The rise and fall of Samuel Rutherford's National Benefit Life Insurance Company

“The National Benefit Life Insurance Co., of Washington, D.C., is not only the largest of Negro insurance companies but the greatest Negro business enterprise of any kind in the United States, if not the world,” declared the Baltimore Afro-American in June 1927. The company’s success in the early decades of the 20th century was a proud beacon of black achievement, proof that black enterprises could prosper despite Jim Crow constraints. Perhaps it seemed that the company had such a golden touch that any investment it made was sure to be a good one. However well intentioned, the company made several bad real estate investments, and after the Great Depression hit, it went into receivership when its capital reserve was depleted. Partially implicated in the financial collapse, founder Samuel Rutherford left a mixed legacy. Nevertheless, his achievements outweighed his failings.



Samuel Wilson Rutherford was born on a farm outside of Jonesboro, Georgia, in 1866. His grandparents had purchased their freedom before the Civil War and owned the farm on which he grew up. He attended Sunday School, learning what he could from a catechism and Webster’s Spelling Book. As a young man, one of his first jobs was as a salesman for the Singer Sewing Machine Company. He also opened a grocery store in Rome, Georgia, and later served as a regional sales agent for Singer in Lynchburg, Virginia.

Samuel W. Rutherford (Source: The Baltimore Afro-American, Dec. 20, 1913).
After his first wife died in 1897, Rutherford moved to Washington. Despite a lack of formal business training, he founded the National Benefit Association, a fraternal aid association offering life insurance based on member contributions, in 1898. For six dollars a month, the fledgling association rented a small room at the back of the black-owned Capitol Savings Bank at 609 F Street NW. Staff consisted of Rutherford and one assistant.

Circa 1909 postcard from the National Benefit Association (author's collection).

Another postcard view of the offices (author's collection).

Through conservative investments and convincing salesmanship, Rutherford’s company gradually grew and prospered. It benefited from the fact that African Americans had trouble getting insurance from white-owned companies, which balked at the high mortality rates among African Americans. Helping to fill the gap, the National Benefit Association accumulated over 116,000 dollars in assets by 1909. It jumped at the chance to buy the building it occupied at 609 F Street when the Capitol Savings Bank failed, owning it free and clear within three years. By 1913, the successful company employed 750 workers. In December of that year, a conference was held at the prestigious Metropolitan A.M.E. Church on M Street that celebrated the company's achievements, which had “immeasurably aid[ed] in the emancipation of the Negro from business bondage and plac[ed] him upon the business map of the country,” according to the Baltimore Afro-American.

NBL's headquarters is the tall building in this view of the 600 block of F Street from the 1920s (Source: Joseph E. Bishop photograph collection, Historical Society of Washington, D.C.).
The enthusiasm for the company’s success was in sharp contrast to the overall state of African American affairs. The harsh repression of the Jim Crow era had shut blacks out of white society’s privileges and prosperity, and in 1913 conditions were only getting worse. Woodrow Wilson had been inaugurated earlier that year, the first southerner since Andrew Johnson to lead the country, and soon the government began systematically dismissing blacks from federal jobs, a trend that had a devastating impact on many Washingtonians. Booker T. Washington wrote, “I have never seen the colored people so discouraged and bitter as they are at the present time.”

Against that tide, blacks like Rutherford worked hard to build an independent and self-sufficient community separate from white Washington. In 1917, his firm was officially converted to an “old line” insurance company, which meant that it had accumulated a sufficient reserve of capital assets, conservatively invested in bonds and blue-chip stocks, to support a for-profit status and reliably pay out benefits. Changing its name to the National Benefit Life Insurance Company, it was the first such company operated by African Americans.

In that era, whites and blacks alike often assumed that black-owned businesses were not as well run as white-owned businesses. Banks and other financial institutions run by blacks were particularly suspect. Everyone knew what had happened with the Freedmen’s Savings Bank, an institution founded in 1865 to encourage former slaves to save for the future. The bank had millions of dollars in deposits by 1873, when it became clear that white bank officials had misused deposits for their own enrichment and to help their friends. The bank failed during the financial panic of 1873, robbing many African Americans of their hard-earned savings and resulting in widespread cynicism about financial institutions within the black community. NBL’s success was thus all the more remarkable.

Beneficiaries of NBL's success included several hundred young African American women who were hired as clerks and bookkeepers—jobs they could never get from white-owned companies. One of these young women was a certain Beatrice G., who apparently hailed from the small Eastern Shore town of Whaleysville, Maryland. Beatrice took a trip around 1920 to Chester, Pennsylvania and sent the postcard shown at the top of this article to her friend Francis Jones in Whaleysville. Beatrice teases Francis, stating “I met some one up here that knows you but will not tell you who it is until I hear from you.” She also points out that she is one of the diligent workers depicted on the front of the card.

Back of the postcard shown at the top of this article, showing the message from Beatrice G. (Author's collection).
The bookkeepers on the postcard all appear to be hard at work, and this is consistent with the serious tone Rutherford set for his employees. He was known to have little patience for those who were careless or slacked off. Anyone whose books could not be exactly reconciled at the end of the month was required to make up the difference from their personal funds or be fired.

“You must have faith in your fellow man to succeed,” Rutherford told his employees at a company meeting in 1923. That faith must have been sorely tested the following year when Rutherford was shot in the mouth by a disgruntled employee. Arthur Joadson, a 38-year-old bookkeeper, had been terminated when shortfalls were found in his accounts. After arguing with Rutherford about his dismissal, he suddenly pulled out a gun and fired twice. One bullet went wild, slicing through a woman’s hat hanging on a rack; the other struck Rutherford in the mouth, shattering two teeth. Joadson fled, but a nearby policeman had heard the shots and chased Joadson down F Street, apprehending him. Rutherford was initially treated at Emergency Hospital but subsequently transferred, at his son’s insistence, to Freedmen’s Hospital, where doctors removed the remaining bullet fragments. In time, the 60-year-old company manager fully regained his health.

Throughout the 1920s, NBL continued to expand its business to new states and to build its portfolio of investments. When NBL opened an office in Chicago in 1929, black business officials there begged Rutherford to move the headquarters of his famous company to the Windy City. Rutherford said that he was flattered by the request, but he declined. NBL was on top of the world, it seemed.

The Balfour Apartments (photo by the author).
In fact, the company was on very shaky ground, and the Depression was just around the corner. With operations in 28 states, NBL had expanded far too quickly, imperiling its limited resources. It had unwisely absorbed a failing Georgia insurance company, further eroding its own strength. NBL had also drawn on its limited capital reserves to invest in three risky local real estate ventures, against the advice of the company’s auditor. The acquisitions included paying top dollar for the Balfour Apartments at 16th and U Streets NW in early 1929, just before the stock market crash. NBL also purchased the famous Whitelaw Hotel at 13th and T Streets NW, the first high-class hotel ever built exclusively for African Americans. Completed in 1919, the combined hotel and apartment house was saddled with debt ten years later, when NBL bailed it out at auction. Around the same time, NBL also purchased the unfinished Prince Hall Masonic Temple at 10th and U Streets NW. This ambitious project had been floundering for lack of funds for several years, and NBL financed it by trading to the builder the company’s own headquarters building on F Street as well as two other small commercial buildings. Rutherford, who had a long association with the Masons, envisioned proudly moving NBL into the impressive new Masonic Hall on U Street when it was finally completed.

The Prince Hall Masonic Temple (photo by the author).
It was not to be. The company had been living on borrowed time, draining its capital reserve to almost nothing, and company insiders knew that trouble was brewing. A management shakeup occurred in early 1931; Rutherford retired from day-to-day management of the company, and his son Robert, who was president, was also sidelined, while new officers joined the board of directors. Regulators sensed something was wrong and immediately began examining the company books. By July, their findings were made public. NBL had far less reserve than legally required and was immediately put into receivership. The company’s questionable real estate holdings were soon sold at a loss, employees were let go, and policyholders were left unable to claim benefits.

NBL’s chief actuary, Alfred B. Dawson, had tried to warn its directors that they were headed for disaster. In February 1931, just before the executive shakeup, Dawson wrote a lengthy letter to the Rutherfords and treasurer Mortimer Smith laying out all of his concerns. It was to no avail. After the company collapsed in early July, Dawson was so devastated that he took his own life in his New York apartment.

Dawson’s confidential letter emerged two years later as part of public court filings. In his extensive comments, Dawson repeatedly made clear that he understood that the motive of NBL’s executives for making ill-advised investments was not personal greed at all; it was to do everything humanly possible to support the African American community in Washington. Rutherford, however, had been distracted, according to Dawson. He “has himself loaded to the gills with a lot of office detail that can well be performed by others...and being such a bear for daily labor he will not and does not take the time to examine into most important company transactions where the very life of the National Benefit is at stake....”

Dawson nevertheless admired Rutherford: “I have always found that when he was fully informed on a matter his advice and counsel were most beneficial” he observed, noting that in dealing with whites, Rutherford was “the one outstanding National Benefit gladhand artist—a most important asset to any company.” He even went on to say: “I do not believe the National Benefit Life Insurance Co., would be confronted with the mighty serious situation it has ahead of it today, if S.W. Rutherford had given the necessary personal time to important company problems, instead of merely stepping into the picture occasionally...”

The African American press was soon filled with stories about all the civil lawsuits that were filed. Criminal charges were also soon filed against Rutherford, his son, and other officers, including some of the officers that had been appointed when the two Rutherfords were sidelined in early 1931. They were accused of an assortment of illegal actions, including lying to regulators about the status of the company.

Excerpt of the front page of The Chicago Defender, April 29, 1933.
In 1932, nearly a year after the NBL officers had been indicted, Nannie Helen Burroughs, the influential civil rights activist and educator, came to Samuel Rutherford’s defense. In an article for the Baltimore Afro-American about Rutherford and the recently-deceased John Whitelaw Lewis, she wrote “These two divinely endowed men gave the little business which the colored people of Washington have today a foundation on which to stand, a faith with which to work, and a place of respect from which to look.” Of Rutherford specifically, she noted that “He built the National Benefit Life Insurance Company from a fifty-cent chair to a six-million dollar insurance company. This marvelous achievement made it possible for his company to give employment to an army of young men and women…. He put millions of dollars into the hands of employees with which they bought homes and made their families happy.” Burroughs, a staunch advocate for women’s rights, further pointed out that “But for the presence of the National Benefit, thousands of girls who desired business careers would have been forced into domestic service. Do not forget that.”

In 1934, the charges against Rutherford, his son, and the other company officers were dropped for lack of evidence. While extensive company assets were gone for good, it was difficult to pin the blame on any specific individuals. By the 1940s, litigants were more concerned about how to divide up what remained of the company’s assets. Over 4 million dollars’ worth had vanished by that time.

With his reputation diminished by the financial scandal, Rutherford lived the rest of his life away from the public spotlight, passing away in 1952 at age 87. His last days were spent at the Stoddard Baptist Home near Howard University, and his funeral was held at the venerable 19th Street Baptist Church. Despite his former prominence, the Washington newspapers took little notice of his death.

Buildings in the 600 block of F Street NW in May 1968. The former NBL building is the tall one near the intersection, occupied in 1968 by the Quaker City Linoleum Company. All these buildings were razed in the early 1980s. The Capital One Arena now occupies the entire block. (Source: Emil A. Press slide collection, Historical Society of Washington, D.C.).
Samuel Rutherford certainly seems to bear some responsibility for the downfall of the National Benefit Life Insurance Company, although it may have been more from neglect than active malfeasance. The company (albeit, to its own detriment) managed to preserve the Whitelaw Hotel as a going concern and to fund the completion of the Prince Hall Masonic Temple, two emblems of African American achievement. More importantly, Nannie Helen Burroughs’ defense of Rutherford also still rings true. He gave young bookkeepers like Beatrice G., opportunities they otherwise could not have imagined. What became of Beatrice and the other employees of NBL after the company folded, we do not know.

* * * * *

Special thanks to Jessica Smith of the D.C. History Center, for her assistance with photos of 609 F Street. Other sources for this article included Chris Myers Asch and George Derek Musgrove, Chocolate City: A History of Race and Democracy in the Nation’s Capital (2017); Constance Green, The Secret City: A History of Race Relations in the Nation’s Capital (1967); James B. Mitchell, The Collapse of the National Benefit Life Insurance Company: A Study in High Finance Among Negroes (1939); Carter G. Woodson, “The Insurance Business Among Negroes,” (1929); “Samuel Wilson Rutherford,” The Journal of Negro History 37, no. 2 (April 1952); and numerous newspaper articles.

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