Tuesday, May 26, 2015

Anthony B. Bradley ― The Power of Market-Driven Diversity

The Supreme Life Building is a historic insurance building located in ChicagoIllinois. Built in 1921, the building served as the headquarters of the Supreme Life Insurance Company, which was founded two years earlier. The company, originally known as the Liberty Life Insurance Company, was the first African-American owned insurance company in the northern United States.

(via the Acton Institute Blog):

The story of Chicago-based Supreme Life Insurance Company of America, one of the most venerable black-owned businesses in American history, challenges the prevailing fiction that minority customers need the government to guarantee services for them and is a dynamic reminder of the power of markets as a basis for economic freedom.

Supreme was originally incorporated as the Liberty Life Insurance Company in 1919. An amazing 1969 study of this company by Dr. Robert C. Puth in Harvard’s Business History Review inadvertently dispels all sorts of myths about black businesses and black life during the era of legalized racial discrimination. The article, “Supreme Life: The History of a Negro Life Insurance Company, 1919-1962” details, for example, the existence of thriving black-owned businesses during that era, a fact of which many are unaware. By 1960 the forty-six firms of the National Insurance Association—a coalition of all black owned, managed, and operated firms—had $1.7 billion of insurance in force and held $300 million in assets. In today’s terms, that is approximately $17 billion and $2.3 billion, respectively. In 1965, Supreme Life had assets over $33,000,000 ($251 million inflation adjusted for 2012). Even though black incomes were very low and blacks worked mostly in unskilled labor, black-owned businesses prospered.

These black-owned firms were successful for several reasons. First, legal segregation created a concentrated market free from competition. As such, there was a surge in the 1920s in black entrepreneurship. Second, especially in the North, blacks gained access to manufacturing jobs through the cessation of immigration during World War I. Third, black families epitomized a culture of saving, even more so than white families, making them desired customers. Lastly, it was normal for leaders at Supreme Life and other black firms to maintain relationships with and gain experience working with white business, civic, and religious leaders.

Read more: http://www.acton.org/pub/commentary/2012/05/30/power-market-driven-diversity

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