Breaking Wall Street's Color Barrier: Echoes
Feb. 12, 1970, was a historic day on Wall Street. For the first time in the 178-year history of the New York Stock Exchange, a black man joined the trading community on the exchange floor.
Joseph L. Searles III, the Newburger, Loeb & Co. partner who achieved this milestone, took a meandering route to the Street. He had been a professional football player for the New York Giants and later made a name for himself in politics as an aide to New York City Mayor John Lindsay. But Searles's experience in finance was extremely limited.
The New York Times article announcing his proposed membership on Jan. 31, 1970, read, "The poised and assured Mr. Searles said that he had never owned any stocks or bonds and that his modest stake in the Newburger, Loeb partnership represented his first investment."
Although Searles was the first black trader on the exchange's floor, he was technically not its first black member. That distinction goes to Clarence B. Jones -- counsel and speechwriter to Martin Luther King Jr. -- who became an allied member of the exchange in 1967 when he was named a partner at Carter, Berlind & Weill Inc. As an allied member, Jones had voting stock in a member firm, but he didn't have floor access.
Searles was building on Jones's momentum, which was propelled by the 1964 enactment of Title VII of the Civil Rights Act prohibiting employment discrimination on the basis of sex, race, color, religion or national origin. Viewed through most of its history as a private club for white males, the stock exchange had a culture that was in a transition mode of sorts, after having admitted its first female member, Muriel Siebert, less than three years before he joined the trading community.
Contemporary accounts indicate that Searles's interest in the financial markets may have been more about breaking through the color barrier on Wall Street than about a professional ambition to enter the world of finance.
"It's a personal challenge to me as a black man to become part of the economic mainstream of this country," he told the New York Times. "I don't believe I'll become a token black. I think there will be more black members at the exchange. Hopefully, my presence will increase the credibility of the financial community, as far as blacks are concerned."
Searles gave up his seat in November 1970, less than a year after he started. According to a New York Times article in March 1971, his speedy exit was prompted not by social concerns but by the poor economic conditions of the time. "The big dividing line, he came to feel, was not skin color, but money," the article said.
After leaving the exchange, Searles went on to work at Manufacturers Hanover Trust Co. and later pursued community-business initiatives in Harlem, New York.
But Searles's time at the exchange had a lasting effect. During the next few years, there was a steady increase in black Americans in financial services, including the entrance of the first two black-owned member firms on the exchange in 1971: Daniels & Bell Inc. and First Harlem Securities.
According to Gregory S. Bell, the author of "In the Black: A History of African Americans on Wall Street" (and the son of Daniels & Bell founder Travers Bell), all of the early black-owned financial firms were small, with no more than 20 employees and a few hundred thousand dollars in capital. "If stripped of social significance," Bell wrote, "the Street's first NYSE black firms barely registered on the map."
The presence of these firms, however, signaled a turning point, as financial services became a viable employment option for black men and women.
The Bureau of Labor Statistics reports that in 2010, about 9.8 percent of those employed in business and financial operations and 11.6 percent of all financial analysts were black. (The report indicates that blacks make up 10.8 percent of the entire U.S. workforce.)
Yet black involvement in the financial industry hasn't yet translated to representation in senior positions at financial firms, where there remains a disparity: Blacks make up just 2.8 percent of senior-level management positions in financial services.
"The lack of diversity in the securities industry is particularly acute," said Securities and Exchange Commissioner Luis A. Aguilar in an April 2011 speech. "Clearly, the industry must do substantially better."
(Kristin Aguilera is the deputy director of the Museum of American Finance and the editor of Financial History magazine. The opinions expressed are her own.)
To read more from Echoes, Bloomberg View's economic history blog, click here.
To contact the writer of this blog post: Kristin Aguilera at firstname.lastname@example.org.
To contact the editor responsible for this blog post: Timothy Lavin at email@example.com.