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ОглавлениеEarly African American–Owned “Cooperative” Businesses
Even rural communities that lacked the almost total isolation of the Sea Islands possessed a strong commitment to corporatism and a concomitant scorn for the hoarding of private possessions. . . . It is clear that these patterns of behavior were determined as much by economic necessity as by cultural “choice.” If black household members pooled their energies to make a good crop, and if communities collectively provided for their own welfare, then poverty and oppression ruled out most of the alternative strategies. Individualism was a luxury that sharecroppers simply could not afford.
—JONES (1985, 101–2)
More importantly, the Commission [the 1961 Civil Rights Commission] failed to recognize the degree to which community cooperation during the early years of the twentieth century helped move local farmers away from economic dependence on whites. Actuated by a strong sense of community, residents of Charles City County developed a diverse agricultural economy that included very few tenant farmers. With little need or desire to depend on white factory and landowners, between 1900 and 1930 black farmers achieved a level of economic independence that later aided in the struggle for political rights and racial justice.
—CRAIG (1987, 133–34)
Cooperative businesses among African Americans developed slowly—often evolving from mutual-aid societies to mutual insurance companies and from joint-stock companies to Rochdale cooperatives—as African Americans be-came more sophisticated and experienced in cooperative ownership. W. E. B. Du Bois’s 1907 study in some ways lumps all efforts at economic cooperation together. In this chapter, I examine these businesses from the 1880s to the early 1900s for elements of cooperative economic principles and practices and as examples of the evolution into formal cooperative businesses. During this era, most of these businesses were urban enterprises engaged more in offering services and retail sales than in the production of goods. In addition, in the nineteenth century, the concept of Black capitalism was a strategy of racial economic solidarity and cooperation, as was Negro joint-stock ownership (for example, the Chesapeake Marine Railway shipyard in Baltimore, the Coleman Manufacturing Company in Concord, North Carolina, and the Universal Negro Improvement Association’s Black Star Line and Negro Factories Corporation). Mutual insurance companies were the earliest formal cooperative businesses among Blacks and Whites in the United States. As noted earlier, starting in the late nineteenth century, African Americans also organized official cooperative businesses that followed the European “Rochdale Principles of Cooperation.”1 Other early official cooperatives were farm cooperatives and cooperative marketing boards, consumer cooperative grocery stores, cooperative schools, and credit unions.
Mutual Insurance Companies
Some of the successful mutual-aid societies developed into insurance companies when they formalized as businesses. As some societies became more sophisticated and substituted a board of directors for general member control, they became insurance companies (Du Bois 1898, 18). In the 1880s, many Blacks had joined White insurance companies but discovered that they received fewer monetary benefits for the same service, even though they paid the same premium (or higher). This inspired Blacks to establish their own insurance companies that would not defraud or discriminate against African American clients (Du Bois 1907, 98). Many southern states then passed laws protecting White insurance companies.
One of the largest Black mutual insurance companies was the Grand United Order of the True Reformers, which grew to have branches throughout the South and East. It owned “considerable real estate and conduct[ed] a banking and annual premium insurance business at Richmond,” according to Du Bois (1898, 20). Organized in Richmond, Virginia, in 1881, it began with one hundred members and capital of $150. By 1901, with more than fifty thousand members, the society paid out $606,000 in death claims and $1,500,000 in sick claims. The True Reformers held more than $223,500 in assets. In addition, the organization boasted of having 2,678 lodges (totaling a hundred thousand members) and had paid out $979,440.55 in claims; and the Rosebud children’s department served more than thirty thousand children (Du Bois 1907, 101–2). Woodson also highlights the fact that the True Reformers added death insurance to burial insurance so that families would have something to live on after the death of a family member, especially a breadwinner (1929, 209–10).
The organization also supported a savings bank founded in 1887, the Reformers Mercantile and Industrial Association (a chain of stores with annual business of more than $100,000), a weekly newspaper, a 150-room hotel, a home for the elderly, a building-and-loan association, and a real estate department (Du Bois 1907, 103). The True Reformers bank enhanced its reputation in 1893, during the financial panic, by paying all claims made on it (Woodson 1929, 210). Other banks in Richmond did not.
The Independent Order of Saint Luke (discussed in chapter 1) developed along similar lines. It rapidly became more than a mutual-aid society and included a successful insurance company and bank. Under Maggie Lena Walker’s direction, “this order with more experience and better trained workers than those of others overcame the difficulties which worked the undoing of the True Reformers. The Independent Order of St. Luke still carries on its insurance work, operates a printing plant, publishes a newspaper, and conducts a bank” (Woodson 1929, 211; for more details on the Order of Saint Luke, see Barkley Brown 1989).
The North Carolina Mutual Insurance Company was the largest of the state-based, locally owned insurance companies until World War I. It was established in 1903 out of the mutual-aid movement. At its first annual meeting in 1904, at the Colored State Fair in Raleigh, the company’s agents “testified to the powers of racial cooperation” and offered resolutions at sessions open to the public to promote the message of racial solidarity (Weare 1993, 86). It became the largest Negro insurance company in the world (118). The company’s standing was so strong that it qualified as a legal reserve company in 1912–13 with loans from Fidelity Bank in Duke (a White bank that must have believed in its solvency and reliability in order to back those loans) (94). North Carolina Mutual was very involved in the Black community and “formed the heart of a black political economy in Durham” and beyond (182–83; see also Woodson 1929). In 1927, North Carolina Mutual’s president, Charles Clinton Spaulding, worked with the federal government on what would become President Hoover’s “black capitalism” initiative (Weare 1993, 147–48). That same year, Spaulding started the “Durham stock taking and fact finding” conferences. The first conference was attended by well-known African American scholars and leaders, among them W. E. B. Du Bois; R. R. Moton, the president of Tuskegee University; Mordecai Johnson, the president of Howard University; and Asa Philip Randolph, editor of the Messenger and founder of the Brotherhood of Sleeping Car Porters. Weare notes that “Randolph, like Du Bois, recognized that the Mutual spirit stood for race cooperation at least as much as individual entrepreneurship” (152). Spaulding was also influential in the National Negro Business League and took over its leadership after the death of Booker T. Washington, its founder and first president (for more about the NNBL, see chapter 4).
Weare assesses the significance of the North Carolina Mutual Insurance Company. Every success it had was seen as a racial success: buying a policy meant “double protection”—life insurance and Negro employment (96). White rejection actually brought more customers (98), so that, in a way, the company thrived on Black economic marginalization. North Carolina Mutual “stood as an expression of Afro-American thought centering on the doctrine of self-help and racial solidarity” (95). These are some of the same attitudes held by members of African American cooperatives in the twentieth century.
Du Bois’s critique of the insurance company model suggests that some of the businesses were conducted in an “unscientific” way, using “speculation and dishonesty” and depending on lapsed policies for profits (1907, 108–9). On the other hand, they yielded one of the strongest business models (and models of mutual economic cooperation) of Black economic development.2 In addition, Weare notes that Negro banks “sprang almost involuntarily from Negro insurance companies” (119), continuing the progress of economic development started by mutual-aid societies.
Early African American–Owned “Cooperative” (or Joint-Stock) Businesses
The Chesapeake Marine Railway and Dry Dock Company, the Coleman Manufacturing Company, and the Lexington Savings Bank were early joint-stock companies that may have been cooperatives; they were definitely collectively owned. Marcus Garvey and the Universal Negro Improvement Association also made use of the joint-stock ownership model to develop Black businesses.
The Chesapeake Marine Railway and Dry Dock Company
Between 1865 and 1883, African American caulkers and stevedores owned their own company with the help of prominent African Americans in Baltimore, Maryland. According to Du Bois, the Chesapeake Marine Railway and Dry Dock Company was organized in part to combat the growing demand among White laborers in Maryland that all free Blacks be fired from the shipyards and leave the state or “get a master.” Baltimore had become famous for its caulking, but it was the Black caulkers who “were the most proficient in the state” (Du Bois 1907, 152–53). Shipyard owners were not willing to reduce their Black workforce until White mobs attacked Black caulkers and stevedores on their way home, and White carpenters boycotted shipyards that hired African American caulkers. At that point, a group of Black men decided that they needed to own their own shipyard, to protect and secure jobs for Blacks.
The jointly owned business, which Du Bois (1907) called a cooperative, was quite successful. The Chesapeake Marine Railway Company bought a shipyard—encompassing the property that included the spot where Frederick Douglass describes sitting on a cellar door studying a stolen spelling book to teach himself how to read. According to Du Bois, the founders of the company raised $40,000 by selling eight thousand shares at $5 per share. They paid off their $30,000 mortgage in five years and employed between one and two hundred Black and White caulkers and stevedores per year. In the sixth year of operation, the company paid stock dividends to members totaling $14,000. In the seventh year, it paid dividends of 10 percent, and for four years after that paid dividends of between 4 and 10 percent per year. Therefore, we know that for at least six years the company was profitable enough to pay dividends. The company went out of business in its eighteenth year, in part because of repair problems, changes in the industry, and management issues, but also because of “the refusal of the owners of the ground to release the yard to the colored company except at an enormous rate of increase” (Du Bois 1907, 153). The ground rent was doubled. The cooperative went out of business soon after.3
The significance of this joint-stock company is manifold. The success of the Chesapeake Marine Railway and Dry Dock Company showed that African Americans could successfully use joint ownership in the face of racial oppression and ostracism, particularly to save jobs, create jobs, and accumulate wealth. It showed that African Americans could run a substantial industrial enterprise at a profit. The company also changed the nature of industrial relations in the state of Maryland. Du Bois observes that even after Chesapeake’s demise, “the organization of the ship company saved the colored caulkers, for they are now members of the white caulker’s union. The failure of the whites in driving out the colored caulkers put an end to their efforts to drive colored labor out of other fields. And although the company failed, it must surely have been an object lesson to the whites as well as to the blacks of the power and capability of the colored people in their industrial development” (1907, 153). Du Bois reminds us that even if the shipyard went out of business after eighteen years, much was accomplished, particularly in terms of job creation, profit distribution, civil rights, unionization, and the overall security of the livelihoods and reputation of Black stevedores and caulkers in Maryland.
Coleman Manufacturing Company
The Coleman Manufacturing Company of Concord, North Carolina, was incorporated in 1897 with $50,000 of capital stock. According to a letter from W. C. Coleman published by Du Bois (1898, 26), Coleman Manufacturing was “a co-operative stock company of colored men who propose to build and operate a cotton mill in the interest of the race.” Many of the stockholders were influential Black businessmen and White citizens around Concord, North Carolina. After raising the first $50,000, they offered the second $50,000 at $100 per share (payable in installments of 10 percent). The company produced between forty and fifty thousand bricks a day and planned to begin bricklaying for the mill that would employ three to four hundred people. It planned ultimately to establish (on its own or with others) a boardinghouse, truck farm, livery stable, and dairy, according to Coleman’s letter. The White-owned Concord Times enthusiastically reported on March 10, 1898, that
the [Coleman cotton] mill is to have from 7,000 to 10,000 spindles and from 100 to 250 looms, and, by their charter, will be allowed to spin, weave, manufacture, finish and sell warps, yarns, cloth, prints or other fabrics made of cotton, wool or other material. They own at present, in connection with the plant, about 100 acres of land on the main line of the Southern Railway and near the site of the mill. The mill and machinery with all the fixtures complete will represent an outlay of nearly $66,000, and will give employment to a number of hands. (Du Bois 1898, 26–27)
The newspaper projected that the cotton mill would be a successful Negro business. Calling the new board of directors “some of the highest lights of the Negro race,” the Concord Times also noted that it was “the only cotton mill in the world owned, conducted and operated by the Negro race” (27). In the twentieth century, a few cooperative sewing factories owned by African American women in North Carolina would also be successful and important businesses in their communities. Coleman foreshadows these later developments.
The Lexington Savings Bank
The Lexington Savings Bank, in Baltimore, was incorporated in 1895 with $10,000 of capital stock raised by Black leaders in Baltimore (Maryland State Archives 1998). The bank’s president, Everett Waring, was a graduate of Howard University School of Law and reportedly admired Capital Savings Bank in Washington, D.C. According to the Maryland Archives summary, Waring planned to gain as much of the Black savings in Baltimore as possible. Prominent African Americans in Baltimore—businessmen, lawyers, ministers, elected officials—were charter members and stockholders. Depositors came mostly from the Black working class: the bank “was supported entirely by colored people . . . and catered entirely to the poorer classes” (Baltimore Morning Herald, news clipping, ibid.). Several hundred people held deposits in the bank by 1896, and all celebrated the success of its first year.
In the second year there was a major scandal, from which the bank did not recover. This is another example of an attempt to pool Black resources and jointly own a business that would provide needed services to the Black community. It is also an example of mismanagement and apparent lack of transparency and adequate oversight. There are many examples of both throughout the history of African Americans. The failures, especially of Black banks, also feed the collective Black memory of distrust of and aversion to business ownership, which in the twentieth century has limited the willingness of many African Americans to become involved in Black-owned business ventures. The devastating failure, after the Panic of 1873, of the Freedman’s Savings and Trust Company (signed into law along with the Freedmen’s Bureau at the beginning of Reconstruction) in 1874 (Hine, Hine, and Harrold 2010),4 and the failure of Marcus Garvey’s Universal Negro Improvement Association business ventures in the early 1900s (see below), also contributed to Black ambivalence and often aversion to business ownership and investment in Black-owned banks. However, there remain many other examples of successful ventures and of people willing to give joint ownership a chance, as we will see in chapter 4.
Marcus Garvey and the Universal Negro Improvement Association
Shipp (1996) and Martin (1976) report that Marcus Garvey and the Universal Negro Improvement Association had a model of cooperative economic development. Shipp writes, “Marcus Garvey’s Universal Negro Improvement Association (UNIA) produced an alternative cooperative model for Black community development that has also been utilized by other groups including the Nation of Islam and many Black religious denominations. It shares many characteristics with the Mondragon. Although never fully realized, Garvey’s strategy envisioned the collective economic advancement of African peoples throughout the world” (1996, 86).5 Similarly, Martin contends that Garvey had a “grand design” to link all the UNIA businesses into a “worldwide system of Pan-African economic cooperation.”
Garvey’s attempts to establish economic self-reliance went beyond cooperative business enterprises, for UNIA branches acted as mutual aid friendly societies for the payment of death and other minor benefits to members. In rural areas among poor communities, this aspect of the organization’s operations assumed greater importance. Local divisions also were required to maintain a charitable fund “for the purpose of assisting distressed members or needy individuals of the race,” a fund for “loans of honor” to active members, and an employment bureau to assist members seeking work. (1976, 35–36)
Martin also lists the ways in which the UNIA businesses operated cooperatively. He observes that one manager engaged in cooperative buying for all the stores and restaurants of the Negro Factories Corporation (34). In Colón, Panama, the UNIA ran a cooperative bakery, and in Kingston, Jamaica, the African Communities League Peoples Co-operative Bank sold shares only to UNIA members (35). For Garvey, economic self-reliance was primary, according to Martin. Successful political action required an independent economic base. Blacks needed to be independent producers, not just consumers. Many businesses and assets should be jointly owned by all UNIA members. In the case of the Black Star Line Steamship Corporation, Garvey claimed that “the ships that are owned by this corporation are the property of the Negro race.”6 Everyone was an owner.
The Universal Negro Improvement Association was originally organized in Jamaica in 1914 as a mutual-benefit society—a “Universal Confraternity among the race”—with a mission to establish educational institutions and improve conditions for Blacks everywhere (Martin 1976, 6). It was incorporated in New York in 1918. At its height, the UNIA was the largest African American political organization in the early twentieth century (Hine, Hine, and Harrold 2010, 452). Interestingly, the Colored Farmers’ National Alliance and Co-operative Union was the largest Black organization a decade or two earlier. Here again, while at first the Black cooperative movement seems to have been small and inconsequential as well as little acknowledged, it has actually played a part in many of the major movements for Black liberation in the United States. The UNIA’s Negro Factories Corporation was a joint-stock holding company for two uniform assembly factories, a laundry, a printing plant, three restaurants, and three grocery stores (Shipp 1996).7 The Black Star Line was a joint-stock company that handled international shipping; it purchased three ships altogether in the early 1920s but could not maintain them enough to use them for transport (Hine, Hine, and Harrold 2010, 454; Martin 1976). Garvey was indicted for mail fraud for soliciting (selling shares and asking for contributions) through the mail, and the businesses went bankrupt.8 Between 1920 and 1924, however, UNIA businesses employed as many as a thousand employees. Stock certificates for both the Black Star Line and the Negro Factories Corporation sold for $5 per share. Individual member investors could buy up to two hundred shares in the Black Star Line. The UNIA newspaper, the Negro World, posted advertisements for stock in these businesses and published articles describing the progress of the businesses. In promotional documents such as Garvey’s article in the issue of May 24, 1924, Garvey pushed for all members to invest in the Black Cross Navigation Company (Black Star’s parent company) at levels of $100 to $1,000, in order to raise the necessary capital. The headline read, “Negroes Cooperating for Black Steamship Company’s Success” (Garvey 1924). During this time, the Black press, specifically the Negro World, appears to have used the word “cooperation” a lot. On the other hand, Floyd-Thomas notes that “despite Garvey’s endorsement of racial unity and pride as well as collective economic development for African peoples, his social philosophy made quite a stir within the already volatile climate in 1920s Harlem” (2008, 137). Garvey was extremely controversial, and while he used the language of cooperation, it is not clear how fully he embraced cooperative economics.
Another interesting historical note to Garvey’s failed economic attempts, particularly with the Black Star Line, and connections with other economic visions at the time, is Du Bois’s attempt to resurrect the idea of a U.S.-Africa commercial shipping line. Perhaps ironically, Du Bois, basically a critic of Garvey’s economic projects, had a plan to resurrect the Black Star Line in some fashion in 1923. He wrote to the secretary of state, Charles Hughes, about the failure of the U.S. Congress to confirm a Liberian loan in January 1923 (Du Bois 1923). By this time the Black Star Line was bankrupt, but according to Du Bois there was still interest in commerce between the United States and Liberia. He summarized the aftermath of the Black Star Line “fiasco”:
The difficulty with this [the bankruptcy of the Black Star Line] was that its leader, Marcus Garvey, was not a business man and turned out to be a thoroughly impractical visionary, if not a criminal, with grandiose schemes of conquest. The result was that he wasted some eight or nine hundred thousand dollars of the hard-earned pennies of Negro laborers. However, two things are clear; nearly a million dollars of Black Star Line stock of the Garvey movement is now distributed among colored people and is absolutely without value. On the other hand, the United States owns thousands of vessels, any one or two of which might be used to initiate the plan I have spoken of. (261)
Du Bois wanted the U.S. government to provide two ships to begin a commercial trade venture between Liberia and the United States. Moreover, he asked the secretary of state if such a venture could legally be connected to the worthless Black Star stock in “an attempt to restore the confidence of the mass of American Negroes in commercial enterprise with Africa, possibly by having a private company headed by men of highest integrity, both white and colored, to take up and hold in trust, the Black Star Line certificates” (261). There is no record of a reply to that letter. However, this is more evidence of Du Bois’s interest not just in Pan-African commerce but also in redeeming the concept of joint ownership.
Marcus Garvey, much like Booker T. Washington (and like Du Bois, though most of the time they thought they had very different ideas from each other), urged African Americans to find separate economic solutions to their plight and to control their own economic enterprises. Shipp contends that Garvey wanted these businesses to be managed by their members—the stockholders—and operate democratically. Advertisements in Black newspapers connected participation and investment in these enterprises with the uplift of the race, a strategy for Black liberation, and a way to make a profit by supporting Black endeavors (Briggs 2003 provides copies of some of these ads). Shipp maintains that “the cooperative or collective, as implemented by Garvey, would be a part of an expansive market area, beginning with each UNIA chapter and spreading outward to create a Pan-African trading network based on economic cooperation” (1996, 88).
The Negro World did cover cooperative activity in the African American community, reporting on co-op housing, buying clubs, credit unions, and the Colored Merchants Association (see chapter 6). In addition, the December 27, 1924, edition of the Negro World provides in-depth coverage of a new report from the Russell Sage Foundation called “Sharing Management with the Workers” (Negro World 1924). The subhead includes the phrase “Negroes also benefit,” though it is not obvious from reading the article that any of the employees of the Dutchess Bleachery in Wappingers Falls, New York, who benefitted from the partnership plan were Black. The article does suggest that the UNIA considered this kind of information about workplace democracy important to its readers and members.
Shipp contends that Du Bois based his promotion of cooperative economic development for African Americans on Garvey’s philosophy in the 1930s. However, my research and analysis of Du Bois’s theory of economic cooperation (supported by Haynes 1993 and 1999; DeMarco 1974; and Rudwick 1968) find that Du Bois was already discussing economic cooperation and cooperative businesses in 1898. He wrote a book and called a conference on the subject in 1907, and read and was in contact with the major cooperative thinkers in the United States and United Kingdom by the early 1900s. He established the Negro Cooperative Guild in 1918. Du Bois, therefore, developed his cooperative economics philosophy separately from Garvey, and probably before Garvey, although it is not surprising that great minds would light on similar strategies. Indeed, one of the findings of this study is that many African American leaders and scholars supported the concept of cooperative economic development at some point (often early on) in their careers, if not throughout.
Du Bois did recognize the potential that Garvey and the UNIA had amassed. He wrote that Garvey had proved that “American Negroes can, by accumulating and ministering their own capital, organize industry, join the black centers of the south Atlantic by commercial enterprise and in this way ultimately redeem Africa as a fit and free home for black men” (1921, 977; see also Taylor 2002, 47). Also, Du Bois’s letter to the secretary of state in 1923 suggests that he did not consider a venture like the Black Star Line a bad idea, just poorly executed (see also Du Bois 1921). It is also clear that he was very interested in restoring Black people’s faith in joint ownership.
Marcus Garvey may have written and spoken about pooling resources, been philosophically in favor of cooperative economics, and been interested in promoting cooperative ownership in some of his projects, but the economic organizations started by the UNIA were joint-stock companies rather than cooperative businesses as defined by the Rochdale principles, and the majority of stock was owned by the UNIA. Moreover, Garvey rarely practiced financial transparency, a cooperative principle (Du Bois complained of this; see Du Bois 1921), and was known to be authoritative. Like many of the examples from Du Bois’s 1898 and 1907 studies, the UNIA businesses are examples of economic cooperation among Negroes, but they were not cooperative business enterprises. The UNIA businesses had serious management problems, and none of them operated very successfully, even though they may have solved the capitalization problem by amassing so many small contributions from UNIA members. They also were sabotaged by the U.S. government and others who did not want such grand efforts to succeed. This was another example of serious physical, financial, and political challenges to collective African American economic action. Nonetheless, we see here deliberate actions by African Americans to work with others, to pool resources, to own their own businesses, to provide services to their community, and to earn a decent living—even in the face of both poverty and outside threats.
These efforts were short-lived, but they were gestures grand enough to remain in the African American collective memory—whether as an example of how the U.S. government will retaliate if you try to do too much economically for Black people, or as a lesson that collective projects end in embezzlement and financial mismanagement. While the first has much basis in fact—the Ex-Slave Pension Association was hounded by the federal government, as was the Federation of Southern Cooperatives in the 1970s—the second is a misconception that has hindered some in the Black community from becoming more involved in joint ownership and cooperative economics. For some reason, there is not as strong a collective memory about the cooperative efforts that succeeded.
It is worth noting that in addition to economic advancement—or attempts at economic advancement—Garvey’s UNIA supported women’s leadership. Taylor (2002, 45, 87) and others point out the ways in which women, particularly Garvey’s wife, Amy Jacques Garvey, found their place in the organization and practiced “community feminism,” a term that describes the Combahee River Colony and some of the other mutual-benefit societies run by women, which were successful efforts at collective economics.
Early African American Rochdale Cooperatives
In 1898, Du Bois’s assessment of Black business development and cooperative businesses in general was not optimistic: “From such enterprises sprang the beneficial societies, and to-day slowly and with difficulty is arising real co-operative business enterprise detached from religious activity or insurance. On the other hand, private business enterprise has made some beginning, and in a few cases united into joint stock enterprises. It will be years, however, before this kind of business is very successful” (1898, 21–22). Du Bois counted about fifteen emerging cooperative businesses in 1898, and several cemetery associations. He remained pessimistic in 1907: “To some [cooperative business] is simply a record of failure, just as similar attempts were for so long a time among whites in France, England, and America. Just as in the case of these latter groups, however, failure was but education for growing success in certain limited directions, so among Negroes we can already see the education of failure beginning to tell” (1907, 149). Du Bois identified several challenges to cooperative business development, including the lack of capital and the nature of poor people who will not invest because they are afraid of losing their hard-earned money. He also emphasized the lack of trained managers and workers, particularly in democratic business participation. He noted that in some early attempts at cooperation, poor judgments were made. In some cases, a company did not wait until at least 25 percent of the capital stock had been raised, which often resulted in failure. This increased the perception that “promoters of cooperative enterprises were unscrupulous” (1907, 150). Despite his pessimism, Du Bois held a conference in 1907 (the twelfth Atlanta conference at Atlanta University; see chapter 4) titled “Negro Business Development and Cooperatives,” promoting cooperatives and economic cooperation. The conference also launched his latest academic report on African Americans, Economic Co-operation Among Negro Americans.
Du Bois documented the existence of 154 African American–owned cooperatives: 14 “producer cooperatives”; 3 “transportation cooperatives”; 103 “distribution or consumer cooperatives,” and 34 “real estate and credit cooperatives,” in addition to hundreds of mutual-aid societies and cooperative projects through religious and benevolent institutions, beneficial and insurance societies, secret societies, schools, and financial institutions in 1907. While most of the cooperative businesses were joint-stock companies or collectively owned enterprises rather than Rochdale cooperatives, he made a case for how often it occurred, how necessary joint ownership was, and how difficult it was for African Americans. He attributed difficulties to poor management, lack of know-how, low levels of capitalization, and racial discrimination. He used the case study of Baltimore to illustrate the kinds of businesses that African Americans engaged in collectively, in some sense of the term. The “successful cooperative businesses” he studied include the Douglass Institute (a social entertainment house), the Chesapeake Marine Railway and Dry Dock Company, Samaritan Temple, the Afro-American Ledger newspaper, and the North Baltimore Permanent Building and Loan Association (1907, 151–78). By the early 1900s, African Americans were forming cooperative businesses based on the international principles of cooperation; these businesses are the subject of the following seven chapters.
Four early African American cooperative businesses that followed the Rochdale principles were the Mercantile Cooperative Company in Ruthville, Virginia, Citizens’ Co-operative Stores in Memphis, Tennessee, the Pioneer Cooperative Society in Harlem, New York City, and the Cooperative Society of Bluefield Colored Institute of West Virginia.
The Mercantile Cooperative Company
The Mercantile Cooperative Company, the earliest urban Rochdale cooperative my research has uncovered (after the nineteenth-century unions and farmers’ alliance co-ops, and the ones mentioned by Du Bois in 1907), was established in Ruthville, Virginia, in 1901. Charles City County, where Ruthville is located, is a relatively prosperous county for African Americans. Until John Craig’s account, however, most historians “ignored the role of the area’s free black population” and “the degree to which community cooperation during the early years of the twentieth century helped move local farmers away from economic dependence on whites” (1987, 133–34). Craig highlights collective efforts in Ruthville and observes that Black farmers’ cooperative activity in the early twentieth century through the Mercantile Cooperative enabled them to “achieve a level of economic independence” that contributed to their later success in achieving voting rights and other civil rights (134).
In the first quarter of the twentieth century, according to Craig’s research, 90 percent of residents in Charles City County owned their own homes and the land they farmed, and fewer than 6 percent of local farms had a mortgage. These statistics stand out during a time when the number of Whites in the county was decreasing; between 1900 and 1930, the Black population of the county rose by 2 percent, while the White population declined by 20 percent (139). Ruthville, a predominantly Black town, had a history of fraternal organizations. In 1901 the Odd Fellows Lodge helped to establish the Mercantile Cooperative Company. According to Craig, this was a Black-run cooperative store chartered by the state. Shares were sold at $5 each, and no one member could hold more than twenty shares. Shares could be bought in installments. Members bought a store outside Ruthville and moved it to the main crossroads opposite the County Training School. They raised $1,300 to buy supplies in Richmond. They decided not to take credit, so that they would not have to rely on outsiders. The cooperative coexisted on cordial terms with a White-owned store across the street (135). By 1923, the Mercantile Cooperative had twenty-eight shareholders. The cooperative then bought trucks and was able to hire three employees. The new United Sorghum Growers Club met regularly above the store (136). The community also founded the Intellectual and Industrial Union, which raised money to build a new school (137–38). Craig remarks on the “strength of community solidarity” in the town and the way the Black community “banded together to overcome common problems.” The cooperative store was an important example of this and a mainstay of the community.
Citizens’ Co-operative Stores
Citizens’ Co-operative Stores of Memphis was established in direct response to a Negro Cooperative Guild meeting in August 1919 (see chapter 4).9 From the details in a Crisis article, we know that the citizens of Memphis eagerly joined the project, as evidenced by the large number of participants and the resounding success of the equity drive. According to the Crisis, the cooperative raised more equity than expected, selling double the amount of shares initially offered. Members were able to buy shares in installments, and no one could own more than ten shares. By August 1919, five stores were in operation in Memphis, serving about seventy-five thousand people. The members of the local guilds associated with each store met monthly to study cooperatives and discuss issues. The cooperative planned to own its own buildings and a cooperative warehouse ([Du Bois] 1919).
The Crisis article, written by “the editor” (presumably Du Bois himself), read in part:
The good results of co-operation among colored people do not lie alone in the return of savings. They show, also, new opportunities for the earning of a livelihood and in the chance offered our colored youth to become acquainted with business methods. . . . [They hire members of the community.] Thus, in a larger and different sense, we have another form of co-operation. Colored people are furnishing their own with work and money for services received and the recipients are handing the money back for re-distribution to the original colored sources. ([Du Bois] 1919, 50)
The Citizens’ Co-operative Stores illustrate how advocacy, public education, and self-education can promote cooperative development in the Black community. This story also shows how cooperatives in low-income communities can be made affordable (shares can be bought in installments), and how cooperative businesses can improve community life by hiring local residents and allowing money to recirculate among all the participants. However, Du Bois also noted that the cooperative was later converted into a conventional stock company and went out of business (1940, 759). It was more prosperous and provided greater benefits to the community under cooperative ownership, but under pressure it ceased being a cooperative and became a conventional business.
The Pioneer Cooperative Society
According to Mr. Moore, the manager of the Pioneer Cooperative Society in Harlem, he founded the co-op because it was difficult for Blacks to buy food at affordable prices in Harlem. Moore was “interested in bringing down the high cost of living for our colored people” and was inspired by a newspaper article about cooperatives. He pulled together a group of interested people who started meeting once a week “to study and plan cooperation.” The co-op started a small grocery store on September 6, 1919, with 120 members, mostly of West Indian descent. Shares cost $5 each, and every member was required to buy at least two shares—although each member had only one vote.10 The co-op charged members the same prices as other retail stores, but at the end of the year profits were divided “in proportion to the amount of their purchases.” The co-op kept records of members’ purchases with stamp books. One of the ways that the Pioneer Cooperative Society recruited members and advertised the co-op was to hold a large ball. By 1920, membership had increased to two hundred, and capital accumulation stood at $4,000. Moore attributed the co-op’s success in “large part due to the loyalty of [its] members” (New York Dept. of Farms and Markets 1920, 10).
The Cooperative Society of Bluefield Colored Institute
The commercial department of the Bluefield Colored Institute in Bluefield, West Virginia, formed a student cooperative store in or around 1925.11 The store’s mission was to sell needed supplies to students and others at the school, to teach cooperative economics to the students, and to be a “commercial laboratory for the application of business theory and practice” (Sims 1925, 93). A share of stock sold for less than $1. After two years in business, the cooperative had paid all its debts and owned its own equipment and inventories (Matney 1927). The store began to pay dividends of 10 percent on purchases made. The student members voted to use profits to pay for scholarships to Bluefield’s secondary school and junior college. Nine scholarships had been awarded by July 1927. According to the co-op’s manager, W. C. Matney, members of this cooperative were the first African Americans to attend the National Cooperative Congress.12 They became members of the Cooperative League of the USA (CLUSA) in 1925. After several years of successful operation, however, “the state of West Virginia eventually forbade its continuance,” according to Du Bois (1940, 759).
The cooperative appears to have gotten some national attention. Du Bois quotes a comment made by a member of the Harvard University Graduate School of Education to the Bluefield Cooperative Society’s manager about its promise as a model: “I am convinced that you are doing a splendid piece of work with this enterprise” (1940, 759). In this cooperative, as in the Citizens’ Co-operative Stores in Memphis, education and training were integral aspects of cooperative development, both initially and throughout its existence. Not only did the Bluefield cooperative educate members about cooperative ownership and business development; profits from the business were also used to send members for advanced educational degrees. Affordable membership was also a goal of this co-op—the price of shares was low. In addition, the importance and documentation of profitability and solvency were apparent. Finally, the success of the Bluefield cooperative provides insight into how African American cooperatives inserted themselves into the wider national cooperative movement by joining the national (White) association and attending national conferences.
Economic Segregation and the “Group Economy”
These examples of early African American cooperatives demonstrate how African Americans have used racial solidarity and economic cooperation in the face of discrimination and marginalization to pool their resources and create their own mutually beneficial and often democratic companies. Jacqueline Jones notes that African Americans’ “ethos of mutuality” has been shaped as much by “racial prejudice as by black solidarity” (1985, 102).
In rural and urban settings, community was important, and families worked together and shared resources. Jones notes the importance of kinship networks and extended households. “Despite the undeniable economic pressures on the family, few households were thrown entirely upon their own resources” (1985, 126). In addition, “cooperative work efforts inevitably possessed a strong emotional component, for they reflected feelings of loyalty and mutual affection as well as great material need” (231).
Du Bois researched and wrote about economic cooperation among African Americans, advocating economic segregation as the path to successful “group economy” in the Black community. In a 1934 letter to NAACP executive director Walter White, Du Bois clarified what he meant by this: “I am using segregation in the broader sense of separate racial effort caused by outer social repulsions, whether those repulsions are a matter of law or custom or mere desire. You are using the word segregation simply as applying to compulsory separations” (1934c, 476). Du Bois distinguished what he meant by “group economy” from the strategies of “black capitalism” and “buying black.” His notion encompassed economic activity based on solidarity among Blacks and free from discrimination. Black group economy, he wrote in his autobiography, “consists of such a co-operative arrangement of industries and services within the Negro group that the group tends to become a closed economic circle largely independent of the surrounding white world” (1940, 711). Jones observes that such a philosophy of separation and self-determination insulated Blacks from Whites “and from the disappointment that often accompanied individual self-seeking” (1985, 100), and provided the “mixed blessings of semiautonomy” (101).
Booker T. Washington also advocated economic separation as part of his promotion of Black self-help and Black business development, or Black capitalism. Washington, known for his conservatism, did promote economic independence and the dignity of work, which had a profound effect on Black entrepreneurship and Black nationalist ideology. Washington was also a founder of the National Negro Business League (see chapter 6). Marcus Garvey promoted Black capitalism and joint business ownership as strategies for economic independence, and to support the emigration of Blacks to predominantly Black Caribbean countries and the African continent—strategies that were also part of Black nationalist ideology. Garvey’s political impact through the UNIA was significant as well as legendary, even though his economic philosophy was much less known and relatively unsuccessful.
Du Bois suggested that voluntary racial economic segregation, in which the “colored group” serves itself in what “approaches a complete system” (1940, 709), explains why the large number of Black businesses and professionals in the early twentieth century were little known and documented. It was a closed system that needed little if anything from the outside (White) world and operated under the radar. White society was unaware of most of these businesses and their interlocking associations, because racial segregation was increasing in the early decades of the twentieth century. Therefore, this was a hidden, almost invisible strategy, and yet in many cases it was quite successful.
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This chapter incorporates heavy revisions of Gordon Nembhard 2004a and 2006a.
