Entrepreneurs

By: Roland Barksdale-Hall, Richard Newman

Source:

 Encyclopedia of African American History, 1619-1895: From the Colonial Period to the Age of Frederick Douglass

Entrepreneurs

[This entry contains two subentries dealing with African American entrepreneurs and their businesses from the Colonial period through 1895. The first article discusses the first African American entrepreneurs through 1830 and their long-term impact, while the second article discusses the successes, failures, and obstacles of African American entrepreneurs, including Frederick Douglass, after the Civil War.]

African American Entrepreneurs In Early America

The term entrepreneur is defined as a person who organizes and promotes but, more precisely, as someone who manages and assumes the risk of a business. Black businessmen, shopkeepers, ship's captains, and financiers thus served as leaders of the African American entrepreneurial class in early America. Black entrepreneurs existed in African American communities throughout the colonial, Revolutionary, and early national periods. Perhaps the leading black entrepreneur was the Philadelphian James Forten. Born free, Forten was apprenticed to the white sailmaker Robert Bridges in 1786. After mastering both the craft and the business of sailmaking, he bought Bridges's shop in 1798. Until his death in 1842, Forten not only built his sailmaking business into one of the most prominent in the bustling city of Philadelphia but also secured real estate; made loans to both white and black citizens; and, according to the biographer Julie Winch, created a prosperous empire of investments. His estate was valued at more than sixty thousand dollars when he died.

Forten was not the only African American gentleman of property and economic standing in early national Philadelphia. The Reverend Richard Allen, who remains best known for establishing the Bethel African Methodist Episcopal Church in Philadelphia, held rental properties that provided a substantial income and started a chimney-sweeping business. Allen and another church leader, Absalom Jones, formed a benevolent and social reform organization called the Free African Society, but the two men also sought to become entrepreneurs in the early 1790s with their investment in a nail-producing business. In addition, several of Allen's parishioners at the Bethel Church were listed in Philadelphia directories of the 1810s and 1820s as masters of small businesses.

Black entrepreneurial activity stemmed from African American business ventures in both the colonies and the early Republic. Although most African-descended people were enslaved before the American Revolution, there were still black businessmen who established themselves as viable profit makers. In Root and Branch, a study of African American life in early New York and New Jersey, the historian Graham Russell Hodges reports that Africandescended people established independent farms and small businesses in the 1640s, 1650s, and 1660s in colonial New York. African people arriving in Dutch New Amsterdam hailed from urban cultures with vibrant market systems. On the North American mainland free blacks established market stands that sold a variety of goods, including fish, corn, copper, and ivory.

Black entrepreneurial activity accelerated following the American Revolution. The growth of free black communities, primarily in urban locales, abetted the rise of black businessmen of various sorts. Prince Hall, who worked in the leather trade before the Revolution and was enslaved until the 1770s, established a leather-goods shop during the war. In 1777 he supplied the Continental army with leather goods, for which he received reimbursement. Free black businesses appeared increasingly between the 1780s and 1820s, in New York City; Boston; Newport and Providence, Rhode Island; Baltimore, Maryland; Philadelphia; Richmond, Virginia; and Charleston, South Carolina.

One pathway to economic independence for African Americans was working at jobs that white laborers and businessmen felt were beneath them and had abandoned. That is how black Philadelphians like Allen came to operate chimney-sweeping businesses. Allen's business was successful enough that he even hired out indentured servants. African American businesses also included barbershops, dry-cleaning operations, grog shops, brothels, and theaters.

The most famous early black theater company, the African Company, was started by a black businessman, William Brown, in New York City in 1821. As its first play, the troop of black actors staged William Shakespeare's Richard III. Brown was the economic mover behind the company, which performed at another business enterprise of Brown's: the African Grove Theater, a tea garden and entertainment space for blacks. The African Company lasted only a few years before falling prey to prejudicial attitudes; the African Grove Theater met a similar fate when it closed in 1829.

Merchant activity provided black businessmen with the means to economic elevation. The celebrated ship captain Paul Cuffe, who owned several ships before his death in 1817, worked as a crewman in the whaling trade before becoming an independent ship owner. He bought his first ship with a business partner in 1787, working as a fisherman and whaler near Newfoundland, Canada. He secured a second vessel and then a third before 1800. By 1810–1811 Cuffe was an internationally known captain and reformer, with a crew on some voyages of nearly a dozen people of color. Absalom Boston, a freeborn black citizen of Massachusetts, though not as successful as Cuffe, nevertheless paralleled the great sea captain's rise. Starting as a mariner and general laborer at the outset of the nineteenth century, Boston was captaining the whaling ship Industry by the spring of 1822. He also operated a public inn and a general store.

Black business activity was not confined to free black communities in the North. Free blacks started a variety of establishments in Richmond, Charleston, and Baltimore as well. After the American Revolution in Richmond, African Americans started groceries, grog shops, saloons, and gaming houses. According to the historian Douglas R. Egerton, these black business owners, though small in number, testified to the entrepreneurial spirit in the African American community in the years after Virginia eased emancipation laws in 1782. Even after Richmond authorities closed down certain black businesses, black entrepreneurs created an underground presence.

By the 1810s and 1820s many black entrepreneurs used their prominent economic and social positions in the cause of social justice. Although a minor businessman by most standards, the free black activist David Walker utilized his used-clothing shop in Boston as an entrepôt of black reform. The author and publisher of Appeal to the Coloured Citizens of the World, a militant denunciation of American racial oppression that came out in 1829, Walker sewed copies of the pamphlet into clothing that was smuggled from his Boston shop onto southern plantations. Other reformers contributed to black schools, libraries, and charitable organizations.

In short, black entrepreneurial activity became an emblem of black abolitionism. It undercut white stereotypes about African American abilities while also providing an economic foundation for autonomous black reform movements.

See also African Grove Theater; Allen, Richard; American Revolution; Black Press; Black Seafarers; Cuffe, Paul; David Walker's Appeal; Forten, James; Free African Americans to 1828; Free African Society; Hall, Prince; Indentured Servitude; Inventors; Jones, Absalom; Maritime Trades; New York City; Occupations; Political Participation; Walker, David; and Work.

Richard Newman

African American Capitalism After the Civil War

Frederick Douglass's dream of going from rags to riches proved untenable for most blacks in the rural southern districts. During the Reconstruction era Douglass unsuccessfully advocated the formation of a national land and loan company to purchase large blocs of land for later sale to former enslaved blacks in the South. He believed that the absence of a public land policy was one of the failures of Reconstruction. Yet his moderate Republican views—coupled with his values of hard work, perseverance, and thrift—kept him from supporting the confiscation of lands to be redistributed to landless blacks. His promotion of hard work, perseverance, and thrift overlooked systemic racial barriers to economic progress, as evidenced by the tenant-farming system, unscrupulous white landowners, and southern white hostility to Reconstruction. Martin Robison Delany, a disillusioned black colleague and a former co-editor of the North Star who had advocated black emigration, made a futile attempt to engage Douglass in discourse about the systemic nature of racism and its adverse effect on black political, economic, and social progress.

A string of ventures from serving as president of the Freedman's Savings and Trust Company to his ownership of the black newspaper New National Era during the 1870s perhaps led the self-taught Douglass to maintain high aspirations. He probably found virtue in his visible leadership role as a former enslaved black and concluded that hard work, perseverance, and thrift were the means to black economic growth. Scholars, however, consider Douglass's postwar business ventures to be characterized by lackluster financial performances. His secure financial status and friendly white associations further distanced the self-made man from the bleak plight of the black landless masses as time passed. In 1886 Douglass, an internationally recognized figure who no longer required gainful employment and who had substantial savings, embarked on a leisurely tour of Europe with his wife, Helen Pitts Douglass.

Freedman's Savings and Trust Company

The roots of black capitalism were evident in loan and brokerage concerns before the Civil War. Stephen Smith, a black Underground Railroad operator in Columbia, Pennsylvania, had a reported net worth of $500,000 and made loans at a profit. The 1850 census for New Orleans, Louisiana, showed that eight mulattoes were involved in the brokerage business. It was also in New Orleans that General Nathaniel P. Banks established a bank for black soldiers and the free black community in 1864. Other military banking institutions in Beaufort, South Carolina, and Norfolk, Virginia, perhaps provided inspiration for the establishment of the Freedman's Savings and Trust Company in 1865.

Despite his lack of experience Douglass, always the consummate optimist, assumed the role of president of the savings and trust company in 1874, when the financially troubled banking institution showed a deficit of at least $200,000, unbeknownst to him. A naive Douglass initially considered his appointment an unimaginable dream, but within three months the bank was placed in bankruptcy, causing considerable personal damage to his reputation. To Douglass's credit, he was successful in promoting black self-help and thrifty practices through pamphlets circulated throughout the country. He perhaps found the greatest personal satisfaction in the increased number of black clerks and tellers employed at the savings and trust, who were being trained in proper banking methods.

In reality Douglass was unable to change the Freedman's Savings and Trust Company's plummeting course that began before his arrival because of a too-rapid increase in the number of branches, poor speculative investments, and exorbitant rates of return. The period of rapid expansion, which witnessed the establishment of thirty-four branches, was rumored to have the support of President Abraham Lincoln and the backing of the U.S. Congress. Even though these rumors were less than factual, former enslaved blacks believed the claims. The savings and trust company had opened ten branches within a year of its inception in 1865; by 1867 ten additional branches had opened. The bank operated in the black until 1870, when the trustees, through an amendment to the charter, received the authorization to invest one-half the funds in real estate investments in their own local communities, which resulted in corruption. Finally, the embezzlement of funds and southern white hostility were obstacles too great to overcome. The Freedman's Savings and Trust Company closed in 1874. Some scholars argue that the closing of the savings and trust company left both whites and blacks with little confidence in the federal government for more than a decade. Others conclude that the company's failure later discouraged black commercial banking ventures, which meant black deposits were held in more secure thrifts.

Rise of Black Enterprise

In the mid-nineteenth century black enterprise accompanied by social responsibility was the norm. In 1878 Douglass purchased a fifteen-acre estate along with a twenty-room house in the District of Columbia, where he advocated for black causes and women's rights. His financial security was guaranteed with his appointment to prestigious government posts from 1877 to 1886 as well as with speaking engagements. Mary Pleasant, who passed for white at strategic moments, amassed a considerable fortune as the operator of a mulatto boardinghouse in San Francisco and used her influence in 1868 to finance a legal case to the California Supreme Court so that blacks might ride trolleys. John Jones, a Chicago black tailor who catered to a wealthy clientele, built a four-story office building and was appointed as county commissioner in 1874. The substantial material gains of Douglass, Pleasant, and Jones were atypical when many late nineteenth-century black tenant farmers lived in one- and two-room cabins in the South. Douglass's optimism about substantial black economic progress proved unfounded for the black masses. Even his own children struggled to attain financial independence and required his assistance.

Between 1865 and 1895 the rise of black banking institutions and increasing black thrift moved blacks one step closer to financial independence. However, between 1899 and 1905 one out of four black banks went out of business. In 1888 the Capitol Savings Bank opened with its headquarters in Washington, D.C., and its leadership comprising Henry Baker, Whitfield McKinley, W. S. Montgomery, John A. Pierre, Robert H. Terrell, and J. R. Wilder. At the same time a fraternal group, the Grand Fountain of the United Order of True Reformers, opened the Savings Bank in Richmond, Virginia, with William Washington Browne as president. The Mutual Bank and Trust Company in Chattanooga, Tennessee, was a short-lived bank established in 1889. A year later, B. H. Hudson, an educator and grocer, and W. R. Pettiford, a minister, helped establish the Alabama Penny Savings Bank in Birmingham. Thrifty black industrial workers loyally supported this bank. Yet expansion of three branches in Montgomery, Selma, and Anniston proved a financial miscalculation. These early black banking institutions failed because of poor commercial investments, speculation by officers, and mismanagement. Changing black leadership and overexpansion contributed to bank closures, but these early banks were significant developments in the progress toward black capitalism.

See also Black Press; Civil War; Delany, Martin Robison; Douglass, Frederick; Freedman's Savings and Trust Company; Lincoln, Abraham; Mulattoes; New National Era; North Star; Progress; Racism; Reconstruction; Republican Party; Sharecropping; and Underground Railroad.

Roland Barksdale-Hall

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