Abstract: Southern Business and Public Accommodations: An Economic-Historical Paradox
In retrospect, desegregation of public accommodations was extremely favorable for business in the U.S. South. Evidence for this proposition is detailed in the paper. Yet, with few exceptions, regional businesses and business people supported segregation and resisted local and national efforts at integration. A situation in which profit-seeking businesses have to be compelled to adopt policies in their own economic interest is paradoxical for business and economic history. Segregation of racially sensitive services (such as lunch counters, restaurants, movie theaters, and hotels) was believed to be a profit-maximizing choice by downtown business communities in the South. Both as individual firms and as a collectivity, they feared that an influx of African Americans would drive away more affluent white customers. Only when sit-ins and boycotts inflicted heavy financial damage for extended periods did national chains come to favor locally negotiated desegregation agreements as a lesser evil. They learned in most cases that adverse white reaction was not nearly as bad as they had feared. As local settlements spread, many previously resistant chains relaxed their opposition to comprehensive federal legislation on public accommodations. The case provides a remarkable example of collective co-evolutionary learning toward a better economic outcome.