African American Business Development and Racial Freedoms - Research Paper Example

Was the Great Migration and the Harlem Renaissance the gateway from oppression for African Americans to become business owners? Table of Contents Purpose Statement 2 Description of African American Businesses 3 Racial Segregation and African American Businesses 4 Importance of Study 5 Implication of African American Business Ownership 5 Literature Review 6 Introduction 6 Buildup to the Great Migration 6 The Great Migration and African American Businesses 9 The Harlem Renaissance and afterwards for African American Businesses 11 The Civil Rights Movement and After 15 Contemporary Positions of African American Businesses 16 Summary 16 Concepts and Theories 17 Discussion and Application to African American Business Development and Racial Freedoms 17 Recommendations and Conclusion 19 References 20 Purpose Statement Business ownership especially that of minority groups can be seen as a measure of racial independence, lack of racial segregation and economic progress in a multicultural society. The history of African American businesses in the United States can be seen as being reflective of social conditions of the time. Initially the African American sections of society were enslaved and were denied any independent economic character altogether. Even after emancipation, the state of African American businesses remained dismal given that major African American populations were settled in the racially hostile South. However, as the twentieth century came about, African American businesses saw major changes in the years ahead. The changing social conditions and the transforming demography had major implications for the state of African American businesses both in the South and the North. This study aims to look into the development and growth of African American businesses around the United States in order to discern the part played by business in socio economic uplift of African Americans. The study will look into African American businesses from the earliest periods of post emancipation through to the Great Migration, the Harlem Renaissance, the Second World War, the Civil Rights Movement and the current day. The contention is to see how business ownership improved the socio economic status of African Americans and how these historical events allowed African Americans to own and operate businesses. Description of African American Businesses African American businesses in the United States are older than most people would suppose. The earliest African American owned and operated businesses date back to the post emancipation period from the rural and racially oppressive South [Joh03]. The presence of a large African American population coupled with racial segregation meant that African Americans were confined to using shops from their community alone. The prominent African American thinker W. E. Du Bois aptly observed[WED99]: “It is the density of the Negro population in the main that gives the Negro businessman his best chance.” Given the constant oppression of the rural South, the African America population began to move in large numbers to the industrialized North that presented better economic opportunities as well as greater racial freedoms. The early twentieth century saw a large African American exodus from the racially polarized South. The first of these series of movements, labeled the Great Migration, forced some 1.6 million African Americans into the North [Arn02]. The influx of African American immigrants saw slow business growth since most ended up joining the industries in the north as blue collar workers. Racial segregation continued in the North though not as harshly leading to the development of some African American businesses. It was not until the Harlem Renaissance that distinctly recognizable African American businesses began to appear in the urban landscape. Even so, African American businesses were overshadowed by businesses owned by European immigrants and older white settlers [Che97]. The real strength of African American businesses only begun to take shape after the Civil Rights Movement in the 1960’s that ushered in racial recognition and tolerance unlike ever before in the United States. The socio economic freedoms provided by the Civil Rights Movement bolstered African American business growth such that African American owned and operated businesses accounted for 1.2 million businesses out of the 23 million businesses in the United States [USC05]. In addition, African American businesses have grown to over two million by 2011 and have displayed the strongest growth rates amongst minority owned and operated businesses [Joh10]. Racial Segregation and African American Businesses The early days of African American businesses were marked in large part by racial segregation and intolerance. The rural South, that accounted for most African American owned and operated businesses in the United States, was still host to terrible racial marginalization such that African Americans were not allowed at white shops and services. In order to deal with the vacuum, African American businesses sprung up throughout the rural South to service African American patrons. However, business growth remained slow and near stagnant since the patrons of these businesses were often poor themselves and seldom had enough cash to spend [Joh03]. Consequently, African American businesses remained confined to small stores and shops operated within the African American community with low chances for large retail growth. The Great Migration and the Harlem Renaissance both provided impetus to African American business growth but certain issues still paralleled the rural South in terms of racial oppression. African Americans were confined to racially segregated communities such as the Bronx in New York where their businesses operated. The lack of exposure and access to the entire market meant that African American businesses remained stagnant in terms of growth [Che97]. It was not until the Civil Rights Movement of the sixties and afterwards that African Americans were ushered into the larger market as business competitors. This led to business growth and proliferation at previously unmatched scales. The real success of African American businesses tends to take off after the Civil Rights Movement down to the present day. Importance of Study As mentioned before, business ownership signifies racial independence in a multicultural society. The relatively low numbers of African American businesses signal towards racial segregation and discrimination that may not be apparent at first sight but exists nonetheless. A close examination of African American businesses and their evolution over time provides for identification of reasons holding back African American business ownership in the United States. Implication of African American Business Ownership African Americans account for one of the most racially disadvantaged groups in the United States. Racial segregation of African Americans is visible in terms of their residences being largely in urban decay regions. The low per capita income of African American groups is largely responsible for various socio economic problems in African American communities throughout the United States. African American business ownership provides large opportunities for socio economic uplift that is much needed. Considering that African Americans have had poverty rates of around 25% with little variation over time signifies that major socio economic and political challenges are holding back African American business development and growth [DeN05]. It needs to be seen what structural problems exist and how these can be solved in order to promote better socio economic conditions for African Americans throughout the United States. Literature Review Introduction The tale of Africa American integration and growth encompasses a number of different epochs in the history of the United States. The development and growth of African American businesses throughout the United States can also be considered as a subset of these historical developments. It is not possible to see African American growth into an independent nation without the development and growth of African American businesses. A comprehensive literature review is presented below in order to examine if the development of African American businesses resulting from the Great Migration and the Harlem Renaissance and afterwards were able to mollify discrimination against the blacks in America. Buildup to the Great Migration Most quarters would contend that the African Americans had no business representation before the twentieth century but this was not the case. In fact, African Americans owned businesses in the racially charged rural South directly after the emancipation. The Civil War led to African American liberation though it could not be achieved in complete letter and spirit until much later. African Americans were able to create their own communities in the rural South which meant that residential segregation had begun. Previously, slaves lived on the plantations with their masters and the concept of racially segregated communities and neighborhoods did not exist. However, the Emancipation Proclamation allowed the African Americans to gather in enough numbers to create distinct communities of their own. The earliest African American communities were not much far off from their previous owner’s plantations. Since the African Americans lacked capital and any other forms of skill sets directly after emancipation, they were still forced to work in the fields [Joh88]. It was not until about a decade or later after the emancipation that African American businesses began to grow in the newly formed African American communities in the rural South. The racial segregation meant that African Americans were able to live independently on their own but were still not allowed to enter main markets in villages, towns and cities where white supremacy and privilege ruled. Since the African Americans now had money to spend and the makings of a middle class were in their infancy, they required outlets to exercise their wishes. Eyeing this opportunity, the earliest African American entrepreneurs took to action and established the local grocery stores within the African American communities in the rural South[But91]. The case of African American businesses in the North was different since racial relations were much better even if not perfect and there were some African American establishments already in existence by the time of the Civil War. The business development and growth in the rural South remained confined and stagnated as the African American businessmen could only service the needs of their communities without any exposure to the larger market. This phenomenon presented a distinct problem – the whites had more money to spend and were required for African American businesses to take off. However, a charged up racial environment and the presence of elements such as the Ku Klux Klan led to a thawed business environment for the African Americans. Another distinct problem was that African American entrepreneurs in the earliest time were little more than white store front managers. The whites controlled the supply of goods and the entire supply chain mechanism. The African American entrepreneur in the African American community served as the agent who distributed goods to the end consumer even though the finance was in control of the white suppliers. This led to the development of meager profits for the African American entrepreneur who was restricted to petty gains that forced him into white entrepreneurial yokes[Ale87]. The fact that businesses grew in the rural South to confine the African American entrepreneur in such a manner was not astounding. Businesses across the United States operated and owned by other racial minorities suffered a similar fate. The case of African American businesses being oppressed by the entrepreneurial spirit of the white man had been documented for long. J. P. Brissot observes in his travelogue New Travels in the United States of America from 1788 that[Jul09]: “Those Negroes who keep shops live moderately, and never augment their business beyond a certain point. The reason is obvious: the whites … like not to give them credit to enable them to undertake any extensive commerce nor even give to them means of a common education by receiving them in to their counting houses.” After slavery the African American fell victim to white prejudices in businesses that limited their capacity to achieve much. A constricted cash flow regime meant that the African American entrepreneur could not develop much beyond the white businessman’s African American community agent and operator. Black businesses could not take off in some locations due to legal stipulations. The white man required the newly liberated Negro to own property before it became possible to establish a business [Jul09]. Oppressive legal stipulations, constricted cash flows, market entry barriers, lack of governmental support and a small audience meant that African American businesses in the post emancipation era remained menial at best when compared with the overall economic system. The Great Migration and African American Businesses The Great Migration witnessed the relocation of some seven million African Americans from the rural South to the more urbanized and racially tolerant North. A number of factors were responsible for forcing millions of African Americans to the north. The primary drivers of the Great Migration in the broadest terms remained racial discrimination and a lack of chances for socio economic growth. Among the more recent cause became the unemployment of millions of African Americans who were put off after the cotton crop was affected by pestilence. As African Americans moved into the more racially tolerant North, the chances of owning and operating a business increased. However, such an increase came about but not without sacrifice on the part of millions of self exiled African Americans. The early period of the migration effort saw African Americans being employed in large part in the burgeoning service sector as well as some manufacturing industries. The African American farm hand from the rural South possessed little education and virtually no technical skills so expecting them to perform well in industrial establishments would be tantamount to denying reality[Gre05]. The earliest waves of the African American immigrant from the South were welcomed in the North but soon the sentiment began to fade and reverse too. The majority of the population in the North was European American immigrants, many of whom had just recently immigrated themselves. The early slogans of racial equality and tolerance were soon replaced by cries of decreasing job opportunities by the white sections of the North. However, it has to be appreciated that their protest against the African American immigrants from the South did not espouse the kind of racial intolerance and violence that was espoused by Jim Crow laws and the Ku Klux Klan [Jam97]. Instead, the North forced the African Americans into segregated neighborhoods of their own especially at the turn of the twentieth century. Again, an entrepreneurial regime comparable to the rural South and its isolated African American communities began to emerge throughout the urban Northern landscape. The early wave of immigrants did not possess the requisite capital to start out their own businesses in the north once there. In order to deal with employment, most African Americans took to industrial employment. This had two profound effects – the average income of the African American sections of society began to increase and therefore the profits of the African American entrepreneur began to rise too. In addition, the African American entrepreneur began to gather support from governmental ends as well. In particular, Theodore Roosevelt was famous was his support of African American businesses and their activities. Under the umbrella of the government, one of the earliest African American business organizations came into being. This organization better known as the Negro Business League (NBL) was created in 1902 and had the specific objective of targeting the African American market in the newly forming ghettos within the Northern cities [Fre96]. The emerging class of African American entrepreneurs was able to isolate the African American market to themselves exclusively. Racial tolerance had increased but it was still common practice to find business establishments that did not allow African American patrons. This provided the African American entrepreneur with another set of opportunities since their market was exclusively settled for them by the competition who wanted no part of the African American disposable incomes. The growing size and purchasing power of the African American middle class allowed the African American entrepreneurs to set up early in the Northern cities after the Great Migration. However, the African American entrepreneur was both isolated and insulated from the larger market by racial forces especially the residential segregation of African American neighborhoods. This denied the chance for larger market access but provided for lack of competition on a lot of different fronts. Over time, the African American entrepreneurs developed and spurred on by this period in history were able to save up decent sums of money to launch larger enterprises such as laundries, factories, restaurants and the like[Geo96]. The Harlem Renaissance and afterwards for African American Businesses The Harlem Renaissance The Harlem Renaissance is credited in large part for sponsoring African American development in the arts and literature though its impacts went much further. By the time that the Harlem Renaissance was taking off, the Great Migration was peaking around the start of the 1920’s. The Great Migration continued throughout the twenties but could not keep up its momentum in the thirties as the economy slowed down and moved into the Great Depression afterwards. The Harlem Renaissance in particular and the age of the Harlem Renaissance in general has been labeled by certain scholars as the “golden age” of African American business in the United States up to that point in time [Jul09]. The previous eras had locked out the African American from gathering large capital in order to spur business growth. In addition, government support had been minimal at best. It must be realized that the development of any form of business in the United States required government support in the early twentieth century as it does today. Walker (2009) comments: “Neither the failure of black consumers to support black business nor even the absence of a historic tradition of business participation is the determining factor in the comparatively low business participation rates and business receipts of blacks. In America, government support, both direct and indirect, is critically important for business success. Simply put, in America, white business and government have been inextricably linked since the colonial era.” Even though African American businesses could not take off to their full potential but it is undeniable that African American businesses grew in the period covered by the Great Migration and the Harlem Renaissance. Arguably, this period features the first African American millionaires to emerge through enterprises encompassing transportation, beauty, insurance, leisure, banking and other allied sectors. Moreover, these enterprises were able to hit the million dollar mark and go beyond based on the support provided by largely African American and partially some white consumers of goods and services [Nor99]. In addition, African American enterprise in these times was supported in large part by the development and supplementation of large African American capitalistic fiends who encouraged private enterprise in comparison to employment. The large names of the early African American racial struggle such as Booker T. Washington, Marcus Garvey, W. E. B. Du Bois and the like supported the burgeoning African American private enterprise. Washington was able to organize the National Negro Business League and has been labeled as “a superb capitalist” [Jul09]. On the other hand, Du Bois was able to provide the model of cooperative enterprise along with an awareness of managerial systems and entrepreneurial ideas to jump start African American business activity. In contrast, Garvey proved to be an extremely effective propagandist who espoused the values provided by both Washington and Du Bois in order to further African American business interests with efforts such as the UNIA and the newspaper Negro World [Geo96]. The efforts of the early African American capitalists had the profound effect of making African American businesses develop strongly in the early part of the twentieth century. The Great Depression The turn of events labeled the Great Depression proved to be the first major acid test of the African American business enterprise. The onset of the Great Depression caused massive economic downturn as businesses were forced to close and millions were left unemployed. All manners and forms of businesses suffered direct and indirect effects of the Great Depression including loss of economic volumes, cut throat competition, reduced profits and closures. There is no evidence to indicate that the American government went down harder on African American businesses when compared to other racial segregations of business when it came to governmental support. However, the private enterprise soon sprung into action in response to African American sponsorship to save the looming crisis. The earliest sign of the Great Depression in regards to African American businesses was a drive to gather African American consumers into the fold of the African American entrepreneur domain. Consumers were encouraged to buy from businesses that would offer them employment if required. The awareness drives for this purpose were labeled “Don’t Buy Where You Can’t Work” and were mostly visible in the Northern cities where the African American business segment had become deeply entrenched. The drive was meant to augment black businesses though there is little evidence to support such a contention [Jul09]. The Second World War and afterwards The Second World War emerged as a mixed blessing for the African American segments of the United States society. The war effort allowed the African Americans to gain full employment which became a rather rare and hard to emulate part of American history afterwards. The share of African American employment swelled in both factories and the war fronts. However, it still remains to be seen that African American businesses were discouraged as a policy matter during the Second World War. Defense contracts, especially larger contracts and more sensitive contracts were handed out to white contractors as a matter of national policy more than anything else[Jul09]. While the African American spilled his blood on the war fronts to defend the nation, he was treated equally indifferently at home[Nor99]. There is clear evidence to indicate that African American firms were kept out of government contracting for a large part of the war effort which essentially signaled lost economic opportunity to African American businesses and sections of society [Din95]. Once the war effort ended, there was an abundant supply of African Americans ready for building the nation given their enhanced capital base as well as an augmented skill set. The returning soldiers took onto a variety of different entrepreneurial tasks such as taxi cab companies but remained confined in terms of their success. This occurred in large part due to institutionalized policies on the part of the government to restrict African American business activity[Nor99]. There is evidence to indicate that African American companies especially in the hotel industry were forced to their knees using specialized desegregation formulas that supported white businesses. Previously a segregated society had allowed small African American entrepreneurs to take to the hotel industry with small establishments. The African Americans were unable to keep up to the competition of the larger white owned hotels and were forced to close eventually [Jul09]. The Civil Rights Movement and After The Civil Rights Movement of the African Americans in the United States is typically seen as a struggle for equal social liberties alone. However, the entire picture is far more different and the Civil Rights Movement was as much of a struggle for equal economic privileges as it was for equal social liberties. The stances of Martin Luther King, the Nation of Islam and the Black Panthers resonated equally when it came to economic liberties provided to the African American in the United States[Nor99]. It is also noticeable that the primary stance of Martin Luther King shifted from merely civil rights to African American poverty experienced in the United States. The successful termination of the Civil Rights Movement saw the award of equal social liberties for the African Americans in the United States which took its own time for implementation in letter and spirit. The case of black businesses went a little forward too such as with the creation of the Department of Commerce survey of minority owned businesses. In addition, Richard Nixon took drastic action to incorporate aid to African American businesses for development and growth though the effort was less than what was really required. In a similar manner, Jimmy Carter made it necessary for government contract bidders to show how they were going to supplement minority owned subcontractors[Jul09]. Contemporary Positions of African American Businesses In the nineties, the African Americans were recipients of only one percent of the gross business income although they formed some 12.2% of the entire population[Nor99]. On the other end of the spectrum, in recent years African American business ownership has gone up from 1.2 million in 2002 [USC05] to some 2 million in 2011[Joh10]. Consequently, it comes as no surprise that African Americans have the third highest income in the United States after the whites and the Asian Americans [Uni06]. Given the share of the African American population, these statistics offer appalling positions on the state of African American businesses. Summary African American business has developed over time from the marginalized state in the post Emancipation period to the current state of expansion. The Great Migration and the Harlem Renaissance helped to fuel the drive towards African American business growth by providing a ready hand consumption market along with insulation from competition due to racial segregation. The Great Depression affected all businesses in the United States negatively including the African American enterprises but strong foundations allowed these businesses to survive. The Second World War witnessed protectionism on the part of the government for white businesses that continued throughout the fifties. The onset of the Civil Rights Movement allowed for social as well as economic liberation of the African Americans. Efforts after the Civil Rights Movement have promoted African American businesses but more needs to be done in order to ensure that African American businesses are in proportion to the population mix. Concepts and Theories It has been suggested that African American business could not take off in the United States since government support was not avidly available[Jul09]. However, other commentators argue that a host of factors was responsible for holding back African American businesses from development and growth after the Emancipation Proclamation. These factors included the lack of capital, lack of previous business experience [WED99], racial segregation to limit competition, institutionalised policies to discourage black businesses [Nor99] etc. Discussion and Application to African American Business Development and Racial Freedoms The literature review makes it abundantly clear that African American business growth has been a function of African American efforts more than anything else. This statement stands true for all periods within African American history following the Emancipation Proclamation and the spurring of African American entrepreneurship. In the earliest periods, African American businesses were limited by white entrepreneurs who had limited business access to the African American community in the rural South. Isolation and insulation of African American businesses prevented both market growth and the emergence of new businesses. The saturation of the African American business market forced African American businesses into stagnation and discouraged any further ownership of business. In contrast, things began to change for the better as the Great Migration forced some seven million African Americans to the Northern urban centers. Initially these immigrants were unable to compose businesses but over a few decades this changed as African Americans gained greater disposable incomes. The Harlem Renaissance and the Great Migration share some common timeline which essentially presents the golden age of African American businesses for the time being. African American businesses were still isolated and insulated, but the situation was far better than that of the rural South a few decades before. In essence the Great Migration and the Harlem Renaissance periods provided African Americans the greatest set of supporting factors to spur African American business growth. A number of structural barriers enacted by the white business community aided African American business growth more than it hampered its progress. The onset of the Great Depression dampened business growth for African Americans like other sections of society but did not present an insurmountable barrier. The declaration of the Second World War provided the African Americans with a great chance to gather capital and expertise although they were not allowed a fair representation in government contracting. This period also develops the idea that white enterprise is more integrally linked to the government in the United States than other racial groups. The end of the Second World War and the infusion of African American capital and competition into the wider markets irked many leading to the erection of institutional barriers against African American businesses. Struggle through the Civil Rights Movement was able to remove the inertia, especially the institutional inertia, against African American businesses but was not able to reverse it fully. A number of steps have been taken to promote African American businesses in recent decades but these efforts fail to measure up to the real requirements. Recommendations and Conclusion African American business growth in the United States remained slow and stagnated for most of its history due to a number of structural barriers. It had been proposed that the Great Migration and the Harlem Renaissance signaled the gateway from oppression for African American business ownership. A review of the relevant history provides that the Great Migration and the Harlem Renaissance acted as early catalysts of the African American business growth effort but could not end oppression to own businesses completely. In this sense, the growth of African American businesses can be seen as being aided by both the Great Migration and the Harlem Renaissance that acted as gateways from oppression. A lot has been done in order to bolster African American businesses in the United States but the current scope of efforts are far less than what is required for the socio economic uplift of the African Americans in proportion to their population. The government has to end its wish list attitude in order to deal with the issue of African American business ownership. The real solution to African American empowerment in the real sense is to bolster business ownership. The removal of structural barriers outlined in this research is the only real way to augment African American participation in business in the United States. 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