Maury Maverick’s Administration
In January 1944, President Roosevelt appointed Maury Maverick to the chair of the SWPC [Smaller War Plants Corporation]. Described as an “ardent New Dealer” and antitruster, Maverick had served as a WPB [War Production Board] administrator, as a congressman from Texas, and as one-time mayor of San Antonio. Contemporaries considered him “one of the most colorful figures in Washington.” Unlike [Robert Wood] Johnson, Maverick had no reservations about government aid to small business. He wholeheartedly accepted the small business ideology and defended government intervention in the economy. (He later asserted that “free enterprise is preserved by the Government.”) Maverick praised the Small Business Committees for demonstrating “the leadership of consciousness in Congress,” and like his congressional allies, he hoped to expand the agency to serve wholesalers and retailers as well as manufacturers.
Maverick moved beyond Johnson’s “distressed plant” policy and declared that his agency would represent all of the nation’s 165,000 small manufacturers. He reorganized the SWPC, launched a public relations blitz to highlight the agency’s services, and liberalized the agency’s loan policy by emphasizing a company’s financial need rather than its credit rating. Maverick also proclaimed a global mission for small business, predicting that the United States would dominate the world economy and, therefore, that foreign trade might become a “big field for little business.”
Maverick tried to renew congressional concern for the fate of small business by joining with the Small Business Committees to warn of a reconversion crisis. As military production peaked in 1944, the committees feared the effect of contract cancellations on small firms. Small business advocates believed that big business would use its war-strengthened position to grab civilian markets; therefore, they argued that the government should allow small plants to reconvert from military to civilian production before large corporations did so. Donald Nelson also favored such a policy, and in June 1944, he allowed firms to reconvert on an individual basis. The military, however, blocked Nelson’s plans for early reconversion, and full-scale reconversion did not take place until the end of the war.
Nonetheless, in 1944, Congress passed several acts designed to speed eventual reconversion to civilian production, and under this legislation the SWPC gained new responsibilities. The Contract Settlement Act ordered the agency to help small firms with contract terminations. Under the Servicemen’s Readjustment Act (the “GI Bill”), the agency could guarantee business loans to veterans. The Surplus Property Act authorized the SWPC to purchase military surplus and resell it to small firms. Finally, the War Mobilization and Reconversion Act ordered the procurement agencies to consult with the SWPC in reserving materials for the exclusive use of small plants.
Postwar Planning for Small Business
Maverick tried to use the SWPC’s new duties as justification for continuing the agency into the postwar period. He also emphasized the long-term credit needs of small business and asked Congress to make his agency a “permanent source of credit.” He criticized the banks for demanding a higher rate of interest for small loans and argued that the government should step in to offer credit at below-market interest rates. (Actually, since 1934 the Reconstruction Finance Corporation and the Federal Reserve had been making loans to businesses, but the conservative lending policies of these agencies limited the amount of funds available to small firms.) Some observers doubted whether small businesses really suffered from a credit crunch. In one survey of six hundred small firms, only nine reported difficulties in obtaining credit. Nonetheless, Maverick insisted that many small businesses would fail unless Congress created a credit insurance program administered by the SWPC. He renewed his crisis rhetoric by citing an increase in mergers as a sign that large corporations were acquiring small firms “like so many bags of potatoes.” If Congress did not grant positive aid to small business, the economy would collapse, and “our democracy will then be whirling right, and left, and in a circle.”
Congress did not act on Maverick’s proposal, but President Roosevelt provided him with a new opportunity to plead his case. In October 1944, Roosevelt declared that the American economy would have to generate 60,000,000 jobs to maintain full employment after the war, and Maverick suggested that small business could fill the gap. Maverick argued that with SWPC assistance, small businesses might employ more people by increasing their participation in foreign trade. In early 1945, he traveled to Europe to survey small business opportunities, and this trip convinced him that France, England, and the Soviet Union were potential markets for the goods of small American firms. He hoped that the SWPC’s foreign missions on behalf of small business might persuade Congress to continue the agency indefinitely. But the Commerce Department had a long history of promoting the exports of small manufacturers. Now the SWPC hoped to take over this area of responsibility, and the SWPC’s encroachment on their bureaucratic “turf” antagonized Commerce Department officials and later led them to call for the agency’s elimination.
The creation of a permanent SWPC required the active support of small business people. Maverick claimed that the agency spoke as the “voice” of small business and that it had “a good reputation in the field.” But SWPC field directors reported that many manufacturers did not even realize the SWPC was a federal agency. Furthermore, in early 1944, Maverick’s assistant, C. W. Fowler, surveyed the attitudes of seven hundred beneficiaries of SWPC aid, and the results disappointed agency officials. Two-thirds of the firms expressed appreciation, but one-third denied receiving any assistance at all (a testament to the agency's poor record-keeping). The responses of many firms belied the crisis rhetoric of the SWPC. Powhatan Brass and Iron Works of West Virginia reported they could "sell more than we can produce." Similarly, the Thompson Pipe and Steel Company of Denver, Colorado, was "too busy to take on any additional work." Others remained completely unaware of the SWPC's services. The Carolina Underwear Company, for example, described the SWPC as just another Department, Corporation or Bureau that we read about."
The SWPC conducted further studies that disclosed the healthy state of small business. A survey of Michigan manufacturers revealed their optimism about the future. Fully 60 percent hoped to acquire surplus machine tools at the end of the war, and half expected to pay cash. A second nationwide survey of two hundred manufacturers showed them to be divided over the immediate need for federally funded scientific research. In another study, Connecticut manufacturers stated their opposition to government aid during the postwar reconversion period. A majority agreed that if Congress offered aid to business, it should distribute it through banks rahter than a federal agency.
The SWPC also tried to organize small business associations into regional "Small Business Councils," but an agency study revealed that only six of the associations remained active and that most of these were "promotional propositions" interested only in collecting membership dues. One group, the Conference of American Small Business Organizations (CASBO, claimed to represent all of the nation's small business owners, but an SWPC official reported that "the meetings are . . . too small to speak with authority for all small business." Little had changed since President Roosevelt's unsuccessful attempt to organize small business in 1938.
Without the support of an organized interest group of small business owners, the SWPC could not survive the war; thus, agency officials desperately searched for a constituency. Maverick sought to cultivate the support of two groups of potential entrepreneurs: women and veterans. He believed that many of those women who had entered the workforce during the war would later be interested in starting small businesses of their own. In February 1945, Maverick reached out to this group by appointing the first woman to a SWPC regional board of governors. At the same time, Maverick promoted the SWPC as an agency for returning veterans. An army survey revealed that at least 700,000 veterans planned to open businesses after the war. Forty-two percent needed to borrow most of their capital, and many others needed technical or managerial assistance. Maverick thought that his agency could provide an "industrial homestead" for these veterans by offering loans, technical advice, and surplus property. He hoped thereby to eventually establish a million veterans in business. In practice, however, the agency contacted very few veterans. The SWPC could lend only to manufacturers, while most veterans wanted to open shops in the service or retail sectors, where capital requirements were lower. Furthermore, the SWPC held no monopoly on assistance to veterans; in fact, most returning GIs approached the Veterans Administration for financial assistance. Finally, demand for GI loans did not materialize until much later. Eventually, 1,000,000 veterans did take advantage of the GI bill to open their own businesses, but fewer than 50,000 had done so by the end of 1945.
The lack of an organized constituency threatened the SWPC at a time when the agency faced growing opposition from conservative members of Congress who were concerned with the wartime growth of government. In December 1944, the first sign of opposition surfaced as the agency ran out of funds and Maverick requested an additional $200 million. His request stirred a debate over the merits of this troubled agency. Fred Crawford (R.-Mich.) denied that the SWPC represented small business and rejected the notion of a permanent SWPC. Crawford argued that subsidies to small business discriminated against those who did not receive aid. Frederick Smith (R.-Ohio) dismissed the agency as a "New Deal omnium-gatherum bureau." John McCormack (D.-Mass.) expressed his opposition to "wet-nursing programs" and agreed with Jessie Sumner (R.-Ill.) that a loan guarantee program operated by the Federal Reserve could substitute for the SWPC. Although Congress eventually approved Maverick's request for $200 million, this opposition did not bode well for the future health of the agency.
Throughout 1944 and 1945, members of the Small Business Committees tried repeatedly to extend the life of the SWPC. In May 1944, Senator Murray introduced a bill to continue the agency until 1947. This legislation would have transformed the SWPC into an independent agency representing all types of small businesses, but the bill languished in committee. During the next year, Maury Maverick's congressional allies introduced a flurry of bills to extend the agency, but these measures met the same fate. Finally, as the war neared an end, the issue caused a split among congressional small business advocates. Two conservative members of the House Small Business Committee, Leonard Hall (R.-N.Y.) and Walter C. Ploeser, opposed Maverick's request because they feared it might add to the large budget deficits incurred during the war. Hall attacked Maverick for his policy of "bigger and bigger government," while Ploeser noted "an implied promise that we would discontinue it [the SWPC] at the close of the war." Eventually, in April 1945, those who favored a permanent SWPC secured a one-year extension, but the agency still lacked a clear-cut mission to carry it into the postwar period.
Maverick continued to press for a permanent SWPC, but he now faced opposition from the Commerce Department, which reasserted its claim to represent all businesses, large and small. Commerce Department officials had always viewed the SWPC as a rival; and in June 1945, they urged the president to merge the agency with the Commerce Department. Maverick tried to block this move "to gobble us up" by asking for another bill to extend and expand the SWPC. He orchestrated nationwide meetings of small manufactuers and reported "an almost universal opinion" in favor of a permanent SWPC; but fewer than one hundred of the nation's manufacturers attended these meetings. Apparently, most small business owners did not care if the nation's only small business agency passed from the scene.
Maverick's last-ditch efforts failed to save the agency. In October, President Truman sent him on a trip to the Far East to open up trade for small business, but the president hinted that Maverick's agency would not survive the war. Truman did carry his concern for small business into the Oval Office, but he preferred to work toward this end through the Commerce Department and the Reconstruction Finance Corporation. Therefore, on 27 December 1945, as part of his policy of streamlining the government after the war, Truman abolished the SWPC effective 28 January 1946. Maverick considered the order unconstitutional and "political dynamite," but he relented in the interest of party unity. By executive order Truman transferred the SWPC's lending and surplus property powers to the RFC and all of its other functions to the Commerce Department. Thus the president finally put the agency out of its misery.
Jonathan J. Bean, Beyond the Broker State: Federal Policies Toward Small Business, 1936-1961
Maverick moved beyond Johnson’s “distressed plant” policy and declared that his agency would represent all of the nation’s 165,000 small manufacturers. He reorganized the SWPC, launched a public relations blitz to highlight the agency’s services, and liberalized the agency’s loan policy by emphasizing a company’s financial need rather than its credit rating. Maverick also proclaimed a global mission for small business, predicting that the United States would dominate the world economy and, therefore, that foreign trade might become a “big field for little business.”
Maverick tried to renew congressional concern for the fate of small business by joining with the Small Business Committees to warn of a reconversion crisis. As military production peaked in 1944, the committees feared the effect of contract cancellations on small firms. Small business advocates believed that big business would use its war-strengthened position to grab civilian markets; therefore, they argued that the government should allow small plants to reconvert from military to civilian production before large corporations did so. Donald Nelson also favored such a policy, and in June 1944, he allowed firms to reconvert on an individual basis. The military, however, blocked Nelson’s plans for early reconversion, and full-scale reconversion did not take place until the end of the war.
Nonetheless, in 1944, Congress passed several acts designed to speed eventual reconversion to civilian production, and under this legislation the SWPC gained new responsibilities. The Contract Settlement Act ordered the agency to help small firms with contract terminations. Under the Servicemen’s Readjustment Act (the “GI Bill”), the agency could guarantee business loans to veterans. The Surplus Property Act authorized the SWPC to purchase military surplus and resell it to small firms. Finally, the War Mobilization and Reconversion Act ordered the procurement agencies to consult with the SWPC in reserving materials for the exclusive use of small plants.
Postwar Planning for Small Business
Maverick tried to use the SWPC’s new duties as justification for continuing the agency into the postwar period. He also emphasized the long-term credit needs of small business and asked Congress to make his agency a “permanent source of credit.” He criticized the banks for demanding a higher rate of interest for small loans and argued that the government should step in to offer credit at below-market interest rates. (Actually, since 1934 the Reconstruction Finance Corporation and the Federal Reserve had been making loans to businesses, but the conservative lending policies of these agencies limited the amount of funds available to small firms.) Some observers doubted whether small businesses really suffered from a credit crunch. In one survey of six hundred small firms, only nine reported difficulties in obtaining credit. Nonetheless, Maverick insisted that many small businesses would fail unless Congress created a credit insurance program administered by the SWPC. He renewed his crisis rhetoric by citing an increase in mergers as a sign that large corporations were acquiring small firms “like so many bags of potatoes.” If Congress did not grant positive aid to small business, the economy would collapse, and “our democracy will then be whirling right, and left, and in a circle.”
Congress did not act on Maverick’s proposal, but President Roosevelt provided him with a new opportunity to plead his case. In October 1944, Roosevelt declared that the American economy would have to generate 60,000,000 jobs to maintain full employment after the war, and Maverick suggested that small business could fill the gap. Maverick argued that with SWPC assistance, small businesses might employ more people by increasing their participation in foreign trade. In early 1945, he traveled to Europe to survey small business opportunities, and this trip convinced him that France, England, and the Soviet Union were potential markets for the goods of small American firms. He hoped that the SWPC’s foreign missions on behalf of small business might persuade Congress to continue the agency indefinitely. But the Commerce Department had a long history of promoting the exports of small manufacturers. Now the SWPC hoped to take over this area of responsibility, and the SWPC’s encroachment on their bureaucratic “turf” antagonized Commerce Department officials and later led them to call for the agency’s elimination.
The creation of a permanent SWPC required the active support of small business people. Maverick claimed that the agency spoke as the “voice” of small business and that it had “a good reputation in the field.” But SWPC field directors reported that many manufacturers did not even realize the SWPC was a federal agency. Furthermore, in early 1944, Maverick’s assistant, C. W. Fowler, surveyed the attitudes of seven hundred beneficiaries of SWPC aid, and the results disappointed agency officials. Two-thirds of the firms expressed appreciation, but one-third denied receiving any assistance at all (a testament to the agency's poor record-keeping). The responses of many firms belied the crisis rhetoric of the SWPC. Powhatan Brass and Iron Works of West Virginia reported they could "sell more than we can produce." Similarly, the Thompson Pipe and Steel Company of Denver, Colorado, was "too busy to take on any additional work." Others remained completely unaware of the SWPC's services. The Carolina Underwear Company, for example, described the SWPC as just another Department, Corporation or Bureau that we read about."
The SWPC conducted further studies that disclosed the healthy state of small business. A survey of Michigan manufacturers revealed their optimism about the future. Fully 60 percent hoped to acquire surplus machine tools at the end of the war, and half expected to pay cash. A second nationwide survey of two hundred manufacturers showed them to be divided over the immediate need for federally funded scientific research. In another study, Connecticut manufacturers stated their opposition to government aid during the postwar reconversion period. A majority agreed that if Congress offered aid to business, it should distribute it through banks rahter than a federal agency.
The SWPC also tried to organize small business associations into regional "Small Business Councils," but an agency study revealed that only six of the associations remained active and that most of these were "promotional propositions" interested only in collecting membership dues. One group, the Conference of American Small Business Organizations (CASBO, claimed to represent all of the nation's small business owners, but an SWPC official reported that "the meetings are . . . too small to speak with authority for all small business." Little had changed since President Roosevelt's unsuccessful attempt to organize small business in 1938.
Without the support of an organized interest group of small business owners, the SWPC could not survive the war; thus, agency officials desperately searched for a constituency. Maverick sought to cultivate the support of two groups of potential entrepreneurs: women and veterans. He believed that many of those women who had entered the workforce during the war would later be interested in starting small businesses of their own. In February 1945, Maverick reached out to this group by appointing the first woman to a SWPC regional board of governors. At the same time, Maverick promoted the SWPC as an agency for returning veterans. An army survey revealed that at least 700,000 veterans planned to open businesses after the war. Forty-two percent needed to borrow most of their capital, and many others needed technical or managerial assistance. Maverick thought that his agency could provide an "industrial homestead" for these veterans by offering loans, technical advice, and surplus property. He hoped thereby to eventually establish a million veterans in business. In practice, however, the agency contacted very few veterans. The SWPC could lend only to manufacturers, while most veterans wanted to open shops in the service or retail sectors, where capital requirements were lower. Furthermore, the SWPC held no monopoly on assistance to veterans; in fact, most returning GIs approached the Veterans Administration for financial assistance. Finally, demand for GI loans did not materialize until much later. Eventually, 1,000,000 veterans did take advantage of the GI bill to open their own businesses, but fewer than 50,000 had done so by the end of 1945.
The lack of an organized constituency threatened the SWPC at a time when the agency faced growing opposition from conservative members of Congress who were concerned with the wartime growth of government. In December 1944, the first sign of opposition surfaced as the agency ran out of funds and Maverick requested an additional $200 million. His request stirred a debate over the merits of this troubled agency. Fred Crawford (R.-Mich.) denied that the SWPC represented small business and rejected the notion of a permanent SWPC. Crawford argued that subsidies to small business discriminated against those who did not receive aid. Frederick Smith (R.-Ohio) dismissed the agency as a "New Deal omnium-gatherum bureau." John McCormack (D.-Mass.) expressed his opposition to "wet-nursing programs" and agreed with Jessie Sumner (R.-Ill.) that a loan guarantee program operated by the Federal Reserve could substitute for the SWPC. Although Congress eventually approved Maverick's request for $200 million, this opposition did not bode well for the future health of the agency.
Throughout 1944 and 1945, members of the Small Business Committees tried repeatedly to extend the life of the SWPC. In May 1944, Senator Murray introduced a bill to continue the agency until 1947. This legislation would have transformed the SWPC into an independent agency representing all types of small businesses, but the bill languished in committee. During the next year, Maury Maverick's congressional allies introduced a flurry of bills to extend the agency, but these measures met the same fate. Finally, as the war neared an end, the issue caused a split among congressional small business advocates. Two conservative members of the House Small Business Committee, Leonard Hall (R.-N.Y.) and Walter C. Ploeser, opposed Maverick's request because they feared it might add to the large budget deficits incurred during the war. Hall attacked Maverick for his policy of "bigger and bigger government," while Ploeser noted "an implied promise that we would discontinue it [the SWPC] at the close of the war." Eventually, in April 1945, those who favored a permanent SWPC secured a one-year extension, but the agency still lacked a clear-cut mission to carry it into the postwar period.
Maverick continued to press for a permanent SWPC, but he now faced opposition from the Commerce Department, which reasserted its claim to represent all businesses, large and small. Commerce Department officials had always viewed the SWPC as a rival; and in June 1945, they urged the president to merge the agency with the Commerce Department. Maverick tried to block this move "to gobble us up" by asking for another bill to extend and expand the SWPC. He orchestrated nationwide meetings of small manufactuers and reported "an almost universal opinion" in favor of a permanent SWPC; but fewer than one hundred of the nation's manufacturers attended these meetings. Apparently, most small business owners did not care if the nation's only small business agency passed from the scene.
Maverick's last-ditch efforts failed to save the agency. In October, President Truman sent him on a trip to the Far East to open up trade for small business, but the president hinted that Maverick's agency would not survive the war. Truman did carry his concern for small business into the Oval Office, but he preferred to work toward this end through the Commerce Department and the Reconstruction Finance Corporation. Therefore, on 27 December 1945, as part of his policy of streamlining the government after the war, Truman abolished the SWPC effective 28 January 1946. Maverick considered the order unconstitutional and "political dynamite," but he relented in the interest of party unity. By executive order Truman transferred the SWPC's lending and surplus property powers to the RFC and all of its other functions to the Commerce Department. Thus the president finally put the agency out of its misery.
Jonathan J. Bean, Beyond the Broker State: Federal Policies Toward Small Business, 1936-1961
News Force
Maury Maverick, fiery former congressman from Texas, is chairman of the Smaller War Plants Corporation and trying to represent the small business men in this war. In a recent article in Progressive he said:
Looking beyond the war to the long-range problem we must prepare now to implement the proposition that the small business unit is the most vital thing in the whole American system of economic life.
To that end, (1) there must be a vigorous and unrelenting prosecution of all unlawful restraints on trade, and especially aggressive enforcement of the laws against trusts, cartels, and monopolies—which are the greatest menace to full employment after the war; (2) small business men must be given full opportunity to engage in any kind of civilian program as rapidly as the war program permits; (3) adequate financial aid must be made available to small business; (4) favorable consideration, or even preferential treatment, should be given small business in purchasing surplus war materials and machinery in the post-war period; and (5) little business must be supplied with adequate technical aids with respect to operation and management.
A Deadly Parallel
I am not engaged in any crusade against big business as such. Big business is not of itself an evil thing any more than a little business is good just because it is little. We Americans should, and will, have big business concerns; we should, and will, have mass production on a grand scale. But we must also realize that our three million little business and plants must he preserved. If we let our little businesses be gobbled up by cartels and monopolies, then our little people—and most of us are little people—will be gobbled up in turn.
We cannot have national prosperity or a healthy system of small business unless we have real free enterprise. We must recognize that many who are now carrying on propaganda, for free enterprises, do not really believe in free enterprise at all. All they want is to free business enterprise from healthy and necessary public control and regulation, so they can impose their own controls and restraints on business In the form of cartels, monopolies, price rigging, curtailment of output, and the like—those things that helped on the great depression of 1929. What I mean by free enterprise is the real McCoy in this respect—truly free enterprise with new ideas, new projects, new materials, and new methods of production. This is free enterprise and the American system.
The Sioux Center News, May 4, 1944
Looking beyond the war to the long-range problem we must prepare now to implement the proposition that the small business unit is the most vital thing in the whole American system of economic life.
To that end, (1) there must be a vigorous and unrelenting prosecution of all unlawful restraints on trade, and especially aggressive enforcement of the laws against trusts, cartels, and monopolies—which are the greatest menace to full employment after the war; (2) small business men must be given full opportunity to engage in any kind of civilian program as rapidly as the war program permits; (3) adequate financial aid must be made available to small business; (4) favorable consideration, or even preferential treatment, should be given small business in purchasing surplus war materials and machinery in the post-war period; and (5) little business must be supplied with adequate technical aids with respect to operation and management.
I am not engaged in any crusade against big business as such. Big business is not of itself an evil thing any more than a little business is good just because it is little. We Americans should, and will, have big business concerns; we should, and will, have mass production on a grand scale. But we must also realize that our three million little business and plants must he preserved. If we let our little businesses be gobbled up by cartels and monopolies, then our little people—and most of us are little people—will be gobbled up in turn.
We cannot have national prosperity or a healthy system of small business unless we have real free enterprise. We must recognize that many who are now carrying on propaganda, for free enterprises, do not really believe in free enterprise at all. All they want is to free business enterprise from healthy and necessary public control and regulation, so they can impose their own controls and restraints on business In the form of cartels, monopolies, price rigging, curtailment of output, and the like—those things that helped on the great depression of 1929. What I mean by free enterprise is the real McCoy in this respect—truly free enterprise with new ideas, new projects, new materials, and new methods of production. This is free enterprise and the American system.
The Sioux Center News, May 4, 1944
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