The Suppression Hypothesis Reconsidered: Competition Between Blacks and White Immigrants in the Retail Trade in Large Northern Cities, 1910-1930

Abstract

Introduction The development of entrepreneurship in retail trade in large northern cities during early 20th century was viewed by many leaders as essential to economic progress of blacks as group. If retail entrepreneurs could monopolize local trade in communities that were created in these cities by first wave of Black Migration to North (circa 1915-1930), then, it was believed, number of benefits would follow: These entrepreneurs would expand their businesses, hire additional employees, and, over long run, sustain network of black-owned wholesaling and manufacturing enterprises that could provide foundation for economy, that is, a cooperative arrangement of industries and services within Negro group such that group tends to be closed economic circle largely independent of surrounding white world (Du Bois 1907: 179, quoted in Waldinger and Aldrich 1990: 59). The basis of this belief was doctrine of double-duty dollar, which was popularized by church and press in urban North in 1920s and 1930s. This doctrine, which was evidently based on concept of multiplier effect in economic theory (Pearce 1986: 288), argued that money spent in retail stores owned by blacks would circulate within community and, in so doing, generate greater employment and incomes for blacks, locally and nationally (Drake and Cayton 1962: 430-431; see also Light 1972: 119, citing Harris 1936; Myrdal 1944). Accordingly, in wake of Great Migration, support for entrepreneurship in retail trade was vigorously encouraged in northern cities by churches, newspapers, and voluntary organizations, such as lodges and fraternal orders. This support often took form of buy black campaigns. These campaigns originated in urban North (Frazier 1957: 166) and emphasized the duty of to trade with Negroes and promised to blacks ultimate 'racial' salvation through their loyal patronage of black-owned retail stores (Drake and Cayton 1962: 430; see also Ofari 1970: 52). Sometimes support for entrepreneurship took form of attempts to promote cooperative ventures among those entrepreneurs who sought to become retail merchants. These attempts were motivated by belief that in retail trade would be achieved through efficiencies gained by pooling of resources, coordination of business practices, such as advertising, and standardization of goods and equipment. The Colored Merchants Association, founded in New York City by Albon Holsey in 1929 under auspices of late Booker T. Washington's National Negro Business League, was an example of such collective venture (Light 1972: 125, citing Harris 1936). In spite of these efforts, though, entrepreneurs struggled to establish themselves in retail trade in urban North. They faced numerous obstacles, including racial bias in lending and in extension of credit, exclusion from main commercial districts, restricted access to business training, and denial of both property rights and police protection (Boyd 2001: 242, citing Bates 1973; Butler 1991; Harmon 1929; Harris 1936; Higgs 1977; Myrdal 1944). Furthermore, by some accounts, they were also hampered by limited opportunities to gain experience in buying and selling (Frazier 1949: 411), dearth of entrepreneurial success symbols (Foley 1966: 572), and absence of socio-cultural heritage that included rotating credit associations that could generate financial capital for business startups (Light 1972: 22). As consequence of these and other difficulties, blacks were greatly underrepresented in retail trade. For example, in 60 large northern cities in 1930, number of retail merchants was, on average, 81 percent less than what would be expected on basis of representation of blacks in these cities' workforces (Boyd 2003a: 451). …