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

Abstract

Examines the development of federal small business policy between 1936 and 1961. Particular attention is paid to the Robinson-Patman Act of 1936, the Miller-Tydings "Fair Trade" Act of 1937, the creation of Congressional small business committees in the early 1940s, the establishment of small business defense contract agencies during World War II and the Korean War, and the creation of the Small Business Administration during the second Eisenhower administration. Complementing this, the author reviews how various federal agencies, such as the Federal Trade Commission and the Small Business Administration have carried out their congressionally-mandated missions. The ethos of small business as a guarantor of democracy has a long history in American public policy. The first efforts to protect small business vitality took the form of antitrust legislation. However, judicial interpretations of the legislation and prosecutorial decisions caused antitrust law to have an effect on small businesses as injurious as helpful. The rise of urbanization led to department stores in cities, and the creation of a modern postal infrastructure led to mail-order houses. Although each of these threatened small business local monopolies, it was not until the advent of chain stores, with their ability to obtain large discounts from manufacturers, that small businesses faced a threat grave enough to inspire concerted lobbying. The result was the passage of the Robinson-Patman Act and the Miller-Tydings Act, which limited the availability of discounts and legalized price-fixing agreements designed to overcome chain-store competitive advantages. Wars in the middle of the twentieth century and their attendant crisis rhetoric legitimated in the public mind government intervention in the free market. Surveying various accounts of public choice, bureaucracy, and political entrepreneurship, and coupled with biographies of Congressional small business advocates, the author provides a historical and theoretical account of the institutionalization of small business assistance in American politics. (CAR)

Keywords: U.S. Congress, Robinson-Patman Act of 1936, Miller-Tydings Fair Trade Act of 1937, Federal legislation, Public policies, Government agencies, Antitrust laws, Franchises, Urban development, Competitive advantages, Business assistance programs, U.S. Small Business Administration (SBA)