Jesse Binga was born at Detroit in 1865, one of ten children. His father was a barber, but his mother, Adelphia Powers Binga, was a serial entrepreneur, and became her son’s inspiration throughout his life. As a housing developer, she built “Binga row” houses in the city’s slums. She also operated a food shipment business – the first Great Lakes-caught whitefish ever tasted south of the Mason-Dixon line were transported there by the Bingas.
With ten children in the home, the family was never wealthy. Jesse Binga dropped out of high school and apprenticed to his father as a barber and also worked briefly for a Detroit attorney before setting out to seek his fortune. He worked off and on in barbershops throughout the Midwest, then headed to California, where he found employment as a Pullman porter. In 1893, Binga came to Chicago to attend the World’s Fair that took place that year, arriving with no more than $10 to his name. Remaining in the city after the Fair, Binga spent a few years working at odd jobs before starting a real estate business on south State St., near 33rd street in about 1896.
With his mother’s experience in real estate as an inspiration, Binga threw himself into the business, saying:
Well, I'm going to give it a fair test, and if integrity counts for anything, I'll win. I felt that only prejudice could beat me and I determined that if it did beat me I would go to South America and start life in one of those republics where a man's color is not his crime.Jesse Binga’s audacious success and rapid climb into the highest echelons of Chicago society meant that he never saw the Andes mountains.
(Pictured: Jesse Binga)
At the turn of the century, only around 20,000 African-Americans called Chicago home, less than 2% of the city’s population. Most of these were concentrated in the so-called “Black Belt” district, which stretched a few blocks on either side of State street south from 22nd street down to 35th street. Chicago was not unusual in its racial homogeneity at the time; most African-Americans in the U.S. lived in southern states, several of which in fact had majority or near-majority black populations. Starting in the 1880s, and especially in the first decades of the 20th century, Jim Crow segregation in much of the South, plus racial persecution by the Ku Klux Klan and other white groups and poor agricultural employment opportunities sent millions of southern Blacks into northern cities, including Chicago. The widespread circulation of the Chicago Defender, the city’s chief African-American newspaper, made Chicago a particular magnet for those seeking jobs and inexpensive housing.
It was these new migrants who made up the core of Jesse Binga’s clientele. When he opened his real estate business in 1896, he paid $10 per month in office rent and bought a battered old desk for $1.50. He ordered 1,000 cards from a printer, but finding himself unable to pay the bill, convinced the printer to let him have 25 proofs as “samples,” which he used until he was able to pay in full. His first profitable project was renting an apartment in the same building where he had his office, then fixing it up and subletting it at a premium.
As black migrants flooded into Chicago, the borders of the Black Belt expanded into historically-white neighborhoods. White residents in these districts were eager to leave as blacks moved in, and Jesse Binga was the city’s major broker between white sellers and black buyers. Binga would buy or rent property from departing white residents, then fix up or subdivide these buildings into smaller apartments demanded by poor southern blacks arriving in the city. In this way, he was able to demand upwards of 50% premia over the purchase price of many properties. Binga placed the advertisement below in the Tribune in 1905:
By the middle of the 1900s decade, Binga was the city’s top black real estate broker, a position he continued to hold for the next twenty years. Explaining his rapid success to a reporter in later years, he emphasized his expertise in construction, and underestimation of his intelligence by business partners, as the twin bases for his success in real estate:
I could do the repair work myself. I could do everything from digging a posthole to topping a chimney. I knew. Many a night I've worked all night on boilers and plumbing, and wiping joints, and mending stairs, and hanging paper. I knew materials and I knew when work was right…Due to discrimination, as well as other factors, many blacks in Chicago faced difficulties in gaining access to adequate credit to finance houses and other large purchases. As with real estate, Jesse Binga realized he could turn racism into profit. Opening his own bank, he would serve customers other banks would not – and this lack of competition meant big revenues. When the white-owned McCarthy Bank at 35th and State failed in 1907, Binga purchased the building and chartered his Binga Bank, a private credit institution.
My greatest asset in business -- I won't say that it was altogether my integrity. It was partly the disposition of the average white man to underestimate my knowledge of real estate values. They wouldn't believe that a colored man could take almost any old building and whip it into shape.
The bank was an immediate success, and such was Binga’s growing stature in the community that he decided to dabble in politics, running for County Commissioner in 1910. That run failed, and Binga largely turned away from politics for the rest of his life, finding business a much more profitable pursuit. Later, he would explain his disdain for political life: "the double crossing, the knife in the back one day and the handshake the next -- I never took to that. I vote but I don't know today what ward I live in."
(Pictured: political advertisement which appeared in the Chicago Defender in 1910)
In 1911, the Defender, referring to Binga as “Our Only Banker,” sang his encomium:
He was the pioneer in securing good houses and flats for the race and the beginning of his remarkable business along that line has been one of the main factors in the wonderful growth of the citizens of color in Chicago.The next year, Binga married into the city’s wealthiest and most prominent African-American family, the Johnsons. His bride, Eudora Johnson, was a daughter of famed gambling king John “Mushmouth” Johnson, owner of the massive Emporium Saloon on "Satan’s Mile" (S. State St.) and the upscale Frontenac Club on W. 22nd (some sources claim Eudora was a sister, not a daughter of Mushmouth; as I’ve noted before, the relationships between various Johnson family members were complicated). Supposedly, Eudora inherited over $200,000 from her father, which added to the Binga Bank’s capitalization, making it not only the biggest bank in the Black Belt, but a serious competitor for the business of white depositors as well.
Some have even suggested that Binga married Eudora Johnson exclusively for her money (she was apparently not exactly the picture of pulchritude); more than likely, though, such rumors originated out of jealousy from rival businessmen and renters who resented their landlord. In any case, the Binga-Johnson wedding was the city’s most lavish that year, and, befitting Binga’s growing national stature, even Booker T. Washington sent a letter of congratulations to the newlyweds.
During the next fifteen years, Chicago’s black population, which had already been growing by leaps and bounds, quadrupled in size. Jesse Binga was one of the chief beneficiaries; both his real estate and banking businesses prospered tremendously. Between 1921 and 1924 alone, the bank’s deposits grew from $300,000 to over $1,100,000, and then to nearly $1,500,000 by 1929, a period when real estate values were stagnant and bank failures were not uncommon (through suspensions and closures, the number of banks in Illinois fell from 1,969 in 1920 to 1,806 in 1929).
Binga was Chicago’s leading black citizen, and among its leading citizens of any color. During this period, he opened a “business school” of sorts, the Associated Business Club, wherein black entrepreneurs heard lectures from the city’s top business owners, black and white. He also purchased the home pictured above, at 5922 South Parkway Blvd., in 1917, for the sum of $30,000 (the equivalent of around $500,000 today). The home, located in what was a strictly white neighborhood, overlooks Washington Park, a beautiful and grand park covering more than 70 city blocks.
Jesse Binga’s prominence as a black Chicagoan of means, his activities in “block-busting” – drawing black residents into previously white neighborhoods, and his own purchase of a large home in a white district, made him a target for animosity among whites. Starting during the Chicago Race Riots of 1919, his home on South Park Blvd. was bombed seven times over the next two years. His businesses also suffered repeated bombings. Each time dynamite exploded on his front porch, there would be offers to buy his home, but Binga refused, rebuilt, and remained on South Park Blvd. He placed a private security officer on 24-hour guard for months at a time, and even publicly offered a $1,000 reward for the conviction of the bombers, but none were ever caught. He told the Defender (partially in response to criticism from blacks that he had moved out of the Black Belt),
I am an American citizen, a Christian and a property owner. No man can make of me a traitor or a coward. No power on earth can change my faith in God. I will defend my home and personal liberty to the extent of my life….I have just as much right to enjoy my home at Washington Park as any one else to go there and play tennis or baseball or enjoy other advantages of the district. It is a personal privilege. I went there to live because I liked the house and I had a chance to buy it....I do not want to get away from anybody, but absolutely refuse to live in a neighborhood inhabited by the lower class of white trash.Despite his dislike of politics, Binga consistently went on the record in favor of greater state regulation of private, unincorporated banks like his own. At first blush, it may seem unusual for a businessman to favor greater regulation of his own industry, since the costs of complying with regulations can be high. However, regulatory costs are largely fixed costs – that is, independent of the size of the business – which means only the largest and best-capitalized firms will be able to remain in business. In banking, for instance, most regulations require higher levels of capitalization and more layers of accounting. By 1920, the chief threat to the Binga Bank’s profitability wasn’t greater regulation; it was competing black bankers. State regulation was a way to cripple the competition, and in that year, Binga, along with other major Chicago bankers, succeeded in eliminating private banks. After 1920, all banks had to have state or federal charters, and no less than $100,000 in capital. The Binga Bank – renamed Binga State Bank – was the only Black Belt bank able to meet such requirements.
Binga also associated his bank with the Chicago Clearing House, an association of local banks that could – but were not obligated to – supply cash on demand to a member bank if that bank suffered a run on its deposits. In those days before federal deposit insurance (FDIC), although banks were generally more conservative as investors, they were at greater risk of devastating bank runs (see the more extensive discussion of banking before FDIC in this post), so Clearing House membership added a degree of assurance to depositors. And because a potential run could become quite expensive, only the city’s top banks were allowed to become Clearing House members.
In 1926, Binga purchased property at the center of the Black Belt, on the northwest corner of 35th and State, on which he built a new $120,000 structure to house the Binga State Bank. It was the most expensive single building in the district. Constructed of marble and bronze, the exterior reflected a rich Ionic architecture, and the interior featured walnut paneling and a massive steel vault. 50 bank employees, all African Americans, were skimmed from the top of the community’s talent pool, and featured college degrees from the University of Chicago, the University of Michigan, and Oberlin College, among other institutions. Behind a massive glass and marble desk overlooking them all was Jesse Binga, the high-school drop-out and former barber and Pullman porter.
(Pictured: The Binga State Bank building at 35th and State streets)
In 1927, Binga purchased more property at 35th and State, and built an even grander structure, the Binga Arcade, a $500,000 5-story modern office building, which would house all of the Binga empire, as well as offices for other black-owned businesses. There was no building anything like it south of Van Buren St. in the Loop.
During this period, income among African Americans in Chicago was growing substantially, and Jesse Binga was a leading symbol of the community’s hopes. His success made him a celebrity. He wrote weekly columns on business and real estate for the Defender, and published a book entitled “Certain Saying of Jesse Binga,” which included such pearls of wisdom as
Nothing is so easy or so wasteful as the work of hating -- except hating work.In 1929, at the height of his success, 64-year old Jesse Binga began soliciting funds for a second bank, this one with a federal, instead of a state, charter. It was to be his crowning achievement, his lasting legacy to Chicago before retirement. Binga purchased property on South Parkway Blvd., near 46th Pl., for the new bank building, and sold shares in the business to investors. He had little trouble finding eager subscribers to the new bank. What could go wrong, after all? There was no better bet in Chicago than Jesse Binga.
You can be a menial or a man of business. But to get out of the menial place requires the thrift that produces property. And property enlarges life. Work, then, not for gain alone but for the enlarged life that honest gains create.
Life is pretty much what you make it -- and making it big means using every day of it.
Unfortunately, no one, least of all Binga himself, foresaw the end of the prosperity of the 1920s. In late October, 1929, the great stock market crash eliminated millions of dollars of industrial value. At around the same time, Congress passed the Smoot-Hawley tariff act, which limited imports and exports, destroying well-established businesses and isolating the U.S. from the world economy. Failing businesses had difficulty servicing their loans, and so undercapitalized banks began to fail throughout the country. At the same time, many depositors, fearing the insolvency of banks and needing additional cash to cover income lost in the broadening downturn, removed money from banks. Banks were caught in a vice.
In 1928, 18 Illinois banks had their operations suspended by the state; 1929 saw that number rise to 30, but these were not especially high numbers relative to the previous years of the 1920s. The middle of 1930, however, saw Chicago’s banking industry begin to crater, and the Binga State Bank was the “canary in the coal mine.” By July, the bank was facing serious shortages of capital and had suspended lending. Binga lent much of his own personal fortune in an attempt to keep the bank afloat, but to no avail. On July 31, 1930, Illinois bank auditors closed the Binga State Bank, alleging insolvency and accounting improprieties. As the shock of the event rippled through the city, thousands of worried depositors congregated at 35th and State, and two policemen had to maintain 24-hour watch to protect the building. A pall hung over the crowd, many of whose members had entrusted their life’s savings in the bank. Worse still was the crushed pride of seeing the African-American community’s leading citizen forced out of his commanding business position.
(Pictured: depositors milling around outside Binga State Bank on July 31, 1930)
Behind the scenes, auditors were also preparing a criminal case against Jesse Binga. In their audit of Binga State Bank, the funds that had been subscribed for the new national bank, announced in 1929, were found missing. Authorities gave the bank’s board of directors a few days to raise $400,000 needed to make the bank solvent, and the directors were amenable to the request – but only if the tarnished president, Jesse Binga, stepped down. Binga refused to do so, clinging to the bank he had built up from a single $10 bill, the bank he had poured his entire life savings into in an attempt to forestall its failure.
Next, the Chicago Clearing House, of which Binga State Bank was a member, met to decide whether to supply it with sufficient funds to re-open. Likely other banks in the association were suffering under similar distress, and so the Clearing House members were not keen on taking the risk to prop up Binga State Bank, especially if the rumors of embezzlement by Binga were true. Perhaps, too, racism played a role. Later, one member would describe a conclave of Clearing House members in which the meeting chairman said that Binga State Bank was “a little n----- bank that does not mean anything.” It was the first closure of a Clearing House member bank in twenty years.
In any case, by October, 1930, Binga State Bank had failed, and thousands of depositors’ savings were completely gone. December saw Binga forced into personal bankruptcy and hounded by creditors. Even his wife, Eudora, turned against him, filing suit in court, charging him with incompetency in managing the family’s financial affairs and asking that the court appoint a conservator to handle what little money was left.
The failure of the Binga Bank kicked off a massive string of bank failures in Chicago. From 30 Illinois bank suspensions in 1929, 1930 saw an uptick to 125. Another 238 banks suspended operations in 1931, then 209 more in 1932 and an additional 245 in 1933. The number of banks in the state fell by more than half in four years. If the state regulations of 1920 that shut down the private banking business were intended to protect depositors, they failed miserably. If Chicago Clearing House members thought allowing Binga State Bank to fail would not lead to further runs on banks in the city, they were completely wrong.
In April, 1931, a court handed down an indictment against Jesse Binga for embezzling $39,000 in pledges for the proposed national bank on South Park and 46th, which had never opened. Over 80 witnesses testified at trial against Binga, but Binga’s attorneys argued that a state law precluded capital funds for a national bank from being held in a state bank – thus explaining why Binga had held these funds in his own personal account, but not explaining where the funds had gone. The jury was hung, and the judge decreed a mistrial.
The state’s attorney immediately began preparing a second trial, which, after a long series of continuances, began in May, 1933. Two months before, in March, Eudora Binga died, likely from stress due to the stress of financial dissolution and personal antagonism with her husband.
At the second trial, the state added to its list of witness the #2 officer at the Binga State Bank, Mrs. Inez Cantey. When asked about the events precipitating the closure of the bank and the misappropriation of funds, she repeatedly admitted wrongdoing – “with the permission of Mr. Binga”.
With his chief lieutenant turned against him, Jesse Binga likely knew he was headed for a conviction. He took the stand in his defense, breaking down in tears as he exclaimed,
They're persecuting me. They have killed my wife and now they're trying to kill me. I've lost all I owned; now they're persecuting me. Stop this thing or I'll go mad!"A few days later, the jury returned a verdict of guilty on all counts. In November, 1933, Binga was sentenced to serve 1 – 10 years in state prison. He managed to remain free while awaiting an appeal to the Illinois Supreme Court, but when that court denied the appeal, a 70-year old Jesse Binga entered Joliet prison in April, 1935. He was immediately transferred to the hospital ward for treatment of a heart condition, and most observers fully expected him to die in prison.
11 months later, at his first parole hearing, Chicago’s – and the nation’s – most famous attorney, Clarence Darrow, appeared on behalf of Jesse Binga. "I have known Binga for thirty years and he is a man of fine character. He lost a fortune trying to keep his bank open."
The appeal was denied, but his next parole hearing in February, 1938 was a success. At that hearing, prison officers were presented with a list of 10,000 signatures from Chicago residents, requesting the release of Binga. Many of the signatories were among those who lost money in the failed Binga State Bank.
After being released from prison, Binga moved back into his home on South Parkway Blvd. Completely broke and in poor health, he nevertheless managed to keep creditors from taking his home by working as a janitor at his church, St. Anselm’s on S. Michigan Ave., near 60th St.
In April, 1941, Jesse Binga received some belated relief in the form of a pardon from Illinois Governor Dwight Green. But it was too little to salvage much of his tarnished reputation. Soon after, Binga finally sold his home and moved in with a nephew, Albert Roberts (the Bingas had no children). Jesse Binga died in 1950.
The Binga State Bank, formerly the emerald of the Black Belt, remained closed until 1943, when it was reopened as the Phoenix National Bank under new ownership. Together with the Binga Arcade, the bank building was demolished in the 1970s, replaced by an Illinois Institute of Technology building.
Binga’s home on South Parkway Blvd., however, still stands (though apparently renovated extensively), though the street was renamed Martin Luther King Dr. in the late 1960s. In fact, it is even for sale. The formerly all-white neighborhood where Jesse Binga courageously stood against dynamite attacks in 1919-1921 is now almost entirely populated by black residents.
[Update: See the interesting additional information below in the comments from a Binga nephew]