: $2.03 trillion

Wells Fargo: A diversified, community-based financial services company. Assets: $1.9 trillion

These banks were all functioning and doing business during the most potent years of housing discrimination, predatory lending and profiting from the private prison industry.

Housing Discrimination and Predatory Lending

In the 1930’s, government surveyors graded neighborhoods in 239 cities. Green was for “best,” and red for “hazardous.” The “redlined” areas were discounted as credit risks because of the residents’ racial and ethnic demographics. Bank loans in these neighborhoods were unavailable or very expensive, making it more difficult for low-income minorities to buy homes, setting the stage for the country’s persistent racial wealth gap. It wasn’t outlawed until the Fair Housing Act of 1968. But in city after city, the violation of FHA persists to this day.

In our present day, more than 60 cities have filed lawsuits against J.P. Morgan, Bank of America and Wells Fargo, accusing them of both denying loans to black Americans and also making high interest loans rain on black and brown communities. Many of these cases are unsettled, but the few that do settle do not come anywhere even near the vicinity of commensurate justice.

One example is a 2017 case between the city of Philadelphia and Wells Fargo. The two parties agreed to resolve this lawsuit in which the city accused the bank of violating the Fair Housing Act by steering minority borrowers into risky, high-cost loans beginning in 2004. Under the resolution, Wells Fargo would contribute $10 million to city programs aimed at promoting homeownership for low and moderate-income residents. Wells Fargo did not admit any liability as part of that resolution, and in a press release, continued to deny the allegations laid out in the lawsuit. The money would be allocated as follows: $8.5 million would go toward grants for down payment and closing cost assistance administered by the Philadelphia Housing Development Corp. The other $1.5 million gets scattered among city agencies for various re-development and revitalization programs.

For a company that has net assets of $1.9 trillion, this type of soft, punitive punch hardly acts as a deterrent to curb any desire that they may have to develop more predatory behavior. With these types of settlements, they could continue all day long, steering minority borrowers into risky, high-cost loans. The profits far outweigh the punitive damages.

“We’re pleased that we’ve been able to resolve this matter in a way that will provide real, tangible sustainable homeownership opportunities for many low and moderate-income residents of Philadelphia,” Joe Kirk, a Wells Fargo regional president, said in the announcement.

These kinds of statements are easy to roll out — especially if you continue to deny the allegations.

That’s a small taste of the housing discrimination that has occurred since the 1930’s, and it persists to this day without strong enough measures to curb the banks’ motivations for profits.

The Private Prison Industry

Next is the banks’ involvement with making profits in the private prison system. It is another example of the masterfully cloaked and hidden evolution of discrimination.

This is part of the executive summary from the ACLU:
“The imprisonment of human beings at record levels is both a moral failure and an economic one — especially at a time when more and more Americans are struggling to make ends meet and when state governments confront enormous fiscal crises. However, mass incarceration provides a gigantic windfall for one special interest group — the private prison industry — even as current incarceration levels harm the country as a whole. While the nation’s unprecedented rate of imprisonment deprives individuals of freedom, wrests loved ones from their families, and drains the resources of governments, communities, and taxpayers, the private prison industry reaps lucrative rewards.”

In 2018 alone, J.P. Morgan, Bank of America and Wells Fargo, raised roughly $1.8 billion in debt over three deals for the largest private prison contractors.

Following a fierce campaign by protestors, J.P. Morgan and Wells Fargo began pulling out of the private prison industry in 2019. Bank of America said in June 2019, that it would stop doing business with private prisons. What the bank failed to admit is it had already agreed to lend $90 million to one of the largest private prison companies in the industry through 2024.

The pressure campaign by protesters to embarrass corporations involved in grossly immoral and discriminatory business venture has been effective, compared to the history of what happens in Congress and the courts.

So how would this work? If the public pressure campaign was successful, and if those three banks were brought to the negotiating table, what would the reparations investment plan look like? Obviously if we were lucky enough to get that far, there would be many variations and lots of plans would be offered. I thought putting a few ideas down would be a good place to start.

The banks fund a commission to create a study, much like H.R. 40, but with a focus on the past 80 years.
Following the study, advocacy groups, community organizers and leaders work towards a compensation package and present their findings to the banks.
A settlement would be reached and committees administer funds into education, small business, housing development and wealth building accounts.
Outreach groups disperse into each designated community and metro area mostly disadvantaged.
Applications are delivered with person-to-person training.
Applications are collected for the advocacy groups to approve.
Key areas of early education, after-school programs, continuing education, building wealth education, housing and community investment, job placement and small-business grants are funded.
Successful applicants receive personalized and directional opportunities with periodic assessment.

I believe that in the same way that women added trillions of dollars to America’s GDP since the 1970’s due to their explosive entry into the workforce and the investments that enabled them to shine, the same would be true for black Americans if the conditions and investments for them changed. By investing in them, we invest in all.

Nick Hetherington