[1] The assumption in usage was that communities where black capitalists concentrated their investment strategies formed an autonomous block running alongside, or segregated from, the wider system of American capitalism.
On the eve of the war, free Afro-Americans numbered 88,070, with an estimated collective wealth of around $50 million, accumulated evenly between their respective populations in the northern and southern states.
[11] Even in the slave states of the South, wherever dense concentrations of Afro-Americans existed, such as in cities like Savannah, Charleston, New Orleans and Richmond, blacks keen to escape from selling their labour for wages, managed to run a number of profitable enterprises.
[16] A 2019 study of 107,197 accounts in the FSTC archives found that access to the Freedman Saving's Bank significantly increased the schooling, literacy, employment, income, and real estate wealth of its depositors.
[18] In the wake of the 1873 financial crisis, Frederick Douglass was appointed by the bank's trustees as its president, and, after investing $10,000 of his own money, discovered that the institution was crammed with "dead men's bones, rottenness and corruption".
Du Bois was to observe that, aside from ruining thousands of blacks, the experience drummed into many more a deep sense of institutional distrust of banks and the federal government among the Afro-American community.
[21][c] A core aim of the National Negro Business League under its president Booker T. Washington from its foundation in 1900 was to alleviate the plights of discrimination against blacks by encouraging economic self-sufficiency.
It was thought that by embracing thrift, industry, and Christian values, rather than exercising political pressure to ameliorate their situation through legislative changes, that the social inferiority suffered by blacks could be gradually reduced.
[24] The measures taken by the Carter administration from 1977 to 1979 to improve technical training and facilitate loans for Afro-Americans, and in particular its SBA 8A set-aside program, led to black business's biggest period of growth.
The return to first principles was bolstered by the impressive growth of a black middle class, with a sharp rise in its purchasing power, and lessons it thought it might learn from the successes experienced by other groups, in particular the recent immigrant communities of Koreans, Vietnamese and Cubans, together with the example set by American Jews.
[22] The utility of such models has been questioned: despite appearances, many of these newcomers were professionals, with high education and had access to credit systems and, as refugees from communism, were amply funded as such via federal resettlement programs.
[h] Ralph Bunche discerned in the fragility of black capitalism its dependence on a credit system monopolized by the white class, which, in his view, tolerated this enclave in its larger structure only on sufferance.
[27] Earl Ofari Hutchinson argues that historically, a core problem in the economics of Afro-American communities has been that they are not structured to retain capital, a fact exacerbated by the powerful grip major corporations exercise over domestic markets.
[28] One further drawback noted by Andrew Brimmer, speaking as a member of the Federal Reserve Board of Governors is that black entrepreneurial activities were concentrated in industries that are subject to slow growth.
[27] In a keynote address before the National Black Economic Development Conference in 1969, the economist Robert S. Browne argued that the lack of empowerment of black communities was grounded in their exclusion from what he identified as the six core bases of the American economy (a) huge personal wealth, (b) the top 22 major corporations, (c) the military-industrial complex, (d) the federal and state governmental apparatus, (e) the federal legislative apparatus, and (f) the crime syndicate.
With the historical and current differences in lending patterns toward blacks and whites, the option of using home equity to borrow against in order to open a business is diminished.