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I saw Mr. Walter on the day prior to his departure for Europe, and I prepared for him a list of the loans that I knew. I would like to be on the record, Senator

Senator LEHMAN. In your area?
Mr. Monatt. In my area; yes, sir.
Senator LEHMAN. I would like to have a copy of that for the record.
(The material referred to follows:)

Clients of S. M. Monatt Co.-Flood loss damages excluding business interruption not covered by insurance

Loans requested from Small Business Administration

Term of

requested approved (years)

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50 percent of profit Washington, D. C.

before depreciation
beginning in 1957.


Application pending,

Philadelphia, Pa.



Stroudsburg, Pa









50 percent of profit

before depreciation.



Application pending,

Stroudsburg, Pa.

Name, address, and type

of business

Kind of damage


of damage

Amount Date of appli- Amount

loan cation


Aug. 25, 1955 $120,000


25,000 Sept. 9, 1955






Pocono Gardens Lodge, Entire grounds badly eroded

(resco, Pa.: Honey- through water; demolition of
moon resort.

kitchen; partial demolition of
dining room, office, and recrea-
tion hall; floors damaged in all

James H. Martin, Cana- | Destruction of sewers, electrical

densis, Pa.: Cottages lines, 3 footbridges, fences, park-
and candle shop.

ing area, dam; damages to foun dation of all buildings, floors, refrigeration and heating equip

ment; 1 cottage completely lost. Fred E. Schaefer, Cana- Damage to plumbing and heating

densis, Pa.: Retail nov- system, floor, loading platforms, elties and gifts.

sidewalks, and grounds of busi-
ness property; damage to foun-
dation of residence in final stage

of erection; loss of inventory.
Carl Brown, Canadensis, Spillway of 110-acre lake flooded
Pa.: Fishing resort.

Reeve C. Price, Canaden- Breakage of dam and damage to

sis, Pa.: Summer resort. adjacent land and roads.
William H. Clark, 1005 Removal of southwest corner of
Main St., Stroudsburg, foundation and 2d floor porch;
Pa.: Funeral director, loss of oil burner and heating

system; washout of driveway
and parking area of approxi-
mately 2,550 square yards of
hardtop; extensive damage to
grounds; loss of 1 wall of garage
and severe damage to other
walls; loss of cemetery canopies,
grave markers, storm windows,
50 chairs, and miscellaneous

small tools and equipment.
John J. Cammarata, 1018 Loss of inventory; damage to

West Main St., Strouds- electrical equipment and loss of burg, Pa.; Retail sun- water heater, dries and soca fountain.

17,500 do.
35,000 do
18,000 Sept. 20, 1955

14, 500


1,300 Sept. 19, 1955

1, 300




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Ira M. Nagler, 210° Park Complete loss of all inventories,

Ave., Stroudsburg, Pa.: office furniture, tools, and sup: Used furniture and an- plios; also washout of all tiques; newspaper de. accounts-recrivable records. livery route. Greyhound Inn,

Damage to foors, electrical, and
William Cassati, Bar- plumbing.
tonsville, Pa.: Hoteland

Tucker Chevrolet Co., 912 Loss of parts, tools, and damage

Main St., Stroudsburg, to equipment and fixtures.

Pa.: Chevrolet agency.
Canadensis Swimming | Damage to bridge, pool, and ap-

Pool, Frances Jurgens purtenances.
and Mildred Smith,
Canadensis, Pa.: Swim-

ming pool.
Ray Price Motors, Inc., Loss of parts, tools, and damage

353 Main St., Strouds- to equipment and fixtures.
burg, Pa.: Lincoln and
Mercury agency.

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| Application for direct grant from Red Cross is also pending. ? None requested.

Mr. Monatt. I would like to explain it, sir. This is a list of floodloss damages, excluding business interruption, not covered by insurance, which came through my office.

Senator Bush. What was that?
Mr. Monatt. Excluding business-interruption damage.
Senator Bush. You mean actual property loss?

Mr. MONATT. That is right. We found, after working with the Small Business Administration, a very unhappy situation. We found that half of the loans which were granted to us we had to refuse because of restrictions imposed upon the man who was accepting the loan. For example, when we applied, we were given an application. We were not given any regulations with it. We were not told what we had to look for and what we had to watch for. The idea was hurry, hurry, hurry; get the application in so we can rehabilitate you.

After the application was filed—these applications were based on quick estimates. We went in and surveyed our damage; we took whatever estimates we could and formed an application of dollar amounts.

When the Small Business Administration granted these loans, they held us to the category of our original estimates, even though they were estimates.

In the event a man had estimated in one category that his damage was $2,000, if he spent $3,000, he was held to $2,000. If he spent $1,000, all he would get was $1,000. In addition to that, every bill had to be submitted to the SBA office or to the bank who was participating; they are making the disbursement in most instances.

That in itself could cut down a loan; for example, a $25.000 loan to as low as $10,000 or $12,000. You must remember that after this man has bororwed from the SBA, he has absolutely no borrowing capacity whatsoever.

We have found restrictions as to earnings, which are difficult to handle by the small man, the one-man business. We have had restrictions against acquisition of fixed assets. They tell 11 we can only acquire X dollars of fixed assets. As a matter of fact, these small-business loans had the result of wiping the man out of competition, because he is absolutely choked right up to his neck. He cannot go beyond that. His competitor, who did not have a flooil. can go right ahead and continue in business. The flood victim is restricted to earnings. For example, we had one case where they allowed the man $5,000 earnings. They didn't ask us whether he could live on that. His child was sick for the last 2 years and he spent $2,500 per year on medical expenses. We made an application originally for this same man for $14,500. The SBA reduced it by $1,000 without giving any reasons.

We had other problems. We had a case of a man who was wiped out by the flood, and asked for a grant from the American Red Cross. The small Business Administration on a $5,000 application approved $2,500. It stipulated in that appropriation that this loan must be reduced by any amount that the Red Cross would grant us. After we talked to SBA, they reconsidered.

I have a company for your consideration that had a $1.50,000 loss. I have here for the record that they have insurance coverage of $197 000, spent $1,900 premiums a year. They have $130,000 worth of business-interruption insurance. They spent another $1,000. This is besides their casualty insurance and other compensation insurance and liability insurances. They had not a penny for flood. They could not collect a cent. These people were absolutely out of business. The Small Business Administration granted us a $120,000 loan. We were called into Stroudsburg and we were asked to reduce that to $100,000. We went on to Philadelphia afterward and they tried to put restrictions on. These restrictions were never explained to anyone. These restrictions were put in. I met Mr. Engles, whom you probably know. He is the Deputy Administrator of the SBA in Washington. They told us "We are RFC men. We are following the RFC manuals." We don't know anything about the RFC or their manuals. We are not United States Steel; we are not the large insurance companies.

I have had experience with corporations who are listed on the stock exchanges. They can stand those kinds of restrictions. They can stand restrictions as to earnings, as to sinking funds, as to payment of profits before depreciation. But the small-business man cannot. He must stay in competition. He has absolutely no way of helping himself.

If we go further with that-we went to Philadelphia. In Philadelphia they set the restrictions aside. We sat there for a day with their representatives. The following day I got a phone call from Washington that Mr. Engles wants to see us, so we went to see him. He reinstated the restrictions. He said we had to accept them. But, he said, “I will help you with the bank.” The bank insisted on 6 per

6 cent interest. “And I also see that the bank is more lenient on repayments."

The result was on Monday I had a phone call from Mr. Engles that the bank not only insisted on the 6-percent interest, but they also wanted a year earlier repayment clause.

That is only in a small manner what we were bothered with. After we got our appropriation, we found that after they had the guaranty of the corporation, the guaranty of the partnership, the guaranty of each of the partners, the guaranty of each of the officers—they had additional restrictions. They wanted the stock of the corporation. They had mortgages from the partnership, from the corporation, everything was tied up. They still wanted the stock. The wanted to set aside, at one time, a private annuity I had set up for a man 75 years of age. Further than that, on counsel from Philadelphia, they insisted upon holding us within the original rough estimates. They also insisted that we make no payment against losses after 6 months.

In our county the ground freezes, and after the ground freezes, we cannot work on the ground. Furthermore, we were told, for example, that the air-conditioning units in this resort--this was a honeymoon resort and very well regarded-would be all right after a thorough cleaning. But we have no way of testing them out until after the summer arrives when we can see whether this machinery will work.

On October 1, 1955, the SBA, in a letter--and this is their own publicity-stated there were 80 applications filed in Monroe County of $1,600.000. I know from my own experience that there were 3 applications in excess of $600,000. So there remained 77 applications filed which were somewhere in the neighborhood of $970,000. That is

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