Black Capitalism: 1971-TODAY-TOMORROW

Black Capitalism

1971-TODAY-TOMORROW

Gregory A Schnitzler

Copyright © 2024 Gregory A Schnitzler

All rights reserved

First Edition

PAGE PUBLISHING

Conneaut Lake, PA

First originally published by Page Publishing 2024

ISBN 979-8-89157-285-0 (pbk)

ISBN 979-8-89157-304-8 (digital)

Printed in the United States of America

Table of Contents

To my loved ones who are no longer with me, starting with my wife, Annie; my parents, Bettina and Hans; and my maternal grandmother, Henny. With love, Greg.

Introduction

Chapter 1

A Look Back: The World of Black Capitalism in 1971

Chapter 2

Black-Owned Businesses: Then and Now

Chapter 3

The Problem of Minority Unemployment and Poverty 1971

Chapter 4

Investment Banking and Black Capitalism

Chapter 5

The State of Black Capitalism in 2021: A Report Card

Chapter 6

Education, Education, Education

Chapter 7

The Black Professional in 2021–2022

Chapter 8

McDonald's, a World Leader in Food Service

Chapter 9

The 1619 Project: A Discussion and Review

Chapter 10

Reparations, or an Expenditure In Lieu Thereof

Chapter 11

Final Thoughts

Acknowledgments

About the Author

Endnotes

To my loved ones who are no longer with me, starting with my wife, Annie; my parents, Bettina and Hans; and my maternal grandmother, Henny. With love, Greg.

Introduction

It has been more than half a century since I submitted my thesis Black Capitalism: A Study of Business and Employment Opportunities for Minorities in partial fulfillment of the requirements for the degree of master of business administration to the faculty of the Department of Finance at St. John's University in Jamaica, New York.

The primary purpose of my thesis was to highlight the serious issues our country was facing in 1971 regarding its relationship with its Black American citizens.

It is generally agreed that the problems which this nation faces in dealing with its black people and with other minority interests must be solved now before radical militant groups multiply in numbers and make peaceful coexistence between all people next to impossible in this country.

The words that follow are written by a White man who while gainfully employed on Wall Street in 1971 was also completing his advanced degree in business administration on a part-time basis, after having earned his undergraduate degree in finance from Pace University in New York on a part-time basis. The thoughts and ideas expressed on these pages are simply the result of my observations and research of the world then and now. Throughout these pages, the word Negroes may be used when referring to Black or Afro-Americans. This was, in 1971, acceptable and is in no way meant to imply any derogatory implications.

The time has come for a look back to determine what, if any, progress we can point to in this most critical area and to discuss why progress may appear to be substantial to some, quite limited to others, or even declining, depending on today's reality and the viewpoints of different observers. And finally, we shall venture a look into the future to predict what the coming fifty years may hold and what it may take to accelerate the rate toward total equality.

Let me begin with my four years (1963–1967) in the Commercial Paper Department and subsequently as the assistant money cashier, responsible for the company's daily cash flow of over $100 million, at Goldman Sachs & Co., which was then located at 20 Broad Street in New York City. No people of color were seen within the company and, in all fairness, no people of color were seen anywhere within several blocks of the Wall Street community. White males, in many cases Ivy League educated, made up the partnerships and senior management positions. Dress codes were strictly adhered to with suits, white or blue shirts, and ties mandatory. Women may have held supervisory positions managing smaller departments. Their dress code was very simple. Skirts below the knees, no high heels, no pants, and no smoking where clients might be present.

Today, as we approach the second quarter of the twenty-first century, times indeed have changed. Goldman Sachs, arguably one of the great financial institutions in the world, now employs a workforce of over 43,000 of which, according to the latest available statistics, 649 were Black men and 776 were Black women. In 2020, there were 1,548 senior-level positions situated in the US, of which 24 were Black men and 25 were Black women. Among the 3,411 midlevel managers and first-level officials, 57 were Black men and 48 were Black women.¹

Reviewing these numbers, David Solomon, Goldman's CEO, is quoted as saying, There is still a long road ahead, but I will continue to make this effort a personal priority.

Since the Black population, according to the 2020 US Census, accounts for 13.4% of the total population in the US, we will have to agree with Mr. Solomon that there is indeed still a long road ahead. These same census results indicate that Asian Americans and Hispanic Americans account for 7.2% and 18.7% of the total US population, respectively.

In chapter 5, I will discuss some of the steps Goldman Sachs is taking today that may help to bring the Black finance professional on a more equal footing with his or her White, Asian American, and Hispanic American counterparts.

Another major powerhouse in today's investment banking world is Morgan Stanley. Today, this strong competitor of Goldman Sachs employs seventy-five thousand people, of which forty-eight thousand are situated in the Americas. For calendar year 2020, 6% of the employees in the Americas were Black while Black senior officers accounted for just 3% of all senior personnel. This compares with Morgan Stanley's Asian employees, who accounted for 14% of the total US payroll and 15% of the bank's senior officers.²

Whether one looks at these numbers as successes or failures depends on the viewpoint of each individual. Certainly, they are an improvement when compared to the 1971 numbers, which showed zeros across the board.

UBS Group AG's Wealth Management Unit apparently does not think enough has been achieved. On April 7, 2022, the unit reported that it had launched a group for investment strategies related to diversity and inclusion with its goal to generate both social benefits and returns. The team will offer investments that focus on promoting equality, expanding opportunities and improving outcomes for underrepresented or marginalized groups, the Zurich-based bank's Wealth Management Unit said.

While not entirely focused on Blacks, the group will also offer ways for clients to steer their money toward asset-management firms that may be at least partly owned by minorities and products led by portfolio managers who self-identify as such, including women, racial or ethnic minorities, veterans, people with disabilities and LGBTQ individuals.

In the company's 2021 Diversity, Equity, and Inclusion report for its American region,³ Tom Naratil, president of UBS Americas, stated, We're being more deliberate than ever to ensure racial and gender equity are woven into everything we do from our growth priorities and our strategies around talent, to the partnerships we make with other organizations and the capabilities we deliver to our clients.

UBS employed 20,624 people in the US as of December 31, 2021. Of those, 2,598 (or 13.6%) were Asian American, 1,708 (or 8.3%) were Hispanic American, and 869 (or 4.2%) were Black. Maura Gallagher-Vaughn, executive director and head of diversity and inclusion at UBS, informed me that the company is actively trying to recruit prospective Black candidates at both junior and senior levels.

Other banks, both large and small ones, have also carved out groups within their wealth-management divisions that invest with diversity and inclusion in mind.

The question then arises whether these are baby steps and the progress achieved to date is all that can be hoped for or if more must, can, and should be done. And what, if anything, is blocking accelerated progress in the next fifty years?

Erika Whyte, recently appointed vice president and director of diversity at Janney Montgomery Scott, a medium-size investment management company that employs about 2,400 people, told me she thought the industry was moving at a snail's pace in its quest for diversity. In her new capacity, she will be searching for talent that may have transferable skills, wherever she can find it.

Throughout this discussion, my main focus will be to analyze the proportionality of Black Americans in their continuous quest for equality within the American capitalist system. The only time in America's history when Blacks were almost proportionally represented in American business was during World War II. In A. J. Baime's brilliant biography of President Truman, The Accidental President, he writes that the war had forced integration as nothing ever had. However, half of the employers in the United States still refused to hire Black workers, and Blacks were forbidden from serving alongside white soldiers in the military. But Black leaders would see progress made on the labor front; the war economy had put more African Americans to work than ever before. As one female Black American famously said: ‘Hitler was the one who got us out of the white folks' kitchen.' As of 1944, 7.5% of war production jobs were held by Afro-Americans, while their overall percentage of the national population at the time was 9.8%.

As we shall see, these positive proportionality statistics have been duplicated only within the lower-level positions in the seventy-eight years since World War II came to an end. Is the jargon last in, first out, still practiced in the employment of Black Americans in 2022? Or is there a valid alternative reason for this serious lack of progress?

Chapter 1

A Look Back

A Look Back: The World of Black Capitalism in 1971

By 1971, remedial steps had been taken to bring increased opportunities to those to whom society had been especially negligent. The Voting Rights Act of 1965⁴ was, of course, one such step. Unfortunately, America had passed an earlier Civil Rights Act in 1875⁵ which had guaranteed African Americans equal treatment in public transportation and public accommodations and service on juries. The Act, which was introduced by President Grant, also made it a crime if anyone facilitated the denial of such accommodations or services on the basis of color, race, or previous condition of servitude. But in 1883 the US Supreme Court voted 8–1 to overturn the act, stating that neither the Thirteenth Amendment, which banned slavery, nor the Fourteenth Amendment, which guaranteed equal protection of the laws to African Americans, had been infringed by the existence of uncodified racial discrimination, which, hence, could not be constitutionally prohibited. Thus, the 1965 Act was passed ten years short of one century since the initial 1875 Act.

Five years had elapsed since the newly passed act had become law, and unrest and disappointment were still the major themes of most Black Americans.

However, by many standards at the time, the 1965 Act had to be considered a huge success. Discrimination was now finally recognized as unlawful. This had opened public places such as restaurants and hotels to those to whom such doors had been previously closed. The fight against discrimination in education appeared to be progressing satisfactorily. But the same slogans that Black people shouted ten years earlier were still shouted in 1971. Why? Quite simple. Black people felt they were ready for a piece of the action, and they were not going to stop shouting until they got it.

At the time, the government could probably not have been expected to do much more than it had already done. Aside from seeing to it that its laws were enforced and providing employment to minority groups on federal, state, and local levels, the government would have been skating on thin ice if it had attempted to carry the ball much further. It had been suggested that no federal contracts be awarded to those firms that did not employ a specific number of Black people. But it was thought that such action would divide the country more than it would unite it, for it may have constituted what has then, and is today, called discrimination in reverse, where if two people are equally qualified for a position, the Black candidate would get it because he or she was Black. In that way, the company could have shown that it did, in fact, employ the right number of Blacks.

The objective of my 1971 MBA thesis was to attempt to point to other measures that could bring the Black people of our country into the mainstream of American life. The answer, to me, was that it was the private sector that had to continue what our government had begun. I focused especially on the investment community with which I was somewhat familiar and which was then, as it is today, the pulse of American business. It was and is on Wall Street where many companies are transformed from smaller and medium-size enterprises into publicly owned corporate powerhouses. It was