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Now, that is a little bit different from the Small War Plants Corporation Act. Under the Small War Plants Corporation Act they didn't do anything. It was a board. Do you remember it? It was under Mr. Donald Nelson, a very fine man, but he didn't have any patience with that board. He wouldn't see them. They couldn't even get to the outer office. We amended the law one time and we fixed it so they could go and take a contract anyway. After that they were received cordially. You know, they unrolled the red carpet for
They came in, and they took a few prime contracts-they didn't have to take many of them; in other words, just showing that they would take them. They really got a job done for small concerns in areas just like your own.
I suggest for your immediate help I would bring all the pressure I could. I would get every Congressman I could get. I would get every Senator, anyone who had any political influence, particularly in the Republican ranks, and really pressure these fellows to give you an opportunity to get one of these large prime contracts through SBA and distribute it to the local areas and get the job done. It is possible. The money is available. We authorized $250 million. They have only asked for $80 million. They could get the other any time they wanted it. It is just a question of asking for it.
So you have got a gold mine in your own backyard there. In other words, an acre of diamonds in your own backyard, and it is possible to get the job done. I just hope you do it. It ought to be done. Can't you see something in that?
Mr. HUGHES. You have encouraged me to make a trip Thursday and Friday that I wasn't going to make to a workshop out in Parsons, Kans., where I am invited to talk about this very subject, but I have talked and talked until instead of going toward Kansas, I came to Washington this week, hoping that I could get some help, and I do appreciate your comments. We have got one subcontract. Here is the thing you said I like: If we had facilities to do it with, we have people like Diagraph Bradley, fine people. They can do a job. They can take second subcontracts and do them. We have had one subcontract and no prime contracts in the last 5 years. We have Sangimo Electric, a big outfit. We have International Staple Machinery Co., a subsidiary of a Pittsburgh outfit, high class people, capable of doing wonderful work. All the engineering helpsMr. PATMAN. They can do precision work?
Mr. HUGHES. Everything you want.
Mr. PATMAN. You have a wonderful start there. It is within the power of the Small Business Administration to do it. I hope you point out that the present administration in power has two Cabinet members on that board. That kind of puts them on the spot. If they turn you down, that is the administration turning you down. But they don't seem to mind that. They are turning them down anyway. They have got the Secretary of Commerce and Secretary of the Treasury on that board of Mr. Barnes. Now, I really sympathize with Mr. Barnes. He is powerless. He can't do anything. He is more or less. of a captive because he has got to carry out what the administration wants, as manifested by the desires of those two Cabinet members, but at the same time that puts a burden on the administration to at least
do what is right, in your view, toward necessarily distressed areas, and it can be done. The money is available. It is possible; the law is passed; it is on the statute books; there is no reason on earth why it shouldn't be done, and I hope you put that burden right on them, because they asked for it, and I think that you ought to do it. I wish you good luck.
Mr. HUGHES. Thank you.
Mr. PATMAN. We have known of cases like yours. There is more wheelspinning going on in this Nation today, I guess, than at any other time in history. There is really wheelspinning.
Down in my country, Texarkana, Tex., people get up at 4 o'clock in the morning and get in their cars and go to Dallas, 168 miles away. They wait there in line at the Small Business Administration office to try to see some fellow that is third assistant to the third assistant something, and when they finally get up to that desk they try to talk them out of it: "You have got to go back home and get your private bankers to do it. We can't do this or that."
They talk most of them out of it. They just talk them out of it. The persistent fellow, the fellow who is really in distress and really desperate, he hangs on; he has got to. He has to seek what he can get. Then they will finally send him back for the banker's statement and send him back for an audit, and then for an engineer's statement and send him back for an inventory statement, something else, just keep on running back and forth, wheelspinning between Texarkana and Dallas, keep him going. Finally, the persistent one just stays with them. He has got to have it. He is desperate, and he finally gets an approval. After he gets an approval it is an average of 5 months before they get the money actually paid out on approvals.
Now, that looks like a disgrace to me, actually a disgrace. I think Congress ought to really go after them about it. It is going on all over the country. In your case you have got the relief right on the statute books. You have got the power there. You have got the people to carry it out. It is just a question of getting them to perform their duty, and I wish you all kinds of good luck.
Mr. O'HARA. Would the gentleman yield?
Mr. PATMAN. Yes, sir.
Mr. O'HARA. I note that Mr. Hughes has with him the very able and dynamic Congressman from his district, Congressman Gray, and I am wondering if the gentleman from Texas could suggest any way in which Congressman Gray could help Mr. Hughes put the time light under the Small Business Administration.
Mr. PATMAN. Congressman Gray is kind of like I am. We are like that famous gambler who lost a diamond set. We don't have much power with the administration in power. We are not the ones that can get the job done properly. If anyone can do it, Congressman Gray can. I know that. I think if he had some power and weight from the Republican side, particularly from Republican Members, I think it would be very effective, or Republican leaders in the city where he lives. You know there are lots of fine Republican leaders there, I am sure.
Mr. O'HARA. Dr. Talle is from Iowa. Mr. Gray is from Illinois. Would you help us, Dr. Talle?
Mr. TALLE. My friend, Mr. O'Hara, I will be delighted.
Mr. O'HARA. Your battle is won, Mr. Hughes.
Mr. PATMAN. He is a very effective Member. He will really get the job done for you. At least he will try.
Mr. HUGHES. That is what we are looking for, assistance. We certainly do appreciate it.
Mr. TALLE. I want to thank the gentleman from Texas for his kind remarks.
Mr. PATMAN. You are entitled to them, Doctor.
Mr. MCDONOUGH. What factory facilities do you have down there that are capable of doing some of the work that the Defense Department may need that are now idle?
Mr. HUGHES. Well, we have no plants that are totally idle. We have plants with many machines in them that are idle that could double or triple. Take Diagraph-Bradley; they make stenciling machines and they have subcontracts with Boeing, Lockheed, people like that.
Mr. MCDONOUGH. You mean if they were to get a defense contract, then they would have to increase their machine capacity?
Mr. HUGHES. No; with machines that are now idle they could handle 200 or 300 men in some of those plants, Diagraph-Bradley could, International Stapling Machines.
Mr. MCDONOUGH. Has the management of those plants that are capable of performing this defense work negotiated with the Small Business Administration for loans to compete in some of these contracts?
Mr. HUGHES. In some cases they have. In some cases they went up to a certain point and turned back and just reduced their efforts and stayed within the confines of what their local banks would provide. Mr. MCDONOUGH. Why did they do that? Why didn't they persist in obtaining the loan if they were eligible for it?
Mr. HUGHES. They are eligible up to a certain amount. Then they didn't have any contracts. There was no point. The two ran together. In our workshop we had the procurement people there, and the Small Business Administration people there, the idea being that if we got a contract we would have the added capital easily available. Our banks in southern Illinois can only loan up to 8 or 10 percent of the capital structure of the bank. Most of our banks just cannot provide big commercial or industrial loans.
Mr. MCDONOUGH. Was the reason these people didn't qualify because the local banks would not lend the money?
Mr. HUGHES. No. The reason they didn't qualify was because they didn't get a contract. They didn't have an occasion to qualify. We have only had 1 contract in southern Illinois in 5 years. It was a small subcontract that went to Sangimo Electric.
Mr. MCDONOUGH. What did they produce?
Mr. HUGHES. Zonar equipment for the Navy. They are an electronics plant, a branch plant down there, employing 1,500 people making voltage capacitors.
Mr. MCDONOUGH. How many southern counties do you say you represent?
Mr. HUGHES. About 16 counties.
Mr. MCDONOUGH. How many of them are industrialized?
Mr. HUGHES. I would say that half are industrialized, the northern half. In the coalfield we have a very high degree of population,
and the coal mines have been abandoned, but the people stayed there, and we have been trying to attract industry and develop industries to offset the declining employment in the coal mines. We are doing a pretty good job, but not fast enough.
Mr. McDONOUGH. Who invades your market that prevents your factories from operating? Does the St. Louis and Chicago market come in and undersell you?
Mr. HUGHES. I wouldn't say anybody is invading our market, to the extent that we are being invaded. Our industries are new. Most of them have come since World War II, and most of them are coming as branch factories from some big manufacturing operation in Pittsburgh or Chicago, and they depend upon the domestic market, with no defense contracts.
Mr. MCDONOUGH. In southern California we probably have more diversification of industry than any other area in the United States. Mr. HUGHES. That is healthy.
Mr. MCDONOUGH. Contrary to the statement just made by Mr. Patman about small business, small business that employ as few as 25 to 100 people have had more support from the Small Business Administration there than they ever had before, and the Small Business Administration has increased its number of loans to small plants by three times the amount that it did in the previous administration. In other words, in the past year they have expanded and increased the contracts and aided small business, not only by Federal funds, but by giving them advice and counsel and seeking out loans from banks and investment institutions in the area to finance them. Those that did not qualify were the kind of an operator whose work record, production record, and his know-how didn't qualify for a prime or a subcontract. That has been the case in many instances, where the complaint has been that Small Business Administration hasn't provided the funds. It has been because the individual didn't have any production know-how, he didn't have the personnel, he didn't have the machinery, and he didn't have the credit rating to qualify for such loan.
Mr. HUGHES. I think I pointed out, though, that we were trying to get the contracts and we have to get the contracts before we need the Small Business Administration loan.
Mr. MCDONOUGH. Of course they want competent people to do the work.
The CHAIRMAN. I am going to call the committee around.
Mr. O'HARA. Mr. Hughes, I want to commend you for your constructive statement. I don't know when I have listened to a better statement since I have been a member of this committee. Apparently you examined every phase of the problem, even that of education. you examined every phase of the problem, even that of education, which I think is a good suggestion, but there is a roadblock there. You say that unemployed miners should be given vocational education, to qualify them to take other jobs. That is fine, but we have been told that in a new industry a man who is past 35 or 40 years of age is not hired.
Mr. HUGHES. I don't think we are going to buy that down our way.
Mr. O'HARA. I wouldn't expect that from southern Illinois. Mr. Hughes, you also comment on the sales tax, the portion that now goes to the city, and you think that may be helpful?
Mr. HUGHES. That means the city might be able to supplement some Federal help.
Mr. O'HARA. Not too much more.
Mr. HUGHES. Not a great deal.
Mr. O'HARA. After all, there are a lot of jobs for municipal government to do and it is hard for the cities to find the necessary money. Mr. HUGHES. That is right.
Mr. O'HARA. Of your suggestions, I think the one most helpful is that in regard to the Big Muddy River, the inland waterway. We all appreciate that with the development of the diesel engined tug, able to haul a great line of scows, inland-water transportation has become a major factor. You think, as I get from your statement, that southern Illinois cannot reach its proper plane industrially unless the waterway is built?
Mr. HUGHES. That is my feeling, sir. I answered a railroad objection the other day by saying this: I made a comparison that wherever there was water development the railroads also prospered, and I don't feel that I am doing anything detrimental to their interests. I think the whole community will prosper and the railroads will share in that prosperity.
Mr. O'HARA. Everybody shares in prosperity once it is created. Mr. HUGHES. That is right.
Mr. O'HARA. With development of this waterway you could have aluminum and other plants in the southern Illinois area.
Mr. HUGHES. I wouldn't be taking it away from West Virginia or Kentucky or anybody that already has it, because the development of the aluminum and electrical industry, sitting on the big pile of coal we have, will be a great potential for hundreds of years, and you must take into consideration the defense situation; if you could have that ready, that would be a powerful area, an arsenal of defense, if I may use that word again, not original of course.
Mr. O'HARA. Have you asked for a Federal appropriation for that purpose?
Mr. HUGHES. Our engineers are now studying the canalization of that river, and it is past the preliminary stage. We have had the hearing already; and I think money has been set aside that they can go ahead for the complete study of the engineering, then after that they will come to Congress for support of our project.
Mr. O'HARA. And you are industrously pursuing your efforts in that direction?
Mr. HUGHES. Yes, sir.
Mr. O'HARA. I am sure you are getting good help from your great Congressman.
Mr. HUGHES. Yes, a hundred percent. The fact is we are getting fine cooperation from a lot of people.
Mr. O'HARA. I want to say that I don't know of any new Member of the Congress that has been more dynamic, or has done a better job than your own Congressman.
Mr. HUGHES. We appreciate that very much.
Mr. O'HARA. Just one other remark, Mr. Hughes.
Coming from Illinois, at one time having had many friends in southern Illinois, when I was Lieutenant Governor of that great State, I