The Other Boom

In the biggest boom in U.S. history, there has been persistent worry (some of it real, some purely political) about the small businessman. Last week the U.S. Government's Small Business Administration brought out a fat (200 pages) report that eased the genuine concern and flatly contradicted some of the political talk. The facts: small businessmen* have indeed lagged behind big industry in the boom, but they are catching up fast.

In his semiannual report to the President and Congress, SBAdministrator Wendell B. Barnes pointed out that earnings of small corporations in the year ending with 1955's third quarter jumped to $627 million, up 42% from the previous year. The climb, said SBA, was proof that they were swiftly pulling out of their post-Korea slump. Though the small business earnings index (1947-49 = 100) was still well below wartime peaks, in a year it moved up 21 points to 67, and is still picking up.

"Of course," said Barnes, "various problems plague the small business sector of the economy." Foremost is the squeeze on some raw materials, e.g., steel, aluminum, copper, newsprint. The small businessman also has a tough time bringing in new equity capital and finding long-term loans at cheap rates. But he thrives anyway: business failures dropped to 10,969 last year v. 11,086 in 1954. The business population rose to 4,225,000 firms of all sizes at mid-1955, a net increase of more than 28,000 companies in a year.

For the small businessman's growing prosperity, SBA took a modest share of the credit. To boost its own loan program, it teamed up with local banks to finance capital improvement loans for such small companies as neighborhood stores; in 1955's last half SBA approved $30,332,390 in loans, an increase of 20% over the previous six months. But SBA's proudest accomplishment is channeling a bigger share of Government contracts to small business. This year, said SBA, the Government will boost to $158 million its contracts with small businessmen, a gain of more than 100% over 1955.

* By SBA's rough definition, a small business is 1) a retailer with gross yearly sales of less than $1,000,000, 2) a wholesaler with a gross under $2,000,000 yearly, 3) any firm with fewer than 500 employees.

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