The Color of Money

by Mehrsa Baradaran

  67. David L. Lewis, W. E. B. Du Bois: A Biography (New York: Henry Holt, 2009), 222.

  47. Du Bois, Souls of Black Folk, 49-50.

  48. W. E. B. Du Bois, The Negro in Business (Atlanta: Atlanta University Press, 1899), 5.

  49. Ibid.; Manning Marable, How Capitalism Underdeveloped Black America (Chicago: Haymarket Books, 2015), 131, 145.

  50. Du Bois, Negro in Business, 59.

  51. Ibid.

  52. As historian August Meier explained, blacks faced “difficulties involved in obtaining credit from white banks, the discrimination practiced by white insurance companies and real estate firms, exclusion from white restaurants, hotels, and places of amusement." Thus, black business was a way for the black community to “solve their economic and other problems." August Meir, Negro Thought in America, 1880-1915: Racial Ideologies in the Age of Booker T. Washington (Ann Arbor: University of Michigan Press, 1988), 140-141.

  53. Max Weber, The Protestant Ethic and the Spirit of Capitalism (Mineola, NY: Dover, 2003).

  54. Du Bois, Negro in Business, 57.

  55. Ibid., 59.

  56. “The Negro’s status has changed considerably since the Civil War, but he is today to a great extent what he has always been in this country—the laborer, the day hand, the man who works for wages. The great hiring class is the white people. . . .

  [T]he white man has converted and reconverted the Negro’s labor and the Negro’s money into capital.” Ibid., 56-57, citing Hope.

  57. Melvin L. Oliver and Thomas M. Shapiro, Black Wealth/White Wealth: A New Perspective on Racial Inequality (New York: Routledge, 2006), 48.

  58. Harris, Negro as Capitalist, 53.

  59. Du Bois, Negro in Business, 7. Harmon et al., Negro as a Business Man, 12. The census of 1890 showed the following distribution of occupations: 17,000 barbers, 420 hotel keepers, and 2,000 restaurant keepers.

  60. John Seder and Berkeley Burrell, Getting It Together: Black Businessmen in America (New York: Harcourt Brace Jovanovich, 1971), 10.

  61. Du Bois, Negro in Business, 50.

  62. The NNBL held their first convention in Boston in 1900 with 115 delegates, 80 percent of them from the South. National Negro Business League, Proceedings of the National Negro Business League (Boston: J. R. Hamm, 1901) 23, 24.

  63. NNBL, Proceedings, 26, 129.

  64. NNBL, Report of the Fifteenth Annual Convention of the National Negro Business League, Washington, DC, 83-84. During the same address, Washington claimed that before the establishment of the NNBL there was not a single black bank in Mississippi, but at that time—1910—there were eleven. In all of the United States, before the NNBL there were only four banks, and by 1910 there were fifty-six. During the 1914 convention in Oklahoma, Washington stated that “when the 2,000,000 Negroes in the Southwest have made the most of their opportunities . . . and brought up the riches contained in the earth they will be able to support . . . 40 more banks.”

  65. Seder and Burrell, Getting It Together, 12. NNLB, Report of the Thirteenth Annual Convention of the National Negro Business League, Washington, DC, 52.

  66. Booker T. Washington, The Negro in Business (Coshocton, OH: Hertel, Jenkins, 1907), 136.

  67. Clifford M. Kuhn, Harlon E. Joye, and E. Bernard West, Living in Atlanta: An Oral History of the City, 1914-1948 (Athens: University of Georgia Press, 2005), 106. The bank’s founders were commonly referred to as the “Fervent Five”—Herman E. Perry, James A. Robinson, Thomas J. Ferguson, W. H. King, and H. C. Dugas. The mission was articulated as: “promote financial stability and business development; to stress the principles of thrift; and to make home ownership possible to a larger number of people.” Citizens Trust Bank, http://www.ncif.org/connect /ncif-network/network-banks/citizens-trust-bank-0#.WLXbsjsrLIU.

  68. NNLB, Report of the Eleventh Annual Convention of the National Negro Business League, 79, Nashville, TN, AME Sunday School Union, 1911.

  69. Frazier, Black Bourgeoisie, 40.

  70. Harmon et al., Negro as a Business Man, 4.

  71. Ibid.

  72. Ibid.

  73. Oliver and Shapiro, Black Wealth /White Wealth, 46-47, in part citing Merah Stuart.

  74. “Restricted patronage does not permit the enterprises owned and operated by Negroes to capitalize on the recognized advantages of normal commercial expansion. It tends to stifle business ingenuity and imagination, because it limits the variety of needs and demands to those of one racial group—a race that is kept in a lower bracket of purchasing power largely because of this limitation.” Joseph A. Pierce, Negro Business and Business Education: Their Present and Prospective Development (New York: Springer, 2013), 31.

  75. As Pierce explained, “The practice of Negro business in catering almost exclusively to Negroes has contributed to the development of an attitude that the

  Negro consumer is obligated, as a matter of racial loyalty, to trade with enterprises owned and operated by Negroes." Ibid.

  76. John Hope, Speech at the Fourth Atlanta University Conference, 1898, in Harris, Negro as Capitalist, 53.

  77. Oliver and Shapiro, Black Wealth/White Wealth, 46. John Butler observed that “throughout history, when Afro-American business enterprises developed a clientele outside of their community, they were more likely to be successful." Butler, Entrepreneurship and Self-Help, 77.

  78. Henry Louis Gates Jr., “Madame Walker, the First Black American Woman to Be a Self-Made Millionaire," PBS, http://www.pbs.org/wnet/african-americans - many-rivers-to-cross/history /100-amazing-facts/madam-walker-the-first -black-am erican-woman-to-be-a-self-made-millionaire/.

  79. “Most Negro wealth comes from businesses that white society did not wish to control or from services peculiarly personal—newspaper publishing of the segregated press; real estate and insurance, which grew out of Negro burial societies; and undertaking, which owes its Negro monopoly in the ghetto to the fact that white undertakers did not wish to handle Negro bodies." Kenneth Clark, Dark Ghetto (New York: Harper & Row, 1989), 189.

  80. Jenkins and Hines, Black Titan.

  81. Ibid., 108.

  82. Ibid., 75-76.

  83. Butler, Entrepreneurship and Self-Help, 110-111.

  84. Merah Steven Stuart, An Economic Detour: A History of Insurance in the Lives of American Negroes (New York: Wendell Mallet, 1940), 36. Cited in Butler, Entrepreneurship and Self-Help, 118-119.

  85. Frederick L. Hoffman, Race Traits and Tendencies of the American Negro (New York: Macmillan, 1896), 95; Robert William Fogel and Stanley L. Engerman, Time on the Cross: The Economics of American Negro Slavery (New York: W W Norton, 1995), 125.

  86. Hoffman, Race Traits and Tendencies, 176.

  87. Ibid., 310-311. Hoffman claimed that as whites were becoming stronger, blacks were becoming weaker and that “mulattos" were even weaker than pure blacks or whites: “The mixture of the African with the white race has been shown to have seriously affected the longevity of the former and left as a heritage to future generations the poison of scrofula, tuberculosis, and most of all, of syphilis."

  88. Joseph A. Pierce, Negro Business and Business Education (New York: Plenum Press, 1995), 12.

  89. Seder and Burrell, Getting It Together, 9; Chapin, “Fifteen Cent Policy," 647.

  90. Butler, Entrepreneurship and Self-Help, 176, 180.

  91. Clipping, St. Luke Herald, January 7, 1928; Walter B. Weare, Black Business in the New South: A Social History of the North Carolina Mutual Life Insurance Company (Chicago: University of Illinois Press, 1973), 4-5; William K. Boyd, The Story of Durham: City of the New South (Durham, NC: Duke University Press, 1925), 277; E. Franklin Frazier, “Durham: Capital of the Black Middle Class," in The New Negro, ed. Alaine Locke (New York: Simon & Schuster, 1997), 333.

  92. M&F Bank, “Our History," https://www.mfbonline.com/our-history/.

  93. The clientele of the bank is reflected in its name: “mechanics" refers to the legal term “mechanic’s lien" which was a form of credit that the various service trades use
d to collect payments from their customers. Wiley J. Williams, “Mechanics and Farmers Bank," http://ncpedia.org/mechanics-and-farmers-bank.

  94. Armand J. Thieblot Jr., The Negro in the Banking Industry (Philadelphia: University of Pennsylvania Press, 1970), 14.

  95. A Durham newspaper at the time called the robbers’ races “Unknown." https://www.newspapers.com/newspage/40788827/.

  96. Butler, Self-Help and Entrepreneurship, 182.

  97. Boyd, Story of Durham, 279.

  98. Ibid., 278.

  99. Butler, Self-Help and Entrepreneurship, 193, Durham Morning Herald, September 16, 1927. Quoted in Thomas H. Houck, A Newspaper History of Race Relations in Durham, North Carolina, 1900-1940 (Durham, NC: Duke University Press, 1941), 81.

  100. Butler, Entrepreneurship and Self-Help, 194.

  101. Ibid., 191.

  102. Ibid., 216.

  103. Scott Ellsworth, Death in a Promised Land (Baton Rouge: Louisiana State University Press, 1982), 10-13.

  104. In 2016, a lost eyewitness account of the massacre in Tulsa emerged to provide a new perspective on the horrific attacks by white mobs. See Allison Keyes, “A Long-Lost Manuscript Contains a Searing Eyewitness Account of the Tulsa Race Massacre of 1921,” Smithsonian, May 27, 2016, http://www.smithsonianmag .com/smithsonian-institution/long-lost-manuscript-con tains-searing -eyewitness-account-tulsa-race-massacre-1921 -180959251/.

  105. Ibid., 224.

  106. W. E. B. Du Bois, The Crisis 21-22 (1920): 114.

  107. Ellsworth, Death in a Promised Land, 95. Tulsa World, June 26, 1921; see also Daily Oklahoman, June 26, 1921. R. Halliburton Jr., “The Tulsa Race War of 1921,” Journal of Black Studies 2(3) (1972): 333-357.

  108. “Blood and Oil,” The Survey 46 (June 11, 1921): 369.

  109. Walter White, “The Eruption of Tulsa,” Nation, June 29, 1921, 909.

  110. Butler, Entrepreneurship and Self-Help, 229.

  111. H. Leon Prather, We Have Taken a City: The Wilmington Racial Massacre and Coup of1898 (Madison: NJ: Fairleigh Dickinson University Press, 1984), cited in Oliver and Shapiro, Black Wealth/White Wealth, 49-50.

  112. Ibid., 50.

  113. Between the “red summer” of 1919 and 1923, race riots broke out in Chicago, IL; Washington, DC; Elaine, AR; Charleston, SC; Longview, TX; Omaha, NE; Knoxville, TN; and Rosewood, FL. During the “Rosewood Massacre” of January 1923, a white mob burned the entire Florida town to the ground. Jessie C. Smith and Linda T. Wynn, Freedom, Facts, and Firsts: 400 Years of the African American Civil Rights Experience (Canton, MI: Visible Ink Press, 2009), 64. Gregory Mixon and Clifford Kuhn, “Atlanta Race Riot of 1906,” http://www.georgiaencyclopedia .org/articles/history-archaeology/atlanta-race-riot-1906; Tabitha C. Wang, “East St. Louis Race Riot: July 2, 1917,” http://www.blackpast.org/aah/east-st -louis-race-riot-july-2-1917. For a list of race riots, see http://www.personal.utulsa .edu/-marc-carlson/riot/oldriots.html.

  114. Walter B. Weare, Black Business in the New South (Durham, NC: Duke University Press, 1993), 116-119.

  115. By the 1970s, when there was a renewed effort to revive the urban areas around the Greenwood district, “blacks as a group did not finance, nor did they own, the [center] of the old Greenwood section.” Butler, Entrepreneurship and Self-Help, 234-236.

  116. William Albert Sinclair, The Aftermath of Slavery (Boston: Small, Maynard and Company, 1905), 187-188; William B. Gatewood Jr., Theodore Roosevelt and the Art of Controversy (Baton Rouge: Louisiana State University Press, 1970), 36-37; Douglas A. Blackmon, Slavery by Another Name: The Re-Enslavement of Black Americans from the Civil War to World War II (New York: Anchor, 2008), 166-167. Vardaman was elected governor of Mississippi the next year. Nancy Isenberg,

  White Trash: The 400-Year Untold History of Class in America (New York: Viking, 2016), 397.

  117. Theodore Roosevelt, A Square Deal (Allendale, NJ: Allendale, 1906), 133.

  118. Blackmon, Slavery by Another Name, 162.

  119. W. E. B. Du Bois, “Evolution of the Race Problem," Atlanta University, 1909, http://www.webdubois.org/dbEvolOfRaceProb.html.

  120. Nell Painter, The History ofWhite People (New York: W. W. Norton, 2010).

  121. Frazier, Black Bourgeoisie, 145.

  122. Howard W. Odum, “Social and Mental Traits of the Negro: Research into the Conditions of the Negro Race in Southern Towns" (Ph.D. dissertation, Columbia University, 1910), 171.

  123. William A. Sinclair, The Aftermath of Slavery (Boston: Small, Maynard, 1905), 221222; The St. Louis World’s Fair in 1904 featured a display of live pygmies taken from the Belgian Congo during King Leopold’s brutally violent reign. After the fair, one of the men displayed, named Ota Benga, was taken to two other museums in New York and then placed in the Bronx Zoo in a cage with an orangutan. After several years of being displayed with a primate, he killed himself in 1916. This was America at the turn of the twentieth century. Blackmon, Slavery by Another Name, 240.

  124. Ibid., 269

  125. The Klan was not exclusively a southern phenomenon. According to a black observer, “many non-sheet-wearing whites supported the Klan ideology because whites were beginning to feel the economic pressure of black competition for living space and jobs in urban areas." Dempsey Travis, An Autobiography of Black Chicago (Evanston, IL: Agate), 38. Southern Poverty Law Center, “Ku Klux Klan," https://www.splcenter.org/fighting-hate/extremist-files/ideology/ku-klux-klan.

  126. Woodrow Wilson, Division and Reunion (New York: Longmans, Green, and Co., 1893), 18.

  127. News and Courier, 1906, cited in C. Vann Woodward, The Strange Career of Jim Crow (Oxford: Oxford University Press, 1955), 77, 81.

  128. Roger Lowenstein, America’s Bank: The Epic Struggle to Create the Federal Reserve (New York: Penguin), 199.

  129. Stuart W. Shulman, “The Origin of the Federal Farm Loan Act: Issue Emergence and Agenda-Setting in the Progressive Era Print Press," in Fighting for the Farm: Rural America Transformed, ed. Jane Adams (Philadelphia: University of Pennsylvania Press, 2003), 113-128.

  130. Ira Katznelson, When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-Century America (New York: W. W. Norton, 2005), 20-22.

  131. Farm Act of 1916, Public Law 64-158, 64th Congress, S. 2986, § 7. http://credo .library.umass.edu/view/full/mums312-b035-i254; Gerald Jaynes, ed., Encyclopedia of African American Society (Thousand Oaks, CA: Sage, 2005), 314.

  132. Robert Caro, Master of the Senate (New York: Random House, 2002), 65.

  Chapter 3 The Rise of Black Banking

  1. Isabel Wilkerson, The Warmth of Other Suns: The Epic Story of America’s Great Migration (New York: Random House, 2010), 9-10.

  2. William Loren Katz, ed., The American Negro: His History and Literature, 141 vols. The Negro in Chicago: A Study in Race Relations and a Race Riot in 1919 (New York: Arno Press and New York Times, 1968), 79-86.

  3. Langston Hughes, The Collected Poems of Langston Hughes, ed. Arnold Ramp-ersad (New York: Vintage Books, 1995), 26-27.

  4. James Baldwin, The Evidence of Things Not Seen (New York: Henry Holt, 1985), 25.

  5. The word “ghetto" originated in Italy in the early seventeenth century to describe the area of a city where Jewish residents were forced to live by law and then by economic and cultural pressure. Indeed, the northern American ghettos were also occupied by Jewish and other European immigrants before the black migrants arrived. Mitchell Duneier, Ghetto: The Invention of a Place, the History of an Idea (New York: Farrar, Straus and Giroux, 2016).

  6. For a history of America’s racial ghettos, see Douglas Massey and Nancy Denton, American Apartheid: Segregation and the Making of the Underclass (Cambridge, MA: Harvard University Press, 1993); Robert Samson, Great American City: Chicago and the Enduring Neighborhood Effect (Chicago: University of Chicago Press, 2013).

  7. Abram L. Harris, The Negro as Capitalist: A Study of Banking and Business among American Negroes (Philadelphia: American Academy of Pol itical and Social Science, 1936), 4
8. John Henry Harmon Jr., Arnett G. Lindsay, and Carter G. Woodson, The Negro as a Business Man (College Park, MD: McGrath, 1969), 65, citing Directory of Negro Banks from 1900 to 1928 from the Tuskegee Institute. There were several banks that were not recognized as such by their chartering state. For example, the Negro Year Book for 1925 listed nine banks in Georgia, but the state of Georgia has never recognized more than four black-owned banks. Joseph A. Pierce, Negro Business and Business Education: Their Present and Prospective Development (NewYork: Springer, 1995), 151, 159. Total black bankers in 1900 were 2,105 and 6,405 in 1920. Harmon et al., Negro as a Business Man, 26. Between 1900 and 1920, black bankers exploded by more than 300 percent.

  8. Pierce, Negro Business and Business Education, 159.

  9. Harris, Negro as Capitalist, 49, app. 4. Total combined assets in all U.S. banks in 1926 was $65 billion. Thayer Watkins, “The Money Supply and the Banking System before and during the Great Depression," http://www.sjsu.edu/faculty /watkins/depmon.htm.

  10. Harmon et al., Negro as a Business Man, 65. According to Arnett Lindsay, “unfair banking practices along with the general discrimination heaped upon Negroes . . . necessitated the organization of banking institutions of their own."

  11. In Harris’s complete list of all black-owned banks from 1888 to 1932, no NewYork banks are listed, as compared to six in Chicago, six in Philadelphia, and four in Washington, DC. Harris, Negro as Capitalist, app. 2.

  12. Christopher Robert Reed, “A Reinterpretation of Black Strategies for Change at the Chicago World’s Fair, 1933-34," Illinois Historical Journal 81(1) (Spring 1988): 5.

  13. Nicholas A. Lash, “Asymmetries in US Banking: The Role of Black-Owned Banks," in Global Divergence in Trade, Money and Policy, eds. Volbert Alexander and Hans-Helmut Kotz (Cheltenham, UK: Edward Elger, 2006), 95.

  14. Rick Kogan and June Skinner Sawyers, “Jesse Binga: Banker and Realtor," in Chicago Portraits, ed. June Sawyers (Chicago: Northwestern University Press,

  2012), 39. Binga studied law for two years with one of the first black graduates of the University of Michigan Law School, Thomas R. Crisup. “Michigan Black Lawyers ‘Firsts,’" Michigan Bar Journal (May 2015): 20, http://www.michbar.org /file/barjournal/article/documents/pdf4article2622.pdf.