Entrepreneurs and Entrepreneurship
Entrepreneurs and Entrepreneurship
African economic practices in food production and distribution provided the basis for the initial entrepreneurial expression of black people in the United States. A vibrant commercial culture existed in western and central Africa during the transatlantic slave trade era. The economic structures of African societies were exceedingly sophisticated. Internal market systems proliferated, regulated by central authorities at the national, regional, and local levels. International trade—including trade in slaves—was controlled by kings and wealthy merchants, while local economies required the participation of men and women as producers, wholesalers, and retailers in markets overseen by guilds.
Africans who were brought to the United States as slaves first made use of the surplus commodities from their own provision grounds—land either allotted to them or surreptitiously appropriated by them for food growing and, occasionally, tobacco cultivation—to create local produce markets where goods were sold or bartered. These were the first businessventures that provided slaves with money. Successful slave entrepreneurs could earn enough money to purchase freedom for themselves and their families and subsequently acquire land. In mid-seventeenth-century Virginia the Anthony Johnson family secured its freedom and opened a commercial farm producing tobacco for both local and international markets. The Johnsons also had a number of indentured servants and slaves.
Although there were relatively few free blacks with holdings in land or slaves, their numbers did increase during the eighteenth century. In colonial cities African Americans were particularly active as entrepreneurs in the food-service industry, first as market people and then as street food vendors and cook- and food-shop owners. In 1736, in Providence, R.I., Emanuel Manna Bernoon opened the first African-American catering establishment with the capital from his wife's illegal whiskey distillery business. One of the leading caterers of nearby Newport was "Dutchess" Quamino, a pastry maker who conducted her business in a small house. The catering activities of blacks in these towns placed Rhode Island at the center of African-American enterprise and contributed significantly to the state's early development as a resort area.
One of the most renowned innkeepers in eighteenth-century America was Samuel Fraunces (1722–1795). While there is some dispute whether Fraunces was of African descent, there is no doubt that he was a West Indian who migrated to New York City in the 1750s. His tavern and inn, which opened in 1761, earned him a reputation as a leading restaurateur with "the finest hostelry in Colonial America." Four years later Fraunces established Vaux-Hall (named after the famous English pleasure gardens), a resort with hanging gardens, waxworks, concerts, fireworks, and afternoon dances, which set the standard for pleasure gardens in colonial America; during the 1780s, when New York City was the nation's capital, Fraunces' Tavern in lower Manhattan served as a meeting place for the new government and was the site of George Washington's farewell to his troops.
A number of northern blacks were successful tradesmen or artisans. Peter Williams, Sr., who was born a slave in New York and helped found the African Methodist Episcopal Zion Church in 1800, was a successful tobacconist. With the profits from his earnings, Williams purchased his freedom in 1786. African-born Amos Fortune (1710–1801) purchased his freedom at age sixty and established a successful tannery business with a clientele that extended to New Hampshire and Massachusetts.
Black entrepreneurs were also to be found at the American frontier. In 1779 Jean Baptiste Pointe Du Sable established a trading post on the site of what later became the city of Chicago. In addition to importing merchandise from the East, Du Sable owned a bake house, mill, dairy, smokehouse, and lumberyard. His mercantile activities serviced a wilderness hinterland with a two-hundred-mile radius.
Beginning in the late eighteenth century, blacks developed enterprises in sports and music. In Newport, R.I., African-born Occramer Marycoo, later known as Newport Gardiner (1746-?), established a successful music school based on his reputation as a musician and composer. In 1780 Gardiner cofounded the African Union Society, which kept community records, found training and jobs for black youth, and supported members in time of financial need. Gardiner led thirty-two other African Americans to Liberia, with support from the American Colonization Society, in 1826. The most famous late-eighteenth-century black sports figure was boxer Bill Richmond (1763–1829), who achieved recognition in both America and England. Born a slave in New York, Richmond left for London during the Revolution, where his fame in boxing grew. Upon retiring from the ring, he established a popular inn in London known as the Horse and Dolphin and opened a boxing academy.
The entrepreneurial efforts of African Americans became increasingly pronounced in the early national and antebellum years. Throughout this period African-American entrepreneurs were prominent in crafts and personal services, which required limited capital for the development of enterprise. Blacks also established profitable businesses in transportation, manufacturing, personal services, catering, restaurants and taverns, real estate, finance, commercial farming, merchandising, mining, and construction. Unlike later black entrepreneurs, most antebellum businessmen had a consumer base that was primarily white. By the advent of the Civil War, at least twenty-one black entrepreneurs had accumulated holdings of over $100,000.
A prominent figure in transportation and commodity distribution was Paul Cuffe (1759–1817), a native of New Bedford, Mass., who founded a shipping line, owned several vessels, and held an interest in several others. Cuffe purchased his first ship in 1785 and had constructed a wharf and warehouse by 1800. His shipping enterprises extended from whaling to coastal and transatlantic trade vessels, which carried cargo and passengers to the West Indies, Africa, England, Norway, and Russia. Cuffe's most notable voyage was undertaken in 1815, when he transported thirty-eight African Americans to Sierra Leone at his own expense. He died two years later and left an estate valued at $20,000. Like Cuffe, the Philadelphia entrepreneur James Forten (1766–1842) actively supported the abolitionist movement and agitated for the rights of free blacks. Forten, whose estate was valued at $100,000, invented a new sail-making device and ran a factory that employed over forty workers, both white and black. Other antebellum inventors and manufacturers included Henry Boyd (c. 1840–1922) and William Ellison (1790–1861). Boyd, a native of Cincinnati, patented a bedstead and employed some thirty people in his bed-making factory. Slave-born William Ellison of South Carolina established a successful cotton gin factory after he was freed. He invented a device which substantially increased the gin's efficiency, and his market extended to most of the South's cotton-producing regions. He invested his profits in slaves and real estate holdings.
Antebellum blacks became leading innovators in the personal-service and hair-care industry, establishing luxurious barbershops, bathhouses, and hotels. In Mississippi, where there were fewer than a thousand free blacks and over four hundred thousand slaves, slave-born William Johnson (1809–1851) purchased his freedom and founded a successful barbershop and bathhouse in Natchez. Johnson used his profits to develop other enterprises, such as money brokerage, real estate leasing, a toy shop, a drayage business, and agriculture. He owned slaves, some of whom worked in his barbershop and on his plantation, while others were hired out. The most successful hairdresser in the North was Joseph Cassey of Philadelphia, whose estate was valued at $75,000 in 1849. Cassey's wealth also included profits from moneylending enterprises.
Another prominent African American in the hair-care business and an early African-American philanthropist was Pierre Toussaint (1766–1853), a Haitian immigrant who became one of New York's leading hairdressers. Toussaint was generous in his support of the Roman Catholic church and the education of young men studying for the priesthood. During the 1840s the three Remond sisters, Cecilia, Maritcha, and Caroline Remond Putnam—members of a prominent African-American abolitionist and business family (their mother was a successful caterer)—established the exclusive Ladies Hair Works Salon in Salem, Mass. In addition to promoting the sale of Mrs. Putnam's Medicated Hair Tonic and other products both locally and nationally (through mail-order distribution), they opened the largest wig factory in the state.
Black entrepreneurs also flourished in the clothing industry, as African-American tailors and dressmakers became leading designers in American fashion. Perhaps best known was Mary Todd Lincoln's dressmaker, Elizabeth Keckley (1818–1907), who employed twenty seamstresses at the height of her enterprise.
During the antebellum period Philadelphia and New York became the leading centers for black catering businesses. The most prominent caterers of Philadelphia were Robert Bogle, Peter Augustine, the Prossers, Thomas Dorsey, Henry Minton, and Eugene Baptiste. Much of the $400,000 in property owned by free Philadelphia blacks in 1840 belonged to caterers. New York's Edward V. Clark was listed as a jeweler in the R. G. Dun mercantile credit records; yet he operated a successful catering business, which included lending out silver, crystal, and china for his catered dinners. In 1851 Clark's merchandise was valued at $5,000.
During the War of 1812, Thomas Downing established a famous oyster house and restaurant on Wall Street, which became a noted attraction for foreign tourists and the haunt of the elite in business and politics. In 1844 Thomas's son, George T. Downing (1819–1903), founded the Sea Girt Hotel, housing businesses on the first floor and luxury rooms above. Twelve years after the Civil War, Downing expanded his food-service business to Washington, D.C., where he was known as "the celebrated colored caterer."
Samuel T. Wilcox of Cincinnati, who established his business in 1850 and relied primarily on the Ohio and Mississippi riverboat trade, was the most successful black entrepreneur in wholesale food distribution. Before the Civil War Wilcox's annual sales exceeded $100,000; his estate was valued at $60,000. Solomon Humphries, a free black in Macon, Ga., owned a grocery valued at $20,000. In upstate New York William Goodridge developed a number of diverse enterprises, including a jewelry store, an oyster company, a printing company, a construction company, and a large retail merchandise store, while running a train on the Columbia Railroad. In 1848, Goodridge earned a reported business capital of $20,000 in addition to real estate holdings in both New York and Canada. In Virginia the slave Robert Gordan managed his owner's coal yard and established a side business whose profits amounted to somewhere around $15,000. After purchasing his freedom, Gordan used the capital to start a profitable coal business in Cincinnati and by 1860 reported annual earnings of $60,000 from coal and real estate profits.
The extractive industries proved to be a source of wealth for slave-born Stephen Smith (1797–1873), a Pennsylvania lumber and coal merchant, bank founder, and investor in real estate and stock who was known as "Black Sam." The R. G. Dun mercantile credit records list his wealth at $100,000 in 1850 and $500,000 in 1865. Smith, whose wife ran an oyster house, obtained his start in business as the manager of his owner's lumberyard. William Whipper (1804–1876), Smith's partner in the lumber business from 1835 to 1836, started out in the steam-scouring business. Whipper, who, like Smith, had extensive real estate holdings, was a cashier in the Philadelphia branch of the Freedman's Savings Bank from 1870 to 1874, with reported assets (registered in the 1870 census) amounting to $107,000. Both men were leaders in abolitionist activities and provided financial support to black institutions.
Eight of the wealthiest antebellum African-American entrepreneurs were slaveholders from Louisiana who owned large cotton and sugar plantations. Marie Metoyer (1742–1816), also known as Coincoin, the daughter of African-born slaves, was freed in 1796 at the age of forty-six and acquired several hundred slaves as well as ten thousand acres of land. The Metoyer family's wealth amounted to several hundred thousand dollars. Urban black businessmen and women in Louisiana also owned productive slaves: CeCee McCarty of New Orleans, a merchant and money broker who owned a train depot and used her slaves as a traveling sales force, accumulated $155,000 from her business activities. Most of the wealthy black entrepreneurs lived in New Orleans: the Soulie Brothers, Albin and Bernard, accumulated over $500,000 as merchants and brokers; Francis La Croix, a tailor and real estate speculator, declared assets of $300,000; and Julien La Croix, a grocer and real estate speculator, reported assets totaling $250,000.
The developing frontier continued to provide entrepreneurial opportunities to African Americans. William Leidesdorff, a rancher and businessman in San Francisco during the last years of Mexican rule, died in debt in 1848; shortly afterward, gold was discovered on his property, and the value of his estate leaped to well over a million dollars. While still a slave, "Free" Frank McWorter (1777–1854) established a saltpeter factory in Kentucky during the War of 1812. Profits from the mining of crude niter, the principal ingredient used in the manufacture of gunpowder, enabled McWorter to purchase freedom for his wife in 1817 and for himself two years later. After he was freed, McWorter expanded his saltpeter enterprise and engaged in commercial farming and land speculation activities. In 1830 he moved to Illinois, where in 1836 he founded the town of New Philadelphia, the first town promoted by an African American, though both blacks and whites purchased New Philadelphia town lots. By the time he died, McWorter had been able to free a total of sixteen family members from slavery.
Antebellum blacks, both slave and free, profited significantly from the construction industry. The most resourceful slave entrepreneur in this field was Anthony Weston, who built rice mills and improved the performance of rice-thrashing machines. By 1860 Weston's property in real estate and slaves—purchased in his wife's name, since she was a free black—was valued at $40,075. Slave-born Horace King (1807–1885) worked as a covered-bridge builder in Alabama and Georgia. After being freed in 1846, King established a construction company that was eventually expanded to include construction projects for housing and commercial institutions. After King's death the company was renamed the King Brothers Construction Company and overseen by his sons and daughter.
By the time the Civil War ended in 1865, over twenty-five hundred African-American businesses had been established by slaves and free blacks. Despite the difficulties that blacks experienced with regard to continuing social, political, and economic inequalities, the end of slavery did bring about a much wider range of prospects for budding African-American entrepreneurs. It was during this time that the first black millionaires emerged.
Health and beauty-aid enterprises, real estate speculation, and the development of financial institutions such as
banks and insurance companies provided the basis for the wealth accumulated by many of the most successful black entrepreneurs. The food–and personal-service industries continued to be sources of income. Durham, N.C., and Atlanta, Ga., became the commercial centers for black America. The numbers of blacks involved in business steadily increased: In 1890, 31,000 blacks were engaged in business; their numbers rose to 40,455 in 1900 and to 74,424 in 1920.
Many leading black entrepreneurs of this era were either slave-born or had slave-born parents. Others had only limited formal educations and often started as unskilled workers or laborers. A number of African-American businesses were farm related. In 1900 Junius C. Graves, who owned five hundred acres of Kansas land valued at $100,000, became known as the Negro Potato King. Perhaps the most successful black entrepreneur of the Reconstruction era was Benjamin Montgomery (1819–1877), a slave of Joseph Davis (brother of the Confederate president, Jefferson Davis). In 1866 Joseph Davis sold his cotton plantations to Montgomery for $300,000. In addition to establishing a retail store on the Davis plantation in 1842, Montgomery had managed the Davis plantation from the 1850s on. In 1871 Dun gave Montgomery—who continued to run both enterprises with his sons as commission merchants—an A credit rating, ranking his family among the richest planter merchants and noting: "They are negroes, but negroes of unusual intelligence & extraordinary bus[iness] qualifications." The Montgomerys registered a net worth of $230,000 in 1874 but suffered severe setbacks several years later when crops failed and cotton prices declined. In 1881 the family was unable to make payments on interest and capital and the property reverted to the Davis family by auction. In 1887 Benjamin Montgomery's son Isaiah Montgomery migrated to Mississippi and founded the all-black town of Mound Bayou, where black enterprise was encouraged and where, in 1904, Charles Banks (1873–1923) founded the Bank of Mound Bayou and the Mound Bayou Loan and Investment Company.
By the turn of the century, some of the most successful black entrepreneurs had already begun to discover a national black consumer market. In 1896 Richard H. Boyd, a Baptist minister (1843–1922), established the National Baptist Publishing House in Nashville, Tenn., with a printing plant that covered half a city block. In 1910 the annual company payroll amounted to $200,000. Under Boyd's management the publishing house earned $2.4 million in just under ten years and by 1920 was one of the largest black businesses in the nation. But Boyd did not limit his business enterprises to religious publishing. His holdings included the One Cent Savings and Bank Trust, which he founded in 1904 (and which became the Citizens Savings Bank and Trust in 1920), the Nashville Globe (established in 1905), the National Negro Doll Company (1909–1929), the National Baptist Church Supply Company, and the Union Transportation Company. Union Transportation owned five steam-driven buses and fourteen electric buses, carrying twenty passengers each. This company was founded in 1905 to support a black bus boycott in response to the segregated streetcar ordinance that Nashville had passed that year. By 1993 four generations of Boyds had continued their ownership of the publishing house and Citizens Bank; as of that year the assets of the bank alone totaled $118.3 million.
Urban real estate investment and speculation ventures continued to be the major source of wealth for some of the leading black entrepreneurs during this era. In New Orleans Thomy La Fon (1810–1893), whose real estate activities began before the Civil War, left an estate valued at over $700,000. In St. Louis slave-born James Thomas (1827–1913) used the profits from his exclusive barbershop to invest in real estate; his property holdings exceeded $400,000 by 1879. In Memphis slave-born Robert Church (1839–1912) accumulated over $700,000 from real estate investments and speculation. His first enterprises were a bar, gambling hall, and pawnshop. Church Park, which he developed on Beale Street as a recreation center, included an auditorium used for annual conventions of black organizations and a concert hall that featured black entertainers. Church also founded the Solvent Bank and Trust Company.
The late nineteenth century marked the founding of large-scale black banks and insurance companies. In 1899 slave-born John Merrick (1859–1919) of Durham founded the North Carolina Mutual and Provident Company, which as of 1993 still ranked first on Black Enterprise 's list of black-owned insurance companies with assets of nearly $218 million. Merrick had little formal education and was a barber by trade; his initial business activities included a chain of barbershops as well as real estate investments. He also founded a land company, the Mechanics and Farmers Bank (1907), and the Durham Textile Mill. Indeed, while Chicago and New York were only emerging as important centers of African-American enterprise in the early decades of the twentieth century, Durham's black business district had come to be known as the Capital of the Black Middle-Class. "At the turn of the century," John Sibley Butler noted, "commentators were as excited about North Carolina as they are today about the Cuban-American experience in Miami." Atlanta was also rapidly rising to prominence as a center for black business. Slave-born Alonzo Franklin Herndon (1858–1927), who founded the Atlanta Life Insurance Company in 1905, left an estate valued at more than $500,000. Herndon's real estate investments and lavishly appointed barbershops—which catered to an elite white clientele—provided profits for the start-up and expansion of Atlanta Life.
In some cases, the overly rapid expansion of business enterprises led to bankruptcy. Atlanta businessman Edward Perry (1873–1929) established the Standard Life Insurance Company in 1913 and the Citizens Trust Bank in 1921. With the income from his Service Realty Company and Service Engineering and Construction Company, both founded in the 1920s, Perry purchased land on Atlanta's west side and constructed some five hundred homes. By 1925 he had established eleven different businesses together valued at $11 million and providing employment for twenty-five hundred people. Perry lost all of his holdings within four years. His contemporaries blamed his bankruptcy on imprudent expansion, limited capital reserves, and injudicious business decisions. An insurance company founder and winner of the NAACP's Spingarn Medal in 1927, Anthony Overton (1865–1945) was another black businessman whose success in the early decades of the century was followed by bankruptcy in the depression years.
Real estate, an enterprise crucial to the growth of northern black communities, offered similar opportunities for rapid expansion, sometimes with disastrous results. Jesse Binga (1865–1950) began his real estate operations on the south side of Chicago in 1905. Three years later he founded the first black-owned bank in the North, which in 1921 became the Binga State Bank. In 1929 he constructed the five-story Binga Arcade to revitalize the deteriorating black business district. Later that year, when his bank failed, Binga's wealth was assesssed at more than $400,000; he was convicted of fraudulent bank practices in 1933 and spent three years in jail. Like Herman Perry and James Thomas, Binga spent the rest of his life in poverty and obscurity. The same fate befell Harlem's Phillip A. Payton, Jr. (1876–1917), who organized a consortium of black investors to found the Afro-American Realty Company in 1904. Within two years the company controlled $690,000 in rental properties. Payton was largely responsible for opening Harlem as a community to African Americans; subsequently, however, his stockholders charged him with fraudulent practices, and he went bankrupt.
Hair and beauty care, a less risky industry, proved especially profitable for black entrepreneurs. Annie M. Turnbo-Malone (1869–1957), founder of the Poro Company (1900) and a pioneer in the manufacture of hair- and skin-care products, is considered the first self-made American female millionaire. She began her business in Lovejoy, Ill., and eventually expanded to St. Louis, where she built a five-story manufacturing plant in 1917. The plant housed Poro College, a beauty school with branches in most major cities. In 1930 Turnbo-Malone moved her operations to Chicago and purchased a square city block on the South Side. She franchised her operations and, with national and international markets, reportedly provided employment opportunities for some seventy-five thousand people.
C. J. Sarah Breedlove Walker (1867–1919) was a Poro agent before she initiated her own hair-care products and cosmetics business in St. Louis in 1905. The "Walker system" for hair included an improved steel hot comb that revolutionized hair straightening for black women. The business strategies of the company—which employed over five thousand black women as agents who disseminated information on the Walker hair-care system in a marketing and employee-incentive program that utilized a national and international network of marketing consultants—presaged the practices of modern cosmetics firms.
The World War I era also witnessed the growth of black-owned publishing businesses. In 1905 Robert Abbott (1870–1940) founded the Chicago Defender, the first black newspaper with a mass circulation. The Defender used sensationalized news coverage to attract a large audience and was outspoken in its condemnation of racial injustice. By 1920 it had a circulation of over 200,000, with national circulation exceeding local sales. At Abbott's death the Defender was valued at $300,000. Abbott's successor, his nephew John H. Sengstacke, went on to establish Sengstacke Enterprises, which, with the Defender and ten other papers, became the largest black newspaper chain in America.
As media opportunities grew, African Americans became increasingly visible in the entertainment industry. One of the most successful black entrepreneurs in this field was Harry Herbert Pace (1884–1943). After founding Pace and Handy Music (1917), a sheet music company whose publications included W. C. Handy's "St. Louis Blues," he founded the New York-based Black Swan Record Company (1921), the first record company owned by an African American. Black Swan's first success was Ethel Waters's "Oh Daddy" in 1921, which sold 600,000 copies in six months. Pace, who wanted to tap a national market for his records, refused to record Bessie Smith because he thought her music "too colored." By 1923 Black Swan was cutting six thousand records a day. Pace sold the company, at a hefty profit, to Paramount later that year. In addition, Pace's creative management and financial strategies promoted the growth of several black financial institutions, including Robert Church's Memphis Solvent Savings Bank (whose assets he increased from $50,000 to $600,000 in the years from 1907 to 1911) and Herman Edward Perry's Standard Life Insurance Company. In 1929 Pace engineered the merger of three northern black insurance companies to form Supreme Liberty Life Insurance.
Even as African-American entrepreneurs were branching out into new lines of business, many remained active in the catering and hotel fields. James Wormley (1819–1884), a caterer and restaurateur who built the fivestoried Wormley's Hotel (1871) in Washington, D.C., ranked among the most fashionable black hoteliers. Wormley's hotel was patronized by leading politicians and foreign dignitaries, and he left an estate exceeding $100,000 in assets. In Philadelphia the tradition of catering, long an African-American resource, reached a pinnacle with the Dutrieulle family. Their catering business, established by Peter Dutrieulle (1838–1916) in 1873, lasted for almost a century, flourishing under the management of his son Albert (1877–1974) until 1967.
African Americans also profited in new areas of the food industry. C. H. James & Company of Charleston, W.V., a wholesale food processing and distribution enterprise founded in 1883, lasted for four generations of family ownership. From the time of its inception, the company's suppliers and buyers were primarily white; it was initially headed by Charles Howell James (1862–1929) and included a traveling dry goods retail operation. However, once the family decided to abandon the retail operation (in 1916) and limit the enterprise solely to the distribution of wholesale produce, the profits escalated to over $350,000. After a brief period of bankruptcy—caused by the stock market crash of 1929—the company was resuscitated by Edward Lawrence James, Sr. (1893–1967), and began to show a profit by the end of the 1930s. The company's survival was due largely to innovations in wholesale food distribution
methods. Now headed by Charles H. James III (1959–), it remains one of the most successful black businesses in the country.
Up to the onset of the Great Depression, black entrepreneurial efforts were concentrated primarily on the service industry, since in most cases African Americans could not gain access to the capital markets and financial resources needed for developing industrial enterprises. The few blacks who attempted to capitalize on the demand for such modern industries as auto manufactures, movie production, and airline companies did not succeed. Nevertheless, the Great Migration of the early twentieth century caused a dramatic rise in northern urban black populations, and entrepreneurs were quick to seize the opportunities afforded by a new and rapidly expanding African-American consumer base. This growth was not matched in the South, where Jim Crow laws and societal racist practices restricted black enterprise to the same, increasingly depleted markets.
During the Great Depression the number of black businesses declined from 103,881 in 1930 to 87,475 in 1940. Among the few who prospered in those years was Texan Hobart T. Taylor, Sr., who used family money from farm property to start a cab company in 1931. The company continued to flourish during World War II, and Taylor added considerably to his wealth by investing the proceeds in rural and urban real estate. By the 1970s Taylor's assets were valued at approximately $5 million.
The food-processing industries remained a fairly stable resource for black entrepreneurs before, during, and after World War II. In the late 1930s California businessman Milton Earl Grant started companies in rubbish hauling and hog raising. In 1947 he founded the Broadway Federal Savings and Loan Association in Los Angeles. By 1948 Grant had grossed some $200,000 from the sale of hogs; he invested the profits in real estate, and by 1970 his holdings exceeded more than $1.5 million. In Buffalo, N.Y., Cornelius Ford founded the C. E. Ford Company, a cattle brokerage firm, during the 1920s. Ford's business survived the depression and in the 1950s was yielding over $1 million annually from livestock trade and sales. His company was one of the chief buyers for Armour and Company for some twenty-five years. In addition, Ford became president of the Buffalo Livestock Exchange (the fifth largest in the nation), speculated in the Canadian cattle market, and leased railroad yards from New York Central.
George McDermmod, a potato chip maker and chief executive officer of Community Essentials, established a manufacturing plant in Crescent City, Ill., and a distribution plant in Detroit during the 1940s. As of 1950 McDermmod was selling his products to fourteen hundred dealers in nine states with gross business receipts amounting to over $100,000 annually. In Chicago Kit Baldwin established an ice-cream company that catered primarily to the black community and was reporting annual business receipts of $75,000 by the late 1940s. During this same period Detroit entrepreneur Sydney Barthwell established a drugstore chain of nine stores and manufactured ice cream. In 1948 Barthwell reported a staff of eighty fulltime employees and gross business receipts in excess of $1.5 million.
The hair-care and cosmetic-manufacturing business also continued to attract black entrepreneurs. In Harlem Rose Morgan and Olivia Clark established the Rose Meta House of Beauty in 1947. Three years later they were earning $3 million from the sale of cosmetics and hair-care products in national stores and via international mail. Morgan and Clark's chain of beauty shops proliferated in major American cities as well as in Monrovia, Liberia; Cayenne, British Guiana; Puerto Rico; Cuba; and Jamaica. In New York City alone, their three shops employed three hundred people.
One of the most successful and wealthiest black entrepreneurs of the World War II era was S. B. Fuller (1905–1988), whose Chicago business empire, Fuller Products, comprised health and beauty aids as well as cleaning products and real estate. Fuller's many investments included the famous Regal Theater, the Pittsburgh Courier, Fuller Guarantee Corporation, the Fuller Department Store, and various livestock operations. In 1947 he secretly purchased a cosmetic factory owned and operated by whites. By 1960 Fuller, who had begun his career in 1935 as a door-to-door salesman, reported a payroll of five thousand employees, white and black, and a three-hundred-product line that brought in over $10 million in sales. However, when Fuller's ownership of the cosmetic factory—the products of which were tailored to the needs of southern white consumers—was discovered in the early 1960s, his cosmetics were boycotted by whites, and he was unable to raise sufficient capital to offset his loses. In 1964 the SEC charged Fuller with the sale of unregistered securities and forced him to pay $1.5 million to his creditors. Although Fuller Products was resurrected from bankruptcy in 1972, it never recovered as a major black business.
Another financier who rose to prominence after the depression was Arthur George Gaston (1892–1996) of Birmingham, Ala. Gaston's business activities began with the founding of a burial society, which he incorporated in 1932 as the Booker T. Washington Insurance Company. Seven years later, with the proceeds from life and health insurance sales, Gaston established the Booker T. Washington Business College, the Gaston Motel, and the Gaston Construction Company. In 1952 he expanded his holdings with the Vulcan Realty and Investment Corporation, a real estate firm that financed the construction of office and apartment buildings, as well as the development of housing subdivisions. Gaston's Citizens Federal Savings and Loan Association—ranked seventeenth on the 1993 Black Enterprise list of financial companies—was founded in 1957. Additional enterprises included Booker T. Washington Broadcasting and a soft-drink bottling company. In 1987 Gaston sold ownership of his insurance, radio, and construction companies to the employees. In 1993 the Booker T. Washington Insurance Company ranked sixth on the Black Enterprise list of insurance companies, with assets over $43 million.
The 1940s and 1950s witnessed an increase in manufacturing opportunities for African-American entrepreneurs. The Grimes Oil Company of Boston, a petroleum products distributor, was founded in 1940 by Calvin M. Grimes; as of 1993, its sales had reached $37 million. In 1949 Dempsey Travis founded the H. G. Parks Sausage Company in Baltimore. Subsequently, in 1990, Travis initiated the development of a middle-class townhouse project on Chicago's South Side.
The 1960s marked the emergence of a national network of large black businesses, many of which were founded on minute initial capital outlays. Johnson Publications began in 1942 with an investment of $250; the H. J. Russell Construction Company began in 1952 with a $150 truck; Berry Gordy started Motown for $700 in 1958. As the civil rights movement gathered momentum in the late 1950s and early 1960s, it became easier for blacks to obtain more substantial business financing; however, undercapitalized joint ventures persisted as a major method in the founding and development of new enterprises by African-American entrepreneurs. With few exceptions enterprises founded by black entrepreneurs remain relatively small private or family-owned companies. As of 2005 only seventeen of the Black Enterprise top 100 industrial/service businesses employed more than a thousand people.
In 1964, for the first time in the history of this country, the federal government took steps to provide assistance to black entrepreneurs by creating the Office of Minority Business Enterprises (OMBE), a division of the Small Business Administration (SBA), which was overseen in turn by the Department of Commerce. In 1969 President Richard M. Nixon issued executive order no. 11458, calling for the "strengthening of minority business enterprise"; by 1976 surveys showed that over two-thirds of the top black businesses had been started with support from the SBA. However, under Presidents Reagan and George H. W. Bush progress toward business parity for blacks was visibly slowed.
While African-American businesses have continued to tap an African-American consumer market, black entrepreneurs have slowly expanded sales to include mainstream national and international markets. One ironic consequence of black economic success has been that some of the most profitable black-owned companies—such as Johnson Products and Motown Records—have since been acquired by larger, white-owned organizations. The first black company to have its stock publicly traded was the Johnson Products Company, which was founded by George E. Johnson (1927-) in 1954; it was listed for the first time on the American Stock Exchange in 1969. Johnson Products greatly increased its sales when it introduced a non-lye-based hair relaxer, Ultra-Sheen (developed by George Johnson), into the market in 1966. During the late 1960s Johnson developed another best-selling hair product, Afro-Sheen, in response to the newly popular Afro hair style; so successful were these and other items that his company controlled the market in black hair products throughout the mid–1960s and into the early 1970s. By the mid–1970s, however, a series of setbacks—mostly in the form of competition from new black- and white-owned companies—cost Johnson the leading market share; in 1989 he lost control of the company to his ex-wife, Joan B. Johnson, who then sold Johnson Products to IVAX for $67 million dollars in 1993. In its final year as a black company, Johnson Products ranked twentieth in the Black Enterprise top 100 of 1992, registering $46.2 million in sales.
The most prominent rival for Johnson Products was Edward G. Gardner's (1925-) Soft Sheen Products, established in 1964. Soft Sheen's most successful product, Care Free Curl, was introduced in 1979. Like Johnson, Gardner also had to compete with white companies—most notably Revlon and Alberto Culver—which controlled 50 percent of a $1 billion black hair-care market in 1988. By this time black enterprises were seriously theatened with losing the market to white corporations that had only recently entered the field. Black manufacturers launched an aggressive campaign to prevent white companies from gaining control and received support from Jesse Jackson's Operation PUSH, as well as from John H. Johnson, publisher of Ebony and Jet magazines, and Essence founder Edward T. Lewis, both of whom refused to accept advertisements from white-owned companies in their publications. The white cosmetic giants escalated their strategies; by 1993 only five of the nineteen cosmetic companies in the black hair-care market were African-American owned. Black hair-care products remain an extremely profitable field, but in 2005 only Bronner Brothers cracked the Black Enterprise top 100 industrial/service companies list, at seventy-third.
Berry Gordy's company, Motown Records, a subsidiary of Motown Industries, was the largest and most successful African-American enterprise in the entertainment field and the first to profit from the introduction of black music into the mainstream consumer market. Gordy's eight record labels, which recorded such groups as the Supremes and the Temptations, produced numerous hits on the pop and R&B charts. Almost from its inception Mo-town included Motown Productions, Hitsville, and the music publishing company Jobete. Most of Motown's holdings were sold to MCA Records for $61 million in 1988, and the company's listing was removed from Black Enterprise.
Motown's success served as a catalyst for African-American participation in the entertainment industry. Dick Griffey Productions, a concert-promotion and record company founded in 1975, has continued to flourish in recent years. Its founder, Dick Griffey (1943– ) expanded into international markets by investing the company's proceeds in the African Development Public Investment Corporation, as well as in an African commodities and aircharter service, which he founded in 1985. In 2000 Dick Griffey Productions ranked forty-eighth on Black Enterprise 's listing with sales of $61 million, while in 1993 the African Development Corporation, registered sales of $57.8 million and ranked twenty-second.
Perhaps the most successful African-American entrepreneur of the postwar era was John H. Johnson (1918– ), the owner of Johnson Publications. Johnson's business empire extends to various media corporations, Fashion Fair (a cosmetic company), radio stations, and television production companies. Founded in the 1970s, Fashion Fair has become the largest black-owned cosmetic company of the 1990s.
Black enterprise was greatly stimulated by an increasingly diversified African-American reading audience. Essence Communications, the parent company of Essence, a black woman's magazine, was founded in 1970 by four African-American men. Edward T. Lewis (1940– ), the company's publisher and CEO, also established a direct-mail catalogue business before joining with J. Bruce Llewellyn and Percy Sutton in the purchase of an American Broadcasting Company (ABC) affiliate TV station in Brooklyn. In 1993 Essence Communications reported $71.1 million in sales.
In 1970 Earl G. Graves (1935– ) launched Black Enterprise, a publication designed to address African-American interests in business and to report on black economic development. Soon afterward, Graves expanded his business interests by acquiring both a marketing and research company and EGG Dallas Broadcasting. In 1990 he joined Earvin "Magic" Johnson in purchasing the Washington, D.C., Pepsi-Cola franchise, of which Graves was CEO. In 1998, they sold the franchise back to the parent company. Earl G. Graves, Limited, ranked sixty-fourth on the Black Enterprise listing in 2005, with sales of $57.8 million.
By the 1970s black entrepreneurs had managed to gain access to capital markets and were able to invest their wealth in a variety of business ventures. Some of the earliest black advertising agencies included the Chicago-based Proctor & Gardner Advertising, founded in 1970 by Barbara Gardner Proctor (1932-), and Burrell Communications Group, founded by Thomas J. Burrell (1939-) in 1971. In 2005 Burrell's client list included such megafirms as Coca-Cola, McDonalds, and Sears and registered assets in excess of $200 million.
One of the most promising businessmen to emerge during this period was New Yorker J. Bruce Llewellyn (1927– ), who purchased FEDCO Foods Corporation, a Bronx chain of ten supermarkets, for $3 million. Llewellyn sold FEDCO for $20 million in 1984; the next year he joined basketball star Julius Erving and actor Bill Cosby in purchasing the Philadelphia Coca-Cola Bottling Company. Four years later Llewellyn bought Garden State Cable Television. By 1993 Garden State's assets registered $96 million. In 2005, Philadelphia Coca-Cola reported sales of $450 million, making it the sixth most profitable company on the Black Enterprise top 100 list.
Entertainment entrepreneur Percy E. Sutton (1920– ) pursued a political career (he was Manhattan borough president for several years) in addition to founding the Inner City Broadcasting Company in 1970. Sutton, who controlled the Inner City Cable and the Apollo Theater Group, expanded his interests with Percy Sutton International, which has built manufacturing plants in such countries as Nigeria. In 1989 Sutton estimated his net worth at $170 million.
Black participation increased significantly in the area of finance. Perhaps the most profitable business enterprise was the TLC Group, established by securities lawyer Reginald Lewis (1942–1993). Lewis purchased the McCall Pattern Company for $1 million in cash and $24 million in borrowed money; four years later he sold the company for $63 million. Aided by financing from Manufacturers Hanover Trust and Drexel Burnham Lambert, he then engineered a $985 million leveraged buyout of Beatrice International Companies, a large multinational corporation. Beatrice became the first billion-dollar black company, and in 1993 ranked first on the Black Enterprise top 100 list with $1.7 billion in sales (five times as much as the second company on the list). At its peak in 1996, TLC Beatrice had sales of $2.2 billion and was number 512 on Fortune magazine's list of 1,000 largest companies.
Construction and land development executive Herman J. Russell (1930– ), founder and CEO of H. J. Russell & Company of Atlanta, Ga., started out in 1952 as the owner of the H. J. Russell Plastering Company, a small private business. In 1959, Russell established the H. J. Russell Construction Company, which specialized in building single-family homes and duplexes. His involvement in large-scale private-sector commercial projects began in 1969, when he was commissioned to construct the thirty-four story Equitable Life Assurance Building in Atlanta. In the 1970s Russell obtained financing from the Department of Housing and Urban Development (HUD) in order to construct twenty-nine housing projects with four thousand units for low- and middle-income families, while he maintained ownership of the properties. Other large-scale construction projects followed: the Atlanta Stadium, the Atlanta City Hall Complex, the Martin Luther King Community Center, and the Carter Presidential Center. In joint-venture projects with white construction companies, Russell built the parking deck for Atlanta's Hartsfield Airport, the Georgia Pacific fifty-two-story office building, and the addition to the Atlanta Merchandise Mart. He also joined with another African-American-owned construction company, C. D. Moody Construction, to place the winning bid for the $209 million Olympic Stadium contract in Atlanta for the 1996 games.
Russell has expanded his conglomerate to include many diverse businesses. H. J. Russell & Company is the parent company of several subsidiary firms, including Williams-Russell and Johnson, an engineering, architecture, and construction management firm. Russell also owns Russell-Rowe Communications, an ABC affiliate in Macon, Ga. In addition, the City Beverage Company and the Concessions International Corporation, which oversees food concessions in several major airports, are owned by Russell. In 1972 he secured the management rights to Atlanta's Omni sports-convention complex and a 10 percent ownership share of the National Basketball Association's Atlanta Hawks, anticipating by almost two decades the 37.5 percent interest, $8 million purchase of the Denver Nuggets by black entrepreneurs Bertram Lee and Peter Bynoe (1989).
During the past three decades many black athletes and entertainers have assumed entrepreneurial management positions by using their million-dollar salaries to develop new enterprises both inside and outside the sports and entertainment industries. For example, former Green Bay Packer football player Willie D. Davis (1934– ) went on to earn an M.B.A. from the University of Chicago and found his own business, Willie Davis Distributing Company, in 1970. He sold the highly successful company (averaging annual sales of $25 million) in the late 1980s. Among Davis's multimillion-dollar enterprises are part ownership of five radio stations, significant shares in several companies, and the Alliance Bank of Culver City, Calif. Another successful athlete was football star Gale Sayers, who founded Crest Computer Supply in 1984, and by 1993 became the owner of a company whose annual sales amounted to $43 million. In 1999, George Foreman, boxer turned entrepreneur, put his name on a grill made by Salton. Salton purchased the rights to use his name for $127.5 million, plus $10 million in stock. By 2005, over 60 million George Foreman Grills were sold. Foreman helps to market and sell the grills and has also started a line of clothing and cleaning products.
One of the few very successful female entertainment entrepreneurs is television talk-show host Oprah Winfrey. In 1992 Winfrey became the highest paid U.S. entertainer, with earnings of $98 million. She has amassed a fortune of more than $250 million by controlling syndication of her talk show and founding the Harpo Production Company, a movie investment firm. In 2005, Harpo Inc. had $275 million in sales.
Another successful entrepreneur in the entertainment field is Robert Johnson (1946– ), founder and CEO of Black Entertainment Television (BET). Johnson knew that the power of television could be a useful tool in promoting black businesses and culture. After graduating from Princeton University with a master's degree in public administration, Johnson worked as a lobbyist for the National Cable Television Association. In 1978, he began developing his plan to create the first cable television network aimed at African Americans. BET launched in January of 1980, eleven years later it became the first black-controlled company listed on the New York Stock Exchange. BET is now a number one brand in African-American media, reaching more than 65 million U.S. homes. Johnson also acquired the Charlotte Bobcats (an NBA expansion franchise) in 2004, making him the first African American to be principal owner of a major-league sports franchise.
Naomi Sims (1949– ), one of America's first successful black models, capitalized on the black hair-care-product market by designing and manufacturing wigs that approximated the hair texture of black women. In 1973 she established the Naomi Sims Collection. With sales of $5 million the first year, Sims expanded distribution to include an international market. A cosmetic line, Naomi Sims Beauty Products, Limited, was introduced in 1986, and by 1988 sales from those products exceeded $5 million.
Historically, black entrepreneurs have participated in the clothing industry as tailors and dressmakers but seldom as manufacturers of mass apparel. In 1989 Carl Jones (1955– ) formed the first African-American-owned clothing manufacturing firm, the Los Angeles-based Threads 4 Life Corporation, doing business as Cross Colours. Cross Colours, which reported sales of $93 million in 1993, capitalized on the urban hip-hop, Afrocentric focus in dress, which came to prominence in the early 1990s. The company now has five clothing lines, including Cross Colour Classics, a line tailored to older and more conservative buyers. Jones's innovative Cross Colours Home, a home-furnishing line in which African fabrics and Africandesigned bed and table linens are featured prominently, is sold in Marshall Fields, I. Magnin, and Macy's
New Jersey-based H. F. Henderson Industries, founded in 1954 by Henry F. Henderson (1928– ), is an example of black participation in America's high-tech industries. Henderson specializes in automatic weighing systems, although most of the revenue for the company—which earned a reported $25.7 million in 1993—comes from defense contracts for the design and manufacture of control panels for the U.S. military. He began expanding his business in the 1970s with the Small Business Association's 8(a) program and a $125 million government contract; by the mid–1980s government contracts amounted to 50 percent of his business, with the private domestic sector accounting for 25 percent and the remaining 25 percent coming from an international market that included the People's Republic of China, Japan, Canada, Spain, and England.
Increasingly, black entrepreneurs are tapping markets on a global scale. Henderson, Sutton, Griffey, and George H. Johnson have all found international markets for their products. Soft Sheen's global expansion has taken place under the leadership of Edward G. Gardner's son, Gary, who purchased Britain's black-owned Dyke and Dryden, an import and manufacturing company that specializes in the distribution—primarily in Africa—of black personal-care products. Soft Sheen West Indies was also established in Jamaica. In the 1960s and '70s entrepreneur Jake Simmons Jr. (1901–1981), had used his earnings from the southwestern petroleum industry to invest in oil leases in West Africa.
Despite the development of multimillion-dollar businesses by African-American entrepreneurs, black business-participation rates remain low; only 4 percent of all companies in the United States are black owned. Publicly traded black companies remain few; indeed, only sixteen black companies in the United States (and twenty-one in the Caribbean) have taken this route. In 1971 Parks Sausage of Baltimore went public; it was taken over by a white private investment group in 1977 but was reacquired by the former black owners in 1980. In 1993 its sales reached almost $23 million. Robert Johnson, the founder of the Black Entertainment Channel, placed his company in public trading in order to expand his holdings. "It's time for African-Americans to think of company control in terms other than just percentage of black ownership," Johnson explained. "We should start thinking in terms of black control through the creation of value."
The future of privately held black businesses in the early twenty first century remains unclear, though there are some promising statistics. There are one million African American owned businesses in the United States, which account for over $100 billion in annual sales. Instead of the traditionally owned businesses in the service sector, such as beauty shops, the fastest growing sectors are now legal services, real estate, and business services. According to U.S. Census figures, between 1975 and 1995, the number of black professionals, technicians, administrators and managers nearly tripled, and the number of black college graduates doubled.
It has been argued that in the 1990s and 2000s access to capital and strategic alliances has led some black-owned companies to either go public or become amalgamated within larger, interracial concerns. Whether exclusive black ownership of black enterprises will remain central to the black economy is one of many questions black entrepreneurship will face.
See also Abbott, Robert Sengstacke; Black Entertainment Television (BET); Chicago Defender ; Cuffe, Paul; Du Sable, Jean Baptiste Pointe; Economic Condition, U.S.; Forten, James; Free Blacks, 1619–1860; Gordy, Berry; Mound Bayou, Mississippi; North Carolina Mutual Life Insurance Company; Pittsburgh Courier ; Toussaint, Pierre; Walker, Madam C. J.; Winfrey, Oprah; Women Traders of the Caribbean
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