This partial transcript of Special Report with Brit Hume, March 26, 2002 was provided by the Federal Document Clearing House. Click here to order the complete transcript.

TONY SNOW, HOST: A 36-year-old black activist has filed a federal lawsuit against Aetna insurance, C.S.X., and FleetBoston Financial, alleging that they profited from slavery more than 150 years ago. The plaintiff's attorney says that 1,2 other companies will be hearing from them soon. Fox News correspondent Eric Shawn has the details.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: This is the day that the Lord has made.

ERIC SHAWN, FOX NEWS CORRESPONDENT (voice-over): A simple prayer preceded the filing of a massive class-action lawsuit seeking reparations for slavery. Claiming to represent all 35 million black Americans, a small cadre of lawyers filed suit against three corporations alleging that they profited from the slave trade in the United States. The lawyers say they're seeking $1.4 trillion.

DEADERIA FARMER-PAELLMANN, ATTORNEY & PLAINTIFF: We're going to finally hold corporations accountable for the crimes against humanity that they committed against my ancestors.

SHAWN: They claim Aetna insurance sold policies on slaves that were paid to the slave owners. That a company associated with the transportation giant C.S.X. used slaves to build railroads, and that a

predecessor of Fleet Boston Bank helped finance slave trade.

BRUCE NAGEL, ATTORNEY: I'm a descendant of those slaves. Now should I not challenge those that built that wealth, and say I want my share? I want my share? It belongs to me.

SHAWN: The companies say, not so fast. Aetna, "We do not believe a court would permit a lawsuit over events which, however regrettable, occurred hundreds of years ago. These issues in no way reflect Aetna today."

C.S.X.: "The lawsuit demanding financial reparations is wholly without merit and should be dismissed." Fleet Boston says it hasn't reviewed the lawsuit. Others denounce it.

RICHARD BARBER, PLAINTIFF: I haven't heard of the Jews going to Egypt because of the time of the Pharos of slavery, to get reparations.

UNIDENTIFIED MALE: On the merits, as a bona fide legal case, I think it is frivolous and it is 137 years too late.

SHAWN: It's now up to the courts to decide if this lawsuit has any merit. Meanwhile the lawyers are filing more suits saying as many as 1000 corporations could have historic ties to slavery. In New York, Eric Shawn, Fox News.

(END VIDEOTAPE)

SNOW: Now joining us to discuss the issue of reparations for slavery is professor John McWhorter, of the University of California Berkeley. He joins us from our studio in New York.

Professor, first, it strikes me that what you have here is an open admission, at least on the part of the attorneys, that the great society, welfare programs and other things that were designed to provide uplift for black Americans have been a complete and utter failure.

JOHN MCWHORTER, UNIV OF CA. AT BERKLEY: I think it is worse than that. What I hear these people saying is that those things virtually never happened. You often hear from this crowd that slavery has never been acknowledged. Of course that is a complete fiction. Welfare policies were expanded specifically for poor blacks in the late 1960's.

We have Affirmative Action, we have the Community Reinvestment Act of 1977 and I could go down the list. Now, of course, all of these things didn't work as well as others, but the fact remains that slavery has been acknowledged and that America doesn't need to learn a lesson that Americans were brought here in chains.

SNOW: Interestingly, Mary Francis Barry, who said of the U.S. commission on civil rights, gave a speech about a week, week and a half ago in Georgia and she made the case that she thinks it is time now to push

hard for reparations. You work for a university, one that's been known to have some pretty liberal inclinations. Is this the next wave of activism?

MCWHORTER: No, it is not the next wave of activism. In my view, there are three main issues facing the black community. There's profiling, there is education and some would say that there are health issues.

The important thing is that not one of those things, including education, shows any signs of responding to the same old large cash payments from on high that too many people seem to think are the essence of what we might call civil rights today.

Nowadays the work that we have to do is unfortunately less glamorous. It will not bring people to the streets and it will not involve illiciting white guilt for the theatrical (UNINTELLIGIBLE) of all of that. And unfortunately, the people who are wasting our time with this reparations notion are taking the black community away from the things we need to do to make our way up the last few steps to the mountain top that Martin Luther King spoke of.

SNOW: Let's talk about the basis of this suit. There's the observation, and it's true, that if you look at income levels, there are disparities between black and white Americans. There are educational

attainment disparities and wealth disparities. And slavery certainly had something to do with it.

MCWHORTER: Something to do with, yes.

SNOW: So if you are not going to do a reparations policy, what do you do?

MCWHORTER: This is one of the most important things, before I give the answer to that question, which is that the idea that slavery is directly responsible for the inner city horrors that we see today or the large proportion of black men in prison is a fiction. If you look at what ghettos in inner cities were like before the late 1960's, they certainly were no picnic, however they were not the hell holes that we see today.

What happened today was the result of misaimed, overdone, white benevolence in the late 1960s. Nobody knew they were doing any harm, but expanded welfare policies and other developments created a situation where a great many human beings, who happened to be black, were deprived of the incentive to do their best.

Now, what do we do? First of all, we had some reparations. As I mentioned, we had reparations in the late 1960's. Nobody ever talked about those. Now to the extent that those have not done their job completely, then we have some issues to work on. We have to teach inner city people to buy their own houses. We have to teach inner city people how to handle money. They deserve that help. We have to help inner city people who are on welfare to get jobs.

We seem to already be well on our way to doing that. Affirmative Action can be done in the right way, although usually it isn't. However, taking these companies and shaking them down for money on the basis of things that happened so long ago that neither the white people were involved nor the black people in question have any recollection of even the names of the ancestors that they are doing this on the basis of, really, it's a distraction from the real work that we need to be doing.

SNOW: You talked about three issues. Let's try to check them off quickly. No. 1, profiling.

MCWHORTER: Racial profiling is a very serious problem because for one thing, it is a genuine problem, despite what some people say. And the fact is that until we solve it, we're not going to get past race. It actually is the key to almost all of the problems that we have today. It is what keeps us from going where we need to go.

SNOW: Education?

MCWHORTER: Education, we have a situation where a disproportionate number, although not as many as people often say, of minority students are in terrible schools. Some people say that we need to improve the schools, I would say that we need to get those kids out of those schools into small, concentrated and excellent ones. That's a very important point and I hope we see more on that over the next few years.

SNOW: How important is school choice in that equation?

MCWHORTER: School choice is extremely important, because until the big wonderful old public schools have the incentive to get their acts together, they won't do so. And studies are trickling in showing that when you have the threat of school choice, then suddenly the bloated bureaucracies actually need to start teaching children instead of paying administrators.

SNOW: And finally health?

MCWHORTER: And health problems. Now there are studies refuting the idea that racism infects the health care system. However, there are some problems. They're very complicated. Which mean that many black people don't get the care they need. Sometimes they don't seek it. Sometimes they're not getting it. That needs to be worked on, because a health crisis is a health crisis. That includes the AIDS crisis. These are the things that should be front and center in any modern civil rights movement and not shaking down Aetna for slavery reparations.

SNOW: All right, John McWhorter, thanks for joining us this evening.

MCWHORTER: Thank you.

SNOW: We have to take a break for other headlines, but when we return, find out why Pita is using Jesus in one of its campaigns. The "Grapevine" is next.

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