Business in Black and White: American Presidents and Black Entrepreneurs in the Twentieth Century 9780814789063

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Business in Black and White

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Business in Black and White American Presidents & Black Entrepreneurs in the Twentieth Century

Robert E. Weems Jr., with Lewis A. Randolph

a NEW YORK UNIVERSITY PRESS New York and London

NEW YORK UN IV ERS IT Y PRES S New York and London www.nyupress.org © 2009 by New York University All rights reserved Library of Congress Cataloging-in-Publication Data Weems, Robert E., 1951– Business in black and white : American presidents and Black entrepreneurs in the twentieth century / Robert E. Weems, Jr. ; with Lewis A. Randolph. p. cm. Includes bibliographical references and index. ISBN-13: 978–0–8147–7517–2 (cloth : alk. paper) ISBN-10: 0–8147–7517–9 (cloth : alk. paper) 1. African American businesspeople—United States—History—20th century. 2. Entrepreneurship—United States—History—20th century. 3. Capitalism—United States—History—20th century. 4. African Americans—Economic conditions—20th century. 5. Presidents—United States—Racial attitudes—History—20th century. 6. United States—Race relations—Political aspects—History—20th century. 7. United States—Politics and government—1919–1933. 8. United States—Politics and government—1933–1945. 9. United States—Politics and government—1945–1989. 10. United States. Dept. of Commerce—History—20th century. I. Randolph, Lewis A. II. Title. HD2358.5.U6W44   2009 338’.0408996073—dc22     2008037023 New York University Press books are printed on acid-free paper, and their binding materials are chosen for strength and durability. Manufactured in the United States of America 10 9 8 7 6 5 4 3 2 1

Contents

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List of Tables Acknowledgments

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Introduction: The Initiatives Leading to Black Capitalism The Origins of the Commerce Department’s Division of Negro Affairs, 1925–1940 Emmer Lancaster and the Ascendancy and Fall of the Commerce Department’s Division of Negro Affairs, 1940–1960 More Than Civil Rights: The Kennedy and Johnson Administrations and African American Enterprise The Democratic Party and Black Capitalism during the Presidential Election of 1968 Nixon and the “Militants”: The GOP and Black Capitalism during the Presidential Election of 1968 The National Response to Richard M. Nixon’s Black Capitalism Initiative The Ford Administration and Black Capitalism The Carter Administration and African American Enterprise Epilogue: Whatever Happened to Black Capitalism?

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Appendix Notes Bibliography Index About the Author

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67 89 11o 127 157 190 219 227 229 281 297 313

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List of Tables

Table 3-1  Participant Cities: The 6-by-6 Loan and Management Program as of June 23, 1965

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Table 3-2  Selected Characteristics of Economic Opportunity Loan Program, November 1966 to February 1967

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Table 4-1  Brief Description of Robert F. Kennedy’s Suggested Use of Specific Community Development Tools in Rebuilding Black Urban Areas

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Table 4-2  Brief Description of Richard Nixon’s Suggested Use of Specific Community Development Tools in Rebuilding Black Urban Areas

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Table 8-1  Comparison of Total Government Procurement with Minority Procurement, Fiscal Years, 1969 to 1980

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Acknowledgments

First I want to acknowledge the contribution of political scientist Lewis A. Randolph to the current study. His discussion of Richard Nixon’s and Robert Kennedy’s 1968 presidential campaigns, as well as his input regarding Vice President Richard Nixon’s chairmanship of the President’s Committee on Government Contracts (PCGC), enhanced this project. Doing archival-based research requires the help of numerous archivists and librarians. I am personally indebted to the staffs of the following institutions: the National Archives (College Park, MD), the Herbert Hoover Presidential Library and Birthplace (West Plains, IA), the Harry Truman Presidential Library (Independence, MO), the John F. Kennedy Presidential Library (Boston), the Lyndon B. Johnson Presidential Library (Austin, TX), the Richard Nixon Library and Birthplace (Yorba Linda, CA), the Gerald Ford Presidential Library (Ann Arbor, MI), the Jimmy Carter Presidential Library (Atlanta) the Ronald Reagan Presidential Library (Simi Valley, CA), the Chicago Historical Society (Chicago), the Presbyterian Historical Society (Philadelphia), the University of North Carolina Archives (Chapel Hill), and the Rockefeller Family Archives (Sleepy Hollow, NY). I also want to offer a special thanks to the Gerald Ford Presidential Library for giving me a research travel grant to work there. To write the chapters on the Division of Negro Affairs in the Commerce Department, I used the resources of the National Personnel Records Center (NPRC) in St. Louis, MO, which holds the personnel records of former civilian government employees. I want to thank the NPRC for its assistance, as well as Jerry L. Wallace, historian and archivist at Southwestern College in Winfield, KS, who told me about this important source of information. I also want to acknowledge the financial support I received from the University of Missouri Research Board and the Research Council of the

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University of Missouri at Columbia. This assistance helped defray the expenses associated with doing research at several presidential libraries and the National Archives. Besides receiving the assistance of archivists, librarians, and various funding sources, this project benefited from consultations with a variety of colleagues. Four persons who stand out in this regard are Jonathan J. Bean, Juliet E. K. Walker, Randall Ripley, and Brian Pollins. Bean, a historian of U.S. government initiatives aimed at small businesses, brought to my attention numerous sources that aided this research. I truly appreciate his collegial generosity. Walker, the director of the Center for Black Business History, Entrepreneurship, and Technology at the University of Texas at Austin, shared her encyclopedic knowledge of African American business history, which helped me better conceptualize this book. Ripley and Pollins helped Lewis A. Randolph formulate the concept of “domestic détente” to explain Richard M. Nixon’s interest in promoting African American business development, or “black capitalism.” Because Richard Nixon is the president most closely associated with government programs aimed at helping black business enterprise, Lewis Randolph and I tried to contact persons who worked closely with him in order to investigate Nixon’s reasons for promoting black capitalism. Three former Nixon aides—Martin Anderson, an economic adviser to the 1968 Nixon presidential campaign; Robert Brown, special assistant to President Nixon; and John W. Dean, the former White House counsel—graciously answered our questions about both the candidate and the president Nixon. A special word of thanks goes to Debbie Gershenowitz at New York University Press. I truly appreciate her support of this project. In addition, I want to thank Niko Pfund, the former editor in chief and director of New York University Press, for his support. Last but not least, I want to acknowledge and express my appreciation for the support of my parents, wife, daughter, siblings, aunts, uncles, cousins, in-laws, and other friends and colleagues. In addition, I want especially to acknowledge my friend and colleague Julius E. Thompson (the other “Dr. J.”) who, unfortunately, will never get a chance to read this book.

Introduction The Initiatives Leading to Black Capitalism

I know that many advances have been made in the opening of new avenues and new levels of employment for Negroes. Well and Good. But this is only one side of economic democracy. While we have fought hard for advancement as Employees, we are not fulfilling our mission, our place in the sun, as Employers. . . . Full equality to me includes the right to Hire; not just to be Hired: the power to own the company, not just work for the company. If we can make appreciable gains in this struggle, we will increase the self-respect and the self-dignity of the Negro people a hundred-fold.1

This book surveys historic initiatives supported by American presidents to help African Americans’ quest to participate fully in the American economy. It has been widely assumed that before President Richard Nixon came to office in 1969 seeking to implement his “black capitalism” policy initiative, the U.S. government had demonstrated little or no interest in the affairs of African American businesspeople, a belief that has been reinforced by much of the scholarship related to black business enterprise.2 It is indeed true that for most of American history, governmental bodies (local, state, and national), have not supported black business development. It is equally true that this has retarded the development of successful African American commercial enterprises. As Juliet E. K. Walker commented, “In America, government support, both direct and indirect, is critically important for business success. Simply put, in America, white businesses and government have been inextricably linked since the colonial era.”3 Expanding on the pioneering work of Merah S. Stuart, John Sibley Butler talked about how governmental support of racial discrimi-

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2  Introduction

nation during the Jim Crow era hurt black business development. Specifically, Butler decried the “economic detour” created by state-sanctioned racial segregation, in which the vast majority of black enterprises were forced to rely solely on black consumer support (compared with other entrepreneurs and enterprises who had full access to the American consumer market and economy).4 Notwithstanding a historic tradition of government indifference and hostility toward black entrepreneurial aspirations, by the late nineteenth and early twentieth centuries, drawing on an innate business tradition dating back to pre-transatlantic slave-trade Africa, African Americans found a way to establish a commercial presence (albeit peripheral) in the United States.5 Two pertinent and interrelated manifestations of the “self-help” tradition associated with African American business history were the 1898 “Negro in Business” conference convened by W. E. B. Du Bois at Atlanta University and Booker T. Washington’s organization of the National Negro Business League (NNBL) two years later in Boston.6 Although Du Bois’s and Washington’s public disagreement over such issues of civil rights and black political activity has been well documented,7 at the turn of the twentieth century both men did agree on the importance of black business development. Their agreement also contributed to a dramatic increase in black business activity that led to the government’s interest in black entrepreneurship. In his remarks at the 1898 Atlanta University conference, Du Bois observed: “The character of commercial life is slowly but significantly changing. The large industry, the department store and the trust are making it daily more difficult for the small capitalist with slender resources.”8 Consequently, to help ensure the survival of black businesses in America, Du Bois proposed “the organization in every town and hamlet where colored people dwell, of Negro Business Men’s Leagues, and the gradual federation from these of state and national organizations.”9 Apparently motivated by Du Bois, Booker T. Washington established the National Negro Business League in 1900 to stimulate the growth and development of black-owned enterprises. By all accounts, the NNBL grew quickly. For instance, between 1900 and 1915, the NNBL grew from three hundred charter members to a membership estimated to be between five thousand and forty thousand people, and by 1915, the year of Washington’s death, the NNBL had more than six hundred chapters across the United States and West Africa.10

Introduction  3

Besides the establishment of the National Negro Business League, in the first decades of the twentieth century such auxiliary organizations as the National Bankers Association, the National Negro Insurance Association, the National Association of Funeral Directors, the Colored Undertakers and Embalmers Association, and the National Negro Retail Merchant’s Association were established. Again, this was in keeping with Du Bois’s 1898 plea to black America to formally organize its business community (to better promote its interests).11 Along with the significant growth of black business stimulated by the birth and growth of the NNBL and its auxiliary organizations, political considerations also contributed to the federal government’s interest in African American business development. Most of the NNBL members, as well as the majority of blacks, were staunch Republicans during the early twentieth century, and the GOP has historically been associated with the business community. It is not coincidental, therefore, that a government agency to help black businesspeople surfaced during the presidential administration of Calvin Coolidge and blossomed during the presidency of his successor, Herbert Hoover. Nevertheless, as my study demonstrates, as the twentieth century progressed, both Republican and Democratic presidents supported government programs aimed at black businesspeople. Despite its historical significance, the Commerce Department’s institutional interest in Negro affairs, which existed from 1927 to 1953, has fallen through the cracks of documented history. Ironically, three of the persons who coordinated this effort—James A. (“Billboard”) Jackson, Eugene Kinckle Jones, and Charles E. Hall—are known to scholars for other professional endeavors.12 Emmer Lancaster, who had the longest tenure as head of the Commerce Department’s Division of Negro Affairs, from 1940 to 1953, is mentioned only in Joseph A. Pierce’s 1947 classic Negro Business and Business Education and Vishnu V. Oak’s important 1949 book The Negro’s Adventure in General Business.13 The relative invisibility to scholars of the Commerce Department’s Division of Negro Affairs also reflects its relative invisibility during its existence. Although the Division of Negro Affairs actively sought to inform African American businesspeople of the Commerce Department’s programs available to them, the evidence suggests that only a small percentage took advantage of these services. We can only speculate why so few black businesspeople used the Commerce Department’s Division of Negro Affairs. Before the emergence of the mid-twentieth-century civil rights movement, which attracted well-

4  Introduction

James A. Billboard Jackson, first adviser on Negro affairs in the Commerce Department. He later served as a special representative for the Standard Oil Company of New Jersey (courtesy of National Archives, College Park, MD).

publicized support from the three branches of the federal government (executive, legislative, judicial), many blacks may well have felt that they could not trust anything associated with Washington, D.C. Considering that the political abandonment of African Americans following Reconstruction had contributed to their mistreatment during the late nineteenth and early twentieth centuries, it is understandable that they would be skeptical of a federal program allegedly established for their benefit. Similarly, scholars writing in the late twentieth and early twenty-first century (aware of federally sanctioned racial discrimination in the late nineteenth and early twentieth century) may find it difficult to imagine the existence of an early- to mid-twentieth-century federal office with the mission of assisting African American entrepreneurship. Nevertheless, the Commerce Department’s Division of Negro Affairs was not a mirage, and chapters 1 and 2 attempt to resurrect this unit from undeserved obscurity. Many of the concepts associated with later U.S. government efforts to assist African American business development originated in the Commerce Department’s Division of Negro Affairs (especially during Emmer M. Lancaster’s tenure as division chief). In addition, Harry Truman’s administration sought to use the example of

Introduction  5

successful African American entrepreneurs as an ideological weapon in the evolving cold war. Unfortunately, however, the Commerce Department’s Division of Negro Affairs did not survive the transition from Harry Truman to Dwight Eisenhower. Although the federal government’s specific interest in supporting black entrepreneurs temporarily ceased, the actions of Vice President Richard M, Nixon, as chair of the President’s Committee on Government Contracts (PCGC), provide an important glimpse at his later motivation for promoting black capitalism during the 1968 presidential election. Specifically, Nixon drew a pragmatic link between African American civil rights and national security. In addition, the Small Business Administration, established in 1953, became deeply involved in black business development in succeeding decades. Chapter 3 demonstrates that the relationship between African Americans and the federal government during the early to mid-1960s consisted of more than presidential support for blacks’ unfettered access to public accommodations, employment opportunities, and the voting booth. For example, when this period is viewed through the lens of black business and black business development, we can clearly see the U.S. government’s efforts to enlist the services of African American businesspeople in fighting the evolving cold war. Then Lyndon B. Johnson’s administration sought to expand civil rights legislation to include the “right” of owning a business. By the late 1960s, as African American sentiment changed from “We Shall Overcome” to “Black Power,” the U.S. government stepped up its programs aimed at stimulating black business ownership (hoping to quell urban unrest). Chapter 4 discusses how the issue of black business development animated the Democratic Party during the 1968 presidential campaign. Both the main Democratic candidates for the presidency, Vice President Hubert H. Humphrey and Senator Robert F. Kennedy, were profoundly interested in black economic development. While Richard Nixon and the GOP did not have a monopoly on black capitalism in 1968, the Democratic Party exhibited a variety of opinion as to how its interest in promoting black entrepreneurship should be portrayed. The administrator of the Small Business Administration (SBA), Howard J. Samuels, championed an extremely ambitious and highprofile effort known as Project OWN. But other prominent Democrats offered a more cautious approach to addressing the issue of enhancing black business in America. In the end, Humphrey’s association with the

6  Introduction

Johnson administration’s unsuccessful coordination of the war in Vietnam, as well as the Democratic Party’s apparent lack of a universally agreed-on agenda for pushing black capitalism, helped Richard Nixon win the presidential election of 1968. Chapter 5 discusses how black business development factored into Richard M. Nixon’s ultimately successful 1968 presidential campaign. On the surface, Nixon’s promotion of black capitalism during the 1968 campaign appeared to be at odds with his “Southern strategy” designed to attract southern white voters to the GOP. Yet from the standpoint of the “Machiavellian” Nixon, the two initiatives were complementary. Because black economic development and racial integration are not necessarily related, Nixon could make political overtures like black capitalism to blacks without offending southern whites. To underscore Richard Nixon’s vision of black capitalism, his presidential campaign secretly consulted with noted Black Power advocates Floyd McKissick and Roy Innis, and Nixon’s successful co-opting of McKissick and Innis helped him achieve his larger aim of “domestic détente.” By offering blacks a substantial piece of the American pie through government and private-sector programs to promote black business development, along with claiming the compatibility of blacks’ growing sense of racial pride and self-assurance with the doctrine of free enterprise, Nixon tried to construct a domestic manifestation of his later, widely publicized foreign policy initiative of détente to “contain” the power of the Soviet Union and China. Just as Nixon and Kissinger linked the concessions associated with détente to Soviet and Chinese behavior modification, black capitalism offered U.S. black militants a monetary incentive to repudiate notions of “Burn, Baby, Burn.” This linkage between Nixon’s domestic and foreign policy is given further credence by Stephen E. Ambrose in his 1989 book Nixon: The Triumph of a Politician: “Nixon advocated bringing the Chinese into the family of nations, once the Chinese had learned how to behave; Nixon advocated bringing blacks into the body politic, once they learned how to behave.”14 Maurice Stans, Nixon’s secretary of commerce, given the task of implementing black capitalism, corroborated this assertion when he stated in Gerald Strober’s and Deborah Strober’s Nixon: An Oral History of his Presidency: “[Nixon wanted] to give them [blacks] a chance to be capitalists.  .  .  . Then they become employers, taxpayers, and we shift the burden in the economy for a lot of these people away from welfare and into being taxpayers.”15

Introduction  7

Governor Nelson Rockefeller of New York, Nixon’s chief competitor for the Republican nomination in 1968, also publicly declared the efficacy of greater economic development in America’s (primarily black) inner-city areas. Yet in the end, the Machiavellian Nixon beat back the challenge of Rockefeller, as well as the challenge of Democratic Vice President Hubert Humphrey, to win the White House. While the effectiveness of President Richard Nixon’s black capitalism initiative (institutionalized as the Office of Minority Business Enterprise) has been open to debate,16 it is irrefutable that Nixon’s widely publicized agenda for black America generated an unprecedented level of discussion related to black economic development. Chapter 6 examines this phenomenon. Between 1969 and 1972, a virtual explosion of published works related to black capitalism appeared in books, scholarly journals, business periodicals, and mainstream magazines.17 Even though many of these publications have gathered dust in recent years, The Review of Black Political Economy and Black Enterprise magazine, both begun in 1970 (during the heyday of black capitalism), remain vital sources of information about African American entrepreneurship. In retrospect, while the Office of Minority Business Enterprise (OMBE) provided only limited assistance to black businesspeople and none of the various independent proposals for black economic development came to fruition, the period’s discourse regarding black capitalism helped Nixon accomplish his larger ideological objective of “containing” domestic black radicalism. Despite the efforts of such notable African American Marxists as James Foreman, Robert L. Allen, James Boggs, and Earl Ofari, most blacks apparently gravitated toward either the various derivatives of black capitalism or economist Andrew Brimmer’s call for complete integration into American society. Although Richard Nixon subsequently resigned from the presidency in disgrace on August 9, 1974, his black capitalism initiative remained alive and well during the Ford administration. Chapter 7 examines President Gerald R. Ford’s relationship with the African American community during his brief time in office. While Ford sought to perpetuate the programs associated with the Office of Minority Enterprise (OMBE) to aid his quest for African American support in the upcoming 1976 presidential election, these same programs were coming under increased scrutiny and criticism. For instance, in March 1975, the summary report generated by a 1974 House Appropriations Committee investigation of

8  Introduction

OMBE portrayed the agency as needing substantive reorganization.18 One year later, a collaborative effort between the Commerce Department and the Small Business Administration produced Federal Minority Business Development Programs, an even more critical assessment of the government’s minority business enterprise programs. It concluded that notwithstanding the existence of OMBE and pertinent SBA initiatives, “There is not now a capability to develop a total program plan for the minority business effort, or to determine the role of each program element in that plan.”19 Despite Gerald Ford’s promotion of black capitalism and his “open door” policy of meeting with various African American organizations, in April 1976 he angered many potential black voters by nominating the conservative black economist Thomas Sowell to serve on the Federal Trade Commission. The subsequent firestorm created by his nomination led Sowell to withdraw his name for consideration the following month.20 Besides the Sowell debacle, Gerald Ford’s quest to reach African American voters was impeded by the enduring positive influence in blacks’ minds of such Democratic initiatives as Roosevelt’s New Deal and Johnson’s Great Society. When African Americans overwhelmingly supported the Democratic nominee Jimmy Carter in November, they expected the new president to keep his campaign promises to improve the plight not only of the African American poor but also of African American entrepreneurs. Chapter 8 surveys the Carter administration and its efforts on behalf of African American businesspeople. Although Jimmy Carter has been called “the president who failed” because of his vacillation on a variety of issues,21 his administration’s sustained commitment to minority business enterprise suggests one area of his presidency of which a less strident interpretation is merited. Because of his own background as a businessman, Jimmy Carter gave high priority to minority business enterprise. Some of the accomplishments of his administration in this realm were doubling federal procurement with minority firms and passage of public law 95-507, which directed businesses receiving federal supply and service contracts worth more than $500,000 or construction contracts exceeding $1 million to submit subcontracting plans that included “economically disadvantaged businesses.” In 1979, the Office of Minority Business Enterprise (OMBE) became the Minority Business Development Agency (MBDA), and the renamed agency tried both to stimulate the growth of medium and large

Introduction  9

minority enterprises and to enhance the minority business presence in such growth industries as manufacturing, energy technology, communications, and electronics.22 In addition, the transformation of OMBE to MBDA was a reform measure to address some of the well-documented shortcomings of previous federal government efforts related to black capitalism. But despite the Carter administration’s accomplishments in minority business enterprises, well-publicized scandals associated with minority business setasides in the construction industry, along with its other myriad problems (including the Iranian hostage fiasco), contributed to Jimmy Carter’s losing the 1980 presidential election to the conservative Ronald Reagan. The epilogue is an overview of the Reagan presidency and its aftermath and how black capitalism was transformed into “minority business enterprise.” Finally, I examine the nuances of arguably the most persuasive observations and/or recommendations pertaining to the promotion of black business in America. After winning the presidential election of 1980, Ronald Reagan, who ran on a platform of getting government “off the backs” of the American people, moved quickly to dismantle the vestiges of Lyndon Johnson’s Great Society. But because of Reagan’s own pronounced allegiance to the free-enterprise system, preexisting programs to help black entrepreneurs remained intact. Although these government programs continued untouched during the Reagan years, his Supreme Court nominations subsequently dampened the aspirations of nonwhite entrepreneurs. In 1980, the Supreme Court affirmed the constitutionality of minority business set-asides in the case of Fullilove v. Klutznick.23 In 1989, with the addition of Reagan Supreme Court appointees Sandra Day O’Connor, Antonin Scalia, and Anthony Kennedy, in the case of City of Richmond v. Croson, the Court struck down that city’s program requiring minority contractors to receive a portion of public construction projects.24 Clarence Thomas’s controversial ascension to the Supreme Court in 1991 further solidified its conservative leanings. For instance, in the 1995 case of Adarand Constructors, Inc. v. Pena, Thomas ruled with the majority that the U.S. Transportation Department’s special procurement program for small businesses “owned and controlled by socially and economically disadvantaged individuals” was unconstitutional.25 Even before the negative consequences for black businesses associated with City of Richmond v. Croson and Adarand Constructors, Inc.

10  Introduction

v. Pena, African American entrepreneurs had to contend with the decline of black capitalism and the rise of “minority business enterprise.” Black businesspeople had to compete not only with other native-born nonwhites (and white females) for limited government assistance but also with recently arrived “minority” immigrants.26 While it can be dangerous to compare “victimization,” it is equally clear that persons of African descent born in this country have faced a unique sort of discrimination, if not oppression. For those who claim that history should not influence public policy in postslavery and post–Jim Crow America, Randall Robinson offered the following eloquent rejoinder: No nation can enslave a race of people for hundreds of years, set them free bedraggled and penniless, pit them, without assistance in a hostile environment, against privileged victimizers, and then reasonably expect the gap between the heirs of the two groups to narrow. Lines, begun parallel and left alone, can never touch.27

My study demonstrates that even though these government programs to aid African American entrepreneurship had a mixed record at best, they at least were intended to help ameliorate the economic situation of blacks in this country. More than a generation after the Office of Minority Business Enterprise was created during the Nixon administration, and more than eighty years after the Commerce Department expressed an interest in Negro affairs during the presidency of Calvin Coolidge, black-owned businesses still represent an extremely marginal component of the national economy. Needless to say, the question remains, What can (and should) be done to substantively improve the plight of black business in America? During the chronological period covered in this book, many studies were conducted and many recommendations were produced pertaining to this question. Arguably the best proposal associated with this genre was the 1979 report entitled A New Strategy for Minority Business Enterprise Development produced by Chicago’s Lowry and Associates consulting firm. The report called for a new partnership of the federal government, the private sector, and the African American community based on “different and complementary roles to play.”28 The epilogue concludes with an assessment of how well these three groups have recently performed in African Americans’ historic quest for total participation in the U.S. economy.

1 The Origins of the Commerce Department’s Division of Negro Affairs, 1925–1940

It is widely assumed that President Richard Nixon’s black capitalism initiative represented the first time that the U.S. government had expressed any interest in assisting African American entrepreneurs.1 While Nixon’s domestic agenda for black America received widespread publicity and generated considerable discussion and analysis, the evidence indicates that the government’s interest in promoting black business development actually began during the Coolidge administration. Appropriately, the government agency then in charge of this activity was the Commerce Department. Beginning with the appointment of James A. (“Billboard”) Jackson in November 1927, the Commerce Department’s Division of Negro Affairs established the precedent for later government initiatives to support African American businesspeople. The origins of the Commerce Department’s interest in Negro affairs appears to have been linked to the political influence of black Chicago businessman Claude A. Barnett. Barnett, born on September 16, 1890, in Sanford, Florida, had a long-standing interest in black business development. When he was an undergraduate at Tuskegee Institute, he reportedly served as Booker T. Washington’s office assistant and was permanently affected by his close association with him. As he later wrote, “It was there [Tuskegee Institute] as a boy I virtually sat at the feet of Booker T. Washington and drank in the magic of his strength, his vision, and matchless wisdom.”2 After graduating from Tuskegee, while working full time at the Chicago post office, Barnett organized the Douglass Specialty Company in 1913 as a mail-order firm selling portraits of famous African Americans. Three years later, Barnett was part of a consortium of African American businessmen who established the Chicago-based

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Kashmir Chemical Company to manufacture and distribute a line of African American personal care products.3 But Barnett’s greatest business accomplishment, which occupied the rest of his life, was his founding of the Associated Negro Press (ANP) in 1919. Barnett got the idea for the ANP, an African American version of such mainstream wire services as the Associated Press (AP) and United Press International (UPI), while touring the country promoting Kashmir Chemical Company products in 1918. During numerous meetings with black newspaper owners, he observed the need for a wire service that could provide black papers with pertinent news items from across the United States. After returning to Chicago, Barnett immediately approached Robert Abbott, the publisher of the powerful Chicago Defender, for financial and moral support of his national news service proposal. But Abbott, not interested in such a cooperative venture, refused. Undaunted, Barnett asked the Kashmir Chemical Company’s board of directors for start-up funds for the ANP. Because of Barnett’s position in the company, as well as his offer of extensive advertising space to Kashmir Chemical Company products in ANP member newspapers, the Kashmir board voted to give Barnett the funds he needed to start the Associated Negro Press.4 Even though Barnett realized his dream of establishing a national black news service, he quickly discovered that maintaining this enterprise would be extremely challenging. To participate in the ANP, member newspapers had to provide both stories and payments each week. While most ANP members regularly submitted local stories that were nationally distributed by the ANP, many members were far less diligent in handing over the weekly fees that helped cover the ANP’s operating costs,5 and this prompted Barnett to make a controversial decision. Although during this period many African American newspapers were unabashedly pro-Republican in their coverage of politics, Barnett initially hoped to present the ANP as independent and nonpartisan, but the ANP’s early financial troubles, coupled with the financial and political possibilities associated with openly aligning with the GOP, prompted him to put the ANP at the disposal of the Republican Party.6 Although based on monetary and political considerations, Barnett’s decision also was based on personal inclinations. As Barnett noted later in life, the Republican Party of the early twentieth century “was the only one offering anything to Negroes in the form of jobs, public offices, and legislation.”7

Origins, Division of Negro Affairs, 1925–1940  13

One apparent manifestation of this fact was the aborted presidency of Warren G. Harding. Although the Harding presidency has traditionally been associated with scandal and disgrace, Harding did appear to have a progressive attitude toward American race relations. For instance, during a speech on October 26, 1921, in Birmingham, Alabama, Harding shocked his southern audience by publicly calling for racial equality in American economic and political life.8 Harding’s presidency ended before he could use the power of his office to help bring about the goal articulated in this speech,9 but the reverberations of his message helped create a political climate that ultimately benefited Claude A. Barnett and other black entrepreneurs. By the mid-1920s, because of his promotional efforts on behalf of the GOP, Claude Barnett had personal access to prominent Republican politicians. Accordingly, in November 1925, he used his influence and connections to arrange a meeting with Secretary of Commerce Herbert Hoover to discuss the Commerce Department’s seeming lack of interest in black businesses. As Donald J. Lisio pointed out in his definitive study of Hoover’s relationship with African Americans, before his 1925 meeting with Barnett, Hoover had expressed little sympathy or concern with the plight of African Americans.10 During their meeting, Barnett and Hoover engaged in a spirited discussion concerning what the Commerce Department was and was not doing for black businesspeople. After Barnett asserted that black entrepreneurs were at the bottom of the economic totem pole because the Commerce Department had done nothing to help them, Hoover countered that the Commerce Department regularly published reports that could benefit black businessmen. When Barnett replied that these Commerce Department publications were not written in a style that blacks could easily understand, Hoover sarcastically retorted that these reports were written in English and asked whether blacks spoke a foreign language. At this point, to keep the meeting from descending into unproductive verbal sparring, Barnett asked Hoover to consider appointing a “Negro information specialist” who would help make Commerce Department publications and services more meaningful and relevant to black businesspeople. Barnett further declared that the National Negro Business League, another prominent African American organization with strong ties to the Republican Party, strongly supported such an appointment. Despite Hoover’s initial indifference to Barnett’s suggestion, he

14  Chapter 1

ultimately agreed to make such an appointment if Barnett could find him “the right man.”11 Two relevant external circumstances, along with Barnett’s persuasiveness, prompted Secretary Hoover to consider this proposal. First, as Juliet E. K. Walker and John Sibley Butler observe in their studies of African American business history, the period from 1900 to 1930 could rightly be described as a “golden age” of black business activity. Motivated by a spirit of economic cooperation and coupled with the reality of American apartheid, African American entrepreneurs in a variety of industries were able to establish an impressive number of enterprises.12 Barnett no doubt referred to these accomplishments while making his case for a Commerce Department “Negro information specialist.” Even though Ellis W. Hawley’s seminal 1974 essay “Herbert Hoover, the Commerce Secretariat, and the Vision of an ‘Associative State,’ 1921– 1928” does not mention Hoover’s relationship with African Americans, it does provide another important clue to why Hoover seriously considered Barnett’s proposal. As secretary of commerce, Hoover tried to form a strong working relationship between the federal government and private-sector groups “designed to energize private or local collectivities and guide them toward constructive solutions to national problems.”13 In Hoover’s Commerce Department, one of the principal techniques used to “energize private or local collectivities” was the dissemination of useful information. For instance, Hoover and his Economic Advisory Committee (EAC), which coordinated the September 26, 1921, President’s Conference on Unemployment for the current president, Warren G. Harding, agreed “that the primary role of the national government was to disseminate information, to educate the public so that unemployment could be relieved voluntarily by individual communities.”14 In fact, according to Joan Hoff Wilson, Hoover’s reason for the President’s Conference on Unemployment and the 250 other major conferences that he organized as secretary of commerce was to “pass on to a relatively uninformed public the expertise of his advisors. His American corporate system depended in the last analysis upon voluntary, decentralized implementation of diverse and individual local programs conforming to the general guidelines set by federal experts.”15 The administrative priority that Hoover gave to disseminating authoritative information adds another perspective to his meeting with Claude Barnett. Because of the black business community’s impressive growth during the first decades of the twentieth century, the rational Hoover

Origins, Division of Negro Affairs, 1925–1940  15

could not deny that this was a constituency that could make even greater gains by using the type of information and education promoted by his department. In addition, while Hoover enjoyed a great deal of administrative autonomy as secretary of commerce, which coincided with President Calvin Coolidge’s habit of delegating duties to cabinet officers,16 circumstantial evidence suggests that Coolidge supported Hoover’s decision to consider establishing a special unit for black businesspeople within the Commerce Department. Although Coolidge earned the nickname “Silent Cal” for, among other things, refusing to comment on the Ku Klux Klan’s infamous August 1925 March on Washington,17 he did go on record in June 1924 as someone who was aware of and supported black business development. During remarks as Howard University’s commencement speaker, President Coolidge praised not only African Americans’ literacy gains since Emancipation but also their gains in the realm of business ownership.18 Buoyed by his successful meeting with Secretary Hoover, who had the tacit support of President Coolidge, Barnett began looking for someone to fill this pathbreaking government position. On May 4, 1927, Barnett wrote Secretary Hoover to inform him that “I have the man for the job. He is available now.”19 Barnett’s designee, James A. Jackson (affectionately known as “Billboard”), subsequently became the first U.S. government official to take an active interest in African American business activity. Jackson, born on June 20, 1878, in Bellefonte, Pennsylvania, had a varied professional background that included being Chicago’s first African American bank clerk (while employed by the Jennings Trust Company); working for the “Plant Protection” section of the U.S. Military Intelligence Bureau during World War I; and spending six years (1919 to 1925) with the New York–based Billboard magazine as editor of its Negro Department. Besides acquiring the nickname of Billboard during his tenure at Billboard, Jackson also established wide-ranging contacts in the African American community (which served him well in the Commerce Department). While working for Billboard, Jackson also served as the New York correspondent for Claude Barnett’s Associated Negro Press.20 According to Lawrence D. Hogan, an authority on Claude Barnett and the ANP, Barnett recommended Jackson because he hoped to (and did) use Jackson’s position at Commerce to support the ANP directly.21

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Before Jackson could begin building a new Commerce Department program to provide useful information to black businessmen, he had to subject himself to the sometimes tortuous process associated with securing government employment. Despite his sponsor’s political connections, Jackson, like other aspirants to federal employment, had to take and pass the Civil Service examination.22 Then when Jackson arrived at the Commerce Department on November 15, 1927, to commence his duties, he immediately had to deal with problems regarding the paperwork for his employment. First, Jackson discovered that the Commerce Department had sent him a letter, which he never received, stating that he should report for work on December 1, 1927, so when Jackson showed up two weeks early, no one seemed prepared (or interested) in meeting with him. As Jackson revealed in a November 15, 1927, letter to Claude Barnett regarding his disastrous first day, “everybody seemed somewhat chagrined at my presence.”23 After his rather inauspicious debut, Jackson returned on November 17 and met with Gorton James, head of the Domestic Commerce Division of the Commerce Department. James told Jackson that because he (Jackson) was not filling a “routine” appointment, certifying his dossier had proved to be more complicated and drawn out than usual. Nevertheless, James promised Jackson that he would help cut through the red tape by assuming the responsibility of putting Jackson to work immediately (pending the final certification of his application materials). Nonetheless, reflecting Jackson’s “peripheral” status in the Commerce Department, James told Jackson that his office would be in the old Railway Administration Building.24 The next day, Jackson visited his office, room 722 of the old Railway Administration Building, for the first time. His description of this event, which he recounted in a November 18, 1927, letter to Claude Barnett, included the following: The room was empty save for the things being placed for me. A woman clerk of the statistical service of the Customs bureau had been moved out two weeks ago. While engaged in this moving a messenger learned that a Negro was to occupy the room and was told that “No, it is not a Negro, but a dark-skinned foreigner is to be placed there.”25

In a city and a federal bureaucracy that practiced racial segregation and discrimination, Jackson’s racial heritage apparently had to be camouflaged to avoid overt white criticism.26

Origins, Division of Negro Affairs, 1925–1940  17

Within a few days after settling in his office, Jackson, to his credit, appeared anxious about providing pertinent information to African American businesspeople. In a letter dated November 21, 1927, Jackson informed Barnett that he needed his help in publicizing Jackson’s new position so “we may get a prompt response from Negro business in the way of information and inquiries.”27 Jackson continued, “May I ask in this connection that you have your office furnish me with as many addresses as is possible of associations, business concerns, colleges teaching business and interested individuals to whom we may send a letter announcing the establishment of the new service?”28 Just as Jackson finished this letter to his sponsor, he received a copy of the Commerce Department’s November 21, 1927, Daily Bulletin, which he likewise forwarded to Barnett. Although this document officially cited Jackson’s Commerce Department appointment, it listed him as an “assistant business specialist” rather than a “commercial agent” (the position for which he took and passed the Civil Service exam).29 In a memo attached to the Daily Bulletin, Jackson offered the following analysis: In spite of the examination for Commercial agent and apparent appointment to that place in the regular register where I would remain even tho [sic] this particular work was not continued, I have been appointed as a “Assistant Business specialist.” It must be remembered, in this connection that any special titles are at option of the department head and expire with a discontinuance of the special work for which they were created. It is a nice joker that serves to keep a Negro out of the rating expected. Incidentally it removes the assurance of stability that was anticipated.30

Barnett first responded to Jackson’s problems by declaring in a November 22, 1927, letter: “It is funny how those suckers work.”31 However, in another letter written the following day, Barnett emphasized the positive aspects of Jackson’s situation, noting, “Well at least the first hurdle is over. You are working and are dignified with an office of your own. So far so good. Now, as to your designation. It sounds a bit more impressive than plain Commercial Agent.”32 Still, Barnett assured Jackson that he would investigate the exact Civil Service status of assistant business specialist, and if there were serious problems, Barnett promised to speak with Commerce Department officials.33

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Besides facing issues related to his official title and status, Jackson and the Commerce Department were soon at odds regarding how his appointment would be publicized. Jackson wanted widespread publicity concerning his duties to inform the African American business community of his office’s existence. Conversely, Commerce Department officials, fearing possible negative repercussions for soon-to-be presidential candidate Herbert Hoover in an upcoming election year, did not want to publicize Jackson’s pathbreaking appointment. Instead, they preferred to take a low-key approach, implying that Jackson’s appointment was just a routine expansion of the Domestic Commerce Bureau’s mission.34 Despite Jackson’s rather unsettling first weeks on the job, the issue of his official title did reach quick resolution. In a November 26, 1927, letter to Barnett, Jackson informed him that the question of his “designation” had been settled as follows: “It seems now my title is to be Special Agent, according to Mr. [Gorton] James who states that distinction is made between those engaged in American work while Commercial agent is reserved for the Foreign staff.”35 Although the Commerce Department felt that it was in its best political interest to keep Jackson’s appointment under wraps, the ever wily Claude Barnett found a way to publicize Jackson’s appointment. He asked C. C. Spaulding, president of the North Carolina Mutual Life Insurance Company and a member of the National Negro Business League’s Executive Committee, to write Secretary Hoover a congratulatory letter regarding Jackson’s appointment and to urge Hoover to send Jackson to an important meeting of African American businessmen to be held in Durham, North Carolina, from December 7 to 9, 1927.36 Because of Hoover’s growing respect for the National Negro Business League, which was an outcome of his 1925 meeting with Claude Barnett, he subsequently endorsed Jackson’s December 1927 trip to Durham.37 The Durham Fact Finding Conference, the venue for Jackson’s debut as a Commerce Department official, was an event, according to its promotional material, that dealt frankly with the following eight issues: (1) the business organizations of the Negro, (2) the health condition of the race, (3) the religious progress of the race, (4) the political progress of the race, (5) his general status as a citizen of this country, (6) insurance (fraternal, mutual, life), (7) educational progress, [and] (8) relations to Negro people everywhere.38 In keeping with this tone of frankness, Jackson’s remarks provided considerable “food for thought” for the businessmen assembled.

Origins, Division of Negro Affairs, 1925–1940  19

Early on, after providing an overview of Commerce Department services for businessmen, which included access to market research and studies of retail market problems, Jackson bluntly told his audience: There has been a steady effort on the part of the Bureau to familiarize the country with these services through the medium of public announcement, the publication of pamphlets and mimeographed sheets and the distribution of bound books. That few of these have reached the group addressed is not a matter of Bureau negligence, but because you have not asked for them, and because your associations, specialists and schools have not communicated their needs to the Government.39

He went on to note, with dismay, that besides the National Negro Business League, “no Negro association or organization is listed among the many thousand associations with which the Bureau has established contact for the purpose of cooperating for business betterment.”40 In seeking to ascertain why African American businesspeople did not avail themselves of services offered by the Commerce Department, Jackson offered the following historically based explanation: Of course it is realized that pretty generally we have always feared reporting to government agencies. The tribulations of our fathers has instilled in us a traditional hesitancy about “Messin” with the authorities. Time was when the law was regarded as a menace rather than a help, when our conception of all authority was encompassed in what we termed “John Law,” a fearsome spectacle which meant trouble spelled in large letters.41

Then in a subtle reference to his recent appointment in the Commerce Department, he commented, We have been slow to appreciate the many constructive and helpful forces of government. Let us hope that a new era has dawned, and that this big fact about our government will become more widely known. The vision of “John Law” must not be permitted to obscure service and progress.42

By early 1928, perhaps owing to the positive response to Jackson’s remarks in Durham, the Commerce Department appeared to back away from its early intention not to publicize Jackson’s appointment.

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For instance, in a letter to Claude Barnett on February 18, 1928, Jackson asked him for the convention dates of prominent African American organizations because “I have tentative approval for a trip to several I have mentioned to the Bureau that take place in April.”43 This request suggests that James A. Jackson’s rising profile in the Department of Commerce and Herbert Hoover’s growing awareness of and sensitivity to issues of racial fairness were linked. By 1928, Hoover had progressed considerably since his unpleasant 1925 meeting with Claude Barnett. For instance, Hoover’s coordination of relief efforts during the disastrous Mississippi River flood of 1927 had given him a bird’s-eye view of the nuances of Jim Crow racial segregation. In fact, Hoover was so moved by the racial inequities he witnessed in the Mississippi Delta that he developed a proposal for a land redevelopment corporation in which huge amounts of prime land in the delta would be sold at nominal rates to poor black farmers. Unfortunately, though, this initiative never secured the necessary funding.44 Another Hoover race-related action, which became an issue during the presidential campaign of 1928, was his March 31, 1928, decision to discontinue racial segregation in the Commerce Department’s offices. The reaction of southern Democrats was swift and vociferous. Senator Thomas Heflin of Alabama declared on the floor of the Senate that God supported racial segregation and that “you have no business, Mr. Hoover, to undertake to interfere with the handiwork of the Almighty.”45 While Hoover’s actions clearly alienated many white southerners, they elicited the enthusiastic support of African American voters. Moreover, because the Democrats ultimately nominated a northern Catholic (Al Smith) as their 1928 presidential candidate, many southern Democrats, whose religious inclinations could be described as “Bible-Belt Protestantism,” did not vote for their party’s standard-bearer. In fact, Hoover’s decisive victory in November included five states—Texas, Florida, Virginia, Tennessee, and North Carolina—that were normally counted in the ranks of the Democratic Party’s “Solid South.”46 Shortly after Hoover’s inauguration, Barnett, who had served as secretary of the publicity committee of the GOP’s “Colored Voters Division” during the 1928 campaign,47 made an intriguing, if not controversial, “quid pro quo” offer to the new Hoover administration. On May 21, 1929, Barnett wrote to George Akerson, President Hoover’s personal secretary, asking for Akerson’s (and presumably Hoover’s) reaction to a proposal to use the Associated Negro Press to continually generate

Origins, Division of Negro Affairs, 1925–1940  21

positive news coverage of the Hoover White House.48 In return, Barnett proposed, “If you can suggest to half a dozen national advertisers who are your friends that they include in their schedules the Negro group of papers, you will be performing one of the finest services possible for the Negro press.”49 Significantly, Barnett’s letter and memo to Akerson also included promotional material of the Associated Publishers Representatives (APR), a group that Barnett had helped organize in 1928 to approach white corporations about advertising in black newspapers.50 Despite the ever entrepreneurial Claude Barnett’s wheeling and dealing with the Hoover administration, James A. Jackson’s actions achieved greater visibility and praise. In his first year and an half on the job, the energetic Jackson promoted the work of his office in a number of venues. A July 11, 1929, memo from Frank M. Surface, assistant director in charge of domestic commerce, to Robert P. Lamont, President Hoover’s secretary of commerce, elaborated on Jackson’s work: Since joining the Bureau, Mr. Jackson has placed nearly 30,000 inches of informational copy in 60 daily newspapers in English, more than 50 foreign-language newspapers, 12 magazines, and 112 Negro weeklies. . . . Mr. Jackson learned very soon that addresses, with the opportunity they afford for letting the public ask questions, were an effective means of inculcating better merchandising practices. In the last year and a half he has delivered 111 addresses in 43 states, to audiences aggregating over 20,000 people. In addition, two radio talks have been given.51

Surface concluded his report by noting “numerous hearty endorsements of the work Mr. Jackson is doing and the benefits it is bringing to small retailers have been received from different parts of the country. His work has contributed considerably to the increased number of inquiries coming into the Domestic Commerce Division.”52 Jackson was just as busy during the 1929–1930 fiscal year. Between July 1, 1929, and June 30, 1930, he traveled 18,911 miles visiting thirtyfour cities to make eighty-four presentations to 29,064 individuals. In addition, during the 154 days he spent away from home and his office, he conducted 243 individual interviews on matters related to business.53 When Jackson was in his Washington, D.C., office, he conducted 141 office interviews with visitors from forty-six cities and received sixtyeight inquiries requiring research, thirty-four of which he handled himself. Finally, a total of 1,017 letters passed in and out of his office dur-

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ing the 1929–1930 fiscal year.54 As the July 25, 1930, issue of Pacific Defender asserted in an article about Jackson’s activities, “A number of very tangible and definite advances have grown out of the helps that the Department of Commerce have advanced to the group through this busy little office.”55 The primary message that Jackson presented to the black business community in the various venues he used was that of self-help. He also urged his audiences to view his office as a means by which black entrepreneurs could better help themselves. His encore appearance at the second Durham Fact-Finding Conference, convened from April 17 to 19, 1929, provided a clear example of Jackson’s conservatism. He began his presentation, entitled “Don’t’s and Do’s for the Business Man,” by telling his audience that “the Negro has reached a period in his development where the general public is looking to him to assume full responsibility for his well being.”56 Considering this new reality, one challenge facing the black business community was figuring out how to expand their enterprises so that they could employ more black workers. To do this, black businessmen had to be much more professional in how they conducted their business. Yet as Jackson noted in his comments, many of the black businessmen he observed during his travels were not up to the task. Among other things, he asserted that “it is with regret that I must admit that many of the stores I have visited were downright sloppy. Windows were dirty, the stock displayed therein was specked and tattered, the floors were strewn with trash.” Furthermore, he lamented that in some instances, the owners of substandard black commercial establishments were as “repulsive and untidy than need be a person employed in the lowliest form of unskilled labor.”57 Jackson was characteristically blunt in his analysis of black business and also took African American consumers to task. He cited a report from the president of the National Negro Banker’s Association stating that the average deposit in member banks was only slightly more than $70, compared with an average deposit of approximately $365 in all American banks. Moreover, according to Jackson, “in the larger cities, especially, much of that larger figure is the money of Negroes which ought to be made available for their businessmen.”58 Even though Jackson decried the tendency of black consumers to patronize nonblack enterprises, he did not espouse an unequivocal “buy black” policy for black consumers. Instead, he reasonably implied that black businesses had to earn the patronage of black consumers and that

Origins, Division of Negro Affairs, 1925–1940  23

the best way black businesses could do this was to take advantage of the services his office provided. One group of African American businessmen who wholeheartedly embraced Jackson’s message of business efficiency (and elicited his active support) were black grocers associated with the Colored Merchants Association (CMA) movement. The CMA, which began in Montgomery, Alabama, in 1928 and quickly spread across the country, consciously sought to earn African American consumer support by using the power of collective endeavor. Specifically, the cooperative purchasing of merchandise and advertising by CMA grocers resulted in lower operating costs, and the savings allowed CMA merchants to offer black consumers high-quality products at competitive prices.59 The Colored Merchants Association paralleled a similar movement by its white counterparts. With the rise of chain stores during the 1920s, most notably the Great Atlantic & Pacific Tea Company (A&P), many small white retailers responded by improving their customer service and quality of goods, as well as establishing voluntary chains to take advantage of volume discounts.60 The person responsible for transforming the CMA from a local organization into a national phenomenon was Albon L. Holsey, the secretary of the National Negro Business League. After working to organize CMA chapters across the country, Holsey organized weekly information meetings in which local CMA members could learn from black and white experts about merchandising, marketing, and overall business principles. One of the persons on whom Holsey relied to educate CMA members was James A. Jackson.61 In an April 1, 1930, letter to Jackson, Holsey described how Jackson could help the CMA movement. Besides asking him to include talks to CMA members (on such issues as waste elimination and cost control) in his Commerce Department travel itinerary, Holsey requested that Jackson call on “individual store-keepers who have not yet joined the association.”62 Holsey apparently hoped to use Jackson’s stature as a government official to help recruit members for the Colored Merchants Association. Along with offering direct information to individual black businessmen and organizations such as the CMA, Jackson compiled data on black businesses for the Commerce Department’s files. As Jackson noted in his first public address in Durham, the U.S. government’s lack of substantive information about African American economic development had

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negative ramifications for the black business community, which was why Jackson gave high priority to documenting black America’s economic life. For instance, in a December 1, 1930, report sent to the White House, Jackson provided detailed information about African American entrepreneurial activities: eighteen national trade and professional organizations (such as the National Negro Life Insurance Association and the National Negro Builders Association), eight professional organizations (including the National Association of Teachers in Colored Schools and the National Negro Bar Association), seven industrial and craft organizations (including the Brotherhood of Sleeping Car Porters and Maids and the National Association of Colored Waiters and Hotel Employees), and four automobile associations (including the National Motorists Association and the Co-operative Motorists Association).63 He then observed: “In addition to the foregoing there are 4 tri-State and 34 commercial organizations: and 65 local bodies of business character are found in 25 different communities. There are 6 National Civic Organizations and 59 local civic bodies located in 46 towns and cities.”64 Besides surveying national, state, and local African American organizations, Jackson’s December 1, 1930, report examined black efforts in specific industries, including the Negro Baseball Leagues, African American newspapers and magazines, African American manufacturers, African American retailers, African American hotel owners, and African American banks.65 Consequently, within three years of joining the Commerce Department, Jackson had laid most of the groundwork for the ongoing inclusion of information about black-owned enterprises in the database of American business. Notwithstanding “Billboard” Jackson’s pioneering efforts on behalf of black-owned businesses, the evidence suggests that he was not taken completely seriously by the Hoover administration. For instance, a September 18, 1930, telegram from President Hoover to John J. Jackson asking him to extend special greetings on his (Hoover’s) behalf to the annual meeting of the National Negro Bankers Association indicates that Hoover [or whoever sent the invitation] did not even know Jackson’s name.66 Even before the Hoover administration subtly insulted Jackson by forgetting his name, in the aftermath of the election of 1928 Hoover insulted the African American Republicans who helped him get elected. Encouraged by his surprise showing in the South, Hoover and his aides

Origins, Division of Negro Affairs, 1925–1940  25

sought to solidify GOP gains there by making the party more appealing to southern whites. As one historian described this process, “This policy required purging black Republicans from leadership positions in the southern wing of the G.O.P. and replacing them with respectable, business-oriented southern whites.”67 Predictably, this maneuver generated widespread protest from African Americans across the country.68 Hoover touched off a second wave of African American protest when he nominated Federal Judge John J. Parker of North Carolina to the Supreme Court. In response, the NAACP, along with many other black individuals and organizations, attacked Parker, who had declared while running for governor of North Carolina in 1920 that black political participation was a “source of evil and danger to both races.”69 Even Hoover’s closest black adviser, Dr. Robert Moton, president of both the Tuskegee Institute and the National Negro Business League, strongly urged Hoover to withdraw the Parker nomination.70 In the end, Hoover proceeded, only to see the nomination go down in humiliating defeat during the spring of 1930. Significantly, the black community’s successful mobilization against a Republican presidential administration sent the clear message that the “party of Lincoln” could no longer automatically count on African American political support.71 Although Jackson’s personal feelings concerning the Judge Parker debacle are not known, it is clear that Jackson felt a certain loyalty to Hoover and tried to help his administration in any way he could. For example, in May 1931, Jackson requested an autographed photograph of President Hoover to be placed prominently in his office.72 This, among other things, would clearly indicate to black visitors the connection between Hoover and Jackson’s popular activities. Jackson also played an active role on Hoover’s behalf during in the presidential campaign of 1932. Because of the worsening Great Depression, Hoover’s 1932 campaign was an uphill battle. In addition, because Hoover had alienated many African Americans, he could not automatically count on this traditional bloc of voters on election day. Accordingly, Jackson and other black Hoover supporters had the daunting task of rehabilitating Hoover’s image among African Americans. One example of Jackson’s efforts on behalf of Hoover brought him (Jackson) in conflict with the NAACP. In its ongoing denunciation of Herbert Hoover, the NAACP charged his administration with discriminating against black workers seeking employment with government-sponsored work projects. Jackson’s September 13, 1932, memo to Walter Newton,

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Hoover’s personal secretary, attached an article from the September 10, 1932, issue of the Greenville (Mississippi) Leader. This article, entitled “1000 Sign Up for River Work,” noted that blacks would comprise the majority of the workforce in this government-sponsored reclamation project on the Mississippi River. Jackson suggested to Newton that “the story attached might be sent to the Capitol News Service in Washington and the Associated Negro Press, Chicago for nationwide distribution on its news merits. Its implications will be tremendously valuable.”73 Because James A. Jackson was a government official whose position grew out of a 1925 meeting between Herbert Hoover and Claude A. Barnett, he had a personal vested interest in supporting the Hoover administration. But for other black Republicans not so situated, some of Hoover’s actions as president made it difficult for them to unequivocally support him in 1932. Albon Holsey offers an illuminating case study of such persons. On July 8, 1932, Holsey sent a brief cover letter to Walter Newton along with a copy of a letter sent on the same day to Walter F. Brown, Hoover’s postmaster general. Holsey concluded by telling Newton that “I hope you will convey my respects to the President and assure him that I am most anxious to cooperate in every way that I can to advance the best interests of our party.”74 Nevertheless, Holsey’s letter to Brown raised the following concern: Because of my relationship with the Colored Voters Division in 1928, and because of my work in connection with the National Negro Business League and the C.M.A. Stores Movement, I am expected on various occasions to express an opinion concerning the Republican Party’s attitude toward the Negro  .  .  . would you give me some word of assurance that there is no change in our party’s attitude toward the Negro. . . . My only motive in making this unusual request of you is that I am most anxious to speak with confidence when I publicly state that the Negro can continue his loyalty to our party.75

Although we do not have Brown’s response to Holsey’s letter, the available evidence indicates that deep into the campaign, Holsey had lingering doubts about Hoover’s relationship with blacks. In a October 12, 1932, letter to Francis E. Rivers, head of the “Colored Division” of the Republican National Committee, Holsey lamented: “I confess that during the past few months many incidents have occurred which have

Origins, Division of Negro Affairs, 1925–1940  27

tended to shake the confidence of the Negro in the attitude of the Republican administration toward them.” On a positive note, Holsey did cite “the presence of a Negro [James A. Jackson] in the United States Department of Commerce,” which he had recently described in Opportunity magazine as “one of the most important federal appointments for the Negro which has been made since Emancipation.” Furthermore, because of Jackson’s accomplishments, including his assistance of “the National Negro Business League in its program for the development of cooperative merchandising activities,” Holsey ultimately concluded that “in spite of the conditions set forth at the beginning of this letter, I am going to remain steadfast and support Mr. Hoover for re-election.”76 Holsey’s and Jackson’s support for Herbert Hoover (and the Republican Party) appeared to be clearly linked to class considerations. Unlike the black masses who were especially hard-hit by the worsening depression, middle-class blacks like Albon Holsey and James A. Jackson were relatively insulated from the worst effects of this economic downturn. Thus, while Albon Holsey may have felt some psychological discomfort concerning Hoover’s apparent indifference to blacks, the black masses experienced both psychological and financial discomfort. Accordingly, working-class African Americans, as Nancy Weiss noted in Farewell to the Party of Lincoln: Black Politics in the Age of FDR, became increasingly receptive to Roosevelt’s proposed “New Deal” (aimed specifically at helping working-class Americans of all races). Moreover, as she asserted in a chapter entitled “Why Blacks Became Democrats,” despite Roosevelt’s personal racism, the inequitable distribution (based on race) of New Deal public assistance and the virulent racism of the larger Democratic Party, by 1936 the perceived self-interest of the African American masses prompted them to abandon the GOP.77 Although the 1936 presidential election witnessed a massive African American exodus from the Republican Party, it was the 1932 campaign that set the stage for this watershed political development. While working-class (nonentrepreneurial) blacks may have, with Albon Holsey, applauded James A. Jackson’s presence in the Commerce Department, this was not enough to erase the negatives associated with the Hoover presidency. Therefore, many black working-class voters, along with a sizable number of their white counterparts, felt it was in their self-interest to vote Hoover out of office. Thus, one of the consequences of the presidential election of 1932 was that both Herbert Hoover and James A. Jackson joined the ranks of unemployed Americans.

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On July 1, 1933, Jackson received a Department of Commerce memo informing him that “in view of a reduction in force in the Bureau, the Department will, upon approval of your separation rating by the Civil Service Commission, terminate your services, effective at the close of business on July 15, 1933.”78 While Jackson’s termination may have been publicly portrayed as part of a perfunctory staff reduction related to the reorganization of the federal government, it also is reasonable to assume that his close political association with the deposed Hoover administration contributed to his discharge from federal employment. Because of the goodwill that “Billboard” Jackson generated while working for the Commerce Department, his dismissal elicited an immediate and concerned reaction from the black business community. Within a week of Jackson’s termination, James B. Blayton, president of the Atlanta Negro Chamber of Commerce, urged Daniel C. Roper (Roosevelt’s secretary of commerce) to “re-instate him [Jackson] or some other Negro when the Department is again fully re-organized.”79 Even before the dismissal of James A. Jackson, African Americans had raised concerns about their treatment in the new Roosevelt administration. On April 15, 1933, the National Urban League (NUL) sent a memorandum to the president outlining how the Depression was disproportionately affecting blacks. The NUL also sought assurances that Roosevelt’s proposed New Deal would also help African Americans.80 In an April 27, 1933, response, Roosevelt’s secretary of labor, Francis Perkins, assured the NUL’s executive director, Eugene Kinckle Jones, that “we shall not forget the special problems of more than ten million people who belong to your race.” And in an apparent attempt to assuage the influential NUL and its leader, the Roosevelt administration later designated Jones to replace James A. Jackson in the Commerce Department.81 Eugene Kinckle Jones’s October 1933 appointment as the Negro affairs specialist in the Commerce Department coincided with the Roosevelt administration’s appointment of other African Americans to governmental posts. Besides Jones, Forrester B. Washington’s appointment as the racial adviser in the Federal Emergency Relief Administration and Mary McLeod Bethune’s designation as the director of Negro affairs for the National Youth Administration represented the cornerstone of FDR’s famous “black cabinet.”82 Although the Commerce Department moved relatively quickly to rehire someone to preside over Negro affairs, it took James A. Jackson,

Origins, Division of Negro Affairs, 1925–1940  29

the architect of this program, much longer to find commensurate work. A letter from former Commerce Department official Julius Klein to Claude A. Barnett, dated January 8, 1934, included the following discouraging news: “I have been trying for some months to find a desirable opening for our good friend, Jackson, but thus far without success. It seems a pity that splendid experience and ability of his type should not be utilized in times such as these.”83 Two months later, Jackson, apparently desperate, contacted former President Hoover seeking his assistance. Jackson wrote this March 31, 1934, letter on the stationery of the Harlem Business, Professional, and Consumers’ Association which listed him as the organization’s executive secretary. But as Jackson told Hoover, “Since September, I have been in New York, and for the past few months have been the Executive Secretary of this organization . . . the position has been without remuneration and is about to fold up.”84 After citing his previous service to Hoover, as well as his unsuccessful search for employment, Jackson asked the former president for help in securing a politically related position in New York. To buttress his request, Jackson contended that such employment would allow the GOP “to avail themselves of my connections with the Negro press, and the many organizations with which I am affiliated.”85 In his April 5, 1934, reply, after acknowledging that “I had heard that you had been so unjustly removed from work in which you were doing such service,”86 Hoover told Jackson, “I have nothing in mind at the moment but I will give it my earnest attention.”87 Nonetheless, because of his skills and connections, Jackson ultimately joined Esso Standard Oil as a special representative to the black community. In this position, “Billboard” quickly made his mark in both the company and the national marketing community. By the mid-1940s, James A. Jackson was the first and only African American member of the American Marketing Society, and he also retained ties to the Commerce Department program he started. When one of his successors, Emmer Martin Lancaster, developed the concept of a National Advisory Committee on Negro Business in 1940, “Billboard” Jackson was one of the first persons that Lancaster contacted.88 Although Jackson’s 1933 departure from the Commerce Department appeared as inauspicious as his 1927 arrival, his six-year tenure represents an important milestone in African American business history. Granted, Jackson’s actions did not generate direct financial assistance to black entrepreneurs associated with such later government initiatives

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as Richard M. Nixon’s Office of Minority Business Enterprise (OMBE). Nevertheless, at least conceptually, all subsequent U. S. government programs aimed at assisting black entrepreneurs grew out of Jackson’s pioneering efforts as a “Negro information specialist.” When Eugene Kinckle Jones assumed Jackson’s old position on October 19, 1933, he, unlike Jackson, did not have to create a program from scratch. Moreover, Jones, drawing on his own background and skills, expanded Jackson’s framework and ultimately gave the Commerce Department’s Negro affairs program additional visibility. Jones, born on July 30, 1885, in Richmond, Virginia, had a distinguished background before joining the Commerce Department. Besides serving as the executive director of the National Urban League since 1911, Jones was one of the founders of the Alpha Phi Alpha fraternity, the oldest African American fraternity.89 From a bureaucratic standpoint, one of the early highlights of Jones’s tenure in the Commerce Department was a change in his title from “special agent” to “adviser on Negro affairs.” In addition, as noted in a November 17, 1933, document entitled “Plan of Work of the Advisor on Negro Affairs to the Department of Commerce,” Jones also presided over a distinct Division of Negro Affairs.90 This, among other things, gave Jones a clearer sense than Jackson had had of institutional “identity.” Perhaps ironically, the Commerce Department’s new Division of Negro Affairs not only continued Jackson’s efforts to support black businessmen but also helped white businesses seeking to make inroads into the increasingly important Negro market. For example, Jones’s brief essay entitled “Purchasing Power of Negroes in the U.S. Estimated at Two Billion Dollars,” published in the January 10, 1935, issue of Domestic Commerce, appears to be aimed at a wider audience than African American entrepreneurs. Citing Paul K. Edwards’s important 1932 book The Southern Urban Negro as a Consumer, Jones provided the following information: Enterprising business along many lines might do well to explore the American Negro market for expansion. The annual purchasing power of approximately 890,000 Negroes in the South’s 17 largest cities has been estimated at $308,000,000. This is most significant when compared with the nation’s 1929 export trade of $224,619,486 with Mexico and all of Central America, $208,969,847 with the West Indies and the Bermudas, and $374,851,619 with Argentina, Brazil, and Chile.91

Origins, Division of Negro Affairs, 1925–1940  31

Besides acknowledging research related to black urban consumers, Jones also urged his readers not to ignore the potential profits associated with marketing to rural blacks: The Southern Negro farmer last year produced crops valued at $664,000,000, of which $119,000,000 represents [the] value of crops produced by Negro farm owners whose farm implements and machinery were valued, in 1930, at $19,784,411. Here is a market in itself for farm implements, seed and fertilizer larger than this figure suggests[,] for there are 305,942 colored farmers other than croppers. These cash and share tenant farmers make their purchases direct, not depending upon their landlords for materials.92

Another way in which Jones’s Negro Affairs Division sought to assist businesses seeking more black customers was the 1936 publication The Negro in Business. Relying on the expertise of Ira D. A. Reid, then director of research for the National Urban League, and Dorothy Porter of the Howard University library, Jones’s office produced an extensive bibliography showcasing black America’s economic life. In this publication’s foreword, Jones stated that he expected this publication would be useful not only to scholars and students but also to “persons interested in exploring the Negro market for increased sales.”93 Although many companies undoubtedly found such information useful, this distribution of information about black consumers by the Commerce Department’s Division of Negro Affairs raised (still relevant) questions about how much the federal government can (and will) support the business aspirations of a particular racial or ethnic group. From the standpoint of 1930s black entrepreneurs, forced by social custom to cater exclusively to black consumers, it must have been unsettling to see a government office, ostensibly established for their benefit, encouraging white corporations to seek opportunities in the Negro market. Conversely, how realistic was (is) it to expect the federal government to promote or enforce a “protected market” for African American entrepreneurs in a free-market economy? These inherent tensions, related to the African American consumer market and what can and should be done for African American entrepreneurs by the federal government, represent one of the major themes of twentieth-century African American business history.

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Although Jones, unlike his predecessor, included promoting the Negro market to white companies in his definition of Negro affairs, both he and Jackson gave precedence to gathering information about black business in America. One of Jones’s most important investigative studies was the 1936 report Negro Chambers of Commerce. Questionnaires distributed to local black business organizations across the country generated the data for this work.94 Besides documenting the geographic location and size of local black business organizations, Negro Chambers of Commerce examined the membership base and activities of these organizations. Predictably, black chambers of commerce tended to predominate in those cities and states that had significant African American populations. In size, the smallest had fewer than twenty-five members, and the largest had 550 members.95 Negro Chambers of Commerce’s survey of the membership bases of local black business organizations offered a useful window through which to view the diversity of black economic activity during the mid1930s. Practically all of the Negro chambers reported the membership of dentists, doctors, lawyers, ministers, teachers; and the owners and operators of barber shops, beauty parlors, drug stores, laundries, printing and engraving establishments, tailoring shops, retail and wholesale merchants, and the executives of insurance companies and newspapers.  .  .  . More than onehalf of the Negro chambers of commerce reported that the owners and operators of automobile sales and repair shops, confectionaries, news stands, shoe repair shops, and taxicab and bus lines were included in their membership. . . . One-fourth of the Negro chambers of commerce reported the membership of owners and operators of amusement parks, bakeries, banks and bonding houses, business schools, commercial employment agencies, construction companies and theaters. . . . Some Negro chambers of commerce reported that owners and operators of cemeteries, dancing schools, farms, hospitals, liquor stores, certified public accountants, nurses, and stenographers were members of their organization.96

In regard to what local black business organizations were doing, Negro Chambers of Commerce revealed that these groups were trying to help both their members and the larger community. For instance, “improvement of business methods has been sought by motivating cooperative advertising campaigns, cooperative buying associations, and by

Origins, Division of Negro Affairs, 1925–1940  33

imparting, either by lectures or bulletins, information relative to the proper methods of accounting, advertising, credit extension, and marketing.”97 Similarly, when asked what kinds of civic activities local Negro chambers of commerce were involved in, the responses were “We have procured a twenty bed Negro hospital and a vote on a thirty thousand dollar bond issue for Negro schools”; “We established a day nursery and park facilities”; “We have presented Negro orchestras, put Negro books by Negro authors in the libraries, and contributed to the welfare bureau”; “Obtained a more equitable distribution of relief work, improvement in the high school situation, better treatment at the hands of peace officers, and a comfort station for our group.”98 Perhaps the most serious concern expressed by the Commerce Department in Negro Chambers of Commerce was that very few of the chambers surveyed made use of the Commerce Department’s services, noting that “only four of the twenty-one Negro chambers of commerce [that submitted completed questionnaires] had made use of a District or Cooperative Office of the Bureau of Foreign and Domestic Commerce and only three had made use of the Division of Negro Affairs in the Bureau.”99 This was especially disturbing because as James A. Jackson had done, Eugene Kinckle Jones spent a great deal of time making presentations regarding the Commerce Department’s Division of Negro Affairs and what it could offer black businesspeople. For example, in his “Summary of Work” report for the period between April 1 and June 30, 1935, Jones declared that in the ninety-one public addresses he delivered since his appointment, “at every available opportunity, in conferences and when addressing public gatherings, the services offered by the Department of Commerce through the Washington and District offices were presented.”100 Despite Jackson’s and Jones’s efforts, a significant cross section of 1930s black businesspeople failed to take advantage of the services available to them at the Department of Commerce. It may well have been that before the civil rights movement in the midtwentieth century, many blacks did not trust anything associated with Washington, D.C. One way in which Eugene Kinckle Jones sought to make the Commerce Department’s Division of Negro Affairs more visible was his involvement with the 1936 Texas Centennial Exposition. As chairman of the committee responsible for developing a “Negro exhibition,” Jones used the opportunity to spotlight his office as well as African American achievement in both Texas and across the nation.

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This exhibition, housed in its own building, opened in Dallas on June 19, 1936, and had six sections: (1) aesthetics (black accomplishments in art, sculpture, music, etc.), (2) health (black hospitals, physicians, surgeons, nurses, etc.), (3) education (black educational institutions and black educators), (4) agriculture (African American extension work and laboratory research), (5) mechanical arts (black inventors, architects, and contractors), and (6) statistics of progress (descriptions of black business activity and home ownership). In addition, the lobby entrance to the exhibition featured four murals, three portraying black progress and the fourth offering a symbolic representation of the black explorer Estevanico.101 In his Commerce Department’s “Summary of Work” report, in reference to the Texas Centennial Exposition’s Negro exhibition, Jones proudly asserted that “many say [it is] the most representative exhibit of Negro life ever assembled under one roof. On the opening day, between noon and midnight, 11,977 persons viewed the exhibit and since that day there has been a steady stream of visitors—the attendance being equally divided between white and colored individuals.”102 In Jones’s October 9, 1936, quarterly Commerce Department report, which summarized the period from July 1 to September 30, 1936, he offered more details about his office’s association with the Texas Centennial Exposition. Among other things, the Division of Negro Affairs created and distributed 25,000 copies of a pamphlet entitled “A Selected List of Books by and about the Negro” to visitors to the Negro exhibition; prepared descriptive statements related to various aspects of the exhibition, which were mimeographed and given to visitors; trained sixty-five National Youth Administration (NYA) workers to serve as supplementary tour guides for the Negro exhibition; and continually publicized the Texas Centennial Exposition’s Negro exhibition in both the mainstream and black press.103 As of September 30, 1936, more than 275,000 visitors had seen the Division of Negro Affairs’ handiwork. After the Texas Centennial Exposition closed, Jones stated that his office hoped to compile a detailed report on how the Negro exhibition was put together. Jones’s October 9, 1936, quarterly self-assessment of the Division of Negro Affairs asserted that the Negro exhibition report “will be printed for careful distribution in circles where the information will be helpful in future exhibits of this type.” Finally, Jones proudly mentioned that “a special committee from the 1939 New York World’s Fair authorities visited the building in Dallas and seemed to be much impressed.”104

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Besides his work with the Texas Centennial Exposition, an examination of Jones’s surviving “Summary of Work” reports submitted to Commerce Secretary Daniel C. Roper reveal his and his division’s extremely busy schedule. Besides Negro Chambers of Commerce and The Negro in Business, other Division of Negro Affairs publications in progress by 1936 included works on African American air pilots, trade associations, and insurance company failures.105 The division also provided pertinent information and services to a variety of government agencies, including the Civilian Conservation Corps (CCC); the Departments of Agriculture, Interior, and Treasury; the Office of Education, the U.S. Public Health Service; and the Works Progress Administration (WPA). In sum, while black businesspeople may have been reticent about seeking assistance from the Division of Negro Affairs, other groups apparently were not. For instance, Jones’s “Summary of Work” for July 1 to September 30, 1936, included the following: Routine activities include responses to numerous requests for information from students, publicists, educational institutions and libraries, Negro banks and insurance companies, distributors and manufacturers, newspapers and advertising agencies and chamber of commerce and trade associations. The records show that there have been 794 parcels mailed from the office and 138 interviews held in the office bearing on numerous subjects of interest to the Negro population.106

The addition in November 1935 of Joseph R. Houchins as Jones’s assistant helped alleviate the division’s increasing workload.107 Despite Jones’s successful coordination of the 1936 Texas Centennial Exposition’s Negro exhibition and other items on the Division of Negro Affairs agenda, he decided to return to the National Urban League the following year. His resignation on June 30, 1937, resulted in a bureaucratic reshuffling within the Commerce Department that gave additional visibility to Charles E. Hall, a longtime black federal employee. Charles Edward Hall, born on May 22, 1868, in Batavia, Illinois, began working with the Census Bureau in 1900 as a statistics clerk. He made history in 1905 when he compiled the statistics and wrote the text for the Census Bureau bulletin Clay Products of the United States. This was the first time the U.S. government had published a report on a commercial subject compiled by an African American.108

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Most of Hall’s statistical work for the U.S. Census Bureau examined the African American experience, most prominent of which were Negro Population in the United States, 1790–1915 and Negroes in the United States: 1920–1932.109 Both these works are still consulted by students and scholars today. Despite Hall’s position as the preeminent statistician of African American life during the early twentieth century, an examination of his long career as a government employee reveals his constant battle for respect and dignity in the federal bureaucracy. Hall’s personnel file, in the National Personnel Records Center in St. Louis, is filled with instances of him, or persons speaking on his behalf, urging government officials to give Hall earned raises and promotions.110 Finally, in May 1935, Hall was given the bureaucratic recognition he deserved when he assumed the position of specialist in Negro statistics, comparable to Eugene Kinckle Jones’s position as adviser on Negro affairs.111 Among the individuals and groups who wrote Secretary of Commerce Daniel Roper to express their pleasure with Hall’s promotion was Mary Fitzbutler Waring, president of the National Association of Colored Women.112 Because of Charles E. Hall’s stature and expertise, when Eugene Kinckle Jones decided to leave the Commerce Department, Hall became the front-runner to succeed Jones. As Commerce Secretary Daniel Roper asserted in a June 16, 1937, memo to President Franklin Delano Roosevelt’s administrative assistant James Roosevelt, replacing Jones with Hall was “the best way to solve a rather difficult problem and maintain a very high standard of efficiency in the Negro industrial unit.”113 In addition, many people outside government circles wanted to elevate Hall to a more prominent position in government service. For instance, Emmett J. Scott, the secretary of Howard University and the former secretary of Tuskegee Institute under Booker T. Washington, wrote on June 9, 1937, to Commerce Secretary Daniel C. Roper: For many years I have been acquainted with Mr. Charles E. Hall of the United States Census Bureau. . . . Probably he knows more about the statistics affecting the Negro people than any other man in the United States. I venture to suggest it would be an act of great encouragement to him and his race if the present vacancy could be filled by the appointment of Mr. Hall.114

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Based on internal and external considerations, Secretary Roper, in a June 29, 1937, memorandum to William L. Austin, director of the Census Bureau, declared that I have approved the merging, effective July 1, 1937, of the supervision and direction of the Division of Negro Affairs of the Bureau of Foreign and Domestic Commerce, and the Unit handling all Negro statistics in the Bureau of the Census and placing Charles E. Hall of the Census Bureau in charge thereof.115

Roper expected Hall to divide his workday between the two offices under his jurisdiction, and because of this additional responsibility, Hall received an increase in salary.116 Hall enthusiastically welcomed his additional duties, and as he noted in a July 14, 1937, letter to Secretary Roper thanking him for the promotion/vote of confidence: The factual information, relating to the Negro population, now being gathered and disseminated by the various Bureaus and Divisions of the Department of Commerce is invaluable to my racial group. The data reveals our assets and liabilities; helps us to measure and to intelligently plan for our social progress and for a greater economic security; and it also weakens or destroys unfriendly criticism based on ignorance and intolerance.117

As Hall’s letter to Roper suggests, he was more than just a “numbers cruncher.” In fact, one of Hall’s strengths as a statistician was his ability to link quantitative data with qualitative analysis. Because of his previous statistical studies, Hall assumed his new duties with significant knowledge about black business in America. For instance, chapter 17 of Hall’s Negroes in the United States: 1920–1932 provides a detailed analysis of retail business in the black community.118 Although Hall made a relatively smooth transition to his enhanced stature in the Commerce Department, his age became a major issue in 1938. As of July 1, 1932, the U.S. government established a mandatory employee retirement age of seventy, and a federal worker could receive an extension only by presidential executive order (based on a connection between that employee’s retention and the “public interest”).119 Because Charles E. Hall’s seventieth birthday was on May 22, 1938, his

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supporters, with Hall’s support, tried to make the case for an executive order. On April 4, 1938, William L. Austin, director of the Census Bureau, sent a memo to Secretary Roper outlining the rationale for Hall’s retention: His [Hall’s] long experience and successful handling of negro statistics in the Census Bureau, and the fact that he has supervision also of the Division of Negro Affairs of the Bureau of Foreign and Domestic Commerce, makes his retention most desirable. He appears to be in good health and entirely capable of further service. The Bureau has no other negro official qualified to take his place and knows of no one serving elsewhere in the Department.120

Nevertheless, a Commerce Department personnel committee, which considered Hall’s extension request, ruled against it on May 6, 1938.121 Undaunted, Secretary Roper took Charles E. Hall’s case directly to President Roosevelt. Still, despite the unique circumstances surrounding Hall’s situation, Roosevelt refused to issue an executive order on his behalf.122 Thus Charles E. Hall’s thirty-eight-year career of government service officially ended on May 31, 1938,123 and the Commerce Department had to search for another adviser on Negro affairs. Immediately after Hall’s retirement, Joseph R. Houchins, who had joined the Division of Negro Affairs in 1935 as Eugene Kinckle Jones’s assistant and continued in that capacity under Hall, became the interim head of the Division of Negro Affairs. Although Houchins was an African American, he was seemingly not viewed as a serious candidate to head this Commerce Department unit permanently. Houchins’s role as a caretaker therefore ended on May 23, 1940, with the appointment of Emmer Martin Lancaster as the Commerce Department’s new, permanent adviser on Negro affairs.124 Between 1927 and 1940, James “Billboard” Jackson and his immediate successors established the Commerce Department’s Division of Negro Affairs as a viable government agency. Building on this legacy, during his thirteen years as head of the Commerce Department’s Division of Negro Affairs, Emmer M. Lancaster helped this unit achieve even greater visibility and prominence.

2 Emmer M. Lancaster and the Ascendancy and Fall of the Commerce Department’s Division of Negro Affairs, 1940–1960 Notwithstanding the historical significance of James A. Jackson, Eugene Kinckle Jones, and Charles E. Hall, Emmer M. Lancaster was arguably the most important head of the Commerce Department’s Division of Negro Affairs. Lancaster, born on April 7, 1898, in Akron, Ohio, was a lawyer whose background included serving as president of the Akron chapter of the NAACP from 1931 to 1937.1 His direct involvement with the African American struggle for equality seemingly influenced his actions as the Commerce Department’s adviser on Negro affairs. As his predecessors had done, Lancaster provided black businesspeople with information to help their enterprises grow. In fact, a generation before Richard M. Nixon created the Office of Minority Business Enterprise (OMBE), Emmer Lancaster worked to ensure that established black businesspeople received their fair share of government contracts and that prospective black businesspeople had access to business start-up loans. Nevertheless, despite his efforts, when Dwight D. Eisenhower became president in 1952, the Commerce Department’s Division of Negro Affairs was abruptly terminated the following year. But even though the government’s direct interest in black business development ceased during the Eisenhower administration, Vice President Richard Nixon’s chairmanship of the President’s Committee on Government Contracts (PCGC) and the establishment of the Small Business Administration (SBA) in 1953 had a significant impact on the government’s relationship with African American entrepreneurs.

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On June 13, 1940, one month after assuming his new post in the Commerce Department, Lancaster began contacting prominent African American businessmen and educators to serve on a proposed national Negro business advisory council. Lancaster hoped that besides offering general recommendations on how the U.S. government could better assist black business, this group would help him enhance the scope and mission of the Commerce Department’s Negro Affairs Division. As Lancaster noted in the recruitment letters sent to persons that he wanted in his advisory council, he envisioned using the Negro Advisory office of the Department of Commerce as a clearing house for all Negro businesses throughout the country pertaining to (a) business administration curricula in various Negro institutions, (b) placement of students in business establishments; this would be determined by maintaining a list furnished by the schools of all their choice students applying for jobs in various types of businesses and a list of those businesses desiring expert employees of college experience, (c) factual studies to be made available for the benefit of small Negro businesses, (d) a conference to be called and held in the auditorium of the Department of Commerce and its use thereof as headquarters for the proposed committee.2

Although Lancaster told his prospective advisory council members that he hoped to convene the group’s first meeting as part of a national conference on black business in October 1940, the selection in the fall of 1940 of James H. Jones to replace Daniel C. Roper as secretary of commerce prompted Lancaster to postpone his plans.3 On December 12, 1940, after Jones had completed his transition as secretary of commerce, Lancaster sent a memo to the assistant secretary of commerce, Norman Baxter, outlining his plans for an April 1941 conference on black business. This event, scheduled for April 18 and 19, 1941, in the Commerce Department’s Library Auditorium, would have the theme “A Program Of Cooperative Effort by Government, Educators, and Businessmen to Aid the Negro in Business.”4 Lancaster proposed four plenary sessions in the conference program. The first session would feature African American businessmen’s views on how the government could better assist their enterprises. The second session, entitled “Federal Agencies and the Negro,” would be government officials’ response to the first session, including a discussion of existing federal programs that could help black entrepreneurs. The proposed third session would

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explore strategies to enhance the business administration curricula at black colleges and universities. The final session would discuss the operation and mission of Lancaster’s proposed national Negro business advisory council as well as plans for future conferences.5 On March 13, 1941, one month before Lancaster’s inaugural conference on black business in America, the Commerce Department, to stimulate public interest in this event, issued a press release listing endorsements by the prominent African American businessmen and educators asked to serve on Lancaster’s business advisory council. Among them were Don A. Davis Sr., bursar of the Hampton Institute and chairman of the National Negro Business League’s Executive Committee; Paul R. Williams, the only African American member of the American Institute of Architects; S. B. Fuller, president of the Chicago-based Fuller Products Company; John H. Sengstacke, publisher of the Chicago Defender; Clarence L. Townes, secretary of the National Negro Insurance Association; Albon Holsey, secretary of the National Negro Business League; and James “Billboard” Jackson, the “Negro market” specialist for the Esso Oil Company and former head of the Commerce Department’s Negro affairs initiative.6 Because of the worsening events in Europe and blacks’ growing disgust with their exclusion from meaningful employment in companies with defense contracts, Lancaster modified his initial proposal. Accordingly, when the first annual Conference on the Negro in Business actually convened in April 1941, its final session was entitled “National Defense and the Negro in Business.” One of the speakers, Leon M. Wallace, president of Baton Rouge, Louisiana’s Colored Civic Association, offered an especially cogent analysis of the session’s theme: The Negro has not had a chance to progress very far in the field of manufacturing; thus, there is little hope of receiving large defense contracts. At present this is most unfortunate. His activities have been more or less confined to retailing. It follows then, that if the Negro in Business is to derive any share of benefits from the billions spent for National Defense, it must come directly from Negroes laboring on these projects. Unless he is given the right to hold any job, which his ability and training warrant, it becomes very plain that he is being robbed of his buying power and as a result the Negro businessman suffers.7

Two months after Wallace’s presentation, African American protest concerning discrimination in employment resulted in Roosevelt’s issuing

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his famous executive order 8802 on June 25, 1941.8 Three days later, on June 28, 1941, Lancaster forwarded a list of recommendations compiled by a select committee of his National Negro Business Advisory Council to Assistant Secretary of Commerce Norman W. Baxter. Among the things Lancaster’s memorandum urged the Commerce Department to consider were convening a yearly conference on the Negro in business, giving special consideration to small business enterprises led by blacks and other nonwhite entrepreneurs, helping facilitate Lancaster’s plan to expand business internship possibilities for promising African American youth, and systematically informing the black business community (through the Division of Negro Affairs) of procedures related to procuring government (defense-related) contracts.9 Significantly, when the United States officially entered World War II following the Japanese attack on Pearl Harbor, Emmer M. Lancaster gave priority to helping African American businesses and institutions obtain government (defense-related) contracts. On January 9, 1942, Lancaster submitted a plan of action memorandum to Assistant Secretary of Commerce Baxter entitled “The War Emergency and the Negro in Business,” in which he offered several proposals that would benefit both the war effort and African American businessmen. First, Lancaster urged that state planning committees, composed of black businessmen, be established to help mobilize local black support for the war effort. Second, he recommended that black enterprises, especially financial institutions, be encouraged to invest some of their resources in defense bonds and that these black-owned firms urge their employees to purchase them through payroll deductions. Third, Lancaster proposed that medium to large black-owned businesses be instructed on how to apply for defense contracts and that small black businesses be shown how to pool their resources so they could also qualify for defense contracts. Fourth, Lancaster recommended that black farmers be actively encouraged to participate in the Department of Agriculture’s vegetable procurement program. Fifth, he asked that black lending institutions be given government assistance to help them finance privately built defense industry housing for black workers. Sixth, Lancaster urged that black construction companies be instructed on how to apply for contracts through the U.S. Defense Housing Division. Finally, Lancaster suggested holding a second annual conference on the Negro in Business, to be held on April 10 and 11, 1942, to examine the role of black business during the war emergency.10 Although Lancaster’s proposal for a spring 1942 conference was not accepted, apparently because of budgetary considerations, he did receive

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authorization to proceed with other aspects of his January 9, 1942, recommendations. For example, in a April 6, 1942, memorandum issued to “All State Planning Committees Affiliated with the United States Department of Commerce,” Lancaster declared: All State Planning Committees are urged to make a survey and list all plants, buildings, and businesses operated by Negroes that may be converted for war purposes and send this list to the Chairman of your State Planning Committee and a copy to my office. While as yet we are unable to determine with exactness the type of businesses suitable for conversion  .  .  . we assume that convertible businesses will include all machine and tool shops and any establishment or shop which contains machinery, educational institutions maintaining machine shops and related courses, lumber companies, beverage companies, cosmetic plants, clothing or pants factories, printing establishments, and others.11

Besides working within the Commerce Department to ensure that black-owned businesses were included in the economic framework of the war effort, Lancaster also worked as a special adviser to the War Production Board and the Smaller War Plants Corporation to “render service and counsel to these agencies with reference to the integration of Negro business into the Nation’s productive effort.”12 The limited success of Lancaster’s efforts was revealed in an October 1, 1942, Commerce Department press release entitled “Government Contract Awards and the Negro in Business.” In its introductory summary, this document noted: These awards . . . consist of leaseholds, rentals of truck and [horse] teams; laundry, dry cleaning and construction contracts; purchases of fruits, vegetables, and basic construction materials. In many instances the limited equipment of Negro-owned businesses has confined their field to subcontract operations. However, prime contracts have been awarded to a few construction and architectural engineering firms by the Federal Works Agency, Army, Navy, and the District of Columbia.13

Although most of the government contracts listed in this report were for relatively small projects, some African American businesses did receive larger government contracts during World War II. As of October 1942, Samuel F. Plato, a black contractor based in Louisville, Kentucky,

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had received government contracts totaling $2,835,400 to construct post office and defense industry buildings in Kentucky, Maryland, and Washington, D.C. In addition, that same month, the McKissack & McKissack construction company of Nashville, Tennessee, had a government contract for $4,201,358.50 to construct an airfield and military quarters outside Tuskegee, Alabama, which became the training ground for the famous Tuskegee airmen.14 Nonetheless, during World War II most African American businesses were able to help themselves and the war effort only by obtaining subcontracts from larger white firms that had secured prime government contracts. One of the more interesting cases, cited in the Commerce Department’s October 1, 1942, press release, involved a San Diego– based firm, the Pacific Parachute Company. Co-owned by the popular black entertainer Eddie “Rochester” Anderson, this company manufactured pilot parachutes under a subcontract from the Standard Parachute Company, also based in San Diego.15 Interestingly, one of the strategies associated with President Richard M. Nixon’s later black capitalism initiative, expanded later during Jimmy Carter’s presidency, was the encouragement of large white firms in a variety of industries to subcontract work to black-owned firms. Although the Commerce Department’s press release/report “Government Contract Awards and the Negro in Business” did not mention black colleges and universities, Lancaster also wanted them to have some of the government contracts. In conjunction with his work with the Smaller War Plants Corporation (SWPC), Lancaster urged African American land-grant colleges to submit their complete inventory of machinery, tools, and other plant equipment to the SWPC’s regional offices, and fourteen historically black institutions of higher learning subsequently complied with this request.16 In his July 15, 1943, annual report, Lancaster discussed the disappointing outcome of this process. After inspecting the information submitted by these schools, the SWPC’s regional offices noted that because “none of the reporting institutions possessed facilities capable of performing prime contracts, their performances would necessarily be limited to subcontract operations. Accordingly, regional officers undertook to induce principal contractors to sublet a portion of their contract allotment to [black] institutions within their immediate vicinities.”17 Despite the SWPC’s stated intent to provide black colleges and universities with subcontractor opportunities, in the final analysis only Wil-

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berforce University in Wilberforce, Ohio, received a viable offer from a prime contractor, although the Bordentown Manual Training School, a black trade school in Bordentown, New Jersey, also received subcontractor work from a Newark-based manufacturer.18 Although early on Emmer Lancaster’s Division of Negro Affairs gave top priority to the war effort, this office nonetheless continued its tradition of doing research and publishing reports on the activities of black businesses and black consumers. One of Lancaster’s early research projects was ascertaining the ownership of movie theaters patronized exclusively by blacks. To do this, on November 12, 1941, he contacted prominent African Americans across the country using the following form letter: The Department of Commerce has a record of motion picture theaters patronized exclusively by Negroes, but owned and controlled by white interests. Because of frequent inquiries as to the identity of colored theaters, we are compelled to secure this information from other authentic sources. This inquiry is directed to you for the purpose of ascertaining the names and locations of motion picture theaters in your state owned and operated by Negroes.19

The surviving responses from William H. Bell, president of Alcorn A&M College in Alcorn, Mississippi; B. T. Bradshaw, president-treasurer of the Virginia Mutual Life Insurance Company based in Richmond; and the executive vice president of the Mechanics and Farmers Bank in Durham, North Carolina, indicate that in at least three states, blacks did not own motion picture theaters in the early twentieth century.20 Beginning in 1941, Lancaster’s office also began producing annual reports concerning banking institutions owned and operated by blacks.21 Two years later, the Commerce Department’s Division of Negro Affairs began publishing annual reports on the status of insurance companies owned and operated by blacks.22 Similarly, in 1944, Lancaster’s office began publishing annual reports examining black-owned building and loan associations.23 Besides gathering data on African American enterprises, Lancaster devoted an increasing amount of attention on gathering data related to African American consumers. For example, on May 12, 1943, Lancaster sent a memorandum to Assistant Secretary of Commerce Baxter seeking support for a proposed survey of African Americans’ incomes and

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purchasing power. After citing requests for such a study from such disparate sources as the Atlanta Regional Office of the Bureau of Foreign and Domestic Commerce, the North Carolina Mutual Life Insurance Company, the NAACP, and Pepsi-Cola, Lancaster declared that “this office will attempt to comply with these requests by conducting a survey of incomes of Negro professionals including lawyers, clergymen, teachers, college professors, and physicians in 36 cities wherein the Negro population is 25,000 or more.”24 To conduct this survey, Lancaster envisioned using the twenty state planning committees associated with his office to “compile the names and addresses of the afore mentioned professional classes.”25 Lancaster also told Baxter that he had conferred with representatives of the Internal Revenue Service and expected to get its approval to examine the tax returns of the projected 2,500 survey participants.26 The evidence suggests that unlike that of Eugene Kinckle Jones, Lancaster’s reason for gathering data on black consumers was primarily to disseminate helpful information to black-owned rather than whiteowned enterprises, an assertion borne out in two subsequent reports by the Division of Negro Affairs. Although war still was raging in Europe and the Pacific during the summer of 1943, Emmer Lancaster’s August 1, 1943, report, entitled “Post-War Planning and the Negro in Business,” formulated an agenda for black business in post–World War II America. One of Lancaster’s more interesting proposals was the establishment of an “extension service to small business, similar to that provided by the Department of Agriculture through its field agents to farmers.”27 As Lancaster went on to elaborate, Effective application of this plan would provide for surveys of Negro residential areas to determine their population, wealth, and business consciousness with a view toward the establishment of new businesses and the placement of professional [black] graduates therein. An expansion program providing for the appointment of field extension specialists under direct supervision of the Advisor on Negro Affairs should be considered.28

Besides suggesting the use of market research to determine the most advantageous way to promote black business in the United States, “PostWar Planning and the Negro in Business” also discussed how African American businessmen could benefit from foreign trade:

Ascendancy and Fall, Division of Negro Affairs, 1940–1960  47 Fertile fields exist in certain Central and South American countries for their cultivation by Negro businessmen of the United States. For several years a prominent banker has maintained a plantation in Haiti and ships coffee to the United States. A prominent cotton grower was formerly engaged in exporting cotton to various Caribbean countries. Several cosmetic companies export their products to Latin America and parts of Africa. Negro officials of these Republics have publicly express their desire for business relations with American Negroes.29

David J. Sullivan’s December 1, 1943, report entitled “Research and Its Relation to Negro Business” and written under the auspices of the Commerce Department’s Division of Negro Affairs, provided its own projection of black businesses’ potential in post–World War II America. Sullivan, an African American pioneer in the field of market research,30 tried to give black businessmen information, based on research, about how to most profitably expand their operations in a postwar economy. For instance, in the realm of retail sales, he specifically cited several areas as offering “tremendous possibilities for Negro entrepreneurs”: 1. 2.

3.

4.

5.

6.

Drug stores—of which today there are less than 600 and which there is a need for at least 2,500 Negro owned drug stores. Furniture stores—unusual opportunity will exist for Negro owned furniture stores in the amount of at least 200, distributed throughout the country. Today there are less than 50. Filling stations—with the tremendous back log of new car sales awaiting post war and the expected huge sales of automobiles and accessories, there will exist an opportunity for the opening of an estimated 3,500 Negro owned gasoline and oil stations. There existed 1,268 in 1939. Automotive groups (such as motor vehicle dealers, accessory, tire and battery dealers, etc.) will have room for over 125 such [Negro] dealers—there was a total of 46 such dealers in 1939. Apparel stores (men’s and women’s clothing, etc.)—will offer unusual opportunities. Here, Negro business will have an opportunity for an estimated 1,000 of such retail channels in post war. In 1929, there existed 333 of such establishments. Specialty-appliance stores (for the sale of household appliances, radios, refrigerators, washing machines, ironers, electric washing

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machines, dish-washing machines, vacuum cleaners, oil heating equipment)—Are [one] of the best kinds of retail establishments to engage the attention of [Negro] businessmen. In 1939, there were throughout the United States less than 50 such establishments. In the postwar period, there will exist opportunity for at least 400 such Negro-owned businesses.31 To help African American entrepreneurs take advantage of the new opportunities awaiting them, Emmer Lancaster suggested in 1943 the establishment of the so-called National Negro Finance and Investment Corporation. It would be funded by black banks, building and loan associations, and insurance companies and would serve the needs of both prospective and established black businessmen and homeowners, whose needs were often ignored by mainstream financial institutions.32 When World War II ended, Lancaster tried to implement some of these proposals. His first step was to reconvene his conference on black business. In a July 26, 1946, memorandum to Secretary of Commerce Henry A. Wallace, Lancaster asked for Wallace’s support for such a meeting because it would “acquaint Negroes in business with materials for business improvement” and “develop a greater business consciousness and aptitude among [Negro] students, veterans, and other persons.”33 The meeting, which would be held on October 17 through 19, 1946, in the Commerce Department’s auditorium, would include a plenary session entitled “Foreign Trade and the Negro” on black businessmen from Africa and the Caribbean.34 Although Lancaster envisioned this conference as a means to stimulate “pan-African” economic activity, he also wanted to highlight the accomplishments and potential of the African American business community. To do this, he proposed that his second Conference on the Negro in Business display “approximately 100 photographs of outstanding businesses operated by Negroes from most of the states wherein Negro establishments are most heavily domiciled.”35 By all accounts, the Commerce Department’s second Conference on the Negro in Business was an unqualified success. The 302 delegates from twenty-two states, the District of Columbia, Haiti, Liberia, and the U.S. Virgin Islands36 heard W. Averell Harriman, who had succeeded Henry A. Wallace as secretary of commerce, announce at the opening session, “I want you to know that I am heart and soul in back of the pro-

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gram to develop the participation of Negroes in small, medium, or large businesses.”37 Besides the session on foreign trade possibilities for African American businessmen, this conference had sessions on Commerce Department programs for small businesses, the business education curricula in black colleges and universities, and a panel discussion entitled “Establishing and Operating Your Own Business” featuring prominent African American entrepreneurs.38 Many of the participants spoke glowingly of this meeting. The following responses, which were forwarded to both Secretary of Commerce Harriman and Emmer Lancaster, were typical of the black business community’s reaction to Lancaster’s initiative: George W. Cox (vice president, North Carolina Mutual Life Insurance Company): “I want to take this opportunity to congratulate the Department of Commerce on the recent meeting that was held for Negro business men and women. It was one of the most constructive and beneficial meetings I have had the pleasure of attending.” Norris A. Dodson (president, Norris A. Dodson, Inc.): “This was one of the greatest educational achievements ever held in Washington for the colored business man. Those who were fortunate to attend, left the sessions inspired and enriched by the wealth of information provided.” Dr. V. V. Oak (Wilberforce University, Ohio): “I have attended several other conferences and also the first conference held under the auspices of the Department of Commerce five years ago. This year’s conference was by far the best one, all told.” Charles D. Murray (vice president, Murray’s Superior Products Company, Chicago): “I am very pleased to have been able to participate in such a fine foreward [sic] movement of the race and at any time in the future . . . you may count on our 100% cooperation.”39 Notwithstanding the success of Emmer Lancaster’s second black business conference, he and his office had to contend with ongoing institutional barriers that kept prospective African American entrepreneurs from taking advantage of the opportunities described earlier by David J. Sullivan. The paucity of business loans granted to World War II black veterans exemplified this situation.

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In a March 29, 1946, letter to Colonel Newman Smith, head of the Loan Guarantee Business Division of the Veterans Administration, Lancaster asked for the number of business loans granted to black veterans. He assured Colonel Smith that he “was not charging Veterans Administration with practices of race discrimination in granting business loans to Negro veterans”; rather, “my purpose is to inform Negro audiences that business loans are granted to Negro veterans who meet certain qualifications.”40 Subsequent reports, made available to Lancaster, conveyed a dismal picture of black veterans’ success in obtaining business start-up loans. For instance, a March 20, 1947, memorandum sent from the Commerce Department’s Richmond, Virginia, district office to Lancaster concluded that “the granting of G.I. Business Loans to negro veterans in this area has been very limited.”41 Ray L. Miller, director of the Commerce Department’s Dallas office, delivered similarly discouraging news. In an April 4, 1947, letter to Lancaster, Miller recounted a recent conversation with a VA official who told him that “in the states of Texas, Louisiana, and Mississippi, [the issuing of] business loans to Negro veterans has been exceedingly small.”42 Prospective black entrepreneurs in the northern United States also had considerable difficulty securing business loans. As the acting regional director of the Commerce Department’s Chicago office told Lancaster in an April 3, 1947, letter, “We have contacted several of the larger banks in Chicago and are advised that the number of business loans made to Negro veterans is either nil or insignificant.”43 Besides the issue of racism, the inexperience of many potential black entrepreneurs, plus the weakness of their business plans, led to few black veterans obtaining business loans immediately after World War II. To help alleviate this situation, Lancaster and his office instituted “business clinics” to help prospective and established black businessmen construct realistic business plans and profitable enterprises. In October 1945, in collaboration with the Philadelphia Negro Chamber of Commerce, Lancaster sponsored a three-day business clinic from October 28 through 30. As he noted in an October 15, 1945, press release, the purpose of this clinic (and planned future workshops in other locales) was “to assist and acquaint the Negro in business with the facilities available in government agencies and to impress upon Federal officials the acuteness of problems peculiar to the Negro.”44 During the rest of his tenure with the Commerce Department, Lancaster gave high priority to his office’s “business clinics” initiative. His commitment to this program was such that he sometimes used his own

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money to keep it going when government funding was not available. For example, Lancaster sent a March 28, 1947, memorandum to Bernard L. Gladieux, executive assistant to the secretary of commerce, pertaining to requests for Division of Negro Affairs business clinics in Boston, Birmingham, Philadelphia, Hampton (Virginia), and Detroit. After citing the Commerce Department’s then “budgetary difficulties” and stating that “travel allowances . . . will not be requested,” Lancaster requested permission to go to Hampton and Detroit using his own automobile and informed Gladieux that “relatives in Detroit and officials in Hampton will provide lodging for me.”45 Another way in which Lancaster promoted his business clinic initiative, with minimal government funding, was through his association with the National Negro Business League (NNBL). As he noted in a July 14, 1948, memorandum to Bernard L. Gladieux concerning the NNBL’s forty-eighth annual meeting in Atlantic City from July 21 to 24: I respectfully request that permission be granted me to attend all the sessions. I have regularly attended the convention for the past seven years and I am a member of the executive committee. We have collaborated with the League in the promotion of several clinics and the officials of the League have always cooperated with this office. There will be no government expense in connection with this trip.46

Similarly, Lancaster received nongovernmental assistance from the Phi Beta Sigma fraternity to promote the Commerce Department’s Division of Negro Affairs business clinics initiative. This black fraternity, founded in 1914, had as a national theme “A Bigger and Better Negro Business Program.” In the years immediately following World War II in conjunction with Lancaster’s office, Phi Beta Sigma disseminated useful information to established and prospective black businesspeople across the country.47 Then at its thirty-fifth annual meeting, held in Washington, D.C., from December 27 to 30, 1949, and whose proceedings included a small business clinic, Phi Beta Sigma gave Lancaster an award for his and his office’s efforts.48 Another independent African American organization that offered assistance to Lancaster’s business clinics was the Iota Phi Lambda business sorority. Iota Phi Lambda, founded in 1929, was a national organization of black businesswomen who sought to stimulate the growth of black-owned and -operated enterprises. In September 1951, Iota Phi

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Lambda’s Alpha Mu chapter, based in Lancaster’s hometown of Akron, Ohio, sponsored the Ohio Small Business Clinic and Trade Show. This three-day event (September 23 to 25), to which Lancaster served as a consultant, featured an opening-day parade and trade show and sessions on such topics as “How to Operate a Small Business,” “Selecting a Location,” “Layout and Display,” “Customer Relations,” and “Business Loans.” In a press release publicizing the event, Lancaster predicted that it would also attract black businesspeople from Columbus, Cincinnati, Cleveland, Dayton, and Youngstown.49 Along with working with such outside groups as the National Negro Business League, the Phi Beta Sigma Fraternity, and the Iota Phi Lambda Sorority, Lancaster sought to promote black business in post–World War II America through the use of personal influence within the government bureaucracy. In 1947, Lancaster’s office helped four African Americans, most of whom were veterans, establish the Washington, D.C.–based Eastern Fuel Oil Company. This company, which opened for business in August, provided fuel oil to black homeowners and apartment dwellers. Then in December 1947, Eastern Fuel Oil’s wholesalers failed to deliver the oil the company needed to service its customers. To help keep the company from failing, Lancaster wrote to Oscar Chapman, undersecretary of the Department of the Interior, urging “the U.S. Department of the Interior to intervene for the purpose of alleviating the general oil situation and save the Eastern Fuel Oil Company from eventual liquidation.”50 Because Garland Palmer, the secretary of the Eastern Fuel Oil Company, was a participant at Commerce Department’s third Conference on the Negro in Business held in April 1948, it appears that Lancaster’s direct intervention had been successful.51 Perhaps the most visible way in which Lancaster championed the cause of black businesspeople was through his Negro business conferences. After the unqualified success of the second Conference on the Negro in Business held in October 1946, succeeding meetings were highly anticipated events. The third Conference on the Negro in Business convened from April 1 to 3, 1948, in the Commerce Department’s auditorium. Like the previous conferences, it had four plenary sessions. The first, “Business Education,” echoed the first two conferences in recommending strengthening the business education curricula in predominantly black secondary and collegiate

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institutions.52 The second session, entitled “Foreign Trade and the Negro in Business,” also was similar to the second Conference on the Negro in Business in calling for African American businessmen to take advantage of overseas commercial opportunities.53 One of the highlights of this session was a presentation by W. J. Kwesi Mould, vice chairman of the Gold Coast (West Africa) Forest Products Association, who told delegates: We have the lands, we have the raw materials; firstly because of the wealth in your country and your desire for trade expansion, and secondly, because of the opportunity and pecuniary benefits which accrue from such amalgamation, we sincerely and confidently invite you Americans, assuring you of our whole-hearted co-operation and affectionate goodwill.54

The third session, entitled “Management Aid to the Small Businessman,” continued the Commerce Department’s long tradition (going back to James A. Jackson) of informing black businessmen of various government services available to them. The final session, “A Business of My Own,” continued the precedent of having prominent black entrepreneurs share their experiences with the delegates. Among them were Robert A. Crosby, owner of the Crosby Mink Farm in Hartford, Michigan; Orval E. Peyton, owner of Peyton’s Sohio Service Stations in Columbus, Ohio; Harriet W. Lemon, treasurer of the Citizens and Southern Bank and Trust Company in Philadelphia; and W. C. Buford, chairman of the board, Mammoth Life & Accident Insurance Company, based in Louisville, Kentucky.55 Whereas the first three black business conferences sponsored by Emmer Lancaster were held in 1941, 1946, and 1948, the next five conferences were convened each year from 1949 to 1953. This provides further evidence of the increasing credibility and influence of the Commerce Department’s Division of Negro Affairs, in both the Washington, D.C., federal bureaucracy and the general public. The fourth Conference on the Negro in Business, held from April 20 to 23, 1949, in the Commerce Department’s auditorium, attracted 414 delegates from twenty-one states and the District of Columbia.56 Unlike the previous two conferences, which held sessions on overseas business opportunities for black entrepreneurs, this meeting focused on domestic issues related to black economic development. In the opening session, Secretary of Commerce Charles Sawyer welcomed the delegates:

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Emmer Lancaster, adviser on Negro affairs, and Secretary of Commerce Charles Sawyer on the eve of the fourth conference on the Negro in Business, convened from April 20 to 23, 1949 (courtesy of National Archives, College Park, MD). In the Department of Commerce we believe in the free enterprise system. We believe that any American, regardless of his creed and color, should be able to enter into business and achieve whatever success his initiative, his energy, and his talents and ambition will bring him. This is one of the freedoms which gives vigor to our economic system and raises its level higher than any other economic system in this world today.57

Sawyer also made a veiled reference to the growing cold war, and later, Richard M. Nixon, then a young member of the U.S. House of Representatives from California, shrewdly melded the cold war with civil rights in general and black business enterprise in particular. The first plenary session of the fourth Conference on the Negro in Business, chaired by James A. Jackson, was “Establishing and Operating a Small Business.” Unlike the previous conferences in which this subject received half a day of coverage, the delegates spent an entire day hearing presentations on such topics as “Sources of Finance,” “Selecting the Proper Location,” “Store Arrangement and Display,” “Records and

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Record Keeping,” “Personnel and Public Relations,” and “Advertising and Sales Promotion.”58 In fact, this extended session reflected Lancaster’s interest in preparing black entrepreneurs for the opportunities available in post–World War II America through “nuts and bolts” business clinics. The fourth Conference on the Negro in Business also continued to highlight another of Lancaster’s priorities, exposing more African American youth to the possibilities of a career in business. The plenary session entitled “Business Education” was a panel discussion on “What the Schools Are Doing,” with representatives from eight historically black colleges and universities.59 In addition, 115 students and twenty-nine faculty members from sixteen historically black colleges and universities attended this session, as well as forty-seven students and twelve faculty members from nine private black business schools from across the country. In fact, nearly half the delegates to the conference (203 out of 414) were business students and their teachers.60 The plenary session entitled “Investment Opportunities in Housing Projects for Negro Operated Financial Institutions and Cooperative Associations” was intended to alert black entrepreneurs about the potential profits associated with the growing urban renewal movement in such cities as New York, Louisville, Chicago, Atlanta, and Gary, Indiana.61 The closing plenary session, “A Business of My Own,” was made up of informational and inspirational presentations by eight prominent black business persons.62 The fifth Conference on the Negro in Business, meeting from April 13 to 15, 1950, was an especially grand affair. Besides acknowledging the fiftieth anniversary of the National Negro Business League,63 this meeting had a special exhibition and session entitled “The Negro as a Producer.” Lancaster arranged to have the main lobby of the Commerce Department, as well as the foyer and hallways adjacent to the auditorium where the sessions were held, display “all materials, commodities and products, manufactured, created or produced by American Negroes, natives of Haiti, Liberia and the insular possessions of the United States.”64 This exhibition included the creations of such famous black inventors and scientific innovators as George Washington Carver, Jan E. Matzelinger, Dr. Percy L. Julian, and Benjamin Banneker.65 Although the “Negro as a Producer” exhibition and session generated considerable attention, perhaps the most significant session at the fifth Conference on the Negro in Business was the session “The Negro Market—Foreign and Domestic—Its Potentialities.” The fact that it, again, was an all-day plenary session instead of the customary half day sug-

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gested that this was a topic of great importance.66 The extensive coverage of the Negro market no doubt reflected the growing number of requests that Lancaster’s office received for information about blacks’ spending habits. Notwithstanding the growing importance of the Negro market, the agenda of the sixth Conference on the Negro in Business, held from March 29 to 31, 1951, reflected the country’s concerns about the cold war. Besides the standard sessions on business education and a business of my own, the highlight of the sixth conference was an all-day plenary session on “The Role of Small Business in the Defense Emergency.” Prompted by the Korean conflict as well as the United States’ increasingly hostile relationship with the Soviet Union, speakers from various government agencies told the audience how they could help themselves and the country by seeking government (i.e., defense-related) prime and subcontracts.67 The schedule of the seventh Conference on the Negro in Business, from April 17 to 19, 1952, was different from that of previous meetings. Unlike earlier conferences in which the first day’s activities consisted of an opening meeting with speeches from various dignitaries such as the secretary of commerce, the seventh conference scheduled two plenary sessions on the opening day (“Business Education” and “Defense Loans for Small Business”), along with the traditional public mass meeting on the first evening. Besides the usual comments by Lancaster and other government officials, the main event of this session was an address by John H. Johnson, president of the Chicago-based Johnson Publishing Company. Johnson had recently been cited by the U.S. Junior Chamber of Commerce as one of America’s ten most outstanding young men for the year 1951.68 An all-day plenary session on the subject of reaching the Negro market marked the second day of the seventh conference. Some of the topics discussed then were “Public Relations and Small Business,” “Public Relations and the Negro in Business,” “Market Surveys and Small Business,” “Research Surveys and the Negro,” and “Selling the Negro Market.”69 The underlying message of this plenary session, as stated by Ludlow Werner, one of the presenters, was No matter what the racial identity of the proprietor, so long as he is the owner and operator of a commercial enterprise, he is a business man. . . . Just as we fight diligently and unceasingly for a single standard

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Publisher John H. Johnson addressing the Commerce Department’s seventh conference on the Negro in Business, April 17–19, 1952. Johnson had recently been cited by the U.S. Junior Chamber of Commerce as one of America’s ten most outstanding young men for the year 1951 (courtesy of National Archives, College Park, MD).

of citizenship for all without regard to race, because it is our constitutionally-guaranteed right under our form of government, so must we diligently maintain a single standard in business, because that is a moral obligation.70

Thus, if African American entrepreneurs were to profit from the increasingly important Negro market, their focus should be on sound business principles (including public relations and market research) rather than simple appeals to “buy black.” The final day of the seventh conference was devoted to the traditional “A Business of My Own” session. One of the featured entrepreneurs was Hazel Washington who, with her business partner and Hollywood actress Rosalind Russell, was the co-owner of Hazel, Inc., a company that designed leather craft and fashion apparel for women.71 The eighth Conference on the Negro in Business, convening from April 16 to 18, 1953, mirrored the previous year’s meeting in that the

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first day included two plenary sessions and the evening welcome session. The first plenary session, “Business Education,” was especially well attended, including faculty and students from sixteen historically black colleges and universities and one private black-owned business school, and 378 high school students and nine teachers from the Washington, D.C., area.72 The second session, entitled “Sources of Business Loans and Finance,” focused on what may have been black entrepreneurs’ most pressing concern. The speakers included both government officials as well as representatives of the black banking and insurance industries.73 The evening welcome session included remarks from Pedro Calla, a representative of Cuba’s Fraternal Union, which he described as “the largest Negro organization in the Island of Cuba.”74 In keeping with Lancaster’s interest in informing black entrepreneurs of overseas commercial opportunities, Calla shared the following with delegates: This meeting and the outstanding accomplishments of the Negro business men and women in the United States, is indeed an inspiration to the many little people in Latin America, and all over the world. We have the same problem, but we do not have your great United States Department

Scene from the Commerce Department’s eighth conference on the Negro in Business, April 16–18, 1953 (courtesy of National Archives, College Park, MD).

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Emmer Lancaster addressing the eighth conference on the Negro in Business, April 16–18, 1953 (courtesy of National Archives, College Park, MD). of Commerce and your equally great and efficient Mr. Lancaster. . . . My only contribution to this conference is to point out to you that America includes my beloved Cuba and there are also many opportunities to apply your talents in my country. Over 1,000,000 people just like you need you and hope that some day you will come and help them too.75

The second day of the eighth Conference reflected Lancaster’s desire to offer business clinics to black entrepreneurs. The morning session, “Human Relations in Business,” was a panel of personnel and management specialists discussing “the importance of the human element in the operation of a business as it applies to improved employer–employee relationships and improved services to customers.”76 Although the afternoon session had the generic title “Selling the United States Market,” the various speakers concentrated on “the Negro market and its potentialities.”77

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The final day of this meeting once again featured the session “A Business Of My Own.” Those black businesspersons talking about their commercial success included Barrington G. Henry, president of the Washington, D.C.–based Henry Fuel Oil Company, and J. B. Blayton, owner and operator of radio station WERD in Atlanta.78 Besides these well-received conferences in Washington, D.C., Emmer Lancaster’s office also sponsored local black business conferences in major U.S. cities. Under the auspices of a “fact-finding survey to ascertain the condition of business and employment among the Negro people in certain metropolitan areas,” meetings were held in 1949 in Atlanta, Baton Rouge, Birmingham, Chicago, Cleveland, Detroit, Houston, New York, and St. Louis. A Commerce Department publication entitled Summary Reports of a Fact Finding Survey on Employment and Business Conditions among the Negro People provides an overview of these meetings.79 Even though black businessmen in the selected cities applauded the work of the Washington, D.C.-based Office of the Advisor on Negro Affairs, they urged the Commerce Department to direct its field offices to pay more attention to the concerns of black entrepreneurs. In addition, the local conferences held in Baton Rouge, Cleveland, and New York “vigorously contended for the appointment of qualified Negroes to serve as business consultants in the field offices of the Department of Commerce.”80 Although part of the Division of Negro Affairs’ mission was to gather data on black business and provide a venue for black entrepreneurs to express their concerns, both Lancaster and his predecessors spent a great deal of time disseminating information about black organizations and individuals to the general public. After World War II, Lancaster’s office received an ever growing number of requests for such items as the convention meeting dates of prominent African American organizations, the names and addresses of black firms with at least one hundred employees, the types of supplies or products used by black beauticians and beauty shop operators, information that could be incorporated in business courses aimed at African American students, and a list of black disk jockeys in America.81 Even the venerable W. E. B. Du Bois, then working on a project examining African American business development and property accumulation, contacted Lancaster’s office for assistance in October 1947.82 Besides receiving inquiries from the general public, Lancaster’s office also provided requested information to various government agencies. For

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instance, the State Department’s Voice of America program contacted the Division of Negro Affairs in early 1951 for biographical information about noteworthy black businesspersons. As Lancaster noted in a January 12, 1951, letter to Archie A. Alexander, a prominent Washington, D.C.–based contractor whose achievements were chronicled in the September 1949 issue of Ebony, the State Department wanted to disseminate information about him and other prominent black entrepreneurs to “improve its prestige with the darker races of people in the Asiatic area.”83 As noted by such commentators as Carol E. Anderson, Mary L. Dudziak, Phillip A. Klinkner, and Rogers M. Smith, the Truman administration was keenly aware that Jim Crow made a mockery of America’s claim to be the leader of the free world,84 and so the Commerce Department’s Division of Negro Affairs became a useful asset in America’s quest to rehabilitate its image worldwide. The evolving Korean and cold wars, which apparently stimulated the State Department’s interest in influencing the thinking of “the darker races of people in the Asiatic area,” also led to a remobilization of American military forces. Accordingly, Lancaster, as he had a decade earlier, sought to make sure that African American businesses got their share of prime and subcontractor defense contracts. Besides the issue of black businesses’ involvement in America’s new war with Communist North Korea, Lancaster proposed in late 1951 the establishment of the National Advisory Committee on Defense Contracts for Small Firms Operated by Negroes. He hoped that this committee, made up of prominent black businessmen from across the country, would result in more black businesses securing more prime and subcontractor defense contracts than they had during World War II.85 A December 12, 1951, advisory committee recruitment letter sent to B. T. Bradshaw, president of the Virginia Mutual Life Insurance Company, described the projected duties of members of this national body: The principal functions of this volunteer advisory committee will be (1) to meet occasionally with the Department of Commerce field offices for information relating to the current national defense program, (2) to serve as liaison persons between the field offices and small plants operated by Negroes, and (3) to assist those small plants with the procedural “knowhow” of securing sub-contracts for defense production.86

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By early 1952, Lancaster had recruited seventy-eight members from seventeen states and twenty-eight cities for his National Advisory Committee on Defense Contracts for Small Firms Operated by Negroes.87 Nevertheless, Commerce Department records reveal that despite Lancaster’s best intentions, the number of black entrepreneurs receiving defense contracts during the Korean War, compared with World War II, did not dramatically increase. The main reason that black businesses could not secure government defense contracts may have been the small number of black firms that could actually qualify for this program, as documented in a series of reports from Carlton Hayward, director of the Commerce Department’s Field Services Division, to Emmer Lancaster in the spring of 1952. An April 8, 1952, memorandum from Hayward to Lancaster included the minutes of a April 1, 1952, meeting held in Columbus, Ohio, convened under the auspices of Lancaster’s new national advisory committee. It stated: There are perhaps no more than two or three concerns in this area, solely operated by negroes, who could qualify under a program for assistance. . . . In view of the small number of concerns in this district operated by negroes, there is a question as to the advisability of holding any future meetings.88

In neighboring Cincinnati, however, no such meeting even took place. In fact, Eugene F. Lacey, president of the Negro Business Forum of Cincinnati, in consultation with Horace Sudduth, president of the National Negro Business League, told the manager of the Commerce Department’s Cincinnati District that convening a meeting under the auspices of the National Advisory Committee on Defense Contracts for Small Firms Operated by Negroes would be “useless.”89 The interaction between the Commerce Department’s Chicago office and local members of Lancaster’s advisory committee bordered on the bizarre. Twice and without explanation, Kit Baldwin, president of the Chicago Negro Chamber of Commerce, and the three other committee members did not show up for scheduled meetings.90 Despite disappointing responses to Lancaster’s initiative in Columbus, Cincinnati, and Chicago, his advisory committee did generate some interest in other cities. Reports from meetings in Richmond, Los Angeles, Louisville, Detroit, Houston, Birmingham, Jacksonville, Tallahassee,

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Memphis, Nashville, and Atlanta suggested that blacks in those cities were at least receptive to the idea of trying to identify black businesses that could qualify for government contracts.91 Moreover, an April 4, 1952, meeting held in Baltimore actually cited six black-owned firms in the area that could reasonably compete for government contracts.92 Nevertheless, the surviving records do not indicate to what extent these African American businessmen, or their counterparts in other cities, subsequently obtained government contracts during the early 1950s. While Lancaster seemingly had difficulty generating interest in his program to increase the number of black-owned businesses receiving government contracts, he had no such difficulty generating interest among black and white businesses concerning the Negro market. During the early 1950s, businesses’ interest in courting black consumers skyrocketed. Besides consulting the growing number of articles in business periodicals on the Negro Market,93 companies both large and small and black and white increasingly relied on the Commerce Department’s Division of Negro Affairs for information about and insights into black consumers. For example, a brief article entitled “Negroes Offer a Big Growing Consumer Market,” which appeared in the May 9, 1953, issue of The Kiplinger Washington Letter, cited Lancaster’s office as a source of information about black consumers, resulting in a deluge of requests for information about the Negro market.94 In keeping with Lancaster’s interest in promoting African American enterprises and business professionals, his response to the more than five hundred inquiries resulting from the Kiplinger article included recommendations that could benefit black newspapers and salesmen.95 The following excerpt shows how Lancaster replied to businesses seeking advice on how to attract more African American customers: I think the best methods of reaching Negro residents in your area would be to advertise in the local Negro newspaper and to employ competent Negro sales personnel to market your products with the Negro community. For your general information there are approximately 200 Negro sales representatives now employed by 30 national merchandising firms; these include IBM, Remington Rand, BBDO and all the tobacco companies.96

Because of Lancaster’s desire to raise the status of black business in America, after the Kiplinger article he tried to use his influence to make

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sure that African American businessmen and professionals could benefit from the growing interest in this market. In a June 18, 1953, speech at the annual meeting of the National Newspaper Publishers Association (a consortium of black-owned newspapers), Lancaster proposed linking his Division of Negro Affairs, black newspapers, and African Americans trained in economics, market research, and public relations to coordinate the dissemination of information about black consumers. His office would compile pertinent statistical data related to African Americans generated from the census bureau, as well as market research data from National Newspaper Publishers Association members and their black professional consultants. Lancaster believed that his proposed Negro market research organization could, among other things, “control the field of Negro market survey.”97 Unfortunately for Lancaster, while he was making these ambitious plans, the recently elected president, Dwight D. Eisenhower, decided not to retain Lancaster and his office in the new administration. Accordingly, on September 11, 1953, Lancaster received a memorandum informing him that “it is necessary to separate you from your position because of a reduction in personnel in the Department of Commerce,”98 thereby linking Lancaster’s dismissal, effective October 11, 1953, to routine civil service procedures.99 Although the Commerce Department placed him on its reemployment priority list, Lancaster’s personnel file at the National Personnel Records Center indicates that he did not find a commensurate replacement position until December 1955, when he was given a position in the Department of Labor as a wage-hour analyst. Lancaster retired in 1968 as a trade specialist in the Business and Defense Services Administration.100 Considering the apparent viability of the Commerce Department’s Division of Negro Affairs, its abrupt termination by the Eisenhower administration merits further scrutiny. As one historian noted, “In November, 1952, American voters elected Dwight D. Eisenhower and gave his Republican Party control of Congress for the first time in twenty years. The Republicans were dedicated to balancing the budget and eliminating unessential federal programs.”101 According to this reasoning, the Commerce Department’s Division of Negro Affairs fell into the “unessential” category. But it is not unreasonable to speculate, based on studies of the Eisenhower administration, that racial considerations may well have contributed to the institutional denigration and termination of this governmental unit.

Ascendancy and Fall, Division of Negro Affairs, 1940–1960  65

The presidency of Dwight D. Eisenhower has traditionally been criticized for its lack of interest in issues related to African Americans.102 One of the more caustic interpretations of the Eisenhower administration appears in Kenneth O’Reilly’s Nixon’s Piano: Presidents and Racial Politics from Washington to Clinton. According to O’Reilly, Eisenhower preferred “the late nineteenth century racial model to the mid-twentieth” and was “habitually uncomfortable in black company.”103 In addition, besides a few handpicked black Republicans serving in various administrative positions, “the only blacks in sight [during the Eisenhower administration] were servants.”104 From this perspective, we could indeed reasonably conclude that racial considerations contributed to the demise of Commerce Department’s Division of Negro Affairs. David A. Nichols’s A Matter of Justice: Eisenhower and the Beginning of the Civil Rights Revolution has a different view of Eisenhower’s record regarding African Americans. Aided by the 2006 release of thousands of pages of documents from the papers of Max Rabb, Eisenhower’s chief aide on civil rights, Nichols provides a more positive assessment of Eisenhower in this regard. Even though A Matter of Justice implicitly suggests that race may not have contributed to the termination of the Commerce Department’s Division of Negro Affairs, a direct government interest in black business nevertheless ceased during Eisenhower’s tenure in the White House. Although the aspirations and interests of black businesspeople were not formally recognized during the Eisenhower administration, two other historical developments associated with it did have a significant impact on the government’s relationship with black entrepreneurs. First, Vice President Richard M. Nixon’s service as chair of the President’s Committee on Government Contracts (PCGC) provided an important ideological link to his promotion of black capitalism during the 1968 presidential election. Second, the Small Business Administration (SBA), established in 1953, later became an important vehicle promoting black entrepreneurship. On August 13, 1953, President Eisenhower issued executive order 10479 establishing his President’s Committee on Government Contracts (PCGC). As David Nichols pointed out, the PCGC represented “a dramatic step in fulfilling Eisenhower’s commitment to invoke federal authority to end discrimination.” Moreover, the PCGC “was given definite functions, whereas the Truman administration’s Committee on Government Contract Compliance had been a study board with little authority.”105

66  Chapter 2

As chair of the PCGC, which “was allowed to receive complaints of alleged violations of nondiscrimination provisions in government contracts and forward them to the appropriate contracting agencies,”106 Nixon connected American race relations with the cold war. For example, a December 14, 1954, PCGC report entitled “Summary of Meeting between the President’s Committee on Government Contracts and Representatives of Industry” included the following assertions: “The advancement of the nondiscrimination program helps to create better relations between free nations. Discrimination in employment provides fuel for Communist propaganda and to the extent that we eliminate discrimination we help eliminate a very serious problem.”107 Nixon, who in the 1950s pragmatically linked eradicating employment discrimination with thwarting Communist influence, had a similar (cold warrior–inspired) motivation for promoting greater African American business ownership during the pivotal 1968 presidential campaign (see chapter 5). The creation of the Small Business Administration (SBA) in July 1953 also had important future ramifications for the promotion of black business in America. As Jonathan J. Bean observed, “The SBA was an affirmative action agency even before becoming involved in racial policymaking.”108 The evidence suggests that during its first decade, the great majority of those who benefited from SBA-generated set-aside contracts were small white businesses.109 Nonetheless, by the mid-1960s, the Small Business Administration was actively involved in the movement to include business ownership as a one of the “civil rights” that should be accorded to America’s citizens of African descent. By the end of the 1950s, based on such recent events as the May 18, 1954, Brown v. Board of Education decision and the use of federal troops to enforce that decision in Little Rock, Arkansas, in 1957, the stage appeared set for an even more dramatic use of federal and presidential power to promote racial equality in the United States. In the next decade, both existing and prospective black businesspeople were among the beneficiaries of this significant political development.

3 More Than Civil Rights The Kennedy and Johnson Administrations and African American Enterprise

Most accounts of the early to mid-1960s related to African American history focus on blacks’ quest for civil rights.1 Traditionally, this period’s civil rights movement is associated with blacks’ multifaceted battle for unfettered access to public accommodations, employment opportunities, and the voting booth. Then as the decade progressed, the federal government became an increasingly active supporter. While this analysis is basically correct, the relationship between African Americans and the federal government at this time was much more complex. For example, when this period is viewed through the lens of black business and black business development, we can clearly see the U.S. government’s active attempts to enlist the services of African American businesspeople in fighting the evolving cold war. With the ascension of Lyndon B. Johnson to the presidency, his administration sought to expand the parameters of civil rights legislation to include the “right” of owning a business. In addition, by the late 1960s, as African American sentiment changed from “We Shall Overcome” to “Black Power,” the U.S. government stepped up its programs aimed at stimulating black business ownership, hoping to quell urban unrest. The Kennedy administration’s interest in African American business enterprise grew out of a July 1961 meeting between Asa Spaulding, president of the North Carolina Mutual Life Insurance Company, and Luther Hodges, President John F. Kennedy’s secretary of commerce. Spaulding, speaking as an advocate of the national black business community, urged Hodges to sponsor a conference on black business. Hodges’s subsequent approval of Spaulding’s proposal thus appeared linked to the positive relationship he (Hodges) had developed with North Carolina Mutual during his previous tenure as the governor of North Carolina.2 67

68  Chapter 3

This conference, which met from November 30 to December 2, 1961, focused on the role of black business in a changing social, political, and economic environment both nationally and internationally.3 It is noteworthy that the Commerce Department’s commitment to this meeting did not include fully underwriting its cost. In fact, as Berkeley K. Burrell, then president of the Washington, D.C., Chamber of Commerce, declared at the opening banquet: The economics of this effort have required that all persons who are participating in the three-day Conference—whether as committee members, speakers, or other participants—should pay the full registration fee.  .  .  . We have been quite pleased with the readiness with which people who by rights should be submitting bills for honoraria have actually agreed to pay this registration fee.4

Considering the Commerce Department’s apparent limited expenditures for this conference, Luther Hodges’s assertion in his opening address that “the Kennedy Administration is eager to help you, every day and in every way it properly can” must have rung hollow in some attendees’ ears.5 But this “transparent” support of an African American initiative reflected the general modus operandi of the Kennedy administration’s relationship with blacks.6 Notwithstanding the question of government funding, the 1961 black business conference, similar to Emmer Lancaster’s pioneering efforts, did provide a public forum in which to discuss issues of importance to the African American business community. But the tone of this meeting differed dramatically from the Commerce Department’s earlier black business conferences. Whereas Emmer Lancaster and his conferences tried to enhance the linkage between black businesses and black consumers, this historic economic relationship received minimal endorsement at the 1961 conference. Detroit Congressman Charles C. Diggs Jr., who served as the general chairman of the conference, used his opening remarks to disassociate this conference from any type of black nationalist inclinations: “Let us say quite frankly that our central concern, at this particular conference, is in the greater participation of Negroes in American business life. Let us hasten to point out that this in no wise (sic) implies any interest in any type of segregated—or separate—economy notions.”7 Diggs’s assertions reflected the contemporary belief of some black businesspeople that racial desegregation would help black business gain access to white cus-

Kennedy and Johnson Administrations and African American Enterprise  69

tomers and clients.8 Yet at the time, neither Diggs nor the black businessmen at the 1961 Commerce Department conference could have known that (economic) racial desegregation would prove to be a one-way affair. While white-owned businesses would make considerable inroads among black consumers, white consumers would remain apprehensive about doing business with black-owned enterprises.9 Besides declaring black business’s interest in participating in the mainstream of American economic life, Diggs asserted that this conference wanted to demonstrate its full allegiance to American political ideals. He declared that this conference was “motivated by a serious concern not only for the well-being of the Negro citizens involved, but also for the strength of American business enterprise at home and abroad, and for the broader cause of American democracy itself.”10 Although Diggs (who was not a businessman) spoke glowingly of the potential of black business in an increasingly desegregated society, many of the papers delivered at the conference were far more cautious regarding the present and future possibilities for black business enterprise in America. For example, Lorimer D. Milton, president of Atlanta’s Citizens Trust Company, told the conference attendees that “the more successful Negroes become in the operation of businesses the stiffer becomes the competition which they must face from other firms—competition for both customers and employees.”11 The “other firms” to which Milton was referring were the growing number of white companies seeking their share of the increasingly lucrative Negro market. Julius A. Thomas, a consultant for the National Urban League, echoed Milton’s concerns concerning the future of black business in a desegregated nation. His presentation began by acknowledging that “Negro entrepreneurs arrived on the business scene primarily to provide, for Negroes, certain goods and services which could not be obtained in the so-called white segment of the business community.”12 Because most white businesses during the early twentieth century regarded African Americans as an impoverished consumer market not worth pursuing, black enterprises were able to develop, by default, a close bond with black consumers. As Thomas went on to point out, in 1961 black business faced increasingly stiff competition for the patronage of black shoppers: At the present point in history, we are facing a different kind of situation. Our general economic situation has improved to the point that our business is sought after by all kinds of entrepreneurs. Many of these concerns

70  Chapter 3 have almost unlimited capital. Furthermore, they bring to these enterprises the accumulated “know-how” of years of successful operation in other locations.13

One of the academic presenters at this conference on black business, who later achieved considerable professional prominence, was Andrew F. Brimmer, then assistant professor of finance at the Wharton School of Business. His paper, entitled “Economic Growth and Investment Opportunities—With Special References to Negro-Owned Businesses,” provided a sobering assessment of the immediate future of black businesses in America. After corroborating Milton’s and Thomas’s earlier assertions about black businesses facing increased competition from their larger white counterparts, Brimmer asserted: Although the demand for services will expand more rapidly than the demand for goods in the general economy, the reverse is likely to be true for Negroes. Median income of Negro male family heads, which was about 60 percent of their white counterparts in 1959, may rise to 75–80 percent of projected white median income by 1975, if employment opportunities for Negroes grow as anticipated. As Negroes advance into higher income ranges, they are likely to spend a major share of the gain in income on goods—especially durable goods and housing—rather than on services. . . . These trends may pose a serious challenge to Negro-owned firms. These firms have, in the past, been concentrated most heavily in the service fields.14 (italics in original)

Although many of the conference presentations were cautious, if not pessimistic, in their analysis of black business in America, some bold proposals also were discussed at this meeting. During the “Sources of Capital Financing” session, Edward Irons, then an associate professor of finance at Texas Southern University, delivered a paper entitled “Needed: A Marshall Plan to Facilitate Capital Formation for the Negro Businessman.” Citing the post–World War II Marshall Plan as a precedent, Irons advocated a similar infusion of capital to assist black businessmen. Irons’s proposed Marshall Plan for black America consisted of two distinct but related components. First he urged increasing the number of African American commercial banks. After pointing out that America’s ten black commercial banks in 1960 controlled only one-thirty-third of 1 percent of the total assets of all U.S. banks, Irons noted: “If we accept

Kennedy and Johnson Administrations and African American Enterprise  71

the premise that no business community can achieve its full business potential without adequate banking facilities, it is easily seen that the Negro business community is suffering from this situation.”15 He went on to suggest that the National Bankers Association, an organization of black bankers, should coordinate this part of his proposal.16 The second phase of Irons’s proposed plan for black America was the establishment of a national financial institution “to supplement the credit function of local banks, or to provide credit to areas which do not have their own facilities.” According to Irons, this national institution would not compete with the local institution; it would handle only those cases which, for legal or other reasons, the local bank could not handle. . . . For example, the average community is in need of venture capital. Banks, as we know, cannot lend venture capital. However, unless a community has venture capital, new businesses cannot get off the ground.17

Irons also envisioned this national financial institution, which would generate needed venture capital in the African American community, as a nonprofit entity that would raise funds on a contributory basis.18 Besides Irons’s visionary proposal, presentations focusing on business opportunities for African Americans in Africa gave the businessmen in attendance some hope regarding their future operations. Although they were increasingly losing the battle with their white counterparts for the patronage of African American consumers, black businessmen were told that the African marketplace would both enhance their profitability and enable them to play an important role in the international battle against communism. In his presentation entitled “Investment Opportunities in Africa for the Small Businessman,” economist Stanley Sumlin of the Federal Reserve Bank of New York no doubt encouraged the conference attendees when he claimed: “American Negroes should enjoy some extra advantages in this setting [Africa]. Not only are there ethnic affinities between American and African Negroes; but there is no stigma of colonialism attached to these Western brothers.”19 G. Mennen Williams, the Kennedy administration’s assistant secretary of state for African affairs, told the black businessmen that their efforts both in the United States and Africa would “contribute substantially to our total welfare and to the freedom we are pledged to defend and to extend both at home and aboard.”20 After acknowledging the pioneer-

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ing activities of some African American businessmen in Africa, Williams, with a subtle reference to the cold war, concluded, The United States has great need for the participation and assistance of talented people in its activities to build security by increasing world-wide economic development, and the larger participation of the Negro American in this task is no more and no less than an integral part of his full integration into American life.21

If Williams was a bit circumspect regarding the political dynamics of black businessmen assuming a more visible role in Africa, LeRoy W. Jeffries, vice president of the Johnson Publishing Company, was much more direct. In fact, during his presentation entitled “Public Relations Programs in Small Business,” Jeffries asked, “After all, who can be a better salesman of democracy in Africa than an American Negro businessman with some worthwhile product or service to offer?”22 In his concluding remarks as the conference chairperson, Congressman Charles C. Diggs Jr. linked black business with the cold war: The Conference has reinforced the lines of communication for the delegates with the Federal government, an accomplishment of extreme importance in my opinion. I believe that Secretary Hodges’ opening remarks established a policy of including us in the drive to increase the gross national product and to help in the Nation’s global struggle with the Sino-Soviet block.23

Although the question of how black businessmen could help the United States win the cold war permeated the conference, one presenter, Eugene P. Foley, the Commerce Department’s deputy assistant secretary for domestic affairs, suggested another connection between the federal government and black business. At the conclusion of his paper entitled “The Government’s Interest in Business Growth Opportunities,” which offered a perfunctory overview of various Commerce Department and Small Business Administration programs, Foley shifted gears. After citing the need to establish an organization “interested in promoting business opportunities for young Negroes who demonstrate an aptitude and interest in business,”24 he announced: I realize that much is being done by many people in respect to civil rights; and I fully appreciate that the basic rights of Negroes are the most impor-

Kennedy and Johnson Administrations and African American Enterprise  73 tant matters to be pursued and resolved in this decade. . . . I recognize that seeking business opportunities for young Negroes may not be a fundamental challenge at this time; nevertheless, I do not think it would diminish the energies of the civil rights movement if a few people active in business or closely related to it were to begin opening up commercial avenues for young Negro businessmen. I would like to become part of such an activity.25

Significantly, Foley’s linking the civil rights movement with greater black business ownership received a big boost in August 1963 when President Kennedy appointed Foley to direct the Small Business Administration.26 Furthermore, Foley’s political inclinations, coupled with Kennedy’s later assassination and Lyndon B. Johnson’s desire to enact his predecessor’s civil rights agenda, put Foley in a position to truly make his administrative mark. Specifically, as Jonathan J. Bean pointed out in his history of the Small Business Administration, Foley wanted “to advance his own version of the War on Poverty by promoting the establishment of black businesses in the ghetto. In the next two years, he transformed the agency [SBA] into a vehicle for social change.”27 Besides the interest and inclinations of well-meaning government bureaucrats like Foley, another reason for the government’s greater interest in promoting African American economic progress after the 1961 White House Conference was the increasing militancy of the civil rights movement. By 1963, in the wake of the violence associated with the Birmingham, Alabama, demonstrations and the brazen murder of NAACP official Medgar Evers in Mississippi, groups such as the National Urban League (NUL) began to make demands that moved far beyond the desegregation of public facilities. As Nick Bryant observed in The Bystander: John F. Kennedy and the Struggle for Black Equality, at the NUL 1963 annual convention, Executive Director Whitney Young—described by Bryant as “the most corporate friendly black leader”—argued that “blacks should receive preferential treatment and special privileges for a limited period of time in order to help them catch up with whites.” Also according to Bryant, “Soon there was talk within the National Urban League of granting reparations to the descendants of former slaves, and of a Marshall Plan for black Americans.”28 Motivated by growing black discontent, along with a favorable political climate in the wake of the Kennedy assassination, Foley’s support of Philadelphia’s Small Business Opportunities Corporation (SBOC) represented his first institutional attempt to link African American civil rights with

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black business development. The SBOC, which sponsored a pilot project to assist black Philadelphia businessmen, grew out of a local initiative supported by the city of Philadelphia, the Drexel Institute of Technology, and the Philadelphia Fellowship Commission. Earlier, in 1962, the SBA’s Philadelphia office rejected a proposal by Drexel to provide assistance to black entrepreneurs. This rejection apparently reflected the mind-set of John Horne, Foley’s predecessor as the SBA administrator. Unlike Foley, Horne had little interest in promoting black entrepreneurship.29 During a January 28, 1964, press conference in Philadelphia, Foley announced the establishment of a SBA-sponsored loan program to advance the SBOC’s aims. Subsequently referred to as “6-by-6” loans, the program offered small businessmen loans of $6,000 with a six-year maturity date. This initiative also gave the loan recipients management training, and although all small businessmen were eligible, black entrepreneurs were given special consideration. The program’s immediate success prompted Foley to establish similar pilot loan programs in five other cities.30 Table 3-1 provides a detailed overview of the nuances of the 6-by-6 program in the six participating cities. As Jonathan Bean noted, Foley’s motivation for the 6-by-6 program consisted of more than merely offering start-up capital to prospective black entrepreneurs. Foley, who seemed to epitomize the idealism associated with 1960s liberalism, saw these loans as a means to raise the stature of black business. Just as the civil rights movement sought to elevate the status of the entire African American community and bring blacks into the mainstream of American society, Foley wanted to make black businesspeople a significant presence in the mainstream of American business.31 Foley’s quest to link the civil rights movement with black business development materialized in March 1964 when he convinced Congress to add a loan provision for small businesses to Title IV of the Economic Opportunity Act. This landmark legislation, which represented the cornerstone of Lyndon Johnson’s “War on Poverty,” took as its guiding principle “a hand up, not a handout.” In this context, Foley’s proposal for a broader-based SBA loan program aimed at prospective black entrepreneurs appeared reasonable.32 It also coincided with Whitney Young’s view that in reference to African Americans, the government needed to make a “compensatory effort” to overcome “the heavy aftermath of past neglect.”33 With strong bipartisan backing from such congressional stalwarts as Senators Hubert Humphrey from Minnesota and Jacob Javits from

Kennedy and Johnson Administrations and African American Enterprise  75

Table 3-1 Participant Cities: The 6-by-6 Loan and Management Program as of June 23, 1965 Total Total Number Amount City Of Loans Of Loans Philadelphia, PA

254

$1,071,422

Total Number Minority Loans

Total Amount Of Minority Loans

113

$443,807

(Cumulative from January 28, 1964, to April 23, 1965, when phased into EOL Program)

Camden, NJ

3

$18,000

2

$12,000

363

$1,657,200

200

$846,500

(Very small program)

New York, NY

(Cumulative from April 6, 1964 (Harlem), and August 10, 1964 (Brooklyn), to May 31, 1965)

Washington, DC

142

$688,350

61

$285,400

(Cumulative from July 8, 1964, to May 11, 1965, when phased into EOL Program)

Houston, TX

15

$69,500

4

$17,100

13

$60,000

393

$1,664,807

(Cumulative from January 13, 1965, to June 23, 1965)

San Francisco, CA

17

$72,750

(Cumulative from February 19, 1965, to June 23, 1965)

Grand Total Minority:

794

$3,577,222

49.5% of total number 46.5% of total amount

Source: Administrative History of the Small Business Administration, Document 12, “6 × 6 Loan and Management Program,” Container 1, Lyndon B. Johnson Presidential Library.

New York, Title IV of the Economic Opportunity Act established the Economic Opportunity Loan (EOL) program. Under its auspices, lowincome individuals interested in starting a business, as well as preexisting enterprises interested in hiring the chronically unemployed, would be eligible for loans up to $25,000 which could be repaid over a fifteen-year period.34 Logistically, the EOL program created an administrative link between the newly established Office of Economic Opportunity (OEO) and the Small Business Administration. Specifically, the OEO was given the authority to establish Small Business Development Centers (SBDCs) across the country to serve as intermediaries between EOL loan applicants and the SBA.35 Once black EOL applicants passed the SBDC’s screening process, Foley’s SBA agreed to relax the usual creditworthiness

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and business experience criteria to determine who would receive EOL loans and give priority to the applicant’s “character.”36 While some observers reasonably questioned the sensibility of a business loan program that gave more credence to “character” than to verified business acumen, the EOL’s link to the overall War on Poverty gave it the political currency it needed to survive. Moreover, Foley did not miss an opportunity to reinforce the relationship between business ownership and the campaign against poverty. In fact, as one scholar stated, his influence was such that in 1964 and 1965, the EOL program “was a [Eugene] Foley story.”37 During the spring of 1965, to promote the EOL program, Foley visited several major American cities. In a April 23, 1965, speech in Philadelphia announcing the termination of the 6-by-6 loan program and the establishment of the EOL, Foley told his audience that the new program “will create opportunity; will create jobs; will inspire younger people to enter business; will assure them that those with business aptitudes and potential—but little capital—can have their chance for success.”38 A week later in Chicago, Foley predicted that the Small Business Development Center program would serve as “a prize example of how a community can administer a government program—and make it work.”39 Initially, Foley envisioned both the 6-by-6 and EOL loan programs as proactive responses to urban black poverty. However, the August 1965 black rebellion in the Watts neighborhood of Los Angeles convinced Foley and his successors at the SBA that programs fostering black business ownership could also be used as a powerful reactive strategy to help quell black urban unrest. For instance, Foley’s August 22, 1965, memorandum to President Johnson’s special assistant, Joseph Califano, on the subject “Possible Steps to Be Taken in the Los Angeles Riot Area” suggested the establishment of a Small Business Development Center in Watts. Foley maintained that “the proposal for a Los Angeles SBDC has been before OEO for some time and could be approved immediately if it were thought time were of the essence. Among other advantages to this is the fact that it would involve immediate action with fairly immediate results.”40 Two months later, on October 27, 1965, two Small Business Development Centers opened in Los Angeles. One served the Watts section of Los Angeles, and the other served the residents of east Los Angeles.41 Another result of the 1965 riots in Watts was President Johnson’s selection of Eugene P. Foley to head a newly created government agency,

Kennedy and Johnson Administrations and African American Enterprise  77

the Economic Development Administration (EDA). For the next three years, Foley’s duties included formulating strategies to minimize the possibility of racial violence in major U.S. cities. Significantly, Foley’s focus at EDA moved from prioritizing the creation of more black-owned businesses to prioritizing the creation of more employment opportunities for inner-city residents.42 Foley’s departure from the SBA left a void that was not filled until May 1966 when Lyndon Johnson selected Bernard Boutin to take his place. Boutin, whose federal administrative background included stints with the General Services Administration and the Office of Economic Opportunity, possessed, according to Jonathan Bean, a “no-nonsense management style.”43 Within a couple months of assuming the position of SBA administrator, Boutin proposed a major reform of the EOL program. In a July 25, 1966, memorandum to one of President Johnson’s special assistants, Boutin, convinced that the joint administration of the EOL by the OEO and the SBA “had not lived up to expectations,” called for the EOL program to be “solely administered by SBA using Government employees rather than non-Government employees employed by the community action organizations.”44 Boutin’s suggestion became legislative reality on November 9, 1966, when the SBA, based on President Johnson’s amendments to the Economic Opportunity Act, took total administrative control of the Economic Opportunity Loan program. Under this new arrangement, the scope of the EOL program widened dramatically. First, EOL loans would be administered by the SBA’s seventy-three field offices covering every state, Puerto Rico, the Virgin Islands, and Guam. Previously, the EOL program was available only in the forty-four cities that had Small Business Development Centers.45 Second, Boutin increased the number of potential EOL recipients by establishing the EOL(I) and EOL(II) programs. In a November 9, 1966, memorandum to SBA area administrators, regional directors, and branch managers, Boutin elaborated on the two programs. To bring the EOL program more within the realm of “normal” business financing and to move it away from the previous consideration given to applicants’ “character,” Boutin declared: EOL(I) loans will be made to low-income individuals. The emphasis will be placed on sound loans to existing businesses. While new businesses may

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Table 3-2 Selected Characteristics of Economic Opportunity Loan Program, November 1966 to February 1967

|

|

Total Number of Loans Dollar Volume

EOL I 227 $1,982,110

|

Race

| |

|

EOL I

|

Number

|

Minority White

%

| |

|

EOL II 251 $3,267,802

|

EOL II

|

Number

| |

99 43.6 128 56.4

%

Total 478 $5,249,912

| |

Total

|

Number

| |

77 30.7 174 69.3

|

%

176 36.8 302 63.2

Source: Records of the SBA, Microfilm Roll 8, Lyndon B. Johnson Presidential Library.

qualify for EOL(I) loans, we do not intend to provide start-up financing for a small grocery, beauty parlor, carry-out food shop or other businesses of the type traditionally operated by members of disadvantaged groups. . . . Unless the community clearly stands to benefit, we do not want to finance these new businesses. EOL(II) loans will be made to individuals in higher income brackets who have experienced lack of opportunity. We anticipate this program will attract many individuals who are well employed but who have sound business plans, management capability, and a strong desire to start their own business.46

In a February 20, 1967, notice sent to members of Congress, Boutin announced the progress the revamped EOL program had made in its first quarter of operation. Among other things, he noted that EOL applications were being processed in every state in the Union.47 Table 3-2 provides a quantitative overview of Boutin’s report. Four months later, in June 20, 1967, testimony before the House Committee on Education and Labor, Boutin announced the new OUTREACH program to accentuate the effectiveness of the revamped EOL program. Besides serving the needs of inner-city areas, Boutin declared that SBA personnel were “getting out from behind our desks and striking into new territories, into non-metropolitan areas where the people are also faced with similar hardships from economic stagnation.”48

Kennedy and Johnson Administrations and African American Enterprise  79

Both the quantitative data from table 3-2 and Bernard Boutin’s comments before Congress on June 20, 1967, suggest that by mid-1967 Eugene Foley’s initial vision of the SBA as a vehicle to promote black entrepreneurship had become subsumed in a broader institutional mission of serving the disadvantaged, regardless of their racial or ethnic heritage.49 Consequently, based on the U.S. population’s demographics, more whites than blacks ended up benefiting from the EOL program. In the increasingly racially charged atmosphere of the late 1960s, in which African Americans’ rising expectations collided with racial barriers, the revamped EOL program helped reinforce black doubts about the “sincerity” and “goodwill” of the SBA and other government agencies. As an example, Whitney Young of the National Urban League blasted Bernard Boutin’s restructuring of the EOL program in the January 24, 1967, issue of the Washington Daily News, asserting that “this policy is shortsighted at best, and is a severe blow to thousands of persons who could have regained their economic independence and strengthened the economy of ghetto areas.”50 Although Bernard Boutin created the scenario that spawned growing black criticism of the EOL program, it was his deputy administrator, Robert C. Moot, who was called on to address the African American community’s concerns. After Boutin tendered his resignation, based on financial considerations, on June 27, 1967, Moot took the helm of SBA.51 Robert C. Moot’s early tenure as the SBA administrator coincided with arguably the most violent period of urban racial unrest in American history. During the “long hot summer” of 1967, 176 disturbances took place across America. Besides leading to the creation of the National Advisory Commission on Civil Disorders to determine the causes for the rebellions (or riots, depending on one’s perspective), one important aftermath of this summer was the SBA’s movement toward providing racially specific aid to prospective and existing black businesspersons. One manifestation of this policy decision to help African American entrepreneurs in particular was the growing popularity of the term black capitalism, and chapters 5 and 6 of this book examine how both the Democrats and the Republicans embraced the notion of black capitalism during the presidential campaign of 1968. Although the Small Business Administration played a major role in promoting black entrepreneurship during the mid-1960s, through the efforts of Abraham S. Venable the Commerce Department also made an important contribution in this area.

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Venable, who held BA and MA degrees in economics from Howard University, joined the Commerce Department in 1963 as a specialist in its Community Relations unit. He subsequently served as a member of the Commerce Department’s Task Force on Equal Opportunity in Business and supervised the Commerce Department’s affirmative action programs related to domestic commerce.52 A closer examination of Venable’s activities reveals a clear link to the historical tradition established by his African American predecessors at the Commerce Department. As the pioneering “Billboard” Jackson had done, Venable concentrated on making black businesses aware of pertinent Commerce Department programs. As he noted in a May 1967 article entitled “Mobilizing Dormant Resources: Negro Entrepreneurs,” The [Commerce] Department does not attempt to establish a new set of business rules for minority group members, rather, it is working to help Negro businessmen and other minority groups become more aware of and make greater use of public and private resources that are available to assist business. We emphasize the proven techniques which the majority business community has used to achieve its economic objectives.53

While Venable asserted that there were “universal” aspects related to business activity, in the same article he also acknowledged that based on the dynamics of American society, African American entrepreneurs were affected by unique, racially based circumstances. For instance, after commenting on the marginal status of many black enterprises, he declared: In the white community, businessmen are predominantly community leaders. Because the Negro businessman has to struggle to survive, he has neither the time nor the stature to serve as a community leader. Thus, the neighborhood and the community are deprived of what should be one of their strongest stabilizing influences. . . . More often than not, many Negro businessmen are a symbol of frustration and hopelessness rather than an example of achievement, success and leadership.54

Thus based on this reality and in the tradition of Emmer Lancaster, Venable sought to create special strategies and programs aimed at helping black entrepreneurs. Unlike Eugene P. Foley, who had concentrated on increasing the number of black entrepreneurs, Abraham S. Venable emphasized enhancing

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the operations and profitability of existing African American enterprises. His “Economic Organization Concept,” which he defined as “the cooperative joining of business firms engaged in identical or similar lines of business activity into a trade association,”55 sought to stimulate black economic development. On July 1, 1966, in cooperation with the Small Business Guidance and Development Center at Howard University, the Commerce Department established a pilot program known as the Howard University Dry-Cleaning Project. Using Venable’s “Economic Organization Concept,” the Howard University Dry-Cleaning Project began by convincing local black-owned dry cleaners to form a trade association known as the Capital Drycleaners Association (CDA). Within a year, the CDA had sixty-five dues-paying members.56 An assessment of the CDA included the following positive assertions: “To date significant progress has been made in seven areas: (1) improvement of physical appearance of shops, (2) standardized accounting system, (3) group insurance, (4) employer and employee training, (5) group advertising, (6) publishing a newsletter, and (7) standardized quality controls.”57 The early success of the Capital Drycleaners Association led to an even more ambitious attempt to implement Venable’s Economic Organization Concept. In June 1967, in conjunction with the New York-based Interracial Council for Business Opportunity, the Commerce Department established a regional trade association of blacks who owned furniture and appliance stores. The purpose of this association, based on the Capital Drycleaners Association, was to organize black retailers in Boston, New York, Trenton, Newark, Philadelphia, Baltimore, Washington, and Richmond.58 Although Venable made helping existing black entrepreneurs a priority, he also wanted to increase the number of African American business owners. To do this, Venable centered his attention on helping blacks obtain franchises of national established enterprises. Venable’s interest in increasing the number of black franchise owners appeared to be based on a sound, logical, grasp of the realities facing most blacks trying to enter the world of business ownership. As he noted in a summary report of the Commerce Department’s Affirmative Action activities, Many minority group persons lack the two basic essentials for operating a successful business: (1) business and managerial experience; and (2) adequate financial resources. Franchising provides a means of resolving these problems. Under this system, the franchisor provides managerial training

82  Chapter 3 and assistance on a continuing basis and, in most cases, will finance equipment; co-sign bank notes, arrange leases for property and arrange for equity loans from SBA, local banks, private investors, and, at times, participate themselves.59

To help prospective black franchisees find a suitable franchise opportunity, Venable’s office published the Franchise Company Data Book which listed “franchise firms which have pledged to enter into franchise agreements on a nondiscriminatory basis and without regard to race, color, or national origin.”60 Between January 1965 and February 1967, the number of such firms listed in the Franchise Company Data Book grew from eighteen to 249.61 A significant franchise opportunity promoted by Venable’s office during the mid-1960s involved the Jet Food Corporation. Jet Food, a predominantly black-owned enterprise founded on February 7, 1967, in Baltimore, was intended to open franchise supermarkets in black neighborhoods across America.62 Venable’s rationale for supporting this project, which involved a cooperative effort by the Small Business Administration, the Commerce Department’s Affirmative Action program, and the Jet Food Corporation, was the fact that “the Jet Supermarkets will be a source of employment for hard-core unemployed and will provide minority group persons with entrepreneurial experience. The markets will fill a convenient gap now existing in ghetto communities.”63 Notwithstanding Jet Food, the vast majority of franchise opportunities for prospective black businesspeople were with white-owned companies. Thus, to stimulate interest among African Americans in entering business as a franchisee, Venable began publicizing his “20-×-10-×-2” project in 1967. This, he hoped, would help secure a firm commitment from twenty national franchisers to sign up ten black franchisees each during the next two years.64 In addition, seeking to interest black youth in becoming future franchise owners, Venable began the “Franchise Industry Project” to “train youngsters between the ages of 16 to 21 in the general principles of retailing, business entrepreneurship, and franchise dynamics.”65 Besides using his Franchise Industry Project to promote entrepreneurship among young blacks, Venable, recognizing the importance of role models in the African American community, tried to employ black athletes in his crusade to stimulate the interest of both young and older African Americans in black business development.

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In an undated letter to Buddy Young, an African American pioneer in the National Football League (NFL) and its director of player relations, Venable outlined a bold proposal to assist both the NFL’s black players and the larger African American community. He began by noting that according to a conversation with Young, after many black players completed their athletic careers, they “deteriorate to a level of financial mediocrity and in many instances become irresponsible citizens.”66 But even though the fortunes of many former professional black athletes mirrored that of most blacks, Venable noted one important distinction: “The Negro athlete is a symbol of achievement, success, and leadership, and in many instances, can and does control the destiny of millions of young Negro Americans. This inextricable tie between the Negro athlete and the Negro community is of crucial significance.”67 Based on this fact and on many blacks’ negative perception of black businesspeople, Venable observed, “A major effort directed at developing a meaningful business career for Negro players in the National Football League would undoubtedly have a most significant effect towards changing conditions in the total Negro community. A new dimension in Negro leadership could be created.”68 To reach this goal, Venable asked Young to use his influence to persuade the National Football League to offer an “executive counseling service” to help black NFL players seeking either to enhance their employment options after retirement or to go into business for themselves. Perhaps not coincidentally, Venable told Young that “the franchise industry represents a tremendous possibility for Negro players to become business operators.”69 Besides informing Young that “major franchisors have expressed a keen interest in meeting with professional athletes to discuss franchise possibilities,”70 Venable suggested to him that black athletes develop their own independent franchise businesses, noting, “Most major urban areas are noticeably lacking in recreational facilities. Professional athletes might very well develop or organize new franchise operations such as roller skating rinks, ice skating rinks, swimming pools, health clubs, etc. which they could own or sell franchise rights to others.”71 To help facilitate black NFL players’ entry into the franchise industry, including the establishment of black-owned franchises, Venable proposed a variation of his economic organization concept. He suggested to Young that it would be feasible to establish an investment fund for the NFL’s 136 black players. Venable pointed out that if each black player contrib-

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uted at least $1,000 to the fund, it would add up to at least $136,000 in initial working capital. This money could subsequently “be used for a host of activities including (a) loans to players; (b) business investments; (c) stock purchases, etc.”72 In closing, Venable told Young that besides representing “a new phase for the Negro athlete and the Negro business community,” the investment fund proposal was a “step that must be taken if the Negro is to begin to enter significantly into our economic system.” Moreover, Venable declared that “the knowledge, experience, and training gained by Negroes participating in these types of activities will act as a lever to initiate and motivate a new set of positive forces in the Negro community.”73 Venable’s letter to Young quickly bore fruit. His August 1967 “Summary Program Activities of the Affirmative Action Programs Staff” included a section referred to as the “Athlete’s Project.” Besides reiterating what he had proposed to Buddy Young, Venable noted that the participating black athletes would also “be encouraged to form nonprofit corporations to assist youngsters and others in various projects at the community level.”74 More important, Venable provided details about both the first black athletes involved in this project and the enterprises they were in the process of establishing. The NFL players mentioned in Venable’s 1967 report were John Mackey of the Baltimore Colts, Bobby Mitchell and Lonnie Sanders of the Washington Redskins, and Willie Wood of the Green Bay Packers. According to Venable, The plan is to establish three major businesses in Washington, D.C. during the next year: (1) a Goodyear Tire & Appliance Center; (2) a Multipurpose Recreation Center (hopefully to include a roller skating rink, an ice skating rink, 16 to 20 bowling lanes and an olympic size pool all under one roof) and (3) a motel. The initial arrangements with Goodyear Tire and Rubber Company have almost been completed. We are presently working with AMF on the Multipurpose Recreation Center and with Imperial “400” Motels on the proposed motel.75

Venable’s athlete project was similar to another noteworthy attempt to link professional black athletes with the business and economic aspirations of the larger black community. The Black Industrial and Economic Union, whose most prominent member was former Cleveland

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National Football League participants in the Office of Minority Business Enterprise’s Business Management Fellowship Program, 1974. This initiative, which used NFL players to encourage inner-city youth to consider a career in business management, was a later manifestation of the Commerce Department’s initiatives started by Abraham Venable in the mid-1960s to use professional football players to promote business enterprise and entrepreneurship in the African American community. Standing from left to right: Jim Harris, John Bunting, Jon Staggers, Dave Lewis, Robert West, Clarence Ellis, and Mel Holmes. Seated from left to right: Bob Bell, Ed Bell, Joe Profit, Tim Foley, Cal Snowden, Mack Alston, and Mrs. Carrie Rozelle, wife of NFL Commissioner Pete Rozelle (courtesy of National Archives, College Park, MD).

Browns running back Jim Brown, had offices in eight cities across America. Adopting the motto “Produce, Achieve, and Prosper,” this organization, which was made up of professional athletes and received financial assistance from the Ford Foundation, nicely complimented Venable’s initiative.76 By the beginning of 1968, the issue of how best to encourage black economic development was at the forefront of national priorities and concerns. Even before the notion of black capitalism became a cornerstone issue of the presidential campaign of 1968, the Johnson administration seriously grappled with the question of how to include more African Americans in profitable business enterprises, especially if greater black participation in the American economy as entrepreneurs could help prevent future reenactments of the previous long hot summer.

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In February 1968, the Commerce Department produced a fifteen-page report entitled “A National Strategy for Developing Minority Business Opportunities.” Although this document does not list a specific author, its contents make it clear that Abraham S. Venable was its architect, if not its actual author. One important assertion in “A National Strategy” was the fact that more employment opportunities for blacks would not necessarily satisfy African Americans’ demands for “a larger share in the private ownership and managership of our society.” From inner-city militants who declared that “we had full employment on the plantation” to the moderate black Republican U.S. senator Edward Brooke, who asserted that “real equality in the United States of America will be impossible if the white race is to be a race of owners and managers and the Negro race is to be a race of employees and laborers,” the message was loud and clear. That is, African Americans “want more control over their own destinies and are coming to believe that an important avenue to such freedom is the ownership and operation of business enterprises.”77 In a particularly revealing section, “A National Strategy” asserted that economic equality was just as important as social, political, and racial equality and that “recognizing and enforcing the civil rights of minority Americans will not, in itself, break the cycle of despair described as urban poverty.”78 Clearly the federal government needed to better coordinate its programs promoting black entrepreneurship. By early 1968, according to “A National Strategy,” the federal government had set in motion several programs to help African American business development. The Small Business Administration, the Economic Development Administration, the Department of Labor, the Department of Health, Education and Welfare, the Department of Housing and Urban Development, and the Department of Defense were cited as having initiatives related to promoting black business ownership.79 Furthermore, after noting that this inventory of government programs to promote black business was “by no means complete or even comprehensive,” this Commerce Department document declared “the need is more for unification and cooperation than for new programs.”80 These government programs’ lack of coordination reflected a similar situation in the private sector. By early 1968, a number of organizations and foundations were promoting black economic development. Some of the more prominent were the National Business League, the Urban Coalition, the National Association of Manufacturers, and the

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Ford Foundation. Also, many American universities, including Howard, Columbia, and the University of Washington, were offering management-related programs to help existing and prospective black entrepreneurs.81 To coordinate existing government and private-sector programs related to black business development, as well as to generate greater public awareness of such efforts, the Commerce Department’s February 14, 1968, report called for the establishment of both a “national council on urban enterprise” (NCUE), chaired by the secretary of commerce, and an “office of urban enterprise” (OUE), to be housed in the Commerce Department. The NCUE would be composed of representatives from both the private and public sectors who would serve as an advisory board to the Office of Urban Enterprise. Besides helping construct a viable national policy related to minority business development, by coordinating preexisting public- and private-sector initiatives, the OUE would also be charged, in accordance with the NCUE’s recommendations, with developing new programs to stimulate black entrepreneurship.82 “A National Strategy for Developing Minority Business Opportunities” concluded by asserting that the proposed office of urban enterprise needed to be endorsed and “approved at the highest level of government.” Moreover, there appeared to be no reason to delay immediate implementation of this proposal because “new legislation is not required to begin action. The resources are available and need only to be pulled together in cooperation with a national program.”83 The Commerce Department’s February 14, 1968, recommendations for a national council on urban enterprise and an office of urban enterprise never were accepted. Nevertheless, on March 6, 1968, the obvious need for a national strategy to promote African American entrepreneurship prompted Vice President Hubert Humphrey to request an interagency report coordinated by the SBA that would provide an outline for “A National Program for Promoting Minority Entrepreneurs.”84 The subsequent thirty-eight-page study, presented on March 26, 1968, expanded on the Commerce Department’s report released the previous month. After reiterating the need to offer African Americans an opportunity to fully participate in the U.S. economy as business owners as well as workers, “A National Program” admitted that such an initiative would not be easy:

88  Chapter 3 It should be recognized from the onset that this program will be difficult, and that it will entail high risks in its financial aspects. Nor can sudden and dramatic results be expected. To launch and sustain substantial business enterprises, run and owned by minorities, will be a growth proposition, requiring relatively long-term effort and financing, and in-depth counseling and assistance for protracted periods.85

In retrospect, if we accept the wisdom of this observation, notwithstanding the rhetoric and limited actions of various politicians, the notion of black capitalism has never really been given a chance to work in American society. To begin promoting substantive black economic development, “A National Program for Promoting Minority Entrepreneurs” proposed a “national committee on minority business,” which “would be much like the National Alliance of Businessmen in the field of employment.” In addition to representatives from the business community, this committee would be made up of minority group leaders, foundation executives, and government officials.86 To complement the proposed national committee, “A National Program” called for the establishment of a federal interagency committee. This committee would be chaired by the vice president and would include “the Under Secretaries of Commerce, HUD, and Labor, the Director of OEO, and the Administrator of SBA.”87 In sum, both the Commerce Department’s February 14, 1968, report, “A National Strategy for Developing Minority Business Enterprises,” and the March 26, 1968, interagency report entitled “A National Program for Promoting Minority Entrepreneurship” conveyed the federal government’s serious interest in increasing the number of African American entrepreneurs in the United States. Ironically, although the GOP’s Richard M. Nixon is most often associated with promoting the notion of black capitalism, the chief Democratic candidates in the pivotal presidential election of 1968, Hubert H. Humphrey and Robert F. Kennedy, also had a documented interest in this area.

4 The Democratic Party and Black Capitalism during the Presidential Election of 1968

Richard M. Nixon is generally credited with introducing the notion of black capitalism into the nation’s vocabulary during his 1968 presidential campaign. However, the chief Democratic candidates for the presidency that year, Vice President Hubert H. Humphrey and Senator Robert F. Kennedy, had an equally great interest in black economic development. In any case, during the 1968 campaign, the Democratic Party had a variety of opinions as to how the party’s interest in promoting black entrepreneurship should be portrayed. The SBA administrator, Howard J. Samuels, led an extremely ambitious and high-profile effort known as “Project OWN.” Other prominent Democrats suggested a more cautious approach. In the end, Humphrey’s connection to the Johnson administration’s unsuccessful execution of the war in Vietnam, Robert Kennedy’s June 5, 1968, assassination, and the Democratic Party’s lack of a universally agreed-upon agenda for promoting black capitalism doomed the Democrats’ hopes of retaining the presidency after November 1968. Even before he announced his candidacy for the presidency, Vice President Hubert Humphrey had demonstrated his interest in promoting entrepreneurship in the African American community (see chapter 3). When Humphrey helped facilitate the production of “A National Program for Promoting Minority Entrepreneurs,” President Lyndon B. Johnson had not yet decided not to seek reelection in 1968. But on March 31, 1968, because of the North Vietnamese’s earlier Tet offensive and Senator Eugene McCarthy’s strong showing in the recent New Hampshire presidential primary, Johnson announced his decision not to seek reelection. During his subsequent quest for the presidency, Humphrey found he could not disassociate himself—until the last days of the campaign—

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from the Johnson administration’s failed policy in Vietnam. Nevertheless, he felt confident that he could clearly articulate the Johnson administration’s commitment to civil rights, including African Americans’ right to own a business. Excerpts from two of the speeches that Humphrey gave during the spring of 1968 reveal his thinking about black capitalism. On May 2, 1968, to the African Methodist Episcopal Church Conference, he lamented black business’s peripheral role in American society: “Count 40 white Americans. One is a proprietor. To find one black proprietor, count one thousand. And with rare exceptions, he is in a marginal business.”1 One month later, in a June 3, 1968, speech to the American Management Association similar to Nixon’s earlier “Bridges to Human Dignity” speeches (see chapter 5), Humphrey made a positive connection between “black pride” and black economic development. Citing the link between pride and participation, Humphrey compared the justifiable call for more black participation in the U.S. economy to “the love that Medieval Europeans felt when they saw a cathedral go up—because they had participated in building it.”2 Among the weapons that candidate Hubert Humphrey had in his arsenal to counteract Richard M. Nixon’s assertions regarding black business development was a July 5, 1968, campaign report entitled “Black Entrepreneurship: Need and Opportunity for Government Help.” This document provided Humphrey with both the philosophical and the political justifications for promoting African American entrepreneurship, and it also furnished specific and innovative suggestions as to how this goal could be achieved. Echoing Humphrey’s words at the June 3, 1968, meeting of the American Management Association, “Black Entrepreneurship” began by asserting that “a goal of government should be to help Negroes to participate more fully in the business leadership of Negro communities and to take pride in their communities and in themselves. After all, ‘black pride’ is often what Negroes mean when they talk about ‘black power’” (italics in original).3 Next, in an attempt to connect psychology and politics, “Black Entrepreneurship” asserted that proactive government activities to promote black pride were essential “to demonstrate more meaningfully to innercity Negroes that personal progress and financial independence can be achieved within the existing political economic system” (italics in original).4 After four summers of racial violence, along with the grow-

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ing radicalization of African American youth, it was clear that the U.S. government had to do something substantial to win the support of an increasingly disgruntled African American population. “Black Entrepreneurship” offered a number of possible strategies to use black business development to simultaneously enhance black pride and quell black insurgency. As noted in earlier reports, the U.S. government was sponsoring many programs to assist black business development, although they were underutilized by prospective and existing black entrepreneurs. To address this problem, “Black Entrepreneurship” declared: “It cannot be emphasized enough that these programs have to be more widely and vigorously publicized and promoted” (italics in original).5 Besides citing such long-standing initiatives as the Small Business Administration’s Economic Opportunity Loan Program, this report discusses the Office of Equal Opportunity’s (OEO) Small Business Training and Technical Assistance Program. In addition, the OEO, along with the National Business League and the Interracial Council for Business Opportunity, had recently created Project Outreach, whose mission was to train prospective and existing small black businesses.6 Besides discussing government-sponsored initiatives to promote black entrepreneurship, “Black Entrepreneurship” discussed private-sector initiatives, three examples of which were consortia of African American business and professional people (who together sponsored black-owned companies), white-owned companies that provided financial and or management help to start black-managed enterprises, and communitysponsored development companies.7 The efforts of the Green Power Foundation, created in the Watts area of Los Angeles, received considerable positive coverage in “Black Entrepreneurship.” Green Power, created by a group of 153 black professionals, each of whom donated $75 in start-up capital, epitomized the potential benefits of coordinating the efforts of black community residents, local banks and corporations, and the federal government. After the founders of Green Power raised $11,475 in start-up capital, the foundation followed a five-step action plan: 1. 2.

Leased 100,000 sq. ft. of plant space from the Pacific Telephone Co. for $1 a year. Negotiated a 60-day, $50,000 loan from the United California Bank, with 30 blue-ribbon companies acting as loan guarantors.

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3.

4. 5.

Started manufacturing “Watts Walloper” baseball bats, mounted the bats on presentation plaques and sold the plaques to supporters for $10 apiece. Used the proceeds to pay off the $50,000 loan. Applied for—and expects to receive—a $280,000 SBA loan for plant expansion.8

The story of the Green Power Foundation was even more impressive when the discussion centered on its workforce. After noting that the foundation employed sixty Watts residents and had a waiting list of six hundred job applicants, “Black Entrepreneurship” provided the following observation about its workers: “Green Power hires only people with arrest records, and employees average about twelve arrests each.”9 Thus, to its credit, Green Power Foundation sought not only to economically rehabilitate the Watts community but also to socially rehabilitate black ex-convicts. Of the white-owned corporations that helped foster black economic development, Xerox’s involvement in the establishment of the Rochester, N.Y.–based FIGHTON company was significant. FIGHTON, a company created to manufacture light transformers and metal stampings in an inner-city plant, was the result of the unprecedented cooperation of a local black community organization, a local major corporation, and the federal government. Besides Xerox, the other partners in the creation of FIGHTON were FIGHT (a local black community group) and the U.S. Department of Labor.10 With assistance from local banks, FIGHT would own and operate the FIGHTON plant and would “provide life-skills training and other preemployment training for men and women to enter the labor force.” Besides providing job training for FIGHTON’s workforce, Xerox guaranteed a market for FIGHTON’s products for four years. Finally, the Labor Department agreed to subsidize some of the Xerox’s and FIGHT’s training efforts.11 A final example of private-sector initiatives promoting black entrepreneurship was the community-sponsored development companies. According to “Black Entrepreneurship,” Baltimore’s Council for Equal Business Opportunity was the most noteworthy such company. This interracial group of businessmen, with local funding and funding from the Ford Foundation, was involved in three basic activities. First, they identified areas of business opportunity; second,

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they offered entrepreneurial training and management advice; and third, they established an investment company to provide risk capital. Among the fifty small black-owned firms associated with Baltimore’s Council for Equal Business Opportunity” were a tire dealer, a clinical laboratory, a general contractor, and an electronic component producer.12 As earlier government reports had done, “Black Entrepreneurship” called for the closer coordination of government and private-sector efforts to promote black economic development. What was different about this document was that it called on the federal government to place even greater priority on creating prospective black entrepreneurs. For instance, it pointed out: “The Manpower Development Training Act [MDTA] Program, which now concentrates on teaching basic job skills to the unemployed should be expanded to add executive management training. The MDTA should teach people to become employers as well as employees.”13 Besides expanding the MDTA’s parameters, “Black Entrepreneurship” proposed another innovative way to increase the pool of prospective black entrepreneurs: A most promising source of new entrepreneurs will be found in the ranks of Negro G.I.’s, notably the veterans of Viet Nam. Residents of the innercity look up to them as natural leaders. Also, the rest of society feels that it has an obligation to them, a debt to be paid. (italics in original)14

To help facilitate such a scenario, “Black Entrepreneurship” urged the federal government to “expand the G.I. Bill immediately to provide for on-the-job training in entrepreneurship as well as in-the-school training in academic subjects” (italics in original).15 Moreover, “if a veteran does not wish to go to college with the aid of federal funds, there is every reason that the Government should grant him the same amount to start a business.”16 Another specific suggestion made by “Black Entrepreneurship” to stimulate black economic development was the creation of a national urban development bank. Such an institution, which had been endorsed by Vice President Humphrey, would, among other things, “help blacks to buy businesses from the ghetto’s white entrepreneurs, who may be willing and eager to sell them.” Under this arrangement, white entrepreneurs would not be allowed to “take the money and run.” Rather, they would

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Howard J. Samuels being sworn in as undersecretary of commerce on November 30, 1967. Later, as the administrator of the Small Business Administration, he promoted the Project OWN initiative to increase the number of black entrepreneurs (courtesy of Lyndon B. Johnson Library).

be expected to teach the new black owners the business, and the white exowners would be paid from the business’s profits for their consulting.17 Despite the impassioned and explicit observations and recommendations of “Black Entrepreneurship,” such documents are meaningless unless an administrator actually is able to implement such suggestions. In this case, Howard J. Samuels’s ascension to the position of administrator of the Small Business Administration in July 1968 was important. During the summer and fall of 1968, Samuels’s zealous efforts to promote black businesses were reminiscent of Eugene P. Foley’s actions earlier in the decade. Before entering government service, Samuels, a native of Rochester, New York, had distinguished himself as a businessman. Following service in World War II, he and his brother Richard launched the Kordite Corporation, which produced various plastic products. By the early 1960s, Samuels was a millionaire vice president of the Mobil Corporation (which had purchased Kordite).18 In 1966, Samuels entered the New York gubernatorial campaign. Running as a businessman who could “reform” state government, he declared, “The more I analyzed the job [being governor], the more

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I became convinced that it would take a businessman to do it.”19 Yet despite his zeal, Samuels ultimately lost the Democratic nomination to Frank O’Connor, president of the New York City Council. After his unsuccessful bid to become governor, Samuels later moved to Washington, D.C., where he served as the undersecretary of commerce. In that role, he began to formulate a plan to revamp the SBA’s minority business program. As he told Joseph Califano, special assistant to the president, in a July 13, 1968, memorandum: We plan to change the direction of our inner city operations which has concentrated on the development of manufacturing minority-owned companies and wholesaling into a whole national program supported by the banks and organized and planned in great detail to help minorities buy out businesses in the inner city.20

This proposal, which closely resembled the National Urban Development Bank concept described in “Black Entrepreneurship: Need and Opportunity for Government Help,” received more attention in a July 22, 1968, letter from Samuels to President Lyndon B. Johnson. Writing as the SBA administrator-designate, Samuels outlined his ambitious plans to enhance the SBA’s programs aimed at promoting minority business ownership. The centerpiece of his agenda was the enlistment of the American Bankers Association (ABA), thereby emulating the organizational structure of the National Alliance of Businessmen, to “establish and develop minority-owned and operated businesses in the disadvantaged areas of the country.”21 After informing the president that the initial response of ABA officials “was very positive,” Samuels told him that he and ABA officials had already begun discussions to determine the types of businesses in specific areas which will lend themselves to quick turnover, which have the highest potential for success and which will lend themselves to ownership by minorities who need a minimum of management assistance and/or training. We believe that retail and small service establishments offer the best hope for meeting our three main objectives—speed, visibility, and success. Toward this end, I met yesterday with the leadership of the Menswear Retailers of America and received an enthusiastic response.22

Samuels concluded the letter by urging Johnson to declare publicly his support for this new initiative to assist minority entrepreneurs.23

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Three weeks later, on August 12, 1968, Samuels, who had officially assumed the title of SBA administrator, sent a follow-up letter to the president in which he stated his intention to announce a new program the following day, “for stimulating minority ownership of business.”24 Besides reiterating the support he had from the American Banking Association, Samuels told the president: We are also involving American industry, to give the managerial support required to make minority businesses successful. At the press conference we will announce our first contract which involves the Menswear Retailers of America. Within the next 90 days, we expect to have about 20 similar industry groups organized to provide management assistance and advice to minority businesses.25

At the end of the letter, Samuels optimistically predicted that by the end of fiscal year 1969, his proposed program would generate ten thousand loans to prospective minority businessmen and that by fiscal year 1970, the number of such loans would increase to twenty thousand. In fact, Samuels predicted that if twenty thousand business loans were made available to prospective minority entrepreneurs each year during the 1970s, this could “greatly close the black–white gap in the entrepreneurial sector of the American economy.”26 Perhaps ironically, on August 12, 1968, besides Howard J. Samuels’s optimistic letter to President Johnson, a far more sober report was submitted by the Task Force on Minority Entrepreneurship. This eightmember group, chaired by Matthew Nimetz, staff assistant to Joseph Califano, consisted of individuals from the Bureau of the Budget, Council of Economic Advisers, Department of Labor, Department of Commerce, and Small Business Administration.27 Nimetz’s cover letter to Joseph A. Califano provided an overview of the task force’s report, which directly contradicted some of Samuels’s assertions. For example, some of the principles that the task force had agreed on were the following: •

•

Caution should be exercised to avoid overstating what an entrepreneurship program for minority groups can accomplish, particularly in the short run. Emphasis should be placed on the local level rather than nationwide, and on minority-involvement and

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•

control from the very start, rather than “power structure” domination. Publicity, especially involving the President, should be avoided, but vigorous efforts led by SBA should be made to mobilize the banking community on a city-by-city basis to channel funds for minority entrepreneurs.28

Although the task force provided corroborating evidence to support the principles outlined in Nimetz’s letter, it also criticized some of the economic and social aspects of Samuels’s plan. In response to Samuels’s assertion that the best hope for black entrepreneurship was owning more retail establishments, the report noted: First, small retail businesses are apt to be the kinds of businesses most available for black entrepreneurs, but retail firms regularly account for half of all business failures. Smaller enterprises of all kinds show a markedly greater failure rate than larger ones. . . . Second, in recent years business has shown a marked trend towards fewer and larger retail enterprises, responding in large part to economies of scale. . . . Drug stores, grocery stores, hardware stores, clothing stores and drycleaning shops are examples of retailing in which the number of enterprises has declined.29

The task force’s report was equally unenthusiastic about Samuels’s call for a well-publicized national organization of bankers and businessmen to promote more African American ownership of retail establishments: First, national publicity will probably result in raising expectations that cannot be fulfilled in the short run. In addition, it would almost certainly be criticized as a belated attempt by the Administration to appear to be doing something while in fact doing nothing. . . . Second, even if the leaders of the black community are on the organization’s national board, an organization of white bankers will appear as a white charitable effort. Experience has taught us that if white groups are organized independently and without prior involvement of the black communities, it is often difficult to convince minority leaders to cooperate on a local level.30

While much of this report appeared unequivocally critical of Samuels’s proposed agenda to jump-start black economic development, it did con-

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cede that some elements of his approach were reasonable if approached with great caution. One example was the task force’s discussion of blacks purchasing retail businesses previously owned by whites. Samuels believed that white businessmen in urban areas, especially in the wake of recent urban disorders, should receive government and private-sector assistance to sell their establishments to black entrepreneurs. While the task force agreed that the SBA’s interest in this type of transfer was “entirely warranted,” it also warned: “Many existing businesses that will be offered for sale cannot be operated profitably regardless of the owner’s race, and it is important to avoid the charge that this program is only a method of bailing out white businessmen and dumping marginal businesses on inexperienced Negro purchasers.”31 To its credit, despite being issued in an election year, the task force’s report urged a realistic approach in trying to increase the number of black entrepreneurs. But for a variety of reasons, it was disregarded, if not ignored. First, by all accounts, Samuels was a strong-willed man whose enthusiasm sometimes appeared infectious. As one of his former associates at Mobil noted, Samuels got things done not by bullying subordinates but by “catching them up in his own enthusiasm and then leading them.”32 Undoubtedly, he hoped that his enthusiasm could achieve similar results in the public sector. For instance, at a press conference on August 13, 1968, at which he officially announced his Project OWN program, he explained that the SBA now had “a new religion, a new motivation, a new commitment.”33 Second, precisely because it was an election year, the Democratic Party in general and Hubert Humphrey in particular had little problem with Samuels’s extremely optimistic projections about the impact of Project OWN, especially considering the bad press regarding the Vietnam War that the Democrats and Humphrey were receiving. Vice President Humphrey also had publicly supported the Project OWN agenda’s call for private bankers and the SBA to help black entrepreneurs who wanted to buy white-owned businesses in urban areas.34 Finally, Eugene P. Foley, the original architect of the Johnson administration’s program to assist African American entrepreneurial development, wrote a widely publicized book, The Achieving Ghetto, which conveyed a plan, even more visionary than Samuels’s, to revitalize innercity America.

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The primary thesis of The Achieving Ghetto was that because clearly delineated black enclaves are “here to stay for a long, long time,”35 it was both politically and morally correct for the government to promote the economic revitalization of urban black America. To do this, Foley proposed a “Marshall Plan” for the ghetto. This was not the first use of the Marshall Plan idea for inner-city America (see chapter 3), but Foley presented a more comprehensive and multifaceted strategy to enhance black economic development. The nine components of Foley’s Marshall Plan were as follows: a. b. c. d. e. f. g. h. i.

Design a lease guaranty program to attract private capital to the ghetto. Extend the grant programs of the Economic Development Administration to the ghetto. Create community development corporations in the ghetto. Direct existing private and public investments into the ghetto. Authorize industrial bonds for the ghetto. Enact tax privileges and incentives for the economic development of the ghetto. Institute a set-aside procurement program for the ghetto. Plan and construct housing programs in the ghetto with a view to their economic effects. Strengthen and expand the role of Negro-owned small businesses in the ghetto.36

Even though Foley’s plan called for an unprecedented cooperative relationship among the federal government, the private sector, and the African American community, the main players in this scenario were blacks themselves. Foley noted that based on his experiences and observations, African Americans were up to the task: Not every Negro lacks achievement motivation, not every Negro is completely apathetic, not every Negro has given up. The SBA experiments show that the invaluable resources of self-help, initiative, and risk-takers are just waiting to be utilized. This to me is the key to the development of the ghetto; namely, the development of local, neighborhood success symbols based upon resourceful businessmen and industrious working people.37

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Foley concluded The Achieving Ghetto with a message reminiscent of Richard Nixon’s “Bridges to Human Dignity” speeches: The white establishment not only in the city but particularly in the Federal Government has got to make a major change in its approach to the ghetto and begin to rely on the ability and self-help determination of the people who live there, shifting from welfare programs to programs based on the Negro’s ability to help himself. . . . My own experiences convinces me that this is what the Negro prefers.38

Among other things, Foley provides additional evidence that during the presidential campaign of 1968, Democrats and Republicans had similar ideas of how black capitalism could be most effectively achieved. Even though Foley’s track record gave credibility to his assertions, during the summer of 1968 Samuels emerged as the Democratic Party’s leading spokesperson for black economic development. Thus after his August 13 press conference announcing Project OWN, Samuels aggressively sought to convince the business community, the black community, and other government officials of the correctness of his approach. During the summer and fall of 1968, Samuels toured major U.S. cities to meet with local bankers and black community leaders. His efforts, especially as they pertained to talking with America’s urban bank presidents, were enhanced by the presence of Peter F. McNeish, executive director of the Banker’s Committee on Urban Affairs (a group associated with the American Bankers Association). The American Bankers Association also wrote to the chief officers of America’s largest urban banks urging their “full participation” in Samuels’s Project OWN agenda.39 As the August 12 report of the Task Force on Minority Entrepreneurship explained, any program aimed at promoting black economic development had to take into account blacks’ suspicion of “outside” white institutions, such as the American Bankers Association. But without the support of ABA member institutions, Project OWN, as envisioned by Howard J. Samuels, could not materialize. One of the ways that Samuels tried to minimize this tension were with his Project OWN “opportunity sheets.” These sheets, which would be distributed to black communities across America, would list specific opportunities for black business development. Then, to promote the spirit of self-determination, black enclaves would be asked to identify specific

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business locations for prospective enterprises, as well as specific entrepreneurs to own and operate them. The SBA would then bring together prospective African American entrepreneurs and local bankers to work out the financing.40 Another way in which Samuels sought to maximize African American participation in Project OWN was his creation of Minority Assistance for Minority Entrepreneurs (MAME). Besides receiving advice from white businessmen and SBA officials, prospective black entrepreneurs would have access to advice through MAME from successful black professionals.41 Despite justifiable concerns regarding the logistics of Project OWN, some prominent African Americans applauded Samuels’s efforts. For instance, the black syndicated columnist William Raspberry praised Project OWN in an October 11, 1968, Washington Post article entitled “‘Project Own’ Offers Best Hope for Negro Firms.” Raspberry noted that “if Samuels really has persuaded local bankers to take a new look at ghetto financing, it will go a long way toward solving the capitalization problem [of black businessmen].” After conceding that “unforeseen problems are almost certain to crop up as Samuels’ ambitious program unfolds,” Raspberry concluded, “Barring absolute catastrophe, Project Own just might make it possible for significant numbers of black people to enter the American mainstream without drowning in the process.”42 The National Urban League’s Whitney Young also emerged as a strong supporter of Project OWN. Two years earlier, Young had publicly criticized the then SBA administrator Bernard Boutin’s apparent lack of interest in prioritizing black business development (see chapter 3). Nevertheless, Samuels’s October 23, 1968, memorandum to Lawrence Levinson, President Johnson’s deputy special counsel, observed: “As Whitney Young said to me on Thursday night, we have done more for the development of minority business in three months than has been done in the last 15 years.”43 Although the evidence indicates that Young’s comments were wellreceived hyperbole, the evidence does suggest that Project OWN did have a significant initial impact. In a October 14, 1968, progress report to President Johnson, Samuels announced, In the area of loans to minorities, during September, 1968, we made 325 loans for $7.6 million. This represents 25 percent of total loans and 12

102  Chapter 4 percent of total dollars. Comparable figures for September, 1967, showed 222 minority loans for $4.2 million, representing 20 percent of total loans and only 8 percent of total dollars. . . . Early indications are that these figures will be even better for October.44

Notwithstanding Samuels’s enthusiasm regarding Project OWN, he had a much more difficult time than he had had with bankers and black community representatives convincing fellow Johnson administration officials of the correctness of his approach. Joseph Califano publicly stated his reservations about Project OWN in a September 16, 1968, memo to President Johnson, which attached a letter from Howard J. Samuels to Lyndon B. Johnson, and concluded: “I believe that if you would consider holding a White House meeting within the next 60 days with the leaders of the business and financial community, whose help we need, such a meeting would provide the necessary cement to really put Operation OWN on the road to success.”45 In response, Califano’s memo to Johnson stated: “Since the success of this program [Project OWN] is by no means assured, and your role in this meeting is undefined, I do not recommend such a White House meeting at this time.” The evidence indicates that Johnson followed Califano’s recommendation.46 Continuing reservations about Project OWN were also reflected in a October 21, 1968, report issued by Robert Weinberg of the Bureau of the Budget. Entitled “Minority Entrepreneurship,” it acknowledged the importance of black business development and elaborated on the task force’s August 12 report, which Weinberg had helped compile. By October 1968, it was clear that African Americans’ chief priority had become the economic development of their communities. Citing a recent Ford Foundation–sponsored study of African American attitudes, which appeared in the official report of the President’s Advisory Committee on Civil Disorders, “Minority Entrepreneurship” stated that “94 percent of Negroes interviewed in 15 major cities wanted more Negro businesses, banks and stores. . . . 70 percent thought Negroes should shop in blackowned businesses whenever possible.” In reference to satisfying the desires of blacks, “Minority Entrepreneurship” made the following observation: “Both candidates [Humphrey and Nixon] are committed to action in this area [expanding the ranks of black entrepreneurs]. The question is no longer whether to undertake a program, but rather, how to best do the job.”47 From the standpoint of “Minority Entrepreneurship,” the best way to promote African American entrepreneurship was to construct a cautious,

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empirical agenda for black business development. Weinberg believed there was a direct correlation between the size of a [hastily constructed] government program related to minority business development and the failure rate of firms assisted by such a program. The failure rates associated with a large minority business program that moved too quickly could “result in the creation of a large number of undesirable role models in communities which already have too few visible role models.”48 Although Weinberg’s comments appeared on the surface to be fatalistic, his rationale for making them appeared reasonable. His October 21, 1968, memorandum argued that “no firm estimate exists of the number of nonwhites with the actual or latent motivation to become entrepreneurs. No firm estimate exists of the number of those with motivation who also have the skills and personal characteristics required to be an entrepreneur.”49 Thus “Minority Entrepreneurship” argued that given the high (financial and psychological) costs of (minority business) failure and the lack of pertinent data, two primary points should be considered. First, “a minority entrepreneurship program should start slowly and increase to meet the demand.” Second, “some market research should be undertaken to quantify the availability of potential entrepreneurs.”50 Besides responding to Samuels’s Project OWN agenda, Weinberg’s October 21 report also cast doubt on the efficacy of National Business League’s (NBL) Operation CATAPULT initiative. The NBL, a longtime advocate of black business development dating back to its establishment in 1900 as the National Negro Business League, felt uniquely qualified to spearhead a national program for black economic empowerment. Considering the centrality of black capitalism in the 1968 presidential campaign, it is not surprising that the NBL would want to play a major role in helping influence government policy. In fact, as the promotional material for the league’s 1968 annual convention, held in Cleveland from September 5 to 7, stated: “This year, more than ever before, National Business League is where the action is.”51 One of the apparent results of the NBL’s 1968 convention, which had as its theme “Urban Redevelopment: Opportunities for the Entrepreneur,” was its submission of its Operation CATAPULT initiative for governmental consideration. For those who thought that Samuels’s Project OWN promised too much, too soon, the NBL’s Operation CATAPULT must have appeared surreal. Promising to “achieve in one hundred days, a goal that has not been reached in 100 years,” the NBL sought $73 million from the Economic

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Development Administration to establish a national development corporation with subsidiary development corporations in seven target cities including New York, Washington, Chicago, and Los Angeles. The two main tasks of the proposed national and local development corporations would be to form joint venture relationships with major corporations and banks to promote black business development and to coordinate how this corporate assistance (financing, managerial training, etc.) would be distributed in urban black America.52 Despite the National Business League’s long-standing credentials in black business development, Operation CATAPULT received a cool reception in Washington. As Jan T. Dykman, executive assistant to Secretary of Commerce Cyrus R. Smith, noted: “We have serious doubts that this organization could accomplish in ‘100 days’ what other private and governmental organizations have failed to achieve over a much longer period of time.” Moreover, it appeared “very unlikely that the technical expertise for so large a task can be assembled quickly or that it could be employed effectively without a relatively long lead time devoted to planning and coordination.”53 Charles J. Zwick, director of the Bureau of the Budget, echoed these concerns in an October 7, 1968, memorandum: “It is not realistic to assume that a new $73 million program can be successfully launched in so short a period of time.”54 Amid the Johnson administration’s discussions regarding the usefulness of Operation CATAPULT and Project OWN, by October 1968 Vice President Hubert Humphrey’s presidential campaign seemed to be picking up steam. Two months after the disastrous Democratic National Convention in Chicago, Humphrey, after publicly distancing himself from Johnson’s failed Vietnam policy, increasingly and more confidently spelled out how he and Richard Nixon differed on several important issues.55 While there were clear political differences between Humphrey and Nixon, both men supported the notion of black capitalism. This is significant considering that term is almost exclusively associated with Nixon. Although we should not overestimate the impact of black capitalism on the presidential election of 1968, the evidence does suggest that the Democratic Party did not take full advantage of its strengths in this area. For instance, despite the zeal and programmatic innovations of such administrators as Eugene P. Foley and Howard J. Samuels, President Lyndon Johnson never publicly certified the Democrats’ long-standing interest in promoting black entrepreneurship during the 1968 campaign.

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For his part, candidate Hubert Humphrey did clearly articulate his vision of black capitalism. For instance, in the September 20, 1968, issue of U.S. News & World Report, an article entitled “Black Capitalism— What Is It?” compared and contrasted Nixon’s and Humphrey’s views on this issue. Ironically, the candidates differed very little in what they would do to promote black business if elected. Both Nixon and Humphrey claimed that they would enhance the SBA’s minority business loan program and establish a national urban development bank.56 Moreover, if this had been a debate, Humphrey would have won. In response to Nixon’s assertion that it would cost “little or no Government money” to put his initiative in motion, Humphrey responded by declaring that “this is double talk. Of course it will take money. Talking about black capitalism without capital is just kiting political checks.”57 While Humphrey appeared capable of holding his own with Nixon in a discussion of black capitalism,” he was far less successful in stressing the importance of this issue to President Johnson. Although Humphrey agreed in principle with some aspects of Samuels’s Project OWN initiative, he was unable to use his influence as vice president and presidential candidate to set up the well-publicized White House meeting that Samuels wanted in order to launch Project OWN. In fact, although Humphrey ultimately did reject Johnson’s position regarding Vietnam, his tendency to acquiesce to Johnson’s powerful personality ultimately doomed his 1968 quest for the presidency. As Humphrey himself reflected one year later, After four years as Vice President . . . I had lost some of my personal identity and personal forcefulness. . . . It would have been better that I stood my ground and remembered that I was fighting for the highest office in the land. I ought not to have let a man who was going to be former President dictate my future.58

Joseph A. Califano’s 1991 book The Triumph and Tragedy of Lyndon Johnson: The White House Years provides additional insights into Johnson’s “coolness” toward Humphrey. Califano offered the startling revelation that Johnson privately thought that Republican Governor Nelson A. Rockefeller of New York would make a better president than Humphrey, and Johnson even went to so far as to discreetly encourage Governor Rockefeller to seek the GOP nomination in 1968. Under these circumstances, when Rockefeller subsequently lost the Republi-

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can nomination to Richard Nixon, Johnson could never bring himself to enthusiastically support Humphrey’s presidential candidacy.59 Robert Dallek’s 1998 book Flawed Giant: Lyndon Johnson and His Times, 1961–1973 goes even further than Califano in documenting Johnson’s antipathy toward Humphrey’s presidential campaign. In fact, at one point in the campaign, based on an ingratiating message from Nixon to Johnson delivered by Rev. Billy Graham, Johnson tacitly supported Nixon, telling one adviser, “You know that Nixon is following my policies more closely than Humphrey.”60 Sean J. Savage’s JFK, LBJ, and the Democratic Party elaborated on Johnson’s reluctance to support Humphrey’s 1968 presidential campaign. Humphrey’s selection of Senator Edmund Muskie as his running mate infuriated Johnson because “Johnson had disliked and distrusted Muskie ever since the senator from Maine, a member of the freshman class of 1958, refused to submit to LBJ’s domination of the Senate in a key vote in 1959.”61 Notwithstanding Johnson’s clear lack of enthusiasm for Humphrey’s presidential campaign, Savage plausibly contends that if Johnson had forcefully supported his vice president’s candidacy, it may have done more harm than good. Citing suggestions in 1967 from both the Secret Service and the FBI urging Johnson to sharply limit his public speaking engagements, Savage wrote: “If LBJ had barnstormed the nation on Humphrey’s behalf in the fall campaign, televised news coverage and Nixon’s campaign commercials would have highlighted the inevitable anti-Johnson demonstrations, hecklers, and imposing security precautions associated with LBJ’s campaign appearances.”62 But even if President Lyndon Johnson harbored feelings of antipathy toward Hubert Humphrey, he despised Senator Robert F. Kennedy, the other main Democratic presidential hopeful in 1968, and for Kennedy, the feeling was mutual. Jeff Shesol’s Mutual Contempt: Lyndon Johnson, Robert Kennedy, and the Feud That Defined a Decade provides a detailed examination of Johnson’s and Kennedy’s personal and political hatred of each other: Lyndon Johnson and Robert F. Kennedy loathed each other. “This man,” Kennedy said of Johnson, “. . . is mean, bitter, vicious—an animal in many ways.” Johnson considered Kennedy a “grandstanding little runt.” Their

Democratic Party and Black Capitalism, 1968  107 mutual contempt was so acute, their bitterness so intense and abiding, they could scarcely speak in each other’s presence. When they did speak, cordiality quickly gave way to uneasy silence or a shouting match.63

While based on personality clashes, the animosity between Johnson and Kennedy also “was in large part, an ideological and generational struggle for the soul of the Democratic Party and the future of American liberalism.” Bobby Kennedy called for “a broader coalition, more decentralized decision-making and empowerment of the underprivileged.” Conversely, Johnson represented the maintenance of the status quo, ideologically linked to the New Deal legislation that marked his entry and interest in politics.64 In this context, Kennedy’s interest in African American economic development was another manifestation of his personal and political differences with Johnson. Table 4-1 outlines Kennedy’s views regarding black community development. His plan centered on rebuilding urban poverty communities from the ground up through a holistic partnership approach involving the mainstream business community, community development corporations, tax incentives, and other government funding. Table 4-2 is an overview of Richard Nixon’s publicly articulated views on the subject. Perhaps ironically, tables 4-1 and 4-2 indicate that a perceived liberal (Kennedy) and a perceived conservative (Nixon) essentially agreed on what needed to be done to revitalize America’s inner cities. For example, both stressed job-creating activities, and not expanded social programs, as the cornerstone of any meaningful black community development. Although both Kennedy and Nixon were interested in promoting black entrepreneurship, they did differ in some important areas. For instance, while both proposed using tax incentives to entice large white companies to relocate some of their operations into urban poverty areas, they differed on the qualifications for such tax breaks. Kennedy, unlike Nixon, wanted businesses to fulfill specific preconditions before obtaining any incentives or tax breaks. Kennedy also felt that the residents of urban poverty areas must be hired by the companies that relocated to those communities. This hiring requirement would apply to construction projects as well. Nixon’s job bank proposal did not clearly spell out how the labor of residents in urban poverty areas would be used.

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Table 4-1 Brief Description of Robert F. Kennedy’s Suggested Use of Specific Community Development Tools in Rebuilding Black Urban Areas Incentives Apply tax incentives similar to those used in Operation Bootstrap in Puerto Rico in 1948 to Urban Poverty Areas. Discourage the participation of potential insubstantial or “fly-bynight” enterprises in the rebuilding of Black Urban Areas. Taxes Tax capital gains at one-half the normal rate. Tax incentives must be given only to businesses employing a minimum of 50 workers in targeted urban areas (cities with populations over 50,000). To further qualify for tax incentives, businesses must hire a significant number of unskilled and semiskilled workers from urban poverty areas. Community Development Corporations Promoted the use of Community Development Corporations (CDCs). Distrusted social programs administered through local politicians. Supported CDCs receiving direct funding from Congress. Wanted CDCs to be controlled by community residents. Public and Private Employment Training Programs Residents of targeted urban areas should receive on-the-job training. Sources: Derived from Robert F. Kennedy, “Industrial Investment in Urban Poverty Areas,” in Race and Poverty: The Economics of Discrimination, edited by John F. Kain (Englewood, NJ: Prentice-Hall, 1969, 158–60; Robert F. Kennedy, “Community Development Corporations,” in Political Power and the Urban Crisis, edited by Alan Shank (Boston: Holbrook Press, 1969, 477–80; Evan Thomas, Robert Kennedy, His Life (New York: Simon & Schuster, 2000), 319; Joseph A. Palermo, In His Own Right: The Political Odyssey of Senator Robert F. Kennedy (New York: Columbia University Press, 2001), 169; Peter Eldleman, Searching for America’s Heart: RFK and the Renewal of Hope (Washington, DC: Georgetown University Press, 2003), 91.

In sum, both Kennedy’s thoughtful proposals regarding black community development and Humphrey’s interest in this area demonstrate that both the Democrats and the Republicans gave priority to such economic tools as black capitalism to address the dire conditions facing black urban communities. If we accept the premise that Senator Robert F. Kennedy was the Democratic front-runner at the time of his tragic assassination on June 4, 1968, the evidence suggests that if Kennedy had lived and won the 1968 presidential election, his administration, like Nixon’s, would have given precedence to community development programs over increased social spending. This, among other things, would have been a conscious repudiation of the approach taken by his enemy, Lyndon B. Johnson.

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Table 4-2 Brief Description of Richard Nixon’s Suggested Use of Specific Community Development Tools in Rebuilding Black Urban Areas Incentives Supported special tax incentives for those businesses locating branch offices or new plants in urban poverty areas. Encouraged the need for new incentives and financial assistance for starting new black businesses and expanding existing ones. Tax Credits Supported tax credits for businesses hiring and training the unemployed. Development of New Programs Endorsed a national computer job bank to unite employers and job seekers. Supported and encouraged more black ownership, more black control over the economic structure of their communities. Encouraged the development of institutions that “can be channels of enterprise.” Source: Derived from Richard M. Nixon, “Capital in the Ghetto,” in Race and Poverty: The Economics of Discrimination, edited by John F. Kain (Englewood Cliffs, NJ: Prentice-Hall, 1969), 164–66.

5 Nixon and the “Militants” The GOP and Black Capitalism during the Presidential Election of 1968

One of the most turbulent periods in American history occurred in 1968. Besides the growing internal discord related to the U.S. military involvement in Vietnam as well as increasing racial polarization, Americans during this fateful year were being asked to elect a new president. In this setting, candidate Richard Nixon used his “Southern strategy,” which included the use of such racially charged code words as “law and order,” to elicit support from conservative whites. Even so, the “Machiavellian” Nixon simultaneously and secretly conferred with noted black power advocates Floyd McKissick and Roy Innis to help construct his black capitalism initiative. Employing a less devious campaign strategy, Governor Nelson Rockefeller of New York, Nixon’s chief competitor for the Republican nomination in 1968, publicly declared the efficacy of greater economic development in America’s primarily black inner cities. In the end, Nixon, aided by his working relationship with black militants and his both overt and subtle overtures to conservative whites, beat back Rockefeller’s challenge as well as that of Democratic Vice President Hubert Humphrey to win the White House. When looking back at the words and actions of Hubert Humphrey and Bobby Kennedy during the presidential campaign of 1968, the evidence clearly suggests that all the candidates in 1968 endorsed policies to stimulate African American community development. Nevertheless, Richard M. Nixon, because he was the eventual winner of this pivotal election, has come to personify this federal policy initiative. Thus it is important to analyze Nixon’s motivation for placing black capitalism on the public’s agenda and subsequently on the government’s agenda. Because of Nixon’s complex and well-documented personality and political persona, three explanatory scenarios will be used to accomplish this task. 110

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Explanatory Scenario 1: The “Southern Strategy” and Black Capitalism According to Earl Black and Merle Black’s The Rise of Southern Republicans, two political circumstances precipitated Nixon’s use of the Southern strategy during the 1968 presidential campaign. First, Nixon sought to expand the GOP’s inroads in the South made during the Eisenhower administration. Second, owing to Johnson’s and the Democratic Party’s direct association with civil rights legislation, the GOP viewed white southerners as being increasingly receptive to voting for a Republican. Although the South appeared to be solidly Democratic during the first decades of the twentieth century, according to Black and Black, the Republican Party made significant inroads in the region during the Eisenhower administration. The Blacks note that during the 1950s, the GOP directed recruitment efforts “toward the more dynamic Peripheral South states, where urbanization and industrialization were creating large white middle classes sympathetic to the economic conservatism of the Republican party.”1 Consequently, by 1968, urban, middle-class whites in the upper South were already predisposed to vote Republican. Although the Republican Party already had a constituency in the upper South, Nixon viewed reaching other white southerners as “as an unmatched opportunity to strengthen his political base and that of his party.”2 Consequently, to broaden his base of white voter support throughout the South, Nixon focused on exploiting the greatest fear of whites in the Deep South: black people. As an illustration of Nixon’s political cynicism, while he engaged in his Southern strategy, his campaign also promoted the notion of black capitalism. From the standpoint of the Machiavellian Nixon, promoting black economic development would not necessarily offend southern whites because the South had long had its own, separate, black business infrastructure. Although Nixon identified the South as a focal point of his campaign, Ronald Reagan and George Wallace also saw Dixie as a significant source of political support. Thus another important goal of Nixon’s Southern strategy was to undercut the more conservative Ronald Reagan’s quest for the GOP nomination, as well as to undercut George Wallace’s independent quest for the White House.3

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Another factor leading to Nixon’s Southern strategy was his embrace of the ideas of Kevin Phillips, then a relatively unknown demographer and statistician working for the Nixon presidential campaign. Phillips’s assertions, published in 1969 as The Emerging Republican Majority, contributed to Nixon’s electoral success in 1968. According to him, Nixon and subsequent GOP presidential candidates could be guaranteed victory and could help establish a Republican majority in U.S. politics by highlighting the failures of the Democrats’ “ambitious social programming,” especially as it related to African Americans, and by concentrating on capturing the votes of conservative first- and second-generation European immigrants, southern whites, and white suburbanites (to whom Phillips referred as “the new popular majority”).4 Moreover, as Dan Carter pointed out in The Politics of Rage: George Wallace, the Origins of the New Conservatism, and the Transformation of American Politics: Phillips realized  .  .  . the critical role of fear in general, and white fear of blacks in particular would play in guaranteeing the emerging Republican majority. . . . Phillips [concluded that] the GOP should use the emotional issues of culture and race to achieve what Phillip’s mentor and boss, John Mitchell, called a “positive polarization” of American politics. By “positive” Mitchell meant that the Republicans would end up with more than fifty percent of the votes once the electorate was divided into warring camps.5

One manifestation of this so-called positive polarization was Nixon’s use of such code words as “law and order.” While Nixon made a conscious effort to reach southern whites, his campaign’s goal of activating “the subconscious connection many white Americans made between blackness and criminality, blackness and poverty, [and] blackness and cultural degradation” also resonated with many northern whites.6 Thus, during the 1968 presidential campaign, Nixon clearly “followed the advice of his advisors and courted the white majority . . . because he saw political fortune in the simple fact that there were more white people than black.”7 Although both Richard Nixon and George Wallace played the race card in 1968, Nixon’s politically shrewd concurrent promotion of black capitalism allowed him to escape being labeled a racial extremist.

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Explanatory Scenario 2: Richard M. Nixon and the Assassination of Dr. Martin Luther King Jr. The assassination of Dr. Martin Luther King Jr. on April 4, 1968, in Memphis was one of the most traumatic events in twentieth-century American history. The sudden death of the national leader of the black freedom struggle directly contributed to this movement’s apparent unraveling and indirectly contributed to Nixon’s ultimately successful promotion of black capitalism during the 1968 presidential campaign. After King’s death, the division among black leaders ranged from those who advocated continuing the nonviolent civil rights agenda to those young black leaders who urged African Americans to seek black power. Alex Poinsett’s Walking with Presidents: Louis Martin and the Rise of Black Political Power provides an excellent illustration of how national black leaders differed on the future direction of the black freedom struggle after King’s assassination. Poinsett says that when Roy Wilkins, Whitney Young, and Leon Higgenbotham together met with President Lyndon B. Johnson shortly after King’s assassination, the three civil rights advocates could not agree among themselves on what should be done for blacks. “Wilkins argued for additional civil rights measures, Whitney Young spoke about the need for jobs, and Leon Higgenbotham talked about the courts.”8 Considering that those persons associated with the nonviolent civil rights movement differed among themselves, when the divergent viewpoints held by individuals and organizations associated with the black power movement are factored in, black America in the wake of King’s untimely death appeared to be in ideological chaos. It was in this setting that Nixon announced his notion of black capitalism to attract a black constituency. It is plausible to assume that King’s assassination itself may have indirectly influenced Nixon’s decision to propose his black capitalism initiative. Although King and Nixon had a cordial relationship dating back to the 1950s when King voted for Eisenhower and Nixon in 1956,9 if King had been alive when Nixon took office, he likely would have rejected black capitalism and may have even led demonstrations opposing this policy. This assertion is based on King’s evolving Democratic Socialist ideology, which became increasingly apparent by 1968. As Michael Eric Dyson contends in I May Not Get There with You: The True Martin

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Luther King, Jr., by early 1968, King had dramatically increased both his criticism of capitalism and his calls for a redistribution of wealth in America.10 Thus when Nixon proposed black capitalism, it contradicted King’s belief that to solve the problems of the black poor, “a major structural reform of the American economy was needed.”11 In the end, King’s sudden death and the concurrent silencing of his influential Democratic Socialist voice helped set the stage for the placement of black capitalism on the government’s policy agenda. As John Kingdon observed, the main factor allowing for policy change in a society is the policy window of opportunity.12 A policy window of opportunity opens because of changes that occur in the political stream. Examples are a change in presidential administrations, a crisis of major proportions, a tragic event, or a shift in the government’s political ideology. Therefore from Nixon’s perspective, King’s death, although tragic and unfortunate, created a window of opportunity. Consequently, Nixon prevailed in the policy arena because he had (1) a problem stream (black community economic development), (2) a policy proposal (black capitalism), and (3) a supportive political stream based on ultimately winning the presidency in 1968.13

Explanatory Scenario 3: Co-opting the Black Power Movement: Domestic Détente Despite Nixon’s stated interest in promoting black economic development, many African Americans were extremely skeptical of the GOP front-runner. In fact, most black leaders during the 1968 presidential campaign “found Nixon’s ‘law and order’ rhetoric racially divisive and the candidate himself untrustworthy.”14 Consequently, with few other options for making political inroads in the African American community, Nixon sought support for black capitalism among certain black power advocates. Suggesting that Nixon sought support from black militant leaders for black capitalism is not as inconceivable as it may appear on the surface. For instance, James L. Buckley, one of Nixon’s chief political supporters who later was elected to the U.S. Senate in 1970 from New York, openly endorsed black power. As Dean Kotlowski has noted, Buckley “embraced black power advocates as comrades-in-arms in the conservatives’ crusade against that huge monster on the banks of the Potomac.”15

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Richard Nixon’s important “Bridges to Human Dignity” campaign speeches, delivered on April 25 and May 2, 1968, provides additional circumstantial evidence regarding his interest in gaining the support of black power advocates. For example, in his April 25, 1968 speech, Nixon placed the following positive spin on black militancy: What most of the militants are asking is not for separation, but to be included in—not as supplicants, but as owners, as entrepreneurs—to have a share of the wealth and a piece of the action. And this is precisely what the Federal central target of the new approach ought to be. It ought to be oriented toward more black ownership, for from this can flow the rest— black pride, black jobs, black opportunity, and yes, black power, in the best, the constructive sense of that often misapplied term.16

According to economist Martin Anderson, who served as an economic adviser to the Nixon campaign, after the “Bridges” speeches, noted black power advocates Floyd McKissick and Roy Innis offered their support to the Nixon campaign.17 Thus if the politically shrewd Nixon viewed these speeches as a fishing expedition, McKissick and Innis clearly took the bait. Before McKissick succeeded James Farmer as national director of the Congress of Racial Equality (CORE) in 1967, he had been a civil rights lawyer committed to both nonviolent direct action and racial integration. Yet like other individuals associated with the movement, McKissick’s mind-set shifted from the conciliatory theme of “We Shall Overcome” to the more aggressive “Black Power” as the 1960s progressed. Consequently, during his tenure as national director, CORE all but ceased being an interracial organization. As James Farmer noted in his 1985 autobiography, “SNCC under Stokely Carmichael had put whites out. CORE under McKissick had not done that, but the black power rhetoric had made them uncomfortable and they were rapidly leaving the organization.”18 While McKissick had not been as strident as Carmichael, at the time of the “Bridges” speeches, he clearly was one of the leading figures associated with the black power movement. Athan Theoharris provides additional information regarding McKissick’s stature as a black power advocate in his From The Secret Files of J. Edgar Hoover. Based on his concern about the more militant direction of the black freedom struggle, in 1967 President Johnson asked J. Edgar Hoover for information about Stokely Carmichael and Floyd McKiss-

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ick.19 Hoover responded by telling Johnson that McKissick and Carmichael, with left-wing support, were “self-styled civil rights leaders who were seeking to get as much money out of a troubled situation as possible.”20 Hoover’s assessment of McKissick as someone driven by money implied that he could be bought. While the racist J. Edgar Hoover can hardly be regarded as an objective observer of African Americans, his assumptions about McKissick appear to have had some merit. For instance, at the time of his meeting with the Nixon campaign, McKissick, who was planning to retire from CORE, was considering developing a commercial endeavor named McKissick Enterprises.21 Whereas Floyd McKissick has been described as being less militant than some of his fellow black power advocates, Roy Innis, McKissick’s colleague at CORE, was both strident and flamboyant in his public persona. Called by his admirers “an impudent Bantu on the move,”22 he first achieved widespread attention in 1966 at CORE’s national convention. As chairman of Harlem’s CORE chapter, he successfully pushed through a resolution in which the organization officially repudiated racial integration and its white members.23 At the same time that he offered his assistance and support to Nixon’s presidential campaign, Innis, who succeeded McKissick as CORE’s national director, was in the process of formulating a new organizational constitution that called for “the complete takeover by blacks of all economic, political, and social institutions in black communities for the purpose of fostering the economic development of these communities.”24 When later asked how he could realistically expect white-controlled governmental bodies to endorse such a proposal, Innis reportedly answered, “We [blacks] have the ability to withdraw a sacred commodity from America: peace and tranquillity.”25 Notwithstanding his fiery rhetoric for media and public consumption, the evidence clearly suggests that during the 1968 presidential campaign, Innis was a loyal member of the Nixon team. In May 1968, shortly after Nixon’s April 25, 1968, “Bridges” speech, Nixon met with both Innis and McKissick at Nixon’s New York apartment. This meeting was arranged by John McClaughry, who advised the Nixon campaign on issues related to community affairs. McClaughry later cited the dynamics of that meeting in an October 29, 1968, letter to black Congressman John Conyers. Conyers, who received this letter on November 7, 1968 (after Nixon’s successful elec-

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tion), had publicly expressed grave concern about the possibility of a Nixon presidency. McClaughry, who accordingly felt compelled to allay Conyers’s and other black leaders’ fears, noted: You accuse him [Nixon] of espousing a “trickle down” theory which would mean little to the great majority of poor, black people. . . . You emphasize, rightly, the right of the poor to control their own neighborhoods and make the essential decisions which affect their lives. You call for a long overdue complete share for black people of the economic abundance which they have done so much to create. Both of these precepts are explicit in the Community Self Determination Act. This bill was introduced by 36 Republican Members of Congress on July 19th. A week later, with Vice-President Humphrey and Senator Muskie lending full support, the identical bill was introduced in the Senate by a bipartisan group headed by Percy, Javits, Nelson, and Harris. Thanks in part to your leadership, a number of influential and concerned Democratic Members of the House now added their support.  .  .  . Richard Nixon, more than any other Presidential aspirant, contributed to this important work.  .  .  . I personally set up a private meeting between Mr. Nixon and Floyd McKissick and Roy Innis, at Mr. Nixon’s apartment in May [1968]. At that meeting Mr. Nixon pledged his full cooperation in bringing together the resources to assemble what became the Community Self Determination Act. He kept his word. Two top staff members from his organization, in addition to myself, came to Cambridge with Roy Innis to work out the direction the bill would take. Mr. Nixon’s law firm, at his specific request, undertook the drafting of critical and highly technical parts of the bill. Mr. Nixon gave his encouragement to conservative Republicans in Congress to join the measure as co-sponsors when it was introduced. Mr. Nixon, alone of the Presidential hopefuls, issued a statement upon House introduction of the act, reiterating his support of the underlying philosophy and urging prompt and serious consideration by Congress. And Mr. Nixon has made it known that he intends to put the full resources of his administration behind the continued development and refinement of this legislation, conceived as it was by black people and drafted under their guidance by a largely Republican team of experts.  .  .  . These facts, taken together, seem to me to refute the idea that Nixon favors only some kind of vague trickle down theory of “black capitalism” that would favor a few to the neglect of the many.26

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Nixon, McKissick, and Innis all felt it politically expedient to keep their meeting secret, at least for awhile. At the same time that Nixon met with McKissick and Innis, his Southern strategy to woo white voters in the South was in full bloom. In the context of the times, this was an extremely risky political maneuver. If conservative white southern politicians and voters had discovered that Nixon had formed a political alliance with prominent black power militants, they would have been extremely unlikely to have continued to support his candidacy. Consequently, to simultaneously exploit black power militants and white southern conservative politicians and voters, the politically shrewd Nixon decided to keep secret his interaction with black power advocates. Accordingly, while Nixon clearly met privately with McKissick and Innis, he made sure never to be seen in public with them. Floyd McKissick and Roy Innis also felt compelled to keep their association with Nixon secret, despite the precedent of black nationalist leaders and groups meeting (and forming alliances) with conservative whites. For example, in his Black Leadership, Manning Marable discusses the relationship between the Nation of Islam and both the Ku Klux Klan and the American Nazi Party.27 Similarly, in Race First: The Ideological and Organizational Struggles of Marcus Garvey and the Universal Negro Improvement Association, Tony Martin talks about Marcus Garvey’s relationship with the KKK.28 Even though it is inappropriate to equate Richard Nixon with either the Ku Klux Klan or the American Nazi Party, in the context of 1968 black America, if Innis and McKissick’s secret May 1968 meeting with Nixon had been made public, they would have been vilified by other black militants and the black community in general. Nixon, McKissick, and Innis may have felt it wise not to publicize their May 1968 meeting, but clearly some sort of “deal” was cut in Nixon’s New York City apartment. In his 1997 book Nixon’s 10 Commandments Of Statecraft, James Humes, Nixon’s grandson, describes Nixon’s views regarding these negotiations. One Nixon maxim that seems relevant to his May 1968 meeting with Floyd McKissick and Roy Innis was Commandment III: “Always Remember That Covenants Should Be Openly Agreed to but Privately Negotiated.”29 We could assume that Nixon, McKissick, and Innis agreed not to talk about their meeting in public. But as John McClaughry’s letter to John Conyers indicates, Nixon did agree to indirectly facilitate the passage of the Community Self-Determination bill, and we can assume that McK-

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issick and Innis agreed to indirectly support the Nixon presidential campaign in public. Nixon also presumably assured McKissick and Innis that if he were elected, he would reward them for their assistance. Floyd McKissick’s and Roy Innis’ subsequent July 14, 1968, appearance on Meet the Press appears to validate these assumptions. The following exchange between panelist Robert Novak, representing NBC News, and Roy Innis is especially illuminating: Mr. Novak: Mr. Innis, you have publicly praised Mr. Richard Nixon’s black capital ownership plan which indeed parallels CORE’s plan in that area and I believe that you have worked with him or at least his staff. . . . Is Nixon your choice for President? Mr. Innis: A very direct answer, No. I have no choice for President. Secondly, let me correct your question. I praise Nixon when he said that black nationalism is relevant, black power is the relevant philosophy in this country. I praise those things. I praise him when he endorses CORE’s plan. Mr. Novak: You will have no choice for President during the course of the year? Mr. Innis: You see, my understanding of the power relationship in this country leads me to know that it is really irrelevant which one of these guys become President.30

On Meet the Press, Innis simultaneously indirectly endorsed Nixon’s quest for the presidency while playing the “angry black” who considered American politics “irrelevant.” Yet in the end, it was Floyd McKissick and not Roy Innis who reaped the benefits of Nixon’s subsequent ascension to the White House. In their 1971 book Nixon in the White House: The Frustration of Power, Rowland Evans Jr. and Robert D. Novak contended that Innis supported Nixon during the presidential campaign of 1968 in hopes of being designated “the President’s man in the ghetto.”31 But because Innis’s strident black nationalist persona could alienate Nixon’s newfound white southern constituency, the new president’s advisers, most notably John Mitchell, urged Nixon to shun Innis. Consequently, “Innis’ letters and telephone calls went unanswered; his requests for an interview with the President were ignored.”32

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While Innis was being shunned by the new Nixon administration, Robert Brown, who served as special assistant to President Nixon, helped convince the less flamboyant Floyd McKissick to openly switch from being a black militant to being a black Republican.33 McKissick subsequently received more than $17 million to start “Soul City,” a new town development project in North Carolina on three thousand acres of land. Consequently, during the 1972 presidential campaign, McKissick formed a nonprofit organization known as the National Committee for a Two-Party System. According to the now openly Republican McKissick, he started this group to “free black people from the captivity of the Democrats, and at the same time put them in a position to pressure the Republicans for concessions.”34 Although it appeared that McKissick ultimately got paid and Innis ultimately got played, Nixon’s interest in using black capitalism to co-opt elements of the black power movement consisted of more than merely buying off certain African American supplicants. Besides using McKissick and Innis to help formulate his black capitalism policy agenda, Nixon used this initiative to contain 1960s black militancy and the alleged Communist influence in the black community through a program of domestic “détente.” One important domestic manifestation of cold war politics was the belief that urban racial disorders were instigated by communists, which is reinforced by the contemporary discourse regarding the 1965 Watts uprising.35 In the aftermath of the Watts uprising, some white local and state elected officials immediately accused communists of perpetrating the Watts rebellion. For instance, John Gibson, a Los Angeles city councilman, blamed the disorder on increased communist activity in Watts during the preceding eighteen months.36 Similarly, California Senator George Murphy expressed his fear that “Communist groups are moving in to capitalize on the disorders.”37 From a political standpoint, as Gerald Horne asserted, the linkage of Watts with a communist conspiracy ultimately benefited ultraconservative political candidates running for local and state offices, including the future governor, Ronald Reagan.38 The belief that communists had instigated the 1965 Watts riot extended beyond the boundaries of California. Predictably, based on his track record, J. Edgar Hoover believed that communist manipulation had led to black unrest in Los Angeles. As Randall B. Woods pointed out, Hoover continually tried to convince President Lyndon Johnson that

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communists not only caused Watts but also prompted other expressions of black anger during the mid-1960s.39 Besides the FBI, another prominent organization that viewed the Watts uprising as inspired by communists was the American National Security Council (ANSC). Nearly three years after the Watts uprising, the ANSC’s newsletter put out a special issue entitled “Summer 1968—Riot or Rebellion?” in which it announced, No matter how “spontaneous” a riot or protest may be, it cannot happen without a great deal of prior agitation and some active inciting. In each of the riots of past summers, sociological factors notwithstanding, there has been a history of agitation and propaganda that found its culmination in violence.40

Considering Nixon’s own long-standing concern about communist infiltration in America, coupled with the increasingly virulent rhetoric associated with the black power movement, it is not surprising that he would have wondered how to defuse this potential powder keg. In the end, by offering blacks government and private-sector programs to promote black business development, along with claiming the compatibility of blacks’ growing sense of racial pride and self-assurance with the doctrines of free enterprise, Nixon sought to construct a domestic manifestation of his later widely publicized foreign policy initiative of détente to contain the power of the Soviet Union and China. Just as Nixon and Kissinger linked concessions associated with détente to Soviet and Chinese behavior modification, black capitalism offered U.S. black militants a monetary incentive to move away from notions of “Burn, Baby, Burn.” This connection between Nixon’s domestic and foreign policy is given further credence by Stephen E. Ambrose in his 1989 book Nixon: The Triumph of a Politician: “Nixon advocated bringing the Chinese into the family of nations, once the Chinese had learned how to behave; Nixon advocated bringing blacks into the body politic, once they learned how to behave.”41 Maurice Stans, Nixon’s secretary of commerce who was given the task of implementing black capitalism, corroborated this assertion when he stated in Gerald Strober and Deborah Strober’s Nixon: An Oral History of His Presidency: “[Nixon wanted] to give them [blacks] a chance to be capitalists. . . . Then they become employers, taxpayers, and we shift the burden in the economy for a lot of these people away from welfare and into being taxpayers.”42

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The direct link that Nixon drew between dealing with African Americans and Chinese Communists points to the obvious role of race. As Henry Kissinger stated, Nixon was more concerned with the Soviets than with the Chinese.43 Nevertheless, in linking “domestic détente” with its international counterpart, Nixon apparently believed that African Americans more closely resembled the nonwhite Chinese than white Americans’ eastern European cousins. In the end, when attempting to determine why Richard M. Nixon promoted black capitalism during the 1968 presidential campaign, perhaps James Farmer offered the most cogent analysis: Nixon was an almost completely political animal; he was neither moral nor immoral, but was amoral; he made decisions based on how they affected him politically, not based upon whether they were right or wrong— I don’t think right or wrong entered into it, although he did use those words frequently.44

The unsuccessful candidacy of New York Governor Nelson Rockefeller for the GOP presidential nomination in 1968 further illustrated the potency of black capitalism as a campaign issue. Early on, Jeffrey Geilich, one of Rockefeller’s chief aides, advised him to attack Nixon’s notion of black capitalism as “segregationist.” But when Graham T. Molitor, one of Rockefeller’s pollsters, convinced him that black capitalism was “a clever way to steal a militant slogan” and “a stroke of political genius,” Rockefeller jumped on the black capitalism bandwagon.45 During a May 23, 1968, campaign speech at Atlanta’s historically black Spelman College, Rockefeller outlined his black capitalism-vision for revitalizing urban America. Operating from the premise that “so long as there remains despair in the slums, there will be disorder in the cities,” Rockefeller called for investing “over the next decade, some $150 billion of private and public capital in the rebuilding of our cities.”46 Rockefeller added credibility to his declarations by linking them to initiatives already in place in New York State. He referred particularly to the recently established New York Urban Development Corporation launched with $1 billion of public money, which would be able to “attract and channel as much as $5 billion of private capital into building new housing, new factories, new centers of recreation and culture in our cities.”47 Besides discussing the New York Urban Development Corporation as a model for a national program, Rockefeller also called for “tax credits

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or deductions for employers whose energies and investments help provide the opportunities for the poor in our cities. I specifically mean employers who move their businesses into areas of high unemployment, who train the unskilled, and who provide them job opportunities.”48 Besides encouraging outside companies to help revitalize urban America, Rockefeller also announced, “We must take new and effective action on many fronts to stimulate the ownership and management of business from within urban poverty areas. Such neighborhoods cannot be rebuilt simply from assistance from without, from outside investors or technicians.”49 Despite his generally well received speech, Rockefeller’s visit to Spelman College (an institution that his grandfather had helped establish and endow) was not without controversy. Toward the end of his speech, a young black woman cried out, “Go back to South Africa and get your money out, and we will listen to you.” Although Rockefeller later tried to distance himself verbally from his brother David, the president of Chase Manhattan Bank (which had investments in racist South Africa), the hecklers in the crowd continued their assault on the governor.50 Rockefeller, undaunted by the small group of demonstrators who carried signs reading “Great White Father, Great White Oppressor, Great White Colonialist,” finished his remarks. Afterward, when asked by college officials about his reaction to the heckling, he asserted, “This is part of American life today. Don’t let it worry you. You’ve got to be tough to be in politics.”51 Tragically, the “toughness” of American politics in 1968 became even more visible two weeks later on June 5 with the assassination of Senator Robert F. Kennedy in Los Angeles. Perhaps ironically, the unexpected disappearance of the Democratic front-runner for president offered new hope to Rockefeller’s quest for the GOP nomination in 1968. During his June 10, 1968, commencement address to the graduating class of Allegheny College in Meadville, Pennsylvania, Rockefeller declared that the slain Senator Kennedy “became a bridge between different groups within the nation. Such is the test of the leadership we desperately need in American society.” This marked the beginning of Rockefeller’s appeal to Kennedy supporters.52 On June 11, 1968, the New York Times documented the Rockefeller campaign’s new strategy in an story entitled “Rockefeller Moves to Capture Kennedy Backers in New Drive.” Besides discussing Rockefeller’s Allegheny College speech, as well as his visit to the White House on the same day, the article quoted an unnamed Rockefeller campaign spokes-

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man,53 according to whom the “new” strategy (similar to that employed by the late Senator Kennedy) would be “to generate a grassroots appeal and massive population support that would sway delegates to the national convention.” This spokesman also told the New York Times: “Where are Kennedy’s supporters going—the Negro, the poor? We hope it goes to Rockefeller.”54 Rockefeller used the press conference after his June 10, 1968, White House meeting with President Johnson to revise the strategy of his presidential campaign. Although Rockefeller and the other presidential candidates met with Johnson to be briefed on vital foreign and domestic issues, Rockefeller’s subsequent comments to reporters included references to both Bobby Kennedy and his own campaign plans. Echoing his words earlier in the day at Allegheny College, Rockefeller told the White House press corps that Kennedy had tried to build bridges both between generations and between the affluent and the poor and dispossessed. Rockefeller ended by asserting that Kennedy’s agenda “ought to be continued.”55 Because Rockefeller was clearly trying to establish parallels between the “old” Kennedy campaign and the “new” Rockefeller campaign, reporters asked him whether Kennedy’s assassination would alter his campaign style. Rockefeller brashly declared that there would be “no timidity” in his future campaigning. Owing to the hundreds of thousands of American troops currently risking their lives in Vietnam, Rockefeller believed that it would be “wrong” for presidential candidates here “to cringe from risk.”56 Two days later, he demonstrated that his verbal fearlessness was not mere bombast. On June 12, 1968, Rockefeller visited Los Angeles to, among other things, visit the Watts Manufacturing Company, a black-owned firm that manufactured “Watts Walloper” baseball bats (see chapter 4). At the behest of a local black high school student, Rockefeller accepted an impromptu invitation to visit the predominantly black Centennial High School directly across the street from the Watts Manufacturing Company. To the obvious chagrin of the two New York state troopers, the six secret service men, and several local policemen who were protecting the governor, he quickly became separated from his bodyguards when hundreds of students swarmed around him.57 In a city and country still traumatized from Robert Kennedy’s assassination one week earlier, the scene at Centennial High School surely

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raised concern. But to the relief of Rockefeller’s bodyguards, this was a friendly crowd, and Rockefeller used the opportunity to tell Centennial students and, by implication, others in America, “Candidates must go out among the people like Senator Kennedy, who gave his life for the people.”58 Local reaction to Rockefeller’s demonstration of public populism was mixed. When asked about Rockefeller’s impromptu visit to his school, Centennial’s assistant principal told reporters that “it was a real dumb thing to do.” Workers at the Watts Manufacturing Company were much more positive about Rockefeller’s activities in Watts. One declared, “I’d vote for Rockefeller over any other candidate . . . he will see to the poor.” Another stated, “I haven’t decided, but I think I would vote for Rockefeller because I don’t think he is a puppet like Humphrey and those other guys.” A local Watts resident who observed the scene at Centennial High School told reporters, “If Rockefeller would spend money in Watts for campaigning, set up a headquarters, seek out people to campaign for him, he could win even Negro Democrats.”59 One week after Rockefeller’s widely reported visit to Watts, his campaign committee issued a press release urging other states to recreate New York’s Urban Development Corporation concept. Among other things, this document showed that Governor Rockefeller’s interest in urban economic development (or black capitalism) may even have been stronger than that of GOP front-runner Richard M. Nixon.60 Rockefeller’s attempt to appeal to more African American voters received an especially big boost at a June 23, 1968, brunch held at the home of baseball legend and black Republican leader Jackie Robinson. Besides Governor Rockefeller, nearly seventy publishers of African American newspapers across the country were there. In his closing remarks, the influential Robinson blasted GOP front-runner Richard Nixon and the possibility of a Nixon presidency: “Take a good look at the record. If Mr. Nixon is nominated, I am a Democrat. The same people who supported Goldwater [former Senator Barry Goldwater of Arizona, the Republican presidential candidate in 1964], support Nixon today. If Nixon is elected President, we as Negroes are in serious trouble; we would, in my opinion, be going backward.”61 Despite the support of such prominent black Republicans as Jackie Robinson, as well as his effort to attract Kennedy’s grassroots supporters, Rockefeller fell short in his campaign to win the GOP nomination.

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In the end, Nixon won the presidency, and shortly after his inauguration, to quell the suspicions of Jackie Robinson and other blacks, President Nixon moved to institutionalize his campaign promises regarding black capitalism. Black capitalism simultaneously generated an unprecedented national discourse regarding black economic development and entrenched Nixon’s political aim of domestic détente.

6 The National Response to Richard M. Nixon’s Black Capitalism Initiative

On March 5, 1969, President Richard M. Nixon signed executive order 11458, which created the Office of Minority Business Enterprise (OMBE) and thus institutionalized his black capitalism campaign slogan.1 Although OMBE’s subsequent performance on behalf of black and other nonwhite entrepreneurs generated decidedly mixed reviews,2 between 1969 and 1972 an explosion of published works related to black capitalism appeared in scholarly journals, business periodicals, and mainstream magazines.3 While many of these publications have gathered dust in recent years, The Review of Black Political Economy and Black Enterprise magazine, both begun in 1970 (during the heyday of black capitalism), remain vital sources of information related to African American entrepreneurship. In retrospect, the wide-ranging discussion and analysis of black capitalism during the first Nixon administration reflected an unprecedented national interest in promoting substantive African American economic progress. While OMBE provided only limited assistance to black businesspeople and none of the various independent proposals for black economic development materialized, the discourse regarding black capitalism during this period helped Nixon accomplish his larger ideological objective of containing potential domestic black radicalism. Despite the efforts of such notable African American Marxists as James Foreman, Robert L. Allen, James Boggs, and Earl Ofari, most blacks apparently gravitated toward either the various derivatives of black capitalism or economist Andrew Brimmer’s call for complete integration into American society. The National Black Economic Development Conference (NBEDC), held in Detroit from April 25 to 27, 1969, represented one early notewor-

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Scene from President Richard M. Nixon’s March 5, 1969, signing of Executive Order 11458 which created the Office of Minority Business Enterprise in the Commerce Department (courtesy of Richard Nixon Presidential Library and Museum Staff, National Archives, College Park, MD).

thy response to Richard Nixon’s black capitalism initiative. The following excerpt from the NBEDC’s promotional material reflects the diversity of opinion regarding African American economic empowerment: Buy Black—Not the Whole Answer Black Capitalism—Not the Whole Answer Co-ops—Not the Whole Answer Bringing More Money into the Black Community—Not the Whole Answer New Economic Systems Based on Black Needs . . . a Beginning4 The NBEDC itself sponsored lively discussions of the merits and demerits of black capitalism and other strategies to revitalize the economic situation of African Americans. In his keynote address, black economist Robert S. Browne, then a professor of economics at Fairleigh Dickinson University, examined the various options facing African Americans in their quest for economic development. Early on, Browne acknowledged the aims of the black nationalists in attendance but also noted,

Nixon’s Domestic Détente  129 I sense that this conference is not primarily to be concerned with the question of whether national sovereignty is desirable for blacks or how it can be achieved.  .  .  . Rather it seems to me, we have been brought here to discuss the more modest question of what is achievable by black people within the existing limitations of our NOT enjoying national sovereignty.5

According to Browne, the biggest obstacle that African Americans faced in their quest for economic self-determination was their lack of real access to the six basic sources of power in the United States: (1) huge personal wealth, (2) the top twenty-two major corporations, (3) the military–industrial complex, (4) the federal and state governmental apparatus, (5) the federal legislative apparatus, and (6) the crime syndicate.6 Browne lamented, “This lack of access to the instruments of power, supplemented by white America’s vicious racial prejudice toward black people, has led to our perpetual impoverishment, our self-hatred and psychological insecurity, our poor educational attainment, and our social disorganization.”7 In addition, Browne confessed: “Realistically speaking . . . I see very limited possibility of our grasping the levers of control in this society.”8 Notwithstanding his somewhat depressing assessment, Browne did believe that blacks could effectively attack black poverty despite their exclusion from the national power structure. He viewed the various “local development projects, small business programs, job training, consumer education, vocational guidance, school improvement, and other community programs” as both useful to African Americans and nonthreatening to the national power structure, which did recognize that blacks had to be placated in some way.9 Yet Browne also warned, “Our achievement will be of limited scope and will certainly not bring into being the Black Nation.”10 Even though Browne’s keynote presentation offered a cautious, realistic assessment of the parameters of present and future African American economic empowerment, James Foreman’s April 26, 1969, dinner speech entitled “Total Control as the Only Solution for the Economic Needs of Black People” offered a contradictory, if not surreal, vision of the economic future of African Americans. By 1969, Foreman, who joined the Student Nonviolent Coordinating Committee (SNCC) in 1961, personified the black freedom movement’s ideological shift from “We Shall Overcome” to “Black Power.”

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Forman denounced those blacks who supported black capitalism. Besides derisively referring to conservative supporters of black capitalism as “negroes,” Forman described black nationalist supporters of black capitalism as “black power pimps.”11 He further asserted that “the people must be educated to understand that any black man or negro who is advocating a perpetuation of capitalism inside the United States is in fact seeking not only his ultimate destruction and death but is contributing to the continuous exploitation of black people all around the world.”12 In contrast to Browne’s options for black people, Foreman declared: “Only an armed, well-disciplined, black-controlled government can insure the stamping out of racism in this country . . . we plead with black people not to be thinking about a few crumbs . . . we say think in terms of total control of the U.S.”13 After discussing how black people could take over America, which included black workers sabotaging the U.S. industrial base “while the brothers fought guerilla warfare in the streets,” Forman used his speech to announce future plans for the National Black Economic Development Conference. He began by acknowledging and thanking the predominantly white National Council of Churches (NCC) and the Interreligious Foundation for Community Organization (IFCO), which had helped organize and sponsor the NBEDC. Significantly, as early as 1967, the NCC had established its Investment Committee for Ghetto Community Development to promote and fund black economic development.14 Nevertheless, Foreman maintained that “we [blacks] must begin seizing power wherever we are and we must say to the planners of this conference that you are no longer in charge. . . . The conference is now the property of the people who are assembled here.”15 Foreman then went on to issue what came to be known as the “Black Manifesto,” which demanded $500 million in reparations from America’s white churches.16 Foreman offered the following rationale for the “takeover” of the NBEDC and the demand for money from white American denominations: We maintain we have a revolutionary right to do this. We have the same rights, if you will, as the Christians had in going into Africa. and raping our Motherland and bringing us away from our continent of peace and into this hostile and alien environment where we have been living in perpetual warfare since 1619.17

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Among the projects that would be funded by payments from white American churches were a national black (mass media) communications network to disseminate “revolutionary” information to African Americans and a national black university.18 The disparity between Browne’s “pragmatic” and Foreman’s “revolutionary” vision for the economic future of African Americans reflected a similar disparity among other contemporary commentators interested in the economic plight of African Americans. Those who promoted the theoretical notion of black capitalism, made popular by Richard M. Nixon, differed dramatically in how they would implement black economic empowerment in the context of the capitalist system. Similarly, critics of Nixon’s black capitalism agenda disagreed about what a viable alternative to increased black business ownership would be. Some observers even changed their original position regarding the advantages or disadvantages of black capitalism. Whitney M. Young Jr.’s 1969 book Beyond Racism: Building An Open Society offers an important blueprint for black economic development. Although Young has been characterized as an “integrationist” in the context of 1960s African American political thought, Beyond Racism suggests that Young would be more accurately defined as a “cultural pluralist.” As he stated, An Open Society is not merely an “integrated” society—one that grudgingly allows Negroes some of the privileges white people enjoy. An Open Society is, rather, one that offers choices and options. Some Negroes may prefer to live together for the psychological security that comes from closeknit enclaves that share similar traditions and culture—as just about every other ethnic group in America has done. But in an Open Society, the exercise of such a choice would not be penalized with inadequate services, discriminatory practices and open hostility.19

Besides acknowledging a continued rationale for all-black enclaves within his vision of an “Open Society,” Beyond Racism also acknowledges the need for African Americans to control the institutions within their neighborhoods. As Young declared, Community control is not nearly as revolutionary as it sounds. White suburbanites take for granted their control of local school boards and school

132  Chapter 6 budgets. But big-city schools are run by central boards of education, predominately white, who place a low priority on the education of black children. Control of the schools—and other ghetto institutions—would simply give to the urban poor the same prerogatives enjoyed by the suburban middle class.20

To help stimulate black-controlled community development, Young proposed establishing Neighborhood Development Corporations (NDCs), which would “have a mandate to undertake job-creating projects within the community.” Such projects would provide loans to ghetto entrepreneurs; create cooperatively owned businesses, consumer unions, and housing developments; and run management training schools for local businessmen.21 Young’s Neighborhood Development Corporations would be financed by a National Economic Development Bank (NEBD) “with regional offices in each of the Federal Reserve districts. The regional office would fund the community groups, provide managerial assistance, and audit their books. It would be financed with governmentbacked bonds placed through normal financial channels.” To ensure the maximum participation of the financial institutions in this program, Young stipulated that the Federal Reserve Board “should require member banks to place a certain percentage of their assets in NEBD bonds. This would assure an adequate flow of funds, and at the same time involve federally insured financial institutions in socially responsible use of their assets.”22 After claiming that his National Economic Development Bank proposal was not “just another scheme for government handouts,” Young observed that the NEBD was analogous to the World Bank. Just as the World Bank financed projects in economically underdeveloped countries, ideally to both reduce their dependency and increase their self-sufficiency, the NEBD would seek to do the same for “economically underdeveloped parts of urban America.”23 Theodore L. Cross’s 1969 book Black Capitalism: Strategy for Business in the Ghetto also was an ambitious attempt to articulate a framework for black capitalism. Cross, then editor and publisher of Banker’s Magazine, proposed a massive cooperative effort between corporate America and the U.S. government to enrich underdeveloped black urban areas. While Cross acknowledged that urban black America was eco-

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nomically and socially separated from mainstream society, he maintained that “it encompasses millions of acres of urban real estate which simply cannot be abandoned.”24 According to Cross, black distrust of white businessmen was one of the biggest impediments to the economic reconstruction of urban black America. Nevertheless, Black Capitalism urged white businessmen to ignore “the propaganda of black militants” and pursue “the route of clear logic and justice: the forced injection of credit, risk capital, and entrepreneurial skills into the ghetto economy.”25 To maximize public interest in Black Capitalism, Theodore Cross used Banker’s Magazine to advertise his recently published book. Accordingly, the spring 1969 issue featured a “Symposium on Black Capitalism” in which the journal asked “a number of leaders and opinion makers” to comment on the contents of Black Capitalism. Those offering their opinion of the book were Robert H. Finch, secretary of health, education and welfare; Massachusetts Senator Edward M. Kennedy; Roy Wilkins, executive director of the NAACP; Donald M. Graham, chairman of the American Bankers Association’s Bankers Committee on Urban Affairs; John L. Denman, manager of the Ford Motor Company’s Urban Affairs Department; Floyd B. McKissick, president of Floyd B. McKissick Enterprises and former national director of the Congress of Racial Equality; Carl B. Stokes, mayor of Cleveland, Ohio; and Otto Kerner, former governor of Illinois and chairman of the (1967–68) Advisory Commission on Civil Disorders.26 The commentator most critical of Black Capitalism was the NAACP’s Roy Wilkins. In response to the book’s marketing blurb—“Black Capitalism presents a complete business and legislative program which could transform poverty-stricken ghettos into balanced communities by encouraging the growth of minority enterprises and minority accumulation of wealth”27—Wilkins pointed out: This is simple nonsense. No matter what structural transformations take place in the 163 ghettos targeted by the Cross book, it will remain true, for the predictable future, that the bulk of all people who work will earn their living as workers—as employees, not as entrepreneurs. Most of them will work for large companies. Unless, therefore, it is contemplated that the ghettos, today primarily and properly residential areas, shall be transformed into industrial com-

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Although Cross implied that black militancy thwarted positive economic activity in African American enclaves, and Roy Wilkins suggested the impossibility of insular black economic development, others felt the exact opposite. For instance, Roy Innis, of the Congress of Racial Equality (CORE), promoted the concept of “separatist economics” in an important 1969 essay entitled “Separatist Economics: A New Social Contract.” Rather than allow corporate America to coordinate the economic revitalization of the black community, Innis believed that African Americans needed to control this process. “We are not talking about bringing white businesses into black communities, but about building economic instruments that themselves can hire blacks.”29 Linked with secret negotiations with then presidential candidate Richard M. Nixon in May 1968 (see chapter 5), Innis’s observations actually formed the cornerstone of U.S. Senate Bill 3876 introduced to Congress in July 1968 as the “community self-determination bill.” This legislation, whose sponsors ranged from the liberal Senator Jacob Javits of New York to the conservative Senator John Tower of Texas and which was codrafted by representatives of CORE and associates of the Harvard University Institute of Politics, called for the development of federally chartered community development corporations (CDCs). These entities would both own all the businesses in affected neighborhoods and would designate a portion of their profits to help finance social services in CDCrun communities.30 But despite its initial support in Congress, critics of the bill who thought that it would move the nation toward apartheid31 ultimately contributed to its legislative demise. Another of the many independent proposals generated by Nixon’s black capitalism initiative was Dunbar S. McLaurin’s GHEDIPLAN for Economic Development. GHEDIPLAN, an acronym for “Ghetto Economic Development and Industrialization Plan,” deviated significantly from Theodore Cross’s and Roy Innis’s proposals. The business and professional background of McLaurin, a black economist based in New York City, included ownership of the consulting firm Ghettonomics, Inc.32 In a coauthored 1969 essay entitled “The GHEDIPLAN for Economic Development,” McLaurin wrote that simply pumping more outside capital into the ghetto and giving existing and prospective black entrepreneurs corporate professional guidance (the Theodore Cross approach)

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would do little to enhance the economic life of black communities. McLaurin based his conclusion on the premise that black entrepreneurs, unlike their white counterparts, had problems that transcended mere issues of capital and training. Because the ghetto businessman had limited access to “the outer and larger business and industrial world with its opportunities, challenges, and stimuli, [it is] as if he were in a remote, underdeveloped country.”33 To alleviate the problems associated with black America’s economic and social isolation from mainstream society, McLaurin’s GHEDIPLAN proposed using that same isolation as an advantage. Specifically, McLaurin, following Whitney Young, urged the U.S. government to view America’s black ghettos as an underdeveloped nation. McLaurin believed that this would help resuscitate the economic life of black America by focusing on development strategies that would allow African Americans to develop businesses and industries that could easily meld with the “outside” economy.34 Besides proposing that black America be viewed as an underdeveloped nation, the GHEDIPLAN, similar to Roy Innis’s “separatist economics,” called for the “local [black] ownership of the economy and the control of its destiny.”35 Nevertheless, McLaurin differed from Innis in that he envisioned the GHEDIPLAN’s creating a black economy “strong enough to participate in, compete with, and become an integral part of the national economy.”36 Considering its historic focus on “separatist” economic and social development, the Nation of Islam predictably emerged as a proponent of black capitalism during the first Nixon administration. Significantly, the Honorable Elijah Muhammad, the leader of the Nation, appeared willing to seek his own “détente” with white American society if it stimulated U.S. government support of various Nation economic initiatives.37 The April 17, 1970, issue of Muhammad Speaks contained an editorial essay entitled “Black Enterprise” which discussed African Americans’ distorted perceptions regarding business enterprise. As John Woodford, editor of Muhammad Speaks, noted, People with little or no knowledge of economics have raged at their enterprising brothers and sisters in public and in private. . . . They have labeled them with many terms (Black capitalists, Black Bourgeoisie, etc.). . . . Black men and women involved in trade—in commercial activity—have been scorned for that reason and that reason alone. . . . HOW IGNORANT this is.38

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Woodford went on to discuss black business’s peripheral role in the U.S. economy, which he graphically described as “like a drop of water in a bucketful.”39 Then he announced: When you think of this, and then try to figure out how small the Black man’s share in this [the U.S. economy] is, you see how ridiculous it is for young and old pseudo-revolutionaries to run around crowing about the evils of Black Capitalism. . . . Brothers and sisters, Black Capitalism hardly exists at all! How many Black manufacturing firms do you know about?40

Besides praising the notion of black capitalism in the pages of Muhammad Speaks, Leon Forrest, a former reporter for the newspaper, noted that early on, the traditionally “hard-hitting” Muhammad Speaks refrained from attacking the Nixon administration. In his 1994 collection of essays, Relocations of the Spirit, Forrest offered the following rationale for this seemingly ironic situation: During my first months with the paper, we were under a strict gag order not to say anything against the new administration of President Richard M. Nixon, because he had expressed an interest in creating Enterprise Zones for business development within the black community.  .  .  . Selfhelp programs would deride the failed programs of the Kennedy-Johnson years, Nixon let it be known. Elijah “self-help” Muhammad was certain that President Nixon would be calling on the leader of the Nation of Islam for counsel (and maybe with resources and seed money) to advance these Enterprise Zones.41

Despite the subtle overtures by Elijah Muhammad and Muhammad Speaks to the new president, the Nixon administration did not respond. Consequently, as Claude Clegg writes in his 1997 biography of Elijah Muhammad, An Original Man: The Life and Times of Elijah Muhammad, “Muslim emissaries approached federal officials directly in July 1970 to request millions of dollars in aid to train workers in auto mechanics, printing, and other trades.”42 Another biographer of Elijah Muhammad, Karl Evanzz, provided additional insight into why the vehemently separatist Nation of Islam actively sought funds from the Nixon administration. In his 1999 book, The Messenger: The Rise and Fall of Elijah Muhammad, Evanzz recounts

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how the Nation and Elijah Muhammad looked with disdain and jealousy on the fund-raising activities of Rev. Jesse L. Jackson, president of Operation Breadbasket and People United to Save Humanity (PUSH). As Evanzz states: By the early 1970s, Jackson’s organizations had received several large grants from the federal government for poverty programs. Muhammad’s people were doing the same work—converting “unemployable” inner-city youths into productive members of society—but were doing so with the nickels and dimes collected from members. In the summer of 1970, the Messenger decided to follow Jackson’s lead.43

Predictably, the black community regarded the Nation’s request for money from the Nixon administration with incredulity. For example, “Barbara Reynolds, an outspoken Chicago-based reporter, noted the paradox of the anti-white, anti-American leader [Elijah Muhammad] suddenly groveling for money like others labeled by pundits as ‘poverty pimps.’”44 Nevertheless, in the end, Elijah Muhammad’s economically motivated quest for détente with white America perfectly matched Nixon’s politically motivated quest for domestic détente with potentially disruptive segments of black America. Most proposals related to black capitalism centered on increasing African American entrepreneurship in African American enclaves. Still, some commentators asserted that black capitalism should also include strategies that enabled black businesspeople to reach a mainstream consumer market. Edward H. Jones’s 1971 Blacks in Business suggests “integrated ownership,” which he defines as “the pooling of resources of black and white businessmen in partnerships or in joint ownership of corporations” as an ideal maneuver for “businessmen who want to reach both white and black customers.”45 According to Jones, “integrated ownership” would help black entrepreneurs prosper both inside and outside the black community. First and foremost, Jones maintained that total black (economic) control of black neighborhoods, based on the total expulsion of white businessmen, “would not solve any of the age-old problems of finance, credit, isolation, and discrimination.”46 But “integrated ownership” agreements could benefit black entrepreneurs. That is, the black businessperson who entered into such an agreement could draw on his white partner’s experi-

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ence and contacts as well as his greater likelihood “of obtaining financial help from institutions that have historically been extremely reluctant to grant financial assistance to minority businesses.”47 Jones’s notion of integrated ownership included enterprises both inside and outside black neighborhoods. Although he acknowledged that “there is a lot of money to be made in black communities,”48 it also was true that black businesses that had a positive presence in the mainstream marketplace stood to profit even more. Jones elaborated: The presence of black businessmen in white communities may help to erase the stereotype of the black man and thereby gain for him greater respect while producing a better over-all understanding of his desires and objectives. The white community could demonstrate this new respect by inviting black businessmen to participate in local and civic organizations.49

In retrospect, Jones’s integrated ownership concept appeared to represent a grassroots version of the partnerships between large white corporations and black businesses that had existed since the late 1960s. Although such arrangements clearly had economic benefits for blacks, the economic benefits for white business seemed far more uncertain. In fact, many of these arrangements appear to have been predicated on white businesses’ interest in demonstrating their sense of “social responsibility.” During the economic downturn of the mid- to late 1970s, however, white businesses once again gave priority to profits over notions of “white guilt.” As exemplified by the “Wedtech” scandal of the early 1980s, some white businesses formed partnerships with black and other minority entrepreneurs primarily to enhance their own profitability rather than to help minority firms by means of a cooperative venture.50 One of the most creative proposals related to black capitalism during the first Nixon administration was black economist Richard F. America Jr.’s call for a transfer of 10 percent of Fortune 500 companies to African American control. Citing historical precedents when, in the public interest, the government dismantled corporate monopolies, America insisted that it would be in the public interest to modify a situation that has resulted in “the total absence of any large Black corporations in the United States.”51 The main rationale behind America’s proposal was his belief that “the establishment and nurturing of [African American] small businesses, now being undertaken on an increasing scale, does not satisfy the need for [African American] economic independence and self-determination.”52

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He envisioned that “after about eight corporations have been transferred to Black control each year for fifteen years, the procedure would be discontinued, since by then Blacks will have achieved economic parity roughly equivalent to their proportion of the population.”53 Although America believed there existed enough African American managerial talent to run the transferred corporations,54 others were not so sure. For instance, Louis L. Allen, president of the Chase Manhattan Capital Corporation, noted: “No one can know how to manage a large corporation without experience in doing just that. Certainly, experience in small company management is no substitute.”55 In retrospect, Allen’s critique of America’s proposal for black economic development reflected an inescapable reality. To be blunt, who could realistically expect that 10 percent of Fortune 500 companies would be (peacefully) transferred to African American control? Similarly, who could realistically expect the American government to (peacefully) allow black America to operate as an independent, albeit underdeveloped, nation within the borders of the United States? Significantly, amid Innis’s, McLaurin’s, and America’s proposals for African American economic empowerment, Abraham S. Venable’s 1972 book Building Black Business: An Analysis and a Plan offered a much more realistic approach to black business development. Venable, who had worked for both the Johnson and Nixon administrations in the realm of minority business development, offered an early disclaimer about the limits of black business development: Black business development will not cure all the ills of the black community. Black businesses will not, by themselves, transform bleak ghettos into cheerful suburbs nor will they necessarily turn racial fear and hatred into trust and brotherhood. Black business will employ some black people, but not nearly all the black people who are unemployed or underemployed. Black business will raise the income of some people, but not of all people. Black businesses will help generate economic and political power, but they will not create a self-sufficient minority community.56

Nevertheless, despite Venable’s discussion of the limited outcomes of black entrepreneurship, his book offered a concrete suggestion as to how African Americans businesspeople could use their existing economic power to achieve greater individual and collective respect in America.

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During his tenure with the Commerce Department in the mid-1960s, Venable promoted the notion of black community “trade associations” to enhance the profitability of existing African American enterprises (see chapter 3). In Building Black Business, Venable reintroduced the similar concept of “business associations”: Black entrepreneurs need something that is similar in structure to a trade association but radically different in level of emphasis. The black structure must do more than offer economies in purchasing, advertising, and so forth. It must stress education in business systems and procedures. The point may seem trivial but actual experience has shown that education and the establishment of procedures and systems is the most vital service needed by the majority of black businessmen.57

To provide a real-world example of how business associations could aid African American business development, Venable offered the following example from the Washington, D.C., black business community: In Washington there are approximately ten black fuel oil distributors who each buy about 1.5 million gallons or more of oil every year. That volume is not very significant in the market place. But a 15-million-gallon dealer is significant. If the ten black distributors could combine their requirements and negotiate as a wholesaler, they could buy their fuel oil for approximately 25 percent less, thus, saving about $400,000 a year.58

Venable further suggested that there were similar opportunities for African American enterprises in a variety of other fields, including dry cleaners, funeral homes, grocery stores, restaurants, variety stores, liquor stores, taxicab companies, and building contractors. Besides discussing the potential power of separate business classifications organizing business organizations, Venable outlined the possibilities of an overall community business organization made up of business organizations from each industry. Despite trying to temper his optimism, Venable concluded: “In ten years the black business community in Washington could conceivably increase its profits by $100 million. The total benefit to the community would be tremendous.”59 Venable further illustrated the potential power of his business organization concept by discussing it in the context of regional and national black business development:

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First publications of the Office of Minority Business Enterprise (courtesy of National Archives, College Park, MD). If there are a hundred black business communities with the same potential as Washington, then regional organizations and eventually a National Business League have the potential of raising up to $1 billion over a decade. That $1 billion reinvested back in the black community would be an enormous economic boost. The limits are only those of imagination and organizational effort because the basic concept is a sound, bottoms-up approach based upon a realistic appraisal of the problems and potential of existing minority businessmen.60

Ironically, despite Venable’s admirable attempt to formulate a workable blueprint for black business development, his proposal—like those of Young, Cross, Innis, McLaurin, Jones, and America—soon found itself relegated to the footnotes of American business history. In addition to a variety of independent proposals and publications supporting various derivatives of black capitalism, the Office of Minority Business Enterprise (OMBE) published OMBE Outlook, later renamed OMBE Access, to publicize governmental activities on behalf of black businesspeople. Commencing in November 1969, these OMBE-produced publications provided an important view of the Nixon administration’s initiatives regarding black capitalism.61

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President Richard M. Nixon speaking to the first meeting of the Advisory Council for the Office of Minority Business Enterprise, October 13, 1969 (courtesy of National Archives, College Park, MD).

The first issue of OMBE Outlook featured President Nixon on the cover addressing the first meeting of the meeting of the OMBE Advisory Council, convened on October 13, 1969.62 Even though OMBE Outlook and OMBE Access regularly covered events in the federal bureaucracy related to minority business enterprise, they more often than not documented OMBE’s activities in nonwhite communities across America. An example is an article entitled “OMBE Takes to the Cities” in the January 1970 issue of OMBE Outlook, which discussed recent fact-finding trips by Secretary of Commerce Maurice Stans and OMBE Director Abraham Venable to Philadelphia and New York. As Stans told OMBE Outlook, “Both visits have provided valuable insights as to the problems faced by ambitious members of minority communities who seek a piece of the action, who seek ownership in the American enterprise system.”63 Rev. Leon H. Sullivan of Philadelphia’s Zion Baptist Church coordinated Stans and Venable’s November 26, 1970, trip, as he wanted to give them a firsthand glimpse of his local economic development projects. The first stop on the Philadelphia itinerary was a visit to the Progress Plaza Shopping Center. As OMBE Outlook noted, Progress Plaza was “the first black-owned and operated project of its type, it contains

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17 stores of which 11 are black owned and operated. Six chain stores branches in the center are under black management.”64 After touring Progress Plaza, Stans and Venable were taken to Sullivan’s Opportunities Industrialization Center (OIC), which had trained and found productive employment for more than eight thousand men and women. At the time of the tour, OIC graduates were being placed in two of Sullivan’s other enterprises, Progress Aerospace Enterprises, which manufactured electronic components for the aerospace industry, and the Progress Garment Manufacturing Company.65 Stans and Venable also discovered that Rev. Sullivan had used his church to raise seed capital for his various economic development endeavors. As OMBE Outlook reported, These projects received their initial impetus through the institution of a program devised by Mr. Sullivan known as the “10–36 Plan” whereby 650 members of the Zion Baptist Church invested $10 a month for 36 months in a cooperative pool. Since then, an additional 6,000 persons in the community have become members.66

OMBE Outlook also noted that Secretary Stans, “impressed by the programs . . . signed up as a member of the club.”67 One week later, on December 3, 1969, Stans and Venable visited New York’s Harlem. Their trip started with a meeting with various business, professional, and community leaders at Freedom National Bank. Here Stans and Venable recounted OMBE’s early accomplishments: “pledges of 734 franchise opportunities by 72 franchisors; the earmarking of 75 dealerships for minority group members by the automobile industry; the commitment of the nation’s major petroleum companies to triple the number of minority-owned and -operated service stations over the next five years.”68 Besides meeting with Harlem’s leadership, which included Jackie Robinson, the chairman of Freedom National Bank, Stans and Venable took a walking tour of Harlem’s black business community to listen to the concerns of grassroots entrepreneurs. At one stop, Secretary Stans purchased a carved elephant from Kenya. The African American owner of the Tree House, Lionel Phillips, assured Stans that it was a Republican elephant.69 The May/June 1970 issue of OMBE Outlook discussed another OMBE-inspired initiative that sought to bridge the gap between the fed-

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Scene from the Office of Minority Business Enterprise’s fact-finding tour of black business, Philadelphia, November 26, 1969. Secretary of Commerce Maurice Stans is the second man from the right, and Rev. Leon Sullivan is the fourth man from the right (courtesy of National Archives, College Park, MD).

eral bureaucracy and prospective and established entrepreneurs in urban black America. An article entitled “Business Is Good for Minority Businesses at First Federal Procurement Store-Fronts” discussed the May 1, 1970, opening of Federal Procurement Counseling Centers in Philadelphia and Washington and noted: Sponsored by President Nixon’s Federal Procurement Task Force on Minority Business Enterprise and the General Services Administration, the centers are providing free counseling on subjects ranging from how to fill in a Federal bid document to the kind of computers the Government buys. The President’s primary objective is greater minority business participation in the billions of dollars in Federal procurement under Section 8(a) of the Small Business Act. . . . Known as “store fronts” because of their easy access to the street, the professionally staffed centers are open daily during normal business hours.70

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Located in Philadelphia’s and Washington’s African American communities, these procurement centers represented an attempt to provide blacks with a visible manifestation of the government’s interest in promoting black capitalism. According to Dean Kotlowski, one of OMBE’s early shortcomings was its lack of a budget. In fact, between 1969 and 1971, Commerce Secretary Stans “panhandled other departments for funds.”71 However, by 1972 he had secured OMBE’s first self-contained budget ($40 million), which allowed the agency to fund a variety of initiatives.72 The February 1972 issue of OMBE Outlook highlighted this development in an article entitled “Secretary Stans Announces Multi-Million Contract Awards.” Nineteen minority business development organizations and trade associations serving clients in forty cities were scheduled to receive nearly $16 million to “provide improved business opportunity services for members of minority groups.”73 The first two groups to receive these grants were the National Business League (NBL) and the National Urban League (NUL). OMBE Outlook covered the January 27, 1972, Washington, D.C., ceremony at which the

Scene from the Office of Minority Business Enterprise’s fact-finding tour of black business, New York, December 3, 1969: Secretary of Commerce Stans and OMBE Director Abraham Venable leaving the Freedom National Bank in Harlem (courtesy of National Archives, College Park, MD).

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NBL received a two-year OMBE contract for $1.6 million and the NUL received a two-year OMBE contract for $1.0 million to provide business development services to their constituencies. In his comments, Secretary Stans announced that the NBL, the NUL, and other organizations slated to receive OMBE grants “will become affiliates of the Office of Minority Business Enterprise, thus having available the resources of the Government through OMBE.”74 Another way in which OMBE used its initial budget, as reported in OMBE Outlook, was its sponsorship of the first National Conference on Business Opportunities for Women, held in June 1972. The two-day conference attracted nearly five hundred female entrepreneurs seeking information about how the government could help them either start or expand a business.75 The editors of OMBE Outlook, along with such individuals as Whitney Young, Theodore Cross, Roy Innis, Dunbar McLaurin, Edward Jones, Richard America, and Abraham Venable, believed that black capi-

A Federal Procurement Counseling Center storefront in Washington, DC. This initiative was intended to help give African Americans advice about the procedures for securing government contracts (courtesy of National Archives, College Park, MD).

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The January 27, 1972, signing ceremony for Office of Minority Business Enterprise (OMBE) contracts with the National Urban League and the National Business League. Both organizations received funding to provide various services to African American entrepreneurs. From left to right: Robert Brown, special assistant to President Nixon, and John L. Jenkins, OMBE director. Sitting from left to right: Adolph Holmes, president of the National Urban League; Maurice Stans, secretary of commerce; and Berkeley Burrell, president of the National Business League (courtesy of National Archives, College Park, MD).

talism or something like it was positive and desirable. But other observers believed that black capitalism was a dangerous illusion, and both critics and proponents of black capitalism had different perspectives. Although the Nixon administration actively promoted black capitalism, economist Andrew Brimmer, the period’s highest-ranking African American in government service, emerged as an outspoken critic of it. Brimmer, a member of the Federal Reserve Board, expressed his views in a number of venues. Brimmer wrote a short essay entitled “The Trouble with Black Capitalism” for the May 1969 issue of Nation’s Business, which focused on the impact of racial desegregation on black business. Because racial segregation had contributed to the growth of black-owned service-sector

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Scene from the First National Conference on Business Opportunities for Women, sponsored by the Office of Minority Business Enterprise (OMBE), June 1972. From left to right: John L. Jenkins, OMBE director; Sally Peterson, wife of Secretary of Commerce Peter G. Peterson; Inez Kaiser, consultant to OMBE on women and business and chairwoman of the conference; and Arnita Young Boswell, executive chairwoman of the Chicago League of Black Women (courtesy of National Archives, College Park, MD).

businesses (barber shops, beauty shops, hotels, and restaurants), Brimmer felt that racial desegregation, now, was contributing to the decline of these same black-owned enterprises.76 Besides seeing a bleak future for black-owned companies in the service industry, Brimmer expressed even more doubt about black manufacturing concerns. To illustrate this point, Brimmer explained that large apparel manufacturers were currently producing clothing with an African motif that were undercutting the profits of black community-based tailors and seamstresses. Based on the growing importance of the African American consumer market, Brimmer urged black businessmen not to “count on nationally oriented manufacturing firms leaving the Negro market to Negro entrepreneurs.”77 Brimmer concluded his article by stating that “the only really promising path to equal opportunity for Negroes in business as in other aspects of economic activity lies in full participation in an integrated,

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national economy. It cannot be found in a backwater of separatism and segregation.”78 On July 25, 1969, Brimmer testified before the U.S. House of Representatives’ Select Committee on Small Business regarding black capitalism. After reiterating the information in his Nation’s Business article, Brimmer observed that the desegregation of the national labor force had hampered black entrepreneurs’ quest to hire and retain quality black employees.79 Along with issues related to white competition, Brimmer’s testimony focused on the tenuous financial situation of African American families, the cornerstone of black capitalism’s projected consumer market. He noted that on all income levels, they had more installment debt than did their white counterparts, which reduced the amount of black dispos-

Unidentified registrant for the First National Conference on Business Opportunities for Women, June 1972 (courtesy of National Archives, College Park, MD).

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able income and made them “a poorer potential consumer for additional goods and services than a family of similar income that is less encumbered by installment debt payments.”80 Besides addressing Congress and the mainstream business community, Brimmer took his case against black capitalism directly to African Americans. The August 1970 issue of Ebony magazine included an article by Brimmer entitled “Economic Integration and the Progress of the Negro Community.” Brimmer began by outlining his credentials as an economist and his belief that “the only promising path to genuine economic progress of the Negro in America is an accelerated widening of opportunities in an integrated economy.”81 For African Americans enamored with various proposals (both government sponsored and independent) related to black economic development, Brimmer’s observations in Ebony were sobering, to say the least. After dismissing as a “mirage” the notion of viewing black America as a separate nation with then $35 billion in personal income that could be separately “developed,”82 Brimmer elaborated on black America’s lack of “separate” economic strength. He noted that while African Americans constituted nearly 11 percent of the U.S. population, they received approximately 6.5 percent of America’s personal income and owned less than 2 percent of the country’s household assets.83 In a swipe at the Nixon administration’s Office of Minority Business Enterprise (OMBE) program, Brimmer dismissed black capitalism as a “cruel hoax” and noted that any program aimed at expanding small-scale black-owned businesses “would be running against a strong national trend. In retailing, the trend is steadily toward large chain-store units in which economic efficiency is rising rapidly.”84 Brimmer closed the article by confirming the link between economic integration and African American progress. From his perspective, blacks needed to get inside the U.S. corporate structure to learn how economic power is exercised. He hoped that African Americans would be in a position “to share this power and assure that it is used for them—and not against them.”85 The October 1969 article “The Cons of Black Capitalism: Will This Policy Cure Urban Ills?” by Bernard H. Booms and James E. Ward Jr. was another widely discussed critique of insular African American business development.86 Booms, a professor of economics, and Ward, an investment analyst, expanded this discussion of black capitalism by presenting “some of the possible disadvantages that black capitalism might entail.”87 Their thesis was that black capitalism, which had become

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increasing defined as “a policy for the promotion of black ownership of businesses within the urban ghetto,”88 was an unworkable premise, for a variety of reasons. Despite all the public hoopla surrounding black capitalism, a number of vital questions related to African American entrepreneurship remained all but unanswered. Perhaps the two most significant were, “What does it take to operate a business successfully in the ghetto? What type of businesses seem to have a chance of surviving in the ghetto?”89 According to Booms and Ward, “the few facts available about the very areas where black capitalism programs might be expected to put into operation and about the types of firms that can be expected to be established seem to predict that the fight for success will be a tough one.”90 Booms and Ward’s pessimistic appraisal of the future of inner-city black entrepreneurship was linked to their perception of preexisting black businesses in urban America. Citing a 1968 study of black-owned businesses in Gary, Indiana, they noted, “In general, these retail businesses are very marginal. Often they are one-man operations with help from family members. The owners work long hours, many reporting a 16- to 18- hour workday.”91 They therefore suggested that black capitalism did not “show much economic promise.”92 Similar to Roy Wilkins’s critique of Theodore Cross’s Black Capitalism, Booms and Ward predicted that promoting black entrepreneurship could be at best “a limited solution to our urban problems because very few persons can be owners of businesses. For the nation as a whole, only 10 percent of the labor force are entrepreneurs.”93 Thus most blacks “cannot expect to become owners and will have to be content as wage earners.”94 Booms and Ward concluded that black capitalism, notwithstanding the wide media coverage given to its potential benefits, “may elevate minorities’ hopes, only to later crush them by reality. This end result can only lead to frustration, resentment, and mistrust on the part of the disappointed groups.”95 In a swipe at the Nixon administration, Booms and Ward declared, “There is the danger that, by devoting so much time, energy, and money to minority entrepreneurship, the government may be overlooking other more efficient alternatives.”96 Whereas Brimmer, Booms, and Ward viewed black capitalism as unworkable within the framework of the capitalist system, other critics of this Nixon administration policy simply denounced capitalism, black or white. Although Nixon hoped that his black capitalism initiative would diminish the influence of Marxism in the black community, he

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was not totally successful. In fact, besides James Foreman, several other important black Marxist critics of black capitalism emerged during President Nixon’s first term in office. Robert L. Allen’s important 1969 book Black Awakening in Capitalist America addressed the basic issue of whether black capitalism would benefit the entire African American community or just a relatively few black entrepreneurs. He expressed his skepticism by noting: “Simple transference of business ownership into black hands, either individually or collectively, is in itself no guarantee that this will benefit the total community. Blacks are capable of exploiting one another just as easily as whites.”97 In reference to activities of Roy Innis and other “cultural nationalists,” Allen pointed out: Their programs, far from aiding in the achievement of black liberation and freedom would instead weld the black communities more firmly in the structure of American corporate capitalism. This reformist or bourgeois nationalism—through its chosen vehicle of black capitalism—may line the pockets and boost the social status of the black middle class and black intelligentsia, but it will not ease the oppression of the ordinary ghetto dweller. What CORE and the cultural nationalists seek is not an end to oppression, but the transfer of the oppressive apparatus into their own hands.98

Because Black Awakening in Capitalist America decried the worth of black business ownership, Allen offered instead an ambiguous and utopian (Marxist-tinged) solution to the economic plight of African Americans.99 James Boggs was another prominent black Marxist author and critic of black capitalism. His 1970 book, Racism and the Class Struggle, contains a chapter entitled “The Myth and Irrationality of Black Capitalism.” Boggs had first presented this material as a coauthored position paper at the National Black Economic Development Conference on April 25, 1969.100 Boggs tried to clarify the contemporary African American discourse attacking “the system” by making it clear that “the system” and “capitalism” were synonymous. He also asserted that “black underdevelopment is a product of capitalist development.”101 Considering Boggs’s antipathy toward the capitalist system, he predictably had nothing but derision for black capitalism, calling it a technique “to reenslave Black people” and “a dream and a delusion.” He also

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claimed that the black working class was “in no mood to change from one exploiter to another just because he is of the same color.”102 Besides merely reiterating Marxist dogma, Boggs did offer specific ways that African Americans could develop noncapitalist economic structures. In the rural South, Boggs proposed that African Americans “undertake a massive land reform movement with the aim of forcing the federal government to turn these plowed-under lands over to the millions of Blacks still in the South, to be developed by Black community organizations.”103 In the urban North, where most African Americans lived, Boggs called for “a similar campaign for land reform and acquisition” based on “the principle of eminent domain.”104 Perhaps the most intriguing aspect of Boggs’s noncapitalist vision for black America was his desire to incorporate black “street people” or “untouchables” into the planning and implementation of his larger goals of land reform and acquisition.105 Although he did not offer specific ways to accomplish this, he correctly observed that substantive African American economic development would have to include the active participation and support of all social classes in the black community. Earl Ofari’s 1970 book The Myth of Black Capitalism represented perhaps the period’s most strident denunciation of black capitalism. The following introductory quotations set the stage for this work: You show me a capitalist, I’ll show you a bloodsucker. He cannot be anything but a bloodsucker if he’s going to be a capitalist. He’s got to get it from somewhere other than himself, and that’s where he gets it—from somewhere or someone other than himself. —Malcolm X As long as the Man controls the water or electricity coming into your community, it does you no good to control that community. And to control the community in a capitalistic way, like the Man, is not desirable. —H. Rap Brown The mode of production in material life determines the general character of the social, political, and spiritual processes of life. —Karl Marx106

Using E. Franklin Frazier’s controversial 1957 study Black Bourgeoisie as a reference point, Ofari maintained that the call for black capitalism, based on “a misdirected faith in the myth of Negro business,” came primarily from the black middle and upper classes.107 Despite its stridency, The Myth of Black Capitalism offers the least persuasive (Marxist-based) argument against black capitalism. By directly associating

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black business with a nefarious “black elite,” Ofari exhibits a stunning unfamiliarity with census data on black-owned businesses in America. Historically, most black-owned businesses have been single proprietorships operated by African Americans from a variety of economic backgrounds or classes.108 Some commentators consistently endorsed or denounced the notion of black capitalism, and others publicly changed their minds about the worth of promoting African American entrepreneurship. According to noted black sociologist Robert Staples, “one of the most curious turnabouts was the [Black] Panthers’ embrace of Black Capitalism.”109 The Black Panther Party, co-founded by Huey P. Newton and Bobby Seale in October 1966, epitomized the militancy and radicalism often associated with late 1960s’ black America. The following quotation from the April 25, 1970, issue of the Black Panther newspaper illustrates the organization’s political orientation and its strategy for improving the plight of African Americans: The Black Panther Party recognizes, as do all Marxist revolutionaries, that the only response to the violence of the ruling class is the revolutionary violence of the people. Revolutionary strategy for Black people in America begins with the defensive movement of picking up the Gun, as the condition for ending the pigs’ reign of terror by the Gun.110

Because of the Black Panther Party’s widely publicized promotion of armed self-defense, a February 13, 1972, Washington Post article entitled “The Transformation of the Panthers” must have startled many of its readers. Situated directly above this essay was a cartoon featuring three images of Huey P. Newton which was a clever visual depiction of the Panthers’ “transformation.” The first showed Newton holding a shotgun and wearing a bandolier full of cartridges. The second was a nebulous, fuzzy, image of Newton, and the final image is of Newton holding a golf bag full of golf clubs. Instead of a bandolier, Newton is wearing a belt holding golf balls and tees.111 As the article noted, It may not be widely known, but the revolutionary Black Panther Party is now planning to manufacture golf bags in an Oakland, Calif. factory . . . followers of Huey Newton and Bobby Seale in Oakland have undertaken a series of enterprises that sound little like the Panthers of old.  .  .  . The golf bag plan is one of these. Proceeds from the sales of the bags would be

Nixon’s Domestic Détente  155 earmarked for the purchase of 300 to 400 sets of clothing to be given away each month to ghetto residents by the “People’s Free Clothing Program.”112

By 1972, the Black Panther Party had split into two hostile factions. One faction, based on the East Coast and led by the exiled Eldridge Cleaver, tried to maintain the Panthers’ traditional and overtly adversarial relationship with capitalist American society. The other faction, based in Oakland and led by Huey Newton and Bobby Seale, sought a more “pragmatic” approach to ameliorating the plight of blacks. The party’s plan to produce golf bags was one manifestation of this new mind-set.113 Predictably, as the Newton/Seale faction attempted to use business enterprise as a means to fund community-improvement activities, this segment of the party likewise reevaluated the role of black businessmen in their communities. Instead of being the irredeemable “bloodsuckers,” as Earl Ofari and other black Marxists characterized them, the “new” Black Panther Party argued that “small black capitalists are the victims of the large corporate capitalist structure dominated by whites.” In this way the Newton/Seale faction hoped to “cultivate in the black businessman certain affirmative qualities” that would make them (black businessmen) active participants in the liberation struggle of African Americans.114 Those black businesspeople who contributed to the various Panther community assistance programs were given free advertising in the Black Panther newspaper, and the ads were accompanied by the slogan “Support the businesses that support our community.”115 But those black businessmen who did not support Panther community programs became the object of derision. In reference to enterprises that did not return a portion of their profits back to the black community, the party urged black consumers to “shut them down.”116 Rev. Jesse L. Jackson was another noteworthy African American who did a public turnabout regarding the merits of black entrepreneurship. In early 1969, Jackson, then the national director of the Southern Christian Leadership Conference’s Operation Breadbasket program based in Chicago, issued a press release denouncing black capitalism. The February 21, 1969, issue of Muhammad Speaks (the official organ of the Nation of Islam) reprinted Jackson’s declarations in an article headlined “Breadbasket Leader Rejects Black Capitalism.” After describing the black capitalism as a divisive force in the African American community, Jackson contended: “The issue is not to multiply

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a few additional entrepreneurs or to develop a few model Black cities or to finance a few Black firms as pilot programs. But a[t] stake is the demand for the total economic development of the Black community.”117 He went on to insist (sounding a lot like James Boggs) that “attaching the name ‘Black’ to capitalism is not a description, but a diversion. The term ‘Black Capitalism’ describes less a goal than a gimmick. We have the responsibility to expose the gimmick rather than delude Black people by justifying explanations of a false goal.”118 Ironically, Jackson later used a gimmick (his “Black Expo” programs of 1969–1972) to promote black business and black capitalism. In fact, Jackson’s Black Expo exhibitions have been described as “an annual trade fair for black businesses, both local and national, as well as a general celebration of black capitalism, complete with parties, concerts by black artists, exhibitions of black paintings and sculpture, and other attractions associated with economic expositions.”119 It remains unclear why the mercurial Rev. Jackson changed his mind about the efficacy of promoting black capitalism. This overview of public discourse generated by President Richard Nixon’s black capitalism initiative has lingering ramifications above and beyond the notion of domestic détente. Notwithstanding the importance of the African American consumer market, African American enclaves continue to be areas of economic stagnation and underdevelopment. Consequently, there exists a need for another national dialogue related to black economic empowerment.

7 The Ford Administration and Black Capitalism

Richard Nixon successfully used black capitalism to help defuse domestic urban unrest during his presidency, but his handling of the Watergate Affair was far less skillful. Nonetheless, even though Nixon ultimately left the White House in disgrace on August 8, 1974, his black capitalism initiative remained alive and well. In fact, Gerald R. Ford, Nixon’s successor, continued helping black entrepreneurs in order to attract African American voter support in the presidential election of 1976. Ford’s efforts to reach African American voters were initially coordinated by his chief African American aide, Stanley S. Scott. Scott, who held the position of special assistant to the president, used a variety of strategies (including urging President Ford to maintain an open door policy toward black organizations) to induce African Americans to reconsider the group’s near-universal allegiance to the Democratic Party. Scott originally entered government service in 1971 as the Nixon administration’s assistant White House communications director, and in 1973, he assumed the position of special assistant to the president. Before that, Scott had worked in a variety of media-related capacities, including serving as the first black reporter for United Press International (UPI). One of the highlights of Scott’s tenure at UPI was his presence in Harlem’s Audubon Ballroom on February 21, 1965, where he witnessed (and reported on) the assassination of Malcolm X.1 In an August 24, 1974, memorandum to the presidential aide John Marsh, Scott reviewed his office’s previous activities and recommended how he and his office could better help the new president. Scott’s activities included the following performance objectives: 1.

Serves as the central contact for Blacks seeking information and assistance on a wide variety of subjects and issues.

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Stanley S. Scott, special assistant to President Gerald R. Ford, who coordinated Ford’s interaction with the African American community (courtesy of Gerald R. Ford Library).

2.

3. 4. 5. 6.

7.

To advise both the President and members of the White House or Domestic Council on matters related to Blacks. This includes the development of proposals for meetings between the President and other officials and individual Black leaders. To collect and disseminate information regarding Government programs and activities relating to Blacks. To serve as a principal spokesman for the Administration’s programs and attitudes regarding Blacks. To make recommendations regarding the appointment of Blacks to key Federal positions. To work in close coordination with the Department of Defense in development of equal opportunity programs within the military and to seek means of resolving the problem of racial conflict in the Armed Services. To assist the development of the minority business enterprise program by monitoring the award of OMBE grants, SBA minority loans, MESBIC, 8(a) programs and by encouraging other

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Federal departments and agencies to support minority enterprise via their procurement activities. 8. To promote efforts designed to increase Federal aid to predominantly Black colleges. 9. To assist in improving equal opportunity activities in the Federal Departments and Agencies. 10. In an effort to assist small, Black communities, this office has developed the inter-departmental Rural Small Towns Task Force. 11. To serve as a liaison between the NSC [National Security Council] and Black American groups or individuals regarding African affairs.2 After outlining the specific duties of his office, Scott suggested how the new Ford administration could most effectively deal with issues related to African Americans: During the first [Nixon] Administration, some progress was made in developing or expanding Federal programs in opening the doors of equal opportunity to minority group Americans. Despite our achievements, large numbers of these citizens (particularly Blacks) viewed the Nixon Administration as being hostile to their desire to achieve full status in our national mainstream. Therefore it is necessary that action be taken within the White House itself which would firmly demonstrate our resolution that this primary social problem receive top priority in our domestic program.3

Scott’s principal recommendation to the new Ford administration was that “the direction of all Federal policy regarding minorities should be coordinated by one White House office.” Scott also proposed two ways of achieving this goal. First he suggested establishing a council on human rights, which would be part of the president’s Domestic Council. This new unit “would handle virtually all matters regarding minority groups within the White House and would coordinate the activities of all departments and agencies in the areas of civil rights and equal opportunity.”4 An alternative would be expanding the current structure of the Office of Special Assistant to the President. In explaining his reasons for doing this, Scott revealed that his previous efforts were not given the support they merited: “An individual would be appointed with total responsibil-

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ity for the minority effort. This person should be fully supported by a staff adequate to carry out the duties of that office.”5 Perhaps in response to his relative marginality in the Nixon administration, despite his wide-ranging responsibilities, Scott concluded his recommendations by noting: It is important for us to emphasize that no matter which approach is selected, those appointed should have direct authority and full participation in the development and implementation of the total domestic policy relating to minorities. Members of this office should be involved in all high domestic policy meetings, including Cabinet meetings.6

Besides suggesting how the White House bureaucracy could most effectively address issues related to minority affairs, Scott’s August 24, 1974, memorandum also urged the new Ford administration to “appoint a number of ‘Ombudsmen’ or ‘Domestic Ambassadors’ who would serve the Administration on a consultant basis as emissaries to the minority community.” He specifically suggested that “you could appoint one Black, one Spanish speaking person and one Indian to these posts.”7 Also, and probably based on his background in public relations, Scott urged the new Ford administration “to give serious consideration toward making some gesture paying homage to the memory of Dr. Martin Luther King, Jr.” He pointed out that “the impact of this gesture within the Black community would be extremely positive.” The three options that Scott asked President Ford to consider were (1) urging Congress to declare Dr. King’s birthday a national holiday, (2) designating Dr. King’s birthplace in Atlanta as a national monument, and (3) designating Dr. King’s Atlanta grave site as a national memorial.8 During his first month in office, besides being briefed by aides like Stanley Scott, Gerald Ford, experienced one of the most dramatic political honeymoons in U.S. history. After the tumultuous final months of the aborted second Nixon administration, Americans eagerly embraced the new president. Ford, a naturally friendly and congenial man, appeared to represent the antithesis of the cold and callous Richard Nixon. As Yanek Mieczkowski states in Gerald Ford and the Challenges of the 1970s, the nation’s press contributed mightily to this situation: Reporters responded enthusiastically, even excessively, to Ford’s unpretentious style. During his first month as president, they indulged in an orgy

Ford Administration and Black Capitalism  161 of praise, exulting that Ford had restored the presidency to the people, tickling themselves over his common touch. The media seemed agog that the nation had a president human enough to engage in everyday tasks like fixing his own English muffins for breakfast or appearing in pajamas on the front porch of his Alexandria, Virginia home looking for the morning newspaper. (In a thoughtful gesture to allow the Nixon family to move out of the White House, for his first two weeks as president, Ford continued to live at his suburban home. Like thousands of other federal employees, the president commuted daily to Washington.)9

Gerald Ford’s political honeymoon came to an abrupt end on Sunday, September 8, 1974, when he granted a “full, free, and absolute pardon unto Richard Nixon for all offenses against the United States which he, Richard Nixon, has committed or may have committed or taken part in during the period from January 20, 1969, through August 9, 1974.”10 The public’s negative reaction to Ford’s pardon of Nixon was swift and vociferous. For example, on the following day in Pittsburgh, protesters greeted the president with the chant “Jail Ford, jail Ford.”11 Richard Reeves, author of the 1975 book A Ford, Not a Lincoln, declared that Ford’s quick pardon of Nixon “was a monumental misjudgement, an act of extraordinary political stupidity.”12 President Ford was deeply hurt and surprised by the overwhelming disapproval of his pardon of Richard Nixon. As he said in his 1979 autobiography A Time to Heal, he believed he was acting in the best interests of the nation. Citing the country’s need to address other problems, Ford concluded that it was appropriate and necessary to move beyond Nixon and Watergate. He appeared to have been persuaded mainly by Major Bob Barrett, one of his military aides, who told him: We’re all Watergate junkies. Some of us are mainlining, some are sniffing, some are lacing it up with something else, but all of us are addicted. This will go on and on unless someone steps in and says that we, as a nation, must go cold turkey. Otherwise, we’ll die of an overdose.13

Notwithstanding Ford’s assertion that he pardoned Nixon solely in the national interest, the long-lingering belief is that he pardoned Nixon based on a prearranged deal. But according to Yanek Mieczkowski, the scholar who published the most recent book on the Ford administration, “no evidence ever surfaced to suggest any collusion between Ford and Nixon.”14

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Although Mieczkowski does not link the Nixon pardon to a deal, he does characterize it as “politically clumsy.” He also plausibly links the Nixon pardon to Ford’s initial political honeymoon: In a sense, Ford’s popularity and the media adulation during his first month in office established conditions that made his poor handling of the pardon possible. When awash in public support, presidents experience an almost heady feeling of infallibility that makes them prone to lapses in judgement. . . . High approval ratings breed a sense of presidential hubris or carelessness; it is difficult to imagine Ford granting the Nixon pardon so abruptly had he suffered from lower poll ratings and rougher media treatment. In a more adverse political climate, he likely would have been more cautious.15

Whether one agrees with Gerald Ford’s explanation of why he pardoned Richard Nixon or with White House protesters who carried signs reading “Promise Me a Pardon and I’ll Make You a President,”16 September 8, 1974, helped define the Ford presidency. The new president had to contend not only with the political reverberations of the Nixon pardon but also with the country’s other pressing problems which, according to Ford, prompted him to pardon Nixon in the first place. Perhaps the biggest problem faced by the new Ford administration had to do with the economy. President Ford was struggling with steeply rising consumer prices linked to an ongoing Arab oil embargo to punish the United States for its support of Israel during the 1973 Yom Kippur War.17 As John Robert Greene observed in The Presidency of Gerald Ford, “If Ford had only faced rising prices in the economic sphere, his task would have been merely herculean. But conventional economic wisdom—which holds that in a period of rising prices there will be a corresponding period of low unemployment and relatively strong business— was wrong in the mid-1970s.”18 In a economic landscape of not only rising inflation and unemployment but also a sinking Dow Jones industrial average, the Ford administration had to find a means of keeping the recession-plagued country from descending into depression. On September 30, 1974, President Ford issued an executive order creating the Economic Policy Board. The membership of this new White House agency included “the secretaries of State; Interior; Agriculture; Commerce, Labor; Health, Education and Welfare (HEW); Housing and Urban Development (HUD); and Trans-

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portation as well as the director of the Office of Management and Budget, the Chairman of the CEA [Council of Economic Advisers], and the executive director of the Council on International Economic Policy.” The main purpose of the new Economic Policy Board was to “provide advice to the president concerning all aspects of national and international economic policy.”19 A few days earlier, between September 27 and 28, 1974, the Ford administration had hosted an “inflation summit,” held at the Washington Hilton, to focus attention on the country’s principal economic problem. Although this conference has been characterized as mere “presidential grandstanding,” with little of substance actually discussed,20 a coalition of prominent African Americans used it to express the economic concerns of the black community. On the weekend of September 21 and 22, 1974, the National Black Economic Summit met in Washington to discuss the implications of the country’s economic ills for African Americans. The organizers of this event were Dorothy Height, president of the National Council of Negro Women; Maynard Jackson, president-elect of the National Black Caucus of Local Elected Officials; Vernon E. Jordan Jr., executive director of the National Urban League; Charles B. Rangel, chairman of the Congressional Black Caucus; and Roy Wilkins, executive director of the NAACP.21 This meeting produced a document entitled The Economic Crisis and the Black Community: A Call for Action, which proposed several ways in which the Ford administration could, both effectively and fairly, address the country’s economic problems, both at the September inflation summit and beyond. Besides “shifting funds from a swollen $90.5 billion Defense budget (FY 75),” the National Black Economic Summit urged Ford to immediately consider “sharply increased taxes on excess profits, which are at record levels; a surtax on upper-income individuals; direct tax relief to the lower-income wage earners in the form of an increase in the personal exemption or replacement of the exemption by a tax credit.” In addition, The Economic Crisis and the Black Community stated, “We recommend the immediate establishment of a public service employment program providing no less than 1 million jobs.”22 Although the September 1974 summit meeting focused on the concerns of working-class and lower-income African Americans, it also addressed the issue of government support for black entrepreneurship. Citing the economic hardships faced by black businesses during the

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recession, The Economic Crisis and the Black Community recommended that black entrepreneurs be granted “a one-year moratorium on federal loan repayments.”23 Perhaps ironically, less than ten days after African Americans expressed an interest in maintaining recent gains associated with black business development, plans to cut the budget of the Office of Minority Business Enterprise (OMBE) were revealed. In an October 1, 1974, “administratively confidential” memorandum to chief White House aide Donald Rumsfeld, Stanley Scott expressed deep concern about a proposed $10 million cut from OMBE’s “already inadequate Congressional approved budget of $52 million.” Scott went on to warn Rumsfeld that “at a time when the leaders of the black community have been pressing for significantly expanded commitments to hard-pressed minority businesses, such a move would be regarded as a slap in the face.”24 The evidence suggests that Scott’s October 1, 1974, memorandum was indeed considered seriously by the Ford administration. Two months later, on December 11, 1974, President Ford informed his eleven cabinet officers that increasing minority business participation in the free-market system was one of his administration’s main goals. He then directed them to submit detailed reports by January 31, 1975, proposing how their individual agencies could best help him achieve this objective through their procurement policies.25 Ford’s request, which brought positive responses from various government agencies, signaled his interest in cultivating a positive image with African American voters. Although Ford tried to continue Richard Nixon’s black capitalism initiative, this alone would not have been enough to increase the number of African Americans in the Republican Party, especially since most blacks were not entrepreneurs. Consequently, in 1975, Ford, at the behest of Stanley Scott, began what came to be known as Ford’s “open door” policy toward the African American community, in which he made a number of symbolic gestures to blacks. On January 14, 1975, Ford announced his intention to nominate William T. Coleman, a prominent Philadelphia black lawyer, to be his secretary of transportation.26 That same day, President Ford used official remarks commemorating the forty-sixth anniversary of the birth of Martin Luther King Jr. to signal his support of an extension of the Voting Rights Act.27 Nine days later, on January 23, 1975, President Ford made an unannounced appearance at a White House briefing of members of the

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National Newspaper Publishers Association, the trade association of black newspapers. In his remarks, Ford vowed that he would do all in his power to promote racial equality and fairness in his administration.28 The evidence strongly suggests that Ford’s “unannounced” appearance before representatives of the National Newspaper Publishers Association was a calculated maneuver to elicit support in the African American community. The positive coverage of this episode in black newspapers strongly suggests that it, indeed, helped enhance President Ford’s image among blacks.29 In addition, Ford’s open door policy may have been predicated by more than mere public relations. As former aide Robert T. Hartmann revealed in his 1980 book Palace Politics: An Inside Account of the Ford Years, Ford was not a bigot who had to be convinced of the efficacy of reaching out to the African American community. For instance, in commenting on Ford’s selection of Coleman as secretary of transportation, Hartmann pointed out, “He chose Bill Coleman for his Secretary of Transportation not because he wanted a token black face at the Cabinet table but because he had been impressed with Bill as a young lawyer on the Warren Commission staff.”30 Regardless of the motivation for Ford’s open door policy, this campaign to elicit African American political support gained additional momentum from his February 4, 1975, appearance at the eleventh annual convention of the Opportunities Industrialization Centers (OIC). Ford praised the efforts of Rev. Leon Sullivan, who founded the OIC to provide occupational training to disadvantaged African Americans.31 By the summer of 1975, it appeared that Ford’s efforts to reach African Americans were being taken seriously in some circles. For example, the July 3, 1975, issue of the Atlanta Daily World, one of the country’s most influential black newspapers, agreed with Stanley Scott that African Americans needed to reassess their allegiance to the Democratic Party.32 But because Scott’s family owned the Atlanta Daily World, its endorsement was not totally objective.33 Although Ford attempted to move beyond a myopic focus on black capitalism to increase black support, he and his administration were forced to address the federal government’s commitment to minority enterprise in the wake of an early 1975 report examining the operations of the Office of Minority Business Enterprise (OMBE). On June 24, 1974, during the height of the Watergate crisis, the House Appropriations Committee requested an investigation of OMBE

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that would “include some measure of the effectiveness of the program as well as data concerning arrearages on loans which the Office of Minority Business Enterprise assists businessmen in making.”34 The subsequent administrative audit of OMBE included an examination of its records; interviews with OMBE officials, interviews with pertinent administrators in the Commerce Department’s offices of Administrative Services and Procurement, Audit, Investigations and Security; and interviews with “officials involved in the minority business enterprise program at the Small Business Administration, General Services Administration, and the Departments of Defense, and Health, Education, and Welfare.”35 On March 10, 1975, a draft of the investigative committee’s findings was released for administrative review. It corroborated the widespread belief that federal government’s programs, aimed at assisting minority business development, needed to be revamped. As an example, although a priority of the House investigative committee was gathering quantitative information about the success or failure of businesses assisted by OMBE, the March 10, 1975, report concluded that “the number of minority businesses that are successful or have failed, and the reasons for their successes or failures is not known by OMBE. OMBE has attempted, unsuccessfully, through in-house studies and contracting efforts to develop this information.”36 During the congressional investigation of OMBE, both the Small Business Administration and the Department of Commerce were asked to review and comment on the following six organizational options related to government services for minority businesspeople: I.

Consolidate the OMBE programs with the SBA programs, under SBA management. II. Consolidate the SBA programs with the OMBE programs, under the Department of Commerce. III. Maintain the separate OMBE and SBA programs, but change the organizational arrangement of these programs within SBA and Commerce. IV. Establish a new, comprehensive, minority business program in SBA (or in Commerce) to replace the existing programs. V. Consolidate direct Federal assistance for minority business development in SBA; redirect the OMBE program to focus on stimulating non-Federal actions to promote minority business development.

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VI. Maintain the current organizational arrangement.37 One of the underlying organizational impediments to the government’s coordination of minority business enterprise was that the SBA was institutionally linked to Congress and the Commerce Department was institutionally linked to the White House. Consequently, during this period of administrative soul-searching, both the SBA and Commerce, unwilling to give up their bureaucratic turfs, argued that they should have primacy in this area. On March 31, 1975, Louis F. Laun, deputy administrator of the Small Business Administration, sent a memorandum to Walter D. Scott of the Office of Management and Budget outlining the SBA’s response to possible options for future government programs to aid nonwhite entrepreneurs. Perhaps predictably, the SBA appeared amenable to option I (consolidating OMBE programs within the SBA under SBA management) and hostile to option II (consolidating SBA programs within OMBE programs, under Department of Commerce management).38 In order not to appear totally self-serving, the SBA reintroduced a seventh option, which originally had been submitted on February 19, 1975. From the SBA’s standpoint, the focus should have been on program coordination rather than program consolidation. That is, the SBA proposed that the Office of Minority Business Enterprise return to its original mission, as expressed in executive order 11458 (March 1969), of coordinating government efforts in minority business enterprise “in addition to monitoring, evaluating, and developing statistics with which to guide the federal government’s minority business development efforts.”39 In addition, “all OMBE activities that are not part of 11458 [should] be transferred along with funding to the appropriate federal agencies.”40 From the SBA’s perspective, OMBE’s mission had become confused in the wake of executive order 11625 (October 1971) which superseded executive order 11458. Executive order 11625 authorized the Office of Minority Business Enterprise to engage in program development in the area of minority business development. . . . This activity had the effect of redirecting OMBE’s efforts from coordination function to that of quasi-program functions. Consequently, OMBE energies were diluted and federal program lines became even more blurred.41

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In retrospect, the SBA’s proposal regarding reevaluating OMBE’s scope and mission seems reasonable. As the OMBE investigation revealed, the lack of data on the success and failure of government minority business development programs made it difficult to make substantive decisions about maintaining or terminating them. If OMBE had focused on coordinating, monitoring, evaluating, and developing statistics related to the federal government’s various black capitalism initiatives, the interests of nonwhite entrepreneurs may have been better served. Notwithstanding the SBA’s perspective, the Commerce Department had its own response to the congressional investigation of OMBE as well as to the proposed options for improving government assistance to nonwhite entrepreneurs. As the SBA had done, Commerce sought to enhance, rather than diminish, its role in this administrative area. In an April 7, 1975, letter and memorandum to Walter D. Scott, Secretary of Commerce John K. Tabor proposed the transfer of all of the SBA nonfinancial minority business programs to the Office of Minority Business Enterprise in Commerce. This transfer would include the resources of the Office of the Associate Administrator for Minority Enterprise, the minority business portion of the 406 Management and Technical Assistance Program, the Minority Enterprise Representative staff, the Minority Vendor Program, and the 8(a) Procurement Program.42

The Commerce Department’s report, entitled “Department of Commerce Analysis of Organizational Options for the Federal Minority Business Development Program,” did concede that the SBA had played an important role in providing financial services, such as loans and revolving lines of credit, to nonwhite businesspeople. Nevertheless, Commerce pointed out the unnecessary duplication of services in the area of nonfinancial assistance to black entrepreneurs. For instance, there is duplication between OMBE and SBA in the provision of management and technical assistance. SBA’s $5 million 406 program is used primarily to contract with business assistance organizations to provide management and technical assistance to minority SBA loan clients and 8(a) firms. At the same time, OMBE spends approximately $42 million to fund

Ford Administration and Black Capitalism  169 business assistance organizations to provide management services and technical assistance to minority firms, many of which are those in SBA’s loan portfolio or 8(a) program.43

The Commerce Department’s other reasons for arguing for a stronger OMBE and a weaker SBA in regard to minority business enterprise were that any perceived weakening of OMBE “would be interpreted in the minority community and public and private sectors as a de-emphasis of the minority business program” and that while most minority businesses are in fact, presently classified as “small” businesses, minority enterprise as a whole should not be limited to small business development. The move to SBA would institutionalize prevailing negative attitudes by validating the assumption that minority enterprise is, and will continue to be, small in scope and ambition.44

Although the Commerce Department wanted to see OMBE strengthened in the wake of the congressional investigation, it recognized that this expansion could not take place within the existing structural status quo. To help remedy the poor performance associated with many local OMBE-funded organizations providing managerial and technical advice to nonwhite entrepreneurs, Commerce proposed consolidating these organizations by geographic area. As a result, the new “one-stop centers” would be “responsible for providing a full range of loan packaging, marketing, procurement, and management assistance services to all minority businessmen in the area.” This change also would “substantially reduce the number of funded organizations, thereby increasing the funding and resources of those remaining organizations, which should be best equipped to provide more comprehensive and coordinated assistance to minority businessmen.”45 Again, in retrospect, the Commerce Department’s response to the 1974/75 investigation of OMBE, albeit self-serving, does suggest that this agency did take seriously the issue of minority business enterprise. As the SBA had done, Commerce offered reasonable and thoughtful strategies for how the federal government could provide better services to nonwhite entrepreneurs. As the 1974/75 congressional investigation of OMBE revealed, federal initiatives related to black capitalism were often flawed in their execution. But this administrative audit also produced evidence that despite its

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shortcomings, black capitalism had provided tangible benefits to some of its intended beneficiaries. To better ascertain the impact of black capitalism on the African American business community, the congressional investigation of the OMBE requested that the National Business League (NBL) conduct its own assessment of OMBE. During the late spring of 1975, the NBL produced a report entitled “Programs of the Office of Minority Business Enterprise: An Analysis of Their Impact on Gross Business Receipts of Minority Firms.” In the June 18, 1975, cover letter accompanying this document sent to the White House, NBL president Berkeley G. Burrell noted that “this paper identifies the business receipts achieved as a result of OMBE’s efforts. I can’t recall that anyone who criticizes the program has ever considered this fundamental benefit.”46 From the perspective of the National Business League, OMBE played an important role in stimulating the growth of minority enterprises in several industries between 1969 and 1974, as the following examples show. First, in the commercial banking industry, between 1969 and 1974 the number of minority-owned banks grew from twenty-four to seventy, and their assets increased from $270 million to $1.3 billion. Similarly, in 1969, only fourteen minority-owned auto dealerships had annual gross receipts of $22.4 million, but by 1974, 234 such auto dealerships had annual gross receipts of $585 million. Finally, the most numerically striking increase in minority entrepreneurship was in the area of franchise companies. In 1969, only forty-five franchise companies were owned by African Americans, Hispanic Americans, or Native Americans, with estimated annual gross receipts of $22.4 million. But by 1974, 2,453 franchise companies were owned by minority businesspeople, with estimated annual gross receipts of $392.5 million.47 A July 6, 1975, letter from Curtis T. Perkins, chairman of the Black Council for Republican Politics, to James T. Lynn, director of the Office of Management and Budget, also endorsed OMBE. Perkins noted that it was important to maintain and strengthen OMBE because “making minority business viable and a source of jobs beats welfare.” He concluded by asking, “I pray you will share our view on how important this agency is to the Black voter.”48 Notwithstanding OMBE’s direct association with the GOP, the Democratic National Committee, also aware of how important this agency was to black voters, began its own campaign to establish a better relationship with African American entrepreneurs. On May 7, 1975, at the request of

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Robert Strauss, chairman of the Democratic National Committee, congressional Democratic leaders held a meeting with representatives of the National Association of Black Manufacturers (NABM). Among the politicians in attendance were House Majority Leader Tip O’Neil, Congressman Parren Mitchell, and Senate Majority Whip Robert Byrd. At this one-hour session, representatives of the NABM, which included chairman Jerry Jones, presented a six-point proposal which included the passage of a “minority business act” and the establishment of a “national urban economic development bank.”49 A May 13, 1975, memo issued by the Democratic National Committee summarized the meeting with the NABM: “It was the opinion of the Chairman [Strauss], Members of Congress and the businessmen present that this was one of the most productive and constructive meetings of its type that has ever been held.”50 The Democratic National Committee’s overtures to the influential National Association of Black Manufacturers represented an important preview of the presidential election of 1976. Despite the GOP’s direct association with black capitalism and the Office of Minority Business Enterprise, the Democrats were clearly not going to concede the issue of government support for African American business to the Republicans. During the spring and summer of 1975, various discussions were held about the future of government assistance to black entrepreneurship as well as a continuation of President Ford’s open door policy toward the African American community. A highlight of this ongoing initiative was Ford’s well-received appearance at the ninety-fifth annual meeting of the National Baptist Convention (NBC) in September. Ford gave the keynote address at this convention, held at St. Louis’s Kiel Auditorium. His remarks, which were repeatedly interrupted by applause, included praise of the NBC and its president, Dr. Joseph H. Jackson. The delegates at this convention later passed a resolution “to become collectively involved in national politics.”51 On October 2, 1975, shortly after President Ford’s appearance at the National Baptist Convention, his administration (and pending presidential campaign) received a jolt when Stanley S. Scott resigned as special assistant to the president to become the assistant administrator of the U.S. Agency for International Development (U.S. AID). Here Scott would oversee the agency’s Bureau for Africa.52 Scott’s departure hurt Ford’s presidential campaign. John Calhoun, Scott’s replacement, began his government service in August 1973 as a staff assistant in the White House Public Liaison Office.53 Despite being

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a skilled professional, Calhoun apparently did not possess Scott’s wideranging contacts and connections. In fact, it is reasonable to assume that if Scott had remained Ford’s special assistant, Ford may have won in 1976. One of the first issues that John Calhoun had to address was yet another proposed cut, of $3.2 million, in OMBE’s budget during fiscal year 1977. These plans were discussed in a December 8, 1975, memorandum from Calhoun to James T. Lynn, director of the Office of Management and Budget. Calhoun, a supporter of OMBE, noted that this agency “is undoubtedly the most popular and visible program started by a Republican Administration geared specifically to minorities. The minority business program is viewed as the single domestic program positively identified within minority communities as a Republican brainchild.” Calhoun went on to explain that “unlike Democratic efforts, it [OMBE] is not a handout program but rather an initiative toward self-help and greater participation in the economic system of our nation.”54 After expressing politically predictable platitudes regarding OMBE’s role, Calhoun announced, “Any budget cut, on the eve of an election, would be tantamount to an admissal [sic] of lack of concern and sensitivity and would offset previously made gains in this area among minorities.”55 In an attachment to this memorandum, Calhoun elaborated on how the proposed trimming of OMBE’s budget would affect specific locales. For example, a projected $200,000 cut in funding local projects in the District of Columbia “would probably generate adverse comment from Washington area media.”56 To publicly reinforce his administration’s commitment to minority business enterprise, despite a possible cut in OMBE’s budget, President Ford spoke at the December 15, 1975, meeting of the National Minority Purchasing Council (NMPC). The NMPC, founded by OMBE in May 1972, “sought to promote the concept of minority purchasing throughout the private sector of the economy.” By 1975, the NMPC had in its database more than eight hundred corporate members, including 160 Fortune 500 firms, as well as more than eight hundred minority vendors. The NMPC’s goal was to coordinate the purchase of $1 billion from black and other nonwhite vendors in fiscal year 1977.57 In his remarks to representatives of the NMPC, Ford praised the group for growing from six charter members to more than eight hundred in three and one-half years, and he reiterated the GOP mantra that NMPC

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“is not a civil rights or a jobs program. It is a business program—precisely that—with minorities conclusively demonstrating they can compete successfully in the private sector given the opportunity.”58 As 1976 approached, the Ford administration felt confident that it could wage a successful campaign to attract African American voters. Despite blacks’ long-standing support for Democratic presidential candidates dating back to Franklin Delano Roosevelt, Ford hoped that his open door policy toward blacks, the success of such entities as the NMPC, and blacks’ ongoing positive perception of OMBE would help him win the presidency. In January 1976, Ford’s quest for black voter support received a boost with the publication of Office of Management and Budget’s analysis of the 1977 federal budget. In regard to funding civil rights enforcement, this document revealed that outlays were scheduled to jump to $430 million, up from $197 million in 1972 and $346 million in 1975.59 The following month, President Ford signed the Railroad Revitalization and Regulatory Reform Act of 1976, which created the Minority Business Resource Center in the Department of Transportation. The National Business League later characterized this bill as “the first original piece of legislation to recognize minority enterprise as a national objective.”60 While the Department of Transportation’s new Minority Business Resource Center drew praise in some circles, the ongoing critical discussion of preexisting government programs to assist nonwhite entrepreneurs reached another level in March with the publication of an extensive interagency report, the Federal Minority Business Development Programs. The Executive Office of the President, the Office of Management and Budget, the Department of Commerce, and the SBA participated in this project, which summarized and discussed “the findings and recommendations of several recent studies made of the Federal minority business development programs.”61 Besides an introductory summary of government support for nonwhite entrepreneurs, Federal Minority Business Development Programs analyzed the following topics: “Summary Findings of 1972 Survey of Minority-Owned Business Enterprises”; “Goals to Be Pursued through Minority Business Development Programs”; “Studies of Factors That Lead to Success or Failure of Minority Business”; “Financial Assistance Programs for Minority Business”; “Procurement Assistance [for Minority Business]”; “Evaluation of Federal Management and Techni-

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cal Assistance to Minority Business”; “Problems of the Minority Business Programs Which Are Broader Than the Individual Programs”; and “Proposals for Overcoming the Problems of the Current Program Fragmentation.” On the surface, it appeared that the government programs aimed at assisting nonwhite entrepreneurs had been successful. For instance, the 1972 Survey of Minority-Owned Business Enterprises indicates that “there was a 20% increase in the number of black-owned firms from 1969 to 1972, and a 60% increase in the gross receipts of blackowned firms during that period.” But according to Federal Minority Business Development Programs, these impressive numbers did not “provide any measure of the influence of Federal programs on that advancement.”62 According to this interagency report, several factors contributed to the federal government’s inability to empirically determine the effectiveness of its minority business development programs. First and foremost was “the lack of consensus on what should be measured, e.g., numbers of firms, profitability, employment levels, gross receipts, etc.” Second was “the lack of adequate knowledge of the factors that lead to the success or failure of minority-owned businesses, and the relative importance of each.” Third, the administrators of government minority business development programs were hampered by “the lack of information on the economic condition of the firms that are assisted, over a useful period of time.” These programs also suffered from “the lack of information on the type and amount of Federal assistance which is provided by the several Federal programs to an individual firm.”63 While the federal government’s minority business development initiative suffered from a lack of meaningful data in certain areas, relevant research findings, generated from previous studies, were available. The bulk of Federal Minority Business Development Programs examined the implications of this limited information. Perhaps the most basic question about federal minority business development programs was and is, What are the goals of such initiatives? Based on previous discussions and analyses, Federal Minority Business Development Programs identified the following five possible program goals: 1.

Eliminate discriminatory actions against minorities which prevent or inhibit minorities’ participation in private enterprise.

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2.

3. 4.

5.

Increase minority ownership of private businesses which can operate on a profitable basis without continued Federal assistance, to help increase the income levels and asset ownership of minorities. Close the gap between the majority and minority population in terms of numbers of businesses owned. Close the gap between the majority and minority population in terms of income and assets from participation in private enterprise. Assist minorities to obtain a major financial stake in businesses in predominantly minority communities, to increase the interest and pride of minorities in their communities.64

Of these five, Federal Minority Business Development Programs was especially critical of goals 3 and 5. Although closing the gap between the white and nonwhite business ownership “has considerable superficial appeal,” the report noted that “business ownership is not necessarily by itself a desirable state of affairs.” Specifically, “a non-competitive business, or one that is only marginally profitable, may be an economic burden for its owners. Secondly, a very large number of marginal businesses may provide less economic, social and political benefits to minorities than a few large successful firms.”65 Although the notion of increasing the number of black-owned businesses in black communities was popular in many circles, Federal Minority Business Development Programs did not endorse it. Rather, it claimed that “businesses operating in minority communities frequently have a competitive disadvantage due to higher operating costs (insurance, theft, etc.) and predominantly low income customers.” Moreover, “special Federal programs to entice minorities into business in minority communities may be contrary to the goal of increasing income levels of minorities from participation in private enterprise.”66 Although Federal Minority Business Development Programs doubted the efficacy of merely increasing the number of black entrepreneurs in inner-city locations, it could see the efficacy of goal 2, which was to increase the number of successful black businesses regardless of their location. This report also argued against (exclusively) steering prospective black businesspeople toward inner-city locations, but it conceded that as part of a comprehensive community improvement effort, stable

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black businesses located in black urban enclaves would be a positive and powerful force.67 Federal Minority Business Development Programs also examined other factors contributing to the success or failure of minority business enterprises. Two studies provided the framework for this discussion: Why Some Minority Business Enterprises Fail and Others Do Not: A Statistical Analysis, completed in 1973 by Sharon B. Lockwood in accordance with an OMBE contract; and Study of Minority Borrowers and Firms Prior and Subsequent to SBA Assistance, completed in 1974 by the SBA’s Office of Program Planning and Evaluation. To conduct her study, Lockwood examined data relevant to more than five thousand minority recipients of SBA loans between 1968 and 1971 and concluded that first, “the owner’s years of management experience has the most important impact on the outcome of the enterprise. Entrepreneurs with less than four years of management experience were very likely to fail.”68 The second most important factor contributing to the success or failure of a minority business enterprise was the amount of collateral that the entrepreneur could offer. Lockwood wrote that “entrepreneurs holding less than $3,500 when they apply for a loan have a higher probability of failure than those holding more than this amount.”69 Why Some Minority Business Enterprises Fail and Others Do Not also suggested a link between the year that a minority businessman received an SBA loan and the success or failure of his enterprise. While admitting that “the study was inconclusive as to why this factor was so important,” Lockwood did speculate that “an SBA change in 1971 to make loan approval criteria more flexible to provide assistance to minorities may have adversely affected the failure rate of the minority loan recipient.”70 The age of the minority-owned business when it received an SBA loan also appeared to be important to determining its success or failure. Lockwood found that “minority businesses with less than an average age of four years have a higher probability of failure than businesses with an age of over four years.”71 Finally, Lockwood concluded that the number of employees in a particular minority firm could provide insights into that firm’s subsequent success or failure. She noted that “businesses with more than three employees experienced higher survival rate than those with less than that number of employees.”72

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Although Why Some Minority Business Enterprises Fail and Others Do Not offers useful information, one of the shortcomings of this study, according to Federal Minority Business Development Programs, was that “minority entrepreneurs were studied in a vacuum without reference to equivalent information on non-minority entrepreneurs. Without this equivalent information, it cannot be determined if the causes of minority business failure are unique to minority entrepreneurs or are common to all entrepreneurs.”73 The SBA-financed Study of Minority Borrowers and Firms Prior and Subsequent to SBA Assistance echoed Lockwood’s prioritization of the entrepreneur’s previous management experience. The SBA noted that between 1968 and 1970, “thirty six percent of borrowers with such experience discontinued or were expected to cease operations, compared to 59 percent for those lacking this background.”74 Accordingly, the SBA recommended that “loan approval procedures include evidence that consideration has been given to probable survival problems of prospective borrowers who lack previous business decisionmaking experience. In such cases, pre-loan counseling should be provided.”75 Similar to the Lockwood study, the findings of the SBA’s study were viewed as less than definitive. The random sample of six hundred minority loan recipients that the SBA used to conduct this research represented only 5 percent of nonwhite SBA loan recipients during this period. Thus there was reasonable doubt as to whether the study sample was “fully representative of all SBA minority borrowers.”76 In regard to federal assistance to minority entrepreneurs, two of the most important components were the Economic Opportunity Loan (EOL) Program and the Minority Enterprise Small Business Investment Company (MESBIC) Program, and Federal Minority Business Development Programs looked at preexisting studies of these two programs. The EOL Program, established by Title IV of the Economic Opportunity Act of 1964, represented the business component of the Johnson administration’s War on Poverty. Over the years, its primary purpose had been making funds available to “small business concerns located in areas with high proportions of unemployment or to small business concerns owned by or to be established by persons with low incomes.”77 Between 1964 and 1974, 46,109 EOL loans were approved, with a total disbursement of $683 million. Because of the marginal (or nonexistent) business/managerial background of many of the EOL loan recipi-

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ents, the loss rate of the EOL program was 30 percent of the total loan disbursement, which was “by far the highest loss rate of all SBA loan programs.”78 Thus, based on the EOL’s less-than-stellar financial performance, Federal Minority Business Development Programs included a detailed discussion of what was wrong with this program and how it might be fixed. One possible remedy was proposed by Timothy Bates and William D. Bradford in their unpublished 1975 report “Proposals for New Priorities in SBA’s Minority Lending Program.” Bates, a professor of economics, and Bradford, a professor of finance, examined 555 randomly selected black businesses in Boston, New York, and Chicago which had received EOL loans between 1967 and 1970. Their conclusions included the following: The incidence of delinquency among black recipients of SBA EOL loans (64 percent) is far greater than the frequency of delinquency among black borrowers under other SBA loan programs (42 percent). Using discriminant analysis on information which was available to loan officers at the time the loan approval decisions were made, it was concluded that most of the business failures among black EOL borrowers were predictable; they were therefore avoidable. . . . EOL loans often perpetuate rather than alleviate poverty because the availability of capital at relatively low rates of interest has encouraged many wage earners to enter into businesses that are not viable . . . defaulting on an EOL loan places severe hardship on unsuccessful entrepreneurs. A significant amount (32 percent) of the black EOL borrowers forming new businesses are entering into traditional fields of black enterprise (barber shops, restaurants, laundry, shoe repair, food stores, and funeral parlors). Creating additional firms in these traditionally crowded lines of business could force more black firms to compete for shares in a market that is fixed in size. In this situation, SBA financing of new businesses might succeed in driving existing black entrepreneurs into bankruptcy.79

Based on their findings, Bates and Bradford recommended first that the EOL program be “appreciably diminished,” as it appeared to be a “device for perpetuating rather than alleviating poverty among low income, disadvantaged entrepreneurs.”80 Besides reducing the EOL’s funding, Bates and Bradford suggested that “funds which presently support EOL loans should largely be reallocated to increase financing and other support available for the most capable

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minority entrepreneurs.” In addition, besides urging SBA to “generally avoid financing the creation of new firms in traditional lines of minority enterprise,” Bates and Bradford recommended that the SBA disburse loans only to potential entrepreneurs “who have very strong business backgrounds” because “marginally qualified borrowers that receive SBA loans to create new firms are rarely successful and their loan default rates are extraordinarily high.”81 Limited Success of Federally Financed Minority Businesses in Three Cities, completed by the General Accounting Office (GAO) in November 1973, was another research project discussed in the Federal Minority Business Development Programs. This GAO study examined 845 nonwhite businesses in Chicago, Los Angeles, and Washington that received SBA loans. Within three years, of the 845 firms being monitored, 232 (27 percent) were classified as failures; 213 (25 percent) were characterized as having serious problems and thus as possible failures; 260 (32 percent) were characterized as probable successes; and the status of 140 (17 percent) were characterized as “undeterminable.”82 Limited Success also stated that SBA and OMBE needed to reconsider their definition of “success” in regard the government minority business development programs. Simply increasing the number of loans to nonwhites “has a potential risk as well as a reward. This risk is that minorities, encouraged to go into business by SBA and OMBE, may fail and be left deeply in debt and worse off than before they received help.”83 In its recommendations, the GAO report echoed the findings of similar studies when it asserted that the SBA needed to “provide greater assurance that loans are made for minority businesses with reasonable prospects for success and thus reduce the high rate of failure.” The SBA also needed to “develop loan approval criteria based on an assessment of owner and business characteristics related to business success and failure.”84 The Minority Enterprise Small Business Investment Company (MESBIC) program also came under critical scrutiny in Federal Minority Business Development Programs. MESBICs were privately owned and managed venture capital corporations that were chartered in their home states and licensed by the SBA to operate nationally. The first MESBIC appeared in 1969, but the program officially commenced on October 27, 1972, as part of the Small Business Investment Act Amendment.85 The primary mission of the MESBIC initiative was to provide the following

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four basic services to businesses owned by socially or economically disadvantaged individuals: 1. 2.

3. 4.

Provide venture capital by purchasing an equity interest in the business (common and/or preferred stock). Provide long-term capital by lending funds (normally subordinated to other creditors) to the business, often with warrants permitting the MESBIC to purchase an equity position. Guarantee loans made by third parties to the business. Provide general management and technical assistance to such businesses.86

Also, to provide more needed-capital to disadvantaged entrepreneurs, MESBICs were “given the power by Congress to leverage their privately invested capital by selling long-term debentures and/or preferred stock to the SBA. For instance, MESBICs with $500,000 or more of capital and capital surplus may sell up to three times this sum in debentures to the SBA.”87 On October 8, 1975, the GAO published a report entitled A Look at How Small Business Administration’s Investment Company Program for Assisting Disadvantaged Businessmen Is Working. This study, which examined “ten MESBICs located in or near Chicago, San Francisco, Dallas, and New Orleans,” hoped to provide insight into “the operational problems of MESBICs and SBA administration of the MESBIC program.”88 The General Accounting Office discovered some glaring discrepancies between the stated mission of MESBICs and their actual achievements. For instance, although the SBA guidelines stated that “MESBICs should emphasize equity investments in minority enterprises, the GAO review of ten MESBICs showed that actual equity investments accounted for only 19 percent of the total amount of funds available for investment. The remaining MESBIC financing were made in the form of loans (65%) and debt securities (16%).”89 Perhaps the most disturbing finding of the October 8, 1975, GAO report dealt with how MESBICs provided managerial assistance to minority firms in their purview: Review of the ten MESBICs indicated that management fees for services provided to MESBIC clients tended to be unreasonable. For example, one

Ford Administration and Black Capitalism  181 investment company charges flat fees up to $25,000 for initial management and technical services. Another investment company charged four different minority small businesses 27 percent of profits before taxes as management fees.90

This fleecing of minority businesses was another negative consequence of the relative inexperience (and lack of business savvy) of many recipients of federal aid associated with black capitalism. Another study discussed in Federal Minority Business Development Programs that analyzed the MESBIC program was Robert J. Yancy’s 1974 book Federal Government Policy and Black Business Enterprise. Yancy observed that even though the number of MESBICs rose from thirty-four in 1971 to fifty in 1972, the amount of money MESBICs invested in minority business enterprises dropped from $4.6 million in 1971 to $3 million in 1972. Put another way, during the period examined “MESBIC contribution to new capital decreased by 35 percent while the total number of MESBICs increased by 34 percent.”91 According to the findings of the 1975 GAO study, this increase in the number of the MESBICs and the simultaneous decrease in the funds they made available to minority firms may be attributed to some unscrupulous MESBIC operators, who viewed the program as a way to bilk both the SBA and minority entrepreneurs. To address some of these problems, in February 1974 the SBA and OMBE established a joint task force on MESBICs. But as Federal Minority Business Development Programs noted, “This dual interagency role in the MESBIC program has not contributed to a more effective program, but has developed significant interagency conflict on major MESBIC policy issues.” In fact, even though the joint task force drew up specific work plans for fiscal years 1974 and 1975, “few of the tasks were completed.”92 Besides being unable to work with OMBE to rehabilitate the obviously flawed MESBIC program, the SBA’s handling of its 8(a) contract program was another embarrassment for the agency. Section 8(a) of the Small Business Act of 1953 authorizes the SBA “to enter into procurement contracts with Federal agencies and to subcontract the work to small businesses. The original intent was to make certain that small businesses received contracts during wartime.”93 But section 8(a) remained underutilized until 1968, “when it was employed to develop jobs and training for minorities in the ghettos. Contracts were awarded to small

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firms willing to locate in or near the ghetto and provide jobs. The initial contracts went to manufacturing businesses.”94 By 1969, under the auspices of Richard Nixon’s black capitalism initiative, the section 8(a) program underwent a dramatic transformation. According to Federal Minority Business Development Programs, section 8(a) deemphasized job creation for ghetto residents and prioritized assisting the development of businesses owned by economically or socially disadvantaged individuals. Also, to help such firms succeed, the SBA gave them noncompetitive federal contracts.95 The SBA’s section 8(a) program was arguably the most controversial (and most discussed) form of federal assistance to minority entrepreneurs. Among the many problems associated with 8(a) were the failure of firms to develop under the program, lack of management assistance, poor pricing assistance resulting in little profit or a loss, the inability of the SBA to obtain from procurement agencies the amount of contracts a firm requires for growth, and nonresponsive and negative attitudes on the part of some of the SBA regional and field staff in dealing with minority business owners.96

Two studies discussed in Federal Minority Business Development Programs that examined the problems of the 8(a) program in detail were the April 1975 GAO report entitled Questionable Effectiveness of the 8(a) Procurement Program and the March 1974 SBA report entitled Evaluation of the 8(a) Contract Program. The GAO study evaluated the progress of 110 minority firms that had received at least one section 8(a) subcontract before December 31, 1970. By 1975, of the 110 companies, only eighteen were self-sufficient, that is, did not need 8(a) contracts to continue to survive. As the GAO pointed out, “A major reason for this lack of success was SBA’s inability to control the supply of contracts from Federal agencies. Although applicants specify in business plans the amount of assistance they need each year to become self-sufficient, SBA cannot guarantee any level of assistance.”97 Another problem cited by the GAO regarding the section 8(a) program involved the activities of nondisadvantaged businesses (sponsors) that ostensibly provided “management services, training, and capital to 8(a) firms.” Just as some unscrupulous individuals viewed the MESBIC program as a cash cow to be continually milked, Questionable Effectiveness of the 8(a) Procurement Program expressed a similar concern about

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how some white businesses viewed their sponsorship of section 8(a) firms. The GAO report noted that the “ineffective monitoring by SBA of the activities of sponsors coupled with the high degree of control exercised by sponsors over disadvantaged firms permits some sponsors to maintain their standing in the marketplace by using the 8(a) program.”98 Another area of GAO concern regarding the 8(a) program was how the SBA defined “socially and economically disadvantaged.” As Jonathan J. Bean documented in his book on the SBA, this agency had a history of automatically “equating skin color with disadvantaged.”99 Such a premise is indeed legitimate based on the history of this country. But a government agency with finite resources should be able to, as the GAO recommended, “document in writing the connection between an applicant’s social or economic disadvantage and his inability to compete successfully in the business world.”100 Finally, the April 1975 GAO examination of the SBA’s section 8(a) program expressed concern about both the extent and the quality of management assistance provided to most participants. For instance, “of the 88 firms that received management assistance, only 33 were satisfied with it.”101 Questionable Effectiveness concluded that the SBA needed to “evaluate each firm’s need for management assistance and provide such assistance as required while they are in the program . . . [to] establish realistic goals for the 8(a) program that would include the number of successful program completions” because the SBA’s policy of linking the goals of 8(a) with the number and dollar amount of contracts awarded “is not a valid measure of effectiveness.”102 The SBA’s March 1974 self-study regarding the section 8(a) program suggested, as did the 1975 GAO report, that this aspect of the Small Business Administration’s operations were in near total disarray. Among its findings were the following: There was no system, in any region, which allowed specific identification of individuals who are directly responsible for the 8(a) program. There was significant confusion among many SBA staff as to the goals of the 8(a) program—(e.g., who was disadvantaged—what the assistance was intended to accomplish). Small business owners who had participated in the program felt that it failed to live up to expectations and that they did not receive the level of assistance they had expected.103

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To begin addressing some of section 8(a)’s many problems, the March 1974 SBA report recommended that the SBA’s Office of Business Development “explore means to finance a Certified Public Accountant’s audit for each firm annually. This would serve the dual purpose of identifying financial problems of the firm before they are ‘too far gone’ and provide appropriate definitive financial information for SBA purposes.”104 In its assessment of these two studies, Federal Minority Business Development Programs noted that “problems regarding successful completion of the 8(a) program appear to stem from SBA policy and not from authorizing legislation.”105 Thus 8(a)’s problems were not inherent but were based on the SBA’s poor administration of the program. To help remedy this situation, Federal Minority Business Development Programs noted that the SBA’s associate administrator for procurement planned to take a more active role in monitoring the section 8(a) program. Among the reforms to be implemented were a new standard operating procedure for 8(a) and “heavy emphasis on obtaining and updating business plans for participants.” In addition, there would be “an 8(a) review committee composed of staff from the three SBA program components (procurement, management assistance, and finance) to review 8(a) participants.”106 Two common and interrelated problems found in all the federal minority business assistance programs were many participants’ lack of managerial skill and a simultaneous lack of management training provided to them. Accordingly, Federal Minority Business Development Programs included an examination of this. In December 1974, the SBA completed a report entitled Management Assistance: An Evaluation of Its Extent and Impact on Minority Owned Businesses. To gather data for this study, the SBA surveyed 262 minority loan recipients in Chicago, Dallas, Los Angeles, and Washington during fiscal years 1971 through 1973. Contrary to the popular belief that SBA management training was a “magic bullet” for minority business success, this SBA internal report noted that “forty-six percent of minority loan recipients rate SBA management assistance very poorly in terms of effectively assisting them to improve their business.”107 The primary reason for this discontent was that SBA management assistance, similar to the 8(a) program, judged success in quantitative, rather than qualitative, terms. Specifically,

Ford Administration and Black Capitalism  185 the present SBA system for measuring the value of management assistance is based on numbers of counseling cases, workshops or calls handled. This system provides little, if any, information on the effectiveness of SBA management assistance and limits SBA’s ability to improve the quality of this assistance to minority entrepreneurs.108

Another focus of Federal Minority Business Development Programs was to examine the literature related to more effectively coordinating the efforts of the SBA, OMBE, and other units to deliver a more comprehensive and effective assistance package to minority businesses. The first major report to address this issue was Minority Enterprise and Expanded Ownership: Blueprint for the 70s, produced by the President’s Advisory Council on Minority Business Enterprise in June 1971. The principal message of this document, whose findings and conclusions were characterized as “still relevant today,” was that the federal government needed a comprehensive plan that “existing programs did not provide.” To ensure that minority businesspeople received effective federal assistance, the council concluded there needed to be “a onestop  .  .  . service where the individual entrepreneur can receive a total package without the necessity of going through a series of . . . officials to put the components together.” To do this, the President’s Advisory Council recommended that a “single agency be established to assure a comprehensive Federal program.”109 The evidence strongly suggests that had the recommendations of Minority Enterprise and Expanded Ownership been implemented, the subsequent history of the federal effort to aid minority entrepreneurship may have been much different. Notwithstanding the various programs that SBA and OMBE offered to nonwhite businesspeople, five years after the release of Minority Enterprise and Expanded Ownership, Federal Minority Business Development Programs complained that “there is not now a capability to develop a total program plan for the minority business effort, or to determine the role of each program element in that plan.”110 In other words, the federal effort to assist minority entrepreneurs was a mess. Rather than end on a totally pessimistic note, the final section of Federal Minority Business Development Programs discussed various proposals to solve these problems. Traditionally, the three most popular suggestions to revamp the federal minority business agenda were (1) to consolidate all the minority enterprise programs in OMBE, (2) to con-

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solidate all the programs in SBA, or (3) to establish a new independent agency to administer the programs.111 Because of the possibility of making an already disjointed situation worse, creating a new independent minority business agency was not really an option. As a compromise solution, Federal Minority Business Development Programs suggested that the SBA be given responsibility for the direct assistance programs and that OMBE assume the role of an advocate “to help prevent undesirable legislation or regulations affecting minority firms.”112 To prepare for the OMBE’s negative response to its recommendations, Federal Minority Business Development Programs asserted that not having a direct operational role in the federal minority business assistance programs would free OMBE to more aggressively “stimulate non-Federal sector assistance to minority firms,” such as the National Minority Purchasing Council, “without the competing demands of a direct Federal program.”113 Because of the Ford administration’s interest in reaching black voters in November, coupled with OMBE’s symbolic importance to some African Americans, OMBE’s mission would not be diminished during this important election year. But even though the Ford administration did not want to antagonize the African American community, it ended up doing just that during the spring of 1976. The source of contention was the Ford White House’s ties with black conservative economist Thomas Sowell. Since meeting at the White House in the winter of 1975, Sowell, then a professor of economics at UCLA, maintained regular contact with Robert A. Goldwin, a special consultant to President Ford, and on August 26, 1975, Sowell sent Goldwin a copy of his recently published book, Race and Economics, to be given to President Ford. According to a reviewer, one of the central arguments of this work was that perhaps the greatest dilemma in attempts to raise ethnic minority income is that methods which have historically proved successful—self-reliance, work skills, education, business experience—are all slow developing, while those methods which are more direct and immediate—job quotas, charity, subsidies, preferential treatment—tend to undermine self-reliance and pride of achievement in the long run.114

A couple of weeks earlier, on August 9, 1975, Sowell reinforced his conservative credentials when he submitted a research paper entitled

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“‘Affirmative Action’ Reconsidered” to Robert Goldwin. In his cover letter, Sowell wrote, “Here at last is my research paper on ‘affirmative action.’ The hard statistics present an even more unfavorable picture of the program than I had expected, for it is ineffective as well as burdensome.” Using academia as his database, Sowell concluded that “the numerical ‘representation’ of minorities and women in the academic world is not significantly different after ‘goals and timetables’ than before.” Furthermore, “minority and female faculty members receive some of the resentment and suspicions which this program breeds.”115 The evidence suggests that Sowell’s analysis of contemporary economic and racial issues greatly impressed the Ford administration. In fact, on April 6, 1976, President Ford nominated Sowell to serve on the Federal Trade Commission. But as Ford and Sowell soon discovered, the Congressional Black Caucus was far from enamored with Sowell’s candidacy.116 The Congressional Black Caucus, which regarded Sowell as an “Uncle Tom,” immediately denounced this nomination. Although Robert Goldwin urged President Ford to stand firm on the nomination, the political heat prompted Sowell to withdraw from consideration the next month.117 Stung by Sowell’s nomination and without the public relations expertise of the departed Stanley S. Scott, Ford’s quest to reach more African American voters appeared stalled. Still, during the campaign a consortium of black Republican stalwarts proposed a battle plan to diminish Democratic nominee Jimmy Carter’s stature among African American voters. On September 16, 1976, Douglas L. Thomas, a law professor at West Virginia University, sent Stuart Spencer, the political director of the Ford reelection campaign, a document entitled “The Presidential Election: A Proposal for Adoption of a Minority Voting Bloc Strategy” which declared, “The authors are minority group members interested in the reelection of President Ford. Jointly and severally, their services are available to the President, and are proffered herewith.”118 Contrary to popular political belief, the authors of this document asserted that the GOP should not concede the “minority voting bloc” (MVB) to the Democratic Party and used the following assertion to buttress their contention: “The gubernatorial race strategies of several Republican incumbents and a challenger in the key states of Ohio (Governor Rhodes), Michigan (Governor Milliken), Indiana (Governor

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Bowen) and Illinois (Thompson) place heavy emphasis on a respectable split of the MVB in those elections.”119 Besides urging the Ford campaign to think positively about the candidate’s potential support in the African American community, “The Presidential Election” suggested that Ford exploit the Democrats’ and Carter’s two major weaknesses in regard to the MVB: first, “the utter failure of essentially every public-works-jobs program to improve the socio-economic plight of minorities,” and second, “from the viewpoint of the MVB, the Democratic candidate is, at best, an inherently suspect commodity. At his worst, he is anathema to all in which they believe and have fought to achieve.”120 In its elaboration of Carter’s “very basic liabilities” in terms of the MVB, this report alleged that Carter, a southern “plantation” owner, had run a racist campaign to become governor of Georgia. Even though Carter had assumed a different persona once elected, the Ford campaign needed to emphasize Carter’s past in order to diminish MVB support for him. Specifically, the GOP message should be that “Mr. Carter, based upon his past political history, is a proven racist,”121 that he is temporarily sublimating his true propensities for purposes of political expediency. To more effectively publicize Jimmy Carter’s apparent weaknesses, “The Presidential Election” suggested using so-called truth squads. These groups would be composed of a small well-informed, and well-coached, core group of minority persons. Each person selected to present the statistical and philosophical information should be analytical, politically astute, emotionally controlled and, of course, articulate. . . . There will no doubt be a charge of election year politics regardless of [the] form of the Republican initiative in the minority area. It is expected that persons making up the so-called Truth Squad would act as national advance men.122

Besides the use of truth squads, this report also urged the Ford campaign to use a less visible minority task force to identify for the GOP “the do’s and don’ts of courtship of the minority voter.” Such a group could review policy proposals and help “in the rephrasing of statements to, or concerning minorities.” “The Presidential Election” recommended as well that the proposed minority task force help President Ford in his handling of issues related to the MVB during the upcoming September 23, 1976, debate with Jimmy Carter, which was to focus on domestic issues.123

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Besides incorporating the suggestions in “The Presidential Election,” the Ford campaign used other means to reach the African American electorate. For instance, at the behest of John Calhoun, Ford called Dr. Joseph H. Jackson, president of the National Baptist Convention (NBC) on October 19, 1976. Ford, who had been well received at the NBC’s ninety-fifth national convention the previous year, invited Jackson and the 6.3 million members of the NBC to support the Ford/Dole ticket.124 In the end, although Jimmy Carter had indeed run as a white supremacist candidate during the 1970 Georgia gubernatorial campaign and had endorsed the “ethnic purity” of neighborhoods during the 1976 presidential campaign, African Americans subsequently gave him 90 percent of their vote in November.125 This confidence represented the enduring positive influence in blacks’ minds of such Democratic initiatives as the New Deal and the Great Society. But besides being expected to keep campaign promises to improve the plight of the African American poor, the new president would also be expected to continue the legacy established by the GOP’s Office of Minority Business Enterprise.

8 The Carter Administration and African American Enterprise

Jimmy Carter, as had Richard Nixon and Gerald Ford, gave high priority to minority business enterprise. Some of the accomplishments of his administration in this realm were doubling federal procurement with minority firms; public law 95-507, which directed businesses that received federal supply and service contracts of more than $500,000 or received construction contracts of more than $1 million to submit subcontracting plans that included “economically disadvantaged businesses”; expanding the Department of Transportation’s Minority Business Resource Center (MBRC), which helped African American and other nonwhite businesses profit from the Railroad Revitalization and Regulatory Reform Act of 1976; and enhancing and renaming the federal government’s overall program to assist minority entrepreneurs. In 1979, the Office of Minority Business Enterprise (OMBE) became the Minority Business Development Agency (MBDA). The renamed agency sought both to stimulate the growth of medium and large minority enterprises, as well as to enhance the minority business presence in such “growth industries” as manufacturing, energy technology, communications, and electronics.1 Despite the Carter administration’s accomplishments in minority business enterprise, well-publicized scandals associated with minority business set-asides in the construction industry, along with its many other problems (including the Iranian hostage fiasco), contributed to Jimmy Carter’s losing the 1980 presidential election to the archconservative Ronald Reagan. In February 1977, shortly after Carter’s inauguration, a consortium of African American business leaders and supporters, organized as the “National Black Business State of Affairs Committee” (NBBSAC), contacted the White House to provide specific suggestions as to how the new president could best assist black businesspeople.2

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In their report, entitled “State of Affairs in Minority Business Enterprise in America,” the NBBSAC began by noting that previous government attempts to help black business development had fallen short of the mark: “In 1972, the capital gap between the majority and minority business sectors of this nation was $163.5 billion; since that time, despite all minority programs in existence, the capital gap has grown by at least $13.8 billion each year.”3 To address this concern and to battle the “ethnic and racial discrimination” contributing to the “capital gap,” the NBBSAC urged the Carter administration to give the plight of minority businesspeople “a priority equal to that of the revitalization of the railroads and/or the energy programs.”4 Besides contemplating the NBBASAC’s observations about the state of black business in America, the fledgling Carter administration also had to contend with internal philosophical conflict regarding how best to improve the economic plight of African Americans. An undated, anonymous, internal memorandum described this dilemma: “A policy debate is developing within the Carter administration regarding the approach the administration should adopt in addressing the adverse economic conditions under which black, brown, Indian, and other racial minorities in the United States live.”5 This document further claims that “minority economic improvement programs” such as OEO and Model Cities and “minority business enterprise programs” such as OMBE and MESBICs are “largely non-interactive and non-complementary in design or implementation.”6 Like its predecessors and successors, the Carter administration did not substantively reconcile the federal government’s disjointed approach to improving the economic situation of blacks and other racial minorities. To his credit, though, Carter did try to use the Local Public Works Act of 1977 to address the issues of both black unemployment and black business development. On June 10, 1977, as part of Carter’s economic stimulus package, the Commerce Department announced that not only would the recently passed Local Public Works Act of 1977 “create private sector jobs in areas of high unemployment through the construction of needed public facilities” but that also 10 percent of the $4 billion earmarked for this program would be set aside for minority businesses. As Secretary of Commerce Juanita Kreps announced, “I am confident that minority business enterprise will benefit significantly from this program.”7

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In addition to its use of the Local Public Works Act of 1977 to stimulate African American business development, the early Carter administration created an initiative to help prospective black media owners. In the spring of 1977, Stuart Eizenstat, the director of Carter’s domestic policy staff, approved “a study of actions the Administration can take to increase minority ownership of TV, radio, and cable outlets.”8 Margaret “Bunny” Mitchell, special assistant to the president, and Rick Nuestadt, deputy press secretary, were given the task of coordinating the minority media ownership program. They operated under the premise that even though media outlets had increased their hiring of nonwhites in recent years, “minority leaders feel that only ownership will assure that minority needs and interests are serviced.” From the standpoint of the new Carter administration, such a program would supplement its anticipated overall effort to promote minority business enterprise. At the beginning of the Carter presidency, nonwhites owned “only about 1% of the Nation’s TV and radio stations, and almost no cable systems.”9 The main barrier to an increased minority presence in the area of major media ownership was capital. One important attempt to address this situation, generated by the Carter administration’s interest in this area, was a June 28, 1977, meeting cosponsored by the American Association of Cable Television Owners (AACTO) and the National Cable Television Association (NCTA). One of the resolutions made at this meeting, attended by both cable television owners and investors, stated that lenders would “give strong consideration to a minority ownership package, including start-ups.”10 If the NBBSAC and other black business supporters were encouraged by the Carter administration’s public works and media initiatives, their spirits were buoyed even more by a statement by President Carter on September 12, 1977. He stated in no uncertain terms that the promotion of minority business enterprise would be given high priority in his administration. Part of the rationale for this, which appeared remarkably similar to what the NBBSAC asserted in its “State of Affairs in Minority Business Enterprise in America” report, was that “building strong minority business enterprises is in the national interest because they contribute to our efforts to reduce unemployment and to stimulate community development.”11 Besides committing his administration to promote black business, Carter’s statement was important in that it reflected the White House’s interest, as exemplified by the cable television initiative, in stimulat-

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ing African American participation in “nontraditional” entrepreneurial endeavors. Consequently, in addition to providing continuing assistance to the “overwhelming majority of existing minority businesses” in the retail and service fields, Carter said, “It is my hope that we can promote the participation of minorities in industries with growth potential such as energy and telecommunications, where opportunities for development are greatest.”12 Carter’s September 12 statement also included an important reference to the much-maligned SBA 8(a) program. After noting the establishment of an 8(a) review board, Carter optimistically declared, “We should not permit our disappointment at the manner in which this worthwhile program has been administered in the past to diminish our desire to make it work.”13 Finally, President Carter told the nation that his administration would dramatically revamp overall government procurement policies to assist minority business enterprise. First, he announced that the Office of Federal Procurement Policy would review and revise procurement regulations “to assure adequate involvement of minority and small business firms by requiring that recipients of major federal contracts show how they will involve minority and small businesses before rather than after a contract has been awarded.”14 In addition, Carter revealed: I have instructed all Executive departments to double their purchases of services from minority firms through direct and indirect procurement activities during the next two fiscal years and report to me on their progress in meeting this goal. This increase should raise the level of Federal government purchases from minority firms to about one billion dollars. We will closely monitor the effort of each department to see that this goal is achieved.15

Despite Carter’s well-received comments regarding minority business enterprise, the primary economic concern of many African Americans was their disproportionately high unemployment rate. Indeed, during the 1970s, “black unemployment rose from slightly less than double that of whites to 2.5 times the white figure by 1979.”16 Thus even though African Americans were delighted to hear of the new president’s plans regarding the promotion of black business, they were concerned that he did not publicly propose a plan to promote black employment.

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This early black discontent with the Carter administration was expressed in Black Enterprise magazine. On March 3, 1978, Earl G. Graves, the magazine’s editor, sent Martha Mitchell, President Carter’s special assistant, a copy of the March 1978 issue of Black Enterprise, which contained an article assessing Carter’s first year as president.17 The article, entitled “Jimmy Carter’s First Year: One to Get Ready, Two to Go?” provided a rather critical assessment of the new Carter presidency. For instance, notwithstanding Carter’s encouraging words on September 12, 1977, the article noted that “when it came to blacks, Mr. Carter’s performance was disheartening.”18 The evidence indicates that President Carter took quite seriously the concerns and opinions of African American businesspeople. Three months after the critical article appeared, on June 14, 1978, Carter hosted a White House reception for the corporate leaders of the companies listed in Black Enterprise’s annual compilation of the top one hundred black businesses in America. In his prepared remarks, Carter did not mention economic issues like unemployment but instead used the occasion to reiterate his support for minority business enterprise to placate the entrepreneurs.19 This may have reflected another manifestation

President Jimmy Carter entering the June 14, 1978, White House reception for America’s leading black businessmen. In the foreground is Earl G. Graves, editor and publisher of Black Enterprise magazine (courtesy of Jimmy Carter Library).

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President Carter addressing the June 14, 1978, White House reception for America’s leading black entrepreneurs (courtesy of Jimmy Carter Library).

of Carter’s often-criticized tendency to rely on symbolic gestures rather than substance to address issues related to African Americans.20 In response to President Carter’s reassuring comments, Earl Graves pointed out that he and America’s top black businessmen in attendance did not come to the White House just for a “social gathering.” Although Graves noted that “this President has pledged to do more for minority enterprise than any other chief executive officer in recent history,” he continued: We are here to do more than simply hold President Carter to his promises; we are here to do all we can to help this Administration with its efforts to strengthen the economic fiber of this Nation and to make certain minority businesses obtain their fair share of American commerce.21

Based on his own administrative inclinations as a businessman himself along with the advice and input of America’s top black entrepreneurs, the Carter presidency, compared with its immediate predecessors and successors, stood out in its promotion of minority business enterprise. Still, the Carter administration’s failure to reduce black unemployment, despite such measures as the Humphrey–Hawkins “full employment” bill (signed into law in October 1978), continued to generate African American criticism throughout his presidency.22

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Besides seeking to mend fences with America’s black business leaders, the Carter administration gave priority in the early summer of 1978 to developing a coherent policy response to the Supreme Court’s June 28, 1978, decision in the Bakke case. The Carter administration was concerned about how the Bakke case, which set limits on affirmative action in higher education,23 would affect governmental initiatives related to minority business enterprise. In a July 26, 1978, draft memorandum to Carter, Stuart Eizenstat, director of domestic policy, and Anne Wexler, public liaison director, advised the president that “your decision is needed to scope the eligibility for Federal minority business programs. These include direct contract set-asides; subcontract preferences; business development and management assistance; and special grant programs.” This review was necessary to “reaffirm the basis for the program in light of the Bakke decision.”24 Along with confirming the continued existence of minority business enterprise programs, Eizenstat and Wexler informed the president that the administration “needs to settle on” 1. 2. 3.

What weight to give membership in a “minority” group in determining eligibility as compared to other factors; Which “minority” groups should be explicitly listed as an eligibility consideration; and How to administer the standards and certification process.25

One of the historic points of contention related to government minority business enterprise programs was their mission to help “socially or economically disadvantaged” individuals. As Eizenstat and Wexler contended, “Using race as an automatic qualification to help economically well-to-do persons can be offensive to the most needy minority individuals seeking aid.” Moreover, “such cases can also draw fire from critics seeking . . . to discredit the program and generate backlash.” Nevertheless, “blacks argue that just to be black in America constitutes overwhelming disadvantage—and to add on tests for economic or other factors is offensive.” In addition, it had been argued that denying successful blacks access to government business assistance “suppresses black business advancement into the high-technology, capital-intensive fields where they are solely under-represented.” Thus in the final analysis, government programs to promote minority business enterprise represent merely “a

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‘poverty program’ for black janitorial and window-washing firms where Federal help then stops.”26 Besides briefing the president on the long-standing argument of whether minority business enterprise programs should assist African Americans, Hispanics, and Native Americans of all classes, Eizenstat and Wexler discussed the issue of whether women, the disabled, and Vietnam veterans should be factored into the minority business enterprise mix. They warned the president that “the choice of which groups to explicitly enumerate is highly sensitive. The shorter the list—the more it will satisfy the named minority groups; the more it will concentrate the programs on the named groups; the more it will raise objections from unnamed minority groups.” In the end, Eizenstat and Wexler suggested that including women, the handicapped, and Vietnam veterans as an enumerated minority group for the purpose of receiving minority business assistance would “dilute” the overall (limited budgetary) effort to promote minority business enterprise. Furthermore, “it could be argued that there are other, specialized programs available to assist women, handicapped, and Vietnam Veterans.”27 Because of the sensitive nature of the subject, in their final recommendations to the president, Eizenstat and Wexler urged Carter not to totally disqualify women, the disabled, and Vietnam veterans from receiving minority business assistance. Instead, these groups should be “told that their members might qualify on a case-by-case basis under economic and other factors—grounds other than group membership.”28 Jimmy Carter has been called “the president who failed” because of “his eagerness to accommodate all sides on all issues,” which resulted in his “being regarded as a weak and wishy-washy President.”29 Carter’s tendency toward vacillation, linked to his 1976 presidential campaign persona of being “all things to all people,” has been widely discussed and documented.30 Nevertheless, his administration’s accelerated commitment to minority business enterprise in the wake of the Bakke case suggests one area of his presidency in which a less strident interpretation is merited. Carter’s support of public law 95-507 bears this out. Public law 95-507 (PL 95-507), championed by Congressman Parren Mitchell of Maryland and signed by President Carter in October 1978, stipulated that businesses receiving federal supply and service contracts of more than $500,000 and companies receiving construction contracts of $1 million or more must “submit a subcontracting plan which includes specific goals for subcontracting with economically disadvantaged busi-

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President Jimmy Carter conferring with Representative Parren Mitchell of Maryland. Mitchell was Congress’s leading advocate for black business development during the 1970s (courtesy of Jimmy Carter Library).

nesses.” In addition, P.L. 95-507 provided for economically disadvantaged businesses to receive special assistance for market development, loan packaging, technical issues, and management expertise. Finally, P.L. 95-507 mandated that every federal agency establish an “office of small and disadvantaged business utilization” to ensure that P.L. 95-507 was being adhered to throughout the federal bureaucracy.31 Another prominent instance of federal government support for minority business enterprise in the wake of Bakke was the expansion of the Department of Transportation’s Minority Business Resource Center (MBRC). The MBRC, located in the Department of Transportation’s Federal Railroad Administration, came into being as part of the Railroad Revitalization and Regulatory Reform Act of 1976. The so-called 4-R act allotted $6.4 billion for railroad revitalization projects.32 Starting from scratch, within a couple years the MBRC had become a significant source of potential revenue for African American and other nonwhite businesses. In his June 14, 1979, testimony before a House subcommittee task force regarding minority business enterprise, MBRC Director Kenneth E. Bolton proudly described his unit’s progress: When the Center was established in the summer of 1976, the railroad companies had virtually no minority contracting to report. The initiation of

Carter Administration and African American Enterprise  199 the Center’s program then resulted in railroad contracts of $43 million in 1977 which amounted to approximately 1.5% of the total procurements of the railroads. In the year 1978, however, when most of the Center’s assistance programs were fully implemented, railroad contract awards to minority businesses showed a truly significant increase to $152 million or 5.8% of total procurement needs.33

A contributing factor to the MBRC’s greater effectiveness was the establishment in 1978 of local outreach centers (LOCs) across the country. These units were created under an interagency agreement with the Office of Minority Business Enterprise (OMBE). As Kenneth Bolton told the 1979 House subcommittee task force, “These local outreach centers are fully functional walk-in offices, which provide minority firms technical, management and marketing assistance. Millions of dollars of railroad contracts have been specifically identified with the individual outreach centers.”34 Arguably the greatest individual accomplishment associated with MBRC’s local outreach centers came in July 1979 when the Detroit LOC, along with the Michigan State Department of Transportation, helped establish the Kent-Berry-Eaton Connection Railway (KBEC). A July 23, 1979, Department of Transportation press release pointed out that KBEC was the first minority-owned business “to operate a railroad in the United States.”35 KBEC’s forty-two-mile stretch of track from Grand Rapids to Vermontville had previously been owned by the Michigan State Department of Transportation. But after this Michigan State agency agreed to cede this property to the KBEC, the MBRC’s Detroit local outreach center provided the fledgling company with the capital and technical and managerial assistance necessary to run a successful railroad. In regard to KBEC’s anticipated operations, the Department of Transportation’s press release dated July 23, 1979, stated: “The KEBC will carry grain, lumber, automobiles and other goods through three rural western Michigan counties to mainline railroads.”36 Another manifestation of Carter’s apparent sincerity in promoting black business development were his efforts to ensure that his commitment to double government procurement dollars spent on minority firms by 1979 represented more than mere rhetoric. To increase the amount of money that government agencies spent on black media outlets, the Carter administration instituted its minority advertising program.

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On January 31, 1978, through the Office of Federal Procurement Policy, President Carter issued policy letter 78-1 to federal governmental agencies directing them to “review requirements for procurement of advertising services to determine if smaller portions can be broken out and reserved for solicitations on which minority-owned firms and other small firms can compete.”37 One year later on January 16, 1979, Louis Martin, who in August 1978 had replaced Martha Mitchell as special assistant to the president,38 “met with 17 major procuring agencies for a critical review of their progress and problems in the implementation of Policy Letter 78-1.”39 Predictably, the follow-up review of its implementation revealed that some agencies had done better than others in increasing their advertising expenditures with minority-owned firms. Consequently, in early 1979, Carter urged “each agency to launch a new initiative which will increase advertising opportunities to minority-owned newspapers and magazine publishing companies, media outlets, production companies and advertising firms.”40 To ensure the initiative’s success, the president directed that within thirty days each agency 1. 2.

Submit the name of a person responsible for the minority advertising program. Submit a plan of action for increasing advertising awards to minority-owned firms, outlining the utilization of such vehicles as Public Law 95-507, Section 8(a) of the Small Business Act, grants and other programs and initiatives. Within this plan show specific steps taken to increase advertising awards to minorityowned newspaper and magazine publishing companies.41

At the same time that Carter issued policy letter 78-1 increasing government procurement from minority-owned media outlets, he established the Minority Broadcast Ownership Program (MBOP) “to coordinate the efforts of government agencies with the Federal Communications Commission and private industry in order to increase minority ownership and control of broadcasting outlets.” The National Telecommunications and Information Administration (NTIA) of the Commerce Department was in charge of monitoring and assisting the program’s growth.42 Less than two years after MBOP’s establishment, forty new minorityowned broadcasting outlets had been launched. According to an October 1979 report on its progress, “These additional stations represent a

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65 percent increase over the 62 minority-owned stations that existed in January 1978.” The MBOP’s success appeared to be based on a combination of “federal loans and grants, private industry efforts, and regulatory action.” In May 1978, to facilitate the entry of minority entrepreneurs into major broadcasting markets, the Federal Communications Commission granted “‘tax certificates’ allowing capital gains tax deferral on sales of broadcasting facilities to minorities” as well as reducing “the financial showing necessary to obtain a broadcasting license.”43 Another example of the stepped-up federal commitment to do business with minority enterprises was the Department of Energy’s September 1978 utilization of ten nonwhite public accounting firms to participate in an audit of America’s fifteen largest oil refiners. The government asked the primary contractor for this audit, Alexander Grant & Company, to reserve “approximately 15% of the audit work for minority participation.” In the end, the ten minority accounting firms received subcontracts worth $1.5 million.44 The minority set-aside contracts associated with public law 95-507, the Department of Transportation’s Minority Business Resource Center, policy letter 78-1, and the Department of Energy’s oil audit initiative were extremely small in the context of overall government procurement. As table 8-1 shows, these and other forms of procurement assistance to minority firms increased sharply during the Carter presidency. The table also indicates that Carter did indeed reach his goal of doubling government dollars spent on black and other nonwhite enterprises between 1977 and 1979. The federal government’s Minority Bank Deposit Program (MBDP) was another initiative that greatly expanded during the Carter administration. As of June 30, 1979, the federal government deposited slightly more than $200 million in banks owned by blacks and other nonwhites, compared with the “$102,134,000 on deposit on December 31, 1976, just before President Carter took office.” The MBDP offered minorityowned banks “an opportunity to supply the government’s needs for various banking services.”45 Another concrete reflection of President Carter’s personal commitment to increasing government spending on minority businesses was his administration’s enhancement of the Interagency Council for Minority Business Enterprise (IAC), originally established in October 1971 as part of President Nixon’s executive order 11625. The IAC, chaired by the undersecretary of commerce and made up of the top twenty-five

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Table 8-1 Comparison of Total Government Procurement with Minority Procurement, Fiscal Years 1969 to 1980 Fiscal Year 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 (estimated)

Total Procurement (civilian and defense)

Total Minority Procurement

Percent

$50,229,000,000 $43,323,000,000 $45,013,000,000 $45,650,000,000 $44,893,000,000 $48,675,000,000 $57,206,000,000 $56,760,000,000 $72,427,000,000 $82,845,000,000 $91,665,000,000 $100,000,000,000

$13,000,000 $30,000,000 $146,000,000 $385,000,000 $737,000,000 $701,000,000 $808,000,000 $834,000,000 $1,035,000,000 $1,777,000,000 $2,484,000,000 $3,800,000,000

0.3 0.7 0.8 0.8 1.6 1.4 1.4 1.5 1.4 2.1 2.7 3.8

Source: U.S. Department of Commerce, “History of Federal Minority Business Procurement Goals,” June 20, 1980, Louis Martin Files, MBDA Folder, Box 62, Carter Library.

federal departments and agencies, had an institutional mission to coordinate activities affecting minority business, promoting new initiatives, analyzing and developing policy in the field, maintaining a liaison with government agencies, and acting as the “ombudsman on minority business matters.” Before Carter became president, the IAC was essentially a symbolic entity with no budget, no support staff, and no real clout.46 By fiscal year 1979, the IAC, chaired by Deputy Commerce Secretary Luther H. Hodges Jr., could boast of “12 permanent positions and related support activities.” As the IAC noted in a report to President Carter, “$1.5 million is available in FY 1979 for central staff and programs.”47 Another government minority business assistance program that blossomed during the late 1970s was the National Minority Purchasing Council (NMPC). In 1972, NMPC member corporations spent $86 million on minority enterprises, and by 1978, this figure had grown to $1.8 billion. Seemingly influenced by the federal commitment to increase the purchase of goods and services from minority vendors, the NMPC announced in 1978 that its corporate members intended purchase $3 billion in goods and services from minority firms by 1980.48

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Table 8-1 shows that the projected 1980 federal procurement from minority firms stood at more than $3 billion. This, coupled with the NMPC’s projected $3 billion in private-sector purchases from minority vendors in 1980, not only excited the African American business community but also caught the attention of some nonminority entrepreneurs. One unintended consequence of the Carter administration’s efforts on behalf of minority business enterprise was that it also increased the potential for fraud associated with these programs. With more procurement dollars being earmarked by African American and other nonwhite firms, many European American firms sought to enhance their own profits by subverting the system, which attracted the attention of various media outlets. A headline on the front page of the September 10, 1978, issue of the Chicago Tribune read “Minority Businesses Bilked Out of Millions.” According to the story, based on a four-month nationwide investigation, America’s minority businesses are being cheated out of government contracts worth hundreds of millions of dollars by sham, fly-by-night companies. . . . Established firms, particularly in the construction industry, are creating phony companies and enlisting blacks, Orientals, Latinos, and American Indians as bogus partners to obtain government money intended to help legitimate minority businessmen.49

One of the examples of this abuse was the case of Donald Mudgett, the owner of Michigan Electric in Ravenna, Michigan, and Tom Mason, a black electrician from Muskegon, Michigan. According to the Tribune, Mudgett wanted to bid on an $86,694 federally funded project that required a 10 percent minority set-aside, and he contacted Mason with the following offer: “We need a minority on this job before we can bid it. The material on the job is about $10,000, so I give you $11,000, you buy the materials under your name, and you keep $1,000 for yourself.” Under this agreement, Mason was not required to actually do any work. Instead, he would receive his $1,000 fee merely for signing the paperwork, which was submitted to Washington, D.C., to make it appear that he was a subcontractor for the job.50 On the surface, this scenario appeared to be insignificant in regard to fraud. But the Tribune also disclosed that Mudgett and Mason “worked on seven projects totaling more than $300,000 before they had a falling

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out and split up.”51 Because the Tribune discovered similar scams operating across the country, officials in the Carter administration were forced to address the Tribune’s contentions. In a September 27, 1978, letter to the editor, Robert T. Hall, the Commerce Department’s assistant secretary for economic development, rebutted the Tribune’s exposé. First Hall pointed out that the Economic Development Agency (EDA) “shares the Tribune’s concern that such programs [minority set-asides] not be abused by diverting expenditures to firms which are, in fact, not owned and controlled by minorities.” Nevertheless, the Tribune’s focus on a “few situations of apparent abuse overlooked the unprecedented benefits that the LPW [Local Public Works] program has afforded minority construction and supply firms.”52 Hall went on to inform the Tribune that the 10 percent minority participation provision was inserted into the 1977 LPW legislation because “only about one percent of public works funds have been spent for such firms in past years.”53 In reference to the Tribune’s assertions that minority set-asides associated with the LPW program were poorly monitored, Hall told the editor that his paper’s accusations prompted an immediate EDA review to determine whether any of the allegedly bogus firms you described were improperly participating in EDA projects. In fact, as a result of EDA’s regular monitoring procedures, five of the firms you cited had already been investigated and disqualified. Two other firms had also been investigated previously.54

In sum, Hall told the Tribune that despite “some abuse,” because of the LPW minority set-aside program, “thousands of minority businesses have gained invaluable experience and are well on the way to becoming competitive firms.” And from his office’s perspective, “the 10 percent mandate represented an opportunity to right a historical wrong.”55 On September 28, 1978, a day after writing his letter to the editor, Hall submitted an interim report on the status of the 10 percent LPW minority business set-aside program. In it, he addressed the Tribune’s criticism: “In a precedent-shattering effort of this nature, some problems are unavoidable.” Nonetheless, according to Hall, preliminary evidence suggested that “in the vast majority of cases, the MBE [Minority Business Enterprise] requirement is having its intended effect of promoting

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minority business participation in the construction and construction supply industries.”56 In the short term, Hall appeared to have deflected the Chicago Tribune’s critique of the Public Works minority business enterprise initiative. But when the popular television program 60 Minutes presented its own exposé of minority business “set-asides” on December 17, 1978, it generated even more bad publicity for this government program. In a segment entitled “Minority Fronts,” senior CBS correspondent Mike Wallace began by announcing, “This is a story of good intentions gone wrong.”57 After a brief overview of the LPW program, the 60 Minutes story used three examples of how the minority “set-aside” component operated in West Virginia. The following transcript is of one of the three examples of overt fraud that 60 Minutes presented to a nationwide audience: Mike Wallace: Our first stop, the offices of a minority-owned construction company which had received contracts for $70,000 worth of light construction work on two EDA projects that called for 10 percent minority participation. We asked to see the president of the company. Is Mr. White here? Secretary: No, he isn’t. Wallace: Do you know Mr. White? Does he come in often? Secretary: No, I just answer the phone for them. Wallace: This is John White, president and owner of 52 percent of the stock of John-Lee Construction. He is a handyman by trade. Owner of the remaining stock? Ed Robinson and his white partner. John-Lee Construction operates out of a back room in Robinson’s CB radio store. Except for its black president, John-Lee Construction has no blacks or other minorities on staff. Despite this, when Ed Robinson arrived, he insisted that John-Lee Construction was not a minority front. Robinson assured us that Mr. White took part in the key decisions in running the company. We wanted to meet Mr. White, so Mr. Robinson got him on the phone. Ed Robinson: John? We got Mike Wallace in here with 60 Minutes on national TV. Would you be free to come out? Yeah, Tupper’s Creek. Yeah. Towards Sissonville. Yeah, D & L. OK. Uh-hmm. Good-bye. Wallace: It sou—it sounds like he’s never been to—to the company that he’s the president of before. Robinson: No, we hold all the meetings in town.

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Wallace: Mr. Robinson has told me that you are the president of JohnLee Construction. John White: That is correct. Wallace: This is your first time here? White: Right. I was planning to come this week. Wallace: And—but it’s been in business for almost a year. White: Right. Wallace: Well, how come you—you’ve never been to the business of which you’re— White: Well, we’ve been working out of it. Wallace: —president. White: It’s been—there’s been quite a bit on me, see? So this is coming into a time now that I would be putting a lot of more time in it. Wallace: What did you actually do in the two jobs that John-Lee Construction, Inc. did? White: Well, actually, as being the president, you know I set the jobs up. Wallace: What do you mean you set them up? White: And— Wallace: Did you make the bids? White: Well, sure, we made the bids from the jobs. Now, that also puts me as doing what a president’s job’s supposed to be. Wallace: Which is? White: Well, just—you don’t know? Is [pause]—that’s—that’s kind of tough. Which we—I done quite a few things, which is kind of hard for me to answer that, as the president’s job. It’s—it’s—it’s a great job. Wallace: Being president may be a great job, but it’s Ed Robinson, a white man, who has reaped the financial rewards from those two minority set-aside jobs. While his black president, who did virtually no work on the projects was paid about a thousand dollars, Robinson earned ten times that much for running the operation and supervising the work.58

Because of the popularity and influence of 60 Minutes, the possible negative ramifications for the Carter administration from the “Minority Fronts” segment were obvious. Consequently, one month before the episode aired, in a November 13, 1978, memorandum to President Carter on the “60 Minutes’ Story on 10 Percent Minority Business Enterprise (MBE) Effort,” Secretary of Commerce Juanita Kreps tried to prepare

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him for the rather unflattering depiction of the implementation of minority business set-asides. Kreps complained that 60 Minutes wanted to concentrate on the story’s “sensational” negative aspects because Mike Wallace “thus far, has declined to tape an interview with Assistant Secretary Bob Hall, who could provide a balanced policy perspective on the accomplishments and shortcomings of the MBE effort.”59 In the end, despite the disclaimers by Hall and Kreps, the unflattering assessment by the Chicago Tribune and 60 Minutes of minority business set-asides in the construction and construction supply industries helped reinforce the image of the Carter presidency as being well meaning but incompetent. Fortunately, from the standpoint of the Carter administration, in early 1979 a milestone event related to minority business enterprise temporarily deflected attention and criticism from the LPW program. On January 29, 1979, the Commerce Department sponsored a contract-signing ceremony referred to as a “twin celebration.” American Pouch Foods’ (APF) $22 million contract with the Department of Defense represented both “the largest business contract ever achieved by a minority firm” and “a major technological attack on world hunger and starvation.” Beyond the Commerce Department hoopla surrounding this event, APF’s ascension to business prominence was significant.60 The APF was the brainchild of Wallace D. Muhammad, the chief evangelist of the Chicago-based World Community of Al-Islam in the West (WCIW). Muhammad was the son of Elijah Muhammad, who headed the Nation of Islam until his death in 1975. After his father’s death, Wallace established the WCIW and embraced orthodox Islam instead of the racialized version of Islam espoused by the elder Muhammad.61 Although Wallace D. Muhammad may have repudiated the Nation’s theology, he continued to embrace its focus on business development. Accordingly, in a joint venture with Allan A. Cheng and Associates, Muhammad established American Pouch Foods to enter the retort food– packaging industry. In the late 1970s, retort food packaging—that is, processing food in airtight, flexible pouches—had a potential annual market of $63 billion. Because retort-pouched foods had an indefinite shelf life without the need of refrigeration, some believed that their easy distribution across the globe could reduce world hunger.62 With the assistance of Randolph T. Blackwell, director of the Office of Minority Business Enterprise, APF was able to begin talking with the Department of Defense about providing retort food pouches to replace

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the military’s “standard canned and familiar C-rations, under the Defense Personnel Support Center’s Meal, Ready-to-Eat Program.” Among the considerations that ultimately prompted the Department of Defense to award APF a $22 million contract was that “food in retort pouches can be placed in hot or warm water or chilled, depending on contents, prior to opening and serving.”63 In his keynote address after the January 29, 1979, contract signing between APF and the Department of Defense, U.S. Ambassador to the United Nations Andrew Young praised this historic development: Very early in the work of Martin Luther King, we understood the interrelationship between economics and politics, and I think this is a relationship that the Honorable Wallace Deen Muhammad and his father understood very early also . . . CETA jobs are wonderful, food stamps are wonderful, but ultimately full participation in this society means full participation in the economy with no “social workers” supervising!64

On a related note, the February 15, 1979, issue of the black news weekly Jet reported that the WCIW contract with the Department of Defense would generate four hundred new jobs in the Chicago area.65 On March 1, 1979, Randolph T. Blackwell, who helped orchestrate the historic contract between the WCIW and the Department of Defense, became the director of the Office of Minority Enterprise Program Development (OMEPD). In the press release announcing Blackwell’s reassignment, Commerce Secretary Kreps noted that Blackwell and the OMEPD would “develop new program initiatives, particularly those that involve technology transfers in the creation of minority employment in growth industries.”66 The announcement of Blackwell’s new post and his successful coordination of the WCIW government contract gave the Carter administration an opportunity to demonstrate to the public that minority business enterprise consisted of more than set-asides. During its first year, the OMEPD actively sought and evaluated proposals that fell within the agency’s mission of promoting new, nontraditional, minority-owned enterprises. The OMEPD also favored enterprises that would enhance employment opportunities in depressed rural areas of the South. One proposal that received the attention of the OMEPD was the Mid Delta Rabbitry Venture Cooperative (MDRVC). This enterprise, to be based in Greenville, Mississippi, would produce rabbits for food con-

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sumption as well as for pharmaceutical, laboratory, fertilizer, and novelty uses. In the OMEPD’s first annual report, Blackwell, referring to the MDRVC, stated that “documents, data, and quick review with representatives of the industry confirmed anticipation that some 1,500 persons could be employed within 24 months in the production of 100,000 rabbits per week, in the processing and ancillary industries stemming from the production of the animals.”67 For the MDRVC to succeed in “a very depressed area largely populated by Black and economically disadvantaged persons in the most poverty stricken state in the nation,” the Office of Minority Enterprise Program Development had to “initiate a multi-agency commitment to the region.” According to Blackwell, one of the positive first steps in this process was the Department of Defense’s ceding of a recently vacated air base to the city of Greenville for use as an industrial park. For the proposed rabbit production facility, Blackwell observed that for “a fraction of the cost of a new plant several buildings [from the vacated air base] can be reconditioned and renovated into a first-rate production plant and training center.”68 Although local investors were in the forefront of making the MDRVC proposal a reality, as Blackwell noted in the OMEPD’s first annual report, he hoped that other government departments and agencies, such as Labor, Agriculture, Community Service Administration, and Action, would follow the Defense Department’s lead and get involved.69 Another proposal to which Blackwell’s OMEPD gave priority was the “Twenty-five Counties Energy Project.” The small rural counties targeted in this proposed initiative were located in eight southern states (Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, and South Carolina), where “the poorest segment of population within the United States” lived.70 To develop these areas economically, the OMEPD hoped to “develop 25 gasohol plants, and organize the persons involved in them into an association that would meet regularly, sharing information, and learning from each other while at the same time benefitting from the wholesome competition that will inescapably develop.”71 Along with OMEPD’s admirable goal of stimulating economic development in the rural South, it also was interested in stimulating economic development on the African continent. As Blackwell noted in his spring 1980 annual report, “OMEPD has, for the past four months, been involved with some of the outstanding businessmen in Nigeria, West Africa, in the process of building six companies in that nation related to

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road construction and the manufacture of building construction materials.”72 Even before OMEPD’s attempted to expand the parameters of government-supported minority business enterprise, the Commerce Department had begun restructuring the government’s overall policy and programs related to black capitalism. On November 30, 1978, during the height of the LPW minority participation controversy, Juanita Kreps outlined these plans in a letter to James T. McIntyre, director of the Office of Management and Budget (OMB), in which she proposed integrating OMBE and IAC into one organization “renamed the Minority Enterprise Development Administration (MEDA).”73 While the Commerce Department waited for an official response from the Office of Management and Budget, other developments suggested that a major restructuring and rethinking of programs related to minority business enterprise was appropriate. On May 8 and June 22, 1979, the White House Conference on Small Business convened special meetings of the Task Force on Minority Business Development. Their purpose was to formulate plans “to develop appropriate legislative, executive, administrative, and private sector initiatives, designed to promote minority business development.”74 At its May 8 meeting, the task force assessed “the effectiveness of government programs designed to assist minority business.” Ironically, this latest effort to analyze the government’s efforts to promote black capitalism produced the same conclusions at which previous studies and task forces had arrived. Specifically, as noted in the minutes of this gathering, “it was the feeling of the Task Force that these programs are not being fully implemented within the spirit of the law, primarily due to a serious lack of accountability in implementing these programs on behalf of minority business.” To offer yet another possible remedy to this situation, the participants in the May 8, 1979, task force meeting “proposed to examine all minority business programs being operated by the federal government.” They also “agreed to undertake a study of the top fifty minority businesses under contract with each federal agency,” as it was hoped that such a study “would demonstrate the nature of the business, the systemic problems of the businesses, and problems inherent in doing business with the federal government.”75 Owing to the long-standing controversy associated with the SBA’s 8(a) program, as well as more recent problems with the LPW’s 10 percent minority participation mandate, attendees at the May 8 meeting “recog-

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nized the need to decrease the dependency on the public sector by minority business, and to increase the involvement of the private sector in the development of minority business enterprise.”76 The proposed ways of reaching this goal were as follows: A partnership program between the major corporations (Fortune 500) and minority business community. The Fortune 500 companies would be approached to provide a significant pool of money to be utilized for providing equity capital for minority businesses. Each major industry will be approached to commit itself to creating a minimum number of minority firms over the next three years.77

The task force envisioned relying on more than corporate goodwill to persuade Fortune 500 companies to take these proposals seriously. As the minutes revealed, “The Task Force concluded on the notion that Black consumerism has played a major part in the development of these major corporations, which should be a major leverage point in any discussion with private sector representatives.”78 Besides discussing the effectiveness and scope of public- and privatesector initiatives to help minority business enterprise, the May 8 meeting of the White House–sponsored Minority Business Development Task Force identified “the lack of equity capital as the most acute problem facing the rapid development of minority business enterprise.” Obviously this was not a new revelation. One solution to minority businesses’ lack of equity capital, which in all likelihood would require special legislation, was an “investment tax credit program” which would provide tax credits for firms and individuals investing in minority firms. This and other equity-generating proposals discussed at the meeting, such as “capital grants,” were based on the premise that the private sector would have to be given economic incentives to assist minority business development rather than “relying solely on the private sector’s sense of social commitment.”79 One of the special guests at the task force’s follow-up meeting on June 22, 1979, was William Clement, the SBA’s associate administrator for minority small business. His presence coincided with a frank discussion of the SBA’s much-maligned 8(a) program. According to the Annual Report of the Select Committee on Small Business, “since fiscal year 1968, $2.2 billion in contracts have been let through the 8(a) program to 3,726 firms. Of those 3,726 firms, only 149

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have ever ‘graduated’ from the program.”80 Moreover, as Jonathan Bean pointed out, two years earlier, a 1977 government affairs subcommittee, chaired by Senator Lawton Childs, found “widespread corruption and incompetence in the 8(a) program.”81 Considering the depressing realities associated with the SBA’s 8(a) program by 1979, clear-headed recommendations put forward by the National Association of Black Manufacturers (NABM) on how to improve 8(a) graduation rates were well received by task force members. The NABM urged the SBA to utilize successful minority businesses that have graduated from the 8(a) program to provide the expertise to strengthen the potential success of applicants and existing companies within the 8(a) portfolio. . . . The unique talents of these graduate firms, of which the nation has made a substantial investment, will provide irreplaceable sources of expertise. The utilization of these unique talents and their skills in government contracting, specifically in the 8(a) program, should enhance the success potential of the 8(a) portfolio companies.82

Even before receiving valuable input from the May 8 and June 22 meetings, Carter administration officials sought counsel from James H. Lowry and Associates, a Chicago-based, black-owned consulting firm specializing in community and economic development. Lowry and Associates’ report, A New Strategy for Minority Business Enterprise Development, filed in the White House on March 31, 1979, both reinforced and influenced the Commerce Department’s increasing inclination to use government minority business enterprise programs to assist mediumto large-size businesses, versus the previous emphasis on helping small minority enterprises.83 In a section entitled “The Need for Change,” Lowry and Associates described the barriers to substantive minority business development: 1.

2. 3.

Historically, minorities were discriminated against, precluding minority participation in the higher growth and more profitable industries; As a result, minorities tended to start marginally profitable service and retail businesses in minority neighborhoods; These small-scale businesses were unable to attract capital and capable managers;

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4. 5.

Thus, they were unable to gain access to large growth markets; and As a result, because of their small size and the nature of their businesses, they are now unable to penetrate the mainstream of the U.S. free enterprise system.84

In addition, “the Government must assume a leadership role in breaking this cycle. Minority business persons cannot solve the problem alone because they lack the requisite capital and manpower; and the private sector lacks the purpose and incentive required to open up additional opportunities for minorities.”85 Although in Lowry and Associates’ view, the federal government should play an important role in any effort to bring about substantive minority business development, earlier government initiatives had been weakened by a “lack of focused leadership; lack of consensus on major goals and objectives; inadequate utilization of limited resources; and unrealistic business expectations.”86 This report stated that of these four deficiencies associated with previous minority business enterprise programs, “we feel the biggest weakness in all Federal programs is unrealistic expectations.”87 Lowry and Associates identified the following three areas in which federal minority business development programs “have disregarded the realities of the free enterprise system”: 1.

2.

Abilities Needed to Start and Manage a Successful Business. The relevant Federal agencies have not established any criteria in terms of management, education, experience, or potential for the individuals they have attempted to assist. Therefore, they provide management and technical assistance to individuals who cannot appreciate it and therefore will always require it and waste it. Also loans are made to individuals who are destined to lose the funds because they do not even know how to keep track of them. Speed at Which Change Occurs. The present status of MBED [Minority Business Economic Development] is the result of 200 years of socio-economic struggle on the part of this country’s minorities. Most minority business persons are first generation managers/entrepreneurs. Progress will be made, but in light of the limited capacity of MBEs [Minority Business Enterprises] and the slowdown of the entire U.S. economy, it will be made at a slow pace.

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3.

Interest of Private Sector in MBED. The Federal Government realizes that it will only be able to have a major impact on MBED with the assistance of the private sector, but it has been rather naive in terms of the motivation necessary to get the private sector involved. The private sector is bottom-lined oriented, and until the Federal Government shows the private sector how MBED will put money into its coffers, it will not come to the rescue.88

After describing some of the usual problems associated with government programs promoting black capitalism, Lowry and Associates offered possible solutions. First they advised the federal government to “define an overall mission” for its minority business development programs. In our view, the overriding mission should be to develop a core group of minority businesses and business leaders that can have a significant impact on society. . . . This group would be expected to: (1) Manage and develop businesses of size; (2) Employ large numbers of minority workers in both urban and rural areas; (3) Assume policy-making roles in Government and on the boards of Fortune 500 firms; and (4) Provide role models for subsequent generations of minority youth.89

To do this, according to Lowry and Associates, would require a new partnership of the federal government, the private sector, and minority communities. The members of the proposed partnership would have the following “different but complementary roles to play”: 1.

2.

3.

The Government should take the lead in: —Ensuring that minorities gain fair access to opportunities in all areas of business; —Effectively monitoring the progress of various Government efforts at all levels. The Private Sector should: —Facilitate access to private sector markets for MBEs with quality products and services; and —Divest companies and assets to minority purchasers when appropriate and mutually beneficial for both majority and minority parties. The Minority Community should remain diligent in ensuring various programs are being implemented to achieve results. In addition, the minority community should: —Increase support to

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strong MBED institutions and firms; and —Build support for strong MBE institutions and entrepreneurs, especially among minority youth.90 Although Lowry and Associates urged the federal government to give priority to helping the growth of medium- to large-size minority enterprises, they conceded that “other MBE options should be encouraged. In fact, to ensure that all types and sizes of minority businesses receive the appropriate support, we recommend that the Federal Government adopt a three-tier strategy.”91 The three-tier proposal was described as follows:





Tier 1 Small firms, the majority in retail and service businesses, with an average of five employees and sales not exceeding $1,000,000. Tier 2 Medium-sized firms, in a multiplicity of businesses, with an average of fifty employees and sales ranging from $1–$10 million. Tier 3 Larger firms, heavily concentrated in wholesale and manufacturing, employing over 100 employees with sales exceeding $10 million.92

Lowry and Associates went on to note that “when we segmented the client group into tiers, it was not only because different groups need different types of assistance, but also because different Governmental agencies should provide it based on their respective expertise and capacity.” Thus “we recommend that the Federal Government delegate programmatic responsibility for MBED between SBA and DOC [Department of Commerce], with SBA servicing Tier 1 and DOC servicing Tiers 2 and 3.”93 Even though Lowry and Associates did not intend to dismiss smaller black enterprises in their analysis and recommendations, their report clearly gives priority to creating more of tiers 2 and 3 enterprises, and so their recommendations included specific ways to raise more capital for these concerns. One of Lowry and Associates’ most interesting proposals to provide needed capital for medium- to large-size nonwhite enterprises was a guaranteed loan with compensating balance program. To offer private lenders a strong incentive to lend money to tiers 2 and 3 minority business enterprises, Lowry and Associates suggested that

216  Chapter 8 the Federal Government would offer a 90 percent loan guarantee on any bank loan to a medium sized MBE. The repayment of the loan would be five years at a minimum, at an interest rate negotiated between the bank and the MBE. If the MBE were unable to repay the loan, the Federal Government would compensate the bank for 90 percent of its loss on the principal of the loan. The Federal Government would also agree to deposit Federal funds in any bank participating in the guaranteed loan program. The amount of the Federal deposit would be equal to two-thirds of the value of the loan (e.g., $666,000 in deposits for a $1,000,000 loan).94

Lowry and Associates further contended that “these program features should overcome the reluctance of many banks to make loans to minorities by limiting the level of risk associated with these loans. Additionally, the program has the advantage of not requiring direct Government financing.”95 Lowry and Associates’ report and the recommendations from the May 8 and June 22 meetings of the Minority Business Development Task Force reinforced Juanita Kreps’s November 30, 1979, assertion to the OMB’s James T. McIntyre Jr. that the Commerce Department’s minority business enterprise programs needed to be restructured. So on July 10, 1979, McIntyre approved the proposal, except that instead of changing OMBE’s name to the “Minority Enterprise Development Administration” (MEDA), it should be renamed the “Agency for Minority Enterprise Development” (AMED).96 McIntyre’s suggestion of OMBE’s new name was later scrapped because “the acronym decided for Commerce’s new OMBE—i.e. AMED (for Agency for Minority Enterprise Development) . . . is apparently being confused with an Arab sheikh, or sheikhdom.”97 Also, besides internal debates concerning whether the restructured and renamed OMBE should be an “administration” or an “agency,” the Carter administration had to contend with criticism of this proposed reconfiguration from a longtime advocate of black capitalism. On May 30, 1979, Berkeley G. Burrell, president of the National Business League (NBL), sent a memorandum to Louis Martin expressing his and the NBL’s concern about the proposed reorganization of OMBE. In his cover letter, Burrell noted that “thoughtful consideration should be given to all of the ramifications involved in such a radical overhaul of minority enterprise programs.”98

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First, Burrell and the NBL were critical of Lowry and Associates’ report. While the NBL agreed that previous federal efforts to assist black business had been flawed, it also believed that “concentration on minority firms with receipts in excess of $1 million will likely create an overall situation for minority enterprise which is infinitely worse than anything we have known in the recent past.”99 The NBL went on to state that the Lowry study and similar Commerce Department recommendations were wrong to claim that “one of the major problems of the OMBE program has been its concentration on assistance on ‘small’ minority firms to the exclusion of ‘medium-sized’ firms.” After insisting that this observation was “totally inconsistent with the facts,” the NBL memorandum declared, “A far more accurate assessment of the problem is that OMBE has devoted an overwhelming percentage of its available resources . . . to the establishment of new minority firms to the exclusion of its other mandates  .  .  . specifically, the strengthening and expansion of existing firms.” To provide evidence of this contention, the memorandum stated that during the recession of 1974/75, when the NBL “publicly decried such a posture,” it was estimated that “OMBE was devoting nearly 95% of its resources to establishing new minority enterprises.”100 In discussing the proposed reorganization of OMBE from a “political/ practical standpoint,” the NBL warned that “this proposal can hardly enjoy the popular support of minority enterprise organizations or trade associations. The reason is simple. The constituents of these groups (or at least their members) generally do not fall within the Commerce Department’s definition of medium sized firms.”101 Despite the National Business League’s criticism of the proposed reorganization of the government’s minority business enterprise programs, the Commerce Department went ahead with its plans. And despite the NBL’s prediction that most black businesspeople would oppose the proposed reorganization of OMBE, other sectors of the black business community viewed this development much more favorably. For instance, a short article in the December 1979 issue of Black Enterprise entitled “MBDA: Bigger Can Be Better” looked at the reorganization in a much more positive light. That is, to stimulate the growth and development of medium- and larger-sized black firms in such growth industries as energy, communications, and electronics, the MBDA could “build stronger enterprises that can compete, and last in the maelstrom of American big business.”102

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The creation of the Minority Business Development Agency (MBDA) marked a milestone in the history of government support of black and other nonwhite enterprises in America. Unlike previous presidential administrations in which government support of black capitalism appeared linked to such social and political objectives as alleviating poverty and diminishing the potential for urban rebellions, by the late 1970s the primary criteria for receiving government support shifted to the potential business success of an enterprise. To some, this is where the emphasis should have been all along. The 1979 creation of MBDA, which some considered to be a necessary reform measure, helped the Carter administration deflect attention away from lingering concerns about the LPW Minority Participation program. While some observers emphasized the program’s susceptibility to fraud, others contested the constitutionality of this and similar measures. On July 2, 1980, the Supreme Court gave the Carter administration an important legal victory when it upheld the constitutionality of the 1977 Local Public Works Act’s 10 percent minority participation provision in the case of Fullilove v. Klutznick. In response, a White House press release issued on the same day announced: “The Court’s decision firmly establishes that government efforts to assist minority businesses in obtaining economic equality are on solid constitutional ground. This Administration will proceed vigorously with its set aside program, as well as other efforts to support minority business.”103 Although the Supreme Court’s decision in the Fullilove v. Klutznick case gave the Carter White House a sense of vindication and victory, it proved to be short-lived. During the ensuing presidential campaign of 1980, “the hostage crisis and the stagflation mess that was the American economy” clearly impeded Carter’s quest for reelection. Ronald Reagan, the GOP’s subsequent presidential candidate, took away Carter’s southern base of support through a reemployment of Richard Nixon’s successful 1968 Southern strategy. Carter’s crushing defeat in November 1980 appeared inevitable. But Carter “would re-establish himself as a community activist and problem solving diplomat in the years to come.”104 In the immediate aftermath of the 1980 presidential election, black and other nonwhite entrepreneurs wondered what President-elect Ronald Reagan’s policy would be toward minority business enterprise.

Epilogue Whatever Happened to Black Capitalism?

After winning the presidential election of 1980, Ronald Reagan, who ran on a platform of diminishing the role of government in the lives of the American people, moved quickly to dismantle the vestiges of Lyndon Johnson’s Great Society. Nevertheless, his administration’s policy toward black capitalism reveals a more complex scenario. Because of Reagan’s belief in the efficacy of the free-enterprise system, preexisting programs to assist black entrepreneurs remained intact. In fact, in a December 1982 speech announcing a $22 billion plan supporting minority-owned businesses, Reagan announced that during the rest of his administration, the first week in October would be designated as “Minority Enterprise Development Week.”1 Then on July 14, 1983, he issued an executive order mandating that federal agencies announce their annual goals to increase their procurement from minority enterprises.2 According to Jonathan J. Bean, Reagan’s continued support for black business enterprises reflected not only his personal inclinations but also the influence of moderates in his administration, most notably Elizabeth Dole. Dole, as head of the White House’s Office of Public Liaison, contended that maintaining and enhancing government minority business enterprise programs would contradict the belief, held by many, that Reagan was totally insensitive to the plight of African Americans and other nonwhites.3 More conservative Reagan administration officials such as William Bradford Reynolds, who served as assistant attorney general for civil rights during Reagan’s entire time in office, also influenced the thinking of the president, and Reynolds’s message varied radically from Dole’s. As Nicholas Laham observed: “Reynolds assumed his position determined to end the use of racial and gender preferences and quotas in the allocation of economic opportunities.”4 Moreover, as Reynolds told a House

219

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Subcommittee on Economic Opportunities on September 23, 1981, the Justice Department will “no longer insist upon or in any respect support the use of quotas or any other numerical or statistical formula designed to provide nonvictims of discrimination preferential treatment based upon race, sex, national origin, or religion.”5 An examination of Reagan’s Supreme Court nominations indicates that in this area, conservatives had more influence than moderates did on Reagan’s choices, and this ultimately dampened the aspirations of nonwhite entrepreneurs. In 1980, the Supreme Court affirmed the constitutionality of minority business set-asides in the case of Fullilove v. Klutznick.6 But with the input of Reagan’s new justices—Sandra Day O’Connor, Antonin Scalia, and Anthony Kennedy—in the 1989 case of City of Richmond v. Croson, the Supreme Court struck down that city’s program requiring minority contractors to receive a portion of public construction projects.7 After Clarence Thomas’s controversial ascension to the Supreme Court in 1991, the conservative bent of the nation’s preeminent judicial body became more pronounced. For instance, in the 1995 case of Adarand Constructors, Inc. v. Pena, Thomas was among those who ruled that the U.S. Transportation Department’s special program to do business with small businesses “owned and controlled by socially and economically disadvantaged individuals” was unconstitutional.8 Along with the negative consequences for black businesses associated with City of Richmond v. Croson and Adarand Constructors, Inc. v. Pena, African American entrepreneurs have had to contend with the decline of black capitalism and the rise of minority business enterprise. In fact, as Hugh Davis Graham noted in Collision Course: The Strange Convergence of Affirmative Action and Immigration Policy in America, African American entrepreneurs have increasingly found themselves competing not only with other native-born nonwhites and white women for limited government assistance but also with recently arrived minority immigrants.9 The apparent beginning of the denigration of black capitalism is linked with Richard Nixon’s appointment of Hilary Sandoval, a Mexican American, to head the Small Business Administration in 1969. Several of Nixon’s closest aides “expressed strong opposition to Sandoval’s appointment, alleging he was not competent to run a government agency.” Still, the evidence suggests that Nixon “chose Sandoval to please his congressional backer Senator John Tower and to reward Sandoval for Mexican Americans’ support of Nixon.”10

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Considering that Howard J. Samuels, Sandoval’s predecessor, gave priority to black business development (see chapter 4), black businessmen and their supporters expected that this would continue during the Nixon presidency, especially since Nixon had pushed the notion of black capitalism during his presidential campaign. Nevertheless, black business proponents would discover that Hilary Sandoval had little interest in their concerns. In May 1969, shortly after Sandoval’s ascension to SBA Administrator, members of the SBA’s Black Advisory Council (established by Samuels) requested a meeting with him to seek reassurance regarding the agency’s commitment to promote black capitalism. Not only did Sandoval refuse to meet with this group (which included such African American notables as Ralph D. Abernathy, Whitney Young, Dick Gregory, and Jackie Robinson), but he dismissed the SBA’s Black Advisory Council as having been created “mainly for show purposes.”11 Sandoval, who faced criticism from a variety of circles regarding his administration of the SBA, ultimately resigned under pressure.12 Nevertheless, prospective and established black entrepreneurs never again received the same level of attention by the SBA as they had during the tenures of Eugene P. Foley and Howard J. Samuels. Richard Nixon’s appointment of Hilary Sandoval to head the SBA, which helped denigrate the notion of black capitalism as a governmental priority, reflected yet another of his Machiavellian tendencies. As John D. Skrentny wrote in The Minority Rights Revolution, the Nixon administration increasingly viewed prioritizing minority capitalism over black capitalism as a means to make political inroads among Hispanics, especially since “they were numerous, their votes were winnable, and they lived in key electoral states.”13 Skrentny further contended that Nixon’s overtures to Hispanics represented “the purest case of anticipatory politics. Though Latinos were not demanding it, this program devised for blacks [black capitalism] was presumed to be something they would want. So Nixon gave it to them.”14 Arguably the question most relevant to the fall of black capitalism is, Do African Americans, because of their unique historical experience, deserve unique consideration to compensate for the past? For those who would answer yes, the next question is, What form should this compensation take? Since, from the standpoint of some African Americans, business-related affirmative action has been watered down with the inclusion of other groups, what would replace it? Would it

222  Epilogue

be appropriate to re-establish a unit within the Commerce Department focusing on African American entrepreneurs? What about the issue of reparations? As Randall Robinson pointed out, while Affirmative Action programs such as business assistance initiatives “help people like me, who are poised to succeed when given half a chance,” such programs do little “for the millions of African Americans bottommired in urban hells by the savage time-release social debilitations of American slavery.”15 It appears unlikely that for the foreseeable future, either a government agency exclusively concerned with black business development or reparations for the descendants of America’s black slaves will materialize. Nevertheless, the question remains, What can (or should) be done to improve the plight of black business in America? During the chronological period examined in this book, many studies were conducted and many recommendations were produced addressing this question. Perhaps the most persuasive document associated with this genre was the 1979 report issued by the Chicago-based consulting firm Lowry and Associates (see chapter 8). To reiterate, Lowry and Associates called for a new partnership between the federal government, the private sector, and minorities. The government would ensure that African American entrepreneurs had “fair access to opportunities in all areas of business.” The private sector’s responsibility would be to consistently do business with black enterprises providing “quality products and services.” Finally, the African American community would increase its support of strong black business institutions and firms.16 To ascertain the practicality of this partnership, I next will examine recent activities associated with the Minority Business Development Agency (MBDA), the National Minority Supplier Development Council (NMSDC), and African American consumers. A visit to the Minority Business Development Agency website (http:// www.mbda.gov) reveals that it has used technology to fulfill its mission as “the only federal agency created specifically to foster the establishment and growth of minority-owned business in America.”17 The most useful feature of the MBDA website for entrepreneurs is its “Minority Business Internet Portal,” described as “an e-commerce solution designed for the MBE [Minority Business Enterprise] community. The Internet platform provides MBEs with access to customized tools and business information to help them grow and thrive in an ever-changing digital economy.”18

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The cornerstone of MBDA’s Minority Business Internet Portal is its “Phoenix Database” of minority-owned firms and its “Opportunity Contract Matching System.” The Phoenix Database contains descriptive information on MBEs throughout the U.S. and is designed to match firms with actual contract opportunities. Individuals will automatically receive E-mail alerts of contractual and international trade opportunities in their area. Purchasers from government and the private sector use Phoenix to identify MBEs that can provide the products and services they need. There is no charge for use of the system.19

The National Minority Supplier Development Council (NMSDC), formerly known as the National Minority Purchasing Council, has attempted to carry out Lowry and Associates’ recommendation that large white firms actively engage in mutually beneficial interactions with nonwhite firms. On its website the NMSDC states, “Currently, minorities represent 28% percent of the United States population, but minority businesses represent only 15% of total businesses, 3% of gross receipts— and 4% of total corporate purchases. Much more needs to be done.”20 To its credit, an examination of NMSDC-generated procurement activity indicates that its interest in increasing business-to-business transactions between white and nonwhite firms is more than empty rhetoric. Between 1972, when the organization generated $86 million in corporate procurement contracts for nonwhite firms, and 2006, when the organization generated $100.3 billion in corporate procurement contracts for nonwhite firms, the NMSDC helped nonwhite firms secure more than $932 billion in procurement contracts with 3,500 of America’s largest corporations.21 The NMSDC declares on its website that the increase in member corporations’ purchases from nonwhite firms “was not accomplished by lowering corporate purchasing standards—in fact, these standards have gotten much tougher in recent years—but by sourcing qualified minority firms and giving them business on a competitive basis.”22 The evidence suggests that the federal government, as exemplified by MBDA, and the private sector, as exemplified by NMSDC, have attempted to carry out the spirit of Lowry and Associates’ 1979 proposal to improve the state of black business in America. Perhaps ironically, an examination of African American consumer activity since 1979

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indicates that blacks have demonstrated only minimal interest in supporting strong black business enterprises. The decline and disappearance of black-owned insurance companies since the late 1970s represents a case-study verification of this assertion. African American insurance companies have historically been a cornerstone of black economic development. Evolving from a tradition of mutual aid dating back to Philadelphia’s Free African Society founded in 1787, black-owned insurance companies have tried to perpetuate economic and social cooperation among African Americans.23 In 1979, the year of Lowry and Associates’ report, the top six African American insurance companies (North Carolina Mutual, Golden State Mutual, Atlanta Life, Universal Life, Supreme Life, Chicago Metropolitan) were included in Best’s Review list of the top five hundred life insurance companies. But by 1986, only three black insurers, North Carolina Mutual, Golden State Mutual and Atlanta Life, were included among the insurance industry’s leaders in premium income.24 Six years later, in 1992, only North Carolina Mutual remained in Best’s list, and its ranking had dropped from 204 to 416 between 1979 and 1992.25 If the 1980s were a difficult time for African American insurance companies, the most stable of historic black enterprises, the 1990s were, in the words of Black Enterprise, “a virtual bloodbath.” In its June 1999 overview of the black insurance industry, Black Enterprise noted that between 1989 and 1999, the number of black-owned insurers declined by 68 percent, from thirty-one to ten.26 According to various sources, America’s remaining black insurance companies have been all but abandoned by black consumers. For example between 1996 and 2002, African Americans spent $52.2 billion on insurance, but during the same period, the combined premium income of the top ten black insurance companies was $1.1 billion. Put another way, in this same period, slightly less than $0.02 of every dollar that African Americans spent on insurance was with black-owned firms.27 More recent data indicate an even further decline in both the number of African American insurance companies and their share of the African American consumer market. According to the authoritative Target Market News, African American consumers in 2003 and 2004 spent $32.2 billion on insurance. Black Enterprise’s coverage of black insurance companies for those same years shows that the number of profitable black insurers had dropped from ten to five and that the premium income of the remaining five black firms was $326.6 million. Viewed proportion-

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ately, approximately $0.01 out of every dollar spent by African Americans for insurance went to black insurers in 2003 and 2004.28 The June 2006 issue of Black Enterprise did not even mention black insurance companies in its assessment of African American enterprise during 2005. The June 2007 issue of Black Enterprise at least mentioned black insurance companies, but in a section entitled “B.E. 100s Flashback, June 1973,” which told readers that the number of significant black insurers had fallen from forty-two to four between 1973 and 2006.29 Although Lowry and Associates’ report did not explicitly mention this, one of the implicit reasons why African Americans were urged to support strong black enterprises was that whites had demonstrated little or no interest in doing business with black firms. During the late 1950s and early 1960s when white insurers ended their previous discrimination toward blacks and actively sought their business, black insurance companies tried to attract white customers. Unfortunately for African American insurance companies, manifestations of the “economic detour” that previously had confined them to serving only black consumers appeared alive and well. Although white insurers were able to make considerable inroads among black consumers, white consumers demonstrated little or no interest in black-owned insurance companies. Consequently, by the late 1960s, black insurers were forced to abandon their hopes of integrating their client base and labor force.30 Then when black consumers, too, expressed little or no interest in doing business with these firms, the once significant black insurance industry literally crumbled. The evidence suggests that the role of black consumer support in ensuring the viability of black business enterprise is just as important as the support of government initiatives like the Minority Business Development Agency and the support of private-sector initiatives like the National Minority Supplier Development Council. In fact, just as African Americans strategically used their collective spending power to help dismantle American apartheid,31 it would be equally fitting to use this economic juggernaut (soon to reach $1 trillion annually) to help make sure that black-owned enterprises remain on the landscape of American business.

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Appendix

Budgets for the Office of Minority Business Enterprise (OMBE) and for the Minority Business Development Agency (MBDA) (total obligations in USD millions), 1970–2008 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

1.2 1.8 43.5 63.5 91.3 94.9 52.6 50.0 50.3 60.8

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

58.7 66.3 68.2 60.5 54.3 50.3 45.3 45.9 4.6a 0a

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

0a 40.5b 42.5b 37.9b 44.1b 46.2 49.7 34.0 28.0 28.0

2000 2001 2002 2003 2004 2005 2006 2007 2008

28.0 28.0 28.0 30.0 29.0 35.0 31.0 30.0 29.0

Source: Appendix, Budgets of the U.S. Government, Fiscal Years 1972–2008 (Washington, DC: U.S. Government Printing Office), 1972, p. 247; 1973, p. 248; 1974, p. 243; 1975, p. 240; 1976, p. 240; 1977, p. 209; 1978, p. 201; 1979, p. 235; 1980, p. 242; 1981, p. 229; 1982, p. I-F18; 1983, p. I-F17; 1984, p. I-F18; 1985, p. I-F15; 1986, p. I-F14; 1987, p. I-F16; 1988, pp. I-F12, I-X1; 1989, pp. I-F12-13, I-Y1; 1990, pp. I-F12-13, I-Y1; 1995, p. 254; 1996, p. 264;1997, p. 271; 1998, p. 274; 1999, p. 200; 2000, p. 206; 2001, p. 213; 2002, p. 216; 2003, p. 220; 2004, p. 204; 2005, p. 217; 2006, p. 220; 2007, p. 219; 2008, p. 198. Notes: a OMBE was funded from 1970 to 1979, and MBDA has been funded from 1980 to the present. The SBA received funds usually earmarked for MBDA during these years; $36.3 million in 1988, $40.1 million in 1989, and $39.7 million in 1990. Appendix, Budgets of the U.S. Government, was not published between 1991 and 1994. Ron Marin, financial management officer of MBDA, graciously provided me with this information, which represents the actual appropriations versus the actual obligations.

b

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Notes Introduction 1. George S. Harris, editorial, Urban Life (first quarter, 1965):8. Urban Life was the in-house publication of the black-owned Chicago Metropolitan Mutual Assurance Company, and Harris was the company’s president. 2. For instance, Shelley Green and Paul Pryde’s Black Entrepreneurship in America included the following assessment: “Government focus on black business development came in the aftermath of the civil disorders in the 1960s.” See Shelley Green and Paul Pryde, Black Entrepreneurship in America (New Brunswick, NJ: Transaction Books, 1990), 39. 3. Juliet E. K. Walker, The History of Black Business in America: Capitalism, Race, Entrepreneurship (New York: Twayne, 1998), xix. 4. John Sibley Butler, Entrepreneurship and Self-Help among Black Americans: A Reconsideration of Race and Economics (Albany: State University of New York Press, 1991), 71–73. Merah Stuart’s An Economic Detour: A History of Insurance in the Lives of American Negroes (New York: Wendell Malliett, 1940) is an indispensable source for understanding African American entrepreneurship in the early twentieth century. Although Stuart focuses on black-owned insurance companies, his general thesis regarding the “economic detour” is relevant to other contemporary black enterprises. 5. Stuart, An Economic Detour, xxii. 6. Ibid., 183–84. 7. Among the works that discuss the feud between Du Bois and Washington are Louis B. Harlan, Booker T. Washington: The Wizard of Tuskegee, 1901– 1915 (New York: Oxford University Press, 1983), 50–51; David Levering Lewis, W .E. B. Du Bois: Biography of a Race, 1868–1919 (New York: Henry Holt, 1993), 238–342; Kevern Verney, The Art of the Possible: Booker T. Washington and Black Leadership in the United States, 1881–1925 (New York: Routledge, 2001), 79–93; Raymond Wolters, Du Bois and His Rivals (Columbia: University of Missouri Press, 2002), 40–76; and Jacqueline M. Moore, Booker T. Washington, W. E. B. Du Bois and the Struggle for Racial Uplift (Wilmington, DE: SR Books, 2003), 61–88. Besides these secondary works, Du Bois’s Souls of Black Folk (1903; repr., Greenwich, CT: Fawcett Books, 1961) includes an attack on

229

230  Notes Booker T. Washington in a chapter entitled “Of Mr. Booker T. Washington and Others.” 8. Walker, The History of Black Business in America, 183. 9. Ibid., 184. 10. Ibid. 11. Ibid., 185. 12. For more information about Jackson, see Robert E. Weems Jr., Desegregating the Dollar: African American Consumerism in the Twentieth Century (New York: New York University Press, 1998), 49. About Jones, see Nancy J, Weiss, The National Urban League, 1910–1940 (New York: Oxford University Press, 1974); Jesse Thomas Moore Jr., A Search for Equality: The National Urban League, 1910–1961 (University Park: Pennsylvania State University Press, 1981); and Charles H. Wesley, The History of Alpha Phi Alpha: A Development in College Life, 11th ed. (Chicago: Foundation Publishers, 1969). Hall’s most prominent works, published by the U.S. Census Bureau, were Negro Population in the United States, 1790–1915 (1918) and Negroes in the United States: 1920–1932 (1935). 13. Joseph A. Pierce, Negro Business and Business Education: Their Present and Prospective Development (New York: Harper Bros., 1947), 166; Vishnu V. Oak, The Negro’s Adventure in General Business (1949; repr. (Westport, CT: Negro Universities Press, 1970), 16, 96–97. 14. Stephen E. Ambrose, Nixon: The Triumph of a Politician (New York: Simon & Schuster, 1989), vol. 2, 125–126. 15. Gerald S. Strober and Deborah H. Strober, Nixon: An Oral History of His Presidency (New York: HarperCollins, 1994), 112. 16. Although there are relatively few sources on the federal government’s support of black business before the Nixon administration, Jonathan Bean’s BIG GOVERNMENT and Affirmative Action: The SCANDALOUS HISTORY of the Small Business Administration (Lexington: University Press of Kentucky, 2001), esp. chaps. 3 and 4, provides a detailed discussion of SBA programs aimed at African American entrepreneurs from 1964 to 1968. Walker’s exhaustive study The History of Black Business in America includes a section, “Black Business Defense Contracts” (during World War II), and a section entitled “The War on Poverty and Black Capitalism” (241–44 and 269–71). Several important books discuss President Nixon’s black capitalism initiative, with conflicting interpretations of its effectiveness. Robert J. Yancy offers an important contemporary analysis of government programs to assist black entrepreneurs. After surveying the activities of the Office of Minority Business Enterprise (established by a presidential executive order on March 5, 1969) and other government units entrusted with stimulating black capitalism,” Yancy concludes: “This study has found federal programs to assist black business to be largely unsuccessful. Black businesses which have received federal assistance bear no distinguishing charac-

Notes  231 teristics from those that have not been so assisted.” See Robert J. Yancy, Federal Government Policy and Black Business Enterprise (Cambridge, MA: Ballinger, 1974), 117. Bean’s BIG GOVERNMENT and Affirmative Action provides an even more critical assessment of government programs aimed at helping black entrepreneurs, including a discussion of how bureaucratic struggles between the OMBE and the SBA ultimately diminished the effectiveness of black capitalism (72–73, 78). Walker’s The History of Black Business in America includes a chapter entitled “The Government and Black Business: The 1960s and the 1990s,” in which she discusses some of the shortcomings of black capitalism.” For instance, she notes that “the monetary assistance provided by the federal government in promoting black business in the 25 year period from Johnson’s War on Poverty amounted to merely a fraction of the $175 billion in prime defense contracts awarded white American businesses from 1940–1944” (276). Nevertheless, she does praise the 1972 initiation of the Commerce Department’s Survey of Minority-Owned Business Enterprises (SMOBE). Before the establishment of SMOBE, comprehensive information on African American (and other nonwhite-owned) businesses, according to Walker, “was virtually nonexistent” (277). Dean Kotlowski’s 2001 work, Nixon’s Civil Rights: Politics, Principle, and Policy (Cambridge, MA: Harvard University Press, 2001), focuses on the Nixon administration’s record in the realm of civil rights, including its black capitalism initiative. This book begins with the following excerpt from a March 22, 1973, letter from Nixon to Edward L. Morgan, an aide to John Ehrlichman (Nixon’s chief domestic policy adviser): “When the historical record of the first four years is written, I am confident it will show that this administration did far more in the fields of civil rights and equal opportunity than its critics are willing to admit” (1). In reference to this assertion, Kotlowski contends, “There is much evidence to support that claim” (1). Although Nixon’s Civil Rights presents a generally positive depiction of black capitalism, Kotlowski and other less sympathetic observers of the Nixon administration do discuss the OMBE’s various problems and shortcomings. Besides discussing interagency conflict between the SBA and the OMBE regarding jurisdiction over black capitalism, Kotlowski documents the OMBE’s severe budgetary and leadership problems. 17. A cross section of these works include William H. Haddad and G. Douglas Pugh, eds., Black Economic Development (Englewood Cliffs, NJ: Prentice-Hall, 1969); Ronald W. Bailey, Black Business Enterprise: Historical and Contemporary Perspectives (New York: Basic Books, 1971); “Black Capitalism: A Study of Struggle,” Business Week, January 16, 1971, 96–102; David Myhra, “Purchasing Department Inputs to Stimulate Black Capitalism,” Journal of Purchasing, May 1970, 42–47; “Minority Economic Development,” Journal of Commercial Bank Lending, September 1970, 2–17; Edward D. Irons, “A Positive View of Black Capitalism,” Banker’s Magazine 153 (spring 1970):43–47; “Blacks Debate Black Capitalism,” Business Week, January 10,

232  Notes 1970, 38; “‘Black Capitalism’ a Misnomer, Says N.C. Mutual President,” The National Underwriter, June 4, 1971, 19–20; Fred C. Allvine, “Black Business Development,” Journal of Marketing, April 1970, 1–7; “How Students Are Helping Ghetto Businessmen,” Management Review, July 1969, 55–62; J. Lester Blocker, “The Story of Progress Plaza: Black Power + White Power = American Power,” Banking, August 1969, 41,78; Alex Poinsett, “The Economics of Liberation,” Ebony, August 1969, 150–54; “Publishing Empire Demonstrates How Minorities Can Succeed,” Commerce Today, September 18, 1972, 13–16; Paul London, “Channeling Business Expertise to Black Entrepreneurs,” Management Review, December 1969, 31–36; “The Seeds for Black Capitalism,” Business Week, November 15, 1969, 40–41; “Harlem Gets Down to Business,” Business Week, August 9, 1969, 70–72; “He Makes the Ghetto Make Money,” Business Week, May 10, 1969, 154–55; “Black Capitalism Has a Hollow Ring,” Business Week, August 30, 1969, 51–54; “Black Capitalism: A Study in Frustration, Newsweek, September 28, 1970, 70–72; “‘Black Capitalism’ Now: Success or Failure?” U.S. News & World Report, November 23, 1970, 38–41; Charlayne Hunter, “The New Black Businessmen,” Saturday Review, August 23, 1969, 27–29, 59–60; Samuel Pressley, “Black Capitalism: Does It Really Work?” Iron Age, June 15, 1972, 50–52; Dennis Gensch and Richard Staelin, “Making Black Retail Outlets Work,” California Management Review, fall 1972, 52–62; Jeffrey A. Timmons, “Black Is Beautiful—Is It Bountiful?” Harvard Business Review, November/December 1971, 81–92; Charles H. Levine, “Black Entrepreneurship in the Ghetto: A Recruitment Strategy,” Land Economics, August 1972, 269–73; William K. Tabb, “Viewing Minority Economic Development as a Problem in Political Economy,” American Economic Review, May 1972, 31–38; Dennis H. Gensch and Richard Staelin, “The Appeal of Buying Black,” Journal of Marketing Research, May 1972, 141–47; Norman Glazer, “The Missing Bootstrap,” Saturday Review, August 23, 1969, 19–21, 56–58; Charles L. Frankel, “The Uphill Road to Black Capitalism,” Nation’s Business, 60–62, 64–65; Michael Brower and Doyle Little, “White Help for Black Business,” Harvard Business Review, May 1970, 4–16, 163–64; “Chicago’s Leaders Bankroll the Blacks,” Business Week, September 13, 1969, 56; John H. Johnson, “Five Major Myths of Black Business,” Ebony, December 1971, 156–57. 18. Memorandum, Office of Minority Business Enterprise of the Department of Commerce, March 10, 1975, 1, F. Lynn May Files, Box 3, Office of Minority Business Enterprise Folder, Ford Presidential Library. 19. Interagency Report on the FEDERAL MINORITY BUSINESS DEVELOPMENT PROGRAMS, Executive Office of the President, Office of Management and Budget, Department of Commerce, Small Business Administration, March 1976, 72, Paul C. Leach Papers, Box 28, Minority Business Folder, Ford Presidential Library. Leach was the associate director for agriculture, economic development, in the Commerce Department.

Notes  233 20. Undated memorandum, Robert A. Goldwin to Dick Cheney; Thomas Sowell to Robert A. Goldwin, May 24, 1976, Robert A. Goldwin Papers, Box 27, Sowell, Thomas, Folder, Ford Presidential Library. Dick Cheney served as deputy assistant to the president. 21. Clark R. Mollenhoff, The President Who Failed: Carter Out of Control (New York: Macmillan, 1980), 254. 22. Fact Sheet 108, Minority Business Program, January 1980, Louis Martin Files, Minority Report Folder, Box 65, Carter Library; “MBDA: Bigger Can Be Better,” Black Enterprise, December 1979, 40, Louis Martin Files, MBDA-Leg. Folder, Box 61, Carter Library. 23. White House press release, July 2, 1980, Robert Malson Files, Fullilove v. Klutznick Folder, Box 13, Carter Library. Robert Malson was an assistant director of the domestic policy staff in charge of the civil rights and justice cluster. 24. Ronald Turner, “On Palatable, Palliative, and Paralytic Affirmative Action, Grutter Style,” in Law, Culture, & Africana Studies, edited by James L. Conyers Jr. (New Brunswick, NJ: Transaction Books, 2008), 109–10; John Hope Franklin and Alfred Moss, From Slavery to Freedom: A History of African Americans, 8th ed. (Boston: McGraw-Hill, 2000), 577–78. 25. Franklin and Moss, From Slavery to Freedom, 578–80; Turner, “On Palatable, Palliative, and Paralytic Affirmative Action,” 110–11. 26. Hugh Davis Graham, Collision Course: The Strange Convergence of Affirmative Action and Immigration Policy in America (New York: Oxford University Press, 2002), 2. 27. Randall Robinson, The Debt: What America Owes to Blacks (New York: Dutton, 2000), 74. 28. A New Strategy for Minority Business Development, 19–20, James H. Lowry and Associates, undated report, Louis Martin Files, A New Strategy for Minority Business Enterprise Development Folder, Box 71, Carter Library.

Chapter 1 1. This is the attitude of much of the relevant scholarship. But scholars like Jonathan J. Bean, in BIG GOVERNMENT and Affirmative Action: The SCANDALOUS HISTORY of the Small Business Administration (Lexington: University Press of Kentucky, 2001), and Juliet E. K. Walker, in The History of Black Business in America: Capitalism, Race, Entrepreneurship (New York: Macmillan, 1998), documented the government’s interest in promoting black business development before the urban disorders of the 1960s (and the Nixon administration). My book, however, appears to be the first to trace the U.S. government’s interest in black business development back to its genesis in the mid-1920s.

234  Notes 2. Lawrence D. Hogan, A Black National News Service: The Associated Negro Press and Claude Barnett, 1919–1945 (Rutherford, NJ:, Fairleigh Dickinson University Press, 1984), 38, 41. 3. Ibid., 43. 4. Ibid., 45–48. For additional information on Claude Barnett and the founding of the Associated Negro Press, see Jason Chambers, Madison Avenue and the Color Line: African Americans in the Advertising Industry (Philadelphia: University of Pennsylvania Press, 2008), 22–30. 5. Hogan, A Black National Service, 164–65. 6. Ibid., 166. 7. Ibid., 169. 8. John W. Dean, Warren G. Harding (New York: Times Books, 2004), 125–26. 9. Ibid., 125. 10. Donald J. Lisio, Hoover, Blacks, & Lily-Whites: A Study of Southern Strategies (Chapel Hill: University of North Carolina Press, 1985), 26. 11. Ibid. 12. Walker, The History of Black Business in America, 182–224; John Sibley Butler, Self-Help and Entrepreneurship among Black Americans: A Reconsideration of Race and Economics (Albany: State University of New York Press, 1991), 143–226. 13. Ellis W. Hawley, “Herbert Hoover, the Commerce Secretariat, and the Vision of an ‘Associative State,’ 1921–1928,” Journal of American History, June 1974, 121. 14. Joan Hoff Wilson, Herbert Hoover: Forgotten Progressive (Boston: Little, Brown, 1975), 91. 15. Ibid., 91–92. 16. David Greenberg, Calvin Coolidge (New York: Times Books, 2006), 112. 17. Ibid., 86. 18. Robert Sobel, Coolidge: An American Enigma (Washington, DC: Regnery, 1998), 282–83. 19. Claude A. Barnett to Herbert Hoover, May 4, 1927, Personnel File of James A. Jackson, National Personnel Records Center (NPRC), St. Louis, MO. 20. Commerce Department Employment Application, Personnel File of James A. Jackson, NPRC; Hogan, A Black News Service, 92, 104; G. James Fleming and Christian E. Burckel, eds., Who’s Who in Colored America, 7th ed. (Yonkers-on-Hudson, NY: Christian E. Burckel & Associates, 1950), 290. 21. Hogan, A Black News Service, 104. 22. O. P. Hopkins (acting director of the Bureau of Foreign and Domestic Commerce) to James A. Jackson, July 29, 1927; John T. Doyle (secretary of the U.S. Civil Service Commission) to Herbert Hoover (secretary of commerce) September 28, 1927, Personnel Files of James A. Jackson, NPRC.

Notes  235 23. James A. Jackson to Claude A. Barnett, November 15, 1927, Claude A. Barnett Papers (CABP), Box 283, Folder 5, Chicago Historical Society (CHS). 24. James A. Jackson to Claude A. Barnett, November 18, 1927, CABP, Box 283, Folder 5, CHS. 25. Ibid. 26. For specific examples of this phenomenon, see Kenneth O’Reilly, Nixon’s Piano: Presidents and Racial Politics from Washington to Clinton (New York: Free Press, 1995). 27. James A. Jackson to Claude A. Barnett, November 21, 1927, CABP, Box 283, Folder 5, CHS. 28. Ibid. 29. “Commerce Department Daily Bulletin,” November 21, 1927, CABP, Box 283, Folder 5, CHS. 30. James A. Jackson to Claude A. Barnett, November 21, 1927, CABP, Box 283, Folder 5, CHS. 31. Claude A. Barnett to James A. Jackson, November 22, 1927, CABP, Box 283, Folder 5, CHS. 32. Claude A. Barnett to James A. Jackson, November 23, 1927, CABP, Box 283, Folder 5, CHS. 33. Ibid. 34. James A. Jackson to Claude A. Barnett, November 26, 1927, CABP, Box 283, Folder 5, CHS. 35. Ibid. 36. Barnett to Jackson, November 23, 1927; C.C. Spaulding to Herbert Hoover, November 25, 1927, Commerce Department Papers, Box 133, “Commerce Department / Foreign & Domestic Commerce: Colored Industries, 1926–1927” Folder, Herbert Hoover Presidential Library (HHPL). 37. Lisio, Hoover, Blacks, & Lily-Whites, 27. 38. Spaulding to Hoover, November 25, 1927. 39. “Remarks Prepared for Presentation to the Fact-Finding Conference of Negro Business Men to Be Held at Durham, N.C., Dec. 7–8–9, 1927,” by J. A. Jackson, special agent, CABP, Box 283, Folder 5, CHS. 40. Ibid. 41. Ibid. 42. Ibid. 43. James A. Jackson to Claude A. Barnett, February 18, 1928, CABP, Box 283, Folder 5, CHS. 44. David Burner, Herbert Hoover: A Public Life (New York: Knopf, 1979), 194–96. 45. Reprint file April 1–30, 1929, Box 44, “April 10, 1928, Remarks by Heflin on Negroes in Department of Commerce” Folder, HHPL. 46. David A. Day, “Herbert Hoover and Racial Politics: The DePriest Inci-

236  Notes dent,” Journal of Negro History, winter 1980, 7. 47. Hogan, A Black National News Service, 171–72. 48. Hoover Presidential Papers, Secretary’s Files, Box 430, “Claude A. Barnett” Folder, HHPL. 49. Ibid. 50. Hogan, A Black National News Service, 186. 51. Frank M. Surface to Robert P. Lamont, July 11, 1929, James A. Jackson Personnel File, NPRC. 52. Ibid. 53. Hoover Presidential Papers, Secretary’s Files, Box 647, “Jackson, H.– Jacobsen, N.” Folder, HHPL. 54. Ibid. 55. Ibid. 56. Hoover Presidential Papers, “Colored Question” Files, Box 105, “Correspondence, 1930, January/February” Folder, HHPL. 57. Ibid. 58. Ibid. 59. Vishnu V. Oak, The Negro’s Adventure in General Business (1949; repr. (Westport, CT: Negro Universities Press, 1970), 60–62. 60. Jonathan J. Bean, Beyond the Broker State: Federal Policies toward Small Business, 1936–1961 (Chapel Hill: University of North Carolina Press, 1996), 26–27. 61. Oak, The Negro’s Adventure in General Business, 60–62. 62. Albon Holsey to James A. Jackson, April 1, 1930, CABP, Box 283, Folder 6, CHS. 63. James A. Jackson to Walter Newton (secretary to the president), December 1, 1930, Hoover Presidential Papers, “Colored Question” Files, Box 106, “Correspondence, November/December, 1930” Folder, HHPL. The eighteen African American commercial organizations listed by Jackson were Associated Negro Press, Associated Publishers, Associated Beauty Culture Schools, Bessie Coleman Aero Club, Colored Merchants Association, National Association of Negro Fraternal Societies, National Association of Negro Tailors Dressmakers and Designers, National Negro Bankers Association, National Negro Builders Association, National Beauty Culturalists League, National Negro Funeral Directors Association, National Negro Insurance Association, National Medical Association, National Association Hairdressers and Cosmeticians, National Negro Press Association, National Protective Taxicab Owners Association, National Negro Business League, National Negro Authors and Publishers Association. The eight African American professional organizations that Jackson listed were the National Association of College Deans and Registrars; National Association of Colleges for Negro Youths; National Association of Teachers in Colored Schools; National Association of Presidents in Methodist Episcopal

Notes  237 Schools; National Negro Musicians Association; National Negro Bar Association; National Association of Negro Technicians, Architects, Chemists, and Engineers; and John Andrews Clinical Society (an organization of surgeons). The seven black industrial and craft organizations listed by Jackson were the Brotherhood of Dining Car Employees, Brotherhood of Sleeping Car Porters and Maids, Federation of Railway Workers, Railway Men’s International Benevolent Association, National Postal Alliance, National Apex Hairdressers Association, and National Association of Colored Waiters and Hotel Employees. The four African American automobile associations cited by Jackson were the Atlantic– Pacific Automobile Association, National Motorists Association, United States National Auto Club, and the Co-operative Motorists Association. 64. James A. Jackson to Walter Newton (secretary to the president), December 1, 1930. 65. Ibid. 66. President’s Personal Files, Box 178, “National Negro Bankers Association, 1930–1932” Folder, HHPL. 67. George F. Garcia, “Black Disaffection from the Republican Party during the Presidency of Herbert Hoover,” Annals of Iowa, fall 1980, 462. 68. Ibid., 463–64. 69. Ibid., 466. 70. Ibid. 71. Ibid., 467–468. 72. Hoover Presidential Papers, Secretary’s File, Box 647 “Jackson, H.– Jacobsen, N.” Folder, HHPL. 73. Hoover presidential papers, “Colored Question” Files, Box 106, “Correspondence September 1932” Folder, HHPL. 74. Hoover presidential papers, “Colored Question” Files, Box 106, “Correspondence July 1932” Folder, HHPL. 75. Ibid. 76. Ibid. 77. Nancy J. Weiss, Farewell to the Party of Lincoln: Black Politics in the Age of FDR (Princeton, NJ: Princeton University Press, 1983), 209–35. 78. Department of Commerce Memo, July 1, 1933, James A. Jackson Personnel Files, NPRC. 79. J. B. Blayton to Daniel C. Roper, July 21, 1933, James A. Jackson Personnel Files, NPRC. 80. Weiss, Farewell to the Party of Lincoln, 48. 81. Ibid., 50; Department of Commerce Files, RG 40, Box 683, Folder 88449, National Archives. Jones commenced his duties on October 19, 1933. 82. Weiss, Farewell to the Party of Lincoln, 50. 83. Julius Klein to Claude A. Barnett, January 8, 1934, CABP, Box 283, Folder 6, CHS.

238  Notes 84. James A. Jackson to Herbert Hoover, March 31, 1934, Post-Presidential General Correspondence, Box 128, “Jackson, I–Je” Folder, HHPL. 85. Ibid. 86. Herbert Hoover to James A. Jackson, April 5, 1934, Post-Presidential General Correspondence, Box 128, “Jackson, I–Je” Folder, HHPL. 87. Ibid. 88. Robert E. Weems Jr., Desegregating the Dollar: African American Consumerism in the Twentieth Century (New York: New York University Press, 1998), 49; RG 40, General Records of the Department of Commerce, Box 17, Miscellaneous Folder, National Archives. 89. Fleming and Burckel, Who’s Who in Colored America 1950, 313; Charles H. Wesley, The History of Alpha Phi Alpha: A Development in College Life Eleventh Edition (Chicago: Foundation Publishers, 1969), 25–42. 90. Plan of Work of the Advisor on Negro Affairs to the Commerce Department, November 17, 1933, Eugene Kinckle Jones Personnel File, NPRC. 91. Eugene Kinckle Jones, “Purchasing Power of Negroes in the U.S. Estimated at Two Billion Dollars,” Domestic Commerce, January 10, 1935, 1. 92. Ibid. 93. The Negro in Business 1936: A Bibliography, CABP, Box 283, Folder 4, CHS. 94. Joseph R. Houchins, Negro Chambers of Commerce (Washington, DC: U.S. Department of Commerce, 1936), foreword, RG 40, General Records of the Department of Commerce, Box 683, Folder 88449, National Archives. Fiftyone questionnaires were sent out, and twenty-one local Negro Chambers of Commerce responded. 95. Houchins, Negro Chambers of Commerce, 1, 3. 96. Ibid., 3. 97. Ibid., 4. 98. Ibid., 5. 99. Ibid., 7. 100. RG40, General Records of the Department of Commerce, Box 683, Folder 88449, National Archives. 101. Ibid. 102. Ibid. 103. Ibid. 104. Ibid. 105. Ibid. 106. Ibid. 107. Ibid. 108. “Charles Hall, Statistician, Retires Post,” Washington Tribune, May 14, 1938, Charles E. Hall Personnel Files, NPRC. 109. Ibid.

Notes  239 110. Examples include William L. Austin (chief statistician for agriculture) to Sam L. Rogers (director of the Census Bureau), February 16, 1921; Charles E. Hall to Herbert Hoover (secretary of Commerce), March 19, 1921; Robert L. Vann (chairman of Advisory Committee on Negro Affairs for the Commerce Department) to Daniel C. Roper (secretary of commerce), June 13, 1934; Oliver C. Short (executive assistant to director of Census Bureau) to Ismar Baruch (U.S. Civil Service Commission), April 23, 1935, Charles E. Hall Personnel Files, NPRC. 111. “Charles Hall, Statistician, Retires Post.” 112. Mary Fitzbutler Waring to Daniel C. Roper, May 24, 1935, Charles E. Hall Personnel Files, NPRC. 113. Daniel C. Roper to James Roosevelt, June 16, 1937, RG 40, General Files of the Commerce Department, Box 18, “Negroes” Folder, National Archives. 114. Emmett J. Scott to Daniel C. Roper, June 9, 1937, Charles E. Hall Personnel Files, NPRC. 115. Daniel C. Roper to William L. Austin, June 29, 1937, Charles E. Hall Personnel Files, NPRC. 116. Ibid. 117. Charles E. Hall to Daniel C. Roper, July 14, 1937, RG 40, General Files of the Commerce Department, Box 683, Folder 88449, National Archives. 118. Charles E. Hall, “Retail Business,” in Negroes in the United States: 1920–1932 (Washington, DC: U.S. Department of Commerce, 1934), CABP, Box 283, Folder 4, CHS. 119. Memorandum, Commerce Department Personnel Committee to Daniel C. Roper, May 6, 1938, Charles E. Hall Personnel Files, NPRC. 120. Memorandum, William L. Austin to Daniel C. Roper, April 4, 1938, Charles E, Hall Personnel Files, NPRC. For more information on Houchins, see Adam Green, Selling The Race: Culture, Community, and Black Chicago, 1940–1955 (Chicago: University of Chicago Press, 2007), 106. 121. Memorandum, Commerce Department Personnel Committee to Daniel C. Roper, May 6, 1938, Charles E. Hall Personnel Files, NPRC. 122. William L. Austin to Charles E. Hall, May 28, 1938, Charles E. Hall Personnel Files, NPRC. 123. “Application for Annuity,” Charles E. Hall Personnel Files, NPRC. 124. M. Kerlin to Harry L. Hopkins (secretary of commerce), August 22, 1940, RG 40, General Files of the Commerce Department, Box 683, Folder 88449, National Archives.

240  Notes

Chapter 2 1. G. James Fleming and Christian E. Burckel, eds., Who’s Who in Colored America, 7th ed. (Yonkers-on-Hudson, NY: Christian E. Burckel & Associates, 1950), 330. 2. Emmer M. Lancaster to A. W. Brown, June 13, 1940, RG 40, Records of the Adviser on Negro Affairs, Box 10, Folder B, National Archives. A. W. Brown headed the Department of Commerce and Finance at the State Colored Normal, Industrial, Agricultural and Mechanical College of South Carolina (now known as South Carolina State). Lancaster sent similar letters to other prominent African American businessmen and business educators. 3. Emmer M. Lancaster to L. C. Blount, July 30, 1940, RG 40, Records of the Adviser on Negro Affairs, Box 10, Folder B, National Archives; Emmer M. Lancaster to Elsie Austin, October 31, 1940, RG 40, General Files of the Commerce Department, Box 10, Folder A, National Archives. L. C. Blount was the secretary and general manager of the Great Lakes Mutual Insurance Company, and Elsie Austin was the president of the Delta Sigma Theta Sorority. 4. Memorandum, Emmer M. Lancaster to Norman Baxter, December 12, 1940, RG 40, Records of the Adviser on Negro Affairs, Box 14, Folder B, National Archives. 5. Ibid. 6. Press release, Department of Commerce, March 13, 1941, RG 40, Records of the Adviser on Negro Affairs, Box 17, Miscellaneous Folder, National Archives. 7. Leon M. Wallace Sr., “National Defense and the Negro in Business,” RG 40, Records of the Adviser on Negro Affairs, Box 17, Miscellaneous Folder, National Archives. This was a presentation delivered on April 19, 1941, at the Commerce Department’s first annual Conference on the Negro in Business. 8. John Hope Franklin and Alfred Moss, From Slavery to Freedom: A History of African Americans, 8th ed. (Boston: McGraw-Hill, 2000), 479–81. 9. Memorandum, Emmer M. Lancaster to Norman W. Baxter, June 28, 1941, RG 40, Records of the Adviser on Negro Affairs, Box 8, Folder L, National Archives. 10. Memorandum, Emmer M. Lancaster to Norman W. Baxter, January 9, 1942, RG 40, Records of the Adviser on Negro Affairs, Box 8, Folder L, National Archives. 11. Memorandum, Emmer M. Lancaster to State Planning Committees, April 6, 1942, RG 40, Records of the Adviser on Negro Affairs, Box 17, Miscellaneous Folder, National Archives. 12. “First Annual Report of the Special Advisor to the Secretary [of Commerce] on Negro Affairs,” July 15, 1943, RG 40, Records of the Adviser on Negro Affairs, Box 8, Folder L, National Archives.

Notes  241 13. Department of Commerce press release, October 1, 1942, RG 40, Records of the Adviser on Negro Affairs, Box 8A, Negro Affairs Folder, National Archives. 14. Ibid. 15. Ibid. 16. “First Annual Report of the Special Advisor to the Secretary [of Commerce] on Negro Affairs.” 17. Ibid. 18. Ibid. 19. Emmer M. Lancaster to Dr. William H. Bell (president of Alcorn A&M College), November 12, 1941, RG 40, Records of the Adviser on Negro Affairs, Box 23, Negro Theaters Folder, National Archives. Lancaster sent the same letter to other prominent African Americans. 20. William H. Bell to Emmer M. Lancaster, November 25, 1941; B. T. Bradshaw to Emmer M. Lancaster, November 15, 1941; R. W. McDougal to Emmer M. Lancaster, November 14, 1941, RG 40, Records of the Adviser on Negro Affairs, Box 23, Negro Theaters Folder, National Archives. 21. Fourth Annual Report of Banking Institutions Owned and Operated By Negroes, July 1, 1944, U.S. Department of Commerce, RG 40, Records of the Adviser on Negro Affairs, Box 17, Negro in Business Conference Folder, National Archives. 22. First Annual Report of Insurance Companies Owned and Operated by Negroes, March 9, 1943, U.S. Department of Commerce, RG 40, Records of the Adviser on Negro Affairs, Box 17, Negro in Business Conference Folder, National Archives. 23. First Annual Report of Lending Institutions Owned and Operated by Negroes, February 1944, U.S. Department of Commerce, RG 40, Records of the Adviser on Negro Affairs, Box 17, Negro in Business Conference Folder, National Archives. 24. Memorandum, Emmer M. Lancaster to Norman W. Baxter, May 12, 1943, RG 40, Records of the Adviser on Negro Affairs, Box 8, Folder L, National Archives. 25. Ibid. 26. Ibid. 27. Post-War Planning and the Negro in Business, August 1, 1943, 1, RG 40, Records of the Adviser on Negro Affairs, Box 8A, Negro Affairs Folder, National Archives. 28. Ibid. 29. Ibid., 4–5. 30. Robert E. Weems Jr., Desegregating the Dollar: African American Consumerism in the Twentieth Century (New York: New York University Press, 1998), 32–35.

242  Notes 31. David J. Sullivan, “Research and Its Relationship to Negro Business,” December 1, 1943, 7–8; RG 40, Records of the Adviser on Negro Affairs, Box 23, Post-War Planning Committee and Negro Business Folder, National Archives. 32. Post-War Planning and the Negro in Business, August 1, 1943, 3–4, RG 40, Records of the Adviser on Negro Affairs, Box 8A, Negro Affairs Folder, National Archives. 33. Memorandum, Emmer M. Lancaster to Henry A. Wallace, July 29, 1946, RG 40, Records of the Adviser on Negro Affairs, Box 17, Negro in Business Conference Folder, National Archives. 34. Ibid. 35. Memorandum, Emmer M. Lancaster to Gerald Ryan, August 19, 1946, RG 40, Records of the Adviser on Negro Affairs, Box 17, Negro in Business Conference Folder, National Archives. Gerald Ryan was an administrative officer in the Commerce Department. 36. List of delegates for the second Conference on the Negro in Business, RG 40, Records of the Adviser on Negro Affairs, Box 17, Negro in Business Conference Folder, National Archives. 37. Remarks by W. Averell Harriman at the second Conference on the Negro in Business, October 17, 1946, RG 40, Records of the Adviser on Negro Affairs, Box 16, Programs Folder, National Archives. 38. Official Program, second Conference on the Negro in Business, October 17–19, 1946, RG 40, Records of the Adviser on Negro Affairs, Box 16, Programs Folder, National Archives. 39. Comments regarding second Conference on the Negro in Business, RG 40, Records of the Adviser on Negro Affairs, Box 8A, Negro Affairs Folder, National Archives. 40. Emmer M. Lancaster to Colonel Newman Smith, March 26, 1946, RG 40, Records of the Adviser on Negro Affairs, Box 20, Government Contract Awards Folder, National Archives. 41. Memorandum, Richmond (Virginia) Office to Advisor on Negro Affairs, March 20, 1947, RG 40, Records of the Adviser on Negro Affairs, Box 8A, Negro Affairs Folder, National Archives. 42. Ray L. Miller to Emmer M. Lancaster, April 4, 1947, RG 40, Records of the Adviser on Negro Affairs, Box 8A, Negro Affairs Folder, National Archives. 43. George C. Payne to Emmer M. Lancaster, April 3, 1947, RG 40, Records of the Adviser on Negro Affairs, Box 8A, Negro Affairs Folder, National Archives. 44. Commerce Department press release, October 15, 1945, RG 40, Records of the Adviser on Negro Affairs, Box 20, Miscellaneous Folder IV, National Archives. 45. Memorandum, Emmer M. Lancaster to Bernard L. Gladieux, March 28, 1947, RG 40, Records of the Adviser on Negro Affairs, Box 20, Miscellaneous Folder IV, National Archives.

Notes  243 46. Memorandum, Emmer M. Lancaster to Bernard L. Gladieux, July 14, 1948, RG 40, Records of the Adviser on Negro Affairs, Box 20, Memorandum Folder, National Archives. 47. Emmer M. Lancaster to R. A. Billings, December 10, 1947, RG 40, Records of the Adviser on Negro Affairs, Box 3, Folder M, National Archives. R. A. Billings was the chairman of the 1947 Phi Beta Sigma Conclave Committee. 48. Memorandum, Emmer M. Lancaster to Bernard L. Gladieux, December 12, 1949; A. Langston Taylor and James L. Armstrong to Emmer M. Lancaster, December 9, 1949, RG 40, Records of the Adviser on Negro Affairs, Box 20, Memorandum Folder, National Archives. Taylor and Armstrong were chairmen of the business clinic that was part of the thirty-fifth annual meeting of the Phi Beta Sigma fraternity. 49. Press release, U.S. Commerce Department, no date listed; official program, Ohio Small Business Clinic and Trade Show, September 23, 24, 25, 1951, RG 40, Records of the Adviser on Negro Affairs, Box 8A, Office of the Advisor on Negro Affairs Folder, National Archives; available at http://www.iota1929. org/history.html. 50. Emmer M. Lancaster to Oscar L. Chapman, January 19, 1948, RG 40, Records of the Adviser on Negro Affairs, Box 1, Folder A-G, National Archives. 51. Official program, third Conference on the Negro in Business, April 1, 2, 3, 1948, p. 6, RG 40, Records of the Adviser on Negro Affairs, Box 16, Programs Folder, National Archives. 52. Press release, U.S. Department of Commerce, February 10, 1948, RG 40, Records of the Adviser on Negro Affairs, Box 16, Conference Publicity Folder, National Archives. 53. Ibid. 54. Memorandum, W. J. Kwesi Mould, third Conference on the Negro in Business, April 2, 1948, RG 40, Records of the Adviser on Negro Affairs, Box 16, Conference Publicity Folder, National Archives. 55. Press release, U.S. Department of Commerce, February 10, 1948, RG 40, Records of the Adviser on Negro Affairs, Box 16, Conference Publicity Folder; official program, third Conference on the Negro in Business, April 1, 2, 3, 1948, p. 6, RG 40, Records of the Adviser on Negro Affairs, Box 16, Programs Folder, National Archives. 56. “Visitors & Delegates to the Fourth Conference on the Negro in Business,” RG 40, Records of the Adviser on Negro Affairs, Box 15, Miscellaneous Folder, National Archives. 57. “Remarks of Secretary of Commerce Charles Sawyer Welcoming Delegates to the Fourth Conference on the Negro in Business,” April 20, 1949, RG40, Records of the Adviser on Negro Affairs, Box 15, Official Proceedings Folder, National Archives.

244  Notes 58. Official program, fourth Conference on the Negro in Business, April 20–23, 1949, RG 40, Records of the Adviser on Negro Affairs, Box 16, Programs Folder, National Archives. 59. Ibid. 60. “Educational Institutions Represented at the Fourth Conference on the Negro in Business,” RG 40, Records of the Adviser on Negro Affairs, Box 15, Miscellaneous Folder, National Archives. 61. Official program, fourth Conference; press release, Department of Commerce, February 9, 1949, RG 40, Records of the Adviser on Negro Affairs, Box 16, Conference Publicity Folder, National Archives. 62. Official program, fourth Conference. The individuals who spoke at the session “A Business Of My Own” were A. Walker Taylor, owner of the Taylor School of Dress Design in Columbus, OH; William H. Porter, owner of the Porter Paint and Wall Paper Company of Detroit; E. L. James, manager of the James Produce Company in Charleston, WV; Charles M. Brown, grower and shipper of onions and potatoes in Kenton, OH; Jesse H. Mitchell, president of the Industrial Bank of Washington, DC; George W. Cox, vice president of the North Carolina Mutual Life Insurance Company of Durham; Edward Austin, manager of the Washington, DC–based Glen Trucking Company; and A. A. Alexander, co-owner of a civil engineering firm based in Des Moines, IA. 63. Official Program, fifth Conference on the Negro in Business, April 13–15, 1950, RG 40, Records of the Adviser on Negro Affairs, Box 16, Programs Folder, National Archives. 64. “The Display Exhibit of the Fifth Conference on the Negro in Business,” RG 40, Records of the Adviser on Negro Affairs, Box 16, Conference Publicity Folder, National Archives. 65. Ibid. 66. Official Program, fifth Conference. 67. Press release, Department of Commerce, no date, RG 40, Records of the Adviser on Negro Affairs, Box 16, Conference Publicity Folder; official program, sixth Conference on the Negro in Business, March 29–31, 1951, RG 40, Records of the Adviser on Negro Affairs, Box 16, Programs Folder, National Archives. 68. Official Program, seventh Conference on the Negro in Business, April 17–19, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 16, Programs Folder; “Suggested Radio and TV Announcements on the Seventh Conference on the Negro in Business,” Department of Commerce, no date, RG 40, Records of the Adviser on Negro Affairs, Box 16, Conference Publicity Folder, National Archives. 69. Official program, seventh Conference. 70. Ludlow W. Werner, “Public Relations and Negro Business,” speech to the Seventh Conference on the Negro in Business, April 18, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 17, Speeches, Conferences Folder, National Archives.

Notes  245 71. “Outline of Conference Program and Speakers,” seventh Conference on the Negro in Business, RG 40, Records of the Adviser on Negro Affairs, Box 16, Programs Folder, National Archives. 72. “Partial Report,” eighth Conference on the Negro in Business, RG 40, Records of the Adviser on Negro Affairs, Box 16, Programs Folder, National Archives. 73. “The Eighth Conference on the Negro in Business,” RG 40, Records of the Adviser on Negro Affairs, Box 16, Programs Folder, National Archives. 74. Remarks by Mr. Pedro P. Calla, eighth Conference on the Negro in Business, RG 40, Records of the Adviser on Negro Affairs, Box 17, Speeches, Conferences Folder, National Archives. 75. Ibid. 76. Press release, Department of Commerce, March 14, 1953, RG 40, Records of the Adviser on Negro Affairs, Box 16, Programs Folder, National Archives. 77. “The Eighth Conference on the Negro in Business,” RG 40, Records of the Advisor on Affairs, Box 16, Programs Folder, National Archives. 78. Ibid. 79. Summary Reports of a Fact Finding Survey on Employment and Business Conditions among the Negro People, Department of Commerce, December 1949, Introduction, RG 40, Records of the Adviser on Negro Affairs, Box 8A, Negro Affairs Folder, National Archives. 80. Ibid., 2. 81. I. J. Chisolm to U.S. Department of Commerce, July 28, 1948, RG 40, Records of the Adviser on Negro Affairs, Box 1, Folder C, National Archives, Ms. Chisolm was the director of promotion and publicity for the Southern Field Division of the National Urban League; Don Brown to Emmer M. Lancaster, November 5, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 3, Folder M. Don Brown was an advertising representative for the Johnson Publishing Company; Ann Crawford to U.S. Department of Commerce, October 7, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 1, Folder C. Ms. Crawford was the publisher of Modern Tresses magazine; Robert S. Browne to Emmer M. Lancaster, January 15, 1949, RG 40, Records of the Adviser on Negro Affairs, Box 3, Folder M. Mr. Browne, then an instructor at Dillard University, went on to become a prominent black economist who became the founding editor of the Review of Black Political Economy; Thelma Dale to Emmer M. Lancaster, June 6, 1952, Records of the Adviser on Negro Affairs, Box 1, Folder D, National Archives. Ms. Dale was the assistant campaign manager of the Progressive Party. 82. Hugh H. Smythe (for Dr. Du Bois) to Office of Adviser on Negro Affairs, October 27, 1947, RG 40, Records of the Adviser on Negro Affairs, Box 1, Folder D, National Archives.

246  Notes 83. Emmer M. Lancaster to Archie A. Alexander, January 12, 1951, RG 40, Records of the Adviser on Negro Affairs, Box 1, Folder A, National Archives. The six black businessmen whose achievements were publicized by the Voice of America were Charles C. Spaulding, Paul Williams, Archie A. Alexander, Lloyd Kerford, Sara Spencer Washington, and Sidney Barthwell. As Emmer Lancaster noted in a January 10, 1951, memorandum to Delia Ranally of the State Department, all of these individuals had been featured in Ebony magazine. 84. Carol E. Anderson, Eyes of the Prize: The United Nations and the African American Struggle for Human Rights, 1944–1955 (Cambridge: Cambridge University Press, 2003); Mary L. Dudziak, Cold War Civil Rights: Race and the Image Of American Democracy (Princeton, NJ: Princeton University Press, 2000); Phillip A. Klinkner, with Rogers A. Smith, The Unsteady March: The Rise and Decline of Racial Equality in America (Chicago: University of Chicago Press, 1999). Dudziak succinctly summed up the Truman administration’s linkage of U.S. domestic racial policies with international considerations: Apart from electoral politics and pressure from civil rights activists, the Truman administration had another reason to address domestic racism: other countries were paying attention to the problem. Newspapers in many corners of the world covered stories of racial discrimination against African Americans. When nonwhite foreign dignitaries visited the United States and encountered discrimination, it led to serious diplomatic consequences. And as tension between the United States and the Soviet Union increased in the years after the war [World War II], the Soviets made effective use of U.S. failings in this area in anti-American propaganda. (Cold War Civil Rights, 26–27) 85. Emmer M. Lancaster to B. T. Bradshaw, December 12, 1951, RG 40, Records of the Adviser on Negro Affairs, Box 19, Community Files/Reports (A-C) Folder, National Archives. Mr. Bradshaw was president of the Richmond–based Virginia Mutual Life Insurance Company. 86. Lancaster to Bradshaw, December 12, 1951. 87. Ibid. The states represented on Lancaster’s National Advisory Committee on Defense Contracts for Small Firms Operated by Negroes were Alabama, California, Florida, Georgia, Illinois, Kentucky, Louisiana, Maryland, Massachusetts, Missouri, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, and Virginia. The cities represented were Birmingham, Tuskegee (AL), Los Angeles, Daytona Beach, Jacksonville, Tallahassee, Atlanta, Chicago, Louisville, Baton Rouge, New Orleans, Baltimore, Boston, St. Louis, New York City, Yonkers, Durham, Cincinnati, Columbus, Philadelphia, Pittsburgh, Memphis, Nashville, Austin, Dallas, Houston, Danville (VA), and Richmond.

Notes  247 88. Memorandum, Carlton Hayward to Emmer Lancaster, April 8, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 19, Community Files/Reports (A-C) Folder, National Archives. 89. Memorandum, Carlton Hayward to Emmer Lancaster, April 29, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 19, Community Files/Reports (A-C) Folder, National Archives. 90. Memorandum, Carlton Hayward to Emmer Lancaster, May 2, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 19, Community Files/Reports (A-C) Folder, National Archives. 91. Memorandum, Prentiss M. Terry to George A. Moore, April 2, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 19, Community Files/ Reports (A-C) Folder. Terry managed the Commerce Department’s Louisville district office, and Moore was Terry’s regional director based in Cleveland. Memorandum, Edwin Bates to Carlton Hayward, April 4, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 19, Community Files/Reports (A-C) Folder. Bates managed the Commerce Department’s Los Angeles district office. Memorandum, C. Roy Mundee to Carlton Hayward, April 8, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 19, Community Files/ Reports (A-C) Folder. Mundee was a Commerce Department regional director based in Richmond. Memorandum, Carlton Hayward to Emmer Lancaster, May 13, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 19, Community Files/Reports (A-C) Folder; memorandum, Merrill C. Lofton to Carlton Haywood, May 14, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 19, Community Files/Reports (A-C) Folder. Lofton was the regional director of the Commerce Department’s Atlanta office. Memorandum, Carlton Hayward to Emmer Lancaster, June 19, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 19, Community Files/Reports (A-C) Folder, National Archives. 92. Memorandum, John Weber to Carlton Hayward, April 8, 1952, RG 40, Records of the Adviser on Negro Affairs, Box 19, Community Files/Reports (A-C), National Archives. John Weber managed the Commerce Department’s Baltimore district office. The six black-owned businesses cited as viable candidates for government defense contracts were the Crayton Sausage Company (Baltimore), Henry J. Parks Company (Baltimore), J. W. Jewett Packing Company (St. Michaels), American Bottling Company (Baltimore), Johnnes Potato Chips (Baltimore), and Smith Tea and Coffee Company (Baltimore). 93. See Weems, Desegregating the Dollar, chap. 2. 94. K. Hancock to Adviser on Negro Affairs, May 11, 1953, RG 40, Records of the Adviser on Negro Affairs, Box 20, Miscellaneous Folder II, National Archives. Ms. K. Hancock was the secretary-treasurer of Brodie’s Home Appliances in San Francisco and was seeking information and advice concerning the Negro market. In the weeks immediately following the May 9, 1953, Kiplinger

248  Notes Washington Letter, Lancaster’s office received 540 inquiries about various aspects of the black consumer market. 95. Memorandum, Emmer M. Lancaster to John C. Worthy, June 24, 1953, RG 40, Records of the Assistant Secretary of Commerce for Administration, Box 245, Negroes Folder, National Archives. Worthy was the Assistant Secretary of Commerce for Administration. 96. Emmer M. Lancaster to Miss K. Hancock, June 2, 1953, RG 40, Records of the Adviser on Negro Affairs, Box 20, Miscellaneous Folder II, National Archives. 97. “Speech Outline on the Negro Market,” annual convention of the NNPA, June 18, 1953, RG 40, Records of the Assistant Secretary of Commerce for Administration, Box 245, Negroes Folder, National Archives. 98. F. Leslie Platt to Emmer M. Lancaster, September 11, 1953, Emmer Lancaster Personnel Files, NPRC, St. Louis, Missouri. Platt was the Commerce Department’s assistant personnel operations officer. 99. Ibid. 100. Application for Federal Employment, approved August 13, 1962, Lancaster submitted this application, which resulted in his successful transfer from the U.S. Department of Labor to the Business and Defense Services Administration; J. A. Mulcahy to Emmer M. Lancaster, February 26, 1968. Mulcahy was a personnel officer with the U.S. Civil Service Commission. “Notification of Personnel Action,” April 4, 1968, Emmer Lancaster Personnel Files, NPRC. 101. Jonathan J. Bean, BIG GOVERNMENT and Affirmative Action: The SCANDALOUS HISTORY of the Small Business Administration (Lexington: University Press of Kentucky, 2001), 7. 102. David A. Nichols, A Matter of Justice: Eisenhower and the Beginning of the Civil Rights Revolution (New York: Simon & Schuster, 2007). The introduction to this revisionist work related to Eisenhower’s record on civil rights includes the following observation: The myth persists that Eisenhower was, as even Stephen E. Ambrose, an admiring biographer put it, “no leader at all” in civil rights and that his “refusal to lead was almost criminal.” In 1991, Ambrose endorsed what he called “the best single-volume now available on the Eisenhower presidency,” in which Chester Pach, Jr., and Elmo Richardson asserted that Eisenhower’s sympathies “clearly lay with southern whites, who he patiently said needed time to adjust, not with southern blacks, whom he impatiently criticized for wanting basic rights too soon.” Arthur Schlesinger, Jr. in The Cycles of American History, called racial justice and McCarthyism “the great moral issues of the Eisenhower years” but concluded that “Eisenhower evaded them both.” Tom Wicker in a recent book in Schlesinger’s The American Presidents series, contends that, given Eisenhower’s popularity, he “might well have swung most of the nation in acceptance,

Notes  249 however reluctant, of the Supreme Court’s interpretation of the Constitution.” Instead he was guilty of “a moral failing and a lack of vision.” (1–2) 103. Kenneth O’Reilly, Nixon’s Piano: Presidents and Racial Politics from Washington to Clinton (New York: Free Press, 1995), 165. 104. Ibid., 167–68. According to O’Reilly, the few blacks associated with the Eisenhower administration, who formed an Equality Committee, included E. Frederic Murrow, Val Washington, Joseph Douglas, James Nabrit, Samuel Pierce, and Ernest Wilkins. 105. Nichols, A Matter of Justice, 35. 106. Denton L. Watson, Lion in the Lobby: Clarence Mitchell Jr.’s Struggle for the Passage of Civil Rights Laws (New York: Morrow, 1990), 229. 107. Summary of Meeting between the President’s Committee on Government Contracts and Representatives of Industry, December 14, 1954, PPS 307.28.2, Nixon Library and Birthplace, Yorba Linda, CA. 108. Bean, BIG GOVERNMENT and Affirmative Action, 2. 109. Ibid., 7–36. Bean implies that the SBA did not consider small black businesses to be a part of its constituency until Eugene P. Foley became administrator of the agency in August 1963.

Chapter 3 1. A cross section of the various works relating to the civil rights movement include Taylor Branch, Parting the Waters: America in the King Years, 1954–1963 (New York: Simon & Schuster, 1988); Taylor Branch, Pillar of Fire: America in the King Years, 1963–1965 (New York: Simon & Schuster, 1998); Claybourne Carson, In Struggle: SNCC and the Black Awakening of the 1960s (Cambridge, Mass.: Harvard University Press, 1981); William H. Chafe, Civilities and Civil Rights: Greensboro, North Carolina and the Black Struggle for Freedom (New York: Oxford University Press, 1980); Vicki L. Crawford, Jacqueline Anne Rouse, and Barbara Woods, eds., Women in the Civil Rights Movement: Trailblazers and Torchbearers, 1941–1965 (Bloomington: Indiana University Press, 1993); John Dittmer, Local People: The Struggle for Civil Rights in Mississippi (Urbana: University of Illinois Press, 1994); David J. Garrow, Bearing the Cross: Martin Luther King, Jr. and the Southern Christian Leadership Conference (New York: Morrow, 1986); David J. Garrow, Protest at Selma: Martin Luther King, Jr. and the Voting Rights Act of 1965 (New Haven, CT: Yale University Press, 1978); Henry Hampton and Steve Fayer, Voices of Freedom: An Oral History of the Civil Rights Movement from the 1950s through the 1980s (New York: Bantam Books, 1990); Chana Kai Lee, For Freedom’s Sake: The Life of Fannie Lou Hamer (Urbana: University of Illinois

250  Notes Press, 1999); Manning Marable, Race, Reform, and Rebellion: The Second Reconstruction in Black America, 1945–1982 (Jackson: University of Mississippi Press, 1984); August Meier and Elliott Rudwick, CORE: A Study in the Civil Rights Movement (New York: Oxford University Press, 1973); Anne Moody, Coming of Age in Mississippi (New York: Dial Press, 1968); Aldon D. Morris, The Origins of the Civil Rights Movement: Black Communities Organizing for Change (New York: Free Press, 1984); Kenneth O’Reilly, Racial Matters: The FBI’s Secret File on Black America, 1960–1972 (New York: Free Press, 1989); Charles M. Payne, I’ve Got The Light of Freedom: The Organizing Tradition and the Mississippi Freedom Struggle (Berkeley: University of California Press, 1995); Howell Raines, My Soul Is Rested: Movement Days in the Deep South Remembered (New York: Putnam, 1977); Lewis A. Randolph and Gayle T. Tate, Rights for a Season: The Politics of Race, Class, and Gender in Richmond, Virginia (Knoxville: University of Tennessee Press, 2003). 2. Walter B. Weare, Black Business in the New South: A Social History of the North Carolina Mutual Life Insurance Company (Urbana: University of Illinois Press, 1973), 280. 3. Jonathan J. Bean, BIG GOVERNMENT and Affirmative Action: The SCANDALOUS HISTORY of the Small Business Administration (Lexington: University Press of Kentucky, 2001), 45. 4. H. Naylor Fitzhugh, ed., Problems and Opportunities Confronting Negroes in the Field of Business (Washington, DC: U.S. Department of Commerce, 1962), 11. 5. Ibid., 12. 6. Kenneth O’Reilly, Nixon’s Piano: Presidents and Racial Politics from Washington to Clinton (New York: Free Press, 1995), 189–237. 7. Fitzhugh, Problems and Opportunities, 16. 8. Robert E. Weems Jr., Black Business in the Black Metropolis: The Chicago Metropolitan Assurance Company, 1925–1985 (Bloomington: Indiana University Press, 1996), 103–4. 9. Ibid., 16. 10. Fitzhugh, Problems and Opportunities, 16. 11. Ibid., 19. 12. Ibid., 39. 13. Ibid., 40. 14. Ibid., 47–48. 15. Ibid., 74. 16. Ibid., 75. 17. Ibid. 18. Ibid. 19. Ibid., 60. 20. Ibid., 63.

Notes  251 21. Ibid., 66. 22. Ibid., 89. 23. Ibid., 99. 24. Ibid., 54. 25. Ibid., 54–55. 26. Bean, BIG GOVERNMENT and Affirmative Action, 36. 27. Ibid. 28. Nick Bryant, The Bystander: John F. Kennedy and the Struggle for Black Equality (New York: Basic Books, 2006), 430. 29. Bean, BIG GOVERNMENT and Affirmative Action, 46. 30. Ibid. The other cities where 6-by-6 pilot programs were established were Camden, NJ, New York, San Francisco, and Washington, DC. 31. Bean, BIG GOVERNMENT and Affirmative Action, 46–47. 32. Ibid., 47. 33. Bryant, The Bystander, 430. 34. Bean, BIG GOVERNMENT and Affirmative Action, 47. 35. “Economic Opportunity Loans,” vol. 1 of Administrative History of the Small Business Administration, 128, container 1, Johnson Presidential Library. 36. Bean, BIG GOVERNMENT and Affirmative Action, 47. 37. Judith Ann Heimlich, “The Business of Poverty: The Small Business Administration, the Economic Opportunity Act, and the Problem of Political Innovation” (PhD diss., Columbia University, 1967), 234. 38. Press release, “Statement by Eugene P. Foley, Administrator of Small Business Administration, at a Press Conference in City Hall, April 27, 1965, Launching Small Business Phase of War on Poverty in Philadelphia,” Records of the Small Business Administration, Microfilm Roll 4, Johnson Presidential Library. 39. Press release, “Statement by Eugene P. Foley, Administrator of Small Business Administration, at a Press Conference in City Hall, Chicago, May 4, 1965, Launching Small Business Phase of War on Poverty in Chicago,” Records of the Small Business Administration, Microfilm Roll 4, Johnson Presidential Library. 40. Memorandum, Eugene P. Foley to Joseph Califano, August 22, 1965, Lyndon B. Johnson Papers, Container 305, Folder FG 283 SBA 6/1/65-2/16/66, Johnson Presidential Library. 41. Memorandum, Rees D. Stith (acting director of the Office of Information) to Hayes Redmond (office of Bill Moyers / White House), October 22, 1965, Lyndon B. Johnson Papers Container 305, Folder FG 283 SBA 6/1/652/16/66, Johnson Presidential Library. 42. Bean, BIG GOVERNMENT and Affirmative Action, 50. 43. Ibid., 55. 44. Memorandum, Bernard L. Boutin to W. Marvin Watson, July 25, 1966, Lyndon B. Johnson Papers, Container 305, Folder FG 283 SBA 2/17/6611/28/66, Johnson Presidential Library.

252  Notes 45. Special notice, Bernard L. Boutin to Members of Congress, December 9, 1966, Records of the SBA, Microfilm Roll 17, Johnson Presidential Library. 46. Memorandum, Bernard L. Boutin to SBA Area Administrators, Regional Directors and Branch Managers, November 9, 1966, Records of the SBA, Microfilm Roll 17, Johnson Presidential Library. 47. Special notice, Bernard L. Boutin to Members of Congress, February 20, 1967, Records of the SBA, Microfilm Roll 8, Johnson Presidential Library. 48. Statement of Bernard L. Boutin, Administrator, Small Business Administration, before the Committee on Education and Labor, House of Representatives, June 20, 1967, Records of the SBA, Microfilm Roll 8, Johnson Presidential Library. 49. Bean, BIG GOVERNMENT and Affirmative Action, 61. An important elaboration of Boutin’s “color-blind” approach. 50. Memorandum, Clifford L. Alexander Jr. (deputy general counsel to the president) to Bernard Boutin, January 26, 1967; memorandum, Bernard Boutin to Clifford L. Alexander Jr. January 27, 1967, Records of the SBA, Microfilm Roll 37, Johnson Presidential Library. Whitney Young’s article was attached to these two memoranda. 51. Bean, BIG GOVERNMENT and Affirmative Action, 59–60. 52. Abraham S. Venable, “Mobilizing Dormant Resources: Negro Entrepreneurs,” The MBA, May 1967, article reprint, no pagination, National Advisory Commission on Civil Disorders Series (54), Box 1, Private Enterprise II Folder, Johnson Presidential Library. 53. Ibid. 54. Ibid. 55. Abraham S. Venable, “Summary Program Activities of the Affirmative Action Programs Staff,” 4, Business & Defense Services Administration, U.S. Department of Commerce, National Advisory Commission on Civil Disorders Series (54), Box 1, Private Enterprise II Folder, Johnson Presidential Library. 56. Ibid., 5. 57. Ibid. 58. Ibid., 6. 59. Ibid., 9. 60. Ibid., 9–10. 61. Ibid., 10. 62. “Negro Concern Sets Supermarket Chain,” New York Times, February 8, 1967, 37. 63. Ibid., 14. 64. Ibid., 13. 65. Ibid., 15. 66. Abraham S. Venable to Buddy Young, undated, National Advisory Commission on Civil Disorders Series (54), Box 1, Private Enterprise II Folder, Johnson Presidential Library.

Notes  253 67. Ibid. 68. Ibid. 69. Ibid. 70. Ibid. 71. Ibid. 72. Ibid. 73. Ibid. 74. Abraham S. Venable, “Summary Program Activities of the Affirmative Action Programs Staff,” 28, Business & Defense Services Administration, U.S. Department of Commerce, National Advisory Commission on Civil Disorders Series (54), Box 1, Private Enterprise II Folder, Johnson Presidential Library. 75. Ibid., 29–29. 76. Jim Brown with Steve Delsohn, Out of Bounds (New York: Zebra Books, 1989), 58. 77. “A National Strategy for Developing Minority Business Opportunities,” Commerce Department, February 14, 1968, 2–3, Presidential Task Forces, Box 21, Gaither Minority Entrepreneurship Folder (3), Johnson Presidential Library. 78. Ibid., 3. 79. Ibid., 5. 80. Ibid. 81. Ibid., 6. 82. Ibid., 9–10, 13. 83. Ibid., 14. 84. Robert C. Moot to Vice President Hubert Humphrey, March 26, 1968, Presidential Task Forces, Box 21, Gaither Minority Entrepreneurship Folder (3), Johnson Presidential Library. 85. Robert C. Moot, “A National Program for Promoting Minority Entrepreneurs,” March 26, 1968, 9, Presidential Task Forces, Box 21, Gaither Minority Entrepreneurship Folder (3), Johnson Presidential Library. 86. Ibid., 25. 87. Ibid., 29.

Chapter 4 1. Marshall Loeb, “Black Entrepreneurship: Need and Opportunity for Government Help,” July 5, 1968, 4, Presidential Task Forces, Box 21, Gaither Minority Entrepreneurship Folder (2), Johnson Presidential Library. 2. Ibid., 6. 3. Ibid., 1–2. 4. Ibid., 2. 5. Ibid., 7.

254  Notes 6. Ibid., 9. 7. Ibid., 10, 11, 13. 8. Ibid., 10. 9. Ibid., 10–11. 10. Ibid., 11. 11. Ibid., 11–12. 12. Ibid., 13. 13. Ibid., 17. 14. Ibid., 18. 15. Ibid., 18-19. 16. Ibid., 19. 17. Ibid., 20. 18. “Samuels: Chemical Man in Political Ring,” Chemical Week 99, August 13, 1966, 49–50. 19. Ibid., 49. 20. Howard J. Samuels to Joseph A. Califano, July 13, 1968, Papers of Lyndon B. Johnson, Box 306, Folder FG 283 7/1/68-, Johnson Presidential Library. 21. Howard J. Samuels to Lyndon B. Johnson, July 22, 1968, Presidential Task Forces, Subject File: Gaither, Box 21, Gaither Minority Entrepreneurship Folder (2), Johnson Presidential Library. 22. Ibid. A generation earlier, Emmer M. Lancaster commissioned a study that discussed retail opportunities for black entrepreneurs in post–World War II America (see chapter 2). 23. Howard J. Samuels to Lyndon B. Johnson, July 22, 1968. 24. Howard J. Samuels to Lyndon B. Johnson, August 12, 1968, Papers of Lyndon B. Johnson, Box 306, Folder FG 2283 7/1/68-, Johnson Presidential Library. 25. Ibid. 26. Ibid. 27. Memorandum and attached report, Matthew Nimetz to Joseph A. Califano, August 12, 1968, Presidential Task Forces, Subject File: Gaither, Box 21, Gaither Minority Entrepreneurship Report Folder, Johnson Presidential Library. The members of this task force were Matthew Nimetz, chairman; Robert Weinberg, Bureau of the Budget; Adrian Dove, Bureau of the Budget; David Chambers, Council of Economic Advisers; James Kuhn, Council of Economic Advisers; David Rusk, Department of Labor; Arnold Leibowitz, Department of Commerce; and Richard Philbin, Small Business Administration. 28. Memorandum and attached report, Matthew Nimetz to Joseph A. Califano, August 12, 1968. 29. Ibid., 5. 30. Ibid., 12.

Notes  255 31. Ibid., 29. 32. “Samuels: Chemical Man in Political Ring,” 50. 33. Jonathan J. Bean, BIG GOVERNMENT and Affirmative Action: The SCANDALOUS HISTORY of the Small Business Administration (Lexington: University Press of Kentucky, 2001), 64. 34. Loeb, “Black Entrepreneurship,” 20. 35. Eugene P. Foley, The Achieving Ghetto (Washington, DC: National Press, 1968), 19. 36. Ibid., 105–47. 37. Ibid., 147. 38. Ibid., 147–48. 39. Memorandum, Howard J. Samuels to Matt Nimetz, October 30, 1968, Presidential Task Forces, Subject File: Gaither, Box 21, Gaither Minority Entrepreneurship Folder (4), Johnson Presidential Library. This memo attached the October 18, 1968, issue of the American Banker, which contained an article on Project OWN. 40. Memorandum, Howard J. Samuels to Matt Nimetz, October 30, 1968. 41. Memorandum, Joseph Califano to Lyndon B. Johnson, September 16, 1968, Papers of Lyndon B. Johnson, Box 47, Folder FI 5-7 6/1/68-, Johnson Presidential Library. Attached to this memorandum was a progress report from Howard J. Samuels to Johnson for the first month of Project OWN. 42. Memorandum, Howard J. Samuels to Lawrence Levinson [deputy special counsel to President Johnson], October 23, 1968, Papers of Lyndon Baines Johnson, Box 47, Folder FI 5-7 6/1/68–, Johnson Presidential Library. William Raspberry’s article was attached to this memorandum. 43. Memorandum, Howard J. Samuels to Lawrence Levinson, October 23, 1968. 44. Howard J. Samuels to Lyndon B. Johnson, October 14, 1968, Papers of Lyndon Baines Johnson, Box 47, Folder FI 5-7 6/1/68–, Johnson Presidential Library. 45. Howard J. Samuels to Lyndon B. Johnson, no date given, Papers of Lyndon Baines Johnson, Box 47, Folder FI 5-7 6/1/68–, Johnson Presidential Library. This letter was attached to a September 16, 1968, memo from Joseph Califano to Lyndon B. Johnson. Thus, it is safe to assume that Samuels’s letter was written on the same or previous day. 46. Howard J. Samuels to Lyndon B. Johnson, no date given. 47. Memorandum/Report, Robert Weinberg to Matthew Nimetz, October 21, 1968, 3, Presidential Task Forces, Subject File Gaither, Box 21, Gaither Minority Entrepreneurship Folder (4), Johnson Presidential Library. 48. Ibid., 4. 49. Ibid. 50. Ibid., 5.

256  Notes 51. Memorandum, Berkeley G. Burrell to All Members and Registrants at Meeting of the National Committee for Equal Participation in Business 1967– 68, Presidential Task Forces, Subject File Gaither, Box 21, Gaither Minority Entrepreneurship Folder (4), Johnson Presidential Library. Berkeley G. Burrell was president of the National Negro Business League. 52. Memorandum, Jan T. Dykman, Executive Assistant to the Secretary of Commerce to Ross D. Davis, Assistant Secretary for Economic Development, October 8, 1968, Presidential Task Forces, Subject File Gaither, Box 21, Gaither Minority Entrepreneurship Folder, Johnson Presidential Library. 53. Ibid. 54. Memorandum, Charles J. Zwick to Matthew Nimetz, October 7, 1968, Presidential Task Forces, Subject File: Gaither, Box 21, Gaither Minority Entrepreneurship Folder (4), Johnson Presidential Library. 55. Carl Soberg, Hubert Humphrey: A Biography (New York: Norton, 1984), 355–402. 56. Memorandum, Howard J. Samuels to Matthew Nimetz (staff assistant to Joseph Califano), September 27, 1968, Presidential Task Forces, Container 21, Gaither Minority Entrepreneurship Folder (4), Johnson Presidential Library. Attached to this memorandum is an article entitled “Black Capitalism—What Is It?” which appeared in the September 20, 1968, issue of U.S. News & World Report. The section of the article comparing and contrasting Nixon and Humphrey on black capitalism is on page 65. 57. Memorandum, Howard J. Samuels to Matthew Nimetz, September 27, 1968. 58. Sobel, Hubert Humphrey, 407. 59. Joseph A. Califano Jr., The Triumph and Tragedy of Lyndon Johnson: The White House Years (New York: Simon & Schuster, 1991), 289–93. The title of chapter 18, from which this material is cited, is “Who Is LBJ’s Candidate?” 60. Robert Dallek, Flawed Giant: Lyndon Johnson and His Times, 1961– 1973 (New York: Oxford University Press, 1998), 578–80. Chapter 11 of Dallek’s book, entitled “Unfinished Business,” contains a subsection entitled “Who Was LBJ’s Candidate?” 61. Sean J. Savage, JFK, LBJ, and the Democratic Party (Albany: State University of New York Press, 2004), 316. 62. Ibid., 324. 63. Jeff Shesol, Mutual Contempt: Lyndon Johnson, Robert Kennedy, and the Feud That Defined a Decade (New York: Norton, 1997), 3. 64. Ibid., 9, 10.

Notes  257

chapter 5 1. Earl Black and Merle Black, The Rise of Southern Republicans (Cambridge, MA: Harvard University Press, 2003), 24. 2. Ibid., 218. 3. Lewis Chester, Godfrey Hodgson, and Bruce Page, An American Melodrama: The Presidential Campaign of 1968 (New York: Viking Press, 1969), 446–47. Although Nixon was clearly the front-runner during the Republican primary, Ronald Reagan’s challenge for the nomination did concern the Nixon campaign. As Chester, Hodgson, and Page point out, as early as 1965, a “Friends of Ronald Reagan” organization had been established by “a group of ultra-reactionary businessmen.” Reagan’s political base consisted primarily of conservative white suburbanites who were concerned about such developments as the 1965 Watts uprising and the Free Speech Movement on the University of California at Berkeley Campus (194). By January 1968, with a campaign theme focusing on the “need for new leadership,” the Reagan campaign had raised $1.5 million (198). In the end, Strom Thurmond’s support of Nixon’s candidacy, based on Nixon’s pledge to support a comprehensive antiballistic missile (ABM) system, helped Nixon turn back Reagan’s challenge (447). Also, as Rowland Evans Jr. and Robert D. Novak state in Nixon in the White House: The Frustration of Power (New York: Random House, 1971), Thurmond, the prototypical white southerner, was concerned with thwarting not only communism (the basis for his interest in promoting the ABM missile system) but also the black freedom movement. In return for his support, Thurmond hoped that Nixon would use his presidential powers to slow down, if not dismantle, the school desegregation process (138). 4. Kevin Phillips, The Emerging Republican Majority (New Rochelle, NY: Arlington House, 1969), 25, 31. Phillips says that despite his previous position in the Nixon campaign as a special assistant to the national campaign manager, John Mitchell, this book “does not purport to set forth the past strategies or future intentions of Richard M. Nixon, his campaign organization or administration” (21). But he states in the preceding paragraph that “I wrote most of this book between November, 1966 and November, 1968.” Under the circumstances, a reasonable person would find it hard to believe that Phillips did not share some of his research findings and insights with the Nixon campaign. 5. Dan T. Carter, The Politics of Rage: George Wallace, the Origins of the New Conservatism, and the Transformation of American Politics (Baton Rouge: Louisiana State University Press, 1995), 379. 6. Ibid., 378. 7. Kenneth O’Reilly, Nixon’s Piano: Presidents and Racial Politics from Washington to Clinton (New York: Free Press, 1995), 279.

258  Notes 8. Alex Poinsett, Walking with Presidents: Louis Martin and the Rise of Black Political Power (Lanham, MD: Madison Books, 1997), 165–66. 9. Stephen E. Ambrose, Nixon: The Education of a Politician 1913–1962 (New York: Simon & Schuster, 1987), 435; Tom Wicker, One of Us: Richard Nixon and the American Dream (New York: Random House, 1995), 178. 10. Michael E. Dyson, I May Not Get There with You: The True Martin Luther King, Jr. (New York: Free Press, 2000), 86–87. 11. Ibid., 93. 12. John W. Kingdon, “How Do Issues Get on Public Policy Agendas?” in Sociology and the Public Agenda, edited by William Julius Wilson (Newbury Park, CA: Sage, 1993, 41–45. 13. Ibid., 44. 14. Dean Kotlowski, “Black Power Nixon Style: The Nixon Administration and Minority Business Enterprise,” Business History Review 72 (1998):414. 15. Ibid., 417. 16. Richard M. Nixon, “Bridges to Human Dignity: An Address by Richard Nixon on the CBS Radio Network,” Thursday, April 25, 1968, 6-8, PPS 208.23, Nixon Library and Birthplace. 17. Interview with Martin Anderson, March 25, 2004. Anderson also noted that his wife had recently completed an MA thesis on the Nation of Islam and gave the Nixon campaign ideas about how the Nation linked business development with racial pride and self-help (which may have influenced the content of the “Bridges” speeches). 18. James Farmer, Lay Bare the Heart: An Autobiography of the Civil Rights Movement (New York: Plume, 1985), 307. 19. Athan Theoharis, From The Secret Files of J. Edgar Hoover (Chicago: I. R. Dee, 1991) 122. 20. Ibid. 21. Gerald R. Ford Vice Presidential Papers, “Soul City Souvenir Book,” Box 175, Gerald R. Ford Presidential Library, Ann Arbor, Michigan. 22. Alex Poinsett, “Roy Innis: Nation Builder,” Ebony 24, October 1969, 170. 23. Manning Marable, Race, Reform, and Rebellion: The Second Reconstruction in Black America, 1945–1982 (Jackson: University Press of Mississippi, 1984), 106. 24. Robert L. Allen, Black Awakening in Capitalist America: An Analytic History (1969; repr., Trenton, NJ: Africa World Press, 1990), 185. 25. Ibid., 188. 26. October 29, 1968, “John McClaughty” Correspondence with “Honorable John Conyers Congressman Democrat Michigan,” Floyd B. McKissick Papers, Collection 4930, Southern Historical Collection, Wilson Library, University of North Carolina at Chapel Hill.

Notes  259 27. Manning Marable, Black Leadership (New York: Columbia University Press, 1998), 172–74. 28. Tony Martin, Race First: The Ideological and Organizational Struggles of Marcus Garvey and the Universal Negro Improvement Association (Dover, MA: Majority Press, 1976), 344–46. 29. James Humes, Nixon’s 10 Commandments of Statecraft (New York: Scribner, 1997), 75. 30. Transcript, Meet the Press, Sunday, July 14, 1968, 8. 31. Evans and Novak, Nixon in the White House, 137. 32. Ibid. Innis, apparently undaunted by the “message” being sent by the White House, embarked on an ultimately fruitless campaign to demonstrate his conservatism and acceptability to southern whites. In an interview published in the November 25, 1968, issue of U.S. News & World Report, Innis derisively referred to such Democratic initiatives as Lyndon Johnson’s “Great Society” and Franklin Delano Roosevelt’s “New Deal” as “Mickey Mouse” programs (59). Two years later, in the March 2, 1970, issue of U.S. News & World Report, Innis proposed an alternative to school integration in the South which, he claimed, the governors of South Carolina, Georgia, Mississippi, and Louisiana endorsed as having “more viability than any other offered so far” (31). 33. Interview with Robert Brown, August 16, 2002. 34. Gerald R. Ford, Vice Presidential Papers, Floyd McKissick Folder, Box 175, Gerald R. Ford Presidential Library. 35. Gerald Horne’s The Fire This Time: The Watts Uprising and the 1960s (Charlottesville: University Press of Virginia, 1995) provides the most detailed scholarly discussion of the 1965 Watts rebellion/riot/uprising (depending on one’s perspective). When viewed through the political lens of African Americans, Watts “marked the rise of black nationalism, as blacks revolted against police brutality” (16). But when viewed through the lens of local white officials, which Horne concluded was incorrect, Watts resulted from local residents’ being manipulated by “Red Diplomacy” (269). In retrospect, it appears ludicrous to believe that black people, who had endured long-standing ill treatment from primarily white law enforcement officials, would rely on white communists to tell them how they should respond. 36. Horne, The Fire This Time, 269. 37. Ibid. 38. Ibid. 39. Randall B. Woods, LBJ: Architect of American Ambition: (New York: Free Press, 2006), 793. 40. “Summer 1968—Riot or Rebellion?” American Security Council Report, WR 68-15. 41. Stephen E. Ambrose, Nixon: The Triumph of a Politician (New York: Simon & Schuster, 1989), vol. 2, 125–26.

260  Notes 42. Gerald S. Strober and Deborah H. Strober, Nixon: An Oral History of His Presidency (New York: HarperCollins, 1994), 112. 43. Henry Kissinger, Years of Renewal (New York: Simon & Schuster, 1999), 248–49. 44. Strober and Strober, Nixon, 110. 45. Kotlowski, “Black Power Nixon Style,” 418. 46. “Excerpts of Remarks by Governor Nelson A. Rockefeller prepared for delivery at Spelman College, Atlanta, Georgia, Thursday, May 23, 1968, at 3:00 p.m.,” Rockefeller Family Archives, Record Group 15 (NAR Gubernatorial), Speeches series, Box 60, Folder 2344. 47. Ibid. 48. Ibid. 49. Ibid. 50. Campaign 1968 Research Files, Box 104, Rockefeller clips 5/68 Folder, Richard M. Nixon Library and Birthplace. 51. Ibid. 52. Campaign 1968 Research Files, Box 104, Rockefeller clips, 6/68 Folder, Nixon Library and Birthplace. 53. Ibid. 54. Ibid. 55. Ibid. 56. Ibid. 57. Ibid. 58. Ibid. 59. Ibid. 60. Ibid. 61. Ibid.

Chapter 6 1. Dean J. Kotlowski, Nixon’s Civil Rights: Politics, Principle, and Policy (Cambridge, MA: Harvard University Press, 2001), 134. 2. Ibid., 134–51. 3. A cross section of these works include “Black Capitalism: A Study of Struggle,” Business Week, January 16, 1971, 96–102; David Myhra, “Purchasing Department Inputs to Stimulate Black Capitalism,” Journal of Purchasing, May 1970, 42–47; “Minority Economic Development,” Journal of Commercial Bank Lending, September 1970, 2–17; Edward D. Irons, “A Positive View of Black Capitalism,” Banker’s Magazine, spring 1970, 43–47; “Blacks Debate Black Capitalism,” Business Week, January 10, 1970, 38; “‘Black Capitalism’ a Misnomer, Says N.C. Mutual President,” National Underwriter, June 4, 1971,

Notes  261 19–20; Fred C. Allvine, “Black Business Development,” Journal of Marketing, April 1970, 1–7; “How Students Are Helping Ghetto Businessmen,” Management Review, July 1969, 55–62; J. Lester Blocker, “The Story of Progress Plaza: Black Power + White Power = American Power,” Banking, August 1969, 41, 78; Alex Poinsett, “The Economics of Liberation,” Ebony, August 1969, 150–54; “Publishing Empire Demonstrates How Minorities Can Succeed,” Commerce Today, September 18, 1972, 13–16; Paul London, “Channeling Business Expertise to Black Entrepreneurs,” Management Review, December 1969, 31–36; “The Seeds for Black Capitalism,” Business Week, November 15, 1969, 40–41; “Harlem Gets Down to Business,” Business Week, August 9, 1969, 70–72; “He Makes the Ghetto Make Money,” Business Week, May 10, 1969, 154–55; “Black Capitalism Has a Hollow Ring,” Business Week, August 30, 1969, 51–54; “Black Capitalism: A Study in Frustration, Newsweek, September 28, 1970, 70–72; “‘Black Capitalism’ Now: Success or Failure?” U.S. News & World Report, November 23, 1970, 38–41; Charlayane Hunter, “The New Black Businessmen,” Saturday Review, August 23, 1969, 27–29, 59–60; Samuel Pressley, “Black Capitalism: Does It Really Work?” Iron Age, June 15, 1972, 50–52; Dennis Gensch and Richard Staelin, “Making Black Retail Outlets Work,” California Management Review, fall 1972, 52–62; Jeffrey A. Timmons, “Black Is Beautiful—Is It Bountiful?” Harvard Business Review, November/December 1971, 81–92; Charles H. Levine, “Black Entrepreneurship in the Ghetto: A Recruitment Strategy,” Land Economics, August 1972, 269–73; William K. Tabb, “Viewing Minority Economic Development as a Problem in Political Economy,” American Economic Review, May 1972, 31–38; Dennis H. Gensch and Richard Staelin, “The Appeal of Buying Black,” Journal of Marketing Research, May 1972, 141–47; Norman Glazer, “The Missing Bootstrap,” Saturday Review, August 23, 1969, 19–21, 56–58; Charles L. Frankel, “The Uphill Road to Black Capitalism,” Nation’s Business 58:60–62, 64–65; Michael Brower and Doyle Little, “White Help for Black Business,” Harvard Business Review, May 1970, 4–16, 163–64; “Chicago’s Leaders Bankroll the Blacks,” Business Week, September 13, 1969, 56; and John H. Johnson, “Five Major Myths of Black Business,” Ebony, December 1971, 156–57. 4. “YOU ARE INVITED,” National Black Economic Development Conference, April 25, 26, 27, 1969, Detroit, Records of the National Council of Churches, Folder 14, Box 35, Record Group 6, Presbyterian Historical Society, Philadelphia, Pennsylvania. The National Council of Churches provided a significant amount of funding to the National Black Economic Development Conference, which was part of the NCC’s interest in (and funding of) ghetto community development dating back to 1967. 5. Robert S. Browne, Keynote Speech, National Black Economic Development Conference, April 25, 1969, Records of the National Council of Churches, Folder 14, Box 35, Record Group 6.

262  Notes 6. Ibid. 7. Ibid. 8. Ibid. 9. Ibid. 10. Ibid. 11. James Forman, “Total Control as the Only Solution for the Economic Needs of Black People,” National Black Economic Development Conference, April 25, 1969, Records of the National Council of Churches, Folder 14, Box 35, Record Group 6. 12. Ibid. 13. Ibid. 14. “Report on the Investment Committee for Ghetto Economic Development Presented to the Executive Committee of the Council,” December 1, 1967, Records of the National Council of Churches, Folder 13, Box 35, Record Group 6. 15. Ibid. 16. Ibid. 17. Ibid. 18. Ibid. 19. Whitney M. Young Jr., Beyond Racism: Building an Open Society (New York: McGraw-Hill, 1969), 151. 20. Ibid., 157. 21. Ibid., 163. 22. Ibid. 23. Ibid., 164. 24. Theodore L. Cross, Black Capitalism: Strategy for Business in the Ghetto (New York: Atheneum, 1969), 138–39. 25. Ibid., 69. 26. Theodore L. Cross, “Symposium on Black Capitalism,” Banker’s Magazine, spring 1969, 10–19. 27. Ibid., 13. 28. Ibid. 29. Roy Innis, “Separatist Economics: A New Social Contract,” in Black Economic Development, edited by William F. Haddad and G. Douglas Pugh (Englewood Cliffs, NJ: Prentice-Hall, 1969), 51–52, 58. 30. Frederick L. Sturdivant, “The Limits of Black Capitalism,” in Black Business Enterprise: Historical and Contemporary Perspectives, edited by Ronald W. Bailey (New York: Basic Books, 1971), 114–15. 31. Ibid., 115. 32. Dunbar S. McLaurin and Cyril D. Tyson, “The GHEDIPLAN for Economic Development,” in Black Economic Development, edited by William F. Haddad and G. Douglas Pugh (Englewood Cliffs, NJ: Prentice-Hall, 1969), 126, 131.

Notes  263 33. Ibid., 130. 34. Ibid., 131, 132. 35. Ibid., 132. 36. Ibid. 37. Claude Andrew Clegg III, An Original Man: The Life and Times of Elijah Muhammad (New York: St. Martin’s Press, 1997), 256. 38. John Woodford, “Black Enterprise,” Muhammad Speaks, April 17, 1970, 17. 39. Ibid. 40. Ibid. 41. Leon Forrest, Relocations of the Spirit (Wakefield, RI: Asphodel Press, 1994), 91. 42. Clegg, An Original Man, 256. 43. Karl Evanzz, The Messenger: The Rise and Fall of Elijah Muhammad (New York: Pantheon Books, 1999), 365. 44. Ibid. 45. Edward H. Jones, Blacks in Business (New York: Grosset & Dunlap, 1971), 178. 46. Ibid., 183. 47. Ibid., 183–84. 48. Ibid., 187. 49. Ibid. 50. Jonathan J. Bean, BIG GOVERNMENT and Affirmative Action: The SCANDALOUS HISTORY of the Small Business Administration (Lexington: University Press of Kentucky, 2001), 115–17. 51. Richard F. America Jr., “What Do You People Want?” in Black Business Enterprise: Historical and Contemporary Perspectives, edited by Ronald W. Bailey (New York: Basic Books, 1971), 127. 52. Ibid., 125. 53. Ibid., 136. 54. Ibid., 130. 55. Louis L. Allen, “Making Capitalism Work in the Ghettos,” in Black Business Enterprise: Historical and Contemporary Perspectives, edited by Ronald W. Bailey (New York: Basic Books, 1971), 140. 56. Abraham S. Venable, Building Black Business: An Analysis and a Plan (New York: Crowell, 1972), 5. 57. Ibid., 35. 58. Ibid., 42–43. 59. Ibid., 43. 60. Ibid., 43–44. 61. Collection Description, Record Group 427: Records of the Minority Business Development Agency, 1969–1979, Promotional Photographic File of

264  Notes the Minority Business Development Agency, 1969–1979, National Archives, College Park, MD. The primary purpose of OMBE Outlook and OMBE Access was “to disseminate information on current activities and prospective opportunities for minority businesses operating in all sectors of the American economy.” 62. Cover, OMBE Outlook (Washington, DC: U.S. Department of Commerce, November 1969). 63. “OMBE Takes to the Cities,” OMBE Outlook, January 1970, 6. 64. Ibid. 65. Ibid. 66. Ibid. 67. Ibid. 68. Ibid., 7. 69. Ibid., 6, 7. 70. “Business Is Good for Minority Businesses at First Federal Procurement Store-Fronts,” OMBE Outlook, May/June 1970, 6. 71. Kotlowski, Nixon’s Civil Rights, 138. 72. Ibid., 146. 73. “Secretary Stans Announces Multi-Million Contract Awards,” OMBE Outlook, February 1972, 6. 74. Ibid., 7. 75. “Participants Praise Conference on Business Opportunities for Women,” OMBE Outlook, July 1972, 9. 76. Andrew F. Brimmer, “The Trouble with Black Capitalism,” Nation’s Business, May 1969, 79. 77. Ibid. 78. Ibid. 79. Andrew F. Brimmer, “Small Business and Economic Development in the Negro Community,” in Black Business Enterprise: Historical and Contemporary Perspectives, edited by Ronald W. Bailey (New York: Basic Books, 1971), 165–66. 80. Ibid., 167–68. 81. Andrew F. Brimmer, “Economic Integration and the Progress of the Negro Community,” Ebony, August 1970, 118. 82. Ibid., 119. 83. Ibid. 84. Ibid., 121. 85. Ibid. 86. The Booms and Ward article is cited and discussed in Robert J. Yancy, Federal Government Policy and Black Business Enterprise (Cambridge, MA: Ballinger, 1974), 28. 87. Bernard H. Booms and James E. Ward Jr., “The Cons of Black Capitalism: Will This Policy Cure Urban Ills?” Business Horizons, October 1969, 18.

Notes  265 88. Ibid. 89. Ibid., 20. 90. Ibid., 21. 91. Ibid., 22. 92. Ibid. 93. Ibid., 26. 94. Ibid. 95. Ibid. 96. Ibid. 97. Robert L. Allen, Black Awakening in Capitalist America: An Analytic History (1969; repr., Trenton: NJ: Africa World Press 1990), 153. 98. Ibid., 191. 99. Ibid., 274. Allen contended, Black people cannot afford the social injustices of capitalism. They cannot afford a system which creates privileged classes within an already super exploited and underprivileged community. . . . Of course, capital must be accumulated to make possible the economic development of the black community, but this must be done in a way that precludes the enrichment of one class at the expense of those below it. (274) 100. James Boggs, Charles Johnson, and John Williams, “The Myth and Irrationality of Black Capitalism,” position paper, National Black Economic Development Conference, April 25, 1969, Records of the National Council of Churches, Folder 14, Box 35, Record Group 6. 101. James Boggs, “The Myth and Irrationality of Black Capitalism,” in Black Business Enterprise: Historical and Contemporary Perspectives, edited by Ronald W. Bailey (New York: Basic Books, 1971), 150. 102. Ibid., 152. 103. Ibid., 157. 104. Ibid. 105. Ibid., 158. 106. Earl Ofari, The Myth Of Black Capitalism (New York: Monthly Review Press, 1970), 3. 107. Ibid., 10. 108. Charles E. Hall, Negroes in the United States, 1920–1932 (Washington, DC: , 1935), 496–98; 1992 Economic Census: Survey of Minority-Owned Business Enterprises—BLACK (Washington, DC: U.S. Department of Commerce, 1996), 2, 3, 11. 109. Robert Staples, Introduction to Black Sociology (New York: McGrawHill, 1976), 98. 110. Phillip S. Foner, ed., The Black Panthers Speak (Philadelphia: Lippincott, 1970), 19–20.

266  Notes 111. Ross K. Baker, “The Transformation of the Panthers,” Washington Post, February 13, 1972, B1. 112. Ibid. 113. Ibid., B1–B2. 114. Ibid., B2. 115. Ibid. 116. Ibid. 117. Jesse L. Jackson, “Breadbasket Leader Rejects Black Capitalism,” Muhammad Speaks, February 21, 1969, in Records of the National Council of Churches, Folder 14, Box 35, Record Group 6. 118. Ibid. 119. Thomas H. Landess and Richard M. Quinn, Jesse Jackson & the Politics of Race (Ottawa, IL: Jameson Books, 1985), 49.

Chapter 7 1. Geir Gunderson to Robert Weems, February 7, 2001. Gunderson served as the chief archivist at the Gerald R. Ford Presidential Library. In this communication, Gunderson shared with me a copy of Stanley Scott’s obituary which appeared in the April 7, 1992, issue of the New York Times. 2. Memorandum, Stan Scott to John Marsh, August 24, 1974, William J. Baroody Files, Box 26, Scott, Stan, Folder, Gerald R. Ford Presidential Library. John Marsh held the position of counselor to the president. 3. Memorandum, Stan Scott to John Marsh, August 24, 1974. 4. Ibid. 5. Ibid. 6. Ibid. 7. Ibid. 8. Ibid. 9. Yanek Mieczkowski, Gerald Ford and the Challenges of the 1970s (Lexington: University Press of Kentucky, 2005), 29. 10. Gerald R. Ford, A Time to Heal (New York: Harper & Row, 1979), 178. 11. Mieczkowski, Gerald Ford, 30. 12. Richard Reeves, A Ford, Not a Lincoln (New York: Harcourt Brace Jovanovich, 1975), 107. 13. Ford, A Time to Heal, 160. 14. Mieczkowski, Gerald Ford, 33. 15. Ibid., 35. 16. Ibid., 32. 17. John Robert Greene, The Presidency of Gerald Ford (Lawrence: University Press of Kansas, 1995), 68.

Notes  267 18. Ibid., 68. 19. Ibid., 69. 20. Ibid., 71. 21. Dorothy Height, Maynard Jackson, Vernon E. Jordan, Charles B. Rangel, and Roy Wilkins to President Gerald R. Ford, September 23, 1973, F. Lynn May Files, Box 2, Office of Minority Business Enterprise Folder, Ford Presidential Library. 22. “The Economic Crisis and the Black Community: A Call to Action,” 10–11, F. Lynn May Files, Box 2, Office of Minority Business Enterprise Folder, Ford Presidential Library. 23. Ibid., 18. 24. Memorandum, Stanley Scott to Donald Rumsfeld, October 1, 1974, F. Lynn May Files, Box 2, Office of Minority Business Enterprise Folder, Ford Presidential Library. 25. Gerald R. Ford memorandum to cabinet members, December 11, 1974. F. Lynn May Papers, Box 2, Office of Minority Business Enterprise Folder, Ford Presidential Library. 26. Office of the White House Press Secretary, January 14, 1975, press release, William Baroody Papers, Box 26, Scott, Stan, Folder, Gerald R. Ford Presidential Library. Baroody was the assistant to the president for public liaison. 27. William Baroody Papers, Box 26, Scott, Stan, Folder, Ford Presidential Library. 28. Ibid. 29. Ibid. 30. Robert T. Hartmann, Palace Politics: An Inside Account of the Ford Years (New York: McGraw-Hill, 1980), 216. Hartmann also points out that during his days as a football player at the University of Michigan, Ford was the roommate of Willis F. Ward, the team’s only black player. 31. William Baroody Papers, Box 26, Scott, Stan, Folder, Ford Presidential Library. 32. Ibid. 33. Geir Gunderson to Robert E. Weems Jr., February 7, 2001. In this communication, Gunderson, who served as the chief archivist at the Ford Presidential Library, shared with me an undated newspaper clipping associated with the 1991 Louisiana gubernatorial campaign, in which Stanley Scott denounced the candidacy of David Duke. This article also mentions Scott’s family’s connection to the Atlanta Daily World. 34. Memorandum, “Office of Minority Business Enterprise of the Department of Commerce,” March 10, 1975, 1, F. Lynn May Files, Box 3, Office of Minority Business Enterprise Folder, Ford Presidential Library. 35. Ibid. 36. Ibid., 9.

268  Notes 37. Louis F. Laun to Walter D. Scott, March 31, 1975, F. Lynn May Files, Box 3, Office of Minority Business Enterprise Folder, Ford Presidential Library. Louis F. Laun was the deputy administrator of the SBA, and Walter D. Scott was the OMB’s associate director for economics and government. This letter included a memorandum with a nonpaginated “Summary of Federal Minority Enterprise Organizational Options.” 38. “SBA Staff Paper: Minority Enterprise Organizational Options,” March 31, 1975, Option I, 1–6; Option II, 1–2, F. Lynn May Papers, Box 3, Office of Minority Business Enterprise Folder, Ford Presidential Library. 39. Memorandum, “Federal Minority Business Development Programs,” 1, C. Mack Higgins to Louis Laun, February 19, 1975, F. Lynn May Papers, Box 3, Office of Minority Business Enterprise Folder, Ford Presidential Library. C. Mack Higgins was the SBA’s associate administrator for minority small business. 40. Memorandum, “Federal Minority Business Development Programs,” 2. 41. Ibid. 42. John K. Tabor to Walter D. Scott, April 7, 1975, F. Lynn May Papers, Box 3, Office of Minority Business Enterprise Folder, Ford Presidential Library. 43. Memorandum, “Department of Commerce Analysis of Organizational Options for the Federal Minority Business Development Program, April 7, 1975, 4, F. Lynn May Papers, Box 3, Office of Minority Business Enterprise Folder, Ford Presidential Library. 44. Ibid., 6, 7. 45. Ibid., 12. 46. White House Central Files, Box 99, Folder FG 21-17, Office of Minority Business Enterprise, Ford Presidential Library. 47. Ibid. 48. Curtis T. Perkins to James T. Lynn, July 16, 1975, White House Central Files, Box 99, Folder FG 21-17, Office of Minority Business Enterprise, Ford Presidential Library. 49. William Baroody Papers, Box 26, Scott, Stan, Folder, Ford Presidential Library. 50. Ibid. 51. Stanley Scott to William Baroody, September 25, 1975, William J. Baroody Paper, Box 26, Scott, Stan, Folder, Ford Presidential Library. This memorandum included a copy of an article that appeared in the September 25, 1975, issue of Jet magazine which discussed the ninety-fifth National Baptist Convention meeting in St. Louis. 52. Press releases, Office of the White House Press Secretary, October 2, 1975, William J. Baroody Papers, Box 26, Scott, Stan, Folder, Ford Presidential Library. Two press releases were related to Scott’s resignation. One was the exchange of letters between Stanley Scott and Gerald R. Ford regarding Scott’s

Notes  269 resignation, and the second was Ford’s announcement that he would nominate Scott “to be Assistant Administrator of the Agency for International Development. His area of responsibility will be the Bureau for Africa.” 53. Brooke L. Clement to Robert E. Weems Jr., January 12, 2006. Clement is an archivist at the Gerald R. Ford Library and gave me this background information about John Calhoun. 54. Memorandum, John Calhoun to James T. Lynn, December 8, 1975, Foster Chanock Papers, Box 1, Calhoun, John and Minority Issues Folder, Ford Presidential Library. Foster Chanock served as staff assistant in the White House Operations Office. 55. Memorandum, John Calhoun to James T. Lynn, December 8, 1975. 56. Ibid., attachment, 3. 57. Memorandum, John C. Topping to David Hoopes, November 26, 1975, “NMPC Fact Sheet,” John C. Vickerman Papers, Box 18, National Minority Purchasing Council Folder, Ford Presidential Library. Vickerman worked in the Office of Public Liaison as director for business and trade associations. John C. Topping served as OMBE’s chief counsel, and David Hoopes served as deputy staff secretary to the president. 58. Memorandum, John C. Topping to David Hoopes, November 26, 1975, “Presidential Talking Points for White House Meeting with the National Minority Purchasing Council, Cabinet Room, at 4:00 p.m., Monday, December 15, 1975,” 1, 2. 59. “Federal Civil Rights Activities,” Office of Management and Budget, January 1976, Birge S. Watkins Papers, Box 2, Minority Business Enterprise Folder, Ford Presidential Library. Watkins was a staff member on the Council on International Economic Policy. 60. Memorandum, Arthur Fletcher to Allen Moore, September 15, 1976, Arthur A. Fletcher Papers, Box 2, National Business League Folder, Ford Presidential Library. Fletcher was the deputy assistant to the president for urban affairs on the Domestic Council, and Moore was the associate director for policy and planning. 61. “Interagency Report on the Federal Minority Business Development Programs,” Executive Office of the President, Office of Management and Budget, Department of Commerce, Small Business Administration, March 1976, 1, Paul C. Leach Papers, Box 28, Minority Business Folder, Ford Presidential Library. Leach was the associate director for agriculture, economic development, in the Commerce Department. 62. “Interagency Report on the FEDERAL MINORITY BUSINESS DEVELOPMENT PROGRAMS,” 3. 63. Ibid., 3–4. 64. Ibid., 23. 65. Ibid., 26. 66. Ibid., 27.

270  Notes 67. Ibid., 25–26. 68. Ibid., 29. 69. Ibid. 70. Ibid. 71. Ibid., 30. 72. Ibid. 73. Ibid. 74. Ibid. 75. Ibid., 31. 76. Ibid., 30, 32. 77. Ibid., 33. 78. Ibid. 79. Ibid., 35. 80. Ibid., 36. 81. Ibid. 82. Ibid., 36–37. 83. Ibid., 37. 84. Ibid. 85. Ibid., 40–41. 86. Ibid., 41. 87. Ibid. 88. Ibid., 42. 89. Ibid. 90. Ibid. 91. Ibid., 43. 92. Ibid., 45. 93. Ibid., 47. 94. Ibid. 95. Ibid. 96. Ibid., 47–48. 97. Ibid., 48. 98. Ibid., 49. 99. Jonathan J. Bean, BIG GOVERNMENT and Affirmative Action: The SCANDALOUS HISTORY of the Small Business Administration (Lexington: University Press of Kentucky, 2001), 79–80. The case of Lou Brock, a Major League baseball star who received SBA funds earmarked for disadvantaged minority businesses to purchase an auto dealership in 1969, shows that not every black is disadvantaged. 100. “Interagency Report on the Federal Minority Business Development Programs,” 49. 101. Ibid. 102. Ibid., 50.

Notes  271 103. Ibid., 51. 104. Ibid., 51–52. 105. Ibid., 52. 106. Ibid., 54. 107. Ibid., 61. 108. Ibid. 109. Ibid., 66. 110. Ibid., 72. 111. Ibid., 74. 112. Ibid., 75. 113. Ibid., 76. 114. Thomas A. Sowell to Robert A. Goldwin, August 26, 1975, Robert A. Goldwin Papers, Box 27, Sowell, Thomas, Folder, Ford Presidential Library. Along with this document are two later reviews of Race and Economics. The first, by Michael Novak, appeared in the September 4, 1975, issue of the Wall Street Journal. The second, by David M. Gordon, appeared in the October 6, 1975, issue of the Chronicle of Higher Education. 115. Thomas A. Sowell to Robert A. Goldwin, August 9, 1975, Robert A. Goldwin Papers, Box 27, Sowell, Thomas, Folder, Ford Presidential Library. 116. “Sowell Selected for Seat on FTC,” Washington Star, April 6, 1976, D-7, Robert A. Goldwin Papers, Box 27, Sowell, Thomas, Folder Ford Presidential Library. 117. Undated memorandum, Robert A. Goldwin to Dick Cheney; Thomas Sowell to Robert A. Goldwin, May 24, 1976, Robert A. Goldwin Papers, Box 27, Sowell, Thomas, Folder, Ford Presidential Library. Dick Cheney served as deputy assistant to the president. 118. Douglas L. Thomas to Stuart Spencer, September 16, 1976; “The Presidential Election: A Proposal for Adoption of a Minority Voting Bloc Strategy,” 1, H. James Fields Jr. Papers, Box 1, John C. Calhoun Folder, Ford Presidential Library. Fields was a staff assistant in the White House Operations Office. 119. Ibid., 7. 120. Ibid., 11. 121. Ibid., 13–15. 122. Ibid., 21. 123. Ibid., 23–24; Brooke Clement to Robert E. Weems Jr., March 24, 2006. 124. John C. Calhoun to H. James Fields, October 18, 1976; H. James Fields Papers, Box 1, John C. Calhoun Folder; Brooke Clement to Robert E. Weems Jr., March 24, 2006. 125. Burton I. Kaufman, The Presidency of James Earl Carter, Jr. (Lawrence: University Press of Kansas, 1993), 9, 13–14; John Hope Franklin and Alfred A. Moss Jr., From Slavery to Freedom: The History of African Americans, 8th ed. (Boston: McGraw-Hill, 2000) 559.

272  Notes

Chapter 8 1. Fact Sheet 108, “Minority Business Program,” January 1980, Louis Martin Files, Minority Report Folder, Box 65, Carter Library; Emile Milne and Isaiah Poole, “MBDA: Bigger Can Be Better,” Black Enterprise, December 1979, 40, Louis Martin Files, MBDA-Leg. Folder, Box 61, Carter Library. 2. Letter, Thomas A. Farrington to Martha Mitchell, February 28, 1977, OMBE 1/77–9/77 Folder, Box 20, Martha Mitchell Files, Jimmy Carter Library. Margaret Mitchell was a special assistant to the president, and Thomas A. Farrington was the president of the National Black Business State of Affairs Committee. The listed members of this group were Eugene Baker, president of the National Association of Black Manufacturers; Charles Davis, executive director of the National Insurance Association; William Kennedy, president of the North Carolina Mutual Life Insurance Company; Bruce Llewellyn, president of Fedco Foods; and Barbara Williams, executive director of the Congressional Black Caucus. 3. “Summary of the State of Affairs of Minority Business Enterprise in America,” Introduction, Martha Mitchell Files, OMBE 1/77–9/77 Folder, Box 20, Carter Library. 4. Ibid. 5. Undated, anonymous memorandum, 1, Martha Mitchell Files, OMBE 1/77–9/77 Folder, Box 20, Carter Library. 6. Ibid., 3. 7. Press release, “Secretary Kreps Announces Local Allocations under Federal Job Program,” June 10, 1977, Martha Mitchell Files, SBA and Minorities 8/77 Folder, Box 22, Carter Library. 8. Memorandum, Rick Nuestadt and Frank Washington to Stu Eizenstat, September 8, 1977, Martha Mitchell Files, MBE 5/77-3/78 Folder, Box 22, Carter Library. Nuestadt was deputy press secretary; Washington served with the Office of the General Counsel and the Office of Telecommunications Policy; and Eizenstat was the director of the domestic policy staff. 9. Memorandum, Rick Nuestadt and Frank Washington to Stu Eizenstat, September 8, 1977. 10. “Report on Minority Ownership Meeting to the Members of the American Association of Cable Television Owners (AACTO),” July 15, 1977, 4, attached to letter from Clayton Sinclair Jr. to Martha Mitchell, July 25, 1977, White House Central Files, MC 1/20/77–1/20/81 Folder, Box MC 14, Carter Library. Sinclair was the president of the AACTO. 11. Presidential statement, September 12, 1977, Martha Mitchell Files, MBE 5/77–3/78 Folder, Box 14, Carter Library. 12. Ibid.

Notes  273 13. Ibid. 14. Ibid. 15. Ibid. 16. John Dumbrell, The Carter Presidency: A Re-evaluation (Manchester: Manchester University Press, 1993), 98. 17. Letter, Earl G. Graves to Martha Mitchell, March 3, 1978, Martha Mitchell Files, Graves, Earl: Black Enterprise Folder, Box 10, Carter Library. 18. Roger Wilkins, “Jimmy Carter’s First Year: One to Get Ready, Two to Go?” Black Enterprise, March 1978, 24. 19. Remarks of the President at Reception for Group of Black Businessmen, June 14, 1978, Office of the White House Press Secretary, Martha Mitchell Files, Staff Offices: Speechwriters—Chronological File Folder, Box 27, Carter Library. 20. Kenneth O’Reilly, Nixon’s Piano: Presidents and Racial Politics from Washington to Clinton (New York: Free Press, 1995), 342–43. O’Reilly asserted that despite Carter’s numerous symbolic gestures to the African American community, which included visiting Ebenezer Baptist Church to celebrate King’s birthday and producing videotaped messages to be played at various African American organizational functions, “none of this much impressed those civil rights leaders who wanted more than symbols.” 21. Ibid., 6. 22. Dumbrell, The Carter Presidency, 91, 100–1. Dumbrell cites the following pertinent observation by Louis Martin, who succeeded Martha “Bunny” Mitchell as special assistant to the president in 1978: “Taken as a whole the administration’s record is hailed by most Blacks as progressive. The Black appointments, especially to the federal judiciary, and most of the programs for the disadvantaged have won acclaim. It is the unemployment issue . . . that is becoming a rock upon which everything threatens to break” (91). 23. O’Reilly, Nixon’s Piano, 343–47. 24. Draft memorandum, Stuart Eizenstat and Anne Wexler to President Carter, July 26, 1978, 1, Martha Mitchell Files, Folder MBE 4/78–9/78, Box 14, Carter Library. 25. Ibid. 26. Ibid., 2. 27. Ibid., 4. 28. Ibid., 6. 29. Clark R. Mollenhoff, The President Who Failed: Carter Out of Control (New York: Macmillan, 1980), 254. 30. Besides Clark R. Mollenhoff, other observers who have discussed Carter’s vacillation include Peter Meyer, James Earl Carter: The Man and the Myth (Kansas City, MO: Sneed Andrews and McMeel, 1978), with a chapter unflatteringly entitled “A Man for All Reasons”; Bruce Mazlich and Edward

274  Notes Diamond, Jimmy Carter: A Character Portrait (New York: Simon & Schuster, 1979), describing the broad constituency that Carter sought to attract during the 1976 presidential campaign to be “As Broad as His Grin” (221); Garland A. Haas, Jimmy Carter and the Politics of Frustration (Jefferson, NC: MacFarland, 1992), stating that Carter had worked hard to avoid being labeled as either liberal or conservative. In the ensuing campaign for the nomination, when he was pressed to state how he stood in relation to his Democratic rivals for the nomination, he usually replied: “I never characterize myself as a conservative, liberal, or moderate and this is what distinguishes me from them.” (5) John Orman, author of Comparing Presidential Behavior: Carter, Reagan, and the Macho Presidential Style (Westport, CT: Greenwood Press, 1987), puts a different spin on Carter’s perceived tendency toward vacillation and weakness. In his chapter “The Macho Presidential Style,” Orman argues that Carter, who often sought his wife’s advice when making important decisions, “was widely attacked by many for failing to live up to the demands of macho Presidential style” (18). 31. Fact Sheet 108, “Minority Business Program,” January 1980, Louis Martin Files, Minority Report Folder, Box 65, Carter Library. 32. Press release, “Conrail Exceeds $100 Million in Awards to Minority Firms,” July 30, 1979, Department of Transportation, Louis Martin Files, MBEF7 Folder, Box 62, Carter Library. 33. Statement of Kenneth E. Bolton, Director of the Minority Business Resource Center before the Task Force on Minority Enterprise of the Subcommittee on General Oversight and Minority Enterprise, Committee on Small Business, U.S. House of Representatives, June 14, 1979, p. 2, Louis Martin Files, MBEF7 Folder, Box 62, Carter Library. 34. Ibid., 3. At the time of Kenneth Bolton’s 1979 testimony, MBRC local outreach centers were located in Atlanta, Baltimore, Boston, Chicago, Cleveland, Dallas, Detroit, Denver, Gary, Indianapolis, Los Angeles, Memphis, Miami, Newark, New Haven, New York, Philadelphia, San Francisco/Oakland, Seattle, and St. Louis (appendix to testimony). 35. Press release, “Minority Firm Becomes First to Operate Railroad,” Department of Transportation, July 23, 1979, Louis Martin Files, MBEF7 Folder, Box 62, Carter Library. 36. Ibid. 37. Undated presidential draft memorandum, Louis Martin Files, Minority Advertising Program Folder, Box 61, Carter Library. 38. Memorandum, Hamilton Jordan to Senior Staff, August 10, 1978, White House Central Files, F6-1-1 Louis Martin 1/20/77–12/31/78 Folder, Box FG 52, Carter Library. This memorandum from White House Chief of Staff Hamil-

Notes  275 ton Jordan to other senior White House staffers announced that Louis Martin would be replacing Martha Mitchell as a special assistant to the president “focusing upon special programs and policies that are of interest to Black Americans.” Martin, whose impressive résumé included two stints as deputy chairman of the Democratic National Committee, was a popular choice in both the black community and the Democratic Party. 39. Undated presidential draft memorandum, Louis Martin Files, Minority Advertising Program Folder, Box 61, Carter Library. 40. Ibid. 41. Ibid. 42. Fact Sheet 107, “Broadcast Ownership Program,” October 1979, Louis Martin Files, Minority Report Folder, Box 65, Carter Library. 43. Ibid. 44. Press release, “Minority Firms Sign Contracts to Assist in DOE Oil Audits,” Department of Energy, September 20, 1978, Martha Mitchell Files, MBE 4/78–9/78 Folder, Box 14, Carter Library. 45. Fact Sheet 108, Minority Business Program, January 1980; Fact Sheet 113, Minority Bank Deposit Program, June 1980, Louis Martin Files, M.R. Folder, Box 65, Carter Library. 46. Report to the President, The Interagency Council for Minority Business Enterprise, for Fiscal Year 1978, 1, Louis Martin Files, MBEF Folder, Box 62, Carter Library. 47. Ibid. 48. Ibid. 49. Robert Ungger and William Mullen, “Government Funds Go to Phony Firms,” Chicago Tribune, September 10, 1978, 1, Louis Martin Files, M.B.1 Folder, Box 65, Carter Library. 50. Ibid., 2. 51. Ibid. 52. Robert T. Hall to [Chicago Tribune] Editor, September 27, 1978, Louis Martin Files, M.B.2 Folder, Box 65, Carter Library. 53. Ibid. 54. Ibid. 55. Ibid. 56. Memorandum, Robert T. Hall to Louis Martin, September 28, 1979, Louis Martin Files, M.B.1 Folder, Box 65, Carter Library. 57. “Minority Fronts,” 60 Minutes, vol. 11, no. 14, Sunday, December 17, 1978, 14, Burrelles Luce Transcripts, Livingston, NJ. 58. Ibid., 14–16. 59. Memorandum, Juanita M. Kreps to President Carter, “60 Minutes’ Story on 10 Percent Minority Business Enterprise (MBE) Effort,” November 13, 1978, Louis Martin Files, OMBE Folder, Box 21, Carter Library.

276  Notes 60. “Commerce Department and OMBE Celebrate an Attack on Hunger and Starvation with the Signing of the Largest Business Contract Ever Achieved by a Minority-Owned Firm,” Louis Martin Files, OMBE Folder, Box 21, Carter Library. 61. Malachi D. Crawford, “Bilalian News and the World Community of AlIslam in the West” (master’s thesis, University of Missouri–Columbia, 2003), 32. 62. “Commerce Department and OMBE Celebrate an Attack on Hunger and Starvation.” 63. Ibid. 64. Ghayth Nur Kashif, “Breakthrough for Minorities, Bilalian News, February 16, 1979, 3, Louis Martin Files, OMBE Folder, Box 21, Carter Library. Bilalian News was the official newspaper of the World Community of Al-Islam in the West. 65. “Muslims Get Federal Minority Pact for Food Processing,” Jet, February 15, 1979, 14, Louis Martin Files, OMBE Folder, Box 21, Carter Library. Despite the excitement surrounding the WCIW’s contact with the Department of Defense, within a year, according to one observer, the project faltered “due to production problems and the government’s unwillingness to renegotiate the original cost estimates” (Crawford, “Bilalian News and the World Community of Al-Islam in the West,” 40). 66. Press release, Commerce Department, March 1, 1979, Louis Martin Files, OMBE Folder, Box 21, Carter Library. 67. First Annual Report: Office of Minority Enterprise Program Development, Spring 1980, White House Central Files, 1/20/78–1/20/81 Folder, Box FG 128, Carter Library. 68. Ibid. 69. Ibid. 70. Ibid. 71. Ibid. 72. Ibid. 73. Juanita Kreps to James T. McIntyre, June 6, 1979, Louis Martin Files, MBEF 6 Folder, Box 62, Carter Library. In this later letter Kreps refers to her proposal of November 30, 1978. 74. Report on Meeting of Task Force on Minority Business Development, May 8, 1979, 1, Louis Martin Files, Minority Enterprise Files 5 Folder, Box 62, Carter Library. Among the persons present at this meeting were Louis Martin; Harry Schwartz of the White House Domestic Policy Council; James Dyke, special assistant to the vice president for domestic affairs, David Smoak, executive director of the White House staff; Berkeley Burrell, president of the National Business League; Earl Graves, editor of Black Enterprise; and William Kennedy, president of North Carolina Mutual Life Insurance Company. The evidence suggests that considering to the private-sector attendees, the

Notes  277 May 8 and June 22 task force meetings were offshoots of the June 14, 1978, White House reception for the top one hundred black businesses listed in Black Enterprise. 75. Report on Meeting of Task Force on Minority Business Development, May 8, 1979, 2. 76. Ibid., 3. 77. Ibid. 78. Ibid. 79. Ibid., 4, 5. 80. Agenda Summary, Minority Business Development Task Force Meeting, June 22, 1979, 2, Louis Martin Files, MBEF7 Folder, Box 62, Carter Library. 81. Jonathan J. Bean, BIG GOVERNMENT and Affirmative Action: The SCANDALOUS HISTORY of the Small Business Administration (Lexington: University Press of Kentucky, 2001), 100. 82. Agenda Summary, Minority Business Development Task Force Meeting, June 22, 1979, 2–3. 83. James H. Lowry and Associates, A New Strategy for Minority Business Development, undated report, Louis Martin Files, A New Strategy for Minority Business Enterprise Development Folder, Box 71, Carter Library. Albert Nason to Robert E. Weems Jr., October 1, 2007. Nason is an archivist at the Jimmy Carter Library. 84. Lowry and Associates, A New Strategy for Minority Business Development, 8. 85. Ibid. 86. Ibid., 9. 87. Ibid., 11. 88. Ibid., 11–12. 89. Ibid., 13. 90. Ibid., 19–20. 91. Ibid., 16. 92. Ibid. 93. Ibid., 17. 94. Ibid., 27. 95. Ibid. 96. James T. McIntyre Jr. to Juanita M. Kreps, July 10, 1979, Louis Martin Files, MBEF 6 Folder, Box 62, Carter Library. 97. Memorandum, Les Salamon to John Carey, July 26, 1979, Louis Martin Files, MBEF 6 Folder, Box 62, Carter Library. Salamon was deputy associate director for organizational studies, and Carey was an OMB staff member in the Economics and Government Division. 98. Berkeley G. Burrell to Louis Martin, May 30, 1979, Louis Martin Files, Minority Business Enterprise Files[5] Folder, Box 62, Carter Library.

278  Notes 99. “The National Business League’s Observations on the Proposed Minority Enterprise Development Administration,” May 30, 1979, Louis Martin Files, Minority Business Enterprise Files [5] Folder, Box 62, Carter Library. 100. Ibid. 101. Ibid. 102. Emile Milne and Isaiah Poole, “MBDA: Bigger Can Be Better,” Black Enterprise, December 10, 1979, 40, Louis Martin Files, MBDA-Leg. Folder, Box, 61, Carter Library. 103. White House press release, July 2, 1980, Robert Malson Files, Fullilove v. Klutznick Folder, Box 13, Carter Library. Robert Malson was an assistant director of the domestic policy staff in charge of the civil rights and justice cluster. 104. O’Reilly, Nixon’s Piano, 350, 353, 354.

Epilogue 1. Isaiah J. Poole, “Are the Promises Being Kept?” Black Enterprise, October 1983, 117. 2. Jonathan J. Bean, BIG GOVERNMENT and Affirmative Action: The SCANDALOUS HISTORY of the Small Business Administration (Lexington: University Press of Kentucky, 2001), 114. 3. Ibid., 113–14. 4. Nicholas Laham, The Reagan Presidency and the Politics of Race: In Pursuit of Colorblind Justice and Limited Government (Westport, CT: Praeger, 1998), 22. 5. Ibid. 6. White House press release, July 2, 1980, Robert Malson Files, Fullilove v. Klutznick Folder, Box 13, Carter Library. Robert Malson was an assistant director of the domestic policy staff in charge of the civil rights and justice cluster. 7. Ronald Turner, “On Palatable, Palliative, and Paralytic Affirmative Action, Grutter Style,” in Law, Culture, & Africana Studies, edited by James L. Conyers Jr. (New Brunswick, NJ: Transaction Books, 2008), 109–10; John Hope Franklin and Alfred Moss, From Slavery to Freedom: A History of African Americans, 8th ed. (Boston: McGraw-Hill, 2000), 577–78. 8. Franklin and Moss, From Slavery to Freedom, 578–80; Turner, “On Palatable, Palliative, and Paralytic Affirmative Action,” 110–11. 9. Hugh Davis Graham, Collision Course: The Strange Convergence of Affirmative Action and Immigration Policy in America (New York: Oxford University Press, 2002), 2. 10. Bean, BIG GOVERNMENT and Affirmative Action, 71, 72. 11. Ibid., 74. 12. Ibid., 71–76.

Notes  279 13. John D. Skrentny, The Minority Rights Revolution (Cambridge, MA: Harvard University Press, 2002), 144. 14. Ibid. 15. Randall Robinson, The Debt: What America Owes to Blacks (New York: Dutton, 2000), 8. 16. James H. Lowry and Associates, A New Strategy for Minority Business Development, undated report, 19–20, Louis Martin Files, A New Strategy for Minority Business Development Folder, Box 71, Carter Library. 17. The Basics of MBDA,” posted on Thursday, March 31, 2005, http:// www.mbda.gov. 18. Ibid. 19. Ibid. 20. National Minority Supplier Development Council, Inc., “History,” available at http://www.nmsdcus.org/who_we_are/history.html. 21. National Minority Supplier Development Council, Inc., “Procurement Activity,” available at http://www.nmsdcus.org/who_we_are/procurement. html. 22. Ibid. 23. See Jesse E. Gloster, North Carolina Mutual Life Insurance Company: Its Historical Development and Current Operations (New York: Arno Press, 1976) (reprint of PhD diss., University of Pittsburgh, 1955); Robert C. Puth, Supreme Life: The History of a Negro Insurance Company (New York: Arno Press, 1976) (reprint of PhD diss., Northwestern University, 1968); Walter B. Weare, Black Business in the New South: A Social History of the North Carolina Mutual Life Insurance Company (Urbana: University of Illinois Press, 1973); Alexa Benson Henderson, Atlanta Life Insurance Company: Guardian of Black Economic Dignity (Tuscaloosa: University of Alabama Press, 1990); Robert E. Weems Jr., Black Business in the Black Metropolis: The Chicago Metropolitan Assurance Company, 1925–1985 (Bloomington: Indiana University Press, 1996). 24. Weems, Black Business in the Black Metropolis, 116–17, 123. 25. Ibid. 26. Robert E. Weems Jr., “Africana Studies and the Quest for Black Economic Empowerment: What Can Be Done?” in Law, Culture, & Africana Studies, edited by James L. Conyers Jr. (New Brunswick, NJ: Transaction Books, 2008), 43. 27. “The Buying Power of Black America,” Target Market News (1996– 2002), available at http://www.targetmarketnews.com/buyingpowerstats.htm; “Black Insurance Companies,” Black Enterprise, June 1997, 196; “Black Insurance Companies,” Black Enterprise, June 1998, 187; “Black Insurance Companies,” Black Enterprise, June 1999, 216; “Black Insurance Companies,” Black Enterprise, June 2000, 206; “Black Insurance Companies,” Black Enterprise, June 2001, 206; “Financial Services Overview,” Black Enterprise, June 2002, 220; “B.E. Financial Services Overview,” Black Enterprise, June 2003, 200.

280  Notes 28. “The Buying Power of Black America, 2003”; “Expenditures for All Black Households for 2004,” available at http://www.targetmarketnews.com/ BuyingPower05.htm; “B.E. Financial Services Overview,” Black Enterprise, June 2004, 204; “B.E. Financial Services Overview,” Black Enterprise, June 2005, 186. 29. “Financial Services Firms,” Black Enterprise, June 2006, 171–86; “B.E. Financial Services Overview,” Black Enterprise, June 2007, 176. 30. Weems, Black Business in the Black Metropolis, 39–40, 103–4. One of the techniques used by white insurance companies to increase their market share in the black community was to hire (for more money) the top agents of black companies. Black insurers responded to this raiding of their top sales personnel by attempting to recruit white agents to sell their products in the European American community. In the end, while some black agents with black insurance companies readily defected to white-owned insurance companies, white insurance agents were not similarly attracted to employment with black firms. 31. Robert E. Weems Jr., Desegregating the Dollar: African American Consumerism in the Twentieth Century (New York: New York University Press, 1998), 60–69.

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296  Bibliography ———. “Why Black Business Is Optimistic.” Business Week, October 6, 1973, 95. Wicker, Tom. One of Us: Richard Nixon and the American Dream. New York: Random House, 1995. Wilkins, Roger. “Jimmy Carter’s First Year: One to Get Ready, Two to Go?” Black Enterprise, March 1978, 23–27. Williams, G. Mennen. “Africa’s Challenge to American Enterprise.” In Problems and Opportunities Confronting Negroes in the Field of Business. Report on the National Conference on Small Business, edited by H. Naylor Fitzhugh, 63–66. Washington, DC: U.S. Department of Commerce, 1962. Wood, Robert C. “The Viable Metropolis.” In Business Leadership and the Negro Crisis, edited by Eli Ginzberg, 121–31. New York: McGraw-Hill, 1968. Woods, Randall B. LBJ: Architect of American Ambition. New York: Free Press, 2006. Wright, Harry L. “Institutional Sources of Private Capital Financing.” In Problems and Opportunities Confronting Negroes in the Field of Business. Report on the National Conference on Small Business, edited by H. Naylor Fitzhugh, 70–73. Washington, DC: U.S. Department of Commerce, 1962. Wright, Nathan. “Black Power.” In Business Leadership and the Negro Crisis, edited by Eli Ginzberg, 53–61. New York: McGraw-Hill, 1968. Wright, Robert E. “Toward Controlled Development in Black America.” In Black Business Enterprise: Historical and Contemporary Perspectives, edited by Ronald W. Bailey, 159–63. New York: Basic Books, 1971. Young, Whitney M. Jr. Beyond Racism: Building an Open Society. New York: McGraw-Hill, 1969. ———. “The Split-Level Challenge.” Saturday Review, August 23, 1969, 16–18.

Dissertations and Theses Crawford, Malachi. “Bilalian News and the World Community of Al-Islam in the West.” Master’s thesis, University of Missouri–Columbia, 2003. Heimlich, Judith A. “The Business of Poverty: The Small Business Administration: The Economic Opportunity Act, and the Problem of Political Innovation.” PhD diss., Columbia University, 1967.

Interviews Martin Anderson, March 25, 2004. Robert Brown, August 16, 2002. John W. Dean, January 19, 2007.

Index

Abbott, Robert, 12. See also Chicago Defender Abernathy, Ralph D., 221 The Achieving Ghetto (Foley), 98–100 Adarand Constructors, Inc. v. Pena (1995), 9; negative impact on minority entrepreneurs, 220 Advisory Council for the Office of Minority Business Enterprise, 142 African American consumers, 222, 223–225 African Methodist Episcopal Church Conference, 90 Agency For Minority Enterprise Development (AMED), 216 Akerson, George, 20–21 Alexander, Archie A., 61 Alexander Grant & Company, 201 Allan A. Cheng and Associates, 207. See also American Pouch Foods Allegheny College, 123, 124 Allen, Robert L., 7, 127, 152, 265n99 Alpha Phi Alpha fraternity, 30 Alston, Mack, 85 Ambrose, Stephen E., 6, 121 America, Richard F., Jr., 138–139, 141, 146 American Association of Cable Television Owners (AACTO), 192 American Bankers Association (ABA), 95, 100 American Management Association, 90

American National Security Council (ANSC), 121 American Nazi Party, 118 American Pouch Foods (APF), 207–208 Anderson, Carol E., 61 Anderson, Martin, 113, 258n17 Atlanta Daily World, 165 Atlanta Life Insurance Company, 224 Austin, William L., 37, 38 Baker, Eugene, 272n2 Baldwin, Kit, 62 Banker’s Committee on Urban Affairs, 100 Banker’s Magazine, 132, 133 Banneker, Benjamin, 55 Barnett, Claude A.: and Associated Publishers Representatives, 20–21; background, 11–12; establishes Associated Negro Press, 12; and James A. Jackson, 5, 17; meeting with Secretary of Commerce Hoover, 13–14 Barrett, Bob, 161 Bates, Timothy, and William D. Bradford, 178–179 Baxter, Norman, 40, 42, 45 Bean, Jonathan J., 66, 73, 74, 183, 212, 219, 230–31n16, 233n1, 249n109, 270n99 Bell, Bob, 85 Bell, Ed, 85

297

298  Index Bell, William H., 45 Best’s Review, 224 Bethune, Mary McLeod, 28 Beyond Racism: Building An Open Society (Young), 131–132 “A Bigger and Better Negro Business Program,” 51. See also Phi Beta Sigma fraternity Billboard, 15 Black Advisory Council (Small Business Administration), 221 Black Awakening in Capitalist America (Allen), 152 Black Bourgeoisie (Frazier), 153 Black Business in the Black Metropolis: The Chicago Metropolitan Assurance Company, 1925–1985 (Weems), 280n30 Black capitalism, 100, 103, 108, 131; as campaign slogan, 122; de-emphasized as policy priority, 220–221; defined, 150–151; growing popularity of term after 1967, 79; institutionalized as Office of Minority Business Enterprise, 126–127; restructuring of government programs related to, 210 Black Capitalism: Strategy for Business in the Ghetto (Cross), 132–133 Black Council For Republican Politics, 170 Black, Earl, and Merle, 111 Black Enterprise, 7, 127, 194, 217, 224–225 “Black Entrepreneurship: Need and Opportunity for Government Help” (1968), 90–94 “Black Expo” programs, 156. See also Jackson, Jesse L. Black Industrial and Economic Union, 84–85 Black Leadership (Marable), 118

“Black Manifesto,” 130–131. See also Foreman, James Black Panther Party, embrace of black capitalism, 154–155 Blacks in Business (Jones), 137–138 Blackwell, Randolph T.: director of the Office of Minority Enterprise Program Development, 208–210; facilitator of American Pouch Foods contract with Defense Department, 207–208 Blayton, James B., 28, 60 Boggs, James, 7, 127, 152–153, 156 Bolton, Kenneth E., 198–199 Booms, Bernard H., and James E. Ward, Jr., 150–151 Bordentown Manual Training School, 45 Boswell, Arnita Young, 148 Boutin, Bernard, 77–78, 101; criticism of, as SBA administrator, 79; expansion of revamped EOL program, 78 Bradshaw, B. T., 45, 61 Brimmer, Andew, 7, 70, 127; public criticism of black capitalism and OMBE, 147–150, 151 Brock, Lou, 270n99 Brooke, Edward, 86 Brotherhood of Sleeping Car Porters and Maids, 24 Brown, Jim, 85 Brown, Robert, 147 Brown, Walter F., 26 Brown v. Board of Education, 66 Browne, Robert S., 128–129, 131, 245n81 Bryant, Nick, 73 Buckley, James L., 114 Buford, W. C., 53 Building Black Business: An Analysis and a Plan (Venable), 139–141

Index  299 Bunting, John, 85 Burrell, Berkeley K., 68, 147, 276n74; criticism of 1979 restructuring of OMBE, 216–217; support of OMBE, 170 Business clinics, 50–51, 55, 59 Business Management Fellowship Program. See Office of Minority Business Enterprise Byrd, Robert, 171 The Bystander: John F. Kennedy and the Struggle for Black Equality (Bryant), 73 Calhoun, John, 189; background, 171; supporter of OMBE, 172 Califano, Joseph, 76, 94, 96, 105–106; critic of Project OWN, 102 Calla, Pedro, 58–59 Capital Drycleaners Association, 81. See also Howard University DryCleaning Project Carmicheal, Stokely (Kwame Ture), 115, 116 Carter, Dan T., 112 Carter, Jimmy, 8–9, 44, 187, 188, 189, 190; critics of, 193, 195, 197; and Local Public Works Act of 1977, 191; and minority business setasides scandals, 207; and presidential campaign of 1980, 218; promotion of black capitalism, 192–193; White House reception with black business leaders, 194–195 Carver, George Washington, 55 Centennial High School (Watts), 124, 125 Chambers, Jason, 234n4 Chapman, Oscar, 52 Chester, Lewis, et. al., 257n3 Cheney, Dick, 271n117 Chicago Defender, 12, 41

Chicago Metropolitan Assurance Company, 224, 229n1 Chicago Tribune, 205, 207; on abuses of minority business set-asides, 203–204 Childs, Lawton, 212 City of Richmond v. Croson (1989), 9; negative impact on minority entrepreneurs, 220 Clay Products of the United States (Hall), 35 Cleaver, Eldridge, 155 Clegg, Claude, 136 Clement, William, 211 Coleman, William T., 164, 165 Collision Course: The Strange Convergence of Affirmative Action and Immigration Policy in America (Graham), 220 Colored Merchants Association (CMA), 23 Colored Undertakers and Embalmers Association, 3 “The Cons of Black Capitalism: Will This Policy Cure Urban Ills?” (Booms and Ward), 150–151 Coolidge, Calvin, 3, 15 Community Development Corporations (CDCs), 134 Community Self-Determination Act (Senate Bill 3876), 117, 118, 134 Conference on the Negro in Business (Commerce Department): First, 40–41; Second, 48–49; Third, 52–53; Fourth, 53–55; Fifth, 55–56; Sixth, 56; Seventh, 56–57; Eighth, 57–60 Congressional Black Caucus, 163; blockage of Sowell’s nomination to FTC (1976), 187 Congress of Racial Equality (CORE), 115, 116, 134, 152

300  Index Conyers, John, 116–117 Co-operative Motorists Association, 24 Council for Equal Business Opportunity (Baltimore) 92–93 Council of Economic Advisers, 96 Cox, George W., 49 Crawford, Malachi D., 276n65 Crosby, Robert A., 53 Cross, Theodore L., 132–134, 141, 146 Cuba, 58–59 Dallek, Robert, 106 Davis, Charles, 272n2 Davis, Don A., 41 Democratic National Committee, 170–171 Denman, John L., 133 Diggs, Charles C., Jr., 68, 69, 72 Division of Negro Affairs (Commerce Department), 3–5, 11, 47, 60, birth of, 13–17; enhancement of institutional status, 30; Jones’ tenure with, 30–35; Emmer Lancaster and, 39–64; and the Negro market, 30–31, 63–64; termination, 64–65 Dodson, Norris A., 49 Dole, Elizabeth, 219 Domestic Council, 159 Domestic détente, 6, 156; characteristics, 121–122 Du Bois, William Edward Burghardt, 60; convened “Negro In Business” conference (1898), 2 Dudziak, Mary L., 61, 246n84 Durham Fact Finding Conference: 1927, 18–19; 1929, 22 Dyke, James, 276n74 Dykman, Jan T., 104 Dyson, Michael Eric, 113–114

Eastern Fuel Oil Company, 52 The Economic Crisis and the Black Community: A Call for Action (1974), 163–164 “Economic detour,” 2, 225 Economic Development Administration (EDA), 76, 86, 103–104 Economic Opportunity Loan (EOL) program, 75–76, 91; expansion of program loans, 77–78; proposed improvement of, 178–179; success and failure rate of borrowers, 177–178 Economic Policy Board, 162–163 Edwards, Paul K., 30 8(a) programs, 158; background, 181–182; problems, 182–184, 211–212 Eisenhower, Dwight, D., 5, 39; terminates Division of Negro Affairs, 64–65. See also Division of Negro Affairs Eizenstat, Stuart, 192, 198–197, 272n8 Ellis, Clarence, 85 The Emerging Republican Majority (Phillips), 112 Evaluation of the 8(a) Contract Program (SBA), 182, 183–184 Evans, Jr. Roland, 119 Evanzz, Karl, 136–137 Evers, Medgar, 73 Executive order 11458 (March 5, 1969), 127, 128 Executive urder 11625 (October 13, 1971), 167 Farewell to the Party of Lincoln: Black Politics in the Age of FDR (Weiss), 27 Farmer, James, 115, 122 Farrington, Thomas A., 272n2

Index  301 Federal Communications Commission (FCC), 201 Federal Government Policy and Black Business Enterprise (Yancy), discussion of MESBIC program, 181 Federal Minority Business Development Programs (1976), 8, 173– 186; goals of programs, 174–175; OMBE and SBA task force on MESBIC program, 181; proposed reorganization of programs, 185–186 Federal Procurement (Store Front) Counseling Centers, 144–145, 146 Federal Railroad Administration, 198 Federal Reserve Board, 132, 147 FIGHTON (Rochester, NY), 92 Finch, Robert H., 133 Flawed Giant: Lyndon Johnson and His Times, 1961–1973 (Dallek), 106 Foley, Eugene P. 80, 94, 104, 221; advocate for black entrepreneurship, 71–72; and link of SBA to War on Poverty, 73–74; promotion of EOL program, 75–77; The Achieving Ghetto, 98–100 Foley, Tim, 85 Ford, Gerald R., 7–8, 190; Nixon pardon, reaction, 161–162; “open door” policy toward black community, 164–165, 171; political “honeymoon,” 160–161; promotion of black capitalism, 164, 172–173; unsuccessful nomination of Thomas Sowell to Federal Trade Commission, 187 Ford Foundation, 87, 92, 102 A Ford, Not A Lincoln (Reeves), 161 Foreman, James, 7, 127, 129–131, 152

Franchise Company Data Book, 82 Frazier, Edward Franklin, 153 Free African Society (Philadelphia), 224 Freedom National Bank (Harlem), 143 Fuller, S. B., 41 Fullilove v. Klutznick (1980), 9; affirmed constitutionality of minority business set-asides, 218, 220 Geilich, Jeffrey, 122 General Accounting Office (GAO), 179, 180, 182 Gerald Ford and the Challenges of the 1970s (Mieczkowski), 160–161 GHEDIPLAN for Economic Development, 134–135 Gibson, John, 120 Gladieux, Bernard L., 51 Gold Coast (West Africa) Forest Products Association, 53 Golden State Mutual Life Insurance Company, 224 Goldwater, Barry, 125 Goldwin, Robert A., 186, 187 “Government Contract Awards and the Negro in Business” (1942), 43–44 Graham, Donald M., 133 Graham, Hugh Davis, 220 Graves, Earl G., 194, 195, 276n74 Great Atlantic & Pacific Tea Company (A&P), 23 Green, Adam, 239n120 Green Power Foundation, 91–92 Greene, John Robert, 162 Gregory, Dick, 221 Gunderson, Geir, 267n33 Haas, Garland A., 274n30 Haiti, 47, 48, 55

302  Index Hall, Charles E., 3; background, 35; head of Division of Negro Affairs, 36–38; as statistician for the U.S. government, 35–36. See also Division of Negro Affairs Hall, Robert T., 204–205, 207 Harding, Warren G., 13 Harriman, W. Averill, 48–49 Harris, Jim, 85 Hartmann, Robert T., 165, 267n30 Harvard University Institute of Politics, 134 Hawley, Ellis W., 14 Hayward, Carlton, 62 Heflin, Thomas, 20 Height, Dorothy, 163 Henry, Barrington G., 60 “Herbert Hoover, the Commerce Secretariat, and the Vision of an ‘Associative State,’ 1921–1928” (Hawley), 14 Higgenbotham, Leon, 113 Higgins, Mack, 268n39 Hodges, Luther H., 67, 68 Hodges, Jr., Luther H., 202 Hogan, Lawrence D., 15 Holmes, Adolph, 147 Holmes, Mel, 85 Holsey, Albon L., 41; promoter of the CMA movement, 23; supporter of Herbert Hoover, 26–27 Hoover, Herbert, 3; and hiring of “Negro information specialist,” 13–14; as Secretary of Commerce, 13–15, 20; as president, 24–25 Hoover, J. Edgar, 115–116, 120–121 Horne, Gerald, 120, 259n35 Horne, John, 74 Houchins, Joseph R., 35, 38 Howard University Dry-Cleaning Project, 81 Humes, James, 118

Humphrey, Hubert H., 5, 74, 87, 89, 93, 98, 110, 117; advocate for black capitalism, 90, 104–105; rupture with LBJ, 104–105 Humphrey-Hawkins Bill (1978), 195 I May Not Get There With You: The True Martin Luther King, Jr. (Dyson), 113–114 Innis, Roy, 6, 135, 141, 146, 152, 259n32; background, 116; and Community Self-Determination Act, 117; transformation of CORE, 116; secret meeting with Nixon, 117, 118; “separatist economics,” 134; support of Nixon campaign, 115–120 Interagency Council For Minority Business Enterprise (IAC), 201–202 Interracial Council for Business Opportunity, 81, 91 Inter-religious Foundation for Community Organizations (IFCO), 130 Iota Phi Lambda business sorority, 51–52 Irons, Edward, 70–71 Jackson, James A. (“Billboard”), 3, 4, 11, 38, 41, 54; background, 15; as Commerce Department “Negro information specialist,” 16–27; dismissal from Commerce Department, 28–29 Jackson, Jesse L., 137: critic of black capitalism, 155–156; promoter of black capitalism, 156 Jackson, Joseph H., 171, 189 Jackson, Maynard, 163 James, Gorton, 16 Javits, Jacob, 74–75, 134 Jeffries, LeRoy, 72 Jenkins, John L., 147, 148

Index  303 Jet Food Corporation, 82 JFK, LBJ, and the Democratic Party (Savage), 106 Johnson, John H., 56, 57 Johnson, Lyndon, B., 5, 67, 74, 76, 89, 95, 115; ambivalence toward Humphrey, 105–106; failure to endorse black capitalism, 104; hatred of Robert Kennedy, 106–107 Jones, Edward H., 141, 146; and “integrated ownership,” 137–138 Jones, Eugene Kinckle, 3, 28, 46; background, 30; as Commerce Department’s “Advisor on Negro Affairs,” 30–35 Jones, James H., 40 Jones, Jerry, 171 Jordan, Vernon E., Jr., 163 Julian, Percy L., 55 Kaiser, Inez, 148 Kashmir Chemical Company, 12 Kennedy, Anthony, 9 Kennedy, Edward M., 133 Kennedy, John F., 68, 73 Kennedy, Robert F., 5, 89, 110; hatred of Lyndon Johnson, 106–107, 108; urban economic revitalization plan, 107, 108 Kennedy, William, 272n2, 276n74 Kent-Berry-Eaton Connection Railway (KBEC), 199 Kerner, Otto, 133 King, Martin Luther Jr.: assassination, 113–114; and black capitalism, 113–114; efforts to acknowledge his legacy, 160, 164; and Richard Nixon, 113 Kingdon, John, theory of “policy window of opportunity,” 114 The Kiplinger Washington Letter, 63 Kissinger, Henry, 122

Klein, Julius, 29 Klinkner, Phillip A., and Rogers M. Smith, 61 Kotlowski, Dean, 114, 145, 231n16 Kreps, Juanita, 191, 206–207, 208, 216 Ku Klux Klan, 15, 118 Lacey, Eugene F., 62 Laham, Nicholas, 219 Lamont, Robert P., 29 Lancaster, Emmer M., 3, 29, 38, 68; background, 39; dismissal from the Commerce Department, 64–65; as head of Commerce Department’s Division of Negro Affairs, 40–64 Laun, Louis F., 167, 268n37 Lemon, Harriet W., 53 Levinson, Lawrence, 101 Lewis, Dave, 85 Liberia (West Africa), 48, 55 Limited Success of Federally Financed Minority Businesses in Three Cities (GAO), 179 Lisio, Donald J., 13 Llewellyn, Bruce, 272n2 Local Public Works Act of 1977: constitutionality affirmed, 218; minority business set-asides, 191; minority business set-asides, abuses of, 203–207 Lockwood, Sharon B., 176–177 A Look At How Small Business Administration’s Investment Company Program For Assisting Disadvantaged Businessmen Is Working (GAO), 180–181 Lowry and Associates, 9, 212–216, 222, 225. See also A New Strategy For Minority Business Enterprise Development Lynn, James T., 170, 172

304  Index McCarthy, Eugene, 89 McClaughry, John, 116–117, 118 McIntyre, James T., 210, 216 McKissack & McKissack Construction Company, 44 McKissick, Floyd, 6, 133; background, 115; as GOP recruiter, 120; and McKissick Enterprises, 116; secret meeting with Nixon, 117, 118; “Soul City” project, 120; in Black Power movement, 115–116; support of Nixon campaign, 115–120 McLaurin, Dunbar S., 134–135, 141, 146 McNeish, Peter F., 100 Mackey, John, 84 Managerial Assistance: An Evaluation of Its Extent and Impact on Minority Owned Businesses (SBA), 184–185 Manpower Development Training Act (MDTA), 93 Marable, Manning, 118 Marsh, John, 157 Marshall Plan for black America, 70–71, 73, 99 Martin, Louis, 200, 216, 273n22, 274–275n38, 276n74 Martin, Tony, 118 Mason, Tom, 203–204 A Matter of Justice: Eisenhower and the Beginnings of the Civil Rights Revolution (Nichols), 65 Matzelinger, Jan E., 55 Mazlich, Bruce, and Edward Diamond, 273–274n30 Meet The Press (July 14, 1968), 119 The Messenger: The Rise and Fall of Elijah Muhammad (Evanzz), 136–137 Meyer, Peter, 273n30

Mid Delta Rabbitry Venture Cooperative (MDRVC), 208–209 Mieczkowski, Yanek, 160–162 Miller, Ray L., 50 Milton, Lorimer D., 69 Minority Assistance for Minority Entrepreneurs (MAME), 101 Minority Bank Deposit Program (MBDP), 201 Minority Broadcast Ownership Program (MBOP), 200–201 Minority Business Development Agency (MBDA), 8–9, 190, 217, 225; contemporary operations, 222–223; created as reform measure, 218 Minority Business Resource Center (Department of Transportation), 173, 190, 207; growth of, 198– 199; local outreach centers, 199 Minority Enterprise and Expanded Ownership: Blueprint for the 70s (1971), 185 Minority Enterprise Development Administration (MEDA), 210, 216 Minority Enterprise Small Business Investment Company (MESBIC) Program, 158, 177, 179–180; problems, 180–181 “Minority Entrepreneurship” report (1968), 102–103 The Minority Rights Revolution (Skrentny), 221 Mitchell, Bobby, 84 Mitchell, John, 112, 119 Mitchell, Margaret (Bunny), 192, 194, 200, 272n2 Mitchell, Parren, 171, 197, 198 Molitor, Graham T., 122 Mollenhoff, Clark R., 273n29 Moot, Robert C., 79 Moton, Robert, 25

Index  305 Mould, W. J. Kwesi, 53 Mudgett, Donald, 203–204 Muhammad, Elijah, 135, 136, 137, 207 Muhammad Speaks, 135–136, 155–156; editorial policy on Nixon administration, 135 Muhammad, Wallace D., and American Pouch Foods, 207–208 Murphy, George, 120 Murray, Claude D., 49 Muskie, Edmund, 106, 117 Mutual Contempt: Lyndon Johnson, Robert Kennedy, and the Feud That Defined a Decade (Shesol), 106–107 The Myth of Black Capitalism (Ofari), 153–154 Nation of Islam, 118; overtures to Nixon administration, 135–137 National Advisory Commission on Civil Disorders, 79 National Advisory Committee on Defense Contracts for Small Firms Operated by Negroes, 61–63 National Association for the Advancement of Colored People (NAACP), 25, 46, 163 National Association of Black Manufacturers (NABM), 171; proposal to improve 8(a) program, 212 National Association of Funeral Directors, 3 National Association of Manufacturers, 86 National Association of Teachers in Colored Schools, 24 National Bankers Association, 3, 71 National Baptist Convention (NBC), 171, 189 National Black Business State of Affairs Committee (NBBSAC), 190–191, 192

National Black Caucus of Local Elected Officials, 163 National Black Economic Development Conference (NBEDC), 127–131, 152 National Black Economic Summit (1974), 163–164 National Business League, 86, 145–146; and Operation CATAPULT, 103–104; support of OMBE, 170, 173 National Cable Television Association (NCTA), 192 National Committee for a Two-Party System, 120. See also McKissick, Floyd National Conference on Business Opportunities for Women (sponsored by OMBE), 146, 148, 149 National Council of Churches (NCC), 130, 261n4 National Council of Negro Women, 163 National Council on Urban Enterprise (NCUE), 87 National Economic Development Bank (NEBD), 132 National Minority Purchasing Council (NMPC), 172–173, 186, 202 National Minority Supplier Development Council (NMSDC), 222, 223, 225. See also National Minority Purchasing Council National Motorists Association, 24 National Negro Bankers Association, 22, 24. See also National Bankers Association National Negro Bar Association, 24 National Negro Builders Association, 24 National Negro Business Advisory Council, 42

306  Index National Negro Business League, 18, 19, 27, 52, 55; formed 1900, 2; and Emmer Lancaster, 51; support of “Negro information specialist,” 13. See also National Business League National Negro Finance and Investment Corporation, 48 National Negro Insurance Association, 3, 24 National Negro Retail Merchant’s Association, 3 National Newspaper Publishers Association, 64, 165 National Personnel Records Center (St. Louis), 36 “A National Program For Promoting Minority Entrepreneurs” (1968), 87–88 National Security Council (NSC), 159 “A National Strategy For Developing Minority Business Opportunities” (1968), 86–87 National Telecommunications and Information Administration (Department of Commerce), 200 National Urban League, 28, 69, 73, 145–146, 163 Negro Business and Business Education (Pierce), 3 Negro Chambers of Commerce, 32–33 Negroes in the United States: 1920– 1932 (Hall), 36–37 “Negro exhibition” for Texas Centennial Exposition (1936), 33–34. See also Division of Negro Affairs The Negro in Business, 31 “Negro in Business” conference (1898), 2. See also Du Bois, William Edward Burghardt Negro Population in the United States, 1790–1915 (Hall), 36

The Negro’s Adventure in General Business (Oak), 3 Neighborhood Development Corporations (NDCs), 132 A New Strategy for Minority Business Economic Development (1979), 10, 212–216; criticized by National Business League, 217; proposed restructuring of federal programs for minority business enterprise, 214–216 Newton, Huey P., 154–155 Newton, Walter, 25–26 New York Urban Development Corporation, 122, 125 Nichols, David A., 65, 248–249n102 Nimetz, Matthew, 96, 97 1972 Survey of Minority Owned Business Enterprises, 174 Nixon, Richard M., 1, 5, 6–7, 11, 39, 44, 54, 142, 190; and black militants, 114–122; “Bridges to Human Dignity” speeches, 90, 100, 115; chairs President’s Committee on Government Contracts, 65–66; and decline of black capitalism, 220–221; pardoned by Gerald Ford, 161–162; “Southern strategy,” 110, 111–112; supports Community Self-Determination Act, 117, 118; on urban economic revitalization, 107, 109. See also Domestic détente Nixon: An Oral History of his Presidency (Strober and Strober), 6 Nixon in the White House: The Frustration of Power (Evans and Novak), 119, 257n3 Nixon’s Piano: Presidents and Racial Politics From Washington to Clinton (O’Reilly), 65 Nixon’s 10 Commandments of Statecraft (Humes), 118

Index  307 Nixon: The Triumph of a Politician (Ambrose), 6 North Carolina Mutual Life Insurance Company, 18, 46, 67, 224 Novak, Robert D., 119 Nuestadt, Rick, 192, 272n8 O’Connor, Sandra Day, 9, 220 O’Reilly, Kenneth, 65, 273n20 Oak, Vishnu V., 3, 49 Ofari, Earl, 7, 127, 153–154 Office of Economic Opportunity (OEO), 75; Small Business Training and Technical Assistance Program, 91 Office of Federal Procurement Policy: minority media initiative, 200; promotion of government contracts, 193 Office of Management and Budget, 167, 170, 173, 210 Office of Minority Business Enterprise (OMBE), 7, 8–9, 30, 39, 158, 189, 190, 199; audit of and proposed reorganization, 165–170; and black capitalism, institutionalization of, 127; critics of, 150–151; early budget problems, 145; OMBE Outlook and OMBE Access, 140–146; partnership with the National Football League (Business Management Fellowship Program), 85; proposed 1974 budget cut, 164 Office of Minority Enterprise Program Development (OMEPD), 208–210 Office of Public Liaison (White House), 219 Office of Special Assistant to the President, 159–160. See also Scott, Stanley S. Office of Urban Enterprise (OUE), 87

OMBE Outlook/OMBE Access (magazines), 140–146, 263–264n61 O’Neil, Eugene (Tip), 171 Operation Breadbasket (Southern Christian Leadership Conference), 137, 155. See also Jackson, Jesse L. Operation CATAPULT, 103–104. See also National Business League Opportunities Industrialization Centers (OIC), 143, 165. See also Sullivan, Leon H. An Original Man: The Life and Times of Elijah Muhammad (Clegg), 136 Orman, John, 274n30 Pacific Defender, 22 Pacific Parachute Company, 44 Palace Politics: An Inside Account of the Ford Years (Hartmann), 165 Palmer, Garland, 52 Parker, John J., 25 People United to Save Humanity (PUSH), 137 Pepsi-Cola, 46 Perkins, Curtis T., 170 Perkins, Francis, 28 Peterson, Sally, 148 Peyton, Orval E., 53 Phi Beta Sigma fraternity, 51, 52 Philadelphia Negro Chamber of Commerce, 50 Phillips, Kevin, 112, 257n4 Phillips, Lionel, 143 Pierce, Joseph A., 3 Plato, Samuel F., 43–44 Poinsett, Alex, 113 Policy letter 78-I, 200, 201. See also Minority Business Resource Center The Politics of Rage: George Wallace, The Origins of the New Conservatism, and the Transformation of American Politics (Carter), 112

308  Index Porter, Dorothy, 31 “Post-War Planning and the Negro in Business” (1943), 46–47 The Presidency of Gerald Ford (Greene), 162 “The Presidential Election: A Proposal For Adoption of a Minority Voting Bloc Strategy,” 187–188. See also Thomas, Douglas L. President’s Advisory Committee on Civil Disorders, 102 President’s Advisory Council on Minority Business Enterprise, 185 President’s Committee on Government Contracts (PCGC), 5, 39, 65–66 Profit, Joe, 85 Progress Aerospace Enterprises, 143. See also Sullivan, Leon H. Progress Garment Manufacturing Company, 143. See also Sullivan, Leon H. Progress Plaza Shopping Center (Philadelphia), 142–143 Project Outreach, 91 Project OWN, 5, 89. See also Samuels, Howard J. “Proposals For New Priorities in SBA’s Minority Lending Program” (Bates and Bradford), 178–179 Public law 95–507, 8, 190, 200; stipulations, 197–198 Questionable Effectiveness of the 8(a) Procurement Program (GAO), 182–183 Rabb, Max, 65 Race First: The Ideological and Organizational Struggles of Marcus Garvey and the Universal Negro Improvement Association (Martin), 118

Racism and the Class Struggle (Boggs), 152–153 Railroad Revitalization and Regulatory Reform Act of 1976, 173, 190, 198 Rangel, Charles B., 163 Raspberry, William, 101 Reagan, Ronald, 9, 190, 218; impact of his Supreme Court nominees on minority business enterprise, 220; 1968 presidential campaign, 111; political benefits from Watts rebellion, 120; promotion of minority business enterprise, 220 Reeves, Richard, 161 Regents of the University of California v. Bakke (1978), 196; White House reaction, 196–197 Reid, Ira D. A., 31 Reparations, 73, 222 Republican Party and blacks, 3, 12–13, 24–27, 159; proposal to assist GOP during 1976 presidential election, 187–188 “Research and its Relationship to Negro Business” (1943), 47–48. See also Sullivan, David J. The Review of Black Political Economy, 7, 127 Reynolds, Barbara, 137 Reynolds, William Bradford, 219–220 The Rise of Southern Republicans (Black and Black), 111 Rivers, Francis E., 26 Robinson, Jackie, 125, 126, 143, 221 Robinson, Randall, 10, 222 Rockefeller, Nelson, 7, 110; campaign visit to Watts, 124–125; meeting with black newspaper publishers, 125; as proponent of black capitalism, 122, 124, 125; and RFK assassination, 123–125

Index  309 Roosevelt, Franklin D., 27, 173; and “black cabinet,” 28; and Charles E. Hall case, 38; and executive order 8802, 41–42 Roosevelt, James, 36 Roper, Daniel C., 28, 35, 36, 37, 38, 40 Rozelle, Carrie, 85 Rumsfeld, Donald, 164 Rural Small Towns Task Force, 159 Russell, Rosalind, 57 Samuels, Howard J., 5, 89, 104, 221; administrative zeal, 98; background, 94–95; critics of, 96–98; promotion of black retail ownership (Project OWN), 95–96 Sanders, Lonnie, 84 Sandoval, Hilary, 220–221 Savage, Sean J., 106 Sawyer, Charles, 53–54 Scalia, Antonin, 9 Schwartz, Harry, 276n74 Scott, Emmett J., 36 Scott, Stanley S., 187; advisor to President Ford, 157–160; background, 157; left Ford administration, 171, 268–269n52; and 1976 election, 172 Scott, Walter D., 167, 168, 268n37 Seale, Bobby, 154–155 The Secret Files of J. Edgar Hoover (Theoharris), 115–116 Sengstacke, John H., 41 Shesol, Jeff, 106–107 6-by–6 loans, 74, 76 60 Minutes (December 17, 1978), 205–207 Skrentny, John D., 221 Small Business Administration (SBA), 5, 39, 65, 79, 86; birth of, 66; and congressional audit of OMBE, response to (1975), 167–168;

and 8(a) programs, 182–184; and MESBIC program, 180–181; and Project OWN, 95–96, 100–102; study of management assistance to minority firms, 184–185; study of minority borrowers, 176, 177; and War on Poverty, 73–76 Small Business Development Centers (SBDCs), 75 Small Business Opportunities Corporation (Philadelphia, PA), 73–74 Smaller War Plants Corporation, 43; Lancaster initiative involving black colleges and universities, 44–45 Smith, Cyrus R., 104 Smith, Newman, 50 Smoak, David, 276n74 Snowden, Cal, 85 “Soul City” project, 120. See also McKissick, Floyd The Southern Urban Negro as a Consumer (Edwards), 30 Sowell, Thomas, 8; and Ford administration, 186–187; nomination to FTC withdrawn, 187 Spaulding, Asa, 67 Spaulding, Charles Clinton, 18 Spelman College, 122, 123 Spencer, Stuart, 187 Staggers, Jon, 85 Standard Parachute Company, 44 Stans, Maurice, as Nixon’s Secretary of Commerce, 6, 121, 142–147; funding of business development organizations, 145–146; visit to Progress Plaza (Philadelphia), 142–143; walking tour of Harlem business community, 143, 145 Staples, Robert, 154 “State of Affairs in Minority Business Enterprise in America” (NBBSAC report, 1977), 191, 192

310  Index Stokes, Carl B., 133 Strauss, Robert, 171 Strober, Gerald and Deborah, 6, 121 Stuart, Merah S., 1 Student Nonviolent Coordinating Committee (SNCC), 129 Study of Minority Borrowers and Firms Prior and Subsequent To SBA Assistance (SBA), 176, 177 Sudduth, Horace, 62 Sullivan, David J., 47, 49 Sullivan, Leon H., 142–143 Sumlin, Stanley, 71 Summary Reports of a Fact Finding Survey on Employment and Business Conditions among the Negro People (1949), 60 Supreme Life Insurance Company, 224 Surface, Frank M., 21 Tabor, John K., 168 Target Market News, 224 Task Force on Minority Entrepreneurship, 96–98 Tet Offensive, 89 Theoharris, Athan, 115 Thomas, Clarence, 9, 220 Thomas, Douglas L., 187 Thomas, Julius A., 69–70 Title IV of the Economic Opportunity Act (1964), 74–75 Tower, John, 134, 220 Townes, Clarence L., 41 The Triumph and Tragedy of Lyndon Johnson: The White House Years (Califano), 105–106 Truman, Harry, 4–5, 61 “Twenty-Five Counties Energy Project,” 209. See also Office of Minority Enterprise Program Development (OMEPD)

Universal Life Insurance Company, 224 Urban Coalition, 86 U.S. Bureau of the Budget, 96 U.S. Department of Commerce, 3–5, 8, 96; Division of Negro Affairs, birth of, 13–15; Charles E. Hall, 35–38; Emmer Lancaster and Division of Negro Affairs, 39–64; hiring of James A. Jackson, 16–17; Jackson as “Negro information specialist,” 18–28; hiring of Eugene Kinckle Jones, 28; Jones’ tenure with Division of Negro Affairs, 30–35; response to 1975 congressional audit of OMBE, 168–169. See also Division of Negro Affairs U.S. Department of Defense, 86; contract with American Pouch Foods, 207–208; support of Mid Delta Rabbitry Venture Cooperative, 209 U.S. Department of Energy, 201 U.S. Department of Health, Education and Welfare, 86 U.S. Department of Housing and Urban Development, 86 U.S. Department of Labor, 86, 92, 96 U.S. Department of Transportation, 173, 198 Venable, Abraham S., 79, 80, 86, 146; Building Black Business, 139–141; Economic Organization Concept of, 81, 83–84; link to black predecessors at Commerce Department, 80; and the NFL, 83–84; as OMBE Director, 142–143, 145; promotion of franchise ownership, 81–82 Veterans Administration (VA), 50 Voice of America, 61 Walker, Juliet E.K., 1, 14, 230– 231n16, 233n1

Index  311 Walking With Presidents: Louis Martin and the Rise of Black Political Power (Poinsett), 113 Wallace, George, 111, 112 Wallace, Henry A., 48 Wallace, Leon, M., 41 Wallace, Mike, 207, 208 “The War Emergency and the Negro in Business” (1942), 42 Waring, Mary Fitzbutler, 36 War Production Board, 43 Washington, Booker T., 11; and National Negro Business League, 2 Washington, Forrester B., 28 Washington, Hazel, 57 Watergate, 157, 161, 165 Watts Manufacturing Company, 124, 125 Watts rebellion (1965), 76, 120–121 “Wedtech” scandal, 138 Weinberg, Robert, 102 Weiss, Nancy, 27 Werner, Ludlow, 56–57 West, Robert, 85 Wexler, Anne, 196–197 White House Conference on Small Business (1979): May 8 task force meeting, 210–211; June 22 task force meeting, 211–212 Why Some Minority Business Enterprises Fail and Others Do Not: A Statistical Analysis (Lockwood), 176–177

Wilberforce University, 44–45 Wilkins, Roy, 163; on Black Capitalism: Strategy for Business in the Ghetto, 133–134, 151; on King assassination, 113 Williams, Barbara, 272n2 Williams, G. Mennen, 71–72 Williams, Paul R., 41 Wilson, Joan Hoff, 14 Wood, Willie, 84 Woodford, John, 135–136 Woods, Randall B., 120–121 World Bank, 132 World Community of Al-Islam in the West (WCIW), 207, 208. See also Muhammad, Wallace D. Xerox, 92 Yancy, Robert J., 181, 230–231n16 Young, Andrew, 208 Young, Buddy, 83–84 Young, Whitney, 73, 74, 79, 135, 141, 146, 221; blueprint for black economic development, 131–132; praise of Project OWN, 101; and King assassination, 113 Zion Baptist Church (Philadelphia), “10–36 Plan,” 143 Zwick, Charles J., 104

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About the Authors

Robert E. Weems, Jr., is Professor of History at the University of Missouri–Columbia. His books include The African American Experience: An Historiographical and Bibliographical Guide and Desegregating the Dollar: African American Consumerism in the Twentieth Century (NYU Press). Lewis A. Randolph is Professor of Political Science at Ohio University.

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