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Continued from page 29 – The Economics of Marcus Garvey
would provide them with adequate income. Between
1918 and the early 1920s, Garvey efforts established a
number of UNIA businesses.
Garvey aspired to develop an international shipping line
that would carry passengers and freight between
America, Africa and the West Indies. By drawing on the
speculative get-rich-quick mentality of African
Americans, he was able to persuade investors to purchase
stock in a new shipping corporation. Consequently, the
Black Star Line (BSL) steamship corporation was
incorporated in 1919. The project was capitalized
exclusively by African Americans. Individual purchases
were limited to 200 shares priced at five dollars each. In
the company's first year, capital stock investments
reached approximately $750,000 ($7.825 million in 2002
dollars).
The African American ownership gave Garvey's
supporters a sense of pride and hope for prosperous
returns. Eventually, the BSL purchased three ships.
Unfortunately, the company was unable to negotiate a
fair market price for the ships as dealers took advantage,
charging inflated prices for severely depreciated capital.
These overpriced purchases depleted BSL's funds and
contributed to their eventual bankruptcy. By 1922, the
ships were lost and the corporation collapsed. The BSL
had lost more than $600,000, and accounts payable
exceeded $200,000. There were never any dividends
paid, and the value of BSL's investment assets had
depreciated completely. Nevertheless, the BSL was the
first large-scale business venture financed and managed
by African Americans. It still remains one of the largest
African American owned companies in U.S. history. It
should be emphasized that the underpinnings for the
BSL's financial losses reflected market troubles plaguing
the entire industry. The shipping industry was in a
recession magnified by the excess capacity of transport
ships after World War I. Many shipping firms were
unable to recover their variable costs, and consequently,
shut down business operations.
To accomplish the goal of enhancing entrepreneurship, in
1919 the UNIA established the Negroes Factories
Corporation (NFC) incorporated in Delaware as 200,000
shares were offered at $5 per share (Lewis, 1992). Its
objective was to promote African American
entrepreneurship in large industrial centers by providing
investment capital and technical expertise. The
corporation assisted in the development of grocery stores,
restaurants, a steam laundry, a millinery store, a tailor, a
dressmaking shop, and a publishing business. Garvey
encouraged and established through the NFC a factory
that mass produced the first African American dolls. In
Garvey's plan, each individual business would be
cooperatively owned by UNIA members, and eventually
linked into a worldwide system of economic cooperation
that simulated a socialistic planned economy (Lewis
1992). This trading community would be sufficiently
large so that the economies of scale generated would
enable it to thrive even in the face of hostility from the
rest of the world. Garvey summed up this idea: "Negro
producers, Negro distributors, Negro consumers! The
world of Negroes can be self contained. We desire
earnestly to deal with the rest of the world, but if the rest
of the world desire not, we seek not" (Martin, 1976).
Although these business investments were, for the most
part, not successful, they became a solid economic
foundation for future African American business
ventures.
Economic self-reliance was foremost on Garvey's list
because he foresaw a depression which he thought would
severely harm African Americans (Lewis and Bryan,
1991). Consequently, Garvey's attempts to establish
economic self-reliance went beyond cooperate business
enterprises. The UNIA also acted as a community service
agency by paying death and other minor benefits to
members. Local divisions were required to maintain a
charitable fund for the purpose of assisting distressed
members or needy individuals of the race. A fund for
"loans of honor" to active members, and an employment
bureau to aid members seeking employment, also
established (Martin, 1976).
Garvey on Capitalism
Garvey's thoughts on economic development led him to
consider his views of capitalism and communism. He
considered capitalism to be necessary in the process of
human advancement but expressed difficulty with the
results of its unrestrained uses. He remarked, "It seems
strange and a paradox, but the only convenient friend the
Negro worker or laborer has in America at the present
time, is the white capitalist. The capitalist being selfish is
seeking only the largest profit out of labor--is willing and
glad to use Negro labor wherever possible on a scale
`reasonably' below the standard white union wage"
(Jacques-Garvey, 1969). It was Garvey's belief that white
capitalists tolerated African American workers only
because they were willing to accept a lower standard of
wage than unionized white workers. If, however, African
American workers organized and unionized demanding
comparable wages as the white union men, the preference
of employment would go to the white worker.
Garvey aimed to reform the social democratic nature
rather than attempting to eradicate the capitalist system.
Continued on page 31
-30- Traditional African Clinic August 2012