How do Blacks navigate a currency system they did not create? By showing they know the currency system better than anyone else.

Black Americans have been making arguments about reparations for slavery for decades. The argument that the United States owes the descendants of Africans brought to the United States is a powerfully emotional one. Today’s Blacks are either descendants of African indentured servants who saw their contracts for freedom broken by wealthy Anglo-Saxon landowners, merchants, or plantation owners or of Africans sold directly into slavery by other Africans. Either scenario resulted in harsh treatment of Africans in America.

I often take issue with the view that the slave ancestors built the United States. While Blacks toiled reportedly under harsh conditions, Blacks did not create the philosophy under which this nation-state was created. Blacks did not write the nation-state’s Constitution. Blacks did not design or define the State’s three major powers as spelled out in the Constitution.

With the exception of the Three-Fifths Compromise for the apportionment of taxes as mentioned in Article I Section II of the Constitution and the prohibition of slavery or involuntary servitude except as the result of punishment for a crime, Blacks are not addressed with any specificity in the Constitution nor are Blacks mentioned as signers or writers of the document.

As early as April 1792, the United States had implemented a coinage system for the United States and the dollar as the principal of currency (although the US government would not issue paper money until 1861.)

And by 1914 a Federal Reserve System was in place to distribute the U.S. currency.

The ability of the State to have its currency distributed throughout its nation is important because the use of State-sanctioned currency ties the political economy together. A currency that can be used to settle payments subject to a legal and regulatory framework signals to traders and consumers that the State offers an economic infrastructure that can address their needs. What good is a country where one cannot finance, trade, or consume?

But while Blacks were not the philosophical founders of the American nation-state, Blacks played a direct role in the creation of the nation-state’s currency. Currency is created in the credit markets. A potential borrower brings collateral to a prime broker or a bank and depending on the quality of the collateral, the borrower receives a certain amount of funds.

Black slaves were used as collateral for loans during the antebellum. From as far back as the early 1800s if not earlier, Blacks were unwilling and unknowing participants in America’s bond markets.

I believe that understanding the concept of money creation and currency distribution can help Blacks not only navigate the currency union that we call the U.S., but also help target the reparations movement’s efforts without involving the slow moving, bad intentioned political process.

Black America is long on its way to understanding the money creation and currency distribution process. According to financial website Investopedia, of the 145 minority-owned financial institutions in the United States, twenty of them are black-owned banks. Not only can these banks provide financial services to Blacks, they can provide financial education services as well.

The one financial education service these banks can provide is the flipping of the script on America’s slave collateral story. Leading a campaign amongst the Black community to buy bonds and use that collateral to obtain credit and invest in income generating assets. While this is being done on some scale today, the efforts need to be stepped up.

Alton Drew

1 October 2023

(For more of my insights on the political economy, buy my book at amazon.com/author/altondrew )