from the present act and from H. R. 6645. These changes the subcommittee felt would improve the organization and the operation of the Small Business Administration. I might mention at this point that in addition to the distinguished chairman of the subcommittee, Mr. Multer, the subcommittee membership includes four other distinguished members of the House-Mr. Yates, of Illinois; Mr. Steed, of Oklahoma; Mr. Riehlman, of New York; and Mr. Seely-Brown, of Connecticut. In the interest of unanimity I have joined with the members of Subcommittee No. 2 and with other members of our Small Business Committee in introducing legislation incorporating the recommended changes. This bill is H. R. 7478. I have introduced the second Small Business Administration bill because it represents of the minds of Members on both sides of the aisle. Undeniably this bipartisan aspect of the bill will result in better legislation under which the Small Business Administration will operate and, therefore, will be a boon for small business everywhere. Twelve members of the Small Business Committee have introduced the Subcommittee No. 2 bill amending the Small Business Act. I shall not go into detail regarding these changes, for I am sure members of Subcommittee No. 2 will explain the changes to your satisfaction. I, personally, do not know of any opposition to the proposal for a permanent agency either within the House of Representatives or within the Senate. Even though the reasons for permanency are all too obvious, I should like to enumerate a few of them for this committee. First, since World War II, the small firms in our country have found increasing competitive pressures because of rapid growth in all phases of our economy, because of technological change generated by this growth and because of the great benefits derived by the largest business concerns in producing for the defense effort. Of course, the greatest handicap to small business has been our burdensome Federal tax structure. However, as we all are too well aware, small firms have for a great many years encountered difficulty in securing adequate long-term credit, in securing a fair proportion of Government contracts and in maintaining a strong competitive position through the utilization of the latest information on management and technical matters. While I believe there has been progress made in the solution of many of these problems, there still remains much to be done. The programs authorized by the present Small Business Act are designed to provide assistance in these very areas. Only through a permanent, independent agency, however, can the importance of small business to our economy be given the recognition and attention it deserves. An independent agency, acting as a spokesman for small business among the various Government departments and agencies, cannot achieve the necessary cooperation when the latter feel that perhaps the entire program might terminate at the end of 2 years. I believe that better long-range cooperative programs will be established if the other agencies of the Federal Government know that the Small Business Administration is on an equal footing and is not in the cate-. gory of the casual visitor-here today, gone tomorrow. Similarly, the banks of this country will be more willing to participate with the Small Business Administration on loans to small-business concerns when they know that the lending program is on a perma nent basis. It is difficult to retain the necessary interest and cooperation when a program is on a temporary basis. While the Small Business Administration's financial and procurement personnel are among the best obtainable, morale and personnel recruitment can be greatly improved if the agency is made permanent. As we all know, even the old-line agencies have difficulty competing with private industry for specialists of the caliber needed and desired by the Government. Finally, I might mention that all the small-business men and smallbusiness organizations with whom I have talked believe that a concerted effort is needed to assure small firms a place in our economy. Not only do they contribute immeasurably to a diversified peacetime economy, but they constitute an integral part of any defense program. If we do not attempt to resolve their difficulties now, these small firms will be lost for any future all-out defense effort. I am sure that Wendell Barnes, Administrator of the Small Business Administration, has given you a complete report on the Small Business Administration's activities during the past 2 years. I do not desire to discuss operational details at this time. There are, however, certain indicators of this agency's increased activities and effectiveness. For example, the volume of business loans approved by the Small Business Administration has increased each fiscal year. Starting in fiscal 1954 with 473 loan approvals, we find 1,172 approvals for fiscal 1955, 1,915 for fiscal 1956, and 2,883 for 10 months of a fiscal 1957. As of April 30, 1957, there have been a total of 6,443 business loans approvals amounting to $294,618,000 of which $244,800,000 represent the Small Business Administration's share. In addition, the Small Business Administration has approved 5,829 disaster loans for a total of $63,126,000. There has been a similar increase in the number of Government procurements which have been set aside entirely or in part for bidding exclusively by small firms. In fiscal 1954, including 1 month of Small Defense Plants Administration, there were $247,601,000 in set-asides agreed to. In fiscal 1955, it increased to $386,611,000; fiscal 1956, $497,678,000; and through March of fiscal 1957, $506,800,000. In all, some $1,581 million in set-asides have been agreed to by both military and civilian procuring agencies. Just as the lending program has been broadened to cover additional types of small-business concerns, so the set-aside program has been expanded to include civilian procurement agencies. In addition to the military departments, the Small Business Administration now has cooperative programs with the Department of Agriculture, the General Services Administration, the Veterans' Administration, the Post Office Department, the Department of Commerce and the Department of the Interior. While every effort must be made by the military procuring agencies to increase the amount of contracts going to small business, I believe much will depend upon the success of this set-aside program. It is incumbent upon these procuring agencies to cooperate in broadening the scope of the program to every possible area in which small business can participate and to increase the number of set-asides within each of these areas. The Small Business Administration has done a commendable job in its other procurement and technical assistance programs. More and more, the small firms in our economy are finding out that this agency can supply valuable information which will permit these firms to improve their operations and to strengthen their competitive position. I do feel, however, that limitations on funds and personnel have prevented the Small Business Administration from achieving its full potential. I sincerely hope that Congress will give the most careful consideration to the appropriation request of the Small Business Administration when it is submitted. If a permanent agency is authorized, then no obstacle should be placed in the way of an expanded and comprehensive program which will benefit all small business. The CHAIRMAN. Mr. Hill, after you introduced your bill, you then joined with Mr. Multer in the introduction of his bill? Mr. HILL. That is correct. The CHAIRMAN. You now think that Mr. Multer's bill is more desirable than the bill you introduced? Mr. HILL. Well, I am not going to make that statement, but let us go this far, which is as far as I feel I should go. When I introduced my bill, in all the information that we possessed at that time, that was the best piece of legislation that I felt we could place before this committee. Then when Mr. Multer's Subcommittee No. 2 got into details and when they began to consider both the majority party and the minority party, and the views were all ironed out as far as they could go in cooperating with one another, they came to me, and said, "Now how about you, on this bill that we have agreed to?" And I said, "Why, no, I have already introduced a bill that the administration supports.' They said, well, we need all the assistance we can get. And realizing the fact that we pass legislation through compromises, I thought the matter over, and very deeply, too. And finally I said, "I shall introduce the bill." And I am proud of the fact that so many of us on both sides of the House could introduce a bill and place it before this committee unanimously. That is the bill which, of course, in my mind, would cause us less difficulty on the floor of the House, because, going through what I have, speaking personally, as a member of the Committee on Agricultureand every member of this committee knows it, too-we are on the hot seat. I have often said there is no Member in the House of Representatives who sits on a hotter seat than you members sitting here on this committee, the same as the members on the Committee on Agriculture. We just don't know what would happen if we made one error in planning legislation on such fundamental propositions as small business and agriculture. The CHAIRMAN. I don't think we heated the seat for you, though, Mr. Hill. Mr. HILL. Well, I would say that any place you sit in the House is plenty hot at times. The CHAIRMAN. The administration cooperated in the preparation of your first bill, did it not? Mr. HILL. I would say that I have had a lot of help from everybody on all these bills. Not only that, but the subcommittee, as well. Yes, sir, I have had help from everybody that I thought could contribute, and that is the way legislation should be introduced. The CHAIRMAN. Now the Treasury Department, through its Secretary, and the Commerce Department, through its Secretary, both say they are in favor of the bill you first introduced. (The following letters were submitted for the record by the chairman :) Hon. BRENT SPENCE, THE SECRETARY OF COMMERCE, Washington, May 17, 1957. Chairman, Committee on Banking and Currency, DEAR MR. CHAIRMAN: This letter sets forth the views of the Department of Commerce with respect to H. R. 6645, H. R. 7474 and identical bills to extend and to amend the Small Business Act of 1953, as amended. Two sections of H. R. 7474 and identical bills provide the specific basis for the Department's urging against favorable action on these bills. Only brief comment will be made on these items at this time as arrangements have been made for appearance of Assistant Secretary Mueller before your committee to present our views in detail. Section 103 (d) would establish a three-man policy board, the majority of which would be active small-business men, serving part-time who could establish and control the program of SBA, lending and otherwise. This possible delegation of administrative leadership to persons whose role should be limited to acting in an advisory capacity is inadvisable. Sufficient provision is made by section 212 (i) of the present law and by section 208 (m) of H. R. 6645 authoriz ing the establishment of small business advisory boards to enable SBA to know at all times the views of small businesses including small banks with respect to its activities and plans. Secretary Mueller will set forth in detail reasons underlying our concern over failure to provide for continuance of the policy board as presently constituted and our belief that the proposed modification will be detrimental to small business. Section 115 (b) reads as follows: "All small business functions not heretofore transferred to the Small Business Administration by the Department of Commerce are hereby transferred upon the effective date of this Act." This provision appears to overlook the transfer to Small Defense Plants Administration of all functions of Commerce directly and immediately related only to small business and their subsequent transfer to SBA. There remains nothing, therefore, in such a category exclusively related to small business. Insofar as the functions described include those indirectly and peripherally related to small business, it would include all functions of the Department including even the Office of the Secretary and the various transportation bureaus. Such a result was clearly never intended nor desired. Because of inclusion of these two provisions, we urge against favorable action on H. R. 7474 and suggest instead favorable consideration of H. R. 6645, a bill for the same general purpose. Sincerely yours, Hon. BRENT SPENCE, Chairman, Banking and Currency Committee, United States House of Representatives, SINCLAIR WEEKS, TREASURY DEPARTMENT, Washington 25, D. C. DEAR MR. CHAIRMAN: I think it may be helpful to your committee to give you my opinion, which is shared by others in the administration, on some of the proposals now before your committee for amending the Small Business Act. Let me suggest the principles which we believe should be maintained. (1) The Small Business Administration has done a good job in serving small business, especially at this time when money is less freely available. The present form of organization has proved effective, and should be continued. (2) The Loan Policy Board is an essential part of the plan. It is imperative that there should be such a means of coordination of Small Business Administration policies with the policies of the Government. The lending of Federal funds to private businesses can be justified only if such lending is clearly in the public interest. The policies require careful safeguard to avoid moving towards socialized credit. The Board should be composed of responsible Government officials and not of persons who devote only a limited amount of time and whose primary concerns are elsewhere, or who are actually or potentially beneficiaries of policies established by the Board. Advice from qualified small bankers and small-business men is already available to SBA through advisory committees established both on local and national levels. (3) I strongly recommend that the interest rate ceiling of 6 percent in the present act be retained. In view of our present economic conditions and the nature of the lending program authorized under this act a lower ceiling would be unrealistic and undesirable and would tend to force private funds out of the program. I also strongly recommend that the language relating to "the rate prevailing in the area" be deleted. As a practical matter it is impossible to determine what a prevailing rate is and this language imposes an unworkable responsibilty on the Small Business Administration. (4) I strongly urge that the present provision that "all loans made shall be of such sound value or so secured as reasonably to assure repayment" be retained. The experience of the RFC over many years demonstrated the desirability in the public interest of obtaining security wherever possible, and any weakening of the standards would almost certainly result in unsound loans, unjustifiable losses, and adverse public reaction. (5) These points were covered more fully in the testimony of Assistant Secretary of the Treasury Robbins before Subcommittee No. 2 of the House Select Committee on Small Business on March 26, 1957. (6) H. R. 6645 is consistent with the foregoing views. We recommend its enactment with a slight modification: the fourth sentence of section 206 (b) should be deleated as it is an unnecessary duplication of preceding provisions. I shall appreciate it greatly if your committee will bear these suggestions in mind as you review the various proposals before you. Sincerely yours, G. M. HUMPHREY, Secretary of the Treasury. Mr. HILL. That is correct. Well, my comment is I am happy. Because they did not go that far 2 years ago. The CHAIRMAN. That seems to be still their opinion. Mr. HILL. Well, that is fine. The CHAIRMAN. Do you think they are wrong? Mr. HILL. No, I don't think anybody is wrong that is making progress. If I go at an angle, of course, I get there a little quicker than if I make square corners. Excuse me for speaking as a westerner. The CHAIRMAN. Incidentally, you think you are right. So you would think the fellow who is opposed to you is wrong, wouldn't you? Mr. HILL. Well, there are not enough changes, Mr. Chairman. Our subcommittee chairman, who is on this committee, and a very valuable member, will tell you that there are only a few real differences, basic differences, I would say very few. There are some changes. Now I will be glad to discuss them when you get into the legislation, any time you would like to permit me to come before you. The CHAIRMAN. You certainly don't approve of the position the administration has taken, because it is contrary to your best judgment. Mr. HILL. Well, I would say this: In my best judgment, to pass legislation through this House, I would have to agree with you, and we have to face the fact there are Congressmen on both sides that are not strong for small business legislation. So we have to say "Well, what are we going to do to influence you?" and we think we have done that. You have a Member, as you know, already this morning, who opposes the permanency of that program. This amazed me. I never heard it before. It may have been said. I don't deny it. But I just say that my comprehension has been dulled. I am amazed, really and truly, and quite excited about it, as you can see by the way I testify. |