Shaking down Wachovia

The slavery-reparations crowd is serious about raiding corporate America. That’s the lesson to draw from what’s happening to Wachovia Corp., the nation’s fourth-largest bank, which says that predecessors to two companies it acquired in 1991 and 2001 once traded in slaves. It doesn’t take a historian to see that Wachovia is being mau-maued.

Wachovia and other companies are now discovering that giving to the slavery-reparations movement is a losing proposition. Two weeks ago Wachovia announced that First Union Corp., with which it merged in 2001, and the South Carolina National Corp., which joined it in 1991, had absorbed predecessor companies that dealt in slaves, which it learned from a study by the History Factory, a corporate-research company. A Chicago ordinance requires companies contracting with the city to disclose ties to slavery, and since Wachovia is a partner with a Chicago community-development corporation to build low-income housing, it must comply with city law.

The History Factory found that the old Georgia Railroad and Banking Co., which was founded in the early 1830s and was acquired in 1954 by a predecessor to First Union, owned at least 162 slaves. It also found that the Bank of Charleston, which merged in 1926 with a company that Wachovia acquired in 1991, used at least 529 slaves as collateral on mortgaged properties and loans.

Wachovia said it was sorry. “I apologize to all Americans, and especially to African-Americans and people of African descent,” said Chairman and CEO Ken Thompson. Another executive, Stan Kelly, told colleagues that he is “working to get personally connected to this chapter in our company’s and our country’s history.” The company promised an unspecified financial contribution — in all likelihood an educational fund or some other endowed trust — to benefit the descendants of the slaves.

Nevertheless, Chicago politicians and activists declared that they want to pull Wachovia’s contracts, and Harvard Law Professor Charles Ogletree warned Wachovia that it must “provide comfort to the descendants of slaves” or else the issue “will haunt them for a long time.”

All this is a way of telling Wachovia to pony up more money or else, and Wachovia appears willing to go along. But it may be surprised by what the reparationists want. The National Legal and Policy Center, a corporate-governance watchdog group, cites one Robert Brock, a lawyer, who says the government should pay each descendant of a slave $500,000. The group figures this would cost $15 trillion, or about $50,000 for every man, woman and child of other races.

Having failed in the court of public opinion, the slavery-reparations movement sees gold in corporate boardrooms. As it happens, CEOs, who nearly always prefer to switch than fight, are more pliant than Congress.