Small Business Policy and the American Creed

Published by EH.NET (June 2001)

Sandra M. Anglund. Small Business Policy and the American Creed.

Westport, CT and London: Praeger, 2000. 176 pp. $59.95 (cloth), ISBN:

0-275-96697-6.

Reviewed for EH.NET by Mansel G. Blackford, Department of History, Ohio State

University.

Based on her dissertation in political science at the University of

Connecticut, Sandra Anglund’s Small Business Policy and the American

Creed analyzes “federal small business policy and how American core

values, those often referred to as the American Creed, have influenced this

policy and will likely influence others” (preface). This study is written from

the point-of-view of political science; but historians, especially those

interested in the history of small business, will learn a great deal from this

slender volume. Small Business Policy packs quite a punch. This book is

a study of federal government policies — Anglund looks at the legislative

histories of forty-three acts passed by Congress — toward small business

since World War II. Anglund claims throughout that “traditional interest

group and institutional approaches to explaining policy do not provide a full

understanding of small business aid and that a cluster of core values often

referred to as the American Creed must also be taken into account” (pp. 1-2).

Thus, like the historian Jonathan Bean (Beyond the Broker State: Federal

Policies toward Small Business, 1936-1961, Chapel Hill, University of

North Carolina Press, 1996), she argues that there were few well-organized

natural small-business constituencies. Instead, members of Congress, she

finds, have reacted to what they have viewed as values they have thought

Americans have shared in trying to protect small businesses. Anglund

identifies those core values in Chapter 1 as individualism, freedom, equality,

and democracy. Congressional action, she writes, has also been based on the

assumption that small business has been hurt by events beyond its control,

that it was “in short, a victim” (p. 3).

After a cursory survey of the United States’ antitrust heritage in Chapter 2,

Anglund turns to the meat of her book in Chapters 3 and 4, an analysis of the

formation and early work of the Small Business Administration (SBA). Congress

established the SBA as a temporary federal government agency in 1953, she

shows, out of a concern that small firms were suffering from conditions beyond

their control and out of a desire to ensure economic democracy in America as

the Cold War began. The SBA was made permanent five years later. In 1958,

Congress also enacted the Small Business Investment Act, which authorized the

SBA to certify, regulate and contribute to the financing of private-sector

Small Business Investment Companies (SBICs). The SBICs were, in turn, to

invest in small businesses — thus assuring small businesses of both equity

and long-term capital needed for development. Congressional leaders

interpreted a Federal Reserve Board study as suggesting that a “capital gap”

was retarding the growth of small companies. (Contrary statements from small

business people were ignored.) Once again, Anglund observes, “small business

problems were defined with causal stories blaming small business difficulties

on circumstances beyond the control of the target population” (p. 57).

Likewise, considerations of economic competition and opportunity — with the

Cold War again seen as important by legislators — loomed large in the passage

of the various pieces of legislation.

Chapters 5 through 7 examine the work of the SBA during the 1960s and 1970s.

The prominence of arguments for the preservation of economic competition and

opportunity declined in these decades as the rationale for the SBA’s programs,

Anglund observes. Nonetheless, with small business problems “telling of a

beleaguered, needy, and deserving small business population,” SBA programs

expanded, despite major scandals that rocked the agency (p. 73). The core

value of equality replaced core values of freedom and democracy as the

justification for SBA programs. Increasingly, the SBA came to be seen as an

agency that could be harnessed to help minority enterprises. Anglund does a

particularly good job in dissecting the motives for this switch in emphasis of

the SBA’s work and in analyzing the often-unfortunate results of its programs.

Other federal programs, especially those which emerged as part of President

Lyndon Johnson’s Great Society, aimed at helping minority businesses are fully

discussed, as are the initiatives of Presidents Richard Nixon and Jimmy

Carter. An additional transformation in how members of Congress looked on

small business occurred in the 1980s and 1990s, the topic of Chapter 7. Small

businesses came to be valued for imagined powers in creating jobs, fostering

innovation, and boosting exports, with federal government programs designed to

further those ends. Explicit help for minority enterprises took a back seat to

these new concerns, which, Anglund argues, continued through the

administration of President William Clinton.

Small Business Policy should be required reading for anyone interested

in the history of small business in modern America, but it is important to

recognize just what this study is and is not. This work is not an overall

history of small business in postwar America. Only rarely does Anglund relate

the reality of small business situations. Such is not her goal. Her study is

an effort, largely successful, to examine the origins of federal government

policies and congressional legislation for small business. To some extent,

this volume also examines how that legislation played out, what its effects

have been –although the work is weaker in this area. Useful endnotes, an

appendix, and a short bibliographic essay guide readers to additional studies.

Most generally, Small Business Policy underlines the need for

additional research on the history of small business in America.

Professor Blackford has published Fragile Paradise: The Impact of Tourism

on Maui, 1959-2000 (Lawrence: University Press of Kansas, 2001). He is

currently working on a second edition of his A History of Small Business in

America.