Cover image for In the Black : a history of African Americans on Wall Street
Title:
In the Black : a history of African Americans on Wall Street
Author:
Bell, Gregory S.
Personal Author:
Publication Information:
New York : Wiley, [2002]

©2002
Physical Description:
ix, 294 pages : illustrations ; 24 cm.
General Note:
Includes index
Language:
English
ISBN:
9780471403920
Format :
Book

Available:*

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Call Number
Material Type
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Status
Central Library HG172.A2 B45 2002 Adult Non-Fiction Central Closed Stacks
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Frank E. Merriweather Library HG172.A2 B45 2002 Adult Non-Fiction Black History Non-Circ
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Summary

Summary

The never-before-told story of five decades of African Americans on Wall Street

Here, for the first time, is the fascinating history of the African American experience on Wall Street as told by Gregory Bell, the son of the man who founded the first black-owned member firm of the New York Stock Exchange. A successful finance professional in his own right with close ties to leading figures in both the black financial and civil rights communities, Bell tells the stories of the pioneers who broke down the ancient social and political barriers to African American participation in the nation s financial industry. With the help of profiles of many important black leaders of the past fifty years including everyone from Jesse Jackson and Maynard Jackson, former mayor of Atlanta, to E. Stanley O Neal, COO and President of Merrill Lynch, and Russell Goings, founder of First Harlem Securities and cofounder of First Harlem Securities he shows how in the years following World War II the growing social, political, and financial powers of African Americans converged on Wall Street. Set to publish during Black History Month, In the Black will be warmly received by African American business readers and general readers alike.


Author Notes

Gregory S. Bell is the son of Travers Bell, cofounder of Daniels & Bell, Inc., the firm that made history when it became the first black-owned member of the New York Stock Exchange. Upon his father's death in 1988, he became a silent partner in Daniels & Bell, Inc. He also worked on community outreach in Harlem under the Honorable Charles Rangel. Bell has been featured in the Amsterdam News and Securities Pro Newsletter


Reviews 4

Publisher's Weekly Review

Tough, resourceful and determined, the small band of early African-American pioneers venturing into Wall Street's fast-paced, hard-driving financial markets have not often been recognized for their achievements. Bell's history of those men who made a difference corrects that oversight. Bell (whose father, Travers Bell, worked for the New York Stock Exchange's first black-owned firm) brings an insider's view to the realm of investment banking and finance, starting with a brief biography of his family a clan enamored with trading and brokerage, but hampered by the restraints of Jim Crow. With well-researched support and measured prose, Bell chronicles the first black attempts to penetrate the securities industry pre- and post-Civil War. Little-known facts, such as the entry of the first black registered stockbrokers and salesmen on "The Street" in the early 1940s and the importance of black firms like McGhee & Company and Patterson & Company, underline the relentless struggle these men endured. Some of the best segments come in Bell's recounting of their difficulties during the turbulent 1960s and '70s, when slow yet persistent progress was made on several fronts against discriminatory practices on Wall Street, beginning with Merrill Lynch's hiring of three black brokers in 1965. For those seeking a close, informed look at the long, heroic battle by black businessmen and brokers to seize a piece of the action on Wall Street, this book is a source lean, informative and devoid of filler or tirades. (Jan. 25) (c) Copyright PWxyz, LLC. All rights reserved


Choice Review

African Americans have become important stock market participants thanks to the increasing prosperity of the black community during the 20th century. This easily accessible book documents the experiences of African American financiers and minority-owned investment firms from the 1920s to the present. Through press accounts and interviews with company owners, Bell details the circumstances surrounding their beginnings, the sources and types of capitalization, the personal and business backgrounds of the owners, and also their business philosophy. Many companies prospered as specialists in underwriting municipal bonds. Others entered corporate finance or asset management. Unfortunately some companies went out of business due to the volatility of the markets, personnel turnover, or death of an owner. Not all black-owned firms were headquartered on Wall Street. Atlanta, San Francisco, and Cleveland, among others, were home to large companies as well. Bell includes many compelling personal stories; notable among them are those of his father, Travis Bell Jr., of Daniels & Bell; Calvin Grigsby of Grigsby and Branford; Wardell Lazard of W. R. Lazard; and John W. Rogers Jr. of Ariel Capital Management. The only book on this topic, In the Black is recommended for public, academic, lower-division undergraduate, graduate, and professional collections. G. W. Goodale Castleton State College


Booklist Review

This well-written, straightforward history of African Americans on Wall Street is peppered with both familiar and not-so-well-known names such as Joe Searles, the first black New York Stock Exchange member, and Reginald Lewis, the late head of TLC Beatrice International. Decade by decade, Bell (son of financial firm Daniels Bell cofounder Travers Bell) chronicles successes and setbacks in various segments of the industry, from brokerage firms to investment banks. Real-money deals for these firms begin to abound in the 1980s and 1990s, including the financing of Atlanta's Hartsfield Airport and the largest-ever bond offering in 1993 in Los Angeles. On the other hand, most of these firms struggled for survival, handicapped by undercapitalization as well as by more stringent SEC rulings, such as the May 1, 1975, end of fixed commissions. Today, the black American community is represented throughout all financial services (though probably in fewer numbers than originally expected), and Bell's nonglitzy narrative secures their place in Wall Street history. --Barbara Jacobs


Library Journal Review

Wall Street has been responsible for creating an enormous amount of wealth in the United States, but according to Bell, the son of the man who founded the first black-owned member firm of the New York Stock Exchange, not much of that has found its way into the pockets of African Americans. This book, which charts the African American experience on Wall Street, doesn't contain much prior to the 1960s, but the author offers in-depth coverage of the past 40 years, showing how small, black-owned investment houses got started. Many of these small start-ups were undercapitalized, and while they grew during the good times, they frequently failed during the bad. The author suggests that the "old boy" white network was, in part, responsible for keeping blacks out, and there is some truth to that. However, the times have changed, with Wall Street investment banks actively recruiting minorities and black-owned asset management firms thriving. Unfortunately, the book suffers from spotty research and is not well written or edited. Still, this is the only book to offer much-needed research in this area and is appropriate for larger public library nonfiction collections and African American studies. Richard Drezen, Washington Post, New York City Bureau (c) Copyright 2010. Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.


Excerpts

Excerpts

Chapter One In the late 1950s, a black stockbroker joked, "The only Negroes on Wall Street before us were either sweeping it or shining shoes on it." Although the quip was made for laughs, it concealed a somber tone of unfulfilled promise. The joke was based on truth. No African American had ever come close to reaching the status or wealth of even the most average of securities professionals. No African American had been in a position with enough influence to shape and embolden the industry and, consequently, the world. But the joke also belied the truth. In fact the first blacks began to work within the securities industry in the early twentieth century.     It is not surprising that the black stockbroker who told this joke, or the generations of black financiers who came after him, knew little about the first African Americans on Wall Street. In one of the biggest industries in the world, a business synonymous with structures of grandeur and people of prestige, the first African Americans on Wall Street barely registered on the map. Traditionally, this business was a patrician profession that ran along the lines of a good-old-boy network. In this exclusive world, deals were made in backrooms and social clubs, institutions that were closed to all outsiders--nobody was more rejected than minorities. Whereas some whites could disguise their social background and education, most people of color could not easily hide their origins and were immediately branded as second-class. African Americans had been trying to engage in the securities industry since the early nineteenth century. Yet, they met with stiff resistance.     Wall Street had come to symbolize capitalism and big business because many of the leading brokerages and investment banks claimed it as their home. Underlying each day's activities, the shares traded and deals made, was a power structure that was based on relationships. Legacy and heritage were important aspects of the business, providing access and credibility. Nowhere was this embodied more than in the Street's most recognizable name, J. P. Morgan, who was the son of a banker. Because tradition was paramount, African Americans had no way to enter business on the same levels as their white counterparts simply because blacks had no legacy. Their fathers or friends were not working with securities, and their mere appearance caused waves of unease. This is especially unjust because their ancestors literally helped to build Wall Street. Because of the extreme social attitudes that have permeated throughout American history, those builders and their descendents were unable to profit until the twentieth century in the very arena they constructed.     This injustice became more than folktale or legend in June 1991, when construction workers excavating a site in lower Manhattan stumbled on a "Negro Burial Ground" which is believed to hold more than 20,000 African slaves. The discovery was one of mixed emotion. Archeologists and historians alike were delighted to uncover a priceless map of the past; however, it is sad that these slaves were never recognized for the work they did.     It is believed that African slaves were brought to the Dutch colonial city of New Amsterdam (now New York City) in 1625. Like modern times, the area was a center of financial activity due to its access to ports and other waterways. The slaves were brought from Africa to do the physical labor in this prospering city. In addition to building roads and other structures in what is now lower Manhattan, slaves also built the world famous Trinity Church.     In the mid-seventeenth century, New Amsterdam's economy was booming and, fearing an attack from New England, the Dutch decided to build a wall to shield them from any attacks by land. A log wall that was more than 2,000 feet long was built. Despite its enormous stature, the wall proved to be useless when New Amsterdam was invaded by English troops from the sea. As a result of the invasion, leadership changed; the region was now headed by James II, Duke of York, and the town's name changed from New Amsterdam to New York. The large wall was demolished in 1698. However, its memory remains. The area in which it once stood was named Wall Street, soon to become the hub of deals and capitalist activity.     Slaves were treated just the same as other commodities such as lumber and fur and were traded in similar fashion. James II was a major player in British slave trade. Soon, a slave market was established on the East River and Wall Street, and designated as the city's official exchange "... place where Negroes and Indians could be bought, sold, or hired."     As New York City grew into its current role as center of the financial world, African Americans were predictably locked out. Blacks were traded on Wall Street during the 1700s, and the institutionalized attitudes did not change by the nineteenth century. African Americans also lacked the education or experience with money to successfully operate in the then nascent securities industry. Therefore, the first participation with stocks and bonds came, predictably, from the client side.     Black ownership in equities can be traced back to the early 1800s. Records and folktales reveal emerging black professionals trying to master the rules of investing. The New York African Society for Mutual Relief is believed to have owned $500 in bank stock. Around this time, Stephen Smith, a lumber merchant from Pennsylvania, was the largest shareholder in a thrift named Columbia Bank. Stock ownership also thrived in the South. Marie Louise Panis of New Orleans, Louisiana, owned almost $50,000 worth of stock in Citizens Bank of Louisiana. A commission broker from the state of Louisiana, John Clay, also held a few shares in companies. Although the story cannot be verified, it is believed that in the pre-Civil War period, an African American tried to buy a seat on the then young but flourishing New York Stock Exchange (NYSE) only to have his offer rebuffed.     The denials and limitations within the big corporations and institutions, such as the NYSE, because of racism and segregation, led many ambitious but realistic African Americans in the early twentieth century to build thriving businesses within their own communities. This philosophy sparked one of the greatest successes of this period among people of color. Strangely, this explosion of capitalism developed miles away from lower Manhattan in Tulsa, Oklahoma. This site was home of the development that would later be known as the Negro Wall Street . Although the town had nothing to do with New York's Wall Street, the label described the tremendous growth and development of business within the 35-block radius known as the Greenwood District.     Like many regions throughout America in the early 1900s, Tulsa was divided by segregation. While some areas were hindered from substantial economic development by these Jim Crow policies, others were not. Many communities drew from their own talents and resources to create and build thriving businesses within their boundaries and Tulsa led this movement.     Tulsa's saga promotes the best in self-reliance and talent that black Americans have to offer. These were universal and successful themes that would apply later in all businesses, including the securities industry. Ironically, what drew the best out of these individuals was the harsh reality of segregation. Restricted from hair salons, supermarkets, restaurants, and other white-owned business establishments, the black residents of Tulsa built their own. Other black communities spent their dollars at white businesses, despite being viewed as inferior. In contrast, the people of Tulsa realized the power of ownership. Because black shop-owners provided all the needed services to cater to the black community, all monies and investment stayed within the community and it blossomed. In that 35-block span, there were 1,500 black-owned businesses and houses, including 10 millionaires and many families with substantial savings.     Perhaps that progress was too successful for the attitudes of that time, because racism wiped out all of that development and hope on a spring day in 1921. Hearing a rumor that a black man was accused of sexually assaulting a white woman (a charge of which he was cleared nearly 70 years later), a mob descended on the town and set it on fire. Thus the Tulsa Race Riot of 1921 started. Millions of dollars were lost in damages and, more important, hundreds of lives were taken in the melee, bringing a sudden end to the Negro Wall Street. A sterling symbol of black self-reliance and success was destroyed, never to fully recover.     As Tulsa burned, other important black businessmen were founding, growing, and running their businesses in other black communities. Although they might not have known it at the time, these pioneers served two purposes: First, and most obvious, they were filling a need by giving their black communities products and services. Second, their example inspired the generations that followed, encouraged their pioneering spirit, and taught them that seemingly impossible goals were possible.     Arguably, the most influential black entrepreneur of the twentieth century was Arthur Gaston, the Birmingham, Alabama, native who, starting with $500, increased his wealth to between $30 million and $40 million. He founded the Booker T. Washington Insurance Company in 1926 selling policies to black steelworkers. With vision and a legendary work ethic, Gaston used the insurance company as the foundation of an empire that included Citizen Trust Bank, hotels, and radio stations. Other early black business luminaries included Alonzo Herndon, a former slave who founded Atlanta Life Insurance; John Merrick, A. M. Moore, and C. C. Spaulding, cofounders of North Carolina Mutual Life Insurance in 1898; and Madame C. J. Walker, the hair-care products mogul. Even though these people did not work directly with securities, many early African Americans who worked on Wall Street would credit them with helping to develop a capitalist framework in which to think and dream. * * * The end of a revered business community like Tulsa and the lack of other thriving black business districts like it exposed the need to succeed within the existing aggregate power and economic structure. Both the riot's force and integration in the Northern cities underscored the fact that for black Americans to work in a system where whites made the rules and had most of the money, it would be necessary to learn how to work with them. The high-finance industry was one of the biggest targets and, consequently, one of the toughest to penetrate. Educational resources were scarce, and not many African Americans were prepared to work with securities. Nor were brokerage firms willing to give them an opportunity--the same opportunities afforded some whites with a similar lack of preparedness. So rarely was that the case that, in the early years of the century, only one lone black man was on record as working with stocks--W. Fred Thompson. He is believed to be the only African American broker who worked with securities in the early twentieth century. He began his work in 1903. Black Americans needed time to master how to play the games that others created, as well as to find people who were willing to play with them, regardless of color. That would not always be easy. * * * In 1920, the securities industry was about to embark on an unprecedented boom. That period for the industry was unlike any that had come before it. Cutting-edge businesses, such as the automobile and radio industries, helped to provide a deep universal confidence that eventually developed into the Roaring Twenties. A soaring stock market lured everybody, from the elite to their butlers, into investments that seemed as guaranteed as any speculation could be. The financial district maintained an air of invincibility as people jumped into the market without regard to caution or risk. Investors relied on tips and rumors as heavily as if they represented careful analysis and strategy. History would later assign this period a label of recklessness and manipulation, but for the people working in those years, it was pure magic. Significant black participation in the markets began in this euphoric environment when white legends like Joe Kennedy and Bernard Baruch made their fortunes in this market.     The entrance of black speculators, such as H. R. George, the Jones brothers from Chicago, and others, into this boom started a theme that was common among the first few generations of African Americans on Wall Street. With whites in control and racial tensions high, during the first half of the twentieth century minorities did not have the clout or resources to push open any doors. Instead, they could enter only when the gatekeepers gave permission. The reasons were both financial and emotional. During bull markets, more positions were available because brokerages were expanding, hiring, and focusing less on expenditures. In addition, bosses and owners were happier when stocks were rising. It was hard to find a broker who was not beaming with uncontrollable glee after earning huge sums of money. It was when the fortunes turned and people were glum that African Americans would find out how far they had really come on Wall Street. If the old adage that blacks are "the last to be hired, first to be fired" is any indication, such times would bring disproportionate pain.     However, even during the high-flying 1920s, the days of working in white-owned broker/dealer firms were still a few years away. The first African Americans documented as having substantial successes in the business came, as others did, in the Roaring Twenties. The money was enticing and it seemed as if nobody could lose. Everybody from chairmen of corporations to shoeshine boys were whispering tips and rumors, all of which seemed to pan out. Diving into the middle of this action were black speculators who did not have any clients; rather, they engaged in proprietary trading, meaning that they were investing for their own accounts.     Perhaps the most recognized was H. R. George, a Harlem resident who carried himself with a flamboyance and boldness that separated him from most. According to Ebony , there is a legendary description of him driving through the uptown streets in his long, sleek Packard, which at the time was the most popular car. Supposedly the automobile had sleeping accommodations similar to those of a train, as well as an icebox located within arm's distance of the front seat so that he would not be inconvenienced when retrieving a snack. He used this car to travel between the two offices he maintained, uptown in Harlem and on Wall Street. He would often order his two secretaries to ride with him so that he could continue his dictation. He soon acquired the reputation as the richest black in New York.     George earned his fortune, as speculators do, by taking daring positions in investments. They take above-average risk to earn above-average returns, usually in one big coup, unlike brokers who earn their living from the commissions received with each transaction for a client. In the bull market of the 1920s, the business was not nearly as regulated as it is now, which resulted in greater manipulation and, consequently, more money. Many "pumped and dumped" easily manipulated stocks, those with little volume, and were rewarded with extraordinary returns.     It was in this scheming business that H. R. George earned the majority of his money. His attitude fit the times so perfectly that he was given the nickname the Black Wolf of Wall Street since it took the attitude and instincts of an animal to come out on top in this sea of mistrust and two-faced businessmen. At one point, the deals and investments in which George was involved were believed to have been valued in the millions.     Other black speculators were Edward and George Jones from Illinois. The Jones brothers were more famous for their "day job" than their securities positions. They were policy operators who ran "wheel games" in neighborhoods throughout the south side of Chicago. It is rumored that at their peak, the brothers were earning $15,000 a day. A stylish pair, they spent much of that money on luxurious goods and services. However, $1.6 million of it was deposited in commercial real estate that resulted in ownership of a Ben Franklin store. Other investments were securities, a natural move because many have always considered Wall Street to be a sophisticated numbers racket. At the height of their success with this endeavor, they owned more than half a million dollars' worth of equity in companies like General Motors and American Telephone and Telegraph.     Their success, as well as that of the stock market, came crashing down in 1929. In just two days that October, the newly formed Dow Jones Industrial Average fell more than 22 percent. The brokers who jumped off buildings or were sleeping on cots in shelters after losing their homes were the physical reminders of booming bank accounts that had vanished. Within a few devastating days, fortunes that investors had built with sweat over many years were wiped out.     Among those left with only their broken dreams were H. R. George, the Jones brothers, and the few other black speculators of the period. H. R. George was thrown into bankruptcy. The Jones brothers' securities holdings were wiped out as well. Years after that, problems with the IRS and mob-related problems that are inherent in the numbers racket soon forced the pair out of Chicago. Although these speculators were destroyed by the extraordinary circumstances of the Crash, they provided a historical lesson that would be revisited time and again in the decades to come. Despite great success, black financiers could count on the rapid arrival of great obstacles. * * * With all of the chaos of the Crash of 1929 and the subsequent Great Depression, the first stage of black participation on Wall Street ended quietly. This was not unexpected because their names and successes were not familiar to African Americans beyond their neighborhoods. From a historical perspective, in that age with few communicative mediums, these speculators did not inspire others to learn or enter the business. Nor were there opportunities to work for anybody other than themselves. Jobs at white-owned firms were not available to people of color in the early twentieth century. That certainly did not change during the Depression when white fathers could not afford to employ their sons, let alone black people. Wall Street was a battered and bruised place. The same people who had skipped along the sidewalks in euphoria, dressed in top hats and expensive coats a few years earlier, were now slumped over in despair wondering how to survive.     Because opportunities were closed in the major brokerages, a handful of black-owned securities firms opened. The R. T. Bess Company opened in 1923 and continued on into the Depression era. Another firm named the Evanita Holding Company began in 1934 and its president, John J. Gundles, operated it. He raised initial start-up capital of $10,000 by selling its stock at $10 a share. Within a year, 75 investors had signed on, and in return, Evanita issued a 5 percent dividend to all shareholders.     Not all those who expressed interest in the firm were accepted. Many indicating the little experience with securities that most blacks had during those Depression years were rejected. "[Gundles] stated that the Evanita had turned down dozens of prospective investors who were under the impression that they were going to get rich overnight," the Amsterdam News wrote in 1935. "The only persons admitted to membership in the company, he said, are individuals who realize that they are taking chances." A testament to their hard work, the firm survived those terrible times by investing in companies like Pullman Company, Chase National Bank, and National Biscuit Company. However, the firm eventually closed in 1943. Ironically, this was a few years before an unprecedented boom in the securities business. As the United States emerged from World War II triumphant and with renewed spirit, social attitudes in the industry improved and doors opened.     The first African American registered stockbrokers and salesmen entered Wall Street in the late 1940s. (Unlike the days of W. Fred Thompson, all stockbrokers were now forced to register with the National Association of Securities Dealers [NASD], which was formed in 1939, hence the importance of the word registered when sifting through history.) In this pre-Civil Rights movement era, blacks were not hired because of any social motives. Reverend Martin Luther King Jr. and the now famous boycotts and sit-ins had yet to enter the national dialogue; there was no hint that the action reflected a larger effort of inclusion or other diversity initiatives. Rather, hiring this handful of African American securities salesmen was simply a business decision.     The black middle class was growing as educational opportunities increased the number of lawyers, doctors, and other accomplished black professionals. Brokerages sought to attract these investors by hiring people who reflected their background.     Exactly who became the first registered black securities salesman is unclear. Two men, Thorvald McGregor and Lawrence L. Lewis, were each credited as being the first in two different black newspapers in 1949. This confusion is understandable considering that Wall Street was not something most African Americans cared about at that time. It was not as if the entrance of these brokers sent waves throughout the country. However, the local papers, as well as broader-based black publications such as Jet and Ebony , promoted this push within the financial industry.     McGregor's Wall Street career began in the summer of 1949 at the age of 40. Born in the Virgin Islands, he spent his young adulthood in the Marines. After his service tenure, he entered the import-export business until he was hired by the Wall Street firm Mercer Hicks. One of its officials is said to have commented on the hire, "We hired him simply because we feel he knows how to make money," a progressive statement for the time, whether it was true or not.     Unlike his peers, Lawrence Lewis had spent the majority of his working life in the securities industry in a number of positions. In his early twenties, he became a clerk in a San Francisco firm called J. Barth & Company. He advanced to increasingly more responsible positions like assistant and then member of the accounting arm, but he was prevented from achieving his ultimate goal of brokering on the Street. Seeking employment as a stockbroker, he moved to New York City because that is where the financial industry was concentrated at the time, and the opportunities were better. Brokerages were not distributed nationally as they are today; most of them were in New York. After a search of 120 firms, he finally found one--Abraham & Company--that was willing to hire him. Although he was brought in to expand the firm's client base, Lewis also "made it clear that he did not wish to be limited to Negro customers."     Lewis's determination was quite appropriate, as other endeavors would later reveal. Although many approached the black investing market with great optimism, they soon learned that it was tougher to crack than even they had imagined. Perhaps the greatest attempt to attract black investors during this period was a move by the brokerage house F. L. Salomon into Harlem. There had been previous attempts to do securities-related business there, such as the Evanita Holding Company that tried it and failed. Hoping to defy history, F. L. Salomon opened in Harlem in the summer of 1950. (Continues...) Excerpted from IN THE BLACK by Gregory S. Bell. Copyright (c) 2002 by Gregory S. Bell. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

Table of Contents

Introductionp. 1
1 The Beginningp. 15
2 Cold Callingp. 41
3 The Big Timep. 55
4 A Dry Huskp. 87
5 Rising in the Ranksp. 115
6 The Buildingp. 149
7 Money Managersp. 177
8 The Breakthroughp. 195
9 The Turmoilp. 217
10 The New Breedp. 247
Notesp. 279
Indexp. 287

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