The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
For Release on Delivery
Thursday, October 19, 1972
7:30 p.m. (E.D.T.)
THE ROAD AHEAD:
OUTLOOK FOR BLACKS IN BUSINESS
Presidential Address
By
Andrew F. Brimmer
Member
Board of Governors of the
Federal Reserve System
Before the
57th Annual Meeting
of the
Association for the Study of Negro Life and History
Sheraton-Gibson Hotel
Cincinnati, Ohio
October 19, 1972
THE ROAD AHEAD: OUTLOOK FOR BLACKS IN BUSINESS
By
Andrew F. Brimmer*
I.
Introduction
Three years ago, I examined the situation and prospects
for black businesses in some detail.
I found both the situation
and prospects far from promising.—^ I have just completed another
analysis of the status and outlook for American blacks in the field
of business.
The conclusions and implications emerging from that
assessment are still unpromising -- but the opportunity may also
exist for blacks to launch themselves on a course leading to
expanded participation in the mainstream of American business.
When the existing pattern and structure of black-owned
businesses are unraveled, a graphic -- and disturbingpicture comes into sharp focus.
The fact that black businessmen
have traditionally concentrated primarily on small scale retail
* Member, Board of Governors of the Federal Reserve System.
I am grateful to Mr. John Austin and Mrs. Ruth Robinson
of the Board's staff for assistance in the preparation of this
paper. However, the views expressed here are my own and should not
be attributed to the Board's staff nor to my colleagues on the Board.
1/
"The Economic Potential of Black Capitalism" (with Henry S. Terrell),
paper presented before the 82nd Annual Meeting of the American
Economic Association, New York, December 29, 1969. A modified
version was subsequently published in Public Policy, Vol. XIX, No. 2,
Spring, 1971, pp. 289-308.
- 2trade and the provision of personal services is widely known.
The reasons for this are also widely recognized:
racial segre-
gation and discrimination restricted the access of blacks to
housing and public accommodations.
Under those circumstances,
black businessmen came forward to meet most of the limited demand
for services which a predominantly low-income population did
register in the market place.
Moreover, the extent to which
traditional black businesses have been adversely affected by
the abolition of legally based restraints on access to public
accommodations is also generally appreciated.
However, what is less well understood is the degree
to which black businessmen are caught on a
downhill course:
while they are making some progress in expanding their modest
share of the nation's business activity, the fields in which
they are concentrating are declining relative to the economy as
a whole.
In one sense, the situation of black-owned businesses
today is roughly analogous to that which blacks had to face around
the end of the last century.
Possessing virtually no land and
little skill in farming, they were encouraged to master the knowhow then emerging from the publicly-supported scientific research
in agriculture and thus make themselves into better farmers.
advice was laudable on its face, but the strategy of black
economic development on which it rested suffered from a fatal
The
- 3flaw:
At that juncture, the basic, underlying drift of the
economy was toward industry and away from agriculture.
Although
the latter was yet to achieve the enormous burst of output and
productivity that was subsequently recorded in the first third
of the 20th Century, the mainsprings of national economic growth
were already to be found primarily in the industrial sector.
Consequently, while blacks did make advances in agriculture for a time, they nevertheless were caught on a downhill
course.
The net result was that they lingered too long in
agricultural pursuits and also failed to establish beachheads
in industry at a time when barriers to entry were still scalable
and an expanding market for factory-produced goods lay ahead.
During the decade of the 1970's, the fields of principal
concentration of black businesses -- small scale retail trade
and personal services -- will probably grow more slowly than the
economy as a whole.
So, unless a major diversification occurs
in the range and focus of black-owned businesses, blacks will be
getting an even smaller share of the nationfs business receipts
in 1980 than they are currently receiving.
Moreover, this spanning
out in the pattern of business activity will also have to be
accompanied by a significant increase in the size and efficiency
of black-owned firms.
To achieve this latter goal will require
much larger aggregations of equity capital than blacks have been
- 4 able to mobilize to date.
This, in turn, means that blacks
will have to become much more willing to adopt the corporation
as a form of business organization -- and to rely far less on
individual and personal ownerships.
It also means that blacks
must be increasingly willing to share in joint-ventures with
businessmen of other races and to tap the stream of risk-taking
capital flowing through the economy as a whole.
Finally, blacks
must be prepared to undertake the hard task of acquiring the
technical managerial skills increasingly required to survive
and prosper in the sophisticated business world unfolding before
us.
In other words, if blacks want to have a truly meaningful role in the business world of the future, they will have to
become a new breed of entrepreneurs.
They must be prepared to
compete in a variety of new fields against a phalanx of nationwide corporations
ever anxious to attract an increasing share
of the rising income and expenditures of the black community.
Failure on the part of black-owned firms to diversify means
stagnation and decline in the years ahead.
These general conclusions are amplified in the sections
which follow.
- 5H*
Relative Position of Blacks in Business
In 1969, there were 163 thousand black-owned businesses
2/
in the United States.
(See Table 1, attached.)
These firms
represented about 1.4 per cent of the 12 million firms in the
country at large.
These black-owned enterprises had gross receipts
of $4.5 billion, accounting for 0.24 per cent of the total.
Thus, by
either measure, it is obvious that blacks control only a meager share
of the nation's business activity.
To put the business situation in perspective, it will be
recalled that blacks represent 11.3 per cent of the total population
in the United States, and in 1970 they received 6.5 per cent of total
money income.
However, with respect to income sources, only 0.7 per
cent of the income for blacks was derived from property ownership
(i.e., from rents, interest, dividends, royalties and inheritances)
compared with 4.6 per cent of the income of whites.
So, while blacks
got 6.5 per cent of total income in 1970, they received 3/
less than 1.0
per cent of investment and property income in that year.
2/
3/
The basic statistics relating to black-owned businesses used in
this study are from the U.S. Census Bureau's report, "Minority-Owned
Businesses: 1969." (U.S. Department of Commerce, August, 1971.)
Appendix Table I attached at the end of the paper contains most of
the detailed data used here. A new Census Bureau survey of minorityowned businesses covering 1972 is planned for calendar year 1973.
If the planned schedule can be kept, the results should be available
about October, 1973.
See Andrew F. Brimmer, "Income and Wealth in the Black Community,"
Ebony Magazine, October, 1972, pp. 64-70.
- 6The overall position of blacks in business compared with
other minority groups can also be seen in Table 1.
In 1969, Spanish-
speaking minorities owned 0.8 per cent of all firms, and they
accounted for 0.18 per cent of gross receipts.
For other minorities
(mainly Orientals and American Indians), the corresponding proportions
were 0.5 per cent of business firms and 0.14 per cent of gross
business receipts.
Consequently, with 2.7 per cent of the firms
and 0.56 per cent of total receipts, the representation of all
minority groups on the nation's business scene was modest indeed.
Black firms are predominantly over-managed with no employees.
For example, of the 163 thousand firms reported in 1969, only 38
thousand (or less than one-quarter of the total) had any paid employees
at all.
Collectively they had 152 thousand workers on their payrolls.
Since blacks held roughly 8 million jobs in 1969, black-owned firms
(virtually all of whose employees are black) provided jobs for only
1. 9 per cent of all black workers in the country.
III.
Size of Black-Owned Firms
As already indicated, black businesses are mainly small-
scale operations.
Just how small can also be seen in Tables 1 and 2.
For example, in 1969, the typical black firm with paid employees had
about 4 workers on its payroll.
This was about the same number
found in other minority-owned businesses.
Among major fields of
- 7 activity, however, the average number of employees did differ
somewhat.
In manufacturing and wholesale trade, the typical black
firm had 8 employees;
in retail trade the average was 3 paid workers.
In contrast, in the economy as a whole, the corresponding figures
per firm were:
manufacturing, 72 employees;
employees, and retail trade, 6 employees.
wholesale trade, 15
Thus, measured by number
of employees, the typical black-owned manufacturing firm was about
one-tenth the size of its counterpart in the economy at large.
In
both wholesale and retail trade, the average black firm was about
half as large as the typical firm in those industries.
An alternative way to measure the size of black firms is
in terms of business receipts.
In 1969, the average black-owned firm
with paid employees had gross receipts of $95 thousand.
In
manufacturing, the figure was $187 thousand, and in wholesale and
retail trade it was $497 thousand and $96 thousand, respectively.
The parallel figures for the typical firm in those industries in the
county as a whole were:
manufacturing, $2,068 thousand;
wholesale
trade, $1,974 thousand, and retail trade, $197 thousand.
Again, in
the factory sector, by this measure, the average black-owned firm was
about one-tenth the size of its nationwide counterpart.
But in the
case of wholesale trade, the average black-owned business was onequarter that in the nation, and in retail trade it was still in the
neighborhood of one-half as large.
- 8The average black-owned business with paid workers had
receipts of about $24 thousand per employee.
figure was the same.
In manufacturing, the
It was $66 thousand in wholesale trade and
$30 thousand in the retail sector.
Compared with firms in the
nation at large, these relative measures were about the same for
black firms as for all firms in manufacturing and retail trade.
However, in the case of wholesale trade, the typical black-owned
firm had sales per worker only half those recorded by its counterpart
in the country as a whole.
Industry Pattern of Business Ownership
As mentioned above, the conditions under which blacks have
functioned as owners of businesses have been determined to a substantial
degree by the legacy of racial segregation and discrimination.
The
consequences of this historical experience can be traced clearly in
the industry distribution of business firms.
In Appendix Table I,
the main types of activity of black-owned businesses are shown in
terms of the percentage of all black firms found in each field along
with the proportion of gross receipts accounted for by each industry.
The corresponding figures for the economy as a whole are also shown.
Several highlights can be lifted from among the details
and summarized in the following table:
- 9-
Black-Owned Businesses
Percentage of Percentage of
all firms
Gross Receipts
Industry
All Industry
Percentage of Percentage of
all firms
Gross Receipts
27.73
43.19
18.31
20.41
3.91
6.91
14.11
9.80
3.19
2.45
5.35
4.40
8.66
8.04
3.32
1.49
0.06
2.98
0.04
3.32
Personal services
20.79
6.43
5.29
0.75
Amusement & rec.
2.09
1.17
1.57
0.32
Real estate
3.38
1.74
6.72
0.87
Hotel, motels
1.23
0.96
1.19
0.43
Retail Trade
Auto dealers &
service stat.
Food stores
Eating & drinking
places
Insurance carriers
The extremely heavy concentration of black-owned firms
in retail trade is clear.
This line accounted for over two-fifths
of gross receipts and more than one-quarter of the number of all blackowned businesses —
twice the proportion of receipts and 1-1/2 times
the proportion of firms recorded for all American businesses.
Within
the retail trade sector, automobile dealers and gasoline service
station operators (mainly the latter) represented about the same
proportion of firms in both groups;
but the share of total receipts
in this category for black firms (14 per cent) was nearly three times
- 10 that for all firms (5 per cent).
In the case of food stores, the
ratios for black-owned firms were more than double those for
businesses in general.
The historic discrimination against blacks in terms of
access to public accommodations is traceable in the relative positions
of black-owned eating and drinking places, of amusement and recreation
outlets, and of hotels, motels and other lodging places.
Nearly one-
tenth of all black businesses were restaurants, bars, and similar
establishments, and they accounted for roughly the same proportion
of gross receipts.
Among businesses at large, 3 per cent were eating
and drinking places, and these received 1-1/2 per cent of gross
receipts.
The fraction of business activity accounted for by
amusement and recreation places was also much higher for black-owned
enterprises -- whether measured by the proportion of either number
of firms or gross receipts.
Hotels and motels represented about the
same fraction of total businesses in both groups (1.2 per cent), but
those owned by blacks accounted for more than double the share of
revenue -- 0.96 per cent vs. 0.43 per cent.
The legacy of racial discrimination against blacks in the
provision of life insurance coverage is also still evident.
It may
be recalled that, in the late 19th century, the American life insurance
industry concluded that the relatively short life expectancy of blacks
- 11 made it too risky to insure them using the same standards applied
to whites.
As a result, a separate mortality table for blacks was
developed which carried considerably higher premiums.
Moreover,
some companies cut back on sales of insurance in the black conmunity.
That double standard survived well into the mid-20th century.
While
it lasted, black-owned insurance companies provided a substantial
part of the coverage available to blacks.
It is for this reason that
the relative positions of black-owned and white-owned insurance
companies were quite similar in 1969.
The effects of racial
discrimination on the availability of residential housing are
reflected in the relative position of black-owned real estate firms.
The latter amounted to 3 per cent of all black firms vs. 7 per cent
for the economy as a whole.
Yet, in the case of blacks, they
accounted for a somewhat larger proportion of gross receipts -- 1.74
per cent vs. 0,87 per cent.
On the opposite side of the canvas, one can also see the
relative lack of representation of blacks in those lines of business
where the perversely protective cloak of racial segregation and
discrimination was not so evident--as shown in the following table!
- 12 -
Industry
Black-Owned Businesses
Percentage of
Percentage of
Gross Receipts
all firms
Manufacturing
Food products
Lumber & wood
Printing & publishing
Chemical products
Transportation
Trucking & warehsg.
Local & sub.
Wholesale Trade
Grocery products
All Industry
Percentage of
Percentage of
all firms
Gross Receipts
1.82
6.76
3.40
37.81
0.10
0.79
0.31
0.03
1.25
1.14
0.85
0.83
0.23
0.52
0.51
0.12
5.17
0.81
1.38
3.01
9.69
4.37
2.87
3.28
4.44
4.47
2.99
0.95
2.01
0.54
1.31
0.17
1.02
8.61
3.90
13.80
0.15
2.13
0.54
2.76
On the basis of these data, the modest participation of blacks
in manufacturing is unmistakable.
The proportion of black firms
operating factories was only one-half that for American industry as
a whole.
In terms of gross receipts, the black proportion was only
one-fifth that for businesses in general.
Moreover, where blacks
were represented in manufacturing to some extent, the activity was
typically related to the blacks1 historical situation in this country.
For example, their presence in chemical products is mainly a legacy
of the black-owned cosmetics companies which developed in response
to the special needs of blacks for personal services —
particularly
- 13 through black-operated beauty and barber shops.
Their presence in
printing and publishing, of course, is primarily a mirror of blackoriented newspapers -- although a few magazine and book publishers
have also made considerable headway in recent years.
Blacks producing
lumber and wood products consist almost exclusively of a few smallscale sawmills in the South.
A scattering of black-owned food
processing firms have been in existence for some years.
Yet, it was
only in the recent past that at least one of those companies made a
breakthrough in the general market on a noticeable scale.
Black firms have been able to make some headway in transportation,
but the net results are both mixed and limited.
In some segments of
this industry, black firms have been long accepted as part of the
existing transportation capacity.
and warehousing.
This is especially true of trucking
Here the experience accumulated by blacks as skilled
workers as well as laborers served as a basis for subsequent launching
of businesses.
On the other hand, the rest of the black firms engaged
in transportation activities consist almost exclusively of taxi
operators, included under local and suburban transit in the summary
statistics.
In the case of wholesale trade, one has to look hard to find
black-owned firms outside of food distribution.
It will be recalled
that the operation of retail trade outlets is the most important form
of activity among black businessmen.
So the meager participation of
blacks in wholesale trade means that blacks are essentially missing
in one segment of the distribution network in this country.
- 14 V.
Imperatives of Growth and Diversification of Black-Owned Businesses
The evidence presented so far leads to an inescapable
conclusion:
black firms are heavily concentrated in a relatively
small number of trade and service activities.
base of operations can be seen in Table 3.
Just how narrow is their
This table shows 25
industries ranked according to the share of gross receipts accounted
for by each.
shown.
The corresponding proportions for all firms are also
Sixteen of the industries are in the trade sector, six
are services, and only three are components of manufacturing.
Collectively, these 25 industries accounted for four-fifths of total
business receipts of black-owned firms in 1969.
The same group of
industries accounted for less than half of the total business receipts
in the economy as a whole.
4/
The growth rates" projected for these industries during
the period 1968-1980 are also shown in Table 3.
stands out in these statistics:
A striking feature
half of the 25 industries which are
so important to black firms have projected growth rates below that
anticipated for the economy as a whole.
The annual average rate of
growth for the U.S. economy is estimated at 4.3 per cent over the
period.
Twelve of the 25 key industries for blacks have projected
growth rates below that figure.
4/
~~
In fact, for nine of them, growth
The growth rates used in this analysis are taken mostly
from the U.S. Department of Labor, Bureau of Labor Statistics,
The U.So Economy in 1980, 1970. Other growth rates were taken
from: McGraw Hill, The American Economy, Prospects for Growth
to 1985, 1972; National Planning Association, Revised National
Economic Projections to 1980, 1971; U 0 S 0 Department of Commerce,
Bureau of Domestic Commerce, U.S. Industrial Outlook 1972, with
Projections to 1980, 1972.
- 15 rates below 4 per cent are anticipated.
In contrast, only four
of
the 25 industries have projected growth rates of 6 per cent or above.
Finally, the twelve industries with below-average projected growth
rates accounted for 40 per cent of gross receipts of black-owned
firms in 1969 -- compared with 21 per cent for all firms in the
country.
These data point to consequences of serious proportions for
black businesses:
because they are heavily represented in industries
that are likely to grow.rather slowly in the future, they are
—
unfortunately -- caught on a downhill course.
How to reverse this situation ought to be a matter of major
concern for those interested in expanding business opportunities for
blacks in the years ahead.
The magnitude of the task which must be
confronted ought not to be underestimated.
This task has both
qualitative and quantitative dimensions -- since it involves the quality
of managerial talent available to the black community as well as the
size and growth of black firms.
With respect to the quantitative element, one can estimate
the rate of growth which will be required if blacks are to make
noticeable strides in expanding their share of the nation's businesses
during the 1970fs.
Several alternative paths of expansion for black-
owned businesses are shown in Table 4.
Again, it will be recalled
- 16 that blacks accounted for 0.24 per cent of total business receipts
in 1969.
It will also be recalled that the rate of growth for
the economy as a whole was projected at 4.3 per cent for the years
1968-1980.
So, one target might be to achieve a rate of growth in
black-owned businesses
large.
combined equal to that for the nation at
This matched expansion would maintain the black share of
total business unchanged.
However, it will also be recalled that —
of diversification —
to the total economy.
in the absence
black businesses will probably decline relative
This is so because they are heavily concentrated
in industries whose growth will probably fall short of that anticipated
for the total economy.
Expressed differently, even if blacks succeed
in maintaining their share of those industries in which they are
presently active, their share of total business will shrink somewhat
by 1980.
In fact, an unchanged share of key, existing industries in
which blacks are concentrated would imply an annual average growth
rate of 3.9 per cent in the period 1969-1980.
This is well below the
4.3 per cent growth rate projected for the total economy over roughly
the same period.
This outcome would reduce the blacks1 share of total
business receipts to 0.227 per cent in 1980--from 0.237 in 1969.
Another alternative target might involve an effort to raise
blacks1 1969 share of total industry by one-half in 1980--i.e., from
0.237 per cent to 0.355 per cent.
This is by no means a large
increase in the magnitude of black business activity.
Yet, to
- 17 accomplish even this target would require an annual average growth
rate of 8.2 per cent.
If the aim were somewhat more ambitious,
a target might be adopted of doubling the black's share of total
business by 1980.
This goal would require an annual average growth
rate of 11.1 per cent.
It will be recalled that none of the 25 key
industries in which blacks are currently active have projected
growth rates in excess of 8 per cent.
VI.
Relative Position of Black-Owned Firms in High-Growth Industries
The above analysis suggests
that the hill which black
businessmen must climb -- if they wish to prosper as a group -- is
high indeed.
The effort will be further complicated by the fact
that they are represented in only a meager way in those industries
for which growth prospects are especially bright.
this is true can be seen in Table 5.
The extent to which
This table shows 34 industries
for which projected growth rates are 5 per cent or above —
compared
with a growth rate of 4.3 per cent for the economy as a whole —
the period 1968-1980.
for
More than half of these industries have
projected growth rates of 6 per cent or more.
Distressingly, less than one-fifth (17 per cent) of total
gross receipts of black-owned businesses was accounted for by these
high-growth industries.
Because of lack of data, no detailed comparison
can be made with the situation among firms in the economy at large.
Such figures for all businesses were available for only 13 of the 34
- 18 industries shown.
The gross receipts for these 13 high-growth
industries represented 15 per cent of total business receipts.
If
receipts for the remaining 21 industries had been included, the
proportion of all industry receipts accounted for by high-growth
industries would have been well above 15 per cent -- indeed, it would
have greatly exceeded the 17 per cent shown for black-owned businesses.
Moreover, while one-third of the 34 high-growth industries
represents retail trade lines, another
and manufacturing activities.
groups providing services.
one-third represents finance
Only about one-sixth include industry
So, if black businessmen are to search
for opportunities in these high-growth fields, they must be prepared
to confront a number of new and serious challenges which will tax
the resources of the black community to a serious degree.
VII.
Scaling Barriers to Entry and Diversification
in High-Growth Areas
To advance on the road to enhanced growth, black businessmen
will have to overcome several obstacles.
These include a mastery of
the increased technical and managerial requirements of modern industry,
the fairly large-scale size of firm required for efficient operation,
and greatly increased capital requirements.
Of course, this short
list by no means exhausts the range of barriers, but it probably covers
a major part of the ground.
Moreover, no one understands the nature
of these obstacles better than the black businessmen already trying to
make their way in a frequently inhospitable environment.
But for those
on the outside--or for those contemplating careers as businessmen--
- 19 it may be well to summarize the nature of the problems which must
be confronted.
In the case of managerial talents and technical skills, one
ought to distinguish among at least three situations: (1) the case of
a person considering entering business for the first time, (2) the
case of a person already owning his own business who needs to improve
his own capabilities; and (3) the case of a person who is currently
employed in a technical or managerial capacity by a major white firm.
As far as the first category is concerned, the counsel to be given
is straightforward:
such an embryonic businessman ought to study the
principles of business administration in college or technical school-or he should get a job and accumulate the skills required while serving
an apprenticeship in someone else's business.
For those in the second
category, a number of private and publicly-supported options already
exist, and these need not be catalogued here.
They include counseling
by numerous locally-based small business development centers and offices
of the Federal Government's Small Business Administration.
In my own view, the person in the third category is of
particular interest.
To date--after nearly a decade of effort by large
corporations to attract black college graduates to their organizations-a substantial number
of blacks have developed considerable know-how in
the field of business management.
Undoubtedly, quite a few of these
recruits have found life in the modern, large-scale corporation less
- 20 than hospitable and have left for more personally promising
opportunities.
Yet, many have remained -- and some have even made
progress on the corporate ladder.
Under the appropriate conditions,
some members of these corporate cadres could provide the managerial
and technical talents required if black-owned businesses are to be
diversified.
It is my impression that this is already happening in
a modest way.
I also have the impression that a fair number of other
blacks are looking for a chance to follow the same course.
The task of increasing the size of black-owned firms is
far more difficult.
Some idea of the discrepancy in size between black-
owned firms and those in the economy generally can be gotten from the
data in Table 6.
This table shows the average size of firm (for blacks
and the United States as a whole) in 14 high-growth manufacturing
indust ries.
Size is measured in three ways:
by the number of employees
per firm, the value of receipts per firm, and the value of receipts per
employee.
Several conclusions emerge from these data: most of the highgrowth manufacturing industries are those based on sophisticated technical
processes in which major technological advances and substantial increases
in productivity can be anticipated.
At the same time, measured by
employment, the average black-owned firm in the industries with the
highest projected growth rates are typically less than one-tenth as
large as its counterpart in the economy as a whole.
Measured by value
of shipments, the same kind of short-fall on the part of black-owned
firms is evident«
When value of shipments per employee is used as a
21
standard, the divergence is less sharp, but the relatively small scale
of the existing black-owned firms still shows through.
But for the present purpose, the data in Table 6 can also be
taken as a rough indication of the magnitude of the capital that will
be required if blacks want to diversify into high-growth industries.
Ideally, to make such an estimate, one should have figures on capital
required to finance a business of optimum size.
Alternatively, data
showing capital invested per unit of_output would be useful.
In the
absence of either of these, the figures presented in Tables 6 and 8 do
provide some insights.
Industry
These statistics show the following:
Value of receipts per firm ($1,000)
United States
Black-Owned Firms
All Industry
Retail Trade
Wholesale Trade
Manufacturing
Selected High-Growth Industries:
Office, computing/acc. machines
Electronic components
Chemicals: plastics & synthetics
Service industry mach.
Rubber 6c misc. plastics
Radio, TV & comm. equipment
95
96
497
187
152
163
520
1,625
159
356
946
159
328
356
11,349
3,678
13,364
2,963
2,269
8,545
Thus, one can see that receipts per firm in total manufacturing
are ten times those for all businesses in the United States.
Moreover,
in the case of some of the high-growth industries, receipts per firm are
22
well above those for all manufacturing.
The data for black-owned
firms show the same pattern, but the divergence among the black
firms in the different industries is much less sharp.
In general, the evidence presented here should leave no
doubt in anyone f s mind that black businessmen will have to expand
their scale of operation to a considerable degree if they are to
participate in a meaningful way in the high-growth sectors of the
American economy.
To do so will require substantial aggregations
of capital.
VIII.
Reorganization of Black-Owned Businesses
Unfortunately, as presently organized, the typical black-
owned firm is ill-equipped to raise capital.
The form of organization
of black-owned businesses is shown in Table 7 and that for all businesses
in the United States is shown in Table 8.
The highlights are as
follows (per cent):
Black-Owned Firms with
Paid Employees (1969)
Gross
Number
Receipts
of Firms
Form of Organization
Proprietorships
Partnerships
Corporations
Total
All Industry (1968)
Number
Gross
Receipts
of Firms
79
13
8
48
36
79
8
13
100
100
100
16
12
4
84
100
- 23 These figures indicate that the propensity of blacks to
rely on personal ownership as a form of business organization is the
same as that for all firms.
partnerships.
Blacks make somewhat more use of
But the dependence of blacks on the corporate form of
organization is only three-fifths that among all firms in the country.
However, the really striking comparison is the proportion
of gross receipts received by the different forms of business organizations
in the two communities.
In the case of blacks, proprietorships accounted
for 48 per cent of the total vs. only 12 per cent for all firms.
For
blacks, the share of partnerships was four times as great (16 per cent
vs. 4 per cent).
On the other hand, black-owned corporations received
36 per cent of the gross receipts—compared with 84 per cent for
businesses in the economy as a whole.
Moreover, the relative importance of the corporation as a form
of business organization in the country at large has been increasing
since the end of World War II.
shown in Appendix Table II.
The details documenting this trend are
The highlights can be summarized here
(per cent):
Net Profits
Form of Organization
1945
1960
1968
1945
1960
1968
1945
1960
196£
Proprietorships
Partnerships
Corporations
85
9
6
81
9
10
79
8
13
21
12
67
16
7
77
12
5
83
30
18
52
29
11
60
25
8
67
100
100
100
100
100
100
100
100
100
Total
- 24 As one can see, by either measure —share of businesses,
total receipts, or net profits—the relative importance of the
corporate form of business organization in the United States has been
increasing.
The rise has been at the expense of both proprietorships
and partnerships.
Moreover, while the 200 or so largest corporations
in the country have continued to play a significant role, the experience
charted above is by no means an exclusive reflection of their position.
Instead, the corporate form of organization is being adopted increasingly
even by business firms of moderate size.
The reasons for this trend to the corporation are to be found in
any mysterious sources. On the contrary, the advantages of the corporation
over other forms are quite evident.
These include limited liability and
income tax advantages for the stockholders.
But—of equal importance in
the present content — the corporate form allows the business to raise
from outside sources far more capital than it could get if it had to rely
wholly on the personal resources of a single owner or a few partners.
This is a lesson which some black businessmen have already learned.
It
is imperative that others learn it as well—if they are to move into the
mainstream of American business.
Several other points with respect to business organization and
capital requirements can be made at this juncture.
These relate to the
question of equity capital—meaning the amount of funds invested in a
firm which belong to the owners and thus available as a cushion to absorb
losses or otherwise sustain a business during difficult times.
Little is
- 25 known with any precision about the relative amount of equity capital
invested in black businesses.
However, the general impression one
gets from fragmentary data and discussions with businessmen is that
capital in general—and risk capital in particular — is distressingly
scarce.
Yet, the need for increased availability of equity capital if
black businesses are to diversify and grow is unmistakable.
An idea of the relationship between stockholders equity and
total capital in corporations in the country at large is provided by
the following figures:
Industry
Ratio of Stockholders
Equity to Debt
Manufacturing (Second Quarter, 1972)
All corporations
Size of Assets ($ millions)
Under 1
1-05
5-10
10-25
25-50
50-100
100-250
250-1,000
1,000 and over
2.30
1.93
2.22
2.77
2.63
2.02
2.21
2.00
2.11
2.47
Selected Other Industries (1968)
Contract Construction
Wholesale Trade
Retail Trade
Food stores
General merchandise
Auto dealers 6c serv. stations
Credit Agencies (ex. banks)
Hotel 6c Other Lodging Places
*
**
1.63
1.88
3.45
1.98
0.89
0.34
0.67
See Federal Trade Commission, Quarterly Financial Report for Manufacturing Corporations , Second Quarter, 1972, pp. 28-33.
See Internal Revenue Service, Statement of Income 1968, Corporate
Income Tax Returns 3 pp. 14-19.
- 26 These figures suggest that--in general—stockholders have
a sizable stake in their firms compared with the amount of debt outstanding.
Even in the credit agencies and hotels sectors (which have the
lowest ratios), those who own the businesses have themselves supplied
a sizable proportion of the capital employed in the enterprise.
course, these statistics refer to corporations only.
Of
However, if parallel
data were available for proprietorships and partnerships, the ratio would
probably be similar — if not even higher.
With respect to manufacturing corporations, it will be noted
that stockholders had invested $2.30 for each $1.00 of borrowed money.
The ratio increased somewhat with respect to size of firm--but only up to
a point.
Thus, it rose from 1.93 for those with total assets under
$1 million to 2.77 for those in the $5-10 million class.
The ratio then
declined steadily as size increased to reach 2.00 in the $100-250 million
size group.
Above this category, it again turned upward to
reach 2.47 for corporations with assets of $1 billion and over.
From these statistics a conclusion emerges which is of vital
importance for those interested in the future of black-owned businesses.
If they are to prosper—even if they expect to concentrate in trade and
moderate-scale manufacturing activities--they will need to raise a
substantial amount of equity capital.
They cannot expect to run their
businesses by relying primarily on debt supplied by banks and other
- 27 lenders.
After all, banks are lending depositors money, and they
cannot be expected to take the risk which properly belongs to those
who supply equity capital.
IX.
Concluding Observations
The main conclusions reached in this paper were summarized
in the Introduction and amplified in the preceding sections.
Here a
key point made previously can be reiterated: blacks will have to look
beyond their own community if they wish to expand their participation
in business ownership in a meaningful way.
This is true with respect
to both technical and managerial assistance and equity capital.
In the case of equity capital, blacks have displayed little
eagerness to invest their resources in risk-taking
ventures.
This
reluctance is understandable: given the low level of income of the typical
black family—and the wide-spread inability to make long-range plans for
family security—it is not surprising that blacks have not rushed into
the purchase of common stocks.
On the other hand, blacks have accumulated
a modest amount of wealth, and some of the latter has been invested in
equity issues.
For example, in 1966 (the only date for which statistics are
available), black families had total asset holdings of $18.2 billion,
of which $2.3 billion were financial assets.
So blacks1 holdings of the
latter were 0.7 per cent of the $337.1 billion aggregate amount of financial
assets for the nation as a whole.
In the same year, all American
- 28 families had accumulated assets of $970.1 billion--including money
in banks, Government bonds, stocks in corporations, and equity
investment in farms, businesses, and homes.
So, blacks owned 1.9 per
cent of the accumulated wealth in 1966.
In the same year, blacks had about $200 million of stocks in
corporations.
This represented about 8.7 per cent of their financial
assets and 1.1 per cent of their total wealth.
about $38 per family.
This amount was equal to
In contrast, all families in the country had
stock holdings of about $145.4 billion.
This represented around 15.0 per
cent of their aggregate wealth and 43.1 per cent of their total financial
assets.
This amount was equal to about $2,603 of stockholdings per
fami ly.
So, while blacks received about 6.3 per cent of the nation's
personal income in 1966, they owned less than 2 per cent of the
accumulated wealth.
Their share of total financial assets was 0.7 per
cent, and they held 0.14 per cent of the stocks owned by all families.
Thus, black businessmen would be unwise to look to the black community
as the exclusive source of the equity capital they will need in the
future.
Instead, I am convinced that they will have to rely on joint
ventures with businessmen and investors in the economy at large to meet
their requirements.
The exact form these joint participations may take
cannot be anticipated.
However, a few years ago, I suggested that large
commercial banks might form subsidiaries through which they could acquire
reasonable amounts of equity securities issued by predominantly black-owned
- 29 firms.
The model for this type of institution are the Edge Corporations
owned by U.S. banks through which they do much of their business abroad.""
Under the 1970 amendments to the Bank Holding Company Act, it is now
possible for U.S. banks--through holding company subsidiaries—to form
similar corporations to finance community improvement projects in this
country.
Under certain circumstances, such corporations would be able
to take equity participations in black-owned businesses.
I still believe
this approach is a promising one.
But, whatever approach one may prefer, the need for blacks to
diversify their business activity—and the need for a vehicle to raise
equity capital—cannot be disputed.
If they fail in this effort, the
outlook is bleak indeed.
-
5/
""
0
-
See Andrew F. Brimmer, n The Black Banks: An Assessment of
Performance and Prospects", The Journal of Finance, Vol. XXVI,
No. 2, May, 1971, pp. 379-405, particularly pp. 399-401.
Table 1.
Principal Characteristics of Minority-Owned Business in the U.S., 1969
Minority-Owned Firma
Number of Firms
Per cent
Number
of total
Category
fiross Receiots
Per cent
Amount
of total
($ mill.)
100.0
Number
—
Receipts
($ millions)
Receipts
per firm
($ 1,000)
Firms with Paid Employees
Average number
Number of
of employees
paid
per firm
employees
100.0
1,889,639
322
2.7
10,639
0.56
90
8,934
99
370,064
4
163
1.4
4,474
0.24
38
3,653
95
151,996
4
Black-Owned Firms
3,360
0.18
33
2,814
86
4
100
0.8
126,296
Spanish-speaking minorities
59
0.5
2,805
0.14
19
2,467
All Minority-Owned
Firms
Other minorities
Source:
U.S. Industry: U.S. Internal Revenue Service, Statistics on Income 1969 (Preliminary)
Business Income Tax Returns, and Statistics on Income, 1969 (Preliminary) Corporate
Income Tax Returns! Minority-Owned Finns: U.S. Department of Commerce, Bureau of the
Census, "Minority-Owned Businesses, 1969."
Firms with No Paid Employees
Receipts
Receipts
Number
per firm
($ mill.)
($ 1,000)
- -
—
12,021
All U.S. Industry
Receipts
per employee
($1,000)
131
91,772
5
24,142
232
1,705
7
24,034
125
821
7
22,281
67
546
8
26,882
40
338
8
Table 2.
Average Size of Black-Owned Firms in Major Fields of Activity
Black-Owned Firms, 1969
Wholesale Trade
Manufacturing
Retail Trade
United States; Total, 1967
Retail Trade
Wholesale Trade
Manufacturing
1,566
742
17,208
269,471
232,783
1,577,302
12,306
5,601
55,159
19,322,900
3,518,969
9,380,616
292,448
368,711
1,651,899
557,397,800
459,475,967
310,214,393
Value of shipments or sales ($1,000)
Average number of employees per firm
8
8
3
72
15
6
Average value of shipments or sales
per firm ($1,000)
187
497
96
2,068
1,974
197
Average value of shipments or sales
per employee ($1,000)
24
66
30
29
131
33
Number of firms with paid employees
Number of employees
Sources:
Black-Owned Firms, U.S. Department of Commerce, Bureau of the Census, "Minority-Owned Businesses:
U.S. Total:
U.S. Department of Commerce, Bureau of the Census, "Census of Manufactures,
of Business, 1967."
1969."
1967," and "Census
Table 3. Principal Fields of Concentration of Black-Owned Businesses, 1969
All Industry:
Black-Owned Businesses
Industry
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Gross Receipts
Per Cent
Amount
($1,000)
of Total
Per cent of
Total
Gross
Receipts 1/
Projected Annual
Average Rate of
Growth, 1968/80
(Per cent)
4.3
4.5
3.5
3.4
3.9
5.2
4.7
2.5
4.0
4.3
6.3
3.2
5.2
4.0
4.3
6.8
3.3
5.0
7.8
3.1
2.9
5.1
1.6
6.9
4.1
4.4
4,474,191
All Black Firms: Total
631,321
Auto dealers & serv.stat.
438,492
Food stores: retail
359,975
Eating and drink, places
287,663
Personal services
283,682
Contractors, special trade
277,878
Retail trade stores: misc.
140,476
Contractors, gen. bldg.
133,965
Trucking & warehousing
133,314
Insurance carriers
103,578
Business services: misc.
95,247
Groceries: wholesale
77,916
Real estate
76,937
Auto repair serv. & garages
61,451
Bldg. mat., hardware: retail
56,843
Gen. merchandise: retail
56,183
Food products: mfg.
53,202
Apparel & access.: retail
Furniture & home furn.: retail 53,201
52,524
Amusement & rec. serv.
51,098
Lumber & wood prod.: mfg.
42,970
Hotels, motels, etc.
42,795
Local & urban transit
42,182
Hospitals, med. & dent, labs
38,607
Contractors, heavy const.
37,978
Printing & publishing: mfg.
100.00
14.11
9.80
8.04
6.42
6.34
6.21
3.13
2.99
2.97
2.31
2.13
1.74
1.71
1.37
1.27
1.25
1.18
1.18
1.17
1.14
0.96
0.95
0.94
0.86
0.84
100.00
5.35
4.40
1.49
0.75
2.36
2.72
2.24
1.31
3.32
1.29
2.76
0.87
0.46
1.20
3.17
5.17
1.04
1.01
0.32
0.81
0.43
0.17
3,629,478
81.01
45.13
-
844,713
18.99
54.87
-
Sub-total: 25 Industries
All Other Industries
Source:
Appendix Table I 0
1/
Data are for 1968
-
1.11
1.38
Tuble 4.
I.
Alternative Paths of Expansion for Black-Owned Businesses,
1969-1980
(Amounts in Thousands of Dollars)
Base Position
1969
Gross Receipts
U.S.: All Industry
1,889,638,823
4,474,191
Black-owned Firms
0.237
Per Cent of Total
II.
Alternative Paths
1980
Annual Average Growth
Rate 1968-80 (Per Cent)
U.S.: All Industry
4.3
Gross Receipts
3,002,636,090
Black-owned Firms:
A.
Matched Expansion
Per Cent of Total
4.3
0.237
7,109,489
B.
Unchanged share of
existing industries
Per Cent of Total
3.9
0.227
6,815,267
C.
D.
Raise 1969 share of
total industry by
one-haIf
Per Cent of Total
Double 1969 share of
total industry
Per Cent of Total
8.2
10,664,234
0.355
11.1
0.474
14,218,978
Table 5. Representation of Black-Owned Businesses in High - Growth Industries
(Projected Annual Average Growth Rates, 1968 - 1980)
SIC
Industry
Rank
All Industries
573
62
5022
45
367
1
2
3
4
5
597
28
60
49
723
807
53
5713
572
30
38
5992
7622
7391
369
5064
561
562
564
17
47
65
261
5712
595
70
264
5995
66
6
7
8
9
9
9
10
10
10
11
12
13
13
14
15
16
16
16
16
17
17
17
18
18
18
18
19
19
19
Growth
Rate
(per cent)
4.3
10.3
Radio, TV, music stores
10.2
Security brokers
9.7
Drugs, wholesale
8.6
Air transport
Electronic comp. & acc.,
8.4
mfg.
8.2
Jewelry, retail
7.4
Chemical products, mfg.
7.1
Banking
6.9
Electric, gas 6c san. serv.
6.9
Beauty shops
6.9
Medical, dent. labs.
6.8
General merchandise, retail
6.8
Floor covering, retail
6.8
Household appliances, retail
6.3
Rubber & plastics
6.2
Instruments, mfg.
6.1
Florists
6.1
Radio, TV repair
6.0
Research & devel. labs.
5.5
Misc. elect, equip., mfg.
5.3
Elect, appl., TV, wholesale
5.3
Men's, boys1 furn., retail
Women's ready to wear, retail 5.3
5.3
Children's, inf., retail
5.2
Spec, trade construction
5.2
Transportation services
5.2
Real estate
5.1
Pulp mills
5.1
Furniture, retail
5.1
Sporting goods, retail
5.1
Hotels, motels, etc.
5.0
Misc. paper & prod. mfg.
5.0
Hobby & toy stores
5.0
Comb, real est. & insurance
Sub-total
All other industries
Black owned Firms
Gross Receipts
Amount Per cent
f$l,000) of total
4,474,191
100.00
16,565
6,765
8,153
342
0.37
0.15
0.18
0.01
6,746
4,877
37,080
24,445
9,399
55,291
12,206
56,843
6,890
7,596
3,980
702
9,254
9,643
0.15
0.11
0.83
0.54
0.21
1.23
0.27
1.27
0.15
0.17
0.09
0.01
0.20
0.21
*
7,170
954
15,082
12,084
425
283,682
15,383
77,916
*
U.S. All Industry
Gross Receipts
Amount
Per cent
($1,000)
of total
1,706,136,759 1/
4,065,483
- -
8,837,199
- —
51,493,527
3,854,823
33,179,425
1.94
- - -
54,144,527
3.17
—
- -
14,766,997
11,463,937
0.86
0.67
- - —
- -
0.16
0.02
0.33
0.27
0.01
6.34
0.34
1.74
- —
- - -
- -
40,288,108
4,003,099
17,714,613
2.36
0.23
0.87
- -
- -
16,386
4,641
42,970
606
186
5,095
0.36
0.10
0.96
0.01
2/
0.11
759,375
16.90
254,247,108
3,714,834
83.10
1,451,889,651
—
—
7,426,441
—
- -
3,008,929
1/
~
All industry data on receipts at the three and four digit SIC level were
available for only 13 of the 34 industries shown. If receipts for the
remaining 21 industries had been included, the proportion of all industry
receipts accounted for by high-growth industries would have been well
above 13 per*cent -- indeed, it would have greatly exceeded the 17 per
cent shown for black-owned businesses.
2/
Less than 0.005.
*
Withheld to avoid disclosure of figures for individual company.
3.01
0.22
0.17
Table 6.
SIC
Rank
Average Size of Firms in Selected High - Growth Industries
(Annual Average Growth Rate: 1968-1980)
Growth
Rate
(per cent)
Industry
Black-Owned Firms
Value of
Value of
Number of
Receipts
Receipts
employees
per employee
per firm
per firm
United States: Total
Value of
Value of
Number of
shipments
shipments
employees
per employee
per firm
per firm
($1,000)
($1,000)
10.3
8 1/
159
20
377
11,349
30
Optical, ophthalmic & photo equip.
8.8
9 2/
126
14
72
1,418
20
3
Electronic components
8.4
10
356
36
199
3,678
19
282
4
Chemicals:
6.8
17
946
56
314
13,364
43
358
5
Service industry machinery
6.5
159
20
96
2,963
31
30
6
Rubber & misc. plastic products
6.3
12
328
27
92
2,269
25
365
366
7
Radio, TV & communication equip.
6.2
10
356
36
367
8,545
23
369
8
Misc. electrical equip. & supp.
5.5
10
339
34
105
2,725
26
25
9
Furniture & fixture (exc. household)
5.4
10
164
16
36
739
21
28
9
Chemicals & selected products
5-4
17
946
56
98
4,926
50
3811
382
9
Instruments:
5.4
126
14
113
2,316
20
357
1
Office, computer c* acc. machines
3831
2
367
plastics & synthetics
scientific & control
8 1/
9 2/
33
10
Primary metals
5.3
14
363
26
66
2,971
45
11
Household appliances
5.1
10 3/
339
34
316
9,941
32
363
251
12
Household furniture
5.0
11 4/
157
14
50
859
17
187
23
72
2,068
29
All manufacturing
1/
2/
3/
4/
Source:
Approximated
Approximated
Approximated
Approximated
by
by
by
by
SIC
SIC
SIC
SIC
- -
8
359, Miscellaneous machinery, excluding electrical.
38, Instruments and related products.
369, Miscellaneous electrical equipment and supplies.
2511, Wood household furniture.
Black-Owned Firms: U.S. Department of Commerce: Bureau of the Census, "Minority-Owned Businesses, 1969."
United States Total: U.S. Department of Commerce: Bureau of the Census, "Census of Manufactures, 1967."
Table 7.
Forms of Business Organization, Black-Owned Firms, 1969
All Firms
*ross
Number of
Receipts
firms
($1,000)
Number of
firms
Firms with Paid Employees
Average
Gross
Number of
Number of
Receipts
employees
employees
($1,000)
per firm
Average
Receipts
per firm
Firms without Paid Employees
Number of
Gross
Average
Receipts
Receipts
firms
per
Obuf
Total
163,073
4,474,191
38,304
151,996
3,653,363
4
95
124,769
820,828
7
Sole Proprietorship
148,135
2,512,024
30,131
88,194
1,752,530
3
58
118,004
759,494
6
Partnership
11,424
646,341
5,149
23,357
591,841
5
115
6,275
54,500
9
Corporation
3,514
1,315,826
3,024
40,445 .
1,308,992
13
433
490
6,834
14
iotal
100.0
100.0
100.0
100.0
100.0
- -
- -
100.0
100.0
- -
Sole Proprietorship
90.8
56.2
78.7
58.0
48.0
- -
- -
94.6
92.5
- -
Partnership
7.0
14.4
13.4
15.4
16.2
- -
- -
5.0
6.7
- -
Corporation
2.2
29.4
7.9
26.6
35.8
- -
- -
0.4
0.8
- -
All Industries:
Percentage Distribution
All Industries:
Source:
U.S. Department of Commerce, Bureau of the Census, "Minority-Owned Businesses:
1969,"
Table 9, P rt B. p. 168
Table 8. Forms of Business Organizations in the United States, By Industry Group, 1968
(Number in thousands, total money figures in millions of dollars; money figures per firm in thousands of dollars)
Form of Business Organization
Total: All Forms
Number of Firms
Business Receipts
Receipts per firm ('000)
Profit (less loss)
Profit per firm ('000)
Proprietorships
Number of Firms
Business Receipts
Receipts per firm ('000)
Profit (less loss)
Profit per firm (*000)
Agriculture,
Forestry, and
Fisheries
Mining
Construction
Manufacturing
Transp.,
Comm.,
Elec., Gas
367
116,537
317.5
11,593
31.6
Fin., Ins.,
and Real
Estate
Services
2,566
579,385
225.8
20,069
7.8
453
235,451
519.7
6,791
15.0
2,,113
343.,934
162.7
13,,278
6.3
1,222
164,062
134.2
18,644
15.2
2,795
101,317
36.2
21,490
7.7
59
4,737
80.3
112
1.9
11,672
1,776,405
152.2
129,238
All
Industry
69
15,985
231.6
1,750
25.3
839
97,530
5,401
6.4
397
645,129
1,625.0
45,712
115.1
3,206
37,362
43
1,220
663
19,334
29.1
2,887
4.3
172
6,673
38.8
757
4.4
286
6,175
21.6
925
3.2
1,891
105,922
56.0
7,534
4.0
268
20,432
76.2
1,796
6.7
,623
85.,490
52.6
5;,738
3.5
516
7,760
15.0
2,501
4.8
2,390
36,548
15.3
13,645
5.7
45
1,111
24.7
3
0.1
9,212
222,105
24.1
31,871
3.4
15
1,230
32.0
152
10.1
207
33,917
163.8
2,244
10.8
32
10,977
343.0
556
17.3
175
22 ,940
131.1
,688
9.6
299
9,397
31.4
1,068
3.5
176
16,226
92.2
5,823
33.1
4
552
138.0
46
11.5
918
80,532
87.7
11,405
12.4
66
109,132
1,653.5
10,516
159.3
468
439,546
939.2
10,291
22.0
153
204,042
1,333.6
4,439
29.0
315
235,504
747.6
5,852
18.5
407
146,905
360.9
15,075
37.0
229
48,543
10
3,074
307.4
63
6.3
1,542
1,473,768
955.7
85,962
55.7
11.6
3,545
1.0
28.4
74
1.7
116.2
5,344
44.1
654
5.4
13
970
74.6
73
5.6
50
7,365
147.3
801
16.0
33
5,531
167.6
544
16.5
Corporations
Number of Firms
Business Receipts
Receipts per firm (*000)
Profit (less loss)
Profit per firm ('000)
31
9,017
290.8
268
8.6
13
13,795
1,061.1
1,603
123.3
126
70,831
562.1
1,713
13.6
192
632,925
3,296.5
44,411
231.3
121
1,
1
U.S. Department of Commerce: Bureau of the Census, Statistical Abstract of the United States, 1971, Table 711, p. 459.
Other
Industri
3,358
51,723
15.4
4,467
1.3
Partnerships
Number of Firms
Business Receipts
Receipts per firm ('000)
Profit (less loss)
Profit per firm ('000)
Source:
Wholesale and Retail Trade
Retail
Total
Wholesale
212.0
2,022
8.8
11.0
APPENDIX TABLE I.
SIC
1/
Black-Owned Firms
Number of firms
Gross Receipts
Per cent
Number
Amount
Per cent
of total
($1,000)
of total
Industry
163,073
All Industry
07
08
09
15
16
17
--
Farms
A g r . ser., h u n t i n g , for.
Agricultulture services
fisheries
hunting
Forestry
Fisheries
Other industries
Mining
Building construction, gen. cont.
Construction, heavy
Special trade construction
2,359
369
13,477
1.44
0.22
8.26
2,981
1.82
30
31
32
33
34
35
36
37
38
39
Rubber & plastic products
Leather & le&ther products
Stone, clay & glass
Primary metals
Fabricated metal products
Machinery, exc. elect.
Electrical mach. & equip.
Transporation equip.
Instruments, prof., sci & cont.
Misc. manufacturing
Transp., comm., electric
san.
Local
1.43
0.69
0.32
0.10
0.30
transit
Trucking & warehousing
Water transportation
Air transportation
48
49
Transportation services
Other transportation
Communication
Electric, gas & san. serv.
50
Wholesale & Retail Trade
Wholesale Trade: Total
Motor vehicles & auto equip.
Drugs, chemicals, etc.
Dry goods & apparel
Groceries & related prod.
Farm products-raw materials
Electrical goods
'
Hardware, plumbing & heat, equip.
Machinery, eq. & supplies
Alcoholic beverages
Lumber & const, materials
Other wholesale trade
10. 38
838,,988
140,476
38,607
283,682
3.14
0.36
6.34
165,,356
32,,476
641,,156
302,648
6.76
396,,908
464,343
100.,00
1,706,,136,,759
100,.00
27. 77
27.,18
59
,341
51.,• 722,
45,,269,.480
6,,452,,861
3,.01
2,.65
0,.37
0.,59
15,,985,,242
0..93
--
7., 19
97,,530,,126
5..71
1.93
0.47
1.
5.,49
38,,253,,472
18,,988,,546
40,,288,,108
2,.24
.11
2,.36
1.43
1.14
2.10
0.36
0.20
0.70
3.,40
645,,128,,726
37,.81
0.75
0.05
88,,356,,906
5,.17
0.38
0.06
21,,117,,335
23,,834,,783
13,,979,,110
7,,518,,795
24,,269,,742
23,,688,,641
51,,493,,527
.23
.39
0..81
.44
.42
.38
3..01
0.50
0.59
2.12
0.60
0.36
0.87
0.38
0.02
0.09
0.37
0.10
0.01
0.16
0.07
1.
1.,42
0.,28
1.40
0.26
--
--
56,183
1.25
27,,660
39
163
1,288
.90
21
515
55
0.02
0.10
0.79
0.05
0.01
0.31
0.03
3,233
21,838
51,098
7,656
2,277
37,978
37,080
0.07
0.49
1.14
0.17
0.05
0.85
0.83
7,,827
27,,684
60,,642
14,,979
5,,763
59,,267
14,,319
0.,23
0.,06
0.,23
0.,52
0.,13
0.,05
0.,51
0.,12
21
13
75
29
93
98
64
28
16
269
0.01
0.01
0.04
0.01
0.05
0.06
0.04
0.01
0.01
0.16
3,980
1,106
9,768
4,823
16,777
12,672
17,065
5,658
702
12,754
0.09
0.02
0.22
0.10
0.37
0.28
0.38
0.12
0.01
0.28
8 ,283
,
4,,491
18,,592
,371
34,,270
45,,602
13,,692
9,,214
5,,922
32 ,330
o,,03
0,.16
0,.05
o,,29
o,,39
0,.11
0,.08
0.,05
0.28
14,,766,,997
5,,777,,505
14,,787,,051
43,,811,,545
37,,152,,210
50,,019,,437
46,,546,,975
92,,176,,721
11,,463,,937
74,,177,,055
0,.86
.33
.86
2..56
2.,17
2.,93
2.,72
5.,40
0.,67
4,.34
0.25
0.29
0.40
0.45
0.27
0.21
0.47
0.30
0.27
0.83
0.03
0.02
0.07
0.01
0.05
0.03
0.04
0.01
16,733
10.26
210,808
4.71
366,,667
3..14
116,,537,,354
6.,83
4.56
0.18
7,296
7,252
37
18
4.47
4.44
0.02
0.01
42,795
133,965
3,242
342
0.95
2.99
0.07
0.01
62,,707
233,,275
13,,653
8,,356
11.64
3.13
0.27
0.21
1.42
0.60
0.07
8.02
1.61
0.52
3.82
0.38
6,
gas
serv.
& suburban
63,699
30,901
14,281
4,814
13,703
--
11,670,950
r
3,357, 686
3,172,,391
185, 295
Black-Ovned Firms
as Per cent of Total
Number
Gross
Receipts
0.10
104
Textile mill products
Apparel and other products
Lumber & wood products
Furniture & fixtures
Paper & allied products
Printing and publishing
Chemicals & allied products
&
--
100.0
_
United States, All Industry, 1968
"ross Receifts
Numbefr of fipis^
Amount
Per cent
Number
" Per cent
of total
of total
69,,528
9.96
22
23
24
25
26
27
28
2.06
0.82
0.64
0.33
0.27
16,235
Food & kindred products
501
502
503
504
505
506
507
508
509
3,367
1,337
1,051
538
441
Construction
20
47
--
4,474,191
""
Manufacturing
41
42
44
45
100.0
__
Agriculture
01
Page 1
Black-Owned and Total U.S. Businesses, By Industry, Number, and
0,.07
1.
1.
0,
1.
1.
0.
0.
0 .08
0..19
4,,003,,099
13,,177,,055
27,,038,,870
33,,179,,425
0.,17
1.,31
0.,28
0.,51
0.,24
0,.77
1.,58
1.,94
0.,54
2..01
0.,11
0..07
0..13
0,.01
3,,008,,212
22,,467,,997
4,,825,,497
8,,837,,199
•
0.01
*
1,198
18
53
861
0.74
0.01
0.03
0.52
15,383
594
5,088
9,399
0.34
0.01
0.21
14,,943
I ,119
10,,084
22,,530
46,880
1,660
28.74
1.02
2,317,402
385,039
51.79
8.61
2,590,,943
453,,664
22..20
3..90
583 ,828 ,137
235,,450,,346
34.,21
13.,80
1.81
0.37
0.40
0.16
114
83
51
240
77
16
33
128
42
81
0.07
0.05
0.03
0.15
0.04
0.01
0.02
0.08
0.03
0.05
24,773
9,765
16,246
95,247
24,305
5,407
12,987
24,516
26,385
13,831
0.55
0.22
0.36
2.13
0.54
0.12
0.29
0.55
0.59
0.31
27 ,493
13,,243
20,,849
63 ,403
24 ,364
15,,558
14,,254
50,,719
8 ,148
15,,031
0,.23
0..11
0.,18
0,.54
0,.21
0..13
0..12
0..43
0..07
0,.13
11,,667,,214
9,,877,,481
10,,533,,926
47,,134,,783
21,,279,,049
11,,603,,160
9,,926,,262
20,,726,,086
13,,400,,691
,494,,451
10,
0..68
0.,58
0.,62
2.,76
1.,25
0.,68
0.,58
1.,21
0.,78
0.62
0.41
0.63
0.24
0.38
0.32
0.10
0.23
0.25
0.52
0.54
0.21
0.10
0.15
0.20
0.11
0. 05
0.13
0.12
0.20
0.13
2.94
200,,602
1,.72
68,,807,,243
4.,03
0.40
0.19
795
0.49
131,577
0.11
•
0.02
0.03
Appendix Table I (cont'd.)
Black-Owned Firms
Number of firms
Grogs Receipts
Number
Per cent
Amount
Per cent
of total
($1,000)
of total
52
53
54
55
•56
57
58
59
60
61
62
63
64
65
66
67
Retail Trade: total
45 ,220
27 .73
1,932 ,363
43.19
Bldg. mat., hardware, farm equip.
General merchandise
Food stores
Auto dealers & serv. stations
Apparel & accessories
Furniture & home furn.
Eating and drinking places
Miscellaneous retail stores
515
3 ,959
11 ,268
6 ,380
1 ,315
1 ,246
14 ,125
6 ,412
0 .31
2 .42
6 .91
3 .91
0 .80
0 .76
8 .66
3 .93
61 ,451
56 ,483
438 ,492
631 ,321
53 ,202
53 ,201
359 ,975
277 ,878
1.37
1.27
9.80
14.11
1.19
1.19
8.04
6.21
Finance, insurance and real estate
7,612
4,.66
287 ,471
6.42
35
111
257
104
1,,315
5 ,524
j
147
119
0,.02
0,.07
0,.15
0,.06
0..80
3.,38
0.,09
0.,07
24,,445
12,,644
6,,765
133,,314
21 ,839
j
77,,916
5,,095
5,,453
0.54
0.28
0.15
2.98
0.49
1.74
56,,077
34. 38
663,,236
Banking
Credit agencies, exc. banks
Security & comm. brokers & dealers
Insurance carriers
Insurance agents, brokers
Real estate
Comb, real estate, insurance, law
Holding & other investment cos.
Services
70
72
73
75
76
78
79
80
Hotels, motels, etc.
Personal services
Business services
Auto repair, serv. & garages
Misc., repair services
Motion pictures
Amusement & rec. serv.
Medical & other health serv.
Hosp., med. & dental laba.
San., conv. & rest homes
82
Educational services
89
Miscellaneous services
Industries not classified
2,,015
33,,906
6,,497
4, 549
3,468
84
3,420
208
591
1,328
11
13, 148
1/
SIC - Standard Industrial Classification Code.
*
Less than 0.005 per cent.
Note:
Source:
Note:
1.
23
20. 79
3. 98
2. 79
2. 12
05
2.09
0.
0.13
0.36
0.81
0.01
8.06
Page 2
United States. All IndustryT 1968
Number of firms
Gross Receipts
Number
Per cent
Amount
Per cent
of total
($1,000)
of total
2,137,279
Black-Owned Firms
as per cent of Total
Number
Gross
Receipts
18.31
348,377,791
20.41
2.12
0.55
0.83
2.90
2.45
3.19
0.89
1.03
3.32
3.72
20,556,457
54,144,527
75,161,720
91,327,923
17,901,244
17,259,776
25,521,701
46,504,443
1.20
3.17
4.40
5.35
1.04
1.01
1.49
2.72
0.53
1.18
3.94
1.72
1.27
1.04
3.64
1.48
0.30
0.10
0.58
0.69
0.30
0.31
1.41
0.60
1,221,595
10.46
93,793,673
5.49
0.62
0.31
0.12
0.53
0.31
0.04
1.89
6.72
0.56
0.29
3,854,823
4,370,225
4,065,483
56,812,345
6,455,137
14,889,598
3,008,929
337,133
0.22
0.24
0.12
14,265
62,640
36,195
5,113
219.197
785,365
64,996
33,824
0.25
0.23
3.32
0.37
0.87
0.17
0.02
0.18
0.71
2.03
0.60
0.70
0.23
0.35
14.82
2,795,421
23.95
101,316,950
5.93
2.01
0.65
42, 970
287, 663
103, 578
76,937
35,953
4, 854
52, 524
0.96
6.43
2.31
1.72
0.80
138,921
617,481
400,429
186,943
205,313
19,854
183,171
446,130
1.19
5. 29
3.43
1.60
1.77
0.17
1.57
3.82
7,426,441
12,900,552
22,092,129
7,970,697
3,571,398
4,044,357
5,553,015
20,375,868
0.43
0.75
1.29
0.46
1.45
5.49
1.62
2.43
13, 757
28,425
0.31
0.63
--
16,473
0.36
103,455
0.89
437,647
3.74
0.11
102
164, 584
Figures may not add to totals because of rounding.
Black-owned Businesses: U.S. Department of Commerce, Bureau of the Census;
"Minority-Owned Business: 1969," Part B, U.S.
All Industry: Internal
Revenue Service: "Statistics of Income-Business Tax Returns, 1968.
'he following SIC codes were excluded from coverage in "Minority-Owned
Businesses: 1969": 01, agricultural production; 10, metal mining; 11 f* 12, coal
mining; 13; crude petroleum
natural gas; 14, other mining; 40, railroad
transportation; 801, offices of physicians & surgeons; 802, offices of dentists,
dental surgeons; 803, offices of osteopathic physicians; 804, offices of
chiroprac tors, 8099, health and allied services n.e.c.; 81, legal services,
86, nonprofit organizations; 89, miscellaneous services; 91, Federal Government;
92, State government; 93, local government; and 94, international government.
0.11
1.17
__
*
3.67
96,421
336,920
285,793
372,498
103,292
119,866
387,880
434,608
33,014
0.28
0.63
0.29
0.17
0.23
0.34
0.52
0. 17
1.62
0.20
1.69
0.58
2.23
0.47
0.97
1.01
0.23
0.32
1.19
0.42
1.87
0.31
0.95
0.35
1,340,518
0.07
1.28
1.23
16,041,975
0.94
0.78
0.40
294,210
0.02
39.83
55.94
0.12
: TABLE II
Form of Business
Total Number:
Organization
All Forms
Proprietorships
Partnerships
Corporations
Total Receipts
Proprietorships
Partnerships
Corporations
1939
Per Cent
Amount
Of Total
Amount
Per Cent
Of Total
Amount
Per Cent
Of Total
Amount
Per Cent
Of Total
Change
Amount
1,793
100.0
6,737
100.0
11,172
100.0
11 ,672
100.0
4 ,944
,
275.7
25,.0
100.,0
4,,435
58.7
15.1
26.2
5,689
627
421
84.4
9.3
6.3
9,090
941
1,141
81.4
8.4
10.2
9,,212
918
,542
4.,637
356
-49
440.8
131.4
-10.4
33..0
15..0
-1.,9
93.,8
7.,2
-1.,0
3 ,401
314
720
172
100.0
381
100.0
1,094
100.0
1,
1,,813
78.9
7.9
13.2
100.0
209
121.5
14,.2
100..0
713
24
15
133
14.0
8.7
77.3
79
47
255
20.7
12.3
67.0
171
74
849
15.6
6.8
77.6
222
83
508
12.2
4.6
83.2
55
32
122
229.2
213.3
91.7
22,.0
21,.0
11,.4
26..3
15.,3
58.,4
92
27
594
11
100.0
40
100.0
73
100.0
129
100.0
29
263.6
24.0
100.0
33
2
2
7
18.2
18.2
63.6
12
7
21
30.0
17.5
52.5
21
8
44
28.8
32
11
86
24.8
8.5
66.7
10
5
14
500.0
250.0
200.0
35.0
23 .0
20,.0
34,,5
17.2
48,.3
9
1
23
Proprietorships
Partnerships
Corporations
U.S. Department of Commerce: Bureau of the Census
Statistical Abstract of the United States 1971
Table 710, p . 459
11.0
60.3
1,
1945-1960
Annual Ave.
Rate of
Percentage
Change
Growth (%)
Change
Change
Change
Per Cent
Of Total
1939-1945
Annual Ave.
Rate of
Percentage
Growth (7o)
Change
1968
1,052
271
470
Net Profits (Less Loss)
Source:
Forms of Business Organization in the United States, 1939, 1945, 1960, and
(Number in thousands; money figures in billions of dollars)
A
2
3.
59.8
50.1
171.0
116.5
57.4
232.9
75.0
14.3
109.5
3.
2. 7
6. 9
Per Cent
Of Total
Change
100..0
76.,7
7., 1
16.,2
Amount
500
122
-23
401
Percentage
Change
1960-1968
Annual Ave.
Rate o f
Growth (%)
Per Cent
Of Total
Change
0.6
100.0
-2.,4
35.,1
0.2
-0.3
3.8
24.4
-4.6
80.2
4,.5
1.,3
7. 3
100.,0
719
6.,6
0.8
100.0
5. 3
3. 1
8. 3
12.,9
3.,8
83.,3
51
9
659
29.,8
12..2
77.,6
3.3
2.6
7.4
7.1
1.3
91.6
4. 1
100..0
56
76.,7
7.3
100.0
3. 8
9
5. 1
27.,3
3.,0
69.,7
11
3
42
52.,4
37.,5
95..5
5.4
4. 1
8. 8
19.6
'). 4
7 r). 0
@FedFRASER