Business: THE BIRTH PANGS OF BLACK CAPITALISM

FOR all the divisions that rend the U.S., there is at least one point of agreement between blacks and whites, Democrats and Republicans, young and old. It is that Negroes are not really part of the mainstream of American enterprise, and that they should be brought into it through the classic means: ownership of business. Richard Nixon has called for a mixture of Government loans, tax incentives, private business aid and Negro self-help to create "black capitalism." Hubert Humphrey, urging all of that but with greater emphasis on Government aid, has stumped for "black entrepreneurship." He declares that the Negro has a basic right to be an employer as well as an employee.

Businessmen, bankers and bureaucrats of both races are allied in a major drive to help more Negroes achieve that status. They are working to equip aspiring Negro entrepreneurs with capital, business training and markets. Behind all such efforts lies the conviction that Negroes should have "a piece of the action" in U.S. business, and that broad-based ownership of business by blacks is essential to help defuse racial enmity. If the Negro is to escape from poverty and discrimination, more and more businessmen are recognizing, the U.S. must develop a Negro managerial class to lead, hire and inspire.

Barriers to Bigness. Doing that will not be easy. Beyond doubt, black capitalism today is meager. Though Negroes constitute 12% of the U.S. population, they own scarcely 1% of the country's 5,000,000 private business firms. One out of every 40 white Americans is a proprietor, but only one Negro in 1,000 is.

Almost all black businesses are mom-and-pop operations, catering to a ghetto clientele and providing a slim income for their owners and a few jobs for others. Some surveys show that a quarter of Negro firms are barbershops or beauty salons. Negroes also run mortuaries, restaurants, bars, small grocery stores and cleaning establishments. But they own few manufacturing or distribution firms. Only six of the 28,000 U.S. auto dealerships are Negro-owned; until recently, there was only one. Even the biggest Negro enterprises, such as life insurance companies and banks, are relatively small. The nation's largest Negro-owned concern, North Carolina Mutual Life Insurance Co., has assets of $94 million, compared with $25 billion for front-running Prudential.

Such disparity rises partly out of the obstacles that confront Negroes everywhere: inferior education, lack of capital, the despair of ghetto life, the fear of failure. Negroes lack a heritage of business experience. Successful blacks have gone into law, medicine, religion. Without much exposure to business, a young Negro is often inadequately trained in the fundamentals that whites take for granted, including bookkeeping. When he ventures into enterprise, he runs into a financial community that often rejects him for reasons that strike him as strange: a shortage of collateral, a dim credit history, a lack of precise records.