Friday, March 13, 2009

The Market Resists Discrimination: Streetcar Story

From the "discrimination" entry in "The Concise Encyclopedia of Economics"

The resistance of southern streetcar companies to ordinances requiring them to segregate black passengers vividly illustrates how the market motivates businesses to avoid unfair discrimination. Before the segregation laws were enacted, most streetcar companies voluntarily segregated tobacco users, not black people. Nonsmokers of either race were free to ride where they wished, but smokers were relegated to the rear of the car or to the outside platform. The revenue gains from pleased nonsmokers apparently outweighed any losses from disgruntled smokers.

Streetcar companies refused, however, to discriminate against black people because separate cars would have reduced their profits. They resisted even after the passage of turn-of-the-century laws requiring the segregation of black people. One railroad manager complained that racial discrimination increased costs because it required the company to “haul around a good deal of empty space that is assigned to the colored people and not available to both races.” Racial discrimination also upset some paying customers. Black customers boycotted the streetcar lines and formed competing hack (horsedrawn carriage) companies, and many white customers refused to move to the white section.

In Augusta, Savannah, Atlanta, Mobile, and Jacksonville, streetcar companies responded by refusing to enforce segregation laws for as long as fifteen years after their passage. The Memphis Street Railway “contested bitterly,” and the Houston Electric Railway petitioned the Houston City Council for repeal. A black attorney leading a court battle against the laws provided an ironic measure of the strength of the streetcar companies’ resistance by publicly denying that his group “was in cahoots with the railroad lines in Jacksonville.” As pressure from the government grew, however, the cost of defiance began to outweigh the market penalty on profits. One by one, the streetcar companies succumbed, and the United States stumbled further into the infamous morass of racial segregation.

From Jennifer Roback, “The Political Economy of Segregation: The Case of Segregated Streetcars.” Journal of Economic History 56, no. 4 (December 1986): 893–917.

HT: Rvturnage


At 3/13/2009 1:30 PM, Blogger PeterK said...

here is a link to where one can purchase the article

At 3/13/2009 2:38 PM, Blogger ExtremeHobo said...

Here in Richmond we have the first bank that was opened by either a woman or a black person in 1903 (long before the civil rights act or affirmative action told them they needed the government to help them).

Maggie Lena Walker

According to Chairman and Chief Executive Officer of Consolidated Bank and Trust, Vernard W. Henley, "I think what she (Maggie Walker) had in mind was that African Americans ought to help themselves, and they ought to provide the opportunities for employment and development."

She believed that people could turn "nickels into dollars" by pooling their money and lending it out.

Its amazing what a little profit incentive can do!

At 3/13/2009 4:38 PM, Blogger QT said...

Thanks for an interesting slice of history.

History is far richer and more interesting than we are taught in school (ie. what are the 5 causes of WWII as though Hitler would have asked for 5 reasons to invade Poland!). Ironically, often the people are far more intelligent and sensible than we give them credit or they do things that defy our preconceived a woman founding a whisky distiller in the 19th century.

At 3/13/2009 9:54 PM, Blogger Paul Hue said...

Radical leftists, and most blacks, today believe the following myths:

1. Slavery and Jim Crow were financially advantageous, rather than economically ruinous, for non-black society.

2. Today's widespread black poverty provides a net economic advantage for the rest of society, who benefits from prison profits and low wage workers.

At 3/13/2009 10:27 PM, Blogger Paul Hue said...

Another popular myth with radical leftist and blacks (the two populations are not quite the same): We have Big Gov to thank for ending slavery. In reality, it took Big Gov to give us slavery in the first place, and to prop it up for as long as it lasted.

At 3/14/2009 9:13 AM, Blogger OBloodyHell said...

This isn't at all news if you know the history of Mutual Aid Societies....

Until overwhelmed by the government-created catastrophe of the Great Depression, these organizations did the job done nowadays, and far more effectively, that "Welfare" and "Unemployment" and so on do today.

They helped those down on their luck, helped people find jobs, and helped people finance ideas and businesses.


Post a Comment

<< Home