In harmony with the general movement of the entire population of the United States, however, the Negro is now moving to the city. In the thirty years between 1900 and 1930 the urban Negro population increased by more than three million; the rural population actually decreased by 134,000. The movement to the city became more definite and rapid during each succeeding decade of this thirty-years period. Between 1910 and 1920 the urban population increased by 875,000, while the rural population decreased by 240,000. Between 1920 and 1930 the urban population increased by 1,600,000; the rural population decreased by 206,000.1

Since the early days of the World War much publicity has been given to the movement of the Negro from the rural South to cities of the North. The reason for emphasis upon this particular direction of his migration is readily understandable. The proportionate increase in the Urban Negro population since 1910 has been far greater in the North than in the South. To a population of only 790,000 Negroes in the urban North in 1910, approximately 1,300,000 were added by 1930. Moreover, the percentage of increase in the urban North during recent years has been much greater than that of the white population: the Negro population increase between 1910 and 1930 was 1692%; the white increase, 49.1%. The fact must not be lost sight of, however, that in numbers the Negro population increase of Southern cities has been almost as great as that of Northern cities. To the 1,850,000 Negroes living in Southern cities in 1910, the net addition during the following twenty years was 1,111,000, an increase, to be sure, of only 60%, yet only 226,000 less than that of Northern cities.2 If we take into account the fact that Northern cities have been steadily draining the Negro population of the urban South, it is clear that the migration from the rural South has been largely into Southern cities.

The migration of the Negro to the city has resulted in surprisingly large populations in certain important industrial and commercial centers, both North and South. In 1930 there were 233,903 Negroes in Chicago, or 530.4% of the Negro population there in 1910; 327,706 in New York City, or 357.3% of the 1910 population; and 219,599 in Philadelphia, or 260% of the

1910 population. In the 17 Southern cities with populations, including all races, of more than 100,000 in 1930,3 according to the Federal Census returns of that year, the Negro population numbered 889,611, or 25.2% of the aggregate.

It will be noted in Table 1 that in practically all of the 17 cities the percentage increase of Negroes during the period from 1900 to 1930 was less than that of the white population. This has tended to minimize the importance of the actual numerical increases. As a matter of fact, the combined Negro population of these 17 cities in 1930 was 235.3% of what it was in 1900. Moreover, it is interesting to note that the combined Negro population in 1930 was slightly larger than the combined white population of 1900, and half as large as the combined white population of 1920.

The economic progress of the Negro has been extremely slow and faltering. Even today most of both the males and females gainfully employed in the urban South are occupied at the commoner sorts of directed tasks in white homes and white businesses. A constant awareness and fear of white disapproval of the assumption on their part of the rôle of entrepreneur and a lack of confidence in themselves have very definitely retarded the establishment of business enterprises by Negroes. Moreover, as is discussed at considerable length in Chapter VII, the problems of securing adequate 0245capital with which to organize business units, and of gaining adequate training and experience with which to conduct them intelligently have not only retarded the establishment of enterprises but also prevented any considerable success in their operation. It is not strange, therefore, that Negro industrial establishments of types which might provide employment for a considerable number of Negro workers and make possible the accumulation of business profits are still decidedly novelties. A somewhat larger and, during very recent years, more rapid development has taken place in the field of merchandising. Even here, however. the progress to date has not brought any considerable economic advantage to the Negro race and has provided employment for only a negligible few.

Home communities.—Actually there is some overlapping of Negro and white neighborhoods in the urban South. But, apart from mixed border-line streets and areas in process of transition from white to black, or vice versa, Negroes tend to live in Negro communities and whites in white communities. Negroes are found most often in less desirable areas of a city, such as those bordering railroad yards, near factory and wholesale districts, and notably in the abandoned first white residence sites.4 Negro neighborhoods, however, are usually not confined to any one section of the city, but are rather widely scattered.5

The exceedingly limited choice of areas open to Negro settlement in past years has compelled the more prosperous business and professional families, in many instances, to settle in neighborhoods entirely out of harmony with their living standards. As an indicant both of Negro progress in the South and of a more reasonable attitude on the part of the white populations, however, it is of interest to find that small communities of very attractive, well-built homes, either owned or rented by Negroes, are emerging in some cities. They are frequently mistaken for white neighborhoods, even by white residents.

Pertinent to the present study of the Negro as a consumer is the location of Negro home communities with reference to the retail shopping districts. In Richmond, the largest Negro neighborhood is just off Broad Street, close to the shopping center. In Birmingham, the street made famous by Octavus Roy Cohen borders the area in which the city's great stores are to be found. The largest Negro neighborhood in Atlanta, centering along Auburn Avenue, N.E., is only a short walk from the most important business area of the city.

Channels through which the Negro neighborhood conducts its social life.—The Negro population is thought of both in terms of general city life and of its own internal group. There is, as would be expected, only limited contact with the institutions of the general community. This contact varies in extent and intensity according to city and section. The institutions of the Negro community constitute a sort of rounded whole, varying little from city to city. In affairs which concern the necessities of life, the institutions of the general community serve in some degree the Negro populations. These include such agencies as the school, commercial 0267establishments through which essential trade goes on, the courts, and such established institutions. Always there are variant degrees of contact and participation which in their totality characterize what might be considered the race relations or Negro status in the given locality. In affairs which relate to other phases of life, as for example the organized use of leisure time and cultural opportunities, it is usual that participation in the general agencies is severely limited. There are, however, substituting agencies for many of these within the circle of the Negro community itself. These include the church, the personal service establishment, types of recreation and amusement of a restricted group character, and a general interstimulation between members of the group.

Thus there are commercial enterprises in Southern cities catering to the entertainment and amusement of the white race which permit Negro attendance under strict segregation. A good many white theatres of various kinds open their galleries to the Negro. White commercial amusement parks and similar enterprises sometimes specify certain days for Negro patronage. It should be mentioned also that the white sponsors of occasional entertainments such as musicales, lectures, and ball games frequently make provision for Negro attendance.

Public and private recreation facilities available to the white population of many Southern cities are inadequate. Those available to the Negro under the custom of social segregation are usually inadequate. A rather comprehensive survey of these facilities was made in 1928 by Forrester B. Washington. Of the 17 cities with important Negro populations studied, 13 had combined Negro and White populations of more 0278than 100,000. Table 2 summarizes the findings for the seventeen.6

In Negro neighborhoods in Southern cities, commercial establishments are often to be found which cater solely to the amusement and entertainment of the Negro. Some of them are owned and operated by enterprising members of the race fortunate enough to secure the necessary capital.7 The majority, however, are owned by whites who have discovered here a profitable source of income. They consist of such enterprises as motion picture theatres, pool rooms, and dance halls; those types predominating which require little capital outlay. For this reason, pool rooms are7 For instance, a study of sixteen city directories indicates that Negroes own two motion picture theatres in Atlanta, Ga.; one in Augusta, Ga.; four in Birmingham, Ala.; three in Chattanooga, Ten.; one in Columbia, S. C.; one in Durham, N. C.; two in Jacksonville, Fla.; one in Knoxville, Tenn.; two in Mobile, Ala.; two in Montgomery, Ala.; two in Richmond, Va.; and none in Lexington, Ky., Nashville, Tenn., Shreveport, La., Spartanburg, S. C., and Wilmington, N. C.0289particularly conspicuous in Negro neighborhoods. The numbers of commercial establishments providing wholesome amusement or entertainment are very limited.

The unquestionable inadequacy of public and private recreational facilities available to the Negro populations of Southern cities and the lack of capital in the possession of Negroes with which to provide for themselves outlets for wholesome social expression similar and equivalent to those available to the white populations have resulted in certain significant substitutions. For one thing, the Negro community makes large use of the inexpensive expedient of visiting with relatives and neighbors. A questionnaire study conducted with 1000 Negro families in Nashville in 1929 found a surprisingly large number whose entire social program consisted of this simple, inexpensive activity. Then too, the Negro community has adapted the mechanism of its strongest group enterprises to meet its social needs. The fraternal organization has become a much favored outlet for social expression. The church, however, is the stronghold of the group in the conduct of all of its community activities. Through innumerable clubs and general social activities it fills the gap in social life not otherwise provided for. W. E. B. DuBois says, “The United States is virtually divided into church congregations, which are the real units of race life.”8 George E. Haynes states, “The total enrollment of Negroes in church membership is larger than their membership in any other organization, and probably as large as the membership of fraternities, clubs, insurance companies, and similar organizations combined. . . . The Negro as a worker makes contact with the white world when8 DuBois, W. E. B., The Negro Church, The Atlanta University Publications, No. 8, 1903.02910on his job, and receives information, instruction, and stimulus so far as his occupation influences his ways of life. All his leisure-time activities that condition intellectual development and emotional motivation under present conditions of segregated Negro life, must find their channel mainly through the principal community agency the Negro has—his church.”9 To quote from Forrester B. Washington, “From the very beginning the Negro has had to make numerous approximations and substitutions to supply himself with decent recreational opportunities. In both city and country he has made of the negro church a quasi community center.”10 In a scientific survey of Negro life in Detroit in 1926, the Mayor's Interracial Committee reported that the Negro “has been humiliated in so many public and privately owned institutions and amusement places that he has resorted to the church as a place in which he can be sure of peacefully spending his leisure time. To a large extent it takes the place of the theatre, the dance hall, and similar amusement places, and fills the vacancy created by the failure of public and commercial places of recreation and amusement to give him a cordial welcome. Consequently, the average Negro church in Detroit keeps its doors open constantly for the use of the community. Numerous suppers, lectures, recitals, debates, plays, and the like are given by clubs and individuals from within and without the congregation.”

The rapid migration of the Negro to the city has resulted in the development of large urban populations. 03011The tendency on the part of white business interests is to look upon these large groups of Negroes simply as appendages to the white market; to conclude that their demands correspond largely to those of the common labor class of whites; to assume, therefore, that purchases by the Negro portion of the domestic market are almost wholly of the cheapest types of necessities. The custom of social segregation in the South, however, is responsible for differences in the social lives of the two races which make these assumptions almost completely in error. In the development of their own community and social life, responsibilities, obligations, and customs have grown up among Negroes which find no counterpart among whites. Distinctly different social classes tend to persist even within the enormous occupational class of common labor. The Negro domestic employed by a prominent or wealthy white family has greater social obligations than the domestic or cook working in the average white home. At the opposite extreme, the successful Negro merchant, one doing as much as $10,000 net business in a year, is really in a much more important position socially and otherwise than the white merchant doing the same volume of business. He is in a position, so far as his race is concerned, which among whites would correspond perhaps to that of the owner of a chain store system, and he is expected to measure up relatively as high socially, with all that this implies. Even the young Negro physician just beginning his practice is in a high social position so far as his race is concerned. The small white merchant and the young white physician just beginning practice usually make little social pretense and are not expected to. As a matter of fact, the young white physician often remains for some time on the 03112student or interne living level. Civic and social responsibilities seem to fall on the Negro business and professional family early because of the smaller number of community leaders in the group. The contrast between their position and that of the white business and professional family in similar circumstances is evidenced by the fact that the majority are expected to own automobiles, electrical apparatus, and luxuries far above the requirements of their simple economic level.11

It is not surprising, therefore, that the material of the succeeding chapters of this book should indicate that the standards of living of the various occupation and income classes of Negroes in the urban South actually tend to be higher than those of corresponding occupation and income classes of whites.

In those specific types of employment in which the efforts of the Negro are largely concentrated, he is apt to dominate the field numerically. White labor as a group is not interested in some of these occupations, either because of the distasteful nature of the work involved or because of its low remuneration. Included here, for example, would be the sorting of tobacco in factories by females, and much of the labor of males in fertilizer plants and cottonseed oils mills. In personal 04223service occupations and in some types of industrial work, Negro labor is preferred to white. Charles S. Johnson, in The Negro in American Civilization, Chapter V, makes the assertion that Negro workers seem to have a special usefulness in iron and steel production, in slaughtering and meat packing, in chemicals, in longshore work, and generally where strength must be combined with agility and a certain amount of deftness.

At all events, without the services of the male Negro as common laborer in manufacturing and the mechanical industries, in transportation and public service; in the operation of motor vehicles which carry raw materials and finished products to factory, railroad, warehouse, or home; as porter, janitor, servant, and waiter, it is evident from the data presented in Table 8 that the urban South would have been faced with a real labor problem in 1920. Considerably more than half of the laborers engaged in each of these types of work in the twelve representative cities indicated in this table were Negroes. The cities of the Southeast were especially dependent upon them. In the cities of the Southwest and the border states, however, the male Negro not only made up a considerably smaller part of the total population, but a larger supply of other labor, particularly European immigrant labor, was directly in competition with him. Whereas the male Negro population in each of the cities of the Southeast listed in Table 8 amounted to approximately one-third or more of the total male population, it ranged from less than 10% to approximately 18% of the total in the cities of Louisville, Dallas, Fort Worth, and San Antonio.

These twelve important Southern cities were likewise

learning heavily upon the female Negro in 1920 for their laundresses (not in laundries), female servants, laundry operatives, waitresses, and female labor in manufacturing and the mechanical industries. At one extreme, it will be noted in Table 9, are the cities of the Southeastern states in which the Negro woman was relied upon almost wholly for the performance of these tasks. At the opposite extreme, as has just been noted regarding males, are the cities of the Southwest and the border cities in which the Negro makes up a much smaller proportion of the total population, and wherein either the Mexican or the immigrant from certain European countries enters more importantly into the labor supply. The most extreme situation so far as these twelve cities are concerned is San Antonio, near the Mexican border, where a large population of

Mexican women are direct competitors of the Negro women in these types of work. Negro women, incidentally, made up less than 10% of the total female population there in 1920, according to the Federal census for that year.

The “cash” store was found to be enjoying the patronage of a much larger part of the families interviewed in Atlanta in the sale of small articles of clothing, than in either Birmingham or Richmond. In fact, the “cash” store in Atlanta was receiving more of the trade for this type of merchandise than the “installment credit” clothing store. In both Birmingham and Richmond the situation was reversed. In spite of these rather confusing differences, however, the greater part of the trade for this type of clothing in all the cities 10687was following a similar course. It is significant that approximately one-half or more of the housewives and heads of families interviewed of all occupation groups in all three cities were patrons of legitimate-price “cash and credit” stores.

It will be noted in Table 30 that the proportions of housewives and family heads interviewed from skilled labor families in each city who were buying articles of wearing apparel from this class of retail outlet were consistently larger than in the cases of those from common and semi-skilled labor families. Moreover, the proportion of housewives and family heads interviewed from business and professional families was consistently larger than that from either common and semi-skilled labor families labor families.

Finally, it is of interest that in each of the three cities two or three of either the larger department or 10788dry good stores were receiving at least some business for small items of clothing from a surprisingly large portion of the housewives of all occupation groups. In Atlanta, of the housewives interviewed, 32.3% from common and semi-skilled labor families, 30.2% from skilled labor families, and 53.9% from business and professional families were patrons of one large department store. A second department store in Atlanta was receiving trade in this type of merchandise from 14.6% of the housewives interviewed of common and semi-skilled labor families, from 23% of the housewives from skilled labor families, and from 27.6% of those from the business and professional group. In Richmond, 16.6% of the housewives interviewed from common and semi-skilled labor families, 28.9% of those from skilled labor families, and 48% from the business and professional group were patrons of one large department store, in their purchase of this type of merchandise. One large dry goods store in that city was obtaining business from 11.1% of the housewives interviewed from common and semi-skilled labor families, from 36.8% of those from skilled labor families, and from 28% of those from business and professional families; and a second large dry goods store was receiving patronage for small articles of wearing apparel from 15.4% of the housewives interviewed from common and semi-skilled labor families, from 21% of the housewives of skilled labor families, and from 18% of those from business and professional families. In Birmingham, of the housewives interviewed, 34.4% of those from common and semi-skilled labor families, 44.4% of those from skilled labor families, and 39.4% of those from business and professional families were patrons of a large department store in the purchase of smaller 10889items; and a second somewhat smaller department or dry goods store was doing business with 20.9% of the housewives from common and semi-skilled labor families, with 30.5% of those from the skilled labor families, and with 19.7% of those from business and professional families.

A much smaller proportion of the trade for small items of wearing apparel, of the male Negroes interviewed in all three cities, was going to large retail establishments. It is rather significant, however, that one large department store in Atlanta, and also one in Birmingham, had succeeded in building up a business with almost as many of the male Negroes interviewed of all occupational groups in the sale of small items of wearing apparel as with the females. Of the males interviewed, 17.5% of those from common and semi-skilled labor families, 23.3% of those from skilled labor families, and 31.5% from business and professional families were patronizing this Atlanta department store; and the Birmingham department store was receiving business from 26.3% of the males interviewed from common and semi-skilled labor families, from 44.5% of those from skilled labor families, and from 35.2% of those from the business and professional group.

The general direction of the greater part of the trade of the families interviewed for major articles of wearing apparel followed an even more similar course in the three cities, than the trade for small items. The “cash” store, although still important, played a less important rôle in Atlanta; the “instalment credit” store, on the 10990other hand, played a more significant rôle in all three cities. The legitimate-price “cash and credit” store, however, again played the most important rôle of all—and a relatively more important rôle.

The “installment credit” stores, as can be observed in Table 31, played a rather important part in the trade of labor families—particularly in the trade of the males. It is only when we reach the business and professional groups of families interviewed that there was an important dropping off in the patronage of these stores. In spite of their importance in the sale of this class of merchandise to the labor families interviewed—in particular, to the common and semi-skilled labor families—,even here a far greater use of the legitimate-price “cash and credit” store is obvious.

As was true in the sale of small articles of wearing apparel, it is equally as significant that here again we 11091should find certain ones of the larger department and dry goods stores in each city playing an important part in the sale of major articles. For example, of the housewives interviewed in Atlanta, 23.3% of those from common and semi-skilled labor families, 30.2% of those from skilled labor families, and 36.8% from business and professional families were regular customers, for this type of merchandise, of one large department store. In Richmond, of the housewives interviewed, 14.1% of those from common and semi-skilled labor families, 34.2% of those from skilled labor families, and 34% of those from business and professional families were customers of one of the leading department stores. In Birmingham, the same thing was true; for example, of the housewives interviewed, 27.7% of those from common and semi-skilled labor families, 35.1% of those from skilled labor families, and 38% of those from business and professional families were regular patrons of one of the larger department stores. As was true of the direction of their trade for smaller items of wearing apparel, however, the majority of the men interviewed were purchasing such major articles as overcoats and suits in the smaller stores. No one of the larger department stores was receiving the patronage of an important number.

The “cash” store proved to be a more important source for shoes in all three cities than for either small or major articles of wearing apparel. One reason for the greater importance of these stores in the sale of this type of merchandise is, undoubtedly, that certain popular and well-advertised brands of shoes are sold 11192only in “cash” stores, including manufacturers’ retail outlets. In spite of the fact, however, that the “cash” store assumes greater significance in all three cities in the merchandising of shoes, we find less similarity in the direction of the trade for shoes in the three cities than in the trade for either small or major articles of clothing. The “cash” store assumed much greater importance in Atlanta than even the “cash and credit” stores. In Birmingham and Richmond, on the other hand, even though the “cash” store assumed a more important rôle in the sale of shoes than in the sale of clothing, nevertheless it was far less important than the “cash and credit” store. As is indicated in Table 32, 9.1% of the housewives of common and semi-skilled labor families interviewed in Richmond, and 19.8% in Birmingham, were patronizing “cash” stores in the purchase of shoes, contrasted with 79.7% of the housewives of this occupation group in Atlanta. Of the family heads interviewed, 17.3% of common and semi-skilled labor families in Richmond, and 22.8% in Birmingham, were buying their shoes in “cash” stores, contrasted with 68.4% of the heads of families of this occupation group in Atlanta. On the other hand, of the housewives interviewed, 68.7% in Birmingham, and 78.8% in Richmond, were buying their shoes from legitimate-price “cash and credit” stores, contrasted with 18.8% in Atlanta; of the family heads interviewed, 61.9% in Birmingham, and 64.4% in Richmond, were buying their shoes from legitimate-price “cash and credit” stores, contrasted with 30.6% of the family heads in Atlanta.

It will be noted in Table 32 that the proportions of housewives and family heads of both skilled and business and professional families buying their shoes in

“cash” and “cash and credit” stores were likewise in contrast among the three cities, although in somewhat less severe contrast.

In spite of these differences in the direction of the trade for shoes in the three cities, even here certain ones of the larger department and dry goods stores in each were doing some business in shoes with rather large numbers of the housewives interviewed. For example, of those interviewed in Atlanta, 10.7% of those from common and semi-skilled labor families, 12% of those from skilled labor families, and 32.8% from business and professional families were shoe customers of one of these stores. In Birmingham, of the housewives interviewed, 16.8% of those from common and semi-skilled labor families, 33.3% of those from skilled labor families, and 32.2% from business and professional families were patrons of one particular department store. In Richmond, only a few of the women interviewed 11394from common, semi-skilled, and skilled labor families were buying shoes in the larger stores. Fourteen per cent of those interviewed from business and professional families, however, were patrons of one of the larger department stores, and 12% were customers of one of the larger dry goods stores. Of the family heads interviewed from all occupation classes in the three cities, only an insignificant number were buying their shoes in the larger department and dry goods stores.

The “instalment credit” clothing store is interested primarily in the business of that element of the community unable to meet the credit requirements of the better stores. This has been frankly acknowledged by the proprietors of several of these houses. The head of one large company selling both clothing and jewelry made the observation that whenever a well-dressed, prosperous-appearing individual came into his store, he was immediately looked upon with suspicion. To trade profitably on credit with the element of the community to which these stores appeal necessitates radically different credit, collection, and price policies from those of stores selling only on the open-account basis.

The instalment or contract credit plan.—Whereas 121102the open-account plan extends a blanket credit privilege to the customer, usually on 30 and 60-day terms, the instalment or contract plan provides in principle a systematic method of payment for one article, requiring usually a down payment, followed by other regular payments at specified intervals.2 This general plan of credit extension actually works to better advantage in sales to the smaller income groups and less responsible customers than the open-account system. Nor is it difficult to understand why. For one thing, the merchant retains title to the article until it is paid for in full. The merit of this feature of the plan does not lie in the power it provides to requisition the suit of clothes or dress, or coat, if not paid for according to contract. Clothing is so perishable in nature that depreciation rapidly diminishes its original value. Rather, the merit lies in a certain psychological control it gives the merchant over the customer.3 Again, the small regular payments demanded weekly or bi-weekly under the instalment or contract scheme of credit extension match in frequency the regular pay days of laborers, so that a2 The instalment or contact credit plan is usually of in connection with the payment for one major article such as a coat, suit, or dress. The business of the “instalment credit” clothing store consists primarily in the sale of this type of merchandise. Nevertheless, the instalment or contract plan of payment can be and is occasionally applied to small articles as well. In this event the customer is permitted to buy up to a definite limit, the obligation incurred being liquidated exactly as in the case of major articles.

3 (a) In sales to a sample list of 180 Negro accounts taken alphabetically from various sections of the records of an “instalment credit” clothing store during the course of this study, an average of fourteen weeks (the median) elapsed before final payments were made on such articles as men's suits and overcoats, and women's coats and best dresses.

(b) In the sale of clothing on the instalment plan, some merchants require the balance to be paid in a maximum of two, two and a half, or three months, whereas many allow six months, and some from six to twelve months. See National Retail Credit Survey, Part I, Domestic Commerce Series, No. 33, Bureau of Foreign and Domestic Commerce.

The collection problem of the “instalment credit” clothing store.—In the effort to gain trade, the “installment credit” clothing store makes the purchase of merchandise extremely easy. The down payment required in the sale of major articles of wearing apparel is often exceedingly small. Advertisements offering coats and dresses on the basis of $1 or $2 down payment are common at all times. In 1930, on account of the depression, sales were actually consummated which required no down payment, or only a nominal payment of 25 or 50 cents. Moreover, the weekly or bi-weekly contract payments required following the down payment are adjusted to meet the wage paid even to common and semi-skilled labor, being stretched out over whatever period of time is required by the economic position of the individual concerned. This is given point in the somewhat humorous expression common among one class of Negroes, that their method of purchase is “a dollar down and a dollar a week from now on.”

It is reasonable to believe that the instalment credit privilege can be utilized to advantage in purchases by that part of any community able to apportion income intelligently among the various costs of living—at least in the purchase of nonperishable articles. On this subject Thomas A. Sheckell, the assistant manager of an important credit adjustment bureau in New York City, makes the following statement in the Rotarian of December, 1929: “The instalment plan of payment has helped many a man to become the owner of a home, 123104an automobile, a set of books, or other costly commodities, which possibly he could not otherwise have had. It has helped him to save.”

In the case of that element of the community to which the “instalment credit” clothing store appeals, however, the opportunity to buy clothing on exceedingly easy payment terms induces the purchase of articles not actually needed and the payment of more for these articles than is justified on the basis of income. It has been interesting to observe on numerous occasions how this works out in the actual process of purchase in these stores. Foe example, a truck driver earning not over $20 a week entered an “instalment credit” jewelry store one morning with a friend who had a regular payment to make on an article previously purchase. During the time that this friend was at the cashier's desk in the rear, the truck driver remained in the front of the store idly watching customers, apparently with no thought of making a purchase himself. Before his friend returned, however, he had succumbed to the combined influence of a soft-voiced, clever saleswoman, and exceedingly easy and attractive payment terms, and walked out of the store with a $30 lady's wrist watch.

The ease with which a purchase can be made in the “instalment credit” clothing store quite naturally minimizes the importance of price. It is a common occurrence for a sale to be actually completed before any direct inquiry is made regarding it. The customer is chiefly interested in the quality of the article, the amount of the down payment, and the weekly or bi-weekly payments to follow. It is not surprising, therefore, that whereas the high-grade department store practically eliminates the collection problem through the acceptance 124105for the most part of good credit risks only, collections are the major problem of the “instalment credit” store. Indicative of the truth of this statement we find that 45% of an alphabetical sample list of accounts taken from various sections of the records of an “instalment credit” jewelry store in one of the South's large cities were exceedingly slow payment or worse; 78% of a similar list from the records of an “instalment credit” clothing store were behind contract; and of a list from the records of a second “instalment credit” clothing store 42% were either exceedingly slow in paying or weren't paying at all. In one of these two “instalment credit” clothing houses of least twice as much was being expended in collections as in sales in 1929. Two women were responsible for the major sales effort of the store. On the other hand, two clever male collection experts, together paid $600 a month, spent all of their time, aided occasionally by the proprietor, attempting to collect overdue accounts. Numerous ingenious schemes were worked out by these men to frighten or compel delinquent customers to pay their bills. Incidentally, the turnover of accounts was exceedingly high.4

Prices in the “instalment credit” clothing store.—Because of the heavy expense of collections, the relatively long periods of time given customers in which to pay, and the high percentage of accounts which fall behind contract or never finish payment, it is simply 126107sound economic reasoning to conclude that the quality of the product sold by the average “instalment credit” clothing store must be lower in relation to retail price than is true of the merchandise sold by legitimate-price stores. The comparative prices charged by “instalment credit” and legitimate-price “cash and credit” stores for articles of clothing may, of course, reflect either differences in price for the same quality of merchandise, or difference in quality. It is of some significance, nevertheless, that analyses of prices paid for representative major articles of wearing apparel, at the same period of time, by men and women of comparable occupation groups, revealed higher prices in the “instalment credit” clothing stores studied than in any class of store, including department stores, catering to the best element of trade. For example, a sample list of accounts taken from the records of a large department store appealing primarily to the best and middle classes of white trade, showed females from common, semi-skilled, and skilled labor families, as well as from business and professional families, to be paying an average of about $16.50 for their best dresses; a similar list from the records of a smaller department store appealing chiefly to middle-class white trade, prices ranging from $13.25 to $16.50. In one “instalment credit” clothing store a sample list of female customers from common, semi-skilled, and skilled labor families were paying $18.98; and in a second instalment store, from $19.75 to $29.75. In their purchase of suits a sample list of male accounts from common, semi-skilled, and skilled labor families, as well as from business and professional families, were paying from $30 to $39.50 in a medium-size department store reaching middle-class white trade in particular; from $34.75 to $39.50 in one “instalment 127108credit” clothing store; and from $37.50 to $39.50 in a second “instalment credit” store.5

In concluding the discussion of the Negro as a credit risk, three rather interesting observation deserve mention:

1. Upon several occasions in the conduct of this study prominent white individuals have evidenced surprise that there is such a thing as Negro credit. As a matter of fact there are many excellent credit risks among Negroes in the urban South. The small numbers of accounts on the books of the better stores are invariably good risks. And analysis of Negro credit ratings in the Blue Book published annually by the Birmingham Merchant's Credit Association shows that of 114 ratings for Negro railroad laborers, 47.3% were good or fair; that 54% of 170 credit ratings for Negro employees of an important iron and coal company were either good or fair. A study of sections of the files of the Credit Service Exchange in Atlanta found that of 267 credit ratings for Negro common laborers, 51.3% were prompt pay, and 82% were either prompt or fair pay; that of 165 credit ratings for Negro skilled laborers, 50.9% were prompt pay, and 85% were prompt or fair pay. Finally, an analysis made of the credit standing of 600 Negroes regarding whom information was requested of the Nashville Retail Credit Bureau during several day's time by all kinds of enterprises is of interest here. Of 413 Negroes from common and semi-skilled labor families, 46.1% were rated either fair or good risks by the 136117Bureau; of 87 Negroes from skilled labor families, 49.3% were rated either fair or good credit risks; of 100 Negroes from business and professional families, 57% were rated either good or fair.

Because of the widely differing proportions of the Negro and white populations in each occupation classification, in the South's large cities, it is exceedingly unfair to compare the two races as a whole as credit risks. Equitable comparisons can be made only between occupation classes. For example, a reasonable comparison would be between the 75% of the Negro group 138119and the 25% of the white group in common and semi-skilled labor families. Studies of the comparative percentages of the Negro and white credit customers of the better stores in each occupation class, however, show how exceedingly difficult, if not impossible it is, to make such comparisons. There are very few white common and semi-skilled labor accounts on the books of this class of store; there are more accounts with Negro families of this occupation classification than any other. Moreover, because of the small percentage of Negro laborers employed at skilled work there are very few Negro skilled labor accounts in the credit records. In Nashville in 1920 only 9.1% of the male and female Negroes gainfully occupied were employed as skilled labor; 26.6% of the male and female whites were in this occupation class. Unless comparisons of the labor families of the two races as credit risks are planned and executed with extreme care, therefore, they are almost sure to be largely between Negro common and semi-skilled laborers on the one hand and white skilled laborers on the other.

There is probably no type of retailing effort today in which any individual merchant faces more complete and drastic competition than the retailing of grocery products. It was in this field that the chain system of retailing first achieved real success,4 bringing with it the economies of scientific management and large-scale operation. In spite of this fact, however, more Negroes4 The Great Atlantic & Pacific Tea Company, established in 1858, was a pioneer in this field in the United States. The Jones Brothers Tea Company was established in 1872. See Principles of Marketing, by Maynard, Weidler, and Beckman, Chapter VII.144125are engaged in the retailing of groceries in the urban South than in the retailing of any other type of consumer merchandise. The belief that a retail grocery establishment can be set up with less capital than other types of retail establishments, and that its operation requires no specialized training and little or no previous experience, has entered into the calculations of many of these merchants. In view of the relatively large number of Negro groceries in operation in the South on the one hand, and of the constantly increasing efficiency of competitive units on the other, the findings of a rather comprehensive study of the calibre of the Negro groceries in Nashville, which observation indicates are quite representative of independent Negro grocery units throughout the South, are of particular interest.

Education, experience, and business capacity of management.—Of 35 Negro grocers interviewed in Nashville during 1929, only 12, or 34.3%, had had any experience either as proprietors of groceries, or as employees in grocery stores, prior to the opening of their present establishments. The background of the others, with two or three exceptions, had scant relation to management of a store of any sort. One had previously worked in a paint store as a laborer, one had been a farmer, two had been moulders in foundries, one had worked in railroad shops, two had been boat hands, one had been a laborer in the employ of the city, two had been teachers, one had practiced medicine, one had been a collector for an “instalment credit” clothing store, one had peddled coal and ice, one had worked as laborer in a feed mill, one had operated a filling station, one had been a laborer in a furniture store, one had been a preacher, and one had been a quartermaster in the army. The five women proprietors interviewed had had little 145126or no previous experience other than the conduct of their own homes. Of these 35 grocery proprietors, the education of 20, or 57.1%, had ended with the grammar grades; 10 had had some work in college, but only 5 had finished either college or normal school.

As evidence of the business capacity of these 35 grocers, it is significant that two were keeping absolutely no bookkeeping record of any sort and that 17 others were depending entirely upon either a customer's book, a day book, a cash register, or merely credit slips. The National Negro Business League found in its study of 526 grocery stores that 77, or 14.6%, were keeping no bookkeeping record at all of the conduct of their business, and that only 58, or 11%, were using a double-entry or manifold system. Of the 35 grocers interviewed in Nashville, 16, or 45.7%, had never taken inventory of stock, and only 9, or 25.7%, had never benefited through quantity purchases of merchandise, either for immediate or future delivery. As a matter of fact, the majority of these grocers were carrying stocks which permitted but exceedingly limited choice of brands on the part of the customer. They consisted, in most cases, largely of staple canned and other nonperishable products. Seventeen, or approximately half of these merchants, reported stock on hand valued at less than $800, which in some cases amounted to less than $100. In response to a question regarding their advertising programs 22 reported no advertising whatsoever, giving as their reason that it did not pay. Of the 526 retail grocers included in the survey of the National Negro Business League, 252, or 47.9%, were not advertising.

Prices charged for products.—The retail prices of a representative list of products were found to be higher

in the majority of cases in Negro groceries, representing from the poorest to the best Negro units in Nashville and located in different neighborhoods, than prices on the same dates in the stores of a large white chain penetrating into these same areas. Prices in each of these Negro groceries and for the white chain were obtained daily, except holidays, during the period June 25 to July 6, 1929, and again during the week of October 14-19, 1929. Table 35 presents both the arithmetic and modal average retail prices for various sizes or quantities of popular brands of 15 types of products in two class “A” Negro stores, representative of the best Negro outlets in the city; two class “D” Negro stores representative of the poorest and at the same time most usual calibre of Negro outlets; and the stores of the white chain. The prices indicated for the Negro stores represent the level prevailing in all Class “A” and “D” Negro stores in the city on the dates concerned.

During the eight days from June 25 to July 6, 1929, the 24-pound sack of high-grade wheat flour could be purchased in the stores of the white chain from 3¢ to 13¢ less than in the Negro groceries studied; between October 14 and 19, from 5¢ to 10¢ less. During the first period of comparison a pound of granulated sugar in the stores of the chain ranged from the same price charged in the independent groceries to one cent less; the 10-pound sack or carton from the same price to as much as 10¢ less. During the second period of comparison a pound of granulated sugar in the stores of the chain ranged from the same price as in the Negro stores to 1¢ less per pound, and the 10-pound sack or carton ranged from the same price to as much as 7¢ less. Between June 25 and July 6 a pound of lard 150131could be bought in the stores of the chain for the same price to as much as 5¢ less than in the Negro groceries; between October 14 and 19 it could be obtained in the stores of the chain for from 1¢ to 5¢ less. In the first period the Tru-li-Pure brand of creamery butter ranged from 4¢ to 9¢ per pound in the stores of the chain; during the second period from the same price to as much as 10¢ less. P & G laundry soap was one-half cent less per bar in the stores of the chain during both periods of comparison; Maxwell House coffee ranged from the same price in the chain to as much as 5¢ per pound less. Number 1 Irish potatoes ranged from the same price per pound in the stores of the chain during the first period of comparison to as much as 2¢ less; during the second period from 1¢ to 1¢ more. Altogether, the comparison of the retail prices of this variety of grocery products, which enter significantly into the daily purchases of both whites and Negroes, showed the prices of the chain to be at least as low, if not considerably lower in the great majority of cases. To sum the findings up statistically, we note that during the first period of comparison the prices charged by the stores of the chain were the same of lower than the lowest price in any one of the four Negro groceries considered in Table 35, in 19 or 86.4%, of the 22 cases; during the second period, in 16, or 72.7%.

Buildings and equipment.—The interiors and exteriors of 20, or 57.1%, of the 35 Negro groceries studied on Nashville during the spring of 1929 were either in a run-down and dilapidated condition, or were otherwise unattractive. Some were badly in need of an exterior coat of pain, some dark and gloomy, others actually dirty.

Apart from the retailing of grocery products, the conduct of ice cream and soft drink parlors, the peddling of such merchandise as ice, coal, and wood, and the operating of tailor shops, which the census classifies under manufacturing but which are more commonly pressing establishments, there are probably more Negroes operating drug stores in the South than any other type of retail establishment. In Negro neighborhoods these drug stores give the appearance, as a rule, of greater prosperity than other Negro retail establishments found in any numbers. Moreover, available statistics show that the average unit is doing a larger volume of business than the average unit of other types of retail enterprise found in any considerable numbers. Of the 187 drug stores included in the survey of Negro business units in 33 cities by the National Negro Business League, 59.4% were doing an annual gross business amounting to $10,000 or more. This was true in the cases of only 29.5% of the 526 grocery stores included in the study; 8% of the 312 tailor shops; 16.9% of the 65 soft drink and cigar stores; and 37.1% of the ice, coal, flour, and feed dealers. It would be far from accurate to say, of course, that the drug store is not operating in a highly competitive field. Observation of the rapid development of drug store chains alone would refute any such assertion.5 The druggist, however, conducts several distinct types of business, not all of which are subjected to the same degree of price competition. The druggist is in the prescription business, sells patent medicines, toilet products and cosmetics, ice cream and5 It is estimated that chains do 12% of the retail grocery and nearly 20% of the retail drug business in this country. P. D. Converse, Marketing Methods and Policies, p. 297152133soft drinks, and usually handles a wide assortment of other products including stationery, magazines, tobacco, and confections. Each of these is a business in itself. The Negro druggist must meet the drastic price competition of the large white drug store chains in his sales of patent medicines and of most toilet products, including cosmetics. In the sale of certain toilet articles and cosmetics peculiarly racial in use, however, white competition is less severe. The prescription business, because of its professional character, is beyond the range of common trade competition. Prescriptions are, in fact, usually not purchased on a price basis. They are apt to be required suddenly and promptly, and convenience rather than price is more likely to be the deciding factor in purchase. Again, the physician has the opportunity of directing the prescription business of his patients almost anywhere he chooses. It is thus not strange to find that 11 drug stores included in this study in Nashville reported their prescription business and their sales of patent medicines to lead the entire sales volume. Finally, the Negro drug store, because of the custom of social segregation in the South, serves as an important social center in the Negro community. Its volume of business in the sale of ice cream, soft drinks, and confections is usually large.

Other explanations of the apparent success of the Negro drug store might be given. It was found that 10 out of 11 visited in Nashville had among their personnel at least one college graduate. The requirement of the law that a graduate pharmacist be in charge of the prescription department makes it less easy for the uneducated to enter this field of enterprise. The proprietors of six of these eleven drug stores had had experience either in drug stores or in some closely related 153134work prior to the establishment of their present enterprise. Because of better educated management there appeared attempts at scientific economies in operation. Seven of these stores were following the practices of buying some of their crude drugs, patent medicines, and occasionally other products in large quantities. Several, in fact, were buying for future delivery at times when prices seemed to be especially favorable. The entire eleven reported the regular inventorying of stock at least once each year. Six were consistent advertisers and apparently believed in advertising.

The most disappointing finding concerning the business capacity of these entrepreneurs was that although no store reported a complete lack of bookkeeping records, as was found in the cases of two grocery stores in the city, nevertheless, none of them reported the use of the double-entry system. A somewhat more favorable picture is provided by the survey conducted by the National Negro Business League. Of the 187 drug stores visited, only 4, or 2.1%, reported no bookkeeping record whatsoever, contrasted with 77, or 14.6%, of the 526 groceries visited; and 79, or 42.2% of the drug stores reported the double-entry or manifold system of bookkeeping, contrasted with 58, or 11%, of the groceries.

Even the alert Negro merchant in the urban South is faced with a series of problems which make his road particularly difficult. For one thing, segregation locates Negro businesses for the most part within Negro areas, and limits the market largely to members of the Negro race. Some stimulation to sales is possible on the plea of race pride, but unfortunately for these merchants, 154135the purely racial plea for support seldom outweighs the economic argument of cheaper goods elsewhere. The white merchant, on the other hand, has the privilege of locating in either white or Negro neighborhoods. Indicative of the extent to which Negro enterprise is concentrated in Negro neighborhoods throughout the country, is the finding of the National Negro Business League in its survey of Negro business in 33 large cities, that out of 1807 business units of all sorts studied, 1761, or 97.5%, were located in Negro neighborhoods. With approximately 75% or more of the Southern urban Negro population belonging in the classification “common and semi-skilled labor and its equivalent,” this means a market consisting largely of families of low income. In the merchandising of grocery products, for example, this contemplates a demand chiefly for staples or necessities, in the sale of which price competition is particularly severe, and upon which the margin of profit is exceedingly narrow. A market composed of labor families of low income in this proportion also makes the problems of credit extension to the consumer unusually hazardous. Some idea of the seriousness of this particular problem of credit to the Negro merchant, whose clientele consists so largely of common and semi-skilled labor families, can be gained from the experience of 30 Nashville grocers from whom expressions were received on the subject. 11 reported no serious losses from the extension of the open-account privilege; 16 reported serious losses; 3 of the 30 reported they had found it absolutely necessary to discontinue this service, in spite of the fact that doing so meant a serious loss of custom.

Even the alert Negro merchant faces a particularly discouraging task in his effort to gather together adequate 155136capital for the establishment and conduct of his business. Because of the accepted position of the Negro in the economy of the South today, capital for progressive adventure into the field of business must, of course, come largely from within the Negro group. At the present stage of their economic progress, from 75% to 90% or more of those gainfully employed in the larger urban centers are at work as laborers in white enterprises; the remaining few are engaged almost entirely at tasks in which they serve various needs of these wage earners. Individual incomes in most cases, therefore, are exceedingly low and, consequently, the accumulation of savings correspondingly small. Some idea of the proportion of the Negro population saving any part of its earnings in the urban South today and of the places in which these savings are kept can be gained from a summary of interviews regarding these two points with members of some 400 well-distributed families of all occupation classes in Nashville. Of 264 common and semi-skilled labor families visited, 7.6% reported savings accounts in white banks, and 4.9% in Negro banks; 77.7% reported insurance policies with white institutions, and 11.7% with Negro institutions; 0.8% reported accounts with building and loan associations, and 0.8% other miscellaneous investment. Of 57 skilled labor families visited, 21.1% reported savings accounts in white banks, and 22.8% in Negro banks; 96.5% reported insurance policies with white institutions, and 15.8% with Negro institutions; 3.5% reported accounts with building and loan associations; 3.5% reported ownership of stock, and 5.3%, of bonds; 7.9% reported other miscellaneous investments. Of 79 business and professional families, 31.6% reported savings accounts in white banks, and 48.1% in 156137Negro banks; 72.2% reported insurance policies with white institutions, and 31.6% with Negro institutions; 1.3% reported accounts with building and loan associations; 13.9% reported ownership of stock, and 13.9% of bonds 2.5% reported that they were in process of buying their homes; 20.5% reported other miscellaneous investments.6 Because of the occupations of Negroes and the generally low level of their earnings, it is a reasonable assumption that the majority of these individual units of savings in liquid form are in very small sums.7 Moreover, those few individual with liquid funds in any significant amounts, because of the high degree of risk involved, are not apt to place these funds at the disposal of the majority of Negro merchandising enterprises.

The inability to obtain capital from within the group and the extreme slowness of the accumulation of individual savings at least partially explain the fact that the great majority of Negro retailers in the urban South begin operations with wholly inadequate fixed and working capital. That the majority of these merchants able to survive any length of time continue to operate with inadequate capital brings other contributing factor definitely into the picture, including in some cases 157138the character of the market served, or the experience, education, or general ability of the management.

The problem of obtainïng an adequate background of practical experience prior to the inauguration of his own enterprise is, perhaps, the most serious of the Negro merchant's difficulties. Whereas the prospective white business man can usually find an opportunity to become thoroughly acquainted with the business he expects to enter, in well-established white enterprises, and consequently can avoid making many of the mistakes others have made, the limited number of really successful Negro units in all fields of business endeavor makes it impossible in most cases for the prospective Negro merchant to learn adequately the game in enterprises operated by members of the Negro race. A single illustration will show the reasonableness of this conclusion. We have noted that in the nine cities of Atlanta, Birmingham, Richmond, Nashville, Montgomery, Mobile, Chattanooga, Durham, and Columbia, S. C., there were in 1930 only two Negro shoe stores. This fact indicates how impossible it would be for any except a limited few prospective Negro shoe merchants to learn the ins and outs of the shoe trade thoroughly from the successful experience of Negro enterprise. Again, this privilege other than in exceptional instances, is not open to the Negro in Southern white retail units. One of the two Negro shoe stores located in the nine cities just mentioned was established in the year 1927. The promoters of this corporation, despite an eager search for a man adequately equipped to manage the store intelligently, finally were forced to select one whose education had been limited to the elementary grades and whose previous experience consisted of thirty years of display work for a white shoe company. 158139The sound judgment of this man undoubtedly qualified him for the job a nearly as anyone available. The point of significance, however, is that he had had no direct experience in actually fitting and selling shoes, in the buying of shoes, or in the managing of a shoe store. The previous experience of the chief assistant to the manager of this particular store, a woman, consisted of newspaper reporting, clerical work in connection with an insurance company, and in the management of a small millinery business.

Until recently it has been practically impossible for a young Negro to obtain an adequate scholastic education in the principles of business administration without going to Northern white universities for it. Southern white colleges and universities do not accept Negroes as students. Negro colleges over the entire country have in the past placed relatively little emphasis upon the subject of business education. Only within recent years have they given serious attention to the development of courses in which comprehensive treatment is given to such fundamentally important subjects as accounting, business organization, finance, and marketing.

During the annual sessions of the National Negro Business League in Indianapolis in 1929, numerous Negro leaders emphasized as the major problem confronting Negro business that of gaining the patronage of the Negro race itself. The seriousness of this problem has been emphasized over and over again at other conventions as well as in the meetings of Negro boards of trade and similar bodies. The analysis of a questionnaire submitted to Negro business men of Nashville 159140by the local Board of Trade regarding their problems found this one uppermost in the minds of the majority. In enumerating the problems of their individual businesses as they saw them, 17 of the 35 grocers interviewed in Nashville in connection with the present study stated their major problem to be that of gaining the patronage of the Negro group. That Negro merchants in the urban South supply only a small part of the demands of the Negro populations of Southern cities for consumer merchandise is obvious on the basis of the statistics presented at the opening of this chapter. The findings of rather comprehensive questionnaire interviews with Negro housewives in Nashville, Birmingham, Atlanta, and Richmond, regarding the direction of their trade for grocery products are pertinent in this same connection. Of 198 housewives interviewed from common and semi-skilled labor families in Nashville, 196, or 99%, were found to be buying groceries from stores operated by whites, and 58, or 29.3%, from stores operated by Negroes. Of the 196 housewives buying from white grocery units, 146, or 74.5%, were giving all their business to these units. Of the 58 housewives buying from Negro grocery units, only 8, or 13.8%, were giving them their entire trade. Again, of 52 housewives interviewed in Nashville from skilled labor families, 49, or 94.3%, were found to be buying groceries from white stores, and 26, or 50%, from Negro stores. Of the 49 housewives buying from white units, 26, or 53.1%, were doing all of their trading with them. Of the 26 housewives buying from Negro stores, only 3, or 11.5%, were going to these stores for all of their groceries. It will be noted in Table 36 that this general trend in the division of the grocery trade between Negro and white units obtains for families of

all occupation classes in Nashville, as well as in Birmingham, Atlanta, and Richmond.

That Negro druggists find the problem of Negro patronage less serious than the majority of Negro merchants is reflected in their estimate of the weight of this factor alone in the operation of their business. Only 4 of 17 druggists interviewed in Nashville, Memphis, Birmingham, Atlanta, and Richmond considered this problem of major importance. This would indicate that such factors as prices of merchandise, the adequacy of stocks, or even the attractiveness and cleanliness of store buildings enter into an explanation of the direction of the trade of the group. Factors of an intangible nature, having to do with the conduct of the individual retail unit, also enter occasionally into an explanation of the lack of patronage. For example, in a Negro neighborhood of a city in the Middle West there happens to be a most attractive Negro drug store. From all appearances it is a much better establishment than its chief competitor across the street, operated by two Jewish druggists. Most of the business of the community for drug store products, however, goes to this competitor. It is evident that the problem of this Negro store is largely one of personality. The Jewish druggists across the street are masters in the art of dealing with their customers.

Negro merchandising establishments which are without question in a position to meet adequately all these physical and intangible factors of competition still find the problem of race patronage an important one. Negro retail units of this high calibre are few in number. It is only natural, therefore, that the inferior average of Negro stores should carry the presumption for the Negro population that the white man's store in 162143general is better. To convince the race of the fact that Negro enterprise which is able to meet every offering of white enterprise does exist demands patient education. A Negro clothing merchant in Atlanta illustrated this situation well by relating the difficulty he had had in convincing his wife that she could obtain a bottle of milk of magnesia just as reasonably in a certain Negro drug store as in a store belonging to an important white chain. After some persuasion she went to the Negro store and found to her surprise that she could obtain the product at a price even lower than that advertised by the chain.

Negro banks and other financial institutions face this same problem regarding Negro patronage. There is clearly a lack of confidence in Negro financial institutions in general. In the urban South are a few well operated Negro banks will adequate reserves. Even these banks, however, are confronted with the problem of Negro patronage. Recent statistics bearing on the general subject of the numbers of Negro banks and the numbers of failures of Negro banks, however, make this matter less of a mystery. According to the report of the President of the Negro Bankers’ Association for the years 1928 and 1929, there were 34 Negro banks in the United States. Of these 34 banks, 5 or 14.7%, failed during 1929. During this same year there were a total of 26,227 national, state, and private banks in the United States, of which 551, or 2.1% failed.8 It is safe to say that the volume of deposits involved in these 551 failures made up only an infinitesimal percentage of the deposits of the entire 26,227. On the other hand, since there are no large Negro banks, those of the five8 Based on personal investigation of George W. Hines, Professor of Economics at Fisk University, 1927-1930.163144which failed involved a significant percentage of the total deposits in all 34. That the failure of one Negro bank should have a more far-reaching and important influence upon the confidence of the Negro race in Negro banking institutions as a whole, than the failure of one white bank has upon the sentiment of either the white or Negro races toward white banks in general, is reasonable on the basis of these statistics.

In connection with this question of Negro patronage of Negro enterprise, particularly heated criticism has been directed to the so-called “Big Negro” belonging to the business and professional classes.9 The this part of the Negro group encourage the Negro Merchant and thereby set an example of racial interest is, of course, essential to the development of the confidence of the group as a whole in racial enterprise, and consequently, to its ultimate success. To expect this part of the group to buy from the Negro merchant regardless of the quality of merchandise he offers, the prices he charges, the completeness and adequacy of the stock he carries, or the cleanliness or sanitation of his store building, however, is entirely unreasonable. Moreover, for the these leaders to support enterprises operated by untrained or incapable individuals simply means putting off a

9 The following direct statements made by Negro merchants illustrate the character of this criticism: “We need in some way to awaken a consciousness of a responsibility to Negro business on the part of the intelligent ones of our group. A small percentage of my customers come from this class, and we find the same conditions obtain with other Negroes who are in business where there is white competition.”

“Teachers and the upper group do not patronize us.”

“Colored people should stick together. We can depend only on the laboring class of people.”

“Get the educated Negroes to patronize Negro business enterprises. When the educated Negro gets a little money, he leaves the race.”

“Get the so-called big Negro organized. The professional man does not patronize his own race.”

The success of the Negro in the field of retail merchandising depends first of all, therefore, upon meeting white competition. As individual successes become more numerous, the problem of Negro patronage will become less and important. The road is difficult— and yet individual examples of successful enterprise are to be found in almost every Southern city supporting a large Negro population. All of the really successful units coming to the attention of those engaged in the conduct of this study have had certain characteristics in common. They have had ample fixed and working capital and have been managed by men or women adequately prepared from the standpoint of education, experience, or both. In most cases these stores have been clean and attractive, their stocks large and well-selected, and their prices on a basis competitive with those of white enterprises. In the paragraphs to follow, intimate facts regarding the success attained by three Negro retail establishments of moderate size are presented. The reasonable degree of success achieved by each of these stores can be found duplicated at various points in the south.

At the present time the Negro merchant in the South plays only a small part in supplying the needs of the Negro pubic. Certain factors make the successful operation of merchandising units by him particularly difficult. Among these factors are: (1) the low purchasing power of the average family making up his market; (2) the inaccessibility of adequate investment funds through which to satisfy capital requirements; (3) the lack of opportunity for practical experience in successful enterprises prior to the establishment of his own enterprise; and (4) the lack of complete confidence in Negro enterprises on the part of the Negro race itself. In spite of these handicaps, however, there are successful Negro retail units of various sorts in the South today. Balancing the data included in these several findings leads to certain conclusions:

1. The exceedingly difficult problems in the way of the successful establishment and conduct of Negro merchandising units limits the opportunity to the alert, well-prepared Negro of much more than average ability.