'Even as they embraced what they viewed as the superior efficiency and productivity of big business', wrote historian Mansel Blackford in A History of Small Business in America', Americans continued to revere small businesspeople for their self-reliance and independence'.Īs Blackford describes, policy-makers have sought repeatedly to reconcile Americans' appreciation for the benefits that big business brings them with their reverence for the small businessperson. Many people celebrated the higher wages and lower prices that came with large-scale enterprise, but others worried that the qualities Jefferson extolled might be lost in the process. Railroads, the telegraph, the development of steam engines, and rapid population growth all created conditions in which some businesses – especially capital-intensive ones such as primary metals, food processing, machinery-making, and chemicals – could become bigger and, in the process, more efficient. The American belief in small business was put to the test beginning in the late 1800s. As Thomas Jefferson, the third president of the United States, put it, a nation of farmers and small businesspeople would avoid dependence, which 'begets subservience and venality, suffocates the germ of virtue, and prepares fit tools for the designs of ambition'. Small business, they believed, cultivates character and strengthens democracy.

Whatever the reason businesses were small, Americans liked it that way. And productive capacity was limited because wind, water, and animal power were the only sources of energy.

Financial institutions also were too small to support big business. Transportation was slow and inefficient, keeping markets too fragmented to support large-scale enterprise. Moreover, small businesses continue to have a strong hold on the American imagination.īusinesses had no choice but to be small in America's early days. Large-scale enterprises have eclipsed small business to a significant degree since then, of course, but the vast majority – almost 90 percent of American employers have fewer than 20 workers – are still small.

For the first century of the country's existence – until the 1880s – it would have been equally accurate to say that the business of America was small business since virtually all businesses in the nation were small in those years. Whether small businesses create a disproportionate number of jobs is not clear, but they clearly have influenced big businesses, which have adopted the flexible practices of smaller companies.Ĭhristopher Conte, a former editor and reporter for The Wall Street Journal, is a freelance writer who reports on a variety of public policy issues.Ĭalvin Coolidge, the president of the United States during the 'roaring' 1920s, famously declared that 'the business of America is business'. For more than a century, the United States has implemented laws aimed at preventing big business from competing unfairly with small businesses. Americans have long revered small businesses for not only building the economy but also bolstering democracy.

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