The 500-page report that was produced after six years of study also said the violence, which killed as many as 60 people, was not a spontaneous riot but rather the nation's only recorded coup d'etat.
"There is no amount of money that can repair what happened years ago and compensate for the loss of lives and the loss of property," said vice chairman Irving Joyner, a professor at N.C. Central School of Law.
The commission did not provide any cost estimates, although compensation advocate Larry Thomas of Chapel Hill estimated that the economic losses calculated today are "probably in the billions of dollars."
Along with compensation to victims' descendants, the commission also recommended incentives for minority small businesses and help for minority home ownership. It also recommended that the history of the incident be taught in public schools.
State Rep. Thomas Wright, a Democrat who helped establish and chair the panel, said the next step is to file a bill in the Legislature with the recommendations. That won't happen before 2007 because the filing deadline for this session has passed.
The 1898 violence began when white vigilantes, resentful after years of black and Republican political rule during Reconstruction, burned the printing press of a black newspaper publisher, Alexander Manly.
Violence spread, resulting in an exodus of 2,100 blacks, the commission concluded. Then the largest city in the state, Wilmington flipped from a black majority to a white majority in the months that followed.
Before the violence, which led to a Democratic takeover from Republicans and Populists, black men in North Carolina had been able to vote for about three decades. But Democrats quickly passed voter literacy tests and a grandfather clause, which disenfranchised black voters until the civil rights movement of the 1960s.
"The growth of Wilmington was stunted as a result of what happened in 1898," Joyner said. "Wilmington has never recovered economically, socially or politically."
Wilmington likely became a "catalyst" for the violent white supremacist movement around the country, with other states taking note, said Lerae Umfleet, the state's lead researcher.
"Jim Crow had passed in a few other states," Umfleet said. "But the whole white supremacy campaign in North Carolina was watched around the country. People built on what happened in Wilmington."
Some previous historical accounts had portrayed the incident as spontaneous, although more recently, historians have described it as a coup d'etat.
"This sets the record straight," Wright said. "Now there is an official document confirming this part of North Carolina's — and America's — history. Nowhere in the United States has a legitimate government ever been overthrown."