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CONTENTS

Statement of-

Barnes, Wendell B., Administrator, Small Business Administration____

Letters, statements, memorandums, etc., submitted for the record by—

Agricoltore Department:

Page

560

Letters on definition of small business.

678

Humphrey, Hubert H., a United States Senator from the State of
Minnesota: Statement

658

International Cooperation Administration: Letter on definition of
small business_.

682

Javits, Jacob K., a United States Senator from the State of New
York: Statement..

657

III

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Thye, Edward J., a United States Senator from the State of Minne-
sota: Statement..

654

Treasury Department: Report on S. 2825..

555

Tunick, Abraham, Washington counsel, Wine & Spirits Wholesalers of
America, Inc.: Letter to Senator Clark.

669

CREDIT NEEDS OF SMALL BUSINESS

FRIDAY, MAY 23, 1958

UNITED STATES SENATE,

COMMITTEE ON BANKING AND CURRENCY,
SUBCOMMITTEE ON SMALL BUSINESS,
Washington, D. C.

The subcommittee met, pursuant to call, at 10: 10 a. m., in room 301, Senate Office Building, Senator Joseph S. Clark (chairman of the subcommittee) presiding.

Present: Senators Clark, Sparkman, Proxmire, Capehart, and Case.

Also present: Senator Bush.

Senator CLARK. The subcommittee will be in session.

We are happy to have you back with us, Mr. Barnes. I see you have a pretty elaborate statement here. I suggest that you just proceed in your own way. Do you want to read it all?

Mr. BARNES. I will not read it all. Some are exhibits.

Senator CLARK. All right. We will put it in the record at the end of your remarks.

Senator Capehart would like to make a statement.

Senator CAPEHART. I will be unable to remain for your testimony, Mr. Barnes, because I have to go to a Foreign Relations Committee meeting, where we are writing up to the mutual aid bill, but I have gone over your letter and your proposals and I am sure that these two distinguished gentlemen here will treat you with great consideration. Mr. BARNES. All right, sir.

Senator CLARK. Before you go ahead, Mr. Barnes, there are a few formal matters I would like to get in the record. First, by way of opening, these hearings are in a sense a continuation of hearings held by this subcommittee in the spring of last year, 1957. Since that time the House has passed H. R. 7963. That bill makes the Small Business Administration a permanent agency and rewrites the Small Business Act of 1953. Accordingly, we will be very much interested in hearing Mr. Barnes' views on the House bill. There are other bills, namely, S. 2729, S. 2825, S. 2993, S. 3319, S. 3434, S. 3453, S. 3664, S. 3791, and Senate Resolution 138, which have been referred to this committee since the last hearings, and which are concerned with the Small Business Administration.

Testimony to be received in the present hearings is by no means limited to comments on these bills, but the committee is particularly interested in obtaining views and information about them.

I would like to offer for the record the bills I have just referred to, and the reports on the bills which have been received from Government agencies.

Senator Fulbright has asked me to offer for the record his statement made on the floor of the Senate on January 13, 1958, in introducing S. 2993.

We also have some letters received by the committee with respect to Senator Fulbright's bill, S. 2993, and other letters and material sent to Senator Fulbright by Mr. Barnes regarding small business size and standards for the purposes of Government procurement, all of which I will be glad to have appear in the record. (See appendix, p. 671.)

(The information referred to follows:)

[H. R. 7963, 85th Cong., 1st sess.]

AN ACT To amend the Small Business Act of 1953, as amended

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That title II of the Act of July 30, 1953 (Public Law 163, Eighty-third Congress), as amended, is hereby withdrawn as a part of that Act and is made a separate Act to be known as the "Small Business Act".

SEC. 2. The Small Business Act is amended to read as follows: "SEC. 1. This Act may be cited as the 'Small Business Act'.

"SEC. 2. (a) The essence of the American economic system of private enterprise is free competition. Only through full and free competition can free markets, free entry into business, and opportunities for the expression and 'growth of personal initiative and individual judgment be assured. The preservation and expansion of such competition is basic not only to the economic well-being but to the security of this Nation. Such security and well-being cannot be realized unless the actual and potential capacity of small business is encouraged and developed. It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts for property and services for the Government (including but not limited to 'contracts for maintenance, repair, and construction) be placed with smallbusiness enterprises, and to maintain and strengthen the overall economy of the Nation.

"(b) Further, it is the declared policy of the Congress that the Government should aid and assist victims of floods and other catastrophes.

"SEC. 3. (a) For the purposes of this Act, a small-business concern shall be deemed to be one which is independently owned and operated and which is not dominant in its field of operation. In addition to the foregoing criteria the Administrator, in making a detailed definition, may use these criteria, among others: Number of employees and dollar volume of business. Where the number of employees is used as one of the criteria in making such definition for any of the purposes of this Act, the maximum number of employees which a small-business concern may have under the definition shall vary from industry to industry to the extent necessary to reflect differing characteristics of such industries and to take proper account of other relevant factors.

"(b) The Administrator shall without delay establish a new definition, in compliance with subsection (a); and if such new definition has not been established and placed in effect for all purposes of this Act within sixty days after the date of the enactment of this subsection, the definition which was in use by the Administrator for financial assistance purposes immediately prior to the date of the enactment of this subsection shall be in effect for all the purposes of this Act from the end of such sixty-day period until such time as the Administrator establishes and places in effect such new definition. Nothing in this subsection shall affect any small-business certificate issued under this Act before the enactment of this subsection, or restrict the authority of the Administrator to issue such certificates under section 8 (b) (6).

"SEC. 4. (a) In order to carry out the policies of this Act there is hereby created an agency under the name 'Small Business Administration' (herein referred to as the Administration), which Administration shall be under the general direction and supervision of the President and shall not be affiliated with or be within any other agency or department of the Federal Government.

The principal office of the Administration shall be located in the District of Columbia. The Administration may establish such branch and regional offices in other places in the United States as may be determined by the Administrator of the Administration. As used in this Act, the term 'United States' includes the several States, the Territories and possessions of the United States, the Commonwealth of Puerto Rico, and the District of Columbia.

"(b) The management of the Administration shall be vested in an Administrator who shall be appointed from civilian life by the President, by and with the advice and consent of the Senate, and who shall be a person of outstanding qualifications known to be familiar and sympathetic with small-business needs and problems. The Administrator shall not engage in any other business, vocation, or employment than that of serving as Administrator. The Administrator is authorized to appoint three Deputy Administrators to assist in the execution of the functions vested in the Administration.

"(c) The Administration is authorized to obtain money from the Treasury of the United States for use in the performance of the powers and duties granted to or imposed upon it by law, not to exceed a total of $650,000,000 outstanding at any one time. For this purpose appropriations not to exceed $650,000,000 are hereby authorized to be made to a revolving fund in the Treasury. Advances shall be made to the Administration from the revolving fund when requested by the Administration. This revolving fund shall be used for the purposes enumerated subsequently in sections 7 (a), 7 (b), and 8 (a). Not to exceed an aggregate of $500,000,000 shall be outstanding at any one time for the purposes enumerated in section 7 (a). Not to exceed an aggregate of $125,000,000 shall be outstanding at any one time for the purposes enumerated in section 7 (b). Not to exceed an aggregate of $25,000,000 shall be outstanding at any one time for the purposes enumerated in section 8 (a). The Administration shall pay into miscellaneous receipts of the Treasury, at the close of each fiscal year, interest on the net amount of the cash disbursements from such advances at a rate determined by the Secretary of the Treasury, taking into consideration the current average rate on outstanding interest-bearing marketable public debt obligations of the United States of comparable maturities.

"(d) There is hereby established a National Small Business Advisory Board, which shall advise and consult with the Administration in carrying out the purposes of this Act. The Board shall consist of the Administrator, as chairman, the Secretary of the Treasury, the Secretary of Commerce, and not less than two nor more than six other individuals appointed by the Administrator who are familiar with small-business needs and problems and are truly representative of small-business interests. The Secretary of the Treasury and the Secretary of Commerce may each designate an officer from his Department, who has been appointed by the President by and with the advice and consent of the Senate, to act in his stead as a member of the Board.

"SEC. 5. (a) The Administration shall have power to adopt, alter, and use a seal, which shall be judicially noticed. The Administrator is authorized, subject to the civil-service and classification laws, to select, employ, appoint, and fix the compensation of such officers, employees, attorneys, and agents as shall be necessary to carry out the provisions of this Act; to define their authority and duties; to provide bonds for them in such amounts as the Administrator shall determine; and to pay the costs of qualification of certain of them as notaries public. The Administration, with the consent of any board, commission, independent establishment, or executive department of the Government, may avail itself on a reimbursable or nonreimbursable basis of the use of information, services, facilities (including any field service thereof), officers, and employees thereof, in carrying out the provisions of this Act. Subject to the standards and procedures under section 505 of the Classification Act of 1949, as amended, not to exceed fifteen positions in the Administration may be placed in grades 16, 17, and 18 of the General Schedule established by that Act, and any such positions shall be additional to the number authorized by such section.

"(b) In the performance of, and with respect to, the functions, powers, and duties vested in him by this Act the Administrator may

"(1) sue and be sued in any court of record of a State having general jurisdiction, or in any United States district court, and jurisdiction is conferred upon such district court to determine such controveries without regard to the amount in controversy; but no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the Administrator or his property;

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