The Business Development Corporation of North Carolina, 1955 - 1981 : a record of the first statewide development credit corporation in the South

The Small Business Administration was created in 1953 as a compromise between Democrats and Republicans over the closure of the Reconstruction Finance Corporation. In testimony leading to the SBA's establishment, the Federal Reserve Board asserted that short-term credit needs of businesses were adequately met by commercial banks, but that long-term credit and equity was insufficient for small scale manufacturing concerns. At the state-level a movement to assist businesses facing similar financial constraints had already begun. In 1949, for instance, Maine had established the Development Credit Corporation of Maine. During the 1950s this organizational form spread throughout the New England and Mid-Atlantic region. One such bank was established in North Carolina, the first of its kind in the South.

This dissertation investigates the birth, life, and eventual demise of the The Business Development Corporation of North Carolina, (BDC). As a quasi-public agency, the BDC possessed distinct operating rules from the SBA. Its capital base was formed through stock issues versus public funds, and its lending activity was financially supported by private financial members that became members of the BDC. In essence the BDC performed as a risk-pooling agency for the private sector with an objective of stimulating development across the State.

It is concluded that the Business Development Corporation of North Carolina evolved from a concern servicing native North Carolinian entrepreneurial hopes into a state level tool designed to attract and develop big business. Lacking the use of Industrial Revenue Bonds until 1977, the BDC operated as the only state authorized agency providing financial support for business recruitment between 1955 and 1977. Due to competitive forces, such as the growth of the SBA, and to external factors, such as the escalating Prime Rate, activity at the BDC declined in the 1970s. By the end of the decade it was no longer a viable development tool and was subsequently dismissed.