The impression may have been gained that the author feels there are very distinct limits within which small business can be assisted. This is a correct impression. For the majority of small firms there is little that can be done in the way of aid. They provide uneconomic substitutes for jobs which have not been provided elsewhere in American system and the primary solution to the problem is not to be found in perpetuating this state of inefficiency. The continuance of the American economic system is much more dependent on finding an effective way to employ this manpower and these resources than in attempting to continue people in a state of "free" but marginal uncertainty. Most persons are not good entrepreneurs even for a small firm. Certainly there are many fewer good businessmen than the numbers of those who are attempting to be entrepreneurs. Small business is concentrated in the service trades and retailing, fields in which a small amount of capital is required and which involve types of operation that do not compete with the greater efficiency of the mass production industries.

This article proposes to investigate, review, and analyze the data which have been compiled on the subject of profitability in relation to size to determine the foundation on which the statement of large corporations being unprofitable has been based, and to comment on the validity of the assertion as it relates to the relative profitableness of corporations of different size. Such an analysis must necessarily be limited to the objective material available and will not enter into the broader discussion of the social and economic evils usually associated with, and often attributed to, monopoly or big business. No attempt will be made to evaluate the proposition that large-scale business necessarily results in a power position which is so antisocial that a reduction in size would be warranted, regardless of the possible outcome for efficiency and profitability. Such matters can be settled satisfactorily only after long investigation and will involve complex analyses of broad social policy.

Now that the U.S. Federal Trade Commission and the Department of Justice have become more active in their attack upon big business, it seems appropriate to analyze the relative efficiency of large-scale enterprise. The existence of this efficiency has been accepted by certain business groups and set forth as one if not the major justification for the continuance of such large corporations, while evidence to the contrary has been seized, at times enthusiastically and rather uncritically, as sufficient reason for demolishing the giants. Efficiency is a word which is used more often than it is understood. Perhaps this is because it can be employed in different ways which do not have a common meaning. As an economic term efficiency is necessarily related to cost, and that business is most efficient which has the ability to produce and market goods or services at the lowest cost possible under the environmental circumstances lacing the management. It should be quite obvious that comparability as to external circumstances is of primary significance. When businesses are operating under such conditions it is reasonable to conclude that the one with lowest cost is the most efficient. This low cost, however, is significant only if continued for a period of years, so that it is clearly based on efficiency of operation rather than on some unusually fortunate circumstance or accounting adjustment.

The article presents a critical analysis of statutory renegotiation. Since it's inception in 1942, statutory renegotiation of the overall profits of contractors engaged in war business has been the subject of extended discussion. Business interests at first vilified but later grudgingly accepted renegotiation while government spokesmen in and out of the U.S. Congress have praised it most highly. Principal comments in the past have come from those who had an axe to grind on one edge or the other but it is now possible to evaluate critically the results of this legislation. Any evaluation of the accomplishments of renegotiation must first consider the background and intent of the Renegotiation Acts as well as the nature and scope of the avowed aims and then examine the degree to which these purposes have been fulfilled in actual practice. In the first World War, a major public scandal resulted from the excessive profits realized by corporations and individuals and as the production of war goods expanded in 1941, it became increasingly evident that tremendous profits would again be realized.