The Problems of Black Business Black Capitalism

PUBLISHED BY THE UNIVERSITY OF MINNESOTA, CENTER FOR URBAN AND REGIONAL AFFAIRS

In This Issue The Problems of Black Business . 1 THE PROBLEMS OF

Black Capitalism: The National Scene . 1 BLACK BUSINESS

Black Business in the Twin Cities .. .2 Participation in business among blacks ings, automobile sales, lumber and hard has been far below that of whites. Black ware, hotels and motels, amusement and Minority Business owned and operated businesses are usu recreation, and general merchandise. Training in Minneapolis: BEAM .3 ally small and specialized in personal One of the concerns of the current First Planning Institute A Success .4 services - such as barbering, laundry, national administration is to give minor shoe repair, and household maintenance. ities an opportunity to participate more Mankato Urban Studies Institute At the other end of the scale, Black fully in business. Several important books No Ivory Tower ...... 5 ownership and operation falls far below have been written recently on the prob Center for Youth Development . .6 national averages - to being nearly non lems of black businessmen, most notably existent - in such areas as home furnish- Theodore Cross' Black Capitalism, which the Christian Science Monitor calls "a remarkable blueprint for ghetto economic BLACK CAPITALISM survival." Excerpts from Mr. Cross' book are presented in this issue of the Re The National Scene porter. The great challenge to America is what Mr. Cross suggests that if black businesses Students and faculty at the Univer Theodore Cross, in his book Black Capital are to succeed, the main economy busi sity of Minnesota are involved. A student ism, calls the "second face of poverty" - nessmen and bankers mu st supply the project in the department of Geography, the hardened refusal of the ghetto system black businessmen with three essential comparing black-owned business with to permit anyone who lives under it a ingredients for the building of black white-owned businesses in the Twin Cities chance to own and build capital. The capitalism: 1) training and entrepre area is reviewed in this issue of the ghetto economy, he says, operates at the neurial skills; 2) credit, and 3) risk capi Reporter. Faculty have been involved threshold of anarchy. Just as urgent as tal. Among special incentives he notes through projects such as BEAM - a the ghetto resident's need to escape the are: training effort for minority businessmen. monopolistic clutches of the slum credit •selling shares in undeveloped black This issue of the Reporter looks briefly at merchant is his need for the leverage of slums - with special tax incentives some of the problems of black businesses business credit which multiplies affluence •self executing loan-repayment - and at some of the areas where the on Main Street. True economic emancipa guarantees (up to 90% or the full facilities of higher education have played tion for black people will be achieved face amount) with FHA & SBA and can play an important role in meeting· only if society satisfies the Negro's right limited to post-audit loan review needs of black businesses. and opportunity to mobilize talent for • loan clearing-houses in the ghetto production and marketing in a total (to drive out the loan sharks by redtape of new federal bank pro economy which will be receptive to his compensating commercial banks posals) product and services. Mr. Cross suggests and finance cos.) - with additional •federally subsidized bonus to new credit techniques for an economy tax deductions for high risk loans ghetto savings institutions that can which has been deprived of financial •core area service clusters - a vari best merchandise savings accounts leverage, and massive federal guarantees ety of retail and service facilities, (by use of trading stamps and all and incentives applied as risk-reduction including day care, housing, hospi such gimmicks "downtown" banks devices. tals, banks, shopping centers, etc. now use) While these new black enterprises •ghetto development bank - a non •community development corpora often begin with a great deal of enthusi profit community corp. funded tions - to build training and man asm, they are short on sound business from local banks, insurance cos., agement skills under a protec- management, on capital, and on credit. and business corps. (to bypass the BLACK CAPITALISM (cont'd. on page 2) BLACK BUSINESS in the Twin Cities A comparative study of black and white Data collected included business type, The Wickstrom - Holdridge study businesses in Minneapolis and St. Paul has size, and location, floor space, number of shows that the characteristics of black been completed by two University of employees, years in business, percent of businesses in the Twin Cities are similar Minnesota graduate students, David Wick white customers, and difficulty of getting in pattern to national black business strom and John Holdridge. The purpose insurance and credit. All Twin Cities characteristics. Black businesses are of the study is to evaluate the role and black-owned businesses listed in the smaller, both in number of employees condition of Minneapolis-St. Paul black Minneapolis and St. Paul Urban Leagues' and in floor space than white businesses businesses. Buy Black Directory were included. The and a high proportion of black businesses field inventory also included similar data are engaged in personal services. Credit is Early in 1969, H. Peter Meyerhoff, for neighboring white owned businesses much more difficult to obtain and failure who heads the Buy Black Campaign in order to provide a comparative profile. rates among black businesses are much headquarters (a section of the Minne This comparative data between black and higher than white. apolis Urban League), was searching for a nearby white-owned businesses is the The attached map shows the three way to involve the resources of the unique contribution of this study. major concentrations of black population University in his effort to facilitate the In the summer and fa! I of 1969, in the Twin Cities area which account for expansion of black-owned businesses. In Wickstrom ahd Holdridge conducted per at least 95% of the black population - the course of discussing ways of aiding sonal interviews of a sample of the black west of downtown St. Paul, south central black businesses with state officials, the and white businesses from the field inven Minneapolis and the near north side of need for statistical data on black busi tory. CURA, the Minneapolis Chamber of Minneapolis. Also shown are black-owned nesses was recognized. As a resu It, six Commerce, and the directors of the Min businesses, representing about a 20% geography students under Professor John neapolis and St. Paul Urban Leagues sample of all black-owned businesses of R. Borchert, undertook a field inventory aided in obtaining the assistance of the the Twin Cities. Most black businesses are of black businesses in the spring of 1969. businessmen who were interviewed. !coated in or near the three black neigh borhoods and in downtown Minneapolis. BLACK CAPITALISM (from page 1) tions recently secured by blacks may give There are also a few black-owned busi torate, with the help of private these individuals personal and financial nesses located in predominantly white. foundations security, but they do little to advance residential areas. Of 34 black businesses ''--··· •development of special tax credits black economic thinking, to enrich black sampled, 9 had almost all black custom- for franchise income from the neighborhoods, or to reduce the unfortu ers, while 10 black owned businesses had ghetto plus a protected product nate failures of untrained and underfi almost all white customers. Those with market to encourage ghetto retail nanced black businessmen, according to almost all black customers were located outlets Mr. Otterbourg. Big corporations could in black residential neighborhoods or As a white lawyer with expertise in well serve as the training ground for downtown Minneapolis, while those with the fields of banking and finance, and an young blacks, who can learn the inside almost all white customers were located understanding of the intangible and per workings of growth industries (i.e. elec downtown, Minneapolis, while those with sistent barriers to economic development, tronics, computers, mass-distribution) as borhoods or on the fringe of the black ''apprentices" in large corporations, Theodore Cross seems to offer some neighborhoods. which can underwrite mistakes and pro realistic, yet creative approaches to deal Black businesses in the Twin Cities ing with the main causes of ghetto de vide an actual management education were found to be considerably smaller following upon in busi pendency and powerlessness. He is joined college training than white businesses. Black businesses ness administration or engineering. But by many blacks, and by groups such as averaged 3.0 employees while white then, emphasizes Mr. Otterbourg, the the Council for Concerned Black Execu owned businesses averaged 6.8 employ black entrepreneur must be encouraged tives and the Association for the I ntegra ees. White businesses had been in business (and abetted) to move into self employ tion of Management, who feel that black at their same locations on the average of ment. business will never hold real economic about three times as long as black busi power until it can build sizeable corpora nesses. Average age of black businesses on tions of its own that can in turn influence There are new banking policies and the survey was 7 .8 years, compared to banking and financial attitudes. availability of capital to black business 23.8 years for white businesses. Nineteen Robert K. Otterbourg, a New York both from private sources and through percent of the black businessmen owned financial public relations consultant and OEO, but legislation is needed to further the floor space that they used, while 41% member of the Interracial Council for implement new banking policies. And of white businessmen owned their floor Business Opportunity of New York, sug University expertise is needed in research, space. Twenty-one percent of black busi gests some possibilities in the July 10, training and education for black business nessmen had experienced difficulty in· 1970 Wall Street Journal. Many blacks development. These efforts represent in acquiring credit while 11% of white busi recognize that the entry and middle part the commitment needed that will nessmen had the same difficulty. management positions in large corpora- begin to make black capitalism a reality. TWIN CITIES (cont'd. on page 4)

2 RACIAL COMPOSITION OF BUYERS

[61 AT SAMPLE BLACK-OWNED BUSINESSES (Related to Population Distribution)

o Almost all ~ 75% (l 50% el 25% • Almost all black --5 Black population as a percent of total population

Source 1960 US Census, and Student S•ght Counts for M1nneopol1s Public Schools, 1969, and St Poul Publ1C Schools, \969

After W1cbtrorn and Holdridge, ~ock Business 1n Minn~o29~1~ Com_£?!O_!i~e_St~~2'.

Minority Business Training in Minneapolis BEAM

Two years ago the N atio na I Urban Zimmer has coordinated the involvement minorities are welcome, and no previous League secured $2 million in foundation of the School of Business. Professor Jack college training is required. Professor grants to begin a "new thrust" - an Gray, also of the School of Business, has Andrew F. Whitman of the School of effort to provide minorities with greater worked to develop curriculum materials. Business is teaching these courses this fall, opportunities in business. Local Urban Seminars in business management have with John Mitchell and Scott Harrison Leagues across the country were asked to been offered since June 1969, under the assisting. submit specific project proposals. And as sponsorship of CURA, which administers Mr. Mitchell spends a good deal of a result, Minneapolis was awarded a grant the courses and prov ides the required his time talking to local business groups, from the National Urban League for the books. The Seminars have attempted to to arouse enthusiasm and support for project BEAM (Business Enterprises for consider the need for setting business minority businesses. In addition, he has American Minorities). This grant provides objectives and developing long range plan been drawing support for the Twin City about half of the funds for the program - ning, determining working capital and Black Business Trade Fair, (held Nov. 5-6 local businesses and institutions have con investment needs, providing information in the NSP Building) to encourage a tributed the balance to make the program required of the SBA and banks, calculat metropolitan interest in the promotion of possible. Director of BEAM is John ing cash flow, evaluating the use of credit, minority businesses. Mitchell, engineer in the Aerospace Divi determining product mix and pricing, BEAM has available a number of sion of Honeywell, who is on paid leave familiarization with business terminology directories of interest to consumers and from his company. Hugh Harrison, Man and problem analysis. businessmen in the Twin Cities, in agement Consultant and Chairman of the cluding: There were 50 participants in the Task Force on Business Development for •Consumer Directory - a listing of first course, including minority persons the Urban Coalition has helped to secure all black businesses - shops, restau who were already in business or wanted local financial support. rants, etc. to go into business, and a few white • Twin Cities Industrial Directory of Since one of the prime elements in partners in black business or promoters of Black Businesses - an inventory of the BEAM program is the training of black business. Of those enrolled, 27 products or services offered, num minorities in business concepts, proce went on to earn a total of 44 certificates ber of employees, etc. dures and approaches, the University of in general management, taxation and Minnesota was sought to he Ip develop marketing. The courses are being repeated These directories are available from appropriate coursework. Professor Robert this fall, with 19 students enrolled. All the BEAM office, 332-3395.

3 TWIN CITIES (from page 2) First Planning Institute a Succes~ Holdridge and Wickstrom found that there were considerable differences The first Summer Institute for State senior state officials from such organiza among the four major black business and Regional Planning and Development tions as: areas in the Twin Cities. Black business offered a new approach to policy prob • State Planning Agency men in the south Minneapolis area had lem solving, in response to the new needs • Pollution Control Agency the least credit difficulty - about 7% of a broad range of clientele who are con • Metropolitan Council while 37% of black businessmen in St. cerned with state and regional planning • Urban Affairs Council Paul experienced credit difficulty. The and development policies. The. Institute • Department of Administration typical size of black-owned business in was jointly presented by the Department • Minnesota Legislative Council Staff the three residential neighborhoods aver of Agricultural and Applied Economics Other organizations represented aged between 1 and 3 employees, in and the School of Public Affairs in co by these faculty leaders included: addition to the owner. In downtown operation with the General Extension • Economic Development Admin Minneapolis black operated businesses Division, the Summer Session, and the istration were more likely either one man shops or Agricultural Extension Service of the Uni • Limnological Research Center of had 4 or more employees. The south Min versity of Minnesota. the University of Minnesota neapol is area showed the greatest stability The 46 students enrolled participated • Arrowhead Regional Development in black owned businesses, with 54% of selectively in four graduate and under Commission the businesses having been in operation graduate level courses, two policy • Center for Urban and Regional for 11 years or more. In the north seminars, and two special workshops. Affairs Minneapolis business area, 55% of the Relatively broad representation was • Upper Midwest Research and Devel- black businessmen had been in business obtained in terms of the clientele group opment Council less than 5 years, while in St. Paul 63% served by the Institute. Ten of the partici • Zero Population Growth had been in business for less than 5 years. pants came from seven state departments • Planned Parenthood of St. Pau I On the average, the south Minneapolis and agencies including: Departments of • Minnesota Association of Counties area had a larger proportion of white Education, Taxation, Highways, and Wel • Worthington Daily Globe customers than any of the other black fare as well as the Planning Agency, the • U.S. Department of Agriculture business areas. And of the three major Public Service Commission, and the • Minnesota Experimental City black residential neighborhoods, the Governor's Crime Commission. Included south Minneapolis area had a higher per also were enrollees from two state col family income. With its greater stability The Institute was funded as a part of a leges, one county office, four private con and higher income, the south Minne program grant from the Minnesota Higher sulting agencies, one out-of-state Univer apolis area was clearly the most desirable Education Coordinating Commission sity as well as graduate students and location for black businessmen. under Title I of the Higher Education Act faculty from a number of University of of 1965. Matching funds came from each The prospects for black business Minnesota components. of the cooperating University organiza growth, however, do not appear hopeful The Institute participants were ex tions. The weekly Tuesday evening televi because of a general decline in the de posed to joint policy seminars co sion program "Perspective on the 70's - mand for personal services and also the ordinated with theory and policy courses the Minnesota Public Policy Report" is an general inefficiency of small business in Regional Economics and State Public integral part of this program grant and operations. It is therefore I ikely that as Administration and Development Plan the four programs aired during the period technology, affluence and integration ning, as well as non-credit workshops on of the Summer Institute utilized both re progress, the small black businesses will Environmental Quality and Information source faculty and Summer Institute par disappear. They often lack the entrepre Systems. The core content of each of ticipants in the presentation of those pro neurial skills to take advantage of a these activities was devoted to the under grams. According to Professor John S. changing market and to invest capital in standing, application, and implementa Hoyt, Jr., Director of the Institute, the new areas. In general, black businessmen tion of economic and political science evaluation of the Institute by the parti do not take a scientific approach to busi theory and policy to the problems of cipants has been overwhelmingly favor ness. But their attitudes are similar to societal change. able. A detailed evaluation of the Insti those of white businessmen, i.e. "hard In addition to the six core faculty tute is underway and will be published work is the road to success" and for those members from the School of Public together with a summary of the seminars who have achieved success their rewards Affairs and the Department of Agricul and workshops. tural and Applied Economics a total of are rightfully theirs. A number of recommendations sug 31 resource personnel participated as gested that the Institute be made avail The complete study "Black Business special faculty in the joint seminars and able, in the future, to a larger number of in Minneapolis and St. Paul" will be the workshops. Th is special faculty group local government personnel. PI ans are be- available from the CURA Office included both Governor Harold LeVander (373-7833). and Lt. Governor James Goetz as well as PLANNING INSTITUTE (cont'd. page 5)

4 Mankato Urban Studies Institute No Ivory Tower

St. Clair, Minnesota, is a small village in community and providing meaningful and the election of a new mayor and several Blue Earth County that has been adopted usefu I research and field experience for new councilmen who supported the goals by the Urban Studies faculty and stu students and in a better manner than and objectives outlined within the com dents of Mankato State College. St. Clair anything presented in a classroom situa prehensive plan and the modernization of is a quiet village eight miles from Man tion or from a simulated situation. the community. The program is now kato and while it can hardly be con Students from Sociology classes not moving into the implementation stage; sidered urban si nee its population is only only learned how to. construct a ques the zoning ordinances have been reviewed 450, it has many of the problems of its tionnaire in theory and in practice, but by a municipal attorney (obtained for the larger cousins and in many ways reflects were involved in administering the ques project by the community) and the sub why rural America, and more particu tionnaire. Shortcomings of design often division regulations went into effect in larly, rural Minnesota, is declining in do not appear until attempts to actually the summer of 1970. Applications have population and thus contributing to the administer a questionnaire commence. been made to federal agencies to con overall problem of urban concentration. Additionally, questionnaire-design teams struct a sanitary sewage collection system The "St. Clair Project" came into and retrieval-design teams discovered that and to construct a waste treatment being in the spring of 1969. What started they must work together if the data facility. as an attempt by a faculty member to gathering is to be a meaningfu I planning Publicity concerning the dilemma of assist a community in applying for federal function. Finally, the surveyors dis small communities has been successful in assistance in the area of recreation turned covered how important appearance and attracting the attention of state-wide into an attempt by the Urban Studies presentation are to the success in a survey candid ates and these candid ates are Institute to assist a community in a total situation. The students working on the speaking out about such communities re-examination of its future and its cur project also indicated one additional which are not going to die and may very rent status. That status revealed a com benefit which the project director had well hold the key to stemmir:ig the out munity with vague ordinances (when they not previously contemplated, that being flow of people to large metropolitan 1 existed), no planning commission, no the discovery that the generation gap isn't centers. If nodules such as St. Clair can be zoning codes, no sewage treatment facil as wide when common problems and encouraged to create and to maintain a ity and a complete void in accurate maps common goals exist. qua Iity of Iife that is an attracter rather detailing the existence of basic facilities. Other students were utilized from than a detracter, we may very well be The project members started from scratch the physical design areas with in the Ur able to order metropolitan growth to to rebuild. They created ordinances, de ban Studies Program, notably the carto better handle the massive problems which tailed maps, drew up subdivision regula graphic-skilled students and the photo rapid growth creates. tions and zoning plans, as well as com interpreters. These students were no Other small towns have indicated to pleted economic base studies, financial longer spending long hours creating func the Institute a desire to be part of any inventory reports and detailed demo tional as well as attractive visuals that similar projects in the future and it is graphic profiles in the community. In received grades and were then placed on hoped that other communities will be June of 1969 a group of students and shelves to be forgotten. Maps that were adopted in such a manner in coming faculty went house to house with a created from field notes are now part of years. While such programs are expensive student-prepared, 70 question survey. the comprehensive plan. Models !hat were and time-consuming, and often frustrat Armed with advice and instruction from built of the community through informa ing to both the participants of the aca the student project leader and from the tion gathered will be utilized by the demic world and the participants of the faculty involved, the students surveyed community in promotional act1v1t1es real world, the benefits to both cannot over three-fourths of the dwellings in the aimed at financing the goals outlined and should not be ignored in the opinion community asking questions aimed at within the comprehensive plan. of the Urban Studies Institute staff. determining income levels, population Students also were exposed to the growth, attitudes toward growth, atti problems of administration of govern PLANNING INSTITUTE (from page 4) tudes toward changes in the basic land ment within the micro-micro-cities that use, as well as migration patterns. The dot our Minnesota landscape and to the ing made now to repeat the Institute, in survey was constructed to utilize the importance of record keeping. Addition modified form, at four one-week sessions computer services of the college and ally, they were able to observe the village to be held at various out-state locations students were involved in the program council in operation during a period of next summer. Implementation of these ming and analysis of the data once extreme crises. During the one-year obser· plans will of course depend upon the collected and processed. vation and participation segment the stu availability of both funding and appro The over-all objectives of the pro dents were exposed to a power struggle priate Institute locations in the summer gram are aimed at the servicing of a within the community which resulted in of 1971.

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CENTER FOR YOUTH DEVELOPMENT AND RESEARCH

GRANT DIRECTOR ON LEAVE ADVISORY COMMITTEE

The University of Minnesota will be· Gisela Konopka, Director of the Center Mrs. Nancy Belbas, Junior League of come the nationwide collection point for for Youth Development and Research, Minneapolis Mr. Virgil Burns, Director, Minnesota information about youth development under CU RA, has been off on a 6-month Montessori Foundation centers at United States colleges and uni sabbatical which began Sept. 1. During Dr. Paul Cashman, Vice President for versities, Congressman Donald M. Fraser the first 2 months Dr. Konopka has been Student Affairs, University of Minne annou need today. traveling in the Near and Far East, where sota "The project will be supported by a she was a delegate to the International Dr. Warren Cheston, Dean, Institute of Technology, University of Minnesota $47 ,000 grant from the Department of Conference of Schools of Social Work Dr. John Darley, Psychology Department, Health, Education and Welfare," Fraser and the International Conference of University of Minnesota said. The University's Center for Youth Social Welfare, both held in Manila. She Mr. Eugene Eidenberg, Special Consultant Development and Research, headed by also served as Chairman of the Workshop to Vice President for Academic Dr. Gisela Konopka, will conduct the on Student Participation at the Schools Administration, University of Minnesota project, which is designed to assist col of Social Work meeting. Mr. Jewel Goddard, Director, Department leges and universities to develop more In her further travels, Dr. Konopka of Court Services, Hennepin County effective research about youth. Mr. Larry Harris, Director of Urban will focus on social problems concerns, "The Center for Youth Development Affairs, Minneapolis Public Schools and specifically on the relationship be has already been engaged in important re Mr. William Hoffman, Director, Contin tween the generations in rapidly changing search - in studies of youthful unrest and uing Education for Social Work, societies. She will have the opportunity University of Minnesota relationships between generations, for to observe and do writing in this area. Dr. Arthur Johnson, Sociology example" - Fraser said, "and these new Department, University of Minnesota During her absence, her assistant Diane funds will make it possible for the Univer Mrs. Josie Johnson, Afro-American Hedin will be the Acting Director of the sity to broaden and extend this important Studies Department, University of Center. Dr. Barbara Knudson, newly work." Minnesota appointed Assoc. Prof. and Coordinator Mr. Robert Johnson, Anoka County of Community Service Programs in the Attorney Dr. Roland Larson, Associate Director, General Extension Division, will take over Youth Research Center many of Dr. Konopka's duties and activi Dr. Harold Stevenson, Director, Institute ties on a part-time basis. of Child Development, University of Minnesota Dr. Frank Wilderson, Assistant Dean, College of Education, University of Minnesota Mr. Theatrice Williams, Director, Phyllis Wheatley Community Center.