Quakers pioneered social enterprise. They were also the first to fail

Social enterprise isn’t nearly as new as everyone thinks it is.

The practice of making money while making a social impact is a business strategy largely thought to have originated on the brink of the 21st century with the rise of cleantech. But the seeds of social enterprise may have actually been sown in fertile Philadelphia soil two and half centuries ago.

This is the story of the rise and fall of an alternative economy that existed in 18th- to 19th-century Philadelphia: how it came to be, why it struggled and the reasons why it eventually fizzled away.

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It’s 1830, and a Philadelphia Quaker named Lydia White has just opened what very well could be the world’s first brick-and-mortar social enterprise on 86 N. 5th St.

White is selling “free produce” — goods produced entirely outside of the slave economy. Born out of 18th century Quaker abolitionism, free produce was a powerful tool in the non-violent abolitionist’s tool belt. It was a tool utilized by White and her fellow Hicksite Quakers — a sect of the religion that strove to align their moral position with their economic activity.

Maintaining that practice in an economy powered by slave labor proved difficult, and by 1846, White’s 5th Street free produce shop closed its doors when her supply chain fell through.

That shop was the “first establishment exclusively of this character,” writes Syracuse University professor Carol Faulkner in The Root of the Evil: Free Produce and Radical Antislavery. But it existed decades after the free produce movement began.

The movement was never solely a Quaker undertaking, writes Faulkner, but it originated with Quakers — and thus, was deeply rooted in religious belief.

“For these people it’s about religion,” said Ellen Ross, a religion professor at Swarthmore College. “All humans are related in a familial way. Everyone is our brother and sister and all creation is made by God.”

The concept of “blood-bought sweets,” that consumers of goods produced by slave labor are just as sinful as the slave owners themselves, Ross said, was the impetus behind the rise of a new alternative economy existing outside the sphere of slavery.

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That concept was held dear by Mount Holly, N.J. Quaker John Woolman.

White may have had the first brick-and-mortar free produce shop, but in the mid-1740s, Woolman was pioneering what would become the free produce movement in his capacity as a retailer.

“This was at a time when the colonial economy was becoming more and more complex as the British empire was becoming more and more intricately involved, moving away from farming systems to transatlantic markets,” said Jon Kershner, a Quaker academic and cofounder of Quaker Studies Group. Kershner is currently writing a book about Woolman.

“Woolman would be retailing in Mount Holly goods that were coming from the West Indies, produced by slaves,” Kershner said. “As he became aware of these connections, he started abstaining from selling those goods. He stopped being involved in that trade up and down the coast.”

At this time, Kershner said, Woolman became aware he had the capacity to become a very successful and prosperous business owner — but it would quickly lead him to compromise his integrity. In some sense, then, Kershner said Woolman is a forefather of present-day concerns about where the products we buy and consume originate.

“He didn’t view anything as morally benign or morally inoculate. Everything was morally charged,” Kershner said. “The actions he did, the places he went, the products he consumed —  all of that had moral import. It was spiritual import.”

So, Woolman resigned to making his own clothes, growing his own food and traveling by foot. By the time he died in 1772, his influence paved the way for a new generation that would soon become a predominant proponent of free produce.

“If Quakers had saints, we’d be burning candles in front of [Woolman],” said Max Carter, the first director of the Friends Center at Guilford College in North Carolina. “You establish a single price system, charge a fair price and don’t haggle. You make a product with integrity and live simply so you pour the money back into the business and into your workers.

Woolman, Carter said, truly adopted the “harmonization of practice and principle” — or, practice what you preach. With the 19th century on the horizon, the concept was adopted by a whole sect of Quakers. They were a group Faulkner called the “moral vanguard of the antislavery movement,” and they would soon become pioneers of social enterprise.

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Fast forward to the late 1820s. Free produce is on the rise and popping up in Quaker strongholds across America and Europe.

In 1827, Philadelphia Hicksite Quaker James Mott, husband of famed social reformer Lucretia Mott, helps found the Free Produce Society of Pennsylvania, a group mostly dedicated to disseminating information on the free produce movement. More active was their sister society, the Female Association for Promoting the Manufacture and Use of Free Cotton.

In 1829, Faulkner writes, the members of that un-acronym-able society reported their contractors had spun 2,515 pounds of cotton. Compared to the approximately 78 million pounds of cotton produced across the country in the year 1800 alone, it was a drop in the bucket.

They were attempting to create an alternative economy, Faulkner write. And that it isn’t easy.

“It was tough,” Carter said. “Many Quakers went bankrupt doing that.”

In 1838, Faulkner writes, the Nixons, a Quaker couple in Randolph County, N.C. recruited by the newly formed American Free Produce Association (an alliance formed by several free produce associations) “had difficulty convincing farmers of the duty and economy of free cotton.” They were subsequently forced to price their cotton above market value to earn a living. There was no market for free produce cotton in what would soon become Confederate North Carolina.

Across the pond in England, Quaker abolitionist Joseph Sturge was exclusively importing free produce cotton. Carter said the process was not only difficult but extremely expensive, and Sturge “eventually went bankrupt because of that.”

The stakes were higher for Quakers. Failing in business is a 'matter of church discipline.'

In Cincinatti, Quaker abolitionist and businessman Levi Coffin, known for his heavy involvement in the Underground Railroad, was not only selling free produce goods, but storing stock from associations across the country in a warehouse he bought in 1847. Ten years later, Coffin was forced to close the warehouse down. Carter said Coffin, a national figure at the time, wrote an autobiography to get out of debt.

The stakes were higher for Quakers. Kershner said for Quakers, failing in business is a “matter of church discipline.”

“They were very leery of loans and of going into debt,” he said. “When people would have businesses, if they failed at those businesses especially because of debt reasons, in an extreme example, they would probably leave the Quakers. It was kind of a shame thing. There would be discipline for that.”

Quaker businesses were traditionally well-capitalized, Kershner said. They grew slowly because they weren’t looking for “quick infusions of cash” like the venture capital activity we see today. Everything was paid for, and revenue went directly back into the business. And considering everything had moral import, failure would have represented a compromise of faith.

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By 1840, Faulkner writes, even national abolitionist figure William Lloyd Garrison “had grown weary of [the movement’s] rigors.”

Even though many American free produce enterprises failed, the movement as a whole persisted with what it had until slavery was abolished nationwide post-Civil War.

In 1847, the American Free Produce Society dissolved. Each local branch, which served as a support network for local enterprises, fell apart one by one. Philadelphia’s was the last bastion for supporters of the movement, closing up shop in 1856. The society, founded by a ragtag band of Philadelphia Quakers, was both the first and last of its kind.

It may not mirror today’s social enterprise, but it was certainly a predecessor of the modern-day social impact space. But we cannot call it a rebirth — not quite.

Today’s social enterprises are not looking to create a new, alternative economy growing outside of the existing economy, but compete within it.

Today’s social entrepreneurs are much more concerned about measuring their social impact than free produce merchants of the 1800s might have been.

And many in the social impact space are not looking to grow slowly, but land those “quick infusions” of capital to scale faster and subsequently — they hope — achieve higher and better returns, both social and financial.

But free produce was socially conscious business, and that counts for something — especially when we think about social impact as a new, cutting-edge space.