Race, Risk, and Capitalism in the 20th-Century United States

AHA Session 150
Friday, January 5, 2018: 3:30 PM-5:00 PM
Columbia 10 (Washington Hilton, Terrace Level)
Amy C. Offner, University of Pennsylvania
Amy C. Offner, University of Pennsylvania

Session Abstract

In the United States, the codification and categorization of racial difference played a crucial role in the growth and development of financial capitalism. As Edward Baptist and other historians have shown, in the nineteenth century, major financial firms were inextricably involved in the slave trade, and slavery helped facilitate the modernization of American investment institutions. However, scholars have not fully considered the relationship of race and financial capitalism in the twentieth century. From banks, to credit rating agencies, to state lottery commissions, racial demographics and ideas about racial difference played a crucial role in shaping American ideas about investment as well the marketing of risky financial ventures.

The three presentations on this panel explore the tangled relationship between race and risk from 1919 to 1989 in urban, national, and transnational contexts. Though both capitalism and popular understandings of racial difference changed dramatically in this period, race endured as a key factor in shaping the construction and reception of new financial practices. Mary Bridges explores how the racial categorization of customers shaped the entry of American banks into the global financial marketplace during the interwar period. Through analysis of a training program offered by National City Bank, Bridges illustrates how ideas about race shaped American banks’ expansion of branch services into Latin America and the Pacific Rim. Daniel Platt’s paper demonstrates the way financial forecasting firms used conceptions of race as a deterministic category in the volatile investment marketplace of the 1920s. Bond rating agencies based their assessments of European investments on each country's racial makeup, utilizing Social Darwinian views of geography and demographics to substitute for financial analysis. Finally, Jonathan Cohen examines lottery playing in Chicago’s black community in the 1980s. As economic changes and housing and educational discrimination stagnated rates of African-American social mobility, the Illinois Lottery systematically targeted black gamblers, utilizing a series of billboards marketing the long odds of the lottery as an effective, alternative means of advancement.

Taken together, these presentations invite scholars to consider the role of race in the growth of central institutions of American capitalism as well as the development of well-known financial instruments such as life insurance, bond ratings, and lottery tickets. Racial inequality was not incidental to financialization but, in ways important and neglected, laid a critical groundwork for a more speculative economy. So too, changes in financial policy—from the liberalization of credit to the legalization of gambling—would not have been possible without the exploitation of African-Americans and other racial minorities. A closer investigation of the relationship of race and risk reveals the problematic heritage of current investment instruments and offers insight into how financial institutions reckoned with racial difference throughout the twentieth century.

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