Wilkins also stressed the economic risk of holding debts like Mississippi’s. The racist subordination of nearly half of the state’s population represented “an endless economic weight that must reduce the fiscal attractiveness of the state’s securities, not to mention the moral issue,” he wrote. Wilkins implied that by excluding the Black Mississippi from economic opportunity, the state would have to spend greater expenditures on welfare, policing, and other areas that could otherwise be used to fuel economic growth to secure bondholders’ investments.
Behind these statements was a strategy to relocate large capitalholders, who played a key role in the municipal bond market, and to encourage investment and commercial banks, pension funds and insurers to support a campaign to seek to cut off capital investments from Jim Crow South .
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April 30, 2021, 7:16 p.m. ET
Before Donald Barnes, executive vice president of Childs Securities, wrote a letter to Governor George Wallace in 1965 questioning Alabama’s creditworthiness, civil rights activists sought to harness the power of finance in favor of the movement. Childs Securities’ decision to boycott Alabama came after the Rev. Dr. Martin Luther King Jr. to boycott the state and after dock workers on the west coast refused to handle products made in Alabama.
The lessons are twofold. First, needed social movements to get the banks to separate from the south. The economy has not been the central vehicle for change in the struggle for racial, economic, and social justice, but in some cases it has been an effective tool.
The second lesson is that companies that joined in were working against their peers in the industry, such as the Moody’s analyst who said in 1965 that they “disagree with the civil rights movement.” Childs Securities financiers decided to stand up to the NAACP and against Alabama, but also against their syndicate partners, many of whom disagreed with what one Boston banker described as a “poorly conceived and immature” decision to explain theirs and publicly to respond to opposition to Alabama’s actions. Childs Securities fought on multiple fronts, including a sector where profits were put before social problems.
These efforts have something in common with contemporary social movements. In April, more than 140 racial justice leaders published an open letter calling on large asset managers to use their voting rights on behalf of shareholders to promote racial justice, including by speaking out against all-white boards and getting more insight into supported corporate policy spending.
“They share a unique power to shape corporate behavior and change the normal business practices that maintain white supremacy as the foundation of our economy,” they wrote.
