Traditional theoretical explanations for the rate of expansion of educational institutions have included the "organizational ecology" model of new foundings as a function of population density, the "institutional theory" argument that foundings are responsive to societal/consumer demand, and theories of political economy which describe foundings as products of capitalist interests and expansion. To test predictions from each of these theories, an analysis was conducted of two-year colleges between 1942 and 1979, a period which represented the most rapid expansion of the colleges. Founding dates of two-year institutions in 28 states were identified; the number of other postsecondary institutions in the states was determined; and state populations, per capita incomes, election data, and other variables were determined from U.S. census data. Study findings included the following: (1) analyses of population changes indicated that new foundings usually accompanied population growth, though for two states the opposite was true; (2) state affluence, as measured by per capita income, was directly related to increased foundings; (3) the existence of both large manufacturing sectors and diverse industrial sectors increased foundings, indicating that these interests translated their need for trained labor into educational policies; and (4) in general, the expansion of two-year colleges was not the direct expression of demand, but the success of the manufacturing sector to organize in the presence of large numbers of young adults. Contains 45 references, definitions of terms, and data tables. (KP)