Although there were successful African-American innkeepers, landholders, and tradesmen in America from the seventeenth century onwards, the African-American entrepreneurial spirit began to blossom in earnest in the period from the 1790s to the years before the Civil War. During this era, African-Americans started businesses in many fields, but focused strongly on enterprises related to crafts production and personal services. In part, this was because as an enslaved people they had most access to those trades that profited the slaveowner. (Skilled slaves—blacksmiths, dressmakers, and the like—were often “leased” by their owners for additional income.) These fields also required less in the way of startup capital.
Then as now, African-Americans often found it difficult to secure credit for new businesses. Additionally, access to business and clerical trades were stymied by systemic and institutionalized prohibitions to formal education.
By the late 1850s and early 1860s, it is estimated, there were at least 21 African-American business owners worth more than $100,000—quite a substantial figure for the period. The wealthiest was probably Stephen Smith, a former slave who built a lumber and coal operation, founded a bank, and invested in stocks and real estate. In 1865, his wealth was listed at an impressive half-million dollars. Financial records for the period are not as complete as one would wish, but it seems fair to assume that there must have been a large base of business people operating at a smaller level during the same period.
In Chicago in the years following the turn of the century, a profusion of African-Americans launched successful businesses that specifically targeted African-American consumers. One was the “Perfect Eat” Shop, run by one Ernest Morris. The restaurant was located on 47th Street (now King Drive), a buzzing center of African-American business and cultural activity.
Where It All Happened
Oh, 47th Street was where it all happened. 47th Street, you'd stand on the corner of 47th Street and South Park and … if you stayed there long enough almost anybody you knew in Chicago would come past there sometime during the day. It was the hub. It was the center of our community. And almost—we had a department store; we had entertainment up and down the street; we had places to eat, nice restaurants; we had places to—there was just lots and lots of things going on on 47th Street.
—Historian Timuel Black on one of the most vibrant sections of Chicago's South Side, quoted on the Palm Tavern website (http://palmtavern.bizland.com/palmtavern/id16.html)
In California, a wave of African-American entrepreneurial achievement accompanied the Gold Rush of 1849 and continued for three decades or so thereafter. During this period, when demand for economic output severely outstripped supply, African-Americans successfully targeted white customers and thrived in a number of areas. After about 1880, however, as the white majority settled in, and the demand for goods and services came to match supply, African-American business owners found their opportunities severely limited. White business operators orchestrated a campaign to limit opportunities available to African-American entrepreneurs, and white consumers fell into line.
A pattern of both formal and informal denial of access to the most lucrative markets was firmly in place by the turn of century—and it persisted for the next sixty years. In the Golden State, as elsewhere in the country, African-American business owners opted to target consumers in their own communities. In Los Angeles, Dr. J. A. Summerville opened a hotel for African-Americans and named it after himself.