The effects of racism and racial discrimination on minority business development: the case of black manufacturers in Chicago's ethnic beauty aids industry

Journal of Social History, Spring, 1998 by Robert Mark Silverman

Barnett quickly responded to Ransom's letter, denying that the accusations were true, and agreeing to bring the matter to the attention of his employees. He also attempted to defuse this conflict with his competitor through a plea for racial solidarity. In this statement aspects of the isolation that black businesses felt was apparent:

I am very sorry that you have thought it necessary to make a charge which seems to us unjust because it has been in my mind that these leaders in our line would find it of advantage to get closer together in a sort of mutual understanding with an idea of preserving in so far as possible, this particular business within our group. Any time you are in Chicago, we would be very glad to have you drop in and pay us a visit.(29)

Ransom grudgingly accepted Barnett's explanation, informing him that he had knowledge of a salesman from the Kashmir Chemical Company who had stated that the Madame C. J. Walker Manufacturing Company had "sold out to a white man," but he indicated that the matter was resolved to his satisfaction.(30)

Ransom's reply to Barnett discussed the disadvantages that black businesses had when competing with larger white-owned companies. He addressed this issue directly in his response:

I rather appreciate the tone of your letter, however, and nothing would please me greater than to see and have a talk with you as I am entirely in accord with you in that organizations such as ours should co-operate fully with each other so as to force such as the Plough's Chemical Company and other unscrupulous white concerns off the market.(31)

The presence of larger mainstream companies tended to supersede competition among black entrepreneurs at the parochial level. However, race was only the most apparent distinction to be made between black and mainstream businesses involved in the manufacturing and distribution of ethnic beauty aids. At a more fundamental level, these firms did business differently. The sales approach adopted by black-owned firms was distinct from the approach adopted by white-owned firms.(32) For instance, black-owned firms were more active in the area of door-to-door sales. They were particularly effective at using this approach to sell direct to black-owned barber shops and beauty salons.

Sales Strategies Used in Overcoming Racial Barriers to the Mainstream Economy

Selling door-to-door was a necessity to black companies, since retailing was underdeveloped in the black neighborhoods they served, and since access to the shelves of the few retailers in black neighborhoods was further limited due to racial discrimination by white and Jewish store owners. Even if racial barriers were overcome and black businesses gained access to white and Jewish-owned stores, the high cost of advertising and promoting products made it difficult for them to compete. In order to sell goods through stores, a manufacturer needed to invest capital in advertising to develop and maintain a market. However, black manufacturers were undercapitalized. Because of this, door-to-door sales to black barbers and beauticians were considered a more cost effective way for small and medium-sized black manufacturers to distribute their products. Door-to-door sales allowed black firms to accomplish three things: they made it possible for manufacturers to avoid the racial barriers to market access encountered in white and Jewish-owned stores, they lowered the costs of advertising, and they increased the association of a company's products with "the race" through their affiliation with black barbers and beauty salon owners. In effect, this marketing strategy allowed black manufacturers to overcome racial barriers through the mobilization of ethnic resources.