A Disappointing Start

The catchy and promising phrase "black capitalism" became part of the language when Richard Nixon promised during his election campaign that his Administration would step up loans and other aid for Negroes to start their own businesses. As Nixon put it, the Government should act decisively to help Negroes gain their fair "piece of the action." The rather general idea that Negroes should lift themselves up through business ownership, as many other ethnic groups had done in the U.S., inspired hope and some votes among people of all races. "To the extent that programs of 'black capitalism' are successful," said Nixon, "ghettos will gradually disappear." Today, to many aspiring entrepreneurs in the ghettos, black capitalism sounds like just more smooth honky talk. From all sides, the Administration is under increasing criticism for failing to live up to campaign promises and provide forceful leadership.

There are still few capitalists among the U.S.'s 22 million blacks. They own only 3% of the nation's businesses -- and that 3% accounts for less than 1% of U.S. business receipts. In greater Harlem, which has a population of half a million, there are fewer than 25 black-owned businesses that have more than 25 employees. Few of the important stores on 125th Street, the major artery of Harlem, are black-owned. True, more and more Negro entrepreneurs are rising, but too few have received any real help from the Nixon Administration, whose programs for black capitalism are mired in confusion, contradiction and delay. The Government has 117 programs for aid to "minority" businesses, but no central clearinghouse to bring together those programs and the people seeking them. "The Government has to lead the private sector," says Adolph Holmes, the National Urban League's economic planner. "One concludes from what is not being done that there is no real commitment in this effort other than verbal."

Budget Cut. At the center of the controversy is the embattled Small Business Administration, which was supposed to have been the primary financier, cheerleader and quarterback of black capitalism. The Government's general budget hold-down has forced the SBA to cut its loans. Funds for the SBA's four main loan programs were reduced from $554 million last year to $253 million in the current fiscal year.

The Senate Select Committee on Small Business recently postponed scheduled hearings on the SBA, concluding that the agency has so many problems that a "60-day reprieve" would be necessary for it to "gather itself together." The House Small Business Committee went ahead with its own hearings and heard blacks and whites criticize inaction, lack of imagination and the kind of slipshod procedures that resulted in the use of funds to guarantee a $135,000 bank loan to Lou Brock, the St. Louis Cardinals star whose salary is $85,000. "Black capitalism has not failed, because it was never given a chance," said former CORE director Floyd McKissick.

No Respect. The Ripon Society, a group of Republican liberals, blames the Administration's "floundering" largely on SBA Administrator Hilary J. Sandoval Jr., an El Paso businessman appointed by Nixon to replace Democrat Howard Samuels, a far more aggressive leader. The society called for Sandoval's dismissal because "he no longer commands the respect of the black and white communities with whom he has to deal." SBA officials around the nation complain that they get no guidance from Washington. Walt McMurtry, executive director of Detroit's Inner-City Black Industrial Forum, voices a common complaint: "Sandoval just does not have a program. He does not know what he wants to do."

Other observers are more sympathetic to Sandoval, believing that his efforts are withering in the absence of any forceful leadership from the White House.

Commerce Secretary Maurice Stens insists that Nixon is "totally committed" to the concept of black capitalism. In the absence of concrete results, though, such rhetoric is not enough to regenerate the enthusiasm that the idea created during the campaign.

What is needed, say critics, is personal leadership by the President to straighten out the SBA, coordinate the tangle of Government programs and enroll the assistance of bankers and other private businessmen. The businessmen seem eager, if only given direction from Washington, to provide markets and managerial help. Indeed, so successful is the National Alliance of Businessmen, which was founded during the Johnson Administration to find jobs for the hard-core unemployed, that Nixon might consider starting a National Alliance of Enterprise through which experienced businessmen could coordinate public and private efforts to get black capitalism going.

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