Beyond the Broker State: Federal Policies Toward Small Business, 1936-1961.

• Author: Smiley, Gene

By Jonathan J. Bean Chapel Hill: University of North Carolina Press, 1996. Pp. xiv, 281. $45.00 cloth, $16.95 paper.

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 government's policies toward small businesses from the Great Depression through the Eisenhower era. Bean discusses the political process that led to two significant laws--the Robinson-Patman Act and the Miller-Tydings Act--and finally to the Small Business Administration.

According to Bean, the rise of the federal government's 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 Patman's statement that "The wide distribution of economic power among many independent proprietors is the foundation of the Nation's 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...