The History of Small Business in America
05/10/2023
The History of Small Business in America
While small businesses exist all over the world, it is the entrepreneurial spirit and view of America as the land of opportunity that makes small business unique in the United States. Indeed, President Calvin Coolidge declared, “The chief business of the American people is business.” From the very beginning of the country to today, Americans time and again have turned to small business for a thriving economy.
Early Years
The early years of America and small business in America goes back to the settlers and the bartering of crops and supplies. Small farmers made their own goods and bartered for the things they could not grow or make on their own. Most of this was due to the fragmented nature of colonies that lacked quick transportation or communication. This all changed, however, in the 1800s with several remarkable changes to the landscape of the United States. The railroad, telegraph, steam engine, and population explosion all fueled a drastic change in small business.
Americans in the 1800s believed that small business encouraged character building and strengthened democracy as they were able to avoid dependencies. Because of the technological and demographic advances of the United States in the 1800s, there was a rapid change in how Americans did business. Monetary systems began changing. Instead of bartering physical goods and services in exchange for others, systems of credit between customers and small business owners were popularized. As cities became economic centers, small merchants, independent craftsmen, and self-reliant professionals moved the economy away from homesteading.
20th Century
Modernity saw many advances and problems for American small business. World War II caused the American economy to explode; and, since overseas manufacturing was strongly affected by the war, it also overloaded small businesses. These small businesses were unable to keep up with the manufacturing demands of the war, which led to a greater proliferation of corporations. However, the American government wanted to help bring back small businesses post-war and began the Small Business Administration in 1953 to help fund and educate potential small business owners.
In the last two decades of the 20th century, bigger corporations had trouble contending with a move to foreign production. Many people began to move back to small businesses as services became more important than manufacturing. Start-ups also began to flourish and renewed the entrepreneurial spirit of the American population.
Today
Today, small businesses drive the American economy. Small businesses of less than five hundred employees account for 99.9% of all U.S. businesses (Forbes.com). Between 1995 and 2020, small businesses were responsible for 62% of all job creation and report 44% of U.S. economic activity (Forbes.com).
The United States was built on tenets of rugged individualism and a pioneering spirit and boasts 22.5 million independent enterprises today. At The Savings Bank, we hope to provide products and services to small businesses in our communities so that we all may flourish together.
Sources:
https://ciaotest.cc.columbia.edu/olj/ep/ep_jan06/ep_jan06c.pdf
https://www.thoughtco.com/history-of-small-business-in-the-us-1147913