Tougher New Year

LITTLE BUSINESS

In the year just ended the most important --and least publicized--fact about the alleged plight of the little businessman was that he did not go out of business. In the coming year it is a fairly safe prediction that the going for the small businessman is going to be a lot tougher.

The Miracle. The survival of small business in 1942 against all the bets of the experts is now no longer subject to argument. It is a matter of cold statistical year-end fact. All through the year, according to Dun & Bradstreet, the total number of U.S. corporations declined (see chart above). But this decline was due to a decreased rate of business births (infant mortality among businesses is always high). Business deaths by November stood at the lowest figure since 1933. Perhaps the most outstanding survivor was the auto dealer, whose ingenuity in turning his business inside out to cope with the complete loss of his normal stock in trade was a 1942 miracle.

This survival of the small businessman had two explanations. First, many a small firm converted to war work and is now doing a bang-up production job at subcontracting. But, a much more important factor was the huge boom in the production of goods and services which, despite war, stood above the 1929 level. It is because this boom cannot continue in 1943 if the U.S. is to produce a maximum amount of war goods that the problem of the small businessman is so acute. For of almost 3,000,000 business establishments in the U.S. all but 184,000 are in the service industries (wholesaling, retailing, etc.). Hence the debate over subcontracting which went on all through 1942 is largely academic. For the real small business problem is not how to save the relatively few firms which can get into war production, but how to cushion the shock of eliminating many more which cannot.

Planning for Casualties. The man who knows most about this problem in the U.S. is WPB's Civilian Supply boss, small, able Joseph L. Weiner, who is no Washington axman bureaucrat. His first job was to work out an estimate of "bedrock civilian requirements." That, at long last, he has before him. His second job is to "concentrate" those requirements in a small number of firms. Of that he says humbly: "It is a terrific job but we must make the effort because it takes a long time to do it and we may need it desperately later on."

Joe Weiner's guinea-pig industry for concentration was stove manufacturing (TIME, Oct. 19), quotas for which were sharply reduced some months ago and put in the hands of smaller producers. First the plan almost collapsed because the stovemakers left in business could not get enough metal to keep going. Yet last month WPB had to revise its stove quotas sharply upwards to keep people from freezing owing to fuel-oil shortage in the East. Despite these complications the stove industry was relatively easy to handle because most stovemakers can be converted to some degree to war work. Much tougher will be the pulp and paper industry (due for early concentration) which is not geared to make anything but paper. Tougher still will be service industries.

Cushion for Casualties. Yet soon or late, and probably soon, more concentration will be on the way. To carry it out much will depend on the good sense of the Government and the small businessman himself. For the latter the hardest lesson of all is that though he is fighting for his life, so after all is his country. For Government the biggest problem is to provide some means of compensation, without engaging in monumental subsidies, so that businesses which are squeezed out now can reappear later. Best notion yet advanced is Donald Nelson's recommendation to Congress last fall that it set up a war liabilities adjustment agency (TIME, Oct. 12). Last week, in a letter to the Senate Small Business Committee, Don Nelson reiterated his plea:

"As I see it, we are all vitally interested providing for a sound economy when the war is over. To me a sound economy calls for ample opportunity for small enterprises to enter particular fields and add their imagination, initiative and drive to the competitive struggle to provide more & better goods--at continually lower prices. But to me this objective should not involve putting machinery or labor or management brains in cold storage for the duration of the war."

This file is automatically generated by a robot program, so reader's discretion is required.