The week of June 2 to 6, 1997, was designated National Small Business Week. One newspaper article noted that 96 percent of all U.S. businesses are classified as small businesses and that the message is clear: small business is a big deal. Jonathan J. Bean can well attest to that. In Beyond the Broker State: Federal Policies Toward Small Business, 1936-1961, he describes the development of the federal governments policies toward small businesses from the Great Depression through the Eisenhower era. Bean discusses the political process that led to two significant lawsthe Robinson-Patman Act and the Miller-Tydings Actand finally to the Small Business Administration.
According to Bean, the rise of the federal governments concern with small businesses has several roots. A very loosely connected root can be traced back to Jeffersonian Agrarianism. Another root comes from the concern with the growth of big business and the development of the antitrust laws in the late nineteenth century. A third root is found in the egalitarian ethic that is part of the American tradition and found expression in the permanent federal income-tax law passed in 1913. These ideological roots combined with the crisis of the 1930s and political entrepreneurship to give rise to federal intervention on behalf of small businesses. One of the leading advocates of federal intervention for small business was Representative Wright Patman (D.-Tex.), and the various sources can be seen in Patmans statement that The wide distribution of economic power among many independent proprietors is the foundation of the Nations economy. Both Franklin and Jefferson feared that industrialization would lead to a labor proletariat without property and without hope (p. 5). In the view of Patman and others, a strong and thriving small-business sector provided protection against a concentration of power.
The initial response in the mid-1930s was enactment of the Robinson-Patman Act and the Miller-Tydings Act. When the former was passed in 1936 its sponsors declared it to be the Magna Carta of small businesses. In fact, it was framed with small, independent retail businesses, not small manufacturing in mind. Both acts grew out of the anti-chain-store movement of the 1920s and 1930s and were aimed at preserving small, independent retail businesses against the rise of retail chain stores. Initially there was a call to amend the antitrust laws to allow manufacturers to fix minimum retail prices and reduce or eliminate the chain stores advantages. By the early 1930s states were beginning to impose taxes on chain stores. Though chain-store critics had called the situation a crisis for years, it took the real crisis of the Great Depression to get national anti-chain-store legislation. The Robinson-Patman Act of 1936 required manufacturers to justify discounts to chain stores in an attempt to limit or eliminate such discounts. The 1937 Miller-Tydings, or Fair Trade, Act allowed manufacturers to specify the minimum retail price of a product in order to protect small retailers from the price competition of the chain store (p. 42).
The framework Bean adopts to explain this and subsequent small business legislation is crisis, ideology, and political entrepreneurship. As mentioned already, many Americans had an ideological predisposition toward small business, considering it the backbone of democracy. In times of real crises political changes at the federal level could be initiated. The Great Depression, World War II, and the Korean War constituted such crisis periods when action on a small-business agenda could be pushed forward. The third element of this triad was political or ideological entrepreneurship.
Other theories have been proposed to explain the growth of government in the twentieth-century United States. The Progressive explanation argues that politicians expanded government to provide for the disenfranchised population. As Bean notes, however, the Progressive interpretation failed to explain why corporate executives had so much influence on the formulation and administration o