During the early decades of this century, black-owned newspapers played a special role in the lives of blacks, whether they lived in small towns or large cities. Wherever there was a black population, there was likely to be a weekly newspaper, sometimes several, as in cities like Washington, DC, Chicago and Philadelphia. The Norfolk Journal and Guide, Pittsburgh Courier, Philadelphia Independent, Chicago Defender, the Bee newspaper chain, Memphis Triangle, New York Age, Savannah Tribune, The World, Louisville News, The Freeman, Afro-American, Nashville Globe, Boston Reliance, Black Dispatch-these are names of just a few such publications. Some live on today in reconstituted versions, but most have long since passed into history.In the pages of these early newspapers, one can follow much of the social history of black life-from the serious problems faced by a restricted group, to the joys of individual successes and triumphs, to the trivial gossip, intrigues and scandals of the day. Although newspapers were founded by people of varied backgrounds, they were frequently initiated by established businessmen. It is not surprising then that, in the pages of so much of the black press during this period, we can learn about the rise, decline, and sometimes resurrection of particular businesses.
Throughout these early decades, the black press was a chief promoter of black enterprise, inspiring and even cheer leading the community on, as it celebrated the initiation of new businesses. Typical of these sentiments is an editorial in the June 1, 1927 edition of the Memphis Triangle: The new Negro is the optimistic Negro. He believes in himself and, therefore, in others of his race. He believes in Negro business and gives it his full support. He believes in Negro institutions and lends his cooperation in building them up. He believes in the future. The old Negro is the pessimistic Negro. He does not believe in himself or any other Negro. He does not believe in Negro business and hence does not trade at Negro stores or put his money in Negro banks. He believes the case of his race is hopeless unless someone else guides its destiny.
It is in the pages of the black press that we can follow the birth and development of black banks, as well as the devastating collapse of most of them throughout the years of the Great Depression. In following the story of those who pioneered in establishing banks, we gain insights into the great struggle between those blacks who were determined to help the race win economic independence from whites, and those who opposed this pursuit.
Early Self-Help Institutions
Historian John Sibley Butler, in Black Entrepreneurship and Self-Help Among Black Americans, describes how black-owned businesses prior to the Civil War were augmented by a tradition of self-help institutions. Decades before the war, church relief societies provided for sickness, health care and death benefits. After Emancipation, these church societies would provide funding for dozens of private schools (and help to subsidize underfunded state schools), while often providing loans that capitalized small enterprises. Out of these church societies grew the beneficial societies that eventually spread throughout most black communities.
In Petersburg, Virginia, for example, in 1898, there were 22 beneficial societies. Butler writes, "Membership ranged from 22 to 163 persons. Their annual assessments ranged from 60c to $7.00. They paid sick and death benefits to their members." Black lodges of secret societies, such as the Masons, the Odd Fellows and the Knights of Pythias provided more formal insurance benefits. In Arkansas, for instance, between 1892 and 1905, a Masonic Temple paid out $125,000 to "widows and orphans." Butler writes, "From the 1700s to 1915, fraternal and beneficial societies served the masses of Afro-Americans and helped to bring a sense of security to a people who were going through one of the most trying times in their history."
Although these societies were not businesses in the true sense, Butler claims that they laid the groundwork for the many successful black-owned insurance companies that would come later. As the result of the millions of dollars collected in these organizations, "thousands of young Afro-American families were helped in getting an education, hundreds of homes were paid for, and mortgages were satisfied." One report tells about the members of a particular fraternal society deciding that "their large collections in endowment premiums could be utilized as a great agency for good." And referred to their lending practices as "intelligent cooperation."
In 1920, newspaper columnist R.M. McAndrew wrote about the economic significance of the various fraternities that had been organized by blacks over the years. "Secret orders and fraternities among the Negro people have in the past furnished amusement to the American public. These institutions have been regarded more as outcropping of the Negro's desire for mystery and fetish than as a source of internal strength through cooperation and unification. The establishment of the Fraternal Bank and Trust Company [Durham, NC] has resulted from the rapid growth and development of a fraternal order, the Royal Knights of King David." He then went on to detail the real estate properties owned cooperatively by the Royal Knights and the reserve fund that was set aside "for the support of aged members and to furnish paid-up policies to all who have held membership for 20 years." In 1920, the Royal Knights operated in six states with a membership of about 22,000 in more than 800 lodges.
Confidence Lost and Restored
The development of savings institutions was a logical outgrowth of fraternal societies. Yet the path from beneficial society to lending institution to chartered bank was not a smooth one. This was partly due to the earlier experience of blacks with the Freedman's bank. In 1865, Congress incorporated the Freedman's Savings and Trust Company as a banking institution for the former slaves "to receive on deposit such sums of money as may be offered . . . and investing the same in the stocks, bonds, treasury notes or other securities of the United States." The bank was a massive failure, as corrupt bureaucrats swindled its depositors out of millions of dollars. This was a devastating loss that set back the movement toward thrift among blacks. Booker T. Washington wrote, "It was years before the Negro people regained sufficient confidence in banks and in themselves to make a Negro bank possible."
Yet eventually that confidence was regained, and blacks came together in towns and cities, determined to create their own private banks. Butler writes, "Because they had been led to believe that the Freedmen's Bank was a government institution, they lost a tremendous amount of confidence in the whole federal apparatus in Washington. Even after the memories faded, they turned to the creation of private banks in attempt to 'seek for themselves.'" This ambitious effort turned out to be one of the most constructive phases of black Americans' history.
Butler continues, "The history of this effort-as with the history of banking in America-was filled with triumphs and failures, but it was this banking industry which provided the seed money for business enterprises in the period following the Civil War." Citing Abram Harris's 1936 study of the black banking tradition, Butler claims, "From 1888 to 1934, no less than 134 banks were founded and organized by Afro-Americans. Under this classification are private banks doing a general banking business and banks operating under state or national charters. It does not include credit unions, industrial loan associations, or building and loan societies," of which there were many.
It was this banking tradition that made possible the impressive growth of black businesses in the United States. Between 1867 and 1917, the number of black businesses increased from 4,000 to 50,000. This could not have occurred without the sources of capital provided through banks and similar lending institutions. In 1907, Booker T. Washington wrote, "Nearly every colored community of any size has a building and loan association, and these organizations have been of the very highest value in teaching the people habits of saving and enabling small wage earners to purchase homes. It is said that one-half of the homes owned by colored people in Virginia were built by the aid of building and loan associations."
In William Kenneth Boyd's 1927 study of Durham, North Carolina, he writes, "The increase in wealth, the rise of institutions for public welfare, and the spirit of cooperation have not been confined to one race. The progress of whites has been accompanied by corresponding progress among the Negroes."
Encouraging Thrift
The first benevolent group that was granted a state charter to organize an incorporated bank was the Grand Foundation of the United Order of True Reformers. In 1889, this fraternal association opened the True Reformers Bank in Richmond, Virginia. One of the most successful of the early banks was the Alabama Penny Loan & Savings of Birmingham, which ultimately had branches in three other Alabama cities. When, in 1899, William R. Pettiford became its president, he set the tone for integrity and competent management [see Issues & Views, Summer 1993].
Highly respected, Pettiford became a mentor for many others who would go on to establish banks. He led Penny Savings through its prosperous years and was an important presence in the black business community. Although his only business experience had been as financial agent of Selma University, he considered it his duty to create an institution that might educate working-class blacks in the "wise use of money." He was determined to "encourage our people not only to save their earnings but to make wise investments as well."
The subject of thrift and investment was a frequent one in the pages of black newspapers. An editorial in a 1916 edition of the Journal and Guide expressed the attitude of many blacks:
Habits of economy and thrift-the saving something regularly each week out of one's earnings no matter how small or how pressing the obligations-must be learned and become fixed if our people are to play the great part in the life of the nation their numbers entitle them to play.There are now four times as many Negroes in America as there were Americans on this continent at the close of the Revolutionary war. Twelve millions of people are a big nation in themselves, larger than most of the nations of the earth. . . . Suppose our people were to do all over the country like they have been doing in Norfolk in the last year-save nearly a hundred thousand dollars in a Negro bank alone, to say nothing of the nearly million dollars they have in the white banks-they would become a mighty power in finance that could not be despised.
The South will be better off, not worse off, if our people become thrifty instead of spendthrifts, become sellers instead of buyers, become producers and manufacturers instead of consumers only. A race that cannot buy and sell will always play the second fiddle to the race that does buy and sell. There ought to be a hundred stores owned and controlled by us in Tidewater. . . . But we cannot get money until we acquire the habit of saving.
The Banking Movement Grows
The movement to found banks and other businesses picked up steam. In 1904, in the teeth of segregation, the residents of the all-black town of Mound Bayou, Mississippi, formed a bank so successful that it attracted many white depositors from nearby towns and around the state. Some of these whites bought shares in the bank. However, the bank's directors made certain that such shares would be limited, in order to assure that the bank's assets would not be controlled by whites. Like members of other ethnic groups, these bankers recognized the importance of protecting the town's resources. Historian Kenneth Hamilton, in Black Towns and Profit, writes that the Bank of Mound Bayou played a significant role in the economic development of the town, because it enabled blacks "to keep a great deal of their money circulating in their own town and hinterland" and provided capital for new investments.
By 1912, the states of Mississippi and Virginia vied for possessing the most black-owned banks, with 11 each. Of Tennessee's four banks, two were in Memphis, the Fraternal Savings Bank & Trust Company and the Solvent Savings Bank & Trust. The Savannah Tribune of July 12, 1912, after recounting several successful purchases of "stores and buildings" by the black-owned Wage Earners' Loan and Investment Company and Mechanics Investment Company, proudly proclaimed that these purchases attest to the fact that "in matters financial, as well as in other fields, the Negro is able to hold his own." The editorial went on to claim that such success was due to "the loyalty and support that came to these institutions from the Negroes themselves."
In 1912, when officers of 61 black banks met in Chicago, there was reason for optimism. This meeting of a loosely formed bankers association was a promising one, since most of its members (representing banks in 16 states) could report increases in yearly volume of business. Of the 61 banks, 52 were in the South. One of the most prominent of them was Durham's Mechanics and Farmers Bank, which was chartered in 1907 by a group of men from diverse professional backgrounds-barber, doctor, educator, attorney, tinsmith. Eventually opening a branch office in Raleigh, Mechanics and Farmers went on to play an indispensable role in the economic life of Durham's black population for a half century. It is one of the few banks from this pioneering period that survives today.
In a March 1914 commentary in the Washington Bee, Ralph Tyler praises the efforts of blacks to master the intricacies of the insurance and banking businesses. First citing the fact that these were two areas of business where blacks had little chance to "learn the ropes," since whites did not open their doors to them, Tyler describes how black men took the initiative to learn these fields from scratch. "That he has learned the banking and insurance business, has developed them, and is now conducting these branches of business with signal success constitutes one of the best possible answers to the statements by anti-race men, and proves the wisdom of the National Negro Business League."
Giving special kudos to William Pettiford, Tyler wrote, "When Dr. Pettiford established his bank at Birmingham, incredulous white men did not regard it as serious enough to last, and many colored men regarded it with distrust. Today a magnificent building is the home of that bank, and over five hundred thousand dollars in resources, and regular annual dividends paid, attests to its wise and conservative management. Inspired by the success of this bank, other Negro banks have sprung into existence, from Philadelphia to Jacksonville, Florida."
In Boston, in 1913, the writer of a feature published in the Reliance described the challenges faced by businessman David Crawford, who had recently obtained a charter to open a cooperative bank. "Like all other men who have an unshaken confidence in the ability of the Negro to make progress in all business lines, he set to work with the necessary quota of pessimistic cynical supporters. Some have remained steadfast and are with him today, while others took fright at the first sight of reverses and dropped out by the wayside and took their paltry savings to the white institutions who already have control of too much of our money." After citing the many accomplishments of Crawford, who was not only a member of the Massachusetts Bar but also owned large tracts of real estate, the writer continued, "There are 23,000 Negroes in Greater Boston. One dollar a month from them in the Eureka Bank would give us the control of $276,000 annually."
A Good Thing for the Colored People
The road was hardly an easy one, however. Like white-owned banks, black banks had their share of failures. Unfounded rumors could bring on a panic, which could then result in a run on the bank. A 1913 Oklahoma newspaper describes how bank directors worked to avert such a crisis. "Meetings were held in every Negro church in the city and the Negro ministers preached on the subject of the bank. They appealed to race pride and to cool judgment. They pointed out that to get panicky and draw out deposits meant to break the bank. For the bank to fail would be a sad commentary upon the Negro as a factor in the business world, a thing that the Negroes could not afford to have happen." The sermons appeared to have had a positive effect and the crisis was averted.
In Nashville, in 1915, at a stockholders meeting of the One Cent Savings Bank, its president, Robert H. Boyd, told about the skepticism and even scorn he encountered, from blacks and whites, when the bank was first proposed. (The bank was founded in 1904.) "Even when the doors of the bank swung open and a throng of people gathered out of idle curiosity to look on the reality of a thing known as the first Negro bank of Tennessee, all kinds of predictions and prophecies" filled the air. "It might run three months," Boyd said he heard someone say. Others thought it had opened merely to swindle people out of their money, and still others thought it a conspiracy of white men. But Boyd discovered many more Negroes "who were anxious to see such an institution, and declared that it would be a good thing for the colored people." After recounting some national and international downturns, especially in the cotton market, he expressed pride that his bank was able to hand every stockholder six percent on every dollar's worth of stock they owned.
Boyd was tough in his opinions on the various "race movements" that he saw developing. He questioned their merit if the leaders of these groups failed to concentrate on creating jobs for fellow blacks. The Nashville Globe reported, "He went on record as thoroughly opposed to any movement, regardless of who was at the head of it, that did not have for its aim constructiveness, and that failed to provide employment for the boys and girls, men and women of the race." Boyd is quoted as saying, "Our women need the protecting and guiding hand of the business forces of the race. They need to be given employment. They need to be nurtured and encouraged in their efforts to make an honest living."
Profiles of Industrious Men
A feature article in the March 4, 1916 Journal and Guide, ostensibly seeking support for the newly opened Mutual Savings Bank in Portsmouth, Virginia, explained the need for blacks to form their own banks. "Occasions have arisen very frequently in the City of Portsmouth, where, because of inability to get assistance, colored people have lost their property, the new owners obtaining it for oftimes less than one-half of the real value. . . . It is the intention of the officials of the bank, wherever possible, to see that the colored people do not lose their property, and if it must be sold to see that it brings a fair price."
What is special about this article is its impressive listing of black businesses then in existence in Portsmouth. In stressing the convenient location of the bank, the writer informs, "The Mutual Savings Bank is situated in the heart of the Negro business section, across from the Pharmaceutical Establishment of Dr. Eugene J. Bass, one of the pioneers of Negro business in Portsmouth. Situated on the same street are the offices of the Tidewater Building & Loan Association, the Southern Aid Insurance Company, the Virginia Beneficial Insurance Company, the American Beneficial Insurance Company, the Dental Parlors of Drs. J.L. McGriff and W.B. Anderson, the offices of Drs. F.G. Elliott and J.D. Barnes and the Undertaking Establishments of Mr. W.M. Grogans and Mr. Hamilton Jackson. . . . the offices of Drs. J.J. France and W.E. Reid, the Undertaking Establishment of Mr. J.T. Fisher and the Tonsorial Establishments of Mr. Forrest Walke, Mr. James Choate and Mr. John White. The building in which the bank is located is owned by the Portsmouth Cooperative Investment Corporation, some of the directors of the same being also directors of the bank."
The article then gives profiles of some of the bank's officers. "Mr. J. Frank Proctor, president, has large real estate holdings and is a strict business man and because of his strictness in business matters, has won for himself the sobriquet of 'Watch Dog of the Treasury.' Mr. Geo. W. Brandon, vice president, has a large and valuable farm to which he has a dairy attached." Among the board of directors, "Mr. James Terry, one of the largest truck farmers of the Western branch section of Norfolk County, Mr. Julius Mason, a truck farmer in the same section, Mr. J.A. Felton, a successful contractor and builder, Mr. Solomon Vann, a stevedore and contractor for waterway hauling." And last, but by no means considered least, the young novice of the group, "Mr. Malcolm Holmes, clerk in charge of the Christmas Saving Department is a graduate of Norfolk Mission College and a young man of fine qualities and very promising."
William M. Rich, who was then cashier of the successful black-owned Brown's Savings Bank of Norfolk, was credited with offering his valuable expertise to help establish the new Mutual Savings. He was described as having "rendered great assistance in personally conducting the opening of the bank. After completion of duties at his bank, regardless of weather conditions, he could be found at this bank giving the officers the assistance needed."
The Need for Black Banks
In spite of the outstanding success of many black banks, the majority of blacks in the country continued to deposit their money in white-owned institutions. A writer in the New York Age of January 11, 1917, tells of ongoing fears brought on by previous bank failures. "It is a question of the gravest moment that the failure of the Freedmen's Saving and Trust Company, the Alpha Bank and the Capital Savings Bank, fifteen, twenty and forty years ago, so undermined the confidence of the Negroes of the District of Columbia that they are afraid as yet to deposit their money in a bank managed by their own people."
The article went on to claim that Washington blacks had a very large amount of money invested in white banks, where they were unable to obtain positions and, therefore, could not learn the banking trade. Because of this, "the colored people lose the advantage of large capital concentrated where it can't be of the greatest help to them." Also, the writer pointed out, Negroes miss out on the opportunity to develop critical expertise in the banking field that would lead to greater self-reliance. Black banks provide both of these advantages, claimed the writer.
Need Accountants, Not Preachers
In spite of the desire to put the best face on entrepreneurial efforts, observers of the time could be painfully truthful about the lack of managerial experience that led to several bank failures. In a 1914 article in the Chicago Defender, Charles Hall writes about the consequences of inexperience, as related to the failure of three banks in Mississippi. He blamed this partly on the tendency of blacks to turn out "inordinate numbers" of church preachers. Hall wrote, "It will doubtless be a day of rejoicing on the part of many of the progressive Mississippi Afro-Americans when the institutions for the education of the youth of that state turn out a greater number of competent accountants and bookkeepers-when the problems peculiar to this life receive as much attention as is given to the preparation for the life beyond the grave, for, after all, there is a great amount of work to be done in this world before we pass into the next."
Hall observed that among the failed banks there had been enough deposits to have kept them "in operation in splendid style." So, the trouble lay not in lack of patronage from the black community, but in the lack of "practical, experienced and trained officers." He claimed that in many cases "preachers and teachers" were trying to run institutions they knew nothing about.
And yet during this same early period, there are accounts of men who, in spite of disparate backgrounds, disciplined themselves to learn the banking trade, and were quite successful at it. The president and treasurer of Washington, DC's Industrial Savings Bank were two such examples. A newspaper commentator describes an impromptu visit to the bank from a bank examiner, to inspect their books. "The examiner called unexpectedly before the arrival of any of the bank officials and demanded that the books be presented." More than satisfied with what he found, the examiner praised the bank as "one of the best managed and conducted banks in the United States." The writer goes on to claim that "This commendation is evidence of its stability and the honesty and integrity of its officials."
He then offers brief biographies of the bank's president, John Whitelaw Lewis, and treasurer, John H. Simms. "Now, here are two men who have come up from the lower walks in life, that one was a hod carrier [Lewis] and the other a barber. The former didn't possess all of that refinement that is generally credited to bank presidents, the latter possessed but a common school education. Neither had any banking experience when they entered the business. Here we have two men, not office holders, not society dudes, but two men who are looking out for the interest of all the people and their patrons."
Lewis, who never had a formal education, and started to work at age nine, went on to success as a realtor, building the Whitelaw Hotel in Washington, DC, in 1919 [see Issues & Views, Spring 1992].
The Steadfast Richard R. Wright
The single person who made the greatest impact on black banking spent most of his life as an educator. Yet the extraordinary Major Richard R. Wright made up for lost time. Born a slave on a plantation, Wright's family moved to Atlanta after Emancipation, where he attended missionary schools. After graduation from Atlanta University's first collegiate class of 1876, he became an elementary school principal, organized farmers cooperatives, a teachers association, and published a weekly newspaper. As a major during the Spanish-American War, Wright was appointed army paymaster by President McKinley. After the war, he held positions as an educator and served for 30 years as president of Georgia State College of Agriculture (later renamed) in Athens.
Wright had always been concerned about what he considered the imprudent thrift habits of the poor, whose children he had educated over the years. When his son, Richard, Jr. (one of eight children), completed a doctorate in economics at the University of Pennsylvania's Wharton School of Finance, father Wright decided to follow in his son's footsteps. He enrolled at the university and took courses in banking, convincing another son, Emanuel, to do the same. In 1921, at about age 66 (his slave birth date is uncertain), Wright, his daughter Lillian, and Richard, Jr. opened the Citizens and Southern Bank and Trust Company in Philadelphia. His would be one of the few black banks that had the durability to survive the Great Depression of the 1930s.
In 1926, with a group of other bankers, Wright founded the National Negro Bankers Association. He was to serve as its president for the next 16 years, which gave him the opportunity to assist in the development of many black-owned banks. Over the years, hundreds of small enterprises, such as groceries, bakeries, cleaning establishments, caterers, and even private schools, got started thanks to loans from Wright's bank. And some averted financial ruin thanks to him. "Negro banks are important," said Wright, "because they're a source of education. They give experience to young Negro bankers, they supply employment, and they encourage business."
He was a stickler for character and sized up a potential borrower on the basis of his own special standards. He insisted that "character's more important than collateral." He would sometimes go over the heads of the bank's board of directors, to grant a loan to someone he considered a worthy customer. Wright liked to tell the story about four young Negro men who formed a corporation in order to open a laundry. Although they lacked previous experience, when they came to the bank for a loan, Wright granted it. Their management turned out to be poor and the business went broke. The men were not legally liable for the corporation's failure, yet they pulled together all their available assets and repaid the bank in full. Wright said, "When I made the loan, I sized the men up as individuals. What I failed to do was make sure the company had good management. But my estimate of the character of those men was right."
Another man, who was considered a poor risk by every other bank in town, needed $300 to get a sweater factory started. Wright granted him the loan and a few years later proudly reported, "Last year, that man banked $219,000 with us. He might have taken his account away to a bigger bank, but he's been loyal to us." Richard R. Wright was to black banking what Booker T. Washington had been to the overall self-help movement-mentor, counselor, and guide.
Some Good Years
Under the Savannah Tribune's headline of November 22, 1919, "Negro Bank Buys Valuable Half Block," we learn: "Through the purchase of one half of the entire property known as the old English Block, the Laborers' Penny Savings and Loan Company of this city [Waycross, Georgia], becomes the owners of one of the most valuable pieces of real estate in Waycross. . . . The Waycross Casket Company and the Walton Garage take up a portion of the property and it is understood that the bank contemplates the erection of a modern bank and office building on the unimproved part. . . . Officials of the bank are being congratulated from every side on the transaction."
In 1918, a war economy benefited places like Norfolk, Virginia, a naval and shipbuilding center. Edward Jones, writing in The Freeman reported, "The biggest thing that has ever happened in Norfolk, Va. is the promotion and organization of the Tidewater Banking & Trust Company. It is a by-product of the war. . . . In normal times, Norfolk has a Negro population of some thirty-five or forty thousand. But since the declaration of war the influx has easily increased the population to 60,000. For here we have one of the largest centers of war activities. The inflow of population and money led some of the aggressive business Negroes to the opportunity to do something. The Tidewater Banking & Trust Company was the result, and it is the most ambitious financial effort in banking that any group of Negroes have yet attempted."
A year earlier, Mutual Savings Bank of Portsmouth, Virginia, celebrated a record year's growth. The Journal and Guide reported on a stockholder's meeting. "The bank has loaned out more than $45,000.00 during the year and has not lost a dollar, nor has legal proceedings been instituted to collect a single note. Contrary to all expectations, the bank has not only paid its own expenses, but has net earnings of over $8,000.00. . . . The bank has started a School Savings Bank with the idea of teaching children thrift, frugality and industry and more than 2,000 have enrolled as depositors."
It appears that 1917 was a good year for other banks too. Newspaper accounts describe the success of the Brown Savings Bank of Norfolk. One informed, "Reports of the officers and directors showed that the institution's business and natural growth had exceeded that of any previous year by a considerable margin." And a report on the Atlanta State Savings Bank: "A dividend of 4 percent on the capital stock, $25,000, was declared. This marked success is gratifying to all lovers of racial enterprises. This is a good showing for a racial institution, such as a bank whose competition must of necessity be keener than that met by any other race business."
Remarking on the fact that the Atlanta State Savings Bank was "the oldest colored chartered bank in Georgia," a writer challenged blacks in other cities to establish banks. "There's not a one in Louisville nor Kentucky. There is no oldest, no youngest. Simply none. Wake up, Louisville. 50,000 strong or 50,000 weak!" It was not long after this challenge that the Journal and Guide would headline, "Louisville Bank Men Studying Norfolk Banks." The officers of a soon-to-be-opened bank in Louisville were visiting Norfolk, Virginia, to "carefully observe" the workings of the Tidewater Bank and Trust Company and the Brown Savings and Banking Co. The writer states, "The Norfolk banks are regarded as models in organization and management, and during the past year have assisted in training a number of men for new banks."
In 1919, the Savannah Tribune told of the funding by the Wage Earners Savings Bank of a chain of theaters and the projected plans for construction of a hotel and department store. "The tremendous enterprise will be owned and controlled by local interests and the financial features of the deal have already been worked out. In connection with the transaction, the theatre becomes listed with a circuit of Negro theatres including the Lafayette Theatre in New York, the Howard Theatre in Washington, the Avenue Theatre in Chicago, the modern play house now in course of erection on Lombard and Broad Sts. in Philadelphia, and houses in Baltimore, Pittsburg, Cincinnati, Norfolk, New Orleans and Atlanta."
Very often a banking enterprise originated in rented space on the site of an already established company. As it prospered, the directors, seeking more space as well as prestige, would construct a new building. Many of these buildings were erected by the Pharrow Construction Company of Atlanta, said by the Washington Bee to be "the largest Negro construction company in this section of the country."
Failure Hurts
When bank failures came, they hurt. An editorial in the Chicago Defender of March 6, 1915, describes the anguish similar to that frequently depicted in mainstream newspapers at the time, when white-owned banks fell. In this case, the black-owned Southern Bank of Jackson, Mississippi, had gone belly up, and the writer described the events. Unlike most bank failures, however, after the bank was placed in the hands of a receiver, the officers made full settlement to the bank's depositors. The editorial explained, "In order to accomplish this, three officers of the bank sacrificed their personal property, which was in no way involved in the bank's affairs. They felt that they owed it as a duty to the depositors that there be no losses sustained by members of their race who had placed money in the institution." The officers mortgaged various properties they owned to raise the funds. "Bank failures are not uncommon," continued the editorialist, "but it is seldom that the officers or directors suffer financially in consequence; they are supposed to be too shrewd for that."
When, in 1916, the venerable Bank of Mound Bayou went into receivership and its directors set about reorganizing, president Charles Banks took steps to salvage whatever was possible for the depositors. A newspaper account claims that "There is every possibility that with the exercise of patience and indulgence, the stockholders and depositors in the old bank will receive all their money." In a letter to a worried depositor, Banks wrote, "With reference to the new bank, I am glad to state that we have succeeded in reorganizing and opened up in October under the new Banking Law for Mississippi with the deposits guaranteed by the state. In other words, we are on the same footing and relatively as strong as any other bank in the State. We had to go through quite a deal; it was a trying time for me, in that I felt that I owed it to the town, community and the Negroes of the country generally to rehabilitate it if I could."
Banks with solid histories failed, closed, reorganized, and reopened. In 1915, failure came to the Alabama Penny Savings & Loan of Birmingham. Its long-time president, William Pettiford, had died the year before, and the bank had merged and reorganized as Penny Savings Prudential. The merger failed to strenthen it financially. After its collapse, a determined group of depositors reopened it in 1916.
Success and Growth
In July 1920, newspapers reported that the first black bank in the country to reach a million dollars in resources was the Solvent Savings Bank and Trust Company of Memphis. Two other banks were catching up fast-Brown Savings and Banking of Norfolk and the Wage Earners Bank of Savannah. Several other black-owned banks were well past the half-million mark.
Sometimes southern banks were called upon for financial assistance by companies located in northern and midwestern states. In 1918, owners of the Payton Apartments Corporation [see Issues & Views, Spring 1992] of New York City consulted with officers of Savannah's Wage Earners Savings Bank, and received funding they were seeking to expand their operations. The Savannah Tribune reported, "As a result of the conference, these valuable and beautiful properties, among the finest in New York and certainly the most valuable and handsome controlled by Negroes in the world, are put upon a sound business and financial basis and preserved to the Negro race."
Black bankers did not insulate their institutions from the financial world in the larger society. In some cases there was frequent interaction and cooperation with white banks. For a variety of reasons, it was to the advantage of all banks in a given region to stay on a cordial footing. Officers of black banks were sometimes invited by whites to general meetings and white bankers were featured speakers at events sponsored by the National Negro Bankers Association. In 1928, members of the Association met with President and Mrs. Calvin Coolidge in what was billed as a "friendship" visit. In the same year, when Durham's Mechanics and Farmers Bank turned 20 years old, an interracial group of citizens, including North Carolina's Acting Governor, celebrated the event in a festive outdoor ceremony.
The Trust Betrayed
When a banker betrayed the public trust through forms of embezzlement, the editorialists considered this a double sin. For not only was the crime itself considered abominable, it was felt that such behavior helped to undermine public confidence in business in general. In 1928, for example, when bank officers defrauded, and ultimately destroyed the once mighty Solvent Fraternal Savings Bank of Memphis, a crime that landed them in jail, an editorial in The Reporter of Birmingham frankly told the story. After listing the officers' names and citing all of their dastardly deeds (bogus check writing, false ledger entries, bogus collateral claims), the writer waxed indignant: "If giving to the poor is lending to the Lord, . . . we can see no difference between robbing the poor and robbing God. . . . We think of the many cases in which Negro defaulters have missed their just deserts and how this one case emphasizes the necessity for this kind of action to save the remnant of confidence in race leadership."The writer claimed that "economic parasites" who operated under the guise of charity and race appeal were "the worst enemy to the success in building cooperative enterprises among Negroes." He complained that too often such people "have had an excess of sympathy and leniency" granted them, because they were looked upon as "unfortunately inefficient by reason of limitation, rather than criminal by reason of lack of honesty and sterling character qualities." He further lamented, "Progress in Negro business in Memphis has had a paralyzing setback, the extent of which cannot be measured by any means but the lapse of time."
A New Charter and a National Bank
Although state charters had been granted to black-owned banks in the South for years, in 1919, the first such charter was granted to a Chicago bank. The Chicago Defender published the observations of a depositor who had seen the state charter recently granted to R.W. Hunter & Co., Bankers. The Hunter company already ran several private neighborhood banks in Chicago. The depositor wrote, "I had the honor and pleasure of looking upon the first State Charter ever granted to members of our group to do banking business under state supervision on this side of the Mason and Dixon line. If there ever was a sight to arouse one's pride in the great things done by our people, it was this document signed and sealed by the proper state officials authorizing R.W. Hunter and those associated with him to do a banking business under state charter. . . . I also learned that the R.W. Hunter & Co., with almost a million dollars resources, do great things for their clients and depositors, such as furnishing capital for business enterprises and helping the small depositors when sick or out of employment."
From early on, there were blacks who promoted the idea of creating a national bank. In 1913, The Freeman reported on a plan to form a national bank that would become a "clearing house for all the colored banks throughout the country." Up to that time, black banks depended upon large white-owned banks to act as clearing houses for transactions. Although officers of some of the leading black banks would meet from time to time to discuss the possibilities for a national bank, nothing came of their meetings. By 1920, newspapers were still describing strategies being explored to establish such a bank. One account made the case for it: "It is argued that a number of the Negro banks in the South are required to keep on deposit in New York and Chicago, thousands of dollars in order to meet their clearing in these cities and if the race had a national bank, a member of the federal reserve system, this money could be kept there. Moreover, several hundreds of thousands of dollars worth of business is transacted annually by southern buyers, through northern banks. All this business would be turned over to the great national 'family bank.'"
Many strategies were put forth and, in the same year, the New York Age reported, "Announcement has already been made of the decision of a group of colored men, representing colored banking institutions and Negro business, to put under way a national banking program looking to closer affiliation with metropolitan banking interest. Application for the charter has been made." After listing several of the businessmen involved in the venture, the writer explained, "The Allied Bankers' and Industrial Corporation will, it is thought, eventually include the whole group of Negro banking establishments and serve as a clearing house for these Negro banks, for Negro life and fire insurance companies, for manufacturing companies, and for Negro business generally. The corporation will serve as a financial reservoir for the development of industry among the colored people of the United States."
In July 1922, the Douglass National Bank, based in Chicago, opened its doors. It would be led by its first president, Anthony Overton, through a successful, prosperous decade. A year later, the Defender announced that the city of Chicago had just deposited $30,000 in the Douglass National Bank, "the first national bank in the country run and owned by the Race." The amount was to be the first installment of an allotment of city funds. Douglass was already the depository for county, state and federal funds.
The Prospects Are Good
In 1922, The World published a five-part series by Lester Walton on "The Status of the Colored Man in the South." In the third article, published on August 6, Walton offered his observations on banks and insurance companies. At that date, he claimed, there were 69 black-owned banking institutions, with 61 of them in the South. There were 25 insurance companies, with 21 in the South. Walton reported that Virginia led in the number of Negro banks, "as eighteen are doing business under the supervision of the State Banking Department." North Carolina was next with 10 such banks, followed closely by Georgia and Texas. He observed, "The Negro bank wields a potent influence for good. . . . Negro banks have been a God-send to the farmer, the Negro desirous of owning his own home, and those lacking sufficient capital to embark in business."
A year later, an editorial in Norfolk's Journal and Guide bemoaned the loss of large numbers of blacks who were migrating North. All businesses were affected by this population drain, including the banks. This migration, that continued for decades, was eventually to take its toll on all the close, cohesive black communities throughout the South. "There is no doubt that during the past year migration of our people to the North in large numbers has made serious inroads upon our economic life in this section."
The editor then expressed gratitude that two particular banks were performing better than expected. "Thankfully, by the showing of these banks it has not been serious enough to provoke great alarm among us who have decided to remain in the South. The tide of migration may abate next year, or it may continue to flow, but whether or not, we who do remain must not see things darkly. We have made wonderful economic progress in this section, notwithstanding the difficulties that beset us." And with the optimism that was characteristic of the southern black, the editorialist concludes, "Anyhow, let us muzzle the wail, think straight, move cautiously and enter upon the new year with a determination to do more business and to live better."
It was in 1928 that Richard R. Wright, as head of the National Negro Bankers Association, offered the following statistics as proof that blacks could become a financially powerful group, if they continued to cooperate with one another.
- Negro population in U.S. 12 million
- Annual earnings approx. $3 billion
- Negro property holdings approx. $3 billion
- (Largest single property holder, black churches, approx. $150 million)
Jesse Binga and Chicago
A chronicle of black banking is not complete without the story of Jesse Binga. Binga's life reads like a true American saga. It is the story of a focused, determined man, whose intelligence and skills propelled him to the top, where he flourished, until his fall from grace. It would become a familiar story, told about many a business tycoon who would meet his similar fate in the years leading up to the Great Depression.
Binga was born in 1865, in Detroit, and after leaving high school in his third year, traveled west where he worked in barber shops (a skill he learned from his father); opened his own shops for brief periods in Tacoma and Seattle, Washington; then proceeded to work his way east as a Pullman porter, stopping in Idaho to buy and sell land lots. He finally settled in Chicago, around 1893, where he determined to make his fortune in real estate. He arrived at the right time, since Chicago's real estate market was booming. He found his niche, and by 1907 was among the most prosperous realtors in the city. By 1926, one account claims that "he owned more frontage on State Street south of 12th Street than any other person," black or white.
It was not long before he saw the functional need for a bank. He decided to move into the field and learn the ropes by managing a private bank that he founded in 1908. By 1920, he was ready to take on responsibility for a fully state-chartered bank, and during the following year, the Binga State Bank opened its doors. Black Chicagoans flocked to it, since Binga had established his reputation as an astute, competent businessman. In just two years, the bank became an essential institution to black Chicago. In July, 1923, the Pittsburgh Courier reported that the Binga State Bank had surpassed the million dollar mark in deposits. "Today, the Binga State Bank is the largest colored bank in the world, where last week a colored client borrowed $20,000." Further, the report went on, "The Binga real estate department has purchased the world famous corner of 35th and State Street, and will erect the most modern bank and office building owned by colored people in the world. What does the future hold for our young men and women?"
Carl Osthaus, a Binga biographer, writes, "Binga viewed his bank as an example of thrift and business enterprise, as well as a necessary financial service providing a happy medium between the large white banks of the Loop, too often discriminatory and discourteous, and the ubiquitous loan sharks." The bank was instrumental in helping a growing black population acquire homes and start businesses. Binga himself was a booster for Chicago's South Side and he and his wife were known as generous philanthropists. Eudora Binga had a special interest in the needy young and old, and was a founder of a home for the elderly. At Christmas time, the Bingas hosted parties for poor children and the elderly. They also established scholarships for black students at various colleges. In 1929, Binga erected the Binga Arcade Building, a five-story structure that housed a ballroom, stores, and other businesses.
Binga was a founder of the Associated Business Club (an affiliate of the National Negro Business League), which Osthaus writes, "preached self-help and independence, while it actively sought to acquaint South Siders with business opportunities and to organize cooperatives."
As 1928 rolled into 1929, the economic disaster that would forever be known as the Great Depression was gathering steam. In 1930, the Binga State Bank was to share the fate of many other banks whose directors engaged in speculative financial transactions. Osthaus writes, "Just as Binga had climbed to the heights of success largely through the expansion of the Negro population and real estate market, so the decrease in migration and the collapse of that market resulted in his ruin." The bank held an excessive number of first mortgage real estate loans, many by clients who were now being laid off or fired from contracting businesses.
Like other bankers, who sought to stem the tide of failure, Binga made some unwise, and even illegal financial transactions. After the dust had settled, state bank examiners found a shortage of assets over liabilities. Explanations and theories about Binga's troubles were rampant throughout Chicago. An editorial in the Journal and Guide claimed that the closing of the bank "was caused principally by deflation in realty values on which it held mortgages and depressed economic conditions, which made repayment of these loans slow and uncertain." Osthaus claims that the bank's collapse was due mainly to "a combination of real estate depression and unwise loans and investments."
Convicted of embezzlement in 1933, Binga's punishment was lowered to three years in prison, after a petition drive to limit his sentence. Writes Osthaus, "People seemed to associate his imprisonment with the collapse of his bank and not with embezzlement, and felt that he was harshly and unjustly punished." Thousands of Chicagoans remembered that it was the Binga bank that had responded to them when others had shut their doors. Later, it was revealed that Binga might have staved off this final humiliation, if his fiercely stubborn personality had not prevailed. Months before the bank's collapse a group of black businessmen sought to rescue it. Their one condition was that Binga step down as president. This he refused to do.
Reporting in the New York World on August 31, 1930, Lester Walton described the impact in Chicago of the collapse of the Binga bank. "Nine banks on the South Side were more or less affected by a series of runs, precipitated by the closing of the Binga State Bank. . . . The day following the collapse of the Binga bank, the Douglass National Bank, Negro-owned and operated, suffered a $30,000 net decrease in deposits."
The Depression Becomes Real
In November 1930, in Louisville, Kentucky, two black-owned banks did not open one Monday morning. They had closed voluntarily, because, as the Journal and Guide put it, they were "engulfed in the financial storm" that had caused three white banks to collapse the week before. Two of the three failed banks had been clearinghouses for both black banks.
A year later, bank failures were in full swing around the country, with 24 white-owned Chicago banks closing within the space of three days. One newspaper report speculated on how this affected blacks in general. "Colored people, scarcely recovering from the Binga, Banker's State, and Citizens Trust crashes, suffered severely." The writer cited several major banks that were teetering on the brink of collapse or had voluntarily closed their doors. The Depression dealt a tremendous blow to black finances. Tom Schachtman writes in The Day America Crashed, "Blacks in general fared terribly in the Depression. Whatever economic and social gains they had made in the prosperity years were ruthlessly wiped out." Yet, as the Depression rolled across the land, it was no respecter of race. By 1933, of the country's 25,000 banks, 11,000 had failed.
In July 1932, Richard Wright announced to the National Negro Bankers Association, "Certainly 15 and maybe more colored banks in widely located areas are weathering the storm." Most of them were located in the South. Among the hardy survivors were the Mechanics and Farmers of Durham, the Farmers and Merchants Bank of Boley, Oklahoma, and Mutual Savings Bank of Charleston, South Carolina. Wright could also include his own Citizens and Southern Bank in Philadelphia.
As if the Depression had not brought enough anguish to the all-black town of Boley, Oklahoma, an attempted bank robbery temporarily throttled their bank. In December 1932, just months after Wright praised Boley's Farmers and Merchants for remaining intact, the country's newspapers were filled with a shocking story. The bank, which up to then was struggling to hold its own, was forced to close because its president, D.J. Turner (who was also the town's mayor), was shot dead by members of the Pretty Boy Floyd gang. Members of this gang had been terrorizing Oklahoma banks for more than a year. Although two gang members were killed in the raid (one by the bank cashier), another managed to shoot Turner as he was sounding the alarm. This traumatic event was more than the bank could withstand and, in order to prevent a run, officers decided to shut it down.
Also, in 1932, in spite of valiant attempts to save it, Chicago's Douglass National Bank closed its doors. The Douglass had survived the closing in 1930 of the Binga State Bank and other institutions. Now, it too collapsed, a victim of the city's economic woes. The New York Age reported, "With the closing of the Douglass National Bank, Chicago is without a large financial institution owned and controlled by Negroes."
A Pittsburgh Courier editorial urged blacks to take heart, even after this latest blow. "When it is considered that we had only a few Negro banks, it is grace to confess that our institutions were not among the first to close, but in every single case they were among the very last to surrender. . . . Negroes have nothing to do with the manipulation of stocks, bonds and other securities. . . . We did not bring on the depression. . . . Mr. Overton and his associates are to be congratulated that they held on as long as they did."
Attempts at Salvage
In attempts-sometimes successful, sometimes futile-to avert failure, there were many mergers and consolidations. Two or even three banks would try to find safety as one. In September 1931, the Pittsburgh Courier told of an attempt to prevent the closing of two black banks in Richmond, Virginia. "Less than two years ago there were three banks controlled by Negroes in Richmond. Today there is only one, yet none of the banks failed. By skillful diplomacy, tact, rare business acumen and the force of circumstances, the three banks now make up the Consolidated Bank & Trust Company." For at least a while, these banks found stability.
Throughout the Depression, wherever possible, blacks worked to reopen their banks, almost from the moment of collapse. In 1931, in Norfolk, Virginia, the Metropolitan Bank and Trust Company, which went into receivership in January, was back in business in July. Describing the ceremony where the state's receiver returned the bank's keys to president William Rich, one report claimed that the bank was "reopened in a proverbial blaze of glory."
The reorganization of a bank was not usually a glorious affair, but required the ability of a specialized attorney to pick over the pieces of the old administration, while constructing the new. When citizens of Boley, Oklahoma decided to reopen the prematurely closed Farmers and Merchants Bank, they turned to Elisha Scott, a lawyer known for his adeptness in the banking field. After stockholders agreed to purchase the shares owned by the bank's murdered president, Scott was employed to assist in its resuscitation. For years, he had been instrumental in securing state charters for newly founded banks.
Scott managed to win back solid depositors such as William Price, black owner of the last cotton gin in the vicinity that "furnishes employment to a number of worthy individuals"-so claimed the Kansas City Plaindealer in March 1934. Scott was described by the Plaindealer as "one of the most renowned attorneys, white or colored, in the United States, having practiced in 13 states, and is an unusual good business man, and enjoys the respect and confidence of all the Negroes in the vicinity of Boley, which he has merited by making the fight for his people, covering a period of 25 years."
As late as the mid-1940s, groups of blacks found the courage to establish new banks. In 1947, there were 13 black-owned banks in the country. Eleven were Depression survivors and two were newly established within the past year-the Douglass State Bank of Kansas City, Kansas, and the Tri-State Bank of Memphis, Tennessee.
The World of Memphis enthusiastically reported on the opening of the Tri-State Bank with banner headlines. "The Tri-State Bank of Memphis will open for business! It will be the first time in almost 20 years that Memphis, one of America's key cities from the standpoint of Negro population, will be in the position to boast of a Negro-owned, Negro-financed, and Negro-operated banking institution, the bedrock of the economic system upon which this nation is founded." The new president was J.E. Walker, a businessman who earned his reputation as head of the Universal Life Insurance Company, the country's fifth largest black business.
The opening day drew hundreds of people, with many prominent white businessmen from the area attending the ceremonies to offer their best wishes and respects to Walker. Wrote one observer of the occasion, "Out of the ashes of the Solvent Savings Bank [which failed in 1927], Dr. Walker has written in imperishable ink the story of the Negro's indomitable will to live-to try again, and to prove his strength and fortitude."
Self-Help Takes a Back Seat
But the opening of Tri-State did not represent a renewal of an entrepreneurial spirit. Regrettably, the former drive and "indomitable will" was being redirected elsewhere, as blacks turned away from business initiation. During this period, black newspapers reported on business meetings and conventions, where speakers tried to paint a rosy picture of the future. However, the prospect for black business was not a rosy one. In spite of optimistic rhetoric by the diehard faithful, it was clear that the momentum for economic development was waning.
Something else also was becoming clear. Of two prevailing, but opposing points of view, that once vied for the allegiance of blacks, one was fading into the past with memories of the Depression, and one was emerging and taking firm hold. In the life of a man like George W. Lee of Memphis, we get to focus on these two powerful forces that once battled for the attention and even loyalty of the black masses.
During the 1920s, Lee was among those who emphasized group consciousness in economics as a necessity for winning economic independence from whites-a philosophy generally identified as "self-help." Lee was a successful insurance executive and a proud businessman. His path crossed with a Rev. Sutton Griggs, who epitomized those blacks who were aggressively pursuing integration, which was seen as the most practical road to progress. Griggs was one of the earlier concocters of visionary (sometimes crackpot) social programs intended to solve the "race problem," which were outlined in several books he authored. Along with other black church ministers, he formed something called the "Inter-Racial League," which, of course, turned out to have an all-black membership. (Some satirized it as the "lily black inter-racial league.") Griggs and his cohorts were accused of courting white approval and philanthropy, especially philanthropy.
George Lee was mortified by those blacks who sought after what he called "patronizing white generosity," and claimed that Sutton "sought only to win white funds and friends." Lee blamed the weaknesses of the race's economic and social position on "interracial back door diplomats" and "pussyfoots" like Griggs. In a journal article by David Tucker, "Black Pride and Negro Business in the 1920s," Lee is described as adamantly opposed to Griggs and his integrationist philosophy. Tucker writes, "George Lee feared the Reverend and his League conceded too much in seeking white sympathy." Lee complained about the race being "burdened" with "40,000 ministers," who were busily teaching blacks to depend on God, while little if anything was being done "to teach the Negro to depend on himself."
The only means of winning the approval of the white community and advancing the cause of the race, insisted Lee, was "an intelligent exercise of citizenship rights, buying homes, buying farms, building businesses, and producing wealth." He claimed that if problem-solvers such as Griggs, and other "inter-racial exponents," would simply leave Negro businessmen alone, the race could develop its own community and help to "make the south blossom like a rose."
And even when black businesses in Memphis suffered serious setbacks after the failure of the Fraternal and Solvent Savings Bank, due to dishonest bank officers, Lee kept the faith. Could Memphis Negroes, who he considered the most advanced in the South, turn back? Never. "We must step forward and build upon the ashes of the ruins. To turn back means disintegration and economic slavery." The day the doors were shut at the Solvent Bank, Lee was already up and eager to establish a new bank. What should the black man do? he rhetorically asked. He must do as the white man, that is, send his criminals to jail, and then build anew. "Crookedness is not a racial trait," he declared. "Main Street has been sending her white crooks to the penitentiary for years. Beale Street must do the same and then march on with confidence in our race and in our God."
Tucker describes Lee as an outstanding example of that era's spirit of self-help and writes, "Negro capitalists of the 1920s did much more than seek personal gain; providing, as they did, the real cutting edge of Negro protest. In Memphis, the businessmen contributed the most aggressive local leadership, and provided a militant philosophy of black pride." Allan Spear, in Black Chicago, adds, "The doctrine of self-help, although prominent in the development of Negro social service institutions, was above all a business philosophy. Its leading exponents were businessmen and it constantly emphasized the importance of Negro business enterprises in increasing the affluence and self-respect of the Negro community."
Men like George Lee, Robert H. Boyd, and Richard R. Wright often used the term "progressive" in describing themselves and others who shared their views. For them, the term was tied to particular notions about the advancement of blacks. Those who failed to understand the central role of money and the need for wealth accumulation, to bring about greater freedom, were looked upon by these men as backward thinkers, or "unprogressive." A progressive was one who worked at creating capital. For many years, battles like the one between George Lee and Sutton Griggs were commonplace in black communities around the country.
An Era Ends
By 1944, there was not one black-owned bank in Chicago. A Defender editorial entitled, "We Need Banks," lamented the fact that in Chicago, "with approximately 300,000 Negroes, there is not a single bank owned by them." In spite of the many black-owned businesses-"million dollar insurance companies, powerful newspapers, stores, and even some small scale industries"-still no one took the initiative to form at least one bank. "But if their owners were to go to the big downtown banks, where, incidentally, millions of dollars are deposited annually by colored citizens, asking for credit for additional expansion, few would be accommodated. In this way business progress is stifled."
The writer rejected excuses about bank failures during the Depression. "But didn't this happen to big white institutions all over the country?" he queried. After all, there were now banking laws to provide greater protection. White businessmen had the courage to reinvest and bounce back, he claimed. "And all we do is groan and complain because other racial groups with more money for capital move into our areas and gobble up opportunities for new ventures. . . . We have the men with money; there is certainly the need. There is only one question. Do our men with means have the courage, imagination and vision to pool their resources to create this necessary institution?"
The consequences of the Depression made it harder for the proponents of self-help to make their case. What chance did they now stand against those who were urging blacks to cease initiating their own ventures and work for further integration into white institutions? In an interview, the late writer Vincent Baker, who had actively participated in the civil rights movement, reflected on the Depression as a turning point.
He claimed that, as New Deal policies were put into effect to cope with the devastation caused by the Depression, this increased the role of government in the life of the average person. Gradually the American mindset began to adapt to this growing presence in their lives. The new circumstances proved especially injurious to blacks, since there were now no leaders to signal an alarm and warn of the inevitable increased dependence on whites. If anything, said Baker, the projected agendas and policies being drawn up in Washington fit right in with the preachments of the leaders who began to emerge in the 1940s.
One legacy of the 1930s' catastrophe was a defeatism which grew among the most influential blacks. This defeatist spirit was augmented by a growing band of black "intellectuals," who publicly disparaged self-help efforts. In the pages of their academic publications, they made fun of the small black businesses that once dotted the landscape of every black community, and found no virtue in them. "Puny" was a favorite term these elites liked to apply, when comparing black efforts to the mammoth Sears Roebuck or Ford Motor Company. The leading black sociologist of the time, E. Franklin Frazier, led the assault on the entrepreneurial past, and downplayed the importance of black business, because, as he claimed, "the profits of these enterprises did not compare to those of large-scale corporations in America."
It now became fashionable to deride the teachings of people like Booker T. Washington and the Tuskegee elders. In fact, such teachings were soon wiped clear from the history textbooks. This educated, intellectual class of blacks now taught that "the poor have no bootstraps," thus reinforcing notions that leaders in an earlier age vigorously fought against. David Tucker captured the truth when he wrote in 1969, "Black capitalism suffered a drastic loss of prestige in the 1930s when the economic depression led the race intellectuals to initiate an anti-business tradition which has continued into the present."
Issues that once were debated among blacks were no longer open for debate. Now the advocates of economic independence were downgraded and ostracized, while integrationist forces, subsidized by wealthy whites, grew stronger. The era of the NAACP had begun.
Men like William Pettiford, John Whitelaw Lewis, Jesse Binga and Richard R. Wright proved their mettle by their willingness to become active participants in America's economic system, while providing the resources for thousands of blacks to uplift their families out of the reaches of poverty.
Source: Issues & Views
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