As was pointed out in a previous chapter, the Negro enters business either alone or with one or two partners. Small enterprises can be so financed. But for undertakings that require considerable capital those who enter them must either have large means or a number must combine their small funds.
The Negro is alert to business lines which offer chances of profit. He is slowly learning the method of "big business." The corporation, with its advantages of impersonal responsibility, facility for taking in or releasing members, and particularly its combined capital, has been adopted in a few cases. These can be treated briefly for what variations they show from the general type.
One of these was a corporation that ran a garage, furnished storage and other care for machines and operated a line of taxicabs, employing from nine to eleven men. Three of the firm members had been employed chauffeurs and thus got the idea and the money to start the firm. There was storage space for about 50 cars. One of the proprietors came from Georgia, another from North Carolina. They had a book-keeper and the usual books for a business house. Five Negro owners and about forty white owners were storing cars with them.
Another enterprise was a corporation of undertakers with a board of eight directors, who held nearly all of the stock. In size they had four employees, occupied a floor space of about 1,200 square feet at a monthly rental of $150. The investments represented about $1,500 in dead-wagon and fixtures and a stock on hand of about $1,000. The gross business was between $9,000 and $10,000 in 1907, the first year of the business; and over $20,000 in 1908. At its organization there were ten corporators who subscribed about $300 each to float the enterprise. It is interesting to note that a hotel-keeper, a minister, three men in other lines of business and the manager of the concern were among these ten.
Two other corporations were printing establishments, each with six original incorporators. One firm did job printing. The other was a publisher of popular songs and has produced several of New York's most popular airs. They had two and ten employees, occupied about 158 and 3,000 square feet of floor space, respectively. The larger firm had a plant valued at between $4,000 and $5,000, kept several hundred dollars worth of stock on hand and did a gross business of about $15,000 in 1907, and about $17,000 in 1908. The smaller firm had been organized in 1909. The larger had run more than four years. The corporators of the smaller concern included an editor, a messenger, silk-factory employee, and laundry employee; those of the larger, a liquor dealer, two actors and three composers of popular songs.
The four other corporations were real estate firms, a line of business requiring considerable capital and attracting the higher grade of business ability. In these instances, all except one firm was composed of the few original incorporators, making the arrangement only a little removed from a partnership. The one exception was a large concern with a capital stock of over $500,000. The previous occupations of the principal promoters of this company included a lawyer, a pharmacist and two real estate brokers.
The stock of this concern was held by small investors in many parts of the United States. The firm at one time employed over 200 people in and out of New York, and claimed to have done an annual business of over $200,000. At some period in its history it may have done so large a business, but this was probably only for an exceptionally prosperous year. This may have led to too sanguine attempts on the part of the promoters. Because of other poor business methods and bad attempts at investment the enterprise failed in the winter of 1910-11.
Three obvious points are shown by the facts concerning these corporations: First, they were composed of only a few members and therefore were not far removed from large partnerships. This set a large limit to command of capital for there were no large capitalists in New York among Negroes. Second, this form of combining capital and business ability has been tried in a few lines of business only—three in all, if we exclude the garage. Third, as seen in their previous occupations, the promoters were men above the average in ability and of some experience.