The term Jim Crow economy applies to a specific set of economic conditions in the United States during the period when the Jim Crow laws were in effect to force racial segregation; however, it should also be taken as an attempt to disentangle the economic ramifications from the politico-legal ramifications of "separate but equal" de jure segregation, to consider how the economic impacts might have persisted beyond the politico-legal ramifications.
It includes the intentional effects of the laws themselves, effects that were not explicitly written into laws, and effects that continued after the laws had been repealed. Some of these impacts continue into the present. The primary differences of the Jim Crow economy, compared to a situation like apartheid, revolve around the alleged equality of access, especially in regard to land ownership and entry into the competitive labor market; however, those two categories often relate to ancillary effects in all other aspects of life.
Etymology Frequently sources will mention the Jim Crow economy, and then proceed to discuss only what is specific to the topic being broached by a particular author; however, unlike the laws passed to restrict access to services and education, the laws that governed the economy were often written in race-neutral terms, with inequality stemming from enforcement decisions. The economic impacts of Jim Crow are also intertwined with changes in the overall economy of the United States, from the Civil War through the 20th century. There is a temporal rhythm to the economic impacts of Jim Crow; from the Reconstruction onward, social trends preceded policy changes that, in turn, preceded economic changes.
History
Reconstruction During the decade following the Civil War, the freed slaves made gains in political participation, land ownership, and personal wealth; but, those gains were somewhat temporary, perhaps because the mood of the federal policy-makers changed from punishing secessionists, to repatriating them. In the decades following the closure of the Freedmen's Bureau, in the South, black political participation was curtailed, the potential for acquiring new land was diminished, and ultimately Plessy v. Ferguson would usher in the Jim Crow era.
Stagnation By the end of the first decade of the 20th century, not only was African American progress halted, it was regressing. Leading up to and following World War I, the agrarian economy of the South was in dire straits, beginning a slow shift to urbanization and limited industrialization; this period also saw the beginning of the Great Migration. The 1930s saw increasing urbanization and industrialization in the South; and, federal policies of the time, such as the National Industrial Recovery Act and the Fair Labor Standards Act, attempted to force economic parity between the South and the rest of the nation (Wright 1987:171).
Aftermath By the time of the passing of the Civil Rights Act of 1964, the scientific racism that had underlain much of the justification for the Jim Crow era legal racism had been discredited, the South had substantially closed its wealth gap with the rest of the nation, and America was both urbanized and industrialized. However, the African American struggle to earn economic parity, that had made progress during the first half century of the postbellum era, had largely been reversed during the second half. Legally, equality was assured, but that did little to actually promulgate equal conditions in daily life.
Some of the gains in the South's economic relation to the rest of the U.S. can be explained by population shifts to other regions; so, it may have had as much to do with spreading poverty around, as spreading wealth around. In the period when agriculture had formed the basis of the economy, land and labor were intimately tied together in the ownership of farmland; in the shift to urban industrialization, neither land tenure, nor labor opportunities were necessarily improved for African Americans. Thus, to understand the Jim Crow economy it is required to look to the social and political climate prior to the implementation of the laws, and to the economic inertia that continued to impact people's lives after the repeal of the laws.
African American land ownership
In the decades following the Civil War, there were steady increases in African American ownership of farmland in the South, from in 1875, to in 1890, at the turn of the century, and peaking at in 1910 (Reynolds 2002:4). Other estimates suggest that total black ownership of land in the South may have been as much as within a half century after emancipation (Mitchell 2000:507). There were also setbacks, due to property being taken illegally; in the first 30 years of the 20th century, were taken, from 406 separate landowners (Darity Jr. & Frank 2003:327). By 1930, the number of black owned farms was 3% lower than what it had been at the turn of the century (Woodman 1997:22).
Rural After being freed, there were 2 main ways for African Americans to acquire land in the South: either buy it from a private landowner, or stake a claim to public land offered by the federal government under laws like the Southern Homestead Act of 1866, and by state governments, such as South Carolina's Land Commission. The Southern Homestead Act opened up the transfer of public land in the states of Alabama, Arkansas, Florida, Louisiana, and Mississippi, with the hope of providing land to freedmen by limiting the claims to for the first 2 years (Pope 1970:203).
The results were less purchasers than had been hoped for, largely because the recently freed slaves did not have the material means to settle unimproved property, and only 4,000 of the 11, 633 total claims were registered by freedmen (Pope 1970:205). Within the South, the Southern Homestead Act was seen as further punishment of attempting to secede; this was substantiated, by the repeal of 1876, when old enmities gave way to the promise of federal revenues (Gates 1940:311). After the Act was repealed, cash sales of public lands were reopened to large-scale purchasers; the repeal was reversed in 1888, but prior to that point more than of land in the 5 public land states of the South were sold off to land speculators and timber harvesters (Gates 1936:667).
South Carolina's Land Commission was a unique case of a Reconstruction-era state government organization that was formed explicitly for the purpose of selling bonds to fund the purchase of non-operating plantations and selling the land to small farm operators over a 10-year repayment schedule at 7% annual interest (Bethel 1997:20). From 1868 to 1879, the Land Commission sold farmland to 14,000 African American families (Bethel 1997:27). Another well documented sample of African American property ownership in a non-public land state comes from census and tax records in Georgia. In the year following the end of the Civil War, black property owners accumulated approximately of land, with a value of about $22,500; however, on average, African Americans in Georgia held a total wealth of less than $1 per person (Higgs 1982:728). Between 1880 and 1910, Georgia's African Americans increased their average wealth, from $8 per person to $26.59, with some setbacks occurring around the turn of the century; however, relative to white Georgians, that amounted to an increase from 2% to 6% of total wealth held (Higgs 1982:729).
By expanding the defined territory of the South to 16 states (including Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia), in 1910, there were 175,000 black farm owners compared to 1.15 million white farm owners (Higgs 1973:150). Discounting the states of Delaware, Kentucky, Maryland, Oklahoma, Texas, Virginia, and West Virginia, the average white-owned farm was nearly twice the size of the average black-owned farm (Higgs 1973:162).
Land ownership was an important source of capital for both groups, but the ability to use the land with maximal productivity was not equally afforded to both groups. From the antebellum period up to the mid-1880s, all land owners were highly dependent on credit from merchant transporters of cotton; however, as the transportation infrastructure improved the white land owners were able to use their greater land holdings to attract credit directly from Northern financiers, and were thus able to usurp the position of the merchant transporters that furnished necessary staple goods to cotton growers (Woodman 1977:547).
Drawing from a representative sample of 4,695 farms in 27 counties in Alabama, Georgia, Mississippi, North Carolina, and South Carolina, regarding the 1879-1880 cotton crop, white owners were able to leave more than 4 times the amount of land fallow, had nearly twice the value in farming implements, and were more than a third more likely to have access to fertilizer than were the black land owners (Ransom & Sutch 1973:141). Thus, African Americans were laboring harder for lower crop returns, and putting the long-term productivity of their land in greater jeopardy (Ransom & Sutch 1973:142).
Between 1900 and 1930, in the South, 4.7% of black farm owners became tenant farmers; while 9.5% of white farmers were reduced from owners to tenants during that period, that amounted to only 46.6% of all white farmers being tenants compared to 79.3% of all black farmers (Woodman 1997:9). Moreover, there were fewer opportunities to acquire land, as white owners refused to sell land to black purchasers regardless of the price being offered, and there was little legal recourse when property was lost due to extra-legal practices (Higgs 1973:165). In any case, the availability of funds was greatly reduced by the failure of government-initiated lending institutions like the Freedman's Savings and Trust Company; and, lending organizations founded by benevolent societies often found themselves too overextended to withstand moderate levels of default on loans, such as the failure of the True Reformers Savings Banks in 1910 (Heen 2009:386).
Lending organizations outside the South, backed by Northern capitalists, were mostly unwilling to make loans supporting African American land purchase, out of concern that the development of a class of black landowners would result in increased demands from Northern industrial workers (Ezeani 1977:106). With new land being unobtainable, and existing land only able to be subdivided so far before becoming unusable as farmland, the progeny of the land owning generation were pressured to move to Southern cities, or outside the South completely (Bethel 1997:98;101). When the U.S. Became involved with World War I, Northern cities became the focus of out-migration, and Northern industry became the employer of many former farmers (Tolnay et al.:991). The South was much slower to industrialize; and, where predominantly white land owners retained large tracts of farmland, and where the population of black laborers remained high, agriculture continued as the economic base (Roscigno & Tomaskovic-Devey 1996:576).
Urban