Why Aren't Black Business Tycoons Celebrated During Black History Month?

News article

By: Jeffrey J. Matthews

Date: February 27, 2006

Source: History News Network. "Why Aren't Black Business Tycoons Celebrated during Black History Month?" February 27, 2006 〈http://hnn.us/articles/22169.html〉 (accessed July 17, 2006).

About the Author: Jeffrey J. Matthews is the Director of the Business Leadership Program at the University of Puget Sound in Tacoma, Washington, where he teaches courses in leadership, international business, and history. He is also the author of Alanson B. Houghton: Ambassador of the New Era (2004).

INTRODUCTION

This article questions why the history of black people in the United States pays insufficient attention to the achievements of black entrepreneurs and executives such as the renowned John Harold Johnson, who owned Ebony Magazine and numerous other business enterprises.

An annual period to commemorate Black History has been observed in the United States since 1926, when it was first organized by a Harvard scholar Dr. Carter G. Woodson (1875–1950). Woodson was keen to bring the story of African Americans into mainstream historical study and designated a week in February as Negro History week, in which black contributions to American society were celebrated. Over time, it has evolved into the annual Black History Month.

However, as the author of this article notes, the main focus of African America history has always been on slavery and on the experiences of black people as workers and subordinates. Although there is evidence of entrepreneurship among black people even before the Civil War, these accomplishments are generally given little or no discussion in history books.

In the eighteenth century, the vast majority of African Americans in the United States were slaves, working as agricultural field-hands on the cotton, rice, and sugar plantations. After the abolition of slavery in 1864, many blacks continued working in agriculture, mainly as poor sharecroppers and tenant farmers. With industrialization and urbanization, a high percentage of blacks moved to the towns, and into unskilled and low-skilled service occupations and manual labor. Over the course of the twentieth century they have consistently had higher unemployment and under-employment rates than white people and other ethnic minorities such as the Latinos.

The relatively high rates of poverty and disadvantage among blacks have led to a focus in history and social science on these characteristics and on investigating the factors that contribute to them. However, studies have tended to ignore or sideline the phenomenon of black entrepreneurship, which also has a long history. Even during the time of slavery, there are reports that many blacks in the southern states were planters, shareholders, or other businessmen, and many amassed hundreds of thousands of dollars.

Although some of these black entrepreneurs lost their fortunes during the Civil War, others continued their business activities and many black enterprises survived into the twentieth century. A new group of black businesspeople also emerged among the former slaves, some of whom had worked as artisans and were able to transfer their skills easily to new business enterprises, serving white as well as black communities. Indeed, the difficulties faced by African Americans in overcoming racial discrimination in the labor market and securing well-paying jobs has encouraged many of them to turn to self-employment, some simply making a living as individual traders and service providers, and others becoming highly successful businesspeople with very profitable enterprises.

In the late twentieth century, particularly after the Civil Rights Act of 1964 made illegal any discrimination on the basis of color, race, or gender, the number of African American owned businesses grew tremendously, particularly as black people had greater access to sources of funding than in the past. Despite the impressive growth, however, blacks remained under-represented in business compared to their percentage of the population. In the 1990s, it was reported that just over three percent of all United States businesses were owned by black people and these companies accounted for only one percent of total annual business receipts, even though African Americans comprised around thirteen percent of the population at this time. Moreover, although African Americans were achieving success in some niche areas such as the funeral business, black companies in more competitive sectors, such as retailing, were experiencing high rates of failure.

Some scholars have argued that the reasons for African Americans' low level involvement in business include the lack of an entrepreneurial tradition among black people, and the inability to develop the sort of business networks and ethnic credit facilities that have been important in other minority communities. However, others argue that it has been the impact of discrimination and racism against black people that has stifled their greater participation in entrepreneurial activity.

PRIMARY SOURCE

It's February and that means it's Black History Month, a designated time to commemorate and celebrate black contributions to American society. Unfortunately, the historic achievement of African American businesspeople is too often neglected this month, and every month.

For more than two decades, a number of historians, led largely by the pathbreaking scholarship of Professor Juliet E.K. Walker of the University of Texas, have been working to expand our knowledge of the rich tradition of black entrepreneurs, managers, and corporate executives. Too few people, including U.S. historians, have taken notice.

This historical neglect might have changed after last year, which witnessed the passing of one of the greatest entrepreneurs in American history. John Harold Johnson, the grandson of slaves, rose from Depression-era Arkansas roots to reach to the pinnacle of commercial success. By 1982 he had earned a place on the Forbes 400 list of richest Americans—the first African American so recognized. By the time of his death, at the age of eighty-seven, his fortune was thought to exceed half a billion dollars.

Johnson's business career began in 1936 when he accepted a part-time position with the black-owned Supreme Life Insurance Company of Chicago. In 1942, using his mother's furniture as collateral for a loan and advance proceeds from charter subscribers, he began his storied entrepreneurial career by creating the monthly news magazine Negro Digest. Three years later, he launched the legendary Ebony magazine, and in 1951 he began publishing the pocket-sized newsweekly Jet. By 1955, Johnson was an established millionaire and his publishing company reported a combined circulation of 2.6 million.

Of course what makes Johnson's success story even more remarkable is that he, like other black entrepreneurs and businesspeople, was forced to overcome severe racism. Early on, for example, when he approached First National Bank of Chicago for a business loan, he was told "Boy, we don't make any loans to colored people." Years later, a white property owner refused to sell his office building to Johnson because he was black. Undeterred, Johnson hired a white attorney to act surreptitiously on his behalf and he proceeded to buy the property at fair market value.

Another obstacle was convincing white advertising agencies and corporate executives to advertise in Johnson's magazines. He found some limited success with the companies Chesterfield and Kotex, but the significant financial breakthrough came in 1947 when this consummate salesman attracted the loyalty of Eugene F. McDonald, Zenith Radio's president, who not only bought major blocks of advertising but also encouraged other major corporations to do the same. As a result, business historian Robert Weems argues that Johnson "emerged as the major intermediary between corporate America and black consumers." Many years later, Johnson joined Zenith's board of directors.

Clearly Johnson was an ambitious capitalist, but he also was committed to both black economic empowerment and to enhancing the image of African Americans in the media. Over decades, Johnson employed and trained thousands of black Americans and he supported the activities of many black entrepreneurs, especially those in the advertising industry. On a broader scale, the eminent psychologist and Civil Rights leader Kenneth B. Clark concluded that "It is almost impossible to measure the morale-building value of [Ebony]. The mere fact of its existence and success has been an inspiration to the Negro masses."

John Johnson's business activities extended beyond magazine publishing and real estate investments. He owned multiple radio stations, sponsored several television shows, and manufactured hair care products. In 1973, he founded Fashion Fair Cosmetics, which after losing $5 million during its first five years of operation, grew to become America's largest black-owned cosmetics company with international sales in North and Latin America, in Europe, and in Africa. Other Johnson business lines included travel services, a mail order operation, fashion shows, clothing, and book publishing.

Beyond commerce, Johnson left a legacy of philanthropy that was most often committed to education. He was especially dedicated to the United Negro College Fund, and it is estimated that his companies helped to raise more than $51 million in scholarships throughout the country. Several years before his death, he donated $4 million to Howard University's School of Communications, which now bears his name. He also actively supported the Urban League, the National Association for the Advancement of Colored People, and the National Conference of Christians and Jews.

Not withstanding the above, John Johnson was a controversial figure. Employees complained about his autocratic leadership style, with some even referring to Johnson Publishing as the "plantation." In 1985, Fortune magazine labeled him as "one of the toughest bosses to work for." Johnson's publications were also criticized for offering too much "fluff" at the expense of critical reporting on the continuing inequities of American society. In response, Johnson often pointed to specific stories he had published related to the civil rights struggle, but he also reminded his critics that he was "a businessman, not a social worker."

For most of his life Johnson preached that a strong work ethic and sheer perseverance could overcome racial prejudice. But the accomplished millionaire came to question this precept, writing in his autobiography, Succeeding Against the Odds: "the closer I get to the top the more I realize that I'm never going to be fully accepted on merit and money alone. And that a different generation of Blacks—and a different generation of Whites—will know the final victory."

It is difficult to exaggerate John Johnson's influence on American society. And while the extent of his commercial success is truly exceptional, he is but one of countless examples of the inspirational black business tradition in American history. That tradition deserves more attention not only during Black History Month but also in the pages of our classroom history books.

SIGNIFICANCE

By focusing on the study of black people primarily as slaves and workers, mainstream history and social science may serve to perpetuate inequalities between blacks and whites in American society. In consistently portraying black people as subordinates, rather than equal participants in the modern American economy and society, these studies may create or strengthen beliefs and attitudes that legitimize racism at both personal and institutional levels and in turn prevent the greater involvement of black people in business.

A body of research into black business has been developing among white academics in recent years, with an emphasis so far on the study of black financial institutions such as insurance companies. This may help to highlight the achievements of black business people and contribute to a better understanding of the factors which have promoted as well as restricted entrepreneurship among African Americans.

FURTHER RESOURCES

Books

Walker, Juliet E. K. Encyclopedia of African American Business History. Westport, Conn.: Greenwood Press, 1999.

Walker, Juliet E. K. The History of Black Business in America: Capitalism, Race, Entrepreneurship. New York: Macmillan Press, 1998.

Periodicals

Dagbovie, Pero Gaglo. "Making Black History Practical and Popular: Carter G. Woodson, the Proto Black Studies Movement, and the Struggle for Black Liberation." The Western Journal of Black Studies. 28 (June 22, 2004): 372-383.

House, Bessie. "Does Economic Culture and Social Capital Matter?: An Analysis of African-American Entrepreneurs in Cleveland, Ohio." The Western Journal of Black Studies 24 (September 22, 2000): 183-192.