Black Enterprise in the Retail Trade during the Early Twentieth Century

Abstract

Past studies of black enterprise in retailing during the early twentieth century have been limited. Using 1940 census data, I extend this research by analyzing the participation of blacks in retail proprietorships in more than 60 cities in the North and South. Based on a review of the sociological, economic, and historical literatures, I develop and test several hypotheses about the effects of demographic, ecological, and labor market variables. Black enterprise in retailing was positively associated with the residential segregation of blacks in both regions, indicating that, consistent with theory and research, black retailers were aided by the spatial concentration of black consumers. Salient regional differences were also observed. Black enterprise in retailing was positively associated with the percentage of the black population in the North, a finding consistent with the economic detour theory; but the relatively large black populations of southern cities did not support black retailers. Finally, black enterprise in retailing was inversely associated with the black employment-population ratio in the North but not in the South, implying that, in northern cities, consistent with the disadvantage theory of entrepreneurship, the tendency of blacks to become retailers was highest where black employment was lowest.