In the United States, black-owned businesses (or black businesses), also known as African American businesses, originated in the days of slavery before 1865. Emancipation and civil rights permitted businessmen to operate inside the American legal structure starting in the Reconstruction era (1865–77) and afterwards. By the 1890s, thousands of small business operations had opened in urban areas. The most rapid growth came in the early 20th century, as the increasingly rigid Jim Crow system of segregation moved urban blacks into a community large enough to support a business establishment. The National Negro Business League—which Booker T. Washington, college president, promoted—opened over 600 chapters. It reached every city with a significant black population.“The Legacy.” The National Business League, 31 Jan. 2024, nationalbusinessleague.org/the-legacy-2/.
African-Americans have operated virtually every kind of company, but some of the most prominent black-owned businesses have been insurance companies including North Carolina Mutual Life Insurance Company, banks, recording labels, funeral parlors, barber shops, cosmetics, beauty salons, newspapers, restaurants, soul food restaurants, real estate, record stores, and bookstores.
The Census Bureau's 2024 Annual Business Survey, covering reference year 2023, estimated that the United States had about 201,000 Black or African American-owned employer businesses, 3.4 percent of all employer firms. They had $249.0 billion in receipts, 1.9 million employees, and $69.8 billion in annual payroll.
By 1920, there were tens of thousands of black businesses, the great majority of them quite small. The largest were insurance companies. The League had grown so large that it supported numerous offshoots, serving bankers, publishers, lawyers, funeral directors, retailers and insurance agents. The Great Depression of 1929-39 was a serious blow, as cash income fell in the black community because of very high unemployment, and many smaller businesses closed down. During World War II many employees and owners switched over to high-paying jobs in munitions factories. Black businessmen generally were more democrat elements of their community, but typically did support the Civil Rights Movement. By the 1970s, federal programs to promote minority business activity provided new funding, although the opening world of mainstream management in large corporations attracted a great deal of talent. Black entrepreneurs originally based in music and sports diversified to build "brand" names that made for success in the advertising and media worlds.
Before emancipation (until 1865) Black entrepreneurship can be traced back to when Africans were first forcibly brought to North America in the 16th century. Many African-Americans who gained their freedom from slavery opened their own businesses, and even some enslaved African-Americans were able to operate businesses, either as skilled tradespeople or as minor traders and peddlers. Enslaved African-Americans operated businesses both with and without their owners' permission. Although, those who operated businesses without owners permission risked punishment if caught.Juliet E.K. Walker, "Racism, slavery, and free enterprise: Black entrepreneurship in the United States before the Civil War." Business History Review 60#3 (1986): 343-382. Free blacks facing a generally hostile environment occasionally operated small businesses.Juliet E.K. Walker, "Racism, slavery, and free enterprise: Black entrepreneurship in the United States before the Civil War." Business History Review 60#3 (1986): 343-382. online Profit-making businesses were created by more free and enslaved African-Americans than one might realize from the usual survey of antebellum America. When the opportunity presented itself, it was taken by these men and women, sometimes timidly, sometimes whole-heartedly, and often endorsed by the masters of the enslaved. Businesses often evolved out of skills or specialties the business owner, or service provider, already knew. Examples include: Tobacconist – As a young enslaved man, Lunsford Lane recalls selling a basket of peaches for money he could keep and very soon, he says, "plans for money-making took the principal possession of my thoughts." In six to eight years he had amassed one thousand dollars, enough to purchase his freedom, as we read from The Narrative of Lunsford Lane (1842). Shoemaker – William J. Brown was born into a free black family in Rhode Island and as a young man faced discrimination and often unethical treatment from whites as he strove to pursue a trade and career. In his selection from his Life of William J. Brown of Providence, R. I. (1883) we read his frustrating experiences as a store clerk and apprentice shoemaker. Sailmaker – James Forten Sr., a freeman and grandfather of Charlotte Forten (see #3: Free-born), learned the sail-making trade after the Revolution, bought his employer's business, and later became the wealthiest black man in Philadelphia. In this 1835 article from the white journal The Anti-Slavery Record, a white reporter describes a visit to Forten's sailmaking business. Barber – After being emancipated by his enslaver in 1820, William Johnson became a successful black businessman in Natchez, Mississippi, operating a barber shop, loaning money and acquiring real estate.Edwin Adams Davis, and William Ransom Hogan, Barber of Natchez (LSU Press, 1973). Merchant – Free-born in Philadelphia, Mifflin Gibbs became a businessman, lawyer, politician, and abolitionist. For several years he operated a clothing store in San Francisco, which he we learn from his autobiography Shadow and Light (1902). Dressmaker – After purchasing her freedom in St. Louis, Elizabeth Keckley moved to Washington, DC, and became the dressmaker for Mary Todd Lincoln, producing elegant gowns for the capital's elite women. Her 1868 autobiography Behind the Scenes display her ardor and initiative in creating her business and her life.Steve Criniti, "Thirty years a slave, and four years a fairy Godmother: dressmaking as self-making in Elizabeth Keckley's autobiography." American Transcendental Quarterly 22.1 (2008): 309+.
Reconstruction (1865–1900) Emancipation and civil rights permitted businessmen to operate inside the American legal structure starting in the Reconstruction Era (1863–77) and afterwards. By the 1890s, thousands of small business operations had opened in urban areas.From the late 1880s there was a remarkable development of Negro business – banks and insurance companies, undertakers and retail stores.... It occurred at a time when Negro barbers, tailors, caterers, trainmen, blacksmiths, and other artisans were losing their white customers. Depending upon the Negro market, the promoters of the new enterprises naturally upheld the spirit of racial self-help and solidarity.for detailed national report on the numbers of black businessmen and their finances in 1890, see Andrew F. Hilyer, "The Colored American in Business", pp 13-22 in .Memphis Tennessee was the base for Robert Reed Church (1839–1912), a freedman who became the South's first black millionaire. He made his wealth from speculation in city real estate, much of it after Memphis became depopulated after the yellow fever epidemics. He founded the city's first black-owned bank, Solvent Savings Bank and Trust, ensuring that the black community could get loans to establish businesses. He was deeply involved in local and national Republican politics and directed patronage to the black community. His son Robert Reed Church Jr., became a major politician in Memphis. He was a leader of black society and a benefactor in numerous causes.
Black communities were undoubtedly negatively affected by the enforcement of racial segregation in cities and urban areas where blacks were limited in what residential areas they could occupy. Whether in the South or the North, segregation limited the social, educational, and economic progress of the varying black communities forced into this racist social practice. However, new economic, anthropological and census research conducted establishes how black communities in the North during the late 19th century fought against racial segregation by donning new attitudes towards commerce and entrepreneurship. Racial segregation in the North during the late 19th century saw a considerable rise in black entrepreneurship and black-owned small businesses within their respective communities. These small business owners were able to take advantage of constraints placed upon the African-American communities, and exploit a market of untapped black consumers that at the time were not allowed a great deal of purchasing power in white economic markets. This rise in "negro markets" as framed by St. Clair Drake and Horace R. Clayton in Black Metropolis occurred in the South Side of cities like Chicago where African-Americans established a region of their own where the number of black-owned businesses reached 2,500 by 1937 in South Side Chicago.
The Golden Age (1900–1930)
The nadir of race relations was reached in the early 20th century, in terms of political and legal rights. Blacks were increasingly segregated. However the more they were cut off from the larger white community, the more black entrepreneurs succeeded in establishing flourishing businesses that catered to a black clientele.Köllinger, P., Minniti, M. Not for Lack of Trying: American Entrepreneurship in Black and White. Small Bus Econ 27, 59–79 (2006). https://doi.org/10.1007/s11187-006-0019-6 https://www.tandfonline.com/doi/full/10.1080/01419870.2016.1159708
The most rapid growth came in the early 20th century as the increasingly rigid Jim Crow system of segregation moved urban blacks into a community large enough to support a business establishment. The National Negro Business League, promoted by college president Booker T. Washington, opened over 600 chapters, reaching every city with a significant black population.
By 1920, there were tens of thousands of black businesses, the great majority of them quite small. The largest were insurance companies. The League had grown so large that it supported numerous offshoots, including the National Negro Bankers Association, the National Negro Press Association, the National Association of Negro Funeral Directors, the National Negro Bar Association, the National Association of Negro Insurance Men, the National Negro Retail Merchants' Association, the National Association of Negro Real Estate Dealers, and the National Negro Finance Corporation.Kenneth Hamilton, ed., A Guide to the Records of the National Negro Business League. Bethesda, MD: University Publications of America, 1995. The Great Depression of 1929-39 was a serious blow, as cash income fell in the black community because of unemployment and many smaller businesses closing down. During World War II many employees can indeed owners switched over to high-paying jobs in munitions factories. Black businessmen generally were more conservative elements of their community, but typically did support the civil rights movement. By the 1970s, federal programs to promote minority business activity provided new funding, although the opening world of mainstream management attracted a great deal of talent.
In urban areas, North and South, the size and income of the black population was growing, providing openings for a wide range of businesses, from barbershopsQuincy T. Mills, Cutting along the Color Line: Black Barbers and Barber Shops in America (2013) online to insurance companies.Walter B. Weare, Black Business in the New South: A Social History of the North Carolina Mutual Life Insurance Company (1973).Robert E. Weems Jr., Black Business in the Black Metropolis: The Chicago Metropolitan Assurance Company, 1925-1985 (1996) Undertakers had a special niche, and often played a political role.