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.