Educational institutions which have cosponsored administrative management courses-Continued Rhode Island. Tennessee. Virginia..... Washington.. West Virginia. Wisconsin.. Wyoming... Brown University, Providence. Fort Worth Retail Institute, Fort Worth. Texas Christian University, Fort Worth. Big Stone Gap High School, Big Stone Gap.. Danville Public Schools, Danville. George Wythe Junior High School, Newport News. Mount Vernon High School, Alexandria. University of West Virginia, Clarksburg. Wisconsin State College, Stevens Point. Casper Junior College, Casper.... Territory of Hawaii. University of Hawaii, Honolulu. Puerto Rico... Number of courses 2 223 14 2 College of Agriculture and Mechanical Arts, Mayaguez. Senator CLARK. We have statements from Senators Thye, Morse, Javits, and Humphrey which will go into the record. (The statements referred to follow :) STATEMENT OF EDWARD J. THYE, A UNITED STATES SENATOR FROM THE STATE OF MINNESOTA Mr. Chairman and committee members, I regret that longstanding commitments prevent my appearing in person before you this morning to present my views on the urgent need for making the Small Business Administration a permanent agency for service to our Nation's small-business men. As author of the original Small Business Act of 1953, I have maintained a keen interest in the activities of the agency, and I would like to comment at length on the fine record which it has established in its three main categories of service to smallbusiness concerns throughout the Nation. I have reference to (1) the financial assistance program, which has helped many deserving small firms to remain in operation and to expand; (2) the procurement assistance program under which SBA works to carry out the intent of Congress that small business receive a fair share of Government procurement; and (3) the disaster assistance program under which emergency financial assistance is made available to concerns in areas struck by natural disasters such as floods and drought. With respect to these three programs, I could list a long record of achievement built up by the Small Business Administration since its establishment, but rather than to impose upon your committee members' valuable time, I will briefly concentrate on the main point at issue here by emphasizing the reasons why I believe the agency should be made permanent. Your interest in the welfare of our small-business men convinces you, I am sure, of the need for an agency such as SBA as the only Government agency whose activities are solely concerned with serving the needs of small business. Three times in the past 4 years, Mr. Chairman, the Senate has taken temporary action to extend the life of the Small Business Administration. This does not encourage banks to participate in a vast lending program. Local financial concerns in communities throughout the Nation cannot be expected to participate in making loans with an agency whose continued existence is constantly in doubt. You will recall that because of congressional delay last year, the life of the Small Business Administration lapsed for a time after midnight, June 30. I would point out that this agency inherited a pool of experienced financial specialists from the Reconstruction Finance Corporation and has, from time to time, been fortunate in obtaining the services of new financial people. The working efficiency of the agency is constantly placed in jeopardy, Mr. Chairman, when the job security of its competent personnel is periodically subject to doubt. One further point, Mr. Chairman: The Small Business Administration cannot be expected to carry out effective programs of procurement assistance with other Government agencies when those agencies are not dealing with a permanent agency of Government. Finally, I want to express my sincere appreciation to this committee for giving its attention to this question. I would hope that this recognition will result in your recommending that the SBA be placed on a permanent basis so that it can continue to function in the best interests of our Nation's small-business men in the most efficient manner possible. STATEMENT OF WAYNE MORSE, A UNITED STATES SENATOR FROM THE STATE OF OREGON Mr. Chairman, and members of the subcommittee, I appreciate this opportunity to present my views on the bill, S. 2729, which is now pending before your subcommittee. This bill would authorize the Secretary of the Treasury to further extend the maturity of or renew certain loans made by the Reconstruction Finance Corporation for periods up to 15 years, if the extension or renewal would aid in the orderly liquidation of the loan. The loans to which S. 2729 relates are those which were made by the Reconstruction Finance Corporation under section 4 (a) of the Reconstruction Finance Corporation Act of 1947, as amended, and which were transferred to the Secretary of the Treasury pursuant to Reorgaization Plan No. 1 of 1957. The final maturities of such loans are now limited by section 4 (b) (2) of the Reconstruction Finance Corporation Act of 1947, as amended, which provides in part as follows: * "No loan, including renewals or extensions thereof, may be made under sections 4 (a) (1), (2), and (4) for a period or periods exceeding ten years Provided further, That any loan made under section 4 (a) (1) for the purpose of constructing industrial facilities may have a maturity of ten years plus such additional period as is estimated may be required to complete such construction. * * * In view of the foregoing provisions, the Secretary of the Treasury today lacks authority to extend or renew any of the loans referred to beyond the 10 years specified in the statute. However, if S. 2729 were enacted as I propose, the Secretary of the Treasury could extend or renew any of the loans for additional periods not to exceed 15 years, provided, of course, the extension of renewal would aid in the orderly liquidation of the loan. The reasons for the enactment of the proposed legislation may be briefly stated as follows: 1. It is unrealistic to require every business enterprise which obtained a loan from the Reconstruction Finance Corporation to repay its indebtedness within 10 years. We all know there are many sound businesses which require a longer period for loan repayment, and to exact payments of such borrowers on a 10-year basis can only assure the immediate depletion of their working capital. With working capital depleted, these businesses are unable to repair and maintain their plants or to undertake capital improvements necessary to maintain a competitive position. Finally, such businesses are without the means to purchase inventories and supplies and to meet payrolls when they come due. 2. As working capital is depleted and liquidation becomes imminent, borrowers are unable to interest any new investment in their businesses or secure private refinancing. 3. Perhaps the most compelling reason for the passage of S. 2729 lies in the fact that the Secretary of the Treasury has taken the position that there is no alternative but to institute foreclosure proceedings or other such means of loan collection if a loan is not fully repaid within the period now prescribed by statute (or reasonably soon thereafter) even though the loan could be repaid from earnings if additional time were afforded. As final maturity dates approach, the situations referred to above become increasingly evident and more demanding of corrective action. Action should therefore be taken now to authorize the Secretary of the Treasury to further extend or renew any such loan if the extension or renewal would aid in the orderly liquidation of the loan. In order that the subcommittee may have the benefit of a specific illustration of the type of case for which the relief proposed by S. 2729 is required, I would like to quote from a letter I received recently from an Oregon firm engaged in the business of producing hardboard and softboard. This firm, the Oregon Fiber Products Inc., of Pilot Rock, wrote to me under date of April 7, 1958, and I quote from a portion of its letter: "Oregon Fiber Products, Inc., borrowed over $3 million from the RFC and still owes $2,750,000 which is being repaid at the rate of $45,000 per month with certain interim adjustments. "The Treasury has indicated its agreement to authority to extend loans up to 10 years but this period is not enough to aid Oregon Fiber Products, Inc., as our best judgment is the loan should be extended for 15 years, giving a total of 20 years from the present time and this would place monthly payments at about $18,500 per month. "Accordingly we request that you secure the passage of S. 2729 with authority to extend loans for 15 years. If any change is to be made in the bill, the time for extension should be increased to 20 years. The reasons for the passage of the present bill, in addition to what we have stated above are as follows: "(1) The bill is permissive not mandatory. If passed, Treasury can refuse to extend loans if it so desires or it can extend them for 1 year, 2 years, etc., up to 15. If Treasury believes extensions should not exceed 10 years, it has authority under the bill to limit extensions to 10 years. "(2) Every effort has been made to accede to the Government's wishes and refinance the Oregon Fiber Products loan privately but with the high interest rates and tightness of money, it has been impossible to do this thus far. It is our firm conviction that if Treasury were to extend the present loan for an additional 15 years, thus giving a maturity of 20 years, it would allow the loan to be refinanced privately much more quickly than it will be possible to accomplish on the present terms. "(3) With the reduced monthly payments, the company can accumulate a reasonable cash reserve and strengthen its financial position which in a reasonably short time will greatly assist in refinancing the loan privately. "(4) Oregon Fiber Products, Inc., will continue to make every effort to have the loan refinanced privately and this will aid in the Treasury's liquidation program. "(5) This bill S. 2729 will not only give Treasury authority to reset the Oregon Fiber Products loan on a reasonable basis but it will also allow the resetting of all other loans. Hence, Treasury can decide the granting of extensions and the extent of them on grounds of the best interest of the company involved as well as Treasury's best interests. "(6) An extension of loans on a reasonable basis will allow the building up of the business on a sounder basis and thus assure a greater stability in employment. "I might add that this company not only has a substantial payroll in a community that is dependent to a considerable extent upon its continued operation, but also has a considerable number of stockholders and debenture holders who are scattered throughout the State of Oregon and principally in the Pendleton and Portland areas. Hence, it will be appreciated if you will do what you can to have the bill considered and passed with authority for 15 years, or 20 years, if possible." The foregoing letter will, I am sure, demonstrate to the members of the subcommittee that legislation of the type proposed by S. 2729 is urgently required I shall appreciate the subcommittee's thorough and sympathetic consideration of this bill. STATEMENT of Jacob K. JAVITS, A UNITED STATES SENATOR FROM THE STATE of NEW YORK Broad recognition that reciprocal trade has become one of the keystones of United States foreign policy reinforces the responsibility of those of us who most strongly advocate its 5-year extension as requested by the President to provide necessary adjustment for small businesses adversely affected by foreign imports. Therefore, I urge favorable consideration by the committee of S. 3664 introduced by myself and Senators Saltonstall, Ives, and Potter. If enacted, it would make such businesses eligible for Small Business Administration loans and allow them to pool their productive capacities without being in violation of antitrust laws; also, it would amend the Internal Revenue Code to allow more rapid amortization on existing machinery and facilities under certain circumstances. Providing this kind of assistance would virtually eliminate one of the chief criticisms leveled at the escape clause affecting reciprocal trade agreementsthat relief granted to an entire industry very often is of far more benefit to the strong businesses in the field than the weaker concerns which really need it. Such legislation would also answer one of the principal arguments put forward by the groups which want us to retreat behind high tariff walls notwithstanding that at this very critical moment the economic growth and well-being of the United States and the free world are dependent upon the continued expansion of our record export-import trade. United States foreign trade last year, exclusive of military aid, passed the $32 billion mark with $1.50 worth of United States goods exported for every $1 worth of foreign imports. Our overall ratio of 60 percent exports to 40 percent imports also applied to the $25 billion in trade we did with the 43 countries with which we have trade agreements. In the great majority of cases, their trade balance with the United States was in sharp contrast to our own. Thirty-five of these trade agreement countries take more of our exports than we take of their exports while only Brazil, Ceylon, Chile, Ghana, Indonesia, the Federation of Malaya, New Zealand, and Rhodesia and Nyasaland sold more to us than we bought from them in 1957. The United States Commerce Department frequently uses a figure of 4.5 million Americans who work at jobs closely tied to our export trade. Contrasted with this is a United States Labor Department survey of 29 cases requesting relief under the escape-clause provision and endorsed by the Tariff Commission which revealed that less than 120,000 worked even during peak periods of employment in plants producing the commodities concerned. Other experts estimate that between 200,000 and 400,000 jobs are adversely affected by foreign imports-still not more than 10 percent of the total benefiting from increased. Nevertheless, even though the broad national interest dictates the long-range continuance of reciprocal trade policies, we are still not justified in ignoring the plight of small businesses which, lacking the resources to modernize their plants and methods or the capital to cushion a transition into another field, may face a bleak future. Faced with similar problems of businesses unable to adjust to changing economic conditions and markets, the six member nations of the European Community for Coal and Steel have already embraced a program of readaptation featuring adjustment assistance which includes retraining workers in new skills and, in some cases, investment loans to new industries to absorb labor outside the coal and steel fields. To the extent that certain small businesses in the United States are injuriously affected by lower tariffs negotiated under reciprocal trade agreements, my colleagues and I propose S. 3664 designed to help them recapture their competitive position in the open market where possible and when it is not, offering substantial loan aid to allow them to shift their employees, their plant, and their knowhow into a more economically viable line. A section-by-section analysis of the bill is attached. |