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The Little Businessman: A Study of Business Proprietors in Poughkeepsie, New York

Published online by Cambridge University Press:  24 July 2012

Mabel Newcomer
Mabel Newcomer
Affiliation:
Professor Emeritus of Economics at Vassar College
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Abstract

This cross-sectional study of small business tests conventional assumptions regarding backgrounds, motivation, characteristics, function, risks, and longevity, proving many of those assumptions to be imprecise or false. Quantification in historical depth reveals definite patterns both of fixity and change.

Type
Research Article
Information
Business History Review , Volume 35 , Issue 4 , Winter 1961 , pp. 477 - 531
Copyright
Copyright © The President and Fellows of Harvard College 1961

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References

1 Barnes, Wendell B., “Small Business in America — Its Place and Problems,” Advanced Management, vol. 21 (July, 1956), pp. 7–8Google Scholar.

2 “Looking Around,” Harvard Business Review, vol. 33 (Nov.–Dec, 1955), p. 136Google Scholar.

3 The directories cover the city and adjacent areas that form an integral part of the business community. The businesses included are manufacturing, wholesale, retail, and service units combined with public utilities. The taxi and trucking concerns which comprise the larger part of the public utility classification are essentially service units, and railway, telephone, and telegraph companies were automatically excluded from the study since they had no resident presidents. Financial concerns and the construction industry were excluded, partly to hold the study to manageable size. But building contractors also include many skilled workers who occasionally take on independent contracting as a side line, and this made classification uncertain. Those combining contracting with sale of building materials are in the retail group. For financial concerns, the difficulty of distinguishing between agents and independents proved greater than in other business categories, although in recent years this problem arises with increasing frequency in other kinds of business.

Since the study is designed to reflect the characteristics of little businessmen, a few presidents of corporations with 100 or more employees were excluded. This line between large and small units was adopted as a matter of expediency as it was possible to identify these large employers from other available data. A limit of under 20 employees might have been preferable, but since 94 per cent of the business concerns in Dutchess County in 1956 had less than 20 employees and two thirds had less than 4, the addition of a few larger employers cannot greatly change the findings. (U.S. Dept. of Commerce and U.S. Dept. of Health, Education, and Welfare, County Business Patterns, First Quarter, 1956. Most of the business concerns in the county are in the Poughkeepsie area.) The Business Census of 1954 reports about one third of the Poughkeepsie City businesses of the categories included here as having no paid employees at all.

The directory data were found to be reasonably accurate and complete for the information given. Most businesses are listed four times — under their own names, the names of their proprietors, the street listing, and the classified section — and this provided a check on omissions and misspellings. The principal sources of information other than the directories were the local newspapers and questionnaires. The flies of the Poughkeepsie New Yorker were examined for the entire period for bankruptcy notices and obituaries of local businessmen. The latter usually supplied date and place of birth, father's occupation, and some of the individual's job experience. A post-card questionnaire, sponsored by the Junior Chamber of Commerce of Poughkeepsie, was sent to every business proprietor listed in the 1957 directory. These numbered 2,266, comprising 1,369 active proprietors and 897 that had been in active business at some time between 1936 and 1955. Of the latter group 158 were not reached, having apparently moved after the directory was compiled. Those not replying were canvassed by student enumerators from Vassar College. The final returns came to a little over three fourths of the active proprietors and a little over half of those out of business, although not all answered every question. It should be added that the proprietors reached by the enumerators contained a much larger proportion of the foreign born, and the native born whose schooling ended with grammar school, than did the post-card inquiry.

For the proprietors residing in Poughkeepsie before and after their business ventures the directory provided their preceding and succeeding occupations. Consequently, data are available for these items for a much larger number than for most of the other items. Some data in addition to that provided by the directories were obtained for 47 per cent of all proprietors. Most of the others had left the community after closing their business.

Poughkeepsie is atypical in having a larger proportion of foreign-born residents than that found for the entire country; and manufactures employ a larger proportion of workers than in most cities of this size. This last is due to a few large plants; the proportion of manufacturing units among the business firms is below the national average.

4 Those not represented comprise a high proportion of individuals who left the area after their business ended and these probably include a larger percentage of nonlocal proprietors than does the group for which the birthplace is known. Consequently, the sample may overestimate the number of proprietors born in the county. This should not affect the differences in place of birth found for different types of business, however.

5 The 1950 Census reports less than 2 per cent of the employed Negro population in the United States as a whole as proprietors, and there is every indication that in Poughkeepsie, also, they are few in proportion to the Negro population. Most of those that were identified in the course of the study were serving their own group. They are better educated than the foreign born group and for that reason may have alternative forms of employment that are more attractive than those open to many of the foreign born. But also, the prejudice against Negroes in independent business appears to be greater than that against the foreign born.

6 These have a larger proportion of one-man concerns and a smaller average income than any other group of businesses in Poughkeepsie represented by more than 100 proprietors. These percentages have been adjusted to eliminate the bias in figures for inheritance.

7 See page 481 above.

8 First jobs were obtained only from proprietors answering the questionnaires, but for the proprietors' occupations immediately preceding the proprietorship the questionnaire data were supplemented by information from the directories. First jobs were obtained for 45 per cent of the group and the occupation preceding proprietorship for 74 per cent.

9 An earlier study of grocers in Minneapolis and St. Paul which covers total job experience reports that about half had had no previous experience in retail or wholesale business. (Vaile, R. S., “Grocery Retailing With Special Reference to the Effects of Competition,” Univ. of Minn. Studies in Economics and Business, no. 1 [April, 1932], p. 16Google Scholar.)

10 Lipset, S. M. and Bendix, R., “Social Mobility and Occupational Career Patterns.” American Journal of Sociology, vol. 57 (Jan. & March, 1952), pp. 366–374, 494–504CrossRefGoogle Scholar.

11 New York, 1957.

12 Newcomer, M., The Big Business Executive (New York, 1955), p. 96Google Scholar.

13 Those coming from another independent business and those with managerial positions in other corporations.

14 The data for 1900 are from the directories and include only those who had been in the area before going into business. Also, because a comparison of occupations after going out of business seemed desirable, proprietors still in business in 1906 and 1956 respectively were excluded since later occupations were not available for 1950 proprietors still in business in 1956.

15 E. D. McGarry, “Retail Trade Mortality in Buffalo, 1919–1928,” University of Buffalo Studies in Business, No. 4 (1929), p. 73. The businesses are drug, grocery, hardware, and shoe stores.

16 R. S. Vaile, “Grocery Retailing With Special Reference to the Effects of Competition,” University of Minnesota Studies in Economics and Business, No. 1 (1932), p. 16.

17 Phillips, J. D., Little Business in the American Economy (Urbana, Ill., 1958), pp. 57–58Google Scholar.

18 Ibid.

19 Hearings, Part 15, p. 8676.

20 Kaplan, A. D. H., Small Business: Its Place and Problems (New York, 1948), p. 56Google Scholar.

21 A study of small and medium-sized business made in 1955 shows that 20% of the owners stated that they could not obtain all the capital they wanted, but that very few borrowed. (E. C. McKean, “Persistence of Small Business,” Upjohn Institute for Community Research Publication [March, 1958], pp. 39–40). These businesses are apparently somewhat larger than the Poughkeepsie ones.

22 Between 1952 and 1955, inclusive, the percentage of retail grocery sales in the United States made by the supermarkets increased from 44 per cent to 60 per cent of the total. (Donham, Paul, “Whither Small Business?” Harvard Business Review, vol. 35 [March–April, 1957], p. 75Google Scholar.) The number of grocery stores in the Poughkeepsie area decreased by one third in the 20-year period studied, although population increased substantially.

23 E. D. McGarry, “Retail Trade Mortality in Buffalo, 1918–1928,” University of Buffalo Studies in Business, No. 4 (1929), pp. 81–85.

24 Bankruptcies were regularly reported in the local newspapers so that this record is believed to be complete.

25 Four had gone into bankruptcy before leaving; a few were reported as going into business elsewhere; two men had “skipped town” after getting into difficulties with the authorities; and several had retired and gone to Florida or to live with relatives in other areas. Many doubtless returned to an earlier place of residence. Sixty per cent of those leaving after giving up their business had come to Poughkeepsie for the first time when they started the enterprise.

26 The businesses and the percentage decreases in number of establishments are: dressmakers, 72%; tailors, 67%; plumbers, 53%; tobacconists, 53%; butchers, 51%; shoe repairers, 50%; confectioners, 35%; grocers, 34%; barbers, 25%.

27 Between 1929 and 1956 the average income of proprietors increased 163% compared with 197% for manufacturing employees. The average income of proprietors was still higher than that of employees ($4,760 vs. $4,580) but the differential was small. (E. C. McKean, “Persistence of Small Business,” Upjohn Institute for Community Research [March, 1958], p. 24.) If only small proprietors were included, their incomes would be lower than those of factory workers. As one illustration, the average weekly wage in manufactures in New York State in 1955 was $78, compared with weekly gross receipts of $66 for one-man barber shops. The barber shop is cited because cost of materials consumed is low and there are no wages. But this is not a home business, and rent and the cost of the utilities must be deducted from the gross before comparing the earnings of these and the factory workers. (Data from Census of Manufactures and Census of Business, 1954.)

28 U. S. Dept. of Commerce and U. S. Dept. of Health, Education, and Welfare, County Business Patterns, 1956.

29 New York Times, Jan. 30, 1960.

30 Phillips, J. D., Little Business in the American Economy (Illinois Studies in the Social Sciences, vol. 42), (Urbana, 1958), pp. 84–85Google Scholar.