Black Innovators and Entrepreneurs Under Capitalism
Capitalism Is the Bigot's Worst Enemy
OCTOBER 01, 2001 by ANDREW BERNSTEIN
Filed Under : Welfare State, Capitalism, Property Rights, Rule of Law
Andrew Bernstein teaches philosophy at Pace University and is working on a book, The Capitalist Manifesto.
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 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 deprecated ethnic minority. A second question to be answered involves the reasons for such widespread contemporary ignorance of the accomplishments of these great black thinkers. Finally, the stories are inspirational in themselves, apart from any educational benefits to be derived from them.
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, after 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 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 40 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 Pierre Charles L’Enfant, suddenly resigned and took the plans with him to France, Banneker’s photographic memory enabled him to reproduce them in full. His lengthy letter to Thomas Jefferson was so filled with insight that Jefferson changed his mind about 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, which greatly reduced the risk to workers. It was the forerunner of today’s automatic coupler.
Beard received a patent in 1897. 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 made 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 in history.
In The Empire Builders, historian Burton Folsom notes 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 it presented 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. To distinguish it from cheaper imitations, it became known as “the real McCoy,” giving currency to that phrase. He obtained 51 additional patents, including an early version of the ironing board and a cup for imbibing medicine. McCoy patented 51 different automatic lubricators and at age 77, started the Elijah McCoy Manufacturing Company in Detroit to make 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 stand today. He created the innovative skew arch bridge design. “The obstacles facing minority entrepreneurs were substantial,” Folsom writes, “but many did overcome them and used their freedom to excel in Michigan’s economic life.”4
Many other black entrepreneurs took advantage of their freedom in the nineteenth century. Sarah Breedlove was born free in 1867, but was orphaned at age seven, married at 14, and widowed shortly thereafter. She supported herself and her young daughter on the paltry income of a washerwoman. 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 entrepreneur of any race to become a millionaire.5
Madame 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’ capitalizing on America’s late-nineteenth-century freedom to prosper. Some black businesses established in that era have been successfully run by the same families 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. Catering to 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 spinoffs, acquisitions, mergers, and a lucrative McDonald’s contract, built the company into a $31 million business.6
Further, entire towns and business districts of entrepreneurial blacks flourished in that era of U.S. history. Early in the twentieth 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, 25 grocery stores, five hotels, seven restaurants, a waterworks, an electric plant, four cotton gins, a bottling works, a telephone exchange, and a lumberyard.7
Tulsa, Oklahoma, and Durham, North Carolina, both had thriving black business communities. In turn-of-the-twentieth-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.8
The fates of these black business strongholds are 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. But Durham’s black entrepreneurs made a comeback in the 1980s with the opening of two shopping malls and several manufacturing companies.9
A despised racial minority needs political and economic freedom, with their concomitant legal protection of individual rights, even more than members of the majority do, 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 bigotry. They required only the protection of their legal rights as U.S. citizens; their own enterprise 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 advancement, especially for members of a persecuted ethnic minority. Statism is necessary to keep a racial minority oppressed. Under capitalism, most enterprising members of a minority group can overcome any obstacle.
Further proof of this principle is provided by black Caribbean immigrants. The United States received a sizable Caribbean immigration in the early twentieth century, and by 1930 Caribbean immigrants constituted roughly 1 percent of the U.S. black population. Those immigrants, like 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 Caribbean immigrants opened and operated successful businesses. As Thomas Sowell wrote, “As early as 1901, [the immigrants] 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, by the 1980s Caribbean immigrants had an average income roughly equal to whites, and the second generation had a standard of living greater than the average white American.10
Racists Oppose Free Markets
Because racists recognize that the ethnic minorities they oppose will flourish under the political and 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, Sowell wrote, “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.11 Bigots know that without the coercive power of the state to enforce their prejudices, they are powerless to prevent the advancement of the ethnic minorities they fear. Capitalism is the bigot’s worst enemy.
Additional evidence is shown by the varying rates of black economic progress over the past 60 years. Black Americans moved heavily into the northern cities during World War II and the postwar years. The years between 1940 and 1970 were a relatively free period for America’s mixed economy. Because the majority of blacks had lived in the Jim Crow south, where legal restrictions impeded their advancement, 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.
Then came massive government intervention in the form of the Great Society welfare state, which Marxist intellectuals and politicians directed heavily toward blacks because of their still-disproportionate poverty. After 1970 expensive government programs proliferated. With increasing numbers of poor urban blacks being seduced onto the dole, the result was predictable: black economic progress slowed drastically. Twenty-nine percent of black families were below the poverty line in 1980; 26 percent in 1995. Today, roughly 50 percent of black Americans are in the middle class, greater than 40 percent live in homes 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 30 years, one can only wonder how much higher these figures would have been if the freedom of the earlier period had been allowed to continue or be expanded.12
There is a prevalent belief today that the success of blacks and other minorities requires 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 capitalism.
In the past, white racists’ fears explained the absence of recognition accorded to the great black innovators and entrepreneurs. But today the statist 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 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. An entire class of successful black American entrepreneurs is worse than impossible in 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. Capitalism is the Great Liberator.
- Robert Hayden, A Salute to Black Scientists and Inventors (Chicago: Empak Publishing, 1985), p. 6.
- Burton Folsom, The Empire Builders (Traverse City, Mich.: Rhodes and Easton, 1998), pp. 5–6.
- Ibid., p. 6.
- http://tqjunior.thinkquest.org/4091/walker.htm. Other sources also say that Madame Walker was America’s first black millionaire.
- Derek T. Dingle, Black Enterprise Titans of the B.E. 100s (New York: John Wiley and Sons, 1999), pp. 174–91.
- Robert Woodson, ed., On the Road to Economic Freedom (Washington, D.C.: Regnery Gateway, 1987), pp. 5–6.
- John Sibley Butler and Kenneth Wilson, Entrepreneurial Enclaves in the African American Experience (Washington, D.C.: Neighborhood Policy Institute, 1990), pp. 17–31.
- Ibid., pp. vii–viii, 21–3, and 30–1.
- Thomas Sowell, Ethnic America (New York: Basic Books, 1981), pp. 5, 219–22.
- Thomas Sowell, Markets and Minorities (New York: Basic Books, 1981), pp. 85–86.
- Stephan and Abigail Thernstrom, America in Black and White (New York: Simon & Schuster, 1997), pp. 194–97, 199, 211–13, and 233–34, and Charles Murray, Losing Ground (New York: Basic Books, 1984), p. 58.
Note: Madame C.J. Walker built an opulent estate, Villa Lewaro, in Irvington-on-Hudson, New York. The mansion still stands, a half-mile north of the headquarters of the Foundation for Economic Education.