(2) Section 852 of the Internal Revenue Code of 1954 is amended by adding at the end thereof a new subsection as follows:

"(d) NATIONAL INVESTMENT COMPANY RESERVE.—

"(1) RESERVE GENERALLY.-A regulated investment company which is a national investment company chartered under the National Investment Company Act of 1957 may, under regulations prescribed by the Secretary or his delegate establish and maintain a reserve subject to the limitations provided in this subsection.

"(2) LIMITATION ON RESERVE.-The amount of the reserve shall not at any time exceed the lesser of

"(A) 50 percent of the invested capital of the company as defined in paragraph (7), or

"(B) the accumulated earnings and profits determined as of the close of the taxable year.

"(3) CHARGES TO RESERVE.-The reserve shall be charged as of the end of the taxable year (whether or not such charge produces a minus amount in the reserve) with the following:

"(A) the net capital loss for the taxable year (as defined in section 1222 (10));

"(B) the net operating loss for the taxable year (as defined in section 172 (c));

"(C) the Federal income taxes attributable to the amount added to the reserve under paragraph (5); and

"(D) such amount as may be necessary by reason of the limitation provided in paragraph (2).

"(4) MANDATORY ADDITIONS TO THE RESERVE.-There shall be added to the reserve as of the close of the taxable year the following:

"(A) an amount equal to the excess of the net capital gain for the taxable year computed without regard to section 1212 (relating to capital loss carry-over) over the net capital gain for the taxable years; and

"(B) an amount equal to the excess of the taxable income for the taxable year computed without regard to section 172 (relating to the net operating loss deduction) over the taxable income for the taxable year. "(5) DISCRETIONARY ADDITION TO THE RESERVE.-In any year in which an amount (other than the amount described in paragraph (4)) is added to the reserve; the company shall, in the computation of its investment company taxable income be allowed

"(A) a deduction equal to such amount of the addition to the reserve as does not cause the aggregate amount of the reserve (including such addition) to exceed 20 percent of the invested capital of the company as defined in paragraph (7); and

"(B) the dividends received credit provided in section 243 but such credit shall not exceed 85 percent of the portion of amounts added to the reserve under this subparagraph which is not deductible from investment company taxable income under subparagraph (A). "(6) REDUCTION OF TERMINATION OF RESERVE.-In the event of a reduction or termination of the reserve in connection with a partial or complete liquidation of the company (or of any company to which the reserve has been transferred in an exchange upon which gain was not recognized by reason of any provision of this subtitle) the gain realized by a stockholder upon any such liquidation shall, to the extent of the pro rata share of the reserve, be considered as a gain from the sale or exchange of property held for less than six months.

"(7) INVESTED CAPITAL.-For purposes of paragraph (2), the term 'invested capital' means the sum, determined as of the close of the taxable year, of

"(A) the amount of money or property (included in an amount equal to its unadjusted basis without regard to the value of the property as of March 1, 1913, except that if such basis is a substituted basis, it shall be adjusted, with respect to the period before the property was paid in, by an amount equal to adjustments proper under section 312 (f) for determining earnings and profits) previously paid in for stock, or as paid-in surplus or as a contribution to capital, reduced by the amount of distributions not out of earnings and profits in the year of distribution and not out of accumulated earnings and profits; and

"(B) the amount of the outstanding indebtedness (not including interest) of the company which is evidenced by a bond, note, bill of exchange, debenture, certificate of indebtedness, mortgage, or deed of trust, except that indebtedness not represented by a bond or debenture shall not be included in excess of an amount equal to the average daily amount of indebtedness not so represented which was outstanding during the taxable year."

(e) Each national investment company established under this Act, including its franchise, capital, reserves, and surplus, its income, its real property, its tangible and intangible personal property, its obligations (both as in principal and income derived therefrom), shall be subject to taxation, in the same manner and to the same extent as a State-chartered institution of similar character by any State, county, municipality, or local taxing authority or by any Territory, dependency, or possession of the United States; and its real property shall be subject to special assessments for local improvements.

MISCELLANEOUS

SEC. 110. (a) Wherever practicable the operations of a national investment company shall be undertaken in cooperation with banks or other financial institutions, and any servicing or initial investigation required for loans or acquisitions of securities by the company under the provisions of this Act may be handled through such banks or other financial institutions on a fee basis.

(b) Each national investment company may make use, wherever practicable, of the advisory services of the Federal Reserve System and of the Department of Commerce which are available for and useful to industrial and commercial businesses, and may provide consulting and advisory services on a fee basis and have on its staff persons competent to provide such services. Subject to the supervision and direction of the Board, any Federal Reserve bank is authorized to act as a depository of fiscal agent for any company organized under this Act. Such companies may invest funds not reasonably needed for their current operations in direct obligations of, or obligations guaranteed as to principal and interest by the United States.

(c) The Board is authorized to prescribe regulations governing the operations of national investment companies and to carry out the provisions of this Act in accordance with the purposes of this Act. Each national investment company shall be subject to examinations made by direction of the Board by examiners selected or approved by the Board, and the cost of such examinations, including the compensation of the examiners, may in the discretion of the Board be assessed against the company examined and when so assessed shall be paid by such company. Every such company shall make such reports to the Board at such times and in such form as the Board may require.

(d) The Secretary of Commerce is authorized to advise and assist in promoting national investment companies.

(e) Should any national investment company violate or fail to comply with any of the provisions of this Act or of regulations prescribed hereunder, all of its rights, privileges, and franchises derived herefrom may thereby be forfeited. Before any such company shall be declared dissolved, or its rights, privileges, and franchises forfeited, any noncompliance with or violation of this Act shall, however, be determined and adjudged by a court of the United States of competent jurisdiction in a suit brought for that purpose in the district or territory in which the principal office of such company is located, which suit shall be brought by the United States at the instance of the Board or the Attorney General.

(f) Whenever in the judgment of the Board any person has engaged or is about to engage in any acts or practices which constitute or will constitute a violation of any provision of this Act or of any regulation thereunder, the Board may make application to the proper district court of the United States, or the United States courts of any Territory or other place subject to the jurisdiction of the United States, for an order enjoining such acts or practices, or for an order enforcing compliance with such provision, and such courts shall have jurisdiction of such actions and upon a showing by the Board that such person has engaged or is about to engage in any such acts or practices a permanent or temporary injunction, restraining order, or other order shall be granted without bond. (g) Any national investment company may at any time within the two years next previous to the date of the expiration of its corporate existence, by a vote

of the shareholders owning two-thirds of its stock, apply to the Board for approval to extend the period of its corporate existence for a term of not more than thirty years, and upon approval of the Board as provided in section 101 hereof such company shall have its corporate existence extended for such period unless sooner dissolved by the act of the shareholders owning two-thirds of its stock, or by an Act of Congress or unless its franchise becomes forfeited as herein provided.

(h) Nothing in this Act or in any other provision of law shall be deemed to impose any liability on the United States or in any Federal Reserve bank with respect to any obligations entered into, or stocks issued, or commitments made, by any company organized under this Act.

TITLE II-CHANGES IN FEDERAL RESERVE AUTHORITY

REPEAL OF SECTION 13B OF THE FEDERAL RESERVE ACT

SEC. 201. Effective one year after the date of enactment of this Act, section 13b of the Federal Reserve Act (12 U. S. C. 352a) is hereby repealed; but such repeal shall not affect the power of any Federal Reserve bank to carry out, or protect its interest under, under agreement theretofore made or transaction entered into in carrying on operations under that section.

RETURN OF FUNDS TO TREASURY

SEC. 202. (a) Within sixty days after the enactment of this Act, each Federal Reserve bank shall pay to the United States the aggregate amount which the Secretary of the Treasury has heretofore paid to such bank under the provisions of section 13b of the Federal Reserve Act; and such payment shall constitute a full discharge of any obligation or liability of the Federal bank to the United States or to the Secretary of the Treasury arising out of subsection (e) of said section 13b or out of any agreement thereunder.

(b) The amounts repaid to the United States pursuant to section 202, and any remaining balance of the funds set aside in the Treasury for payments under section 13b of the Federal Reserve Act shall be covered into miscellaneous receipts.

AUTHORITY TO SELL ASSETS TO NATIONAL INVESTMENT COMPANIES

SEC. 203. Any national investment company organized under this Act may purchase from any Federal Reserve bank, and any Federal Reserve bank is authorized to sell to any such company, at such reasonable price ass may be agreed upon, any or all of the assets heretofore or hereafter acquired by such Reserve bank under the provisions of section 13b of the Federal Reserve Act.

TITLE III-MISCELLANEOUS PROVISIONS

PENALTIES

SEC. 301. Title 18, United States Code, section 1014, is amended by inserting the phrase "a national investment company organized under the National Investment Company Act of 1957," after the words "National farm loan association,".

GEOGRAPHIC APPLICABILITY

SEC. 302. The authority provided in this Act shall be applicable in the United States, including the District of Columbia and the Territories and possessions.

RIGHT TO AMEND THIS ACT

SEC. 303. The right to amend, alter, or repeal this Act is hereby expressly reserved.

[S. 2184, 85th Cong., 1st sess.]

A BILL To amend the Small Business Act of 1953 to direct the Small Business Administration to make extensive, comprehensive, and continuing studies of certain problems of small business and to file semiannual reports on the results of such studies

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Small Business Act of 1953, as amended, is hereby amended by adding the following new section:

"226. (a) The Administration is directed to make extensive, comprehensive, and continuing studies to accomplish the following aims: (1) to identify and define the principal problems which affect or may affect the growth, stability, and competitive strength of the small business segment of the economy, (2) to identify both the strengths and weaknesses inherent in small business concerns, (3) to identify the fields of endeavor in which small business is best equipped to compete and prosper, (4) to gather information which can be used by small business to improve its competitive strength and to expand its contribution to the national economy, and (5) such other objects as the Administrator may deem desirable in the interests of small business. In making such studies the Administration shall distinguish and give separate consideration to the problems of small business concerns engaged in the manufacturing or distributive or service trades. The Administration also shall give consideration to, among others, the effect on such small business concerns of inflation and deflation, availability of credit, availability of materials and supplies, cost factors, labor problems, management and personnel problems, the development of new manufacturing techniques and equipment, the development of new merchandising methods, research and development problems, automation, nationwide distribution, advertising, atomic development, foreign competition, Government regulation including the activities of regulatory agencies, taxes, and any other factors which may affect the competitive strength and growth of small business.

"(b) In making such studies the Administration is authorized and directed: (1) to utilize on a reimbursable basis the information, services, and facilities of any Government agency, and (2) to employ by contract private persons and organizations to conduct appropriate studies, perform research or direct programs determined by the Administration to be necessary and appropriate under subsection (a) of this section.

"(c) The Administration shall make a report on December 31 and June 30 of each year to the President, the President of the Senate, and the Speaker of the House of Representatives on the activities conducted by the Administration under this section. Such report shall include a description of studies undertaken by the Administration pursuant to this section, a detailed description of the results of such studies as they are available, a statement of future programs and studies planned by the Administration and such other information, comments, and recommendations as the Administrator may deem appropriate."

[S. 2185, 85th Cong., 1st sess.]

A BILL To amend the Small Business Act of 1953 to authorize the Small Business Administration to make loans to local private nonprofit organizations formed to assist, develop, and expand the economy of the area

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 207 of the Small Business Act of 1953, as amended, is hereby amended by adding the following new subsection: "(c) The Administration is empowered to make loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis) to local private nonprofit organizations (including industrial foundations, development credit corporations or similar groups) formed to assist, develop, an expand the economy of the area: Provided, however, That all such loans shall be of such sound value or so secured as reasonably to assure repayment: And provided further, That no such loans including renewals and extensions thereof may be made for a period or periods exceeding twenty years."

[S. 2286, 85th Cong., 1st sess.]

A BILL To assist State programs for small business, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 207 of the Small Business Act of 1953, as amended, is hereby amended by adding the following new subsections: "(c) The Administration is empowered to purchase investment securities issued by State chartered development credit or finance corporations formed to assist, develop, and expand the economy of a State. The Administration shall

not purchase investment securities in an amount in excess of the amount of such securities which are held by purchasers other than the Administration, but in no event shall the Administration purchase more than $5,000,000 of investment securities in any one State. Investment securities purchased by the Administration shall bear interest at a rate not less than the total of one-quarter of 1 per centum per annum added to the rate of interest paid by the Administration on funds obtained from the Secretary of the Treasury as provided in subsection (d) of this section, and shall have maturity dates of twenty years or less. The term 'investment securities' as used in this subsection shall mean obligations evidencing the indebtedness of any State chartered development credit or finance corporation in the form of bonds, notes, and/or debentures as may be further defined by regulations of the Administration.

"(d) In order to finance activities under subsection (c) of this section, the Administration is authorized and empowered to issue to the Secretary of the Treasury, from time to time and to have outstanding at any one time, notes and other obligations in an amount not exceeding $27,500,000. Such obligations shall be in such forms and denominations, have such maturities and be subject to such terms and conditions as may be prescribed by the Administration, with the approval of the Secretary of the Treasury. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average rate on outstanding marketable obligations of the United States of comparable maturities as of the last day of the month preceding the issuance of such notes or other obligations. The Secretary of the Treasury is authorized and directed to purchase any notes and other obligations of the Administration to be issued hereunder, and for such purpose the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act, as amended, and the purposes for which securities may be issued under such Act, as amended, are extended to include any purchases of such notes and obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this section. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States. Funds borrowed under this section and any proceeds shall constitute a revolving fund which may be used by the Aministration in the exercise of its functions under subsection (c) of this section."

SEC. 2. Effective one year after the date of enactment of this Act, section 13b of the Federal Reserve Act (12 U. S. C. 352a) is hereby repealed; but such repeal shall not affect the power of any Federal Reserve bank to carry out, or protect its interest under, any agreement theretofore made or transaction entered into in carrying on operations under that section. Within sixty days after the enactment of this Act, each Federal Reserve bank shall pay to the United States the aggregate amount which the Secretary of the Treasury has heretofore paid to such bank under the provisions of section 13b of the Federal Reserve Act; and such payment shall constitute a full discharge of any obligation or liability of the Federal bank to the United States or to the Secretary of the Treasury arising out of subsection (e) of said section 13b or out of any agreement thereunder. The amounts repaid to the United States pursuant to this section and any remaining balance of the funds set aside in the Treasury for payments under section 13b of the Federal Reserve Act shall be covered into miscellaneous receipts. SEC. 3. Subsection (b) of section 207 of the Small Business Act of 1953, as amended, is amended by adding the following new subparagraph:

"(6) to make grants to any State government, or any agency thereof, State chartered development credit or finance corporations, land-grant colleges and universities, and colleges and schools of business, engineering, commerce, or agriculture for studies, research, and counseling concerning the managing, financing, and operation of small business enterprises and technical and statistical information necessary thereto in order to carry out the purposes of subparagraph 4 of this section by coordinating such information with existing information facilities within the State and by making such information available to State and local agencies. Only one such grant shall be made within any one State in any one year, and no such grant shall exceed an aggregate amount of $40,000. Not to exceed $2,000,000 annually shall be made available from the revolving