Black Innovators and Entrepreneurs Under Capitalism
By Andrew Bernstein
The historical injustices against black Americans have been numerous and prolonged. But despite slavery, racism and Jim Crow laws, many blacks have achieved an exceptionally high level of accomplishment in the United States. It is yet another injustice that the stories of these great black achievers are unknown to most Americans of any race or ethnicity. This is unjust because it ignores the accomplishments of those who have achieved in the face of such adversity, and because it deprives the rest of us of the lessons to be learned from studying their lives. Many current intellectuals claim that the success of blacks requires an antecedent elimination of racism. The success of these black innovators disproves such a claim, and raises the question of the actual conditions necessary for the rise of a despised ethnic minority. A second question needing an answer involves the reasons for such widespread contemporary ignorance regarding the accomplishments of these great black thinkers. Finally, the stories are inspirational in themselves, apart from any educational benefits to be derived from them.
The great black creators and entrepreneurs both historically and currently are too numerous to mention. For example, Garrett Morgan was an innovator and manufacturer who invented both an efficient gas mask and the automatic traffic signal. During a long business career, Morgan manufactured clothing, hair products and his gas mask. In the 1920s, he was a key founder of the Cleveland Call, one of the most successful black newspapers in the Midwest. Dr. Percy Julian, an organic chemist, developed a new method of synthetically producing cortisone and, in the 1950s, established Julian Laboratories in Oak Park, Illinois. In a few years Julian’s company grew to be a widely successful pharmaceutical company, which he sold in 1961 for well over two million dollars. Dr. Charles Drew pioneered new techniques in the preservation of blood plasma that were instrumental in saving the lives of countless soldiers during World War Two.
In terms of purely business success, the list is equally impressive. Arthur G. Gaston started his business career in 1923 by founding a burial service in Alabama to guarantee blacks a decent funeral. By 1932 it had grown large enough to be incorporated. Gaston started the Booker T. Washington Business College in 1939 and the Brown Belle Bottling Company in 1946, offering Joe Louis Punch. He followed these successes with a motel in 1954, an investment firm in 1955, a savings and loan association in 1957, a senior citizens home in 1963 and two radio stations in 1975. In 1986, at the age of 94, he opened the A. G. Gaston Construction Company. Gaston was a consummate self-made man, who overcame Jim Crow laws among other obstacles to eventually bring in more than $20 million in annual revenue. Named Black Enterprise magazine’s “Entrepreneur of the Century,” Gaston’s lifelong principle can serve as the credo of American entrepreneurship: “Money has no color. If you can build a better mousetrap, it won’t matter whether you’re black or white. People will buy it.”
Herman J. Russell similarly refused to permit the South’s Jim Crow laws to retard his business career. He started as a shoeshine boy and a newspaper delivery boy, later worked as a plasterer, then founded the Herman J. Russell Construction Company in 1952 in Atlanta and built it gradually into a $170 million business. Albert Murray grew up the son of a sharecropper in 1920s Georgia, and at sixteen – to support himself through high school – worked a 4 PM to midnight shift pushing wheelbarrows of burnt clay at a local asbestos factory for $14 a week. After serving time in the military during World War Two, he finished college and then law school, eventually becoming a judge in New York City. But he and his wife, Odetta, wanted to own a resort and, despite the racially-segregated policies of the 1950s, bought and operated Hillside Inn in the Pocono Mountains of Pennsylvania. Odetta ran the resort, while Albert drove in from his legal duties on Friday, did all the heavy work over the weekend, then drove back to New York on Sunday. Now 79 years old, the Murrays still run the day-to-day operations of the resort. They have subdivided tens of acres of their 109 acre plot and sold one-acre plots to black professional prospective homeowners, in additon to generating nearly $1,000,000 in annual revenue from the hotel.
Recently, Robert L. Johnson, founder of Black Entertainment Television, sold his company to Viacom for $2.7 billion, making Johnson the first black billionaire and placing him among the Forbes list of wealthiest Americans. Today, David Steward’s World Wide Technology, a St. Louis based distributor of information technology, generates over $800 million annually in business. William Mays, a scientist/entrepreneur, founded the Mays Chemical Company as a one-man operation in 1980, and since built it into a giant chemical distributor that generated $172 million in revenue in 2000. Barbara Manzi founded Manzi Metals in 1993 with her own savings, now has contracts with Lockheed-Martin, Boeing and the U.S. Defense Department, and netted $4.3 million in revenue in 2000. Black Enterprise magazine and books are a source of information regarding the many successful contemporary black entrepreneurs.
Benjamin Banneker was born in 1731 in Maryland, the child of a free mulatto mother and an African father, who had purchased his own freedom. Banneker excelled in mathematics as a student and, when taking over his parents farm, at agriculture. When a traveling salesman named Josef Levi showed Banneker a pocket watch, the young man was so fascinated by it that Levi gave it to him. In 1753, using the watch as a model, Banneker carved a wooden clock that kept perfect time, striking every hour for forty years. It was the first wooden clock ever produced in the United States.
As a freedman, Banneker had the opportunities provided by American liberty but denied to most blacks, and he took full advantage of them. When neighbors introduced him to astronomy, he mastered the science so thoroughly that he predicted the solar eclipse of April 14, 1789 and used his knowledge to publish an almanac that became the main reference for farmers of the Mid-Atlantic states. President Washington, aware of Banneker’s intellect, appointed him to the six man team that designed the blueprints for Washington, D.C. When the team’s leader, Major L’Enfant, suddenly resigned and took the plans with him to France, Banneker’s photographic memory enabled him to reproduce them in full. A lengthy letter of his to Thomas Jefferson was so filled with insight that it caused Jefferson to change his mind regarding the alleged intellectual inferiority of blacks. In tribute, Jefferson sent a copy of Banneker’s almanac to the French Academy of Sciences in Paris. “The color of the skin is in no way connected to the strength of the mind or intellectual powers,” wrote Banneker, in a statement far ahead of its time.1
Andrew Jackson Beard is another little known innovative black thinker. Born into slavery in Alabama in 1849, Beard became a flourishing entrepreneur and inventor after emancipation. He designed new plows and with the profits made on his innovations developed a thriving real estate business. Beard was responsible for several inventions, but his greatest advance was the automatic railroad car (or “Jenny”) coupler, enabling railroad cars to be coupled automatically, thereby greatly reducing risk to the workers. Beard received a patent for the Jenny coupler in 1897, and it was the forerunner of today’s automatic coupler. His story reminds us that despite often bitter racial hatred in the South, some black Americans possessed the extraordinary talent and initiative to succeed there.2
The one black genius of that era to achieve enduring recognition, and whose groundbreaking advances were also achieved in the Jim Crow South, was George Washington Carver, who was born a slave in Missouri in 1860. After earning a Master’s Degree from Iowa State in 1896, he received a letter from Booker T. Washington, Head of Tuskegee Institute in Alabama, requesting his instructional services. He spent the rest of his life at Tuskegee as an agricultural scientist. He is famous for developing peanuts and sweet potatoes as leading crops, but additionally created a new type of cotton, Carver’s Hybrid, and dozens of other agricultural innovations. His early identification of the need for crop rotation enabled southern farmers to keep their soil productive. At his death, Carver, a lifelong bachelor, left his entire savings to establish a research fund for scientists. For his accomplishments, he is generally recognized as the greatest agricultural innovator of history.
Evidence regarding the causes of black American achievement is provided by the examples of such Michigan innovators as Elijah McCoy and Fred Pelham. In The Empire Builders, American historian, Burton Folsom, reminds us that in 1850 Michigan created a state constitution that restricted the government’s powers, leaving economic development in private hands. Based on its greater degree of economic freedom, Michigan developed into one of the world’s leading industrial centers, not surprisingly presenting opportunities for black entrepreneurs. Elijah McCoy, for example, was a mechanical engineer who initially worked for the Michigan Central Railroad as a locomotive fireman. He invented a revolutionary device to lubricate a machine’s moving parts. His product, the lubricator cup, made it possible to oil machinery while in operation, and to distinguish it from cheaper imitations became known as “the real McCoy,” the origin of that phrase. He obtained 51 additional patents, including an early version of the ironing board and a cup for imbibing medicine. McCoy patented fifty different automatic lubricators and, at age 77, started the Elijah McCoy Manufacturing Company in Detroit to manufacture his various products.3
Fred Pelham is another black innovator who thrived in Michigan. Pelham was president of his class at the University of Michigan in 1887, worked as a civil engineer with the Michigan Central Railroad and built numerous bridges that remain standing today. He created the innovative skew arch bridge design. “The obstacles facing minority entrepreneurs were substantial, but many did overcome them and used their freedom to excel in Michigan’s economic life.”4
Freedom, of course, is the condition required by all men to flourish, especially the great innovative thinkers who carry mankind forward. Slavery is both a moral abomination and a thoroughly impractical system, for in stifling the minds of those enslaved it prevents the most creative thinkers from developing the advances that benefit all mankind. Late-19th- century America, following the 13th Amendment ending slavery in 1865, was a historically unsurpassed era of freedom. “The intellectual, cultural and political climate of the country upheld freedom, limited government, and property rights in this era. The economic results are not surprising. The most innovative and creative minds were free to develop new products and methods, to start their own companies, to bring their innovations to the marketplace, to convince consumers that the new products were superior to the old and, in time, to earn fortunes.”5
Black entrepreneurs took immediate advantage of their new freedom. Sarah Breedlove, for example, was born a free African-American in 1867, but was orphaned at age seven, married at fourteen and widowed shortly thereafter. She supported herself and her young daughter on the paltry income of a washerwoman. But interested in beauty and hair care, she developed cosmetic products for black women. When she married Charles Walker, she changed her name to Madame C. J. Walker and opened a beauty school that became hugely successful. She invented a hot comb, developed new shampoos and cosmetics and became the first woman of any race to become a millionaire.6
C. J. Walker’s is one of the most inspiring and (unfortunately) little known American rags-to-riches stories. But hers is not the only example of black entrepreneurs taking advantage of America’s late-19th-century freedom to prosper. Some black businesses established in that era have been successfully run by the same family for generations. In 1883, 19 year old C.H. James started a business in West Virginia by bartering household goods for vegetables and then selling the produce for cash. His business gradually grew from one wagon to a department store on wheels that sold cotton, threads, pots, sugar and other goods. Supplying predominantly white coal miners, James built his business on the explicitly-held principles of dependability, integrity and a warm personality. By 1918, his company had become the largest wholesale food distributor in the state, with sales in excess of $350,000 a year. James was a determined individualist who claimed that no one should permit bigotry to deter him from relentless pursuit of business success. In 1918, Theodore Roosevelt wrote to him: “[I have pointed] to you as a man who actually is by his actions and not merely by his words solving the race problem in this country.” James’s son, E.L., rebuilt the company after the Depression bludgeoned it into bankruptcy and the business has continued to move forward. Today, the founder’s great grandson, Charles H. James III, has, by means of spin-offs, acquisitions, mergers and a lucrative McDonald’s contract built the company into a $31 million business.7
Further, entire towns and business districts of entrepreneurial blacks flourished in that era of U.S. history. Early in the 20th century, black Americans established such new towns as Mound Bayou, Mississippi, Nicodemus, Kansas, Langston, Oklahoma and others. Boley, Oklahoma had a population of 4,000 at the turn of the century. The town was governed and run by blacks, and boasted, among other establishments, a bank, twenty-five grocery stores, five hotels, seven restaurants, a water works, an electric plant, four cotton gins, a bottling works, a telephone exchange and a lumberyard.8
Tulsa, Oklahoma and Durham, North Carolina both had thriving black business communities. In turn-of-the-20th-century Tulsa, bigotry denied blacks access to the main business district even as customers, so enterprising blacks turned the Greenwood section of the city into a bustling commercial center. Numerous service industries thrived, black doctors, lawyers and other professionals maintained offices there and the neat homes of the middle class “lined Detroit Avenue, reflecting their business or professional success.” In Durham, black entrepreneurs succeeded in manufacturing as well as in service industries, including one of the city’s largest brick producing companies. Here, the white community was not hostile to black success, and white capitalists such as Washington Duke (the tobacco magnate for whom Duke University is named) and Julian Carr were helpful in the establishment of black businesses. In 1898, John Merrick and Dr. Aaron McDuffie Moore established the North Carolina Mutual Life Insurance Company, one of the largest and most successful black enterprises in the history of American capitalism, a firm that 100 years later would employ over 1,000 individuals and boast assets exceeding $200 million. In addition to 150 thriving businesses, Durham’s black commercial district was home to an area internationally known as the “Negro Wall Street,” a collection of banks and insurance companies that represented “one of the most dramatic examples of concentrated African American financial might this country has ever produced.” These financial institutions were so sound that they helped virtually every black business in Durham survive the Depression.9
The fates of these black business strongholds is both shocking and revealing. The Greenwood district of Tulsa was burned to the ground by a mob of racist thugs in 1923 in a spree of destruction unrestrained by the legal system. Durham’s magnificent black business district was wiped out by the federal and state governments’ urban renewal program in the mid-1960s. Although Durham’s black entrepreneurs revitalized in the 1980s with the opening of two shopping malls and several manufacturing companies, perhaps the greatest value is the lesson to be learned from these examples.10
A despised racial minority needs political/economic freedom, with its concomitant legal protection of individual rights, even more than do members of the majority, for they are potentially subject to vicious physical attack by racists. Even if all whites in the country were so irrational as to fear, hate and shun blacks, such bigotry would be insufficient to halt black economic progress, if the rights of black individuals were legally protected. Under capitalism, the purpose of the government is to protect individual rights, including property rights. Tragically, the Tulsa government failed to operate on this fundamental capitalist principle. The black producers of Tulsa did not need paternalistic government or even its good will; nor did they require an end to bigoted attitudes among white people. They required only the protection of their legal rights as U.S. citizens; their own enterprise did and would take care of the rest. Similarly, in Durham, the government itself violated the rights of these black property owners. The absence of capitalism, of a government exclusively and scrupulously devoted to the protection of individual rights, was responsible for the destruction of these black business centers. When the government fails to protect, or itself violates individual rights, there is no hope of economic advance, especially for members of a persecuted ethnic minority. Statism is necessary to keep a racial minority oppressed. Under capitalism, there are no obstacles that the most enterprising members of the minority group cannot overcome.
Further proof of this principle is provided by the case of black Caribbean immigrants. The United States received a sizable Caribbean immigration in the early 20th century and by 1930 Caribbeans constituted roughly one percent of the U.S. black population. The Caribbean immigrants, as with virtually all American immigrants, tended to be hard-working, entrepreneurial and frugal. Based on the still significant element of freedom in the American mixed economy of that era, many Caribbeans opened and operated successful businesses. “As early as 1901, [Caribbeans] owned 20 percent of all black businesses in Manhattan, although they were only 10 percent of the black population there.” Despite the existence of anti-black prejudice, Caribbeans have an average income roughly equal to whites, and second generation Caribbeans have a standard of living greater than the average white American.11
Because racists recognize that the ethnic minorities they oppose will flourish under the political/economic freedom of capitalism, they conduct a relentless war against the free market system. The antebellum South not only created and supported a legal system that sanctioned the enslavement of blacks, but also mandated that blacks be kept illiterate. Indeed, “many Southern states not only refused to educate free Negroes but made it a crime for them even to attend private schools at their own expense.” In the postbellum South, Jim Crow legislation made it illegal for blacks to attend the better schools, be hired for the best jobs or live in white neighborhoods, no matter how qualified the individual.12
In South Africa, apartheid legislation was necessary to prevent white-owned companies from hiring the black workers they would otherwise have employed, and laws were passed against racially-mixed marriages and romantic relationships more broadly. Nor is the bigots’ necessary relapse into statism limited to relationships between whites and blacks. Anti-Semitic Eastern European regimes herded Jews into walled-off ghettoes and sanctioned periodic bloody pogroms. In the Western United States, laws were passed attempting to curb the success of Chinese and Japanese immigrants. In several Southeastern Asian countries, the ethnic Chinese minorities have been legally persecuted due to envy of their success. Bigots know that without the coercive power of the state to enforce their prejudices, they are powerless to prevent the advance of the ethnic minorities they fear. Capitalism is the bigot’s worst enemy – and nightmare.13
Additional evidence is shown by the varying rates of black economic progress over the past sixty years. Black Americans moved heavily into the northern cities during World War Two and the following post-war years. The years between 1940 and 1970 were a relatively freer period of America’s mixed economy. Because the majority of blacks had lived in the Jim Crow era South, where legal restrictions impeded their advance, the percentage of black families subsisting below the official poverty line was 87 percent in 1940. In the freer North, with better schools and jobs open to blacks, their rise into middle class prosperity began. By 1960, the number of poor black families had dropped to 47 percent; by 1970, to 30 percent. This represents an enormous and too-little known achievement on the part of black Americans. Then came massive government intervention in the form of the welfare state, which Marxist intellectuals and politicians directed heavily toward blacks because of their still-disproportionate poverty. Proliferating government programs and huge spending were a post-1970 phenomenon. With increasing number of poor urban blacks being seduced onto the dole by Washington’s welfare pimps, the result was predictable: black economic progress slowed drastically. Black families below the poverty line stood at 29 percent in 1980 and at 26 percent in 1995. In the era of massive welfare programs, black families still moved upward out of poverty but at a significantly reduced rate. Today, roughly 50 percent of black Americans are middle class, greater than 40 percent live in homes that they own and more than 30 percent live in the suburbs. Given the rise of government intervention and the decline of freedom over the past thirty years, one can only wonder how much higher these figures would be if the freedom of the earlier period had been allowed to continue or be expanded.14
There is a prevalent belief today that the success of blacks and other minorities requires an antecedent elimination of racism. This is false. Though the end of all forms of bigotry is an undiluted good toward which all rational men should strive, it is not a necessary condition of an ethnic or racial minority’s success. What is necessary is the legal protection of individual rights, including the right to property, provided by the capitalist system.
In the past, the fears of white racists regarding black preeminence explained the absence of credit accorded to these great black innovators and entrepreneurs. But today the liberal media and intellectuals claim to support “black empowerment.” What then is the current cause of the bizarre public silence regarding the entrepreneurial success achieved by numerous black Americans? Anti-Western, ostensibly pro-black intellectuals have promulgated the myth that Western Civilization is a stolen legacy of African culture. In the name of “black pride,” they relentlessly push this fantasy while ignoring magnificent black achievers right under their noses. Why? Because their anti-Western, anti-capitalist prejudices prevent them from acknowledging the existence of successful black capitalists. In the mythical universe they inhabit, white Western capitalists are exploitative of the poor, the minorities, the Third World, etc. An entire class of successful black American entrepreneurs is worse than impossible on their view. It shatters the Marxist delusions they cling to and brings them face-to-face with the enormous benevolence of capitalism. In the name of justice, the prejudices of both white racists and Marxist intellectuals must be swept aside. The achievements of great black American inventors and entrepreneurs must be honored along side those of all of their countrymen.
