—CRAIG (1987, 133–34)
Cooperative businesses among African Americans developed slowly—often evolving from mutual-aid societies to mutual insurance companies and from joint-stock companies to Rochdale cooperatives—as African Americans be-came more sophisticated and experienced in cooperative ownership. W. E. B. Du Bois’s 1907 study in some ways lumps all efforts at economic cooperation together. In this chapter, I examine these businesses from the 1880s to the early 1900s for elements of cooperative economic principles and practices and as examples of the evolution into formal cooperative businesses. During this era, most of these businesses were urban enterprises engaged more in offering services and retail sales than in the production of goods. In addition, in the nineteenth century, the concept of Black capitalism was a strategy of racial economic solidarity and cooperation, as was Negro joint-stock ownership (for example, the Chesapeake Marine Railway shipyard in Baltimore, the Coleman Manufacturing Company in Concord, North Carolina, and the Universal Negro Improvement Association’s Black Star Line and Negro Factories Corporation). Mutual insurance companies were the earliest formal cooperative businesses among Blacks and Whites in the United States. As noted earlier, starting in the late nineteenth century, African Americans also organized official cooperative businesses that followed the European “Rochdale Principles of Cooperation.”1 Other early official cooperatives were farm cooperatives and cooperative marketing boards, consumer cooperative grocery stores, cooperative schools, and credit unions.
Mutual Insurance Companies
Some of the successful mutual-aid societies developed into insurance companies when they formalized as businesses. As some societies became more sophisticated and substituted a board of directors for general member control, they became insurance companies (Du Bois 1898, 18). In the 1880s, many Blacks had joined White insurance companies but discovered that they received fewer monetary benefits for the same service, even though they paid the same premium (or higher). This inspired Blacks to establish their own insurance companies that would not defraud or discriminate against African American clients (Du Bois 1907, 98). Many southern states then passed laws protecting White insurance companies.
One of the largest Black mutual insurance companies was the Grand United Order of the True Reformers, which grew to have branches throughout the South and East. It owned “considerable real estate and conduct[ed] a banking and annual premium insurance business at Richmond,” according to Du Bois (1898, 20). Organized in Richmond, Virginia, in 1881, it began with one hundred members and capital of $150. By 1901, with more than fifty thousand members, the society paid out $606,000 in death claims and $1,500,000 in sick claims. The True Reformers held more than $223,500 in assets. In addition, the organization boasted of having 2,678 lodges (totaling a hundred thousand members) and had paid out $979,440.55 in claims; and the Rosebud children’s department served more than thirty thousand children (Du Bois 1907, 101–2). Woodson also highlights the fact that the True Reformers added death insurance to burial insurance so that families would have something to live on after the death of a family member, especially a breadwinner (1929, 209–10).
The organization also supported a savings bank founded in 1887, the Reformers Mercantile and Industrial Association (a chain of stores with annual business of more than $100,000), a weekly newspaper, a 150-room hotel, a home for the elderly, a building-and-loan association, and a real estate department (Du Bois 1907, 103). The True Reformers bank enhanced its reputation in 1893, during the financial panic, by paying all claims made on it (Woodson 1929, 210). Other banks in Richmond did not.
The Independent Order of Saint Luke (discussed in chapter 1) developed along similar lines. It rapidly became more than a mutual-aid society and included a successful insurance company and bank. Under Maggie Lena Walker’s direction, “this order with more experience and better trained workers than those of others overcame the difficulties which worked the undoing of the True Reformers. The Independent Order of St. Luke still carries on its insurance work, operates a printing plant, publishes a newspaper, and conducts a bank” (Woodson 1929, 211; for more details on the Order of Saint Luke, see Barkley Brown 1989).
The North Carolina Mutual Insurance Company was the largest of the state-based, locally owned insurance companies until World War I. It was established in 1903 out of the mutual-aid movement. At its first annual meeting in 1904, at the Colored State Fair in Raleigh, the company’s agents “testified to the powers of racial cooperation” and offered resolutions at sessions open to the public to promote the message of racial solidarity (Weare 1993, 86). It became the largest Negro insurance company in the world (118). The company’s standing was so strong that it qualified as a legal reserve company in 1912–13 with loans from Fidelity Bank in Duke (a White bank that must have believed in its solvency and reliability in order to back those loans) (94). North Carolina Mutual was very involved in the Black community and “formed the heart of a black political economy in Durham” and beyond (182–83; see also Woodson 1929). In 1927, North Carolina Mutual’s president, Charles Clinton Spaulding, worked with the federal government on what would become President Hoover’s “black capitalism” initiative (Weare 1993, 147–48). That same year, Spaulding started the “Durham stock taking and fact finding” conferences. The first conference was attended by well-known African American scholars and leaders, among them W. E. B. Du Bois; R. R. Moton, the president of Tuskegee University; Mordecai Johnson, the president of Howard University; and Asa Philip Randolph, editor of the Messenger and founder of the Brotherhood of Sleeping Car Porters. Weare notes that “Randolph, like Du Bois, recognized that the Mutual spirit stood for race cooperation at least as much as individual entrepreneurship” (152). Spaulding was also influential in the National Negro Business League and took over its leadership after the death of Booker T. Washington, its founder and first president (for more about the NNBL, see chapter 4).
Weare assesses the significance of the North Carolina Mutual Insurance Company. Every success it had was seen as a racial success: buying a policy meant “double protection”—life insurance and Negro employment (96). White rejection actually brought more customers (98), so that, in a way, the company thrived on Black economic marginalization. North Carolina Mutual “stood as an expression of Afro-American thought centering on the doctrine of self-help and racial solidarity” (95). These are some of the same attitudes held by members of African American cooperatives in the twentieth century.
Du Bois’s critique of the insurance company model suggests that some of the businesses were conducted in an “unscientific” way, using “speculation and dishonesty” and depending on lapsed policies for profits (1907, 108–9). On the other hand, they yielded one of the strongest business models (and models of mutual economic cooperation) of Black economic development.2 In addition, Weare notes that Negro banks “sprang almost involuntarily from Negro insurance companies” (119), continuing the progress of economic development started by mutual-aid societies.
Early African American–Owned “Cooperative” (or Joint-Stock) Businesses
The Chesapeake Marine Railway and Dry Dock Company, the Coleman Manufacturing Company, and the Lexington Savings Bank were early joint-stock companies that may have been cooperatives; they were definitely collectively owned. Marcus Garvey and the Universal Negro Improvement Association also made use of the joint-stock ownership model to develop Black businesses.
The Chesapeake Marine Railway and Dry Dock Company
Between 1865 and 1883, African American caulkers and stevedores owned their own company with the help of prominent African Americans in Baltimore, Maryland. According to Du Bois, the Chesapeake Marine Railway and Dry Dock Company was organized in part to combat the growing demand among White laborers in Maryland that all free Blacks be fired from the shipyards and leave the state or “get a master.” Baltimore had become famous for its caulking, but it was the Black caulkers who “were the most proficient in the state” (Du Bois 1907, 152–53). Shipyard owners were not willing to reduce their Black workforce until White mobs attacked Black caulkers and stevedores on their way home, and White