In the recent debate over minority contract set-asides, many policy-makers have forgotten this program's origins. Richard Nixon, moved by philosophical, practical, and political considerations, made minority business enterprise a theme of his 1968 presidential campaign and his first administration. By using set-asides, the Nixon administration overcame its meager funding of the Office of Minority Business Enterprise (OMBE) and encouraged minority entrepreneurship. Nixon's actions influenced federal policy toward minorityowned businesses for two decades.
Over the past decade, historians have reassessed the presidency of Richard M. Nixon. "Nixon," argued Joan Hoff, "acted as an agent for change in five areas of domestic reform: welfare, civil rights, economic policy, environmental policy, and reorganization of the federal bureaucracy."' Hugh Davis Graham outlined Nixon's support for affirmative action and black voting rights and his low-key desegregation of southern schools.2 While acknowledging the United States Supreme Court forced the president's hand, Tom Wicker credited Nixon with peaceful desegregation: "it was Richard Nixon personally who conceived, orchestrated and led the administration's desegregation effort."3
While many of Nixon's domestic policies have received scholarly attention, his efforts to foster minority business enterprise have not been studied in depth-an oversight given the recent storm over contract set-asides for minority firms.4 In 1989, the U.S. Supreme Court in City of Richmond v. Croson struck down racial classifications for local public contracts unless they were temporary and geared to remedy identified discrimination. The Croson decision raised doubts about the constitutionality of all set-asides and questions about how these programs began. According to the political scientists W. Avon Drake and Robert D. Holsworth, Richmond's set-asides originated with the ideas of local African-American leaders and the election of a black majority on the city council.8 The political scientist George R. LaNoue noted set-asides' bipartisan appeal among national politicians who were "buoyed by a powerful rhetoric of sharing the economic pie."7 The sociologist John David Skrentny considered Nixon's support for affirmative action and minority business enterprise "race-reifying." But how and why the president endorsed set-asides remained elusive.'
Nixon helped lay the foundation for minority set-asides by forming the Office of Minority Business Enterprise (OMBE) and expanding federal procurement from firms owned by African Americans and Hispanic Americans. In so doing, he co-opted a fashionable concept: Black Power. During the 1960s, many African Americans rejected the civil rights movement's stress on nonviolence, interracial coalitions, and government measures to alleviate poverty and achieve integration.9 Such leaders as Malcolm X, Stokely Carmichael, and Floyd McKissick trumpeted separatism and endorsed the need for racial pride, all-black institutions, and economic independence.'o With many whites wary of racial integration and anti-poverty programs, pennywise politicians endorsed some black separatist ideas. In 1968, Nixon advocated "black ownership . . . black pride, black jobs, black opportunity, and yes, black power in the best, the constructive sense of that often misapplied term."" Black Power was an oppositional, but elastic, concept which the Republican candidate stretched into a mainstream proposal for black capitalism.12
Nixon endorsed black capitalism for many reasons. Philosophically, the president and his aides sought to replace the melting pot concept, where distinct ethnic and racial cultures disappear, with one blending economic opportunity and separatism. Nixon's statements on school desegregation and fair housing defined an "open, pluralistic society" as one in which the individual enjoyed "open choices" and "the mobility to take advantage of those choices." Both statements played down the importance of integration: "We cannot be free, and at the same time be required to fit our lives into prescribed places on a racial grid-whether segregated or integrated." Nixon dubbed this rhetoric "excellent" and urged his aides to quote it.13 The president supported separate minority institutions in a number of areas, including "self-determination" for Native American tribes and greater funds for historically black colleges. Nixon also infused needed cash into minority-owned businesses that would contribute to the movement of minorities, especially African Americans, into the middle class-and the Republican party.14
Boosting minority enterprise had many practical and political advantages. Nixon, similar to President Lyndon B. Johnson, proposed a program to raise minority incomes and self-respect, easing the unrest that had overwhelmed cities during the 1960s.15 Minority entrepreneurship advanced Republican ideals of self-reliance, private enterprise, and individualism. It appeared to put Nixon ahead of liberals in responding to trends within the black community. The program seemed politically benign, for it coincided with the American Dream of success through toil. By inviting blacks to acquire a stake in the freemarket economy, it appeared inclusive without enforcing integration in white schools and neighborhoods. In fact, the president publicized his minority business policies to quell criticism that he was indifferent to civil rights.16
The minority enterprise policy unfolded in three major stages. Nixon first esn,oused black canitalism during the election of 1968. Throughout 1969, or phase two, minority enterprise faltered as the policy, run by the Commerce Department, became mired in organizational difficulties. Phase three, spanning the years 1970 and 1971, saw the program's maturation as government officials, guided by White House staffers, expanded procurement from minority-owned firms, deposited federal funds in minority banks, and secured OMBE's first budget. Although not complete, by late 1972, the contours of a useful, but limited, new civil rights program had emerged.
The Birth of "Black Capitalism"
Nixon's support for minority entrepreneurship emerged during the presidential campaign of 1968. In response to the urban race riots, he voiced a message that combined repression with reform.l7 Appealing to whites uneasy over crime, Nixon rejected violence as a protest tactic and pledged to uphold law and order. To heal racial tensions and extend opportunity to ghetto residents, he espoused aid to minority enterprises. Without fully comprehending the many challenges facing African Americans, Nixon paid lip-service to a form of economic black separatism.
Nixon's stance reflected his white, middle-class world view, centrist political instincts, and,`of course, the attitudes of advisers. Viewing urban violence through the lens of financially-comfortable suburbanites, Nixon and his all-white staff insisted upon maintaining law and order above all else. "This is not an issue for vagueness or equivocation," declared one aide. "It is important to tell the Black Power militants they are wrong, that there are no extenuating circumstances for violence."18 Campaign workers sometimes attributed crime to minorities. Upon a news dispatch detailing the murder of a policeman by one youth, a Nixon adviser jotted: "RN-note-This was probably a Negro youngster."19 Nixon himself publicly criticized the Report of the National Advisory Commission on Civil Disorders for its "undue stress" on white racism as a cause of urban unrest."
To deal with civil disorders, Nixon's more conservative advisers endorsed greater use of police squadrons, derided Great Society programs to relieve slums, and offered individual initiative as the solution to poverty. The conservative speech writer Patrick J. Buchanan favored confronting rioters with "maximum essential force at the earliest possible moment" because "too much force will anger the innocent" and "too little will excite and encourage the criminal minorities."" In a memorandum to Nixon, the economist Alan Greenspan rejected the liberal notion that federal anti-poverty projects would raise minority incomes and lower the crime rate. He attacked leftwing politicians for stressing that "capitalism is exploitation and therefore Negroes, being non-owners of property, are being exploited." To resolve the problem, Greenspan proposed shifting federal policy from "reparations for past exploitation" to measures that "help Negroes help themselves."2 But he failed to propose any specific policies to achieve that aim.
Although they responded more sympathetically to AfricanAmerican concerns, Nixon's more liberal aides reached similar conclusions. "There's a danger," wrote the speech writer Raymond K. Price in 1967, "in letting the rash of riots harden attitudes into a simple formula of `it's us against them."' The Long Island native attacked liberal Democrats "who, faced with a riot, beat their breasts in a chorus of collective mea culpas" and white conservatives "who don't recognize the cultural gulf between the ghetto and suburbia." Yet, Price did not fully grasp that "cultural gulf" himself. He naively proposed solving the urban problem by replacing "the Negro habit of dependence" with "one of independence" and "personal responsibility."23 By viewing poverty in terms of dependence versus independence, Price, like Greenspan, overlooked white racism and blamed its black victims.
As the presidential primaries approached, Nixon's liberal and conservative aides concurred on another point: Their candidate needed to reach out to disadvantaged groups. To the anticipated question "Who are you for-the haves or the have nots?" Price urged Nixon to answer: "I'm for both" through "investing our resources in an enterprise that raises the level of the whole society."24 Perhaps remembering Nixon's support of civil rights during the 1950s, Buchanan agreed. "We ought to be thinking of material that will make points with the Negro," he wrote. "These people are not locked into LBJ; they are not particularly hostile to RN . . . and maybe some of them can be sold on RN."25 If Price and Buchanan represented opposite ends of the political spectrum, both men, like their boss, balanced principle with political expediency.
Nixon wove together the strands of his advisers' thinking. Realizing that mounting crime "angered" voters, the Republican candidate called for expanded police forces and lambasted Supreme Court rulings that limited the ability of law enforcement officers to grill suspects and secure confessions." "The most fundamental civil right," Nixon told Bostonians in February 1968, "is the right to be safe from violence." While acknowledging that greater "force is needed," he proclaimed that "force alone is not enough." To forestall "violent revolution," the Republican candidate endorsed peaceful means to achieve "the progress revolutionaries talk about but seldom deliver upon."27 By assuming the role of reformer, Nixon sought to blunt the appeal of black separatists.
Two months after his address in Boston, Nixon set out specific remedies to the urban crisis. In a pair of radio broadcasts titled "Bridges to Human Dignity," the candidate offered poor blacks not "dependency" but "a piece of the action."za He proposed tax incentives to corporations investing in depressed neighborhoods, expansion of tutorial assistance and job training, and more government loans to fledgling minority entrepreneurs and homeowners.29 "Black extremists are guaranteed headlines when they shout 'burn' or `get a gun,"' he noted, "but much of the black militant talk these days is actually in terms far closer to the doctrines of free enterprise than to the welfarist 30's."3o On that last point, Nixon conveniently failed to mention his own previous support of New Deal-like programs.
The idea of fostering minority enterprise had merit. In 1969, blacks and Hispanics, comprising 17 percent of the population, owned 4 percent of the nation's businesses and held just 1 percent of its total business assets.31 Minority enterprises tended to be small-scale and service-oriented. No minority-owned company made Fortune magazine's list of the one thousand largest American businesses, and 58 percent of black businesses were in the retail and service sectors.32 The low state of minority entrepreneurship stemmed from many factors, including shortage of capital, lack of technical and managerial skill, and competition from larger, better-financed white firms. Failure rates for minority-owned companies remained high, and African-Americans held business in low esteem. "More often than not," Abraham S. Venable, a Commerce Department official, declared in 1967, "many Negro businessmen are a symbol of frustration and hopelessness rather than an example of achievement, success, and leadership."33 Minority entrepreneurs needed greater encouragement and dollars.
Since President Johnson had begun to aid minority businesses, Nixon's proposal for "black capitalism" was less original than he suggested. Congress in 1967 passed anti-poverty amendments that boosted the Small Business Administration (SBA) budget to $2.65 billion and required the agency to funnel half its loans to blacks and whites in ghetto areas.' Yet, LBJ's policy to use SBA loans to foster minority enterprise, "Project OWN," was just underway.35 During the last half of 1968, 5.7 percent of SBA money went to minorities, a small but respectable percentage considering that many blacks were poorly educated and Latinos received little attention from the federal government.36 As John David Skrentny pointed out, both Johnson and Nixon used affirmative action and minority business enterprise as crisis management tools, that is, as policies to promote minority economic development and thus allay urban unrest.37
Principle as well as expediency moved Nixon to outdo LBJ. Aiding small entrepreneurs advanced equal opportunity, social mobility, and economic independence-ideas associated with moderate Republicans. President Dwight D. Eisenhower established the Small Business Administration in 1953. A relentless scrapper, Nixon no doubt respected aspiring entrepreneurs who took chances more than stereotypical, self-satisfied corporate executives who preferred management to risk. Beginning in his youth, Nixon favored small businesses over large corporations. His father, a "nickel-and-dime" grocer, purchased gasoline from the upstart Richfield Oil Company instead of the gigantic Standard Oil Corporation. Nixon shared his father's dislike of chain stores.' "I know we can't go back to mom-and-pop grocery stores," the president once told his cabinet, "but does everything have to be sold in a supermarket?"39
In many ways the archetypal representative of such bourgeois values as sobriety, thrift, and self-reliance, Nixon sought to impart these values to minority groups. In the words of Sallyanne Payton, an African-American member of Nixon's White House staff, the president and his aides strove to close the economic gap between the races by "getting more Black people to behave like whites," that is, "get into business, go to school, become homeowners."40 At stake for Nixon was social stability: "People who own their own homes don't burn down their neighborhoods."41 Expanding the black middle class, Nixon believed, would address "the causes of the Negro problem rather than its symptoms."42
Nixon's emphasis on black capitalism represented a political master-stoke that pleased conservatives and left liberals scratching their heads. Such right-leaning periodicals as Time and the Wall Street Journal termed the Republican candidate's proposals "thoughtful" and "promising."43 In New York, James L. Buckley, the Conservative Party's candidate for the United States Senate, parroted Nixon by praising the "spirit" of "militant black leaders who have been preaching black initiative, black capitalism, and yes, black power." Buckley, who won a U.S. Senate seat in 1970 with President Nixon's support, embraced black power advocates as comrades-in-arms in the conservatives' crusade against "that huge monster on the banks of the Potomac."44
African-American reaction to Nixon's initiative proved mixed. Floyd McKissick, the black separatist president of the Congress of Racial Equality (CORE), echoed Nixon: "Handouts are demeaning. They do violence to a man, strip him of dignity, and breed in him a hatred of the system."45 But black capitalism drew little praise from integrationist civil rights leaders or the African-American press. They found Nixon's "law and order" rhetoric raciallv divisive and the candidate himself untrustworthy. The Rev. Ralph David Abernathy, who had succeeded Martin Luther King, Jr., as head of the Southern Christian Leadership Conference (SCLC), registered his disapproval. Abernathy backed liberal Governor Nelson A. Rockefeller of New York for the Republican presidential nomination, and after "Rocky" lost to Nixon, endorsed the Democratic nominee, Vice President Hubert H. Humphrey. The Leadership Conference on Civil Rights hardly took notice of Nixon's black capitalism proposal.46 The Pittsburgh Courier later accused Nixon of championing black capitalism to divide African Americans and undermine "black power as a political force."47
Liberal politicians eventually came to endorse Nixon's goals. At first, Rockefeller puzzled over black capitalism. The governor had favored greater public and private spending to rebuild slum areas.48 Jeffrey Geilich, a liberal staffer, advised Rocky to attack black capitalism as "segregationist."49 But Graham T. Molitor, Rockefeller's pollster, saw black capitalism as a clever way to steal a militant slogan. "The development of this issue is a stroke of political genius," he conceded. "The only criticism we can suggest is a carping one of challenging Nixon's commitment to a government-assisted solution."So Rather than carp, Rockefeller decided to mimic Nixon by favoring federal aid to minority-owned small businesses.51
Liberal Democrats also followed Nixon's lead. To relieve urban blight, Humphrey advanced an eight-billion-dollar domestic "Marshall Plan" modeled after Great Society programs. He only belatedly backed greater aid to minority businesses, even though he had supported both civil rights and assistance to small businesses during his years in the Senate. The New York Times also endorsed minority businesses, while cautioning that "most Negroes, like most whites, are not going to be entrepreneurs."52
The Times editorial raised the shortcomings of Nixon's black capitalism. If minority enterprise emerged as a "sexy issue," Nixon's failure to address other civil rights matters at similar length suggested that he saw this scheme as a cure-all. Since the candidate certainly did not intend to convey such a message, why did he? Relying exclusively on their own values and intuitions, Nixon and his aides underestimated the complexity of African-American social, economic, and political concerns. They ignored the fact that discrimination in home sales and wage scales helped keep African-Americans in urban ghettos. Similar to such white, liberal sociologists as Daniel Patrick Moynihan, Ray Price partly attributed black dependency to the legacy of "slave culture."53 During the election of 1968, at least, Nixon and his aides made little effort to broaden their understanding and seek information from African-American leaders. When one correspondent inquired what blacks besides the basketball star Wilt Chamberlain were advising Nixon on racial problems, members of the candidate's brain-trustBuchanan, Greenspan, and H. R. Haldeman-told their subordinates to say nothing.' So Nixon presented black capitalism as both a panacea and a fait accompli.
Between Election Day and his inauguration, Nixon heightened African-American expectations. Either buoyed or shaken by his narrow victory, the president-elect vowed to "bring the American people together" and "bridge the gap between the races."55 To do that, he reached out to African Americans, who had voted overwhelmingly for Humphrey. Before taking the presidential oath, Nixon promised black leaders that he would "do more for the Negro than any president has ever done."56 He would start by assisting separate minority institutions, such as businesses.
Growing Pains: The Office of Minority Business Enterprise
During 1969, or phase two, Nixon's black capitalism scored few gains. Like his other civil rights policies, Nixon first left minority enterprise to a cabinet official, Commerce Secretary Maurice H. Stans, and withdrew to handle other matters. Hampered by excessive promises, narrow focus, and structural problems, not to mention meager funding, bureaucratic in-fighting, and popular skepticism, the infant program struggled to take its first steps.
Before announcing his policy for black capitalism, Nixon remained true to form by calculating its pluses and minuses. In private, the president termed aiding minority businesses "long overdue" and a "high priority." "Politically," he allegedly told Stans, "I don't think there are any votes in it for us, but we'll do it because it's right."57 At the same time, Nixon understood the program's "enormous problems." "Any small business," he wrote Stans, "has a 75% chance of failing" and a "minority small business has a 90% chance of failing-good luck."58
That splash of reality did not cool the president's ardor. After taking office, Nixon formed a cabinet committee on minority enterprise. In accordance with the committee's advice, particularly that of Stans, the president pressed for immediate results.59 On March 5, 1969, he signed Executive Order 11458 founding the Office of Minority Business Enterprise (OMBE) within the Commerce Department.60 In so doing, Nixon bypassed Congress.
Although the president did not get involved with OMBE's operations, he supported its efforts, at least verbally. Nixon discussed black capitalism with advisers, conferred with African-American business leaders, and appointed a national advisory council to study minority enterprise.Sl In handwritten notes, he stressed the rewards of business ownership-"dignity, pride, self-respect"-for disadvantaged groups.62 Contrary to what he told Stans, Nixon came to see this program as his "best political] theme" regarding middle-class blacks who comprised, he estimated, 20 percent of the African-American vote.63 "[E]verything we can do," argued Harry S. Dent, Jr., Nixon's southern political adviser, "to increase minority business holdings, minority home ownership, and more jobs for minorities, will in the long run mean more to the minorities and help increase our political favor."64
Minority business enterprise fit within the president's ad-lib political strategy. "Like most politicians," Dent recalled, "Richard Nixon did not hesitate to work for votes on both sides of even such an emotional issue as the race question."65 Concerned that Governor George C. Wallace of Alabama might launch another independent presidential campaign in 1972 and draw conservative votes away from the G.O.P. ticket, Nixon made public overtures to white southerners.66 He nominated southern conservatives to the Supreme Court and in 1969 moved to slow down federal pressure for school desegregation in Dixie.67 But beneath such gestures, he backed a moderate policy agenda which achieved record school desegregation in 1970 and did not write off the African-American vote entirely. Dent, who favored minority enterprise, strove both to "watch Wallace" and "woo blacks." OMBE emerged as an important political initiative. To win over conservative southern whites, the president often welcomed criticism from civil rights leaders.68 But when African-American denunciation grew strident, Nixon would tell aides to publicize OMBE's work to demonstrate his concern for minority rights.69
Outside advice reinforced Nixon's commitment to minority business enterprise. Early in 1970, while pondering school desegregation policy, Nixon met with a group of professors from Harvard, Columbia, and the University of California at Berkeley. These academics advised him to "shift policy to helping and backing the strong, instead of putting all effort into raising up the weak." They also contended that whites "have to give the black middle class a cultural legitimacy"-a proposal that sounded like Nixon's "Bridges to Human Dignity."7 During a meeting with senior advisers and members of Congress, in 1971, the president promised to "appeal to Negroes" through "jobs, schools, opportunity," and the idea of "freedom of movement."71 Nixon had already expressed such ideas in his statements on school desegregation and fair housing.
Commerce Secretary Stans appeared suited to the task of running the minority enterprise effort. Although known for button-down conservatism during his years as Eisenhower's budget director, the Minnesotan embraced black capitalism. A self-described "Horatio Alger-type" who had risen from working-class origins to build a major accounting firm, the commerce secretary believed in expanding opportunity and rewarding success.72 As a fund-raiser for Nixon's presidential bids, Stans sensed "vote-getting potential" in minority business enterprise. "With a relatively small budget impact," he wrote domestic policy chief John D. Ehrlichman, "this is one program which can put the Administration in a good light with Blacks without carrying a severe negative impact on the majority community, as is often the case with civil rights issues."73 Self-made, pragmatic, and politically astute, Stans typified the men around Nixon.
Stans worked hard to foster black capitalism. Along with colleagues in the cabinet, the commerce secretary persuaded Nixon to drop the narrow "black capitalism" slogan and rally Hispanics and Indians under the banner "minority business enterprise."74 Stans also drafted the president's executive order establishing the Office of Minority Business Enterprise.75 To build up the program, the commerce secretary, in keeping with his conservative Republican background, favored voluntary cooperation between the public and private sectors. Stans urged the presidents of Ford Motor Company and McDonald's to increase the number of minority-owned dealerships and franchises.76 He also promoted Minority Enterprise Small Business Investment Corporations (MESBICs). Funded by SBA and private sponsors, MESBICs loaned money to minority entrepreneurs.7 The secretary's devotion to this policy proved genuine. Upon learning that Shell Oil had produced a film profiling minority service station owners, Stans remarked that he would be "glad to see it."79 In 1970, he traveled about the country to build public support for minority entrepreneurship."
Despite these actions, the program floundered in 1969. No less than the president, Stans raised expectations about this policy's prospects. The commerce secretary publicly promised to gain commitments for one hundred MESBICs by June 30, 1970, and he succeeded.sl Landing commitments was one thing; breathing life into these hideously-named creatures was quite another. Worried that Congress might not approve, the Bureau of the Budget proved hesitant to fund MESBICs.82 The private sector, sensing little profit, often balked.83 By July 1970, the Commerce Department had licensed thirteen MESBICs.4 A year later, it had approved only thirty-four MESBICs, with twenty more under consideration.' Publicizing this program was important, but policy-makers historically have oversold new initiatives and Stans, like Nixon, should have been more sober in gauging OMBE's initial impact.86
The administration widened the gap between OMBE's promise and performance by limiting its mission. After the cabinet committee on minority entrepreneurship weighed proposals to build the program, Stans stressed that OMBE "will not become involved in individual cases or with programs at the operational level" and will not "seek to encroach upon existing functions" of other federal agencies. In foregoing a legislative mandate, Stans restricted the agency to "stimulation and coordination" of existing public and private programs. He respected the domain of the General Services Administration (GSA), which oversaw procurement, and that of SBA which made loans, leaving OMBE "without the necessary clout to coordinate programs that are diffused throughout the government."ss Furthermore, Stans and OMBE's first director, Thomas F. Roeser, formerly a public relations specialist at Quaker Oats Company, developed few yardsticks to measure the program's progress.89 By mid-1969, OMBE had secured only two assistance grants for minority businesses.90
To be fair, most of OMBE's problems lay beyond Stans's reach. There is no evidence that Nixon wanted a broader mandate for the agency, and the decision to exclude Congress from policy-making was understandable. Conservative members of the House Select Committee on Small Business had regarded LBJ's funneling of SBA loans to minorities as "discrimination in reverse." Yet if Nixon planned to shun Congress, he might have directed the policy more closely. Noting that federal departments of equal rank rarely bend to each other, an SBA official proposed using a White House adviser, not a cabinet officer or new agency, to oversee minority enterprise. This advice never received consideration, and White House coordination of minority enterprise did not begin until 1970, after the policy had faltered.91
Why did White House officials forego brokering the minority business effort? New to governance, the president and his staff did not understand the challenges involved in launching a brand-new agency. On top of defining OMBE's functions, crafting an agenda, and publicizing the policy, the commerce secretary and OMBE's director spent considerable time gathering data, hiring staff, establishing regional offices, persuading business leaders to serve on the National Advisory Council on Minority Business Enterprise, and trudging through endless reports, paperwork, and strategy sessions. To develop ideas, Stans also established task forces on capital development, construction, and government contracting. The commerce secretary surely qualified for overtime pay. Yet, OMBE's structural problems remained unsolved.92
OMBE's difficulties included staff inexperience and frequent changes in leadership. Trained in public relations, Roeser, OMBE's director, proved a poor administrator and left the agency after just six months.93 To enhance the agency's standing with minority groups, the commerce secretary replaced Roeser with Abraham S. Venablean, African-American.94 Described by Stans as "husky" and "amiable," Venable possessed managerial experience and brought stability to OMBE. After Venable departed, in 1971, John L. Jenkins, a black lawyer and a former business executive, assumed command of the agency. While there is no evidence that Jenkins proved less able than Venable (Stans praised both men), all these comings and goings took their toll as the OMBE struggled to gain its footing.95
From its early days, OMBE also endured paltry funding. For two and a half years, Stans and his aides worked without a budget for the wobbly agency. To reduce inflation fueled by the Vietnam War, Nixon in 1969 planned no new domestic programs and set out to pare back such Great Society programs as the Office of Economic Opportunity and the Job Corps.96 The commerce secretary panhandled other departments for funds.97 With its amorphous duties, revolving door leadership, and dependence upon other departments for financing, OMBE hardly earned the respect of fellow agencies during its first year in business.98
Turf fights between OMBE and SBA hindered the minority enterprise policy. Both agencies possessed different prerogatives and goals. Title 8(a) of the Small Business Act of 1953 gave SBA the power to award government contracts to small or "non-competitive" firms and to loan money for business ventures. While OMBE chief Roeser urged more aid to blacks, SBA chief Hilary Sandoval, the ranking Hispanic in the Nixon administration, doubled the volume of SBA loans and 8(a) contracts to all minorities during 1969. The rivalry between the two agencies grew "furious" as Roeser and Sandoval jousted over who would announce the government's first grants.loo Other offices took sides. A Treasury Department report in 1970 identified the Small Business Administration as having "the programs and the potential to be the lead agency in the minority business enterprise program" and urged OMBE's merger into SBA.101
Personality differences did not help matters. Arguing that Sandoval lacked sufficient business experience for the SBA post, Stans urged Nixon not to nominate him. After the appointment went through, Stans and Sandoval reached "a suitable degree of surface harmony."102 But it remained doubtful whether SBA's chief ever won Stans's confidence. One Republican party official noted that Sandoval did not get along with the secretary of commerce.103
In this context, coordinating the minority business effort became taxing. To secure private funding for MESBICs, the Office of Minority Business Enterprise and Small Business Administration operated on different planes. OMBE officials appealed to corporate leaders' "sense of social involvement" and won some commitments. SBA, on the other hand, made its pitch "on a strictly profit and loss basis," and sometimes frightened sponsors away from these high-risk ventures. To solve the problem, Stans told Venable to have MESBIC applications sent to OMBE, not SBA.lo" There was further evidence of a lack of teamwork. SBA officials in 1971 had to request a briefing on OMBE's programs.105 Three years later, a White House staffer lamented that the two agencies "have often failed to cooperate" on minority business projects.106
Divided between separatists and integrationists, African-American leaders expressed dismay over OMBE's first-year blues. Separatists who favored the program bit their tongues as the agency endured its growing pains.l07 Yet, integrationist groups, such as the Leadership Conference on Civil Rights, opposed the policy on principle. "It is saddening," the Leadership Conference declared, "to see the old seemingly discredited doctrine of `separate but equal' manifesting itself anew in some of the current plans for enterprise, education, and housing."loo Many integrationists questioned the value of small, minorityowned businesses in corporate America. Instead, they wanted blacks to secure jobs in corporations. Federal Reserve Governor Andrew F. Brimmer, an African American, rejected black capitalism as "one of the worst digressions that has attracted attention and pulled substantial numbers of people off course."'9 The debate among separatists and integrationists, which more or less continued through the 1990s, prevented African Americans from uniting to lend a hand with the minority business policy.
African-American leaders emphasizing the benefits of economic progress disagreed with the integrationists. The problem with minority enterprise, prominent black executives and leaders of the National Urban League contended, lay in its implementation, not its conception. Whitney M. Young, Jr., executive director of the National Urban League, chided Nixon for leaving the program "in shambles" and Stans for failing to name a representative from his organization to the National Advisory Council on Minority Business Enterprise.110 Stans and his aides responded by promising to include an Urban League offcial, and in fact did keep in contact with the organization's leadership.lll
Appeasing Jackie Robinson proved more difficult. The former baseball player, who had supported Nixon in 1960 and later became a corporate executive, endorsed the president's minority business initiative in 1969.112 Yet within a few months, Robinson grew angry with the program's meager returns.ll3 After Stans met with Robinson and other African-American business leaders to urge patience, the one-time Brooklyn Dodger shot back: "I don't think anyone can ask us for patience. Black people have shown a tremendous amount of patience." Though Robinson would later praise Stans's dedication, his critique boded ill for winning over black business leaders.114
Not all black businessmen had a negative view of the administration's program. In 1970, Milton O. McGinty, an African-American civil servant-turned-entrepreneur, defended OMBE's aims by citing his own success. "I know," McGinty argued, "that there is a place in the business world for the minority entrepreneur-despite the contentions by some people that minority businessmen will tend to operate `Mom and Pop' stores." Finding criticism of the program to be more political than constructive, he dismissed efforts to win over civil rights leaders as "not essential," since black capitalism targeted only "a very small minority within the minorities."lls McGinty's last point hit the mark. If Nixon, Stans, and civil rights leaders had accepted minority enterprise for what it was, a small program with useful but limited impact, and then worked to build it without indulging in rhetorical flourishes, they might have achieved quicker results and allayed skepticism.
By promising too much and delivering too little, OMBE in 1969 failed to impress minorities and members of Congress. "Within the minority community," Venable reported, "there is widespread suspicion and distrust" over the "sincerity" of the government's commitment. Venable recounted complaints about the agency's lack of money, influence, and accomplishments as well as concerns that black capitalism would prove either "a myth" or a formula for subsidies "to a few black fat cats."lls During Senate hearings, Charles H. Percy, Republican of Illinois, termed OMBE's record "inadequate" and the government's planning "lax."117
Such criticism prodded the White House to act. Nixon's domestic policy chief, John D. Ehrlichman, summoned officials from the White House, Commerce Department, and SBA to review the policy and quiet discontent. Some Nixon aides urged a complete overhaul.118
"The whole minority business area needs a push," noted Moynihan late in 1969.119 Nixon then began to centralize decision-making within the White House.
The Maturing of Minority Business Enterprise
Throughout 1970 and 1971, or phase three, minority enterprise began to yield results. Credit for its gains belongs to White House aides Robert J. Brown and Leonard Garment, who helped coordinate the policy, to the ever-zealous Stans, to Republican appointees within the departments, and to Nixon, who generally backed his troops. These concentric policy-making circles expanded procurement from minority-owned firms, deposited unparalleled funds in minority banks, refined OMBE's functions, and secured a budget for the agency.120
Robert J. Brown, White House liaison to minority groups, really forced the issue of minority procurement. Late in 1969, Brown drafted a presidential memorandum inviting federal agencies to "help set goals" to expand purchases from minority firms.121 Brown's reference to "goals" recalled the administration's Philadelphia Plan, which required contractors to show good faith in hiring a certain percentage of minority workers. Unlike the Philadelphia Plan, Brown called for decentralized, voluntary decision-making, with agencies drafting their own targets. Since the minority business policy needed a boost, Brown's ideas drew support from liberal White House aides Moynihan and Garment, moderates such as Ehrlichman, and even conservatives such as Bryce N. Harlow.122 Arguing that banks preferred to loan money to businesses with government contracts, Moynihan dubbed procurement "the most powerful engine the federal establishment has to promote minority enterprise."123 General Services Administrator Robert L. Kunzig agreed. A long-time civil servant and former Nixon campaign aide who chaired OMBE's interagency task force on procurement, Kunzig contended that "virtually nothing will be accomplished without" a presidential statement.l24 On December 5, Nixon signed Brown's memorandum.125
The new memorandum reinforced Stans's policies and spawned the first minority contract set-asides. Before Nixon signed Brown's memorandum, Stans read it to members of OMBE's task force on procurement and signaled his support. Agents from the Small Business Administration then presented procurement goals for minority businesses under Title 8(a), the act which suspended competitive bidding on federal contracts for small firms. During fiscal years 1970 and 1971, SBA proposed to award $38 million and $100 million in contracts to small, minority-owned businesses under 8(a). The task force also drafted procedures for agencies to follow in meeting these goals. General Services chief Kunzig alone pledged to purchase $10 million worth of goods from minority businesses during fiscal year 1970.126 In 1971, Nixon endorsed procurement goals for minority firms under 8(a). Although SBA did not achieve the target of $100 million until 1972, policy-makers, under the aegis of Brown, Garment, and Stans, had begun contract set-asides for minorities.123
Why did SBA fail to meet its aims sooner? For one thing, the 8(a) program encountered resistance from the Defense Department, the government's largest procurer, and from Congress. Defense Secretary Melvin R. Laird opposed paying higher prices for goods contracted under 8(a). He objected to an SBA-proposed contract with tiny Garland Foods of Dallas that ran 36 percent above the lowest bid. Laird relayed word to Sandoval that members of the House Appropriations Committee were up in arms over purchases "used for economic development or for payment of subsidies."'29 In 1970, the Senate Appropriations Committee considered an amendment by Senator Allen J. Ellender, Democrat of Louisiana, to limit price differences between small and large firms to no more than 10 percent under the 8(a) program.130 While fiscal conservatism influenced Ellender and his colleagues, they perhaps disliked a program that seemed to favor minorities.
White House staffers broke the bottleneck. Ehrlichman's intervention helped secure the contract for Garland Foods.131 Although not technically handling minority enterprise, Budget Director George P. Shultz proved an important ally. The one-time labor secretary, who had helped to fashion affirmative action and school desegregation policies, backed Garment, Brown, and Ehrlichman by providing SBA with funds to cover the gap between competitive and non-competitive bids under 8(a).TM Garment got tough with the departments by requesting reports on their purchases from minority-owned businesses.133 By coordinating minority enterprise from the White House, where there were officials both committed to the program and close to the levers of presidential power, Nixon fortified this policy.
Yet Nixon refused to go further and apply procurement goals to one key industry: minority construction firms. The idea to use very precise goals similar to the Philadelphia Plan sprang from two officials at the Housing Department, Undersecretary Richard C. Van Dusen and Assistant Secretary for Equal Opportunity Samuel J. Simmons.134 Van Dusen met with his fellow undersecretaries and endorsed the "Los Angeles Plan."135 This grass roots proposal called for setting aside a certain volume of federal contracts for minority-owned construction firms in Los Angeles.'36 Simmons, chair of OMBE's task force on construction, overcame the indifference of other departments and unveiled the plan late in 1970.13' To extend the Los Angeles Plan, Simmons and Stans drafted orders for each agency to prepare "a comprehensive plan with specific goals for fostering minority enterprise in the construction industry."'38 Their emphasis on a "comprehensive" plan with "specific" goals differed from Brown's earlier, more vague memorandum, which only encouraged agencies to fashion their own targets. Garment advised Nixon to approve Simmons's memorandum. Since the president almost always backed minority enterprise, Garment, Simmons, and Stans expected him to sign it. They were shocked when he refused.139
Although it remains unclear why Nixon rejected goals for construction contracts, philosophical and political factors must have influenced his decision. By urging a "comprehensive" plan with "specific" goals, Simmons probably scared the president. Regarding affirmative action, Nixon distinguished between flexible hiring goals, which he supported, and rigid quotas, which he opposed. Such hairsplitting did not concern either Garment or Simmons.
Moreover, the Simmons memorandum reached the president's desk in July 1971, when Nixon began to pay greater attention to bluecollar workers and play down affirmative action remedies. Beginning in 1969, the president had reserved a place for labor union members within his electoral coalition. He appealed to their patriotism and belief in such traditional values as hard work. He met with union leaders such as AFL-CIO President George Meany to win their support.l40 Yet Nixon's relations with Meany cooled when the president nominated Clement F. Haynsworth, Jr., a southern conservative, to the Supreme Court, and then approved the Philadelphia Plan, which Meany resented as a scheme to split the Democratic alliance of labor unions and civil rights groups.l41 By 1971, the political tides had shifted once again as Nixon sought union support for his Vietnam policy, his anti-inflation program of wage and price controls, and his reelection. In July 1971, the president told Chief of Staff H. R. Haldeman that there were many ways to appeal to workers: "Jobs is the main one, but the racial issue and a lot of others can be used."142 Accordingly, Nixon played down the Philadelphia Plan and refused to apply affirmative action to minority construction contractors.
Nixon, the politician, sensed that whites backed minority enterprise conditionally and would reject programs which overtly favored blacks. White contractors and members of Congress such as Senator J. Strom Thurmond, Republican of South Carolina, already had voiced disapproval of "preferential treatment" for minorities.l43 Former Nixon aide John McClaughry, who had helped draft the "Bridges to Human Dignity" addresses in 1968, even questioned the propriety of promoting a separate "minority" business program.l44
If political expediency was Nixon's prime motivation in rejecting the Simmons memorandum, he erred; Thurmond's concerns aside, Republicans generally backed minority enterprise and might have accepted specific goals for construction contracts. In 1970, the Senate Republican Policy Committee dubbed minority enterprise consistent with the G.O.P's pro-business tenets.l45 Governor Ronald Reagan of California praised SBA's "boot strap" programs to assist minority entrepreneurs.'4 Conservatives such as Reagan might have gone along with contracting goals to foster enterprise, promote social stability, or win minority votes. With an eye toward his Mexican-American constituents, Senator John Tower, Republican of Texas, argued that "creating more business opportunities for minorities does not mean that others in our society have to give up opportunities" because America boasted "substantial amounts" of untapped capital and resources.147 Stans crafted a sensible response to the critics of procurement goals: "Small business generally has had similar preferences in the past and this step merely notes the need for minorities to participate."148 But Nixon failed to make this case.
The president's opposition to contracting goals for minority construction firms did not undermine the procurement effort. This was, after all, one of the few instances where Nixon reined in the policy. Van Dusen and Simmons continued to enforce the Los Angeles Plan for minority contractors in southern California. SBA and GSA proceeded to secure contracts for small, minority-owned firms under the 8(a) program. Garment and Brown kept after agencies and departments to purchase goods from minority-owned firms.l49 Between 1969 and 1975, 8(a) procurement from minority firms sprang from $9 million to $250 million. During the years 1970 to 1975, purchases from minority businesses increased 265 percent, to $475 million.lso Although the United States Commission on Civil Rights later faulted the government for not doing more to procure goods from minority firms, the Nixon administration, beginning almost at ground-zero, compiled an impressive record.151
Another network of policy-makers increased federal deposits in minority-owned banks. The movers behind this program included Undersecretary of the Treasury Charls Walker, Alan Steelman, director of the National Advisory Council on Minority Business Enterprise, and, of course, Stans, Venable, Brown, and the omnipresent Garment. To raise desperately needed capital, Brown, with Stans's support, recommended placing government revenues in banks that made loans to minority businesses.152 The proposal ran into opposition from Treasury Secretary David M. Kennedy, a former banker, who predicted it would "generate political pressures to re-locate deposits for the benefit of other interest groups."153 Garment and Walker reassessed their plans. Backed by Stans, Brown, and Steelman, the two men decided to aid minority-owned banks directly.z4 In so doing, they would provide capital for minority business ventures, bolster financial institutions, and pay homage to another form of black separatism.lss By late 1971, Stans and Walker promised to pump $100 million into minority-owned banks, with one third of the money coming from the federal government.l56
The bank deposit program encountered stiff resistance from familiar quarters. Andrew Brimmer, an African-American governor on the Federal Reserve Board, held tightly to his belief in integration. He doubted the viability of separate black banks and rejected measures to strengthen them.l57 Federal Reserve Chair Arthur F. Burns, a conservative economist and a former White House staffer, also wondered whether such a policy would yield significant returns.158 Members of Congress unfriendly to civil rights questioned the program's propriety. Independent Senator Harry F. Byrd, Jr., of Virginia accused the government of forcing federal contractors to deposit money in minority banks.l59
Shrewd decisions, team work, and strong administration support quieted these critics and enabled the bank policy to thrive. Learning from past mistakes, Stans and his allies set credible targets, recruited powerful patrons, and worked together to achieve their aims. They convinced the president to endorse the $100 million target.lso To reach the goal of $65 million in private deposits, Garment and Stans wrote the presidents of such major corporations as General Motors, Heinz, Eastman-Kodak, and Swift Meats.lsl Garment and Walker developed goals for federal departments to follow in placing their funds in minority banks. When officials in two federal departments, Health, Education, and Welfare (HEW) and Labor, dragged their heels, Garment ordered them to get moving.l62 By October 1971, the government had exceeded its targets, securing nearly $200 million in new minority bank deposits.l63
Hardly a panacea for minority enterprise, the bank policy still posted gains. Federal money in minority banks swelled from $35 million to more than $80 million during the period 1971-1973.164 Between 1970 and 1973, total public and private deposits in such banks surged from $400 million to over $1 billion.lss From 1970 to 1974, the number of minority-owned banks in the United States had almost doubled, from twenty-eight to fifty.166
Policy-makers rounded out the minority enterprise program by expanding OMBE's powers and funding the agency. As the National Advisory Council on Minority Business Enterprise prepared its final report, Ehrlichman ordered Garment to tie its proposals to those of other agencies.l67 To enhance minority enterprise, the council favored merging OMBE, SBA, and the Economic Development Administration (EDA), which provided general economic assistance, into an "agency for expanded ownership" at an additional cost of $350 million.l68 Stans objected to this grandiose scheme, partly because EDA had never played a key role in minority enterprise.l69 Finding little "meat" in the expanded ownership idea, Garment and his deputy, Bradley Patterson, agreed.' With Garment's support, Stans and his aides drafted their own plan, which included an assistant secretary for minority enterprise within the Commerce Department, added oversight powers and money for OMBE, local OMBE affiliates, and legislation to ease the development of MESBICs.17l
Nixon endorsed Stans's proposals. Late in 1970, the managementconscious president toyed with various plans to reorganize the executive branch. Leaning toward the advisory council's plan, Nixon informed Ehrlichman that he wanted to merge SBA with OMBE.'2 But Stans argued that tinkering with OMBE would "impose a reorganization within a reorganization." The result, he argued, would "only confuse everyone" and again sow doubt among minorities about "the Administration's commitment." The secretary advocated "greater thrust to the existing program" through new legislation.'3 Nixon agreed. He submitted Stans's proposals to Congress in 1971, and signed an executive order to enhance OMBE's coordinating duties.l74
Stans also fought for OMBE's first budget. Between 1969 and 1971, the agency obtained its operating funds from other departments. To finance technical assistance grants and new OMBE affiliates, Stans and his lieutenants requested a budget of $188 million in fiscal year 1972.75 With the administration seeking to restrain inflation through wage and price controls and spending reductions, Budget Director Shultz and Ehrlichman offered $130 million over two years. Disappointed, the commerce secretary took his case to the president. Nixon grumbled that "it is ridiculous to have Stans appeal this item." Wielding the budget ax, the president approved $40 million and $60 million, respectively, for OMBE during fiscal years 1972 and 1973.l7 Stans's appeal probably saved OMBE from deeper cuts, given Nixon's budget-slashing mind-set. In fact, Stans's funding request for technical assistance was high enough to please the Congressional Black Caucus and modest enough to deflect criticism from fiscal conservatives on Capitol Hill.177
Minority Business Enterprise: A Balance-Sheet
Stans's legislative proposals helped define OMBE's mission for the next two decades. At Nixon's behest, Congress passed legislation to foster MESBICs, though it did not establish an assistant secretary for minority enterprise.178 OMBE, later known as the Minority Business Development Agency, continued to referee minority enterprise policy.179 The agency also dispensed grants to trade associations and nonprofit groups that provided managerial and technical assistance to minority entrepreneurs.'
By late 1971, the outlines of minority business policy were set, although OMBE was not scandal-proof. The agency's reputation suffered when such White House staffers as Robert Brown, Frederic Malek, and Kenneth Cole used it to advance Nixon's reelection campaign.lsl After hearing that "one of our most stalwart black supporters in Texas" had applied for an OMBE grant, Brown wrote: "I would like to see him funded (by letter contract if necessary)."182 Some applicants for grants or federal contracts were required to declare their support for the president. The chair of the Watts Labor Community Action Committee complained of "unbearable" pressure to get "in line" behind Nixon's reelection bid or lose a $1.5 million contract. Derek Hansen, an OMBE employee, resigned, charging that the agency's "main purpose was political."183
After Nixon's reelection, White House officials continued to use OMBE for ill-gotten political gains. In January 1973, Jim Brown, the former football player who had backed the president's reelection, applied for a $327,000 OMBE grant to finance his Black Economic Union (BEU). Brown's organization had received a $100,000 grant the previous year and, according to Tod Hullin, an Ehrlichman aide, it had "accomplished absolutely nothing." Nevertheless, Hullin prepared an option paper on whether or not to raise BEU's stipend to $250,000 for 1973. "Any increase would be blatantly political," Hullin admitted, with embarrassing candor, because an "increase in funding is not justified on the merits." Ehrlichman approved the $250,000 grant, then scrawled: "consider full funding on assessment of performance."184
Corruption also tainted SBA's 8(a) program. Members of the SBA's procurement staff handed out contracts to some "minority" firms that were, in fact, mostly owned by whites. When SBA chief Thomas Kleppe moved against such tactics the white partners allegedly "got the 'blacks' to 'cry' that SBA was trying to kill the 8(a) Program."185 In 1973, Kleppe issued new 8(a) rules requiring that "actual ownership and control must be in the hands of the eligible minority" and that participating small businesses show "viability."lss Kleppe proved less sensitive to the appearance of favoritism; he defended an $863,000 contract under 8(a) to Cade Services, a firm owned by former White House staffer Robert Brown.l87
The policy implications of such goings-on should not be exaggerated. Politics had influenced earlier small business programs; during the 1950s many Republicans envisioned SBA as a patronage plum, an agency "committed to political ends."ls The OMBE scandal proved minor when compared with the White House's "shakedown" of major corporations to finance Nixon's reelection. Stans, the finance director for the Committee for the Reelection of the President, and the attorney Herbert Kalmbach "marched through the corporate world like Sherman marched through Georgia," declared Fred Wertheimer, an attorney for the left-leaning public interest group Common Cause.189
OMBE continued to be plagued by oversights dating to the period 1969 to 1971. During most of the 1970s, OMBE did nothing to help other disadvantaged groups, such as women. A few minority business leaders found the agency unresponsive and its programs fragmented.190 In 1974, members of President Gerald R. Ford's staff studied these problems and recommended reform.191 Ford responded as Nixon had, signing a memorandum urging more inter-departmental cooperation.192 OMBE's chief difficulty encompassed money, not procedure.
"The academic argument of one agency or the other is not the one we should get involved in," stated Berkeley G. Burrell, president of the National Business League, an African-American organization. "What is needed is a much greater commitment by the government."'93
Nixon's successors declined to increase funds for OMBE. The agency's $60 million budget for fiscal year 1973 remained steady under Presidents Ford and Jimmy Carter, then dropped under Ronald Reagan and George Bush." During Bush's presidency, Stans served on a commission to revive OMBE, with little success.l9 President Bill Clinton's allotment for the Minority Business Development Agency, OMBE's successor, amounted to $38 million in 1994.196 Nixon might have prevented these cuts by investing in an "agency for expanded ownership," as his advisory council had recommended. But it remained uncertain whether this larger office could have fended off budget cuts during the frugal nineties.
By the 1990s, more groups fought for a slice of the pie. By espousing minority enterprise, Nixon encouraged non-black minorities, especially Hispanics, to form businesses. By 1989, there were 234 state and local set-aside programs covering African Americans, Hispanics, American Indians, Asian Americans, Eskimos, Aleuts, and women.197 The expansion of set-asides yielded mixed returns. On the positive side, other disadvantaged groups gained access to public contracts. In 1979, President Carter signed Executive Order 12138 which prohibited bias against female entrepreneurs and the Women's Business Ownership Act of 1988 authorized the federal government to promote women business enterprises.193 But some locales have tried too hard to satisfy all racial groups. Richmond, Virginia included Aleut- and Eskimo-owned businesses in its set-aside program even though there was no evidence of Aleut or Eskimo businesses in that city.199 Critics, who dismiss set-asides as favoritism, have stressed such excesses and the Supreme Court in 1989 insisted upon tighter rules for fighting discrimination in public contracting. "Proper findings," Justice Sandra Day O'Connor wrote in City of Richnnd v. Croson, "are necessary to define both the scope of the injury and the extent of the remedy necessary to cure its effects."200
During the 1980s and 1990s, the minority business effort faced other challenges. SBA corruption neither began nor ended with Nixon. According to a federally-funded study in 1986, whites owned 20 percent of the "minority" businesses receiving set-aside contracts. During the mid-eighties, an independent counsel investigated Reagan's Attorney General Edwin Meese III for improperly lobbying on behalf of Wedtech, a minority-owned defense supplier.201 By the 1990s, critics assailed the minority business effort from all angles. Some lamented the scant funding for MESBICs.202 A few claimed that SBA set-asides offered "too much of a good thing," making minority firms dependent on the government.203 Up to that point, minority business enterprise had enjoyed bipartisan support as "compassionate capitalism," with set-asides becoming legal under Carter and lasting through Reagan and Bush.2? Then right-wing critics of affirmative action gathered strength and took deadly aim at set-asides. In 1996, Clinton declared a three-year ban on new set-aside programs.25
Despite occasional losses, the minority enterprise balance-sheet showed a net profit. Figures on business growth proved striking. Between 1969 and 1991, federal grants and loans to minority-owned firms jumped from $200 million to $7 billion while government purchases from such firms grew from $83 million to $17 billion.2 A good deal of this progress occurred during the Nixon and Ford years. By 1976, eighty-two MESBICs had been formed. Fifty-six of the top one hundred black firms in 1981 had emerged between 1969 and 1976.2o7 From 1969 to 1987, the total number of minority-owned businesses quadrupled from 320,000 to 1.2 million.2? During the 1970s, spending on most federal programs rose alongside economic and population growth, as the historians Hugh Davis Graham and Irwin Unger have noted.20 Yet, Nixon intended to expand opportunities for minority firms and did so within a short time.
Undeniably, the advance in minority enterprise also can be traced to non-governmental factors. The talent and initiative of individual entrepreneurs helped spur minority business growth.210 As African Americans and other minorities gained access to higher education, partly as a result of affirmative action, they obtained technical and managerial expertise and were able to form "capital intensive" firms specializing in computer and business services, manufacturing, and large-scale retailing.211 When blacks and Hispanics entered college and secured higher paying jobs, their earning power grew and they were able to patronize minority-owned firms in their communities. The development of a "black consumer market" and the growth of black banks expanded the volume of capital available to minority enterprises.212 Even so, given the risks of small business ventures, one wonders where minority entrepreneurs would have been without the policies, especially set-asides, that Nixon and Stans set in motion.2l3
The minority enterprise program's greatest contribution was intangible. As the policy began to deliver results, skepticism of it subsided. In 1970, as criticism had fallen off, Stans told Nixon that "we have successfully crossed the `Continental Divide' on the minority enterprise program."214 In 1972, Californians organized a dinner to honor Van Dusen, Simmons, and the Los Angeles Plan. Over two thousand minority business leaders saluted Stans at a similar banquet in Washington that same year. In 1984, one thousand black and Hispanic entrepreneurs sponsored yet another testimonial dinner to thank Nixon and Stans for the minority enterprise program.215 Although Stans was not the policy's lone architect, minority business leaders rightly sensed his zeal and remembered Stans as "really committed" to it.216
Beginning in the 1970s, the concept of minorities owning businesses gained currency. In September 1970, eighteen months after Nixon formed OMBE, the magazine Black Enterprise appeared on newsstands. Such African-American periodicals as Jet and Ebony began publishing business news and ran articles on the emerging black middle class.2' Younger, urban black leaders, such as Rev. Jesse L. Jackson, advocated business opportunities. Jackson's Chicago-based People United to Save Humanity (PUSH) employed African-American economists. "We would rather own A&P than burn it," declared Jackson, sounding a lot like Nixon.218 Such themes found their way into mass culture. The Jeffersons, one of the most-watched television sitcoms of the 1970s and 1980s, featured the travails and triumphs of George Jefferson, a self-made, dry-cleaning tycoon from Harlem. Jefferson was a Republican and the show's theme song was "We're Movin' On Up."219
Not all minorities aspired to own businesses, nor did the Nixon administration deserve sole credit for these developments. But, as Stans asserted in 1996, "our publicized national efforts created a climate in which business ownership became a new hope for the minorities."220 And Nixon, often lambasted by his critics as unprincipled, genuinely believed in minority business enterprise. He lauded one man for exemplifying "what the minority business program is all about," that is, "opening the full range of business opportunity to all by removing the inherited and institutional barriers to entry."221 Taken out of context, this letter sounds like hyperbole. Placed within the framework of Nixon's deeds, however, it does not ring hollow.
[Author Affiliation]
DEAN KOTLOWSKI teaches history at Indiana Universitv and Butler University. In researching this article, the author had financial assistance from the Bentley Historical Libran at the University of Michigan, Gerald R. Ford Foundation, Rockefeller Archive Center, and the Histon Department at Indiana University, Bloomington. For their comments, he thanks the journal's anonymous reviewers as well as Dean J. Fafoutis, Joan Hoff, George I. Juergens Irving Katz, Michael E. McGerr, Heiko Muehr, and Rick, Earl Newport.
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