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

Introduction The development of black entrepreneurship in the retail trade in large northern cities during the early 20th century was viewed by many black leaders as essential to the economic progress of blacks as a group. If black retail entrepreneurs could monopolize the local trade in the black communities that were created in these cities by the first wave of the "Great Black Migration" to the North (circa 1915-1930), then, it was believed, a number of benefits would follow: These entrepreneurs would expand their businesses, hire additional black employees, and, over the long run, sustain a network of black-owned wholesaling and manufacturing enterprises that could provide a foundation for a "group economy," that is, "a cooperative arrangement of industries and services within the Negro group such that the group tends to be a closed economic circle largely independent of the surrounding white world" (Du Bois 1907: 179, quoted in Waldinger and Aldrich 1990: 59). The basis of this belief was the "doctrine of the double-duty dollar," which was popularized by the black church and black press in the urban North in the 1920s and 1930s. This doctrine, which was evidently based on the concept of the multiplier effect in economic theory (Pearce 1986: 288), argued that money spent in retail stores owned by blacks would circulate within the black 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 the wake of the Great Migration, support for black entrepreneurship in the retail trade was vigorously encouraged in northern cities by black churches, black newspapers, and black voluntary organizations, such as lodges and fraternal orders. This support often took the form of "buy black" campaigns. These campaigns originated in the urban North (Frazier 1957: 166) and emphasized "the duty of Negroes 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 black entrepreneurship took the form of attempts to promote cooperative ventures among those black entrepreneurs who sought to become retail merchants. These attempts were motivated by the belief that success in the retail trade would be achieved through efficiencies gained by the pooling of resources, the coordination of business practices, such as advertising, and the standardization of goods and equipment. The Colored Merchants Association, founded in New York City by Albon Holsey in 1929 under the auspices of the late Booker T. Washington's National Negro Business League, was an example of such a collective venture (Light 1972: 125, citing Harris 1936). In spite of these efforts, though, black entrepreneurs struggled to establish themselves in the retail trade in the urban North. They faced numerous obstacles, including "racial bias in lending and in the 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), a dearth of entrepreneurial "success symbols" (Foley 1966: 572), and the absence of a socio-cultural heritage that included "rotating credit associations" that could generate financial capital for business startups (Light 1972: 22). As a consequence of these and other difficulties, blacks were greatly underrepresented in the retail trade. For example, in 60 large northern cities in 1930, the number of black retail merchants was, on the average, 81 percent less than what would be expected on the basis of the representation of blacks in these cities' workforces (Boyd 2003a: 451). …