not taking any money or business from that bank. They have turned him down. They don't want the loan. Or is my logic wrong? Mr. BARNES. No, that is correct.

Mr. MULTER. Let's go on to the next change. At the bottom of page 9, there is a proviso for consultation between the Administrator and representatives of small business. You approve of that change, do you not?

Mr. BARNES. Yes, sir, we have no objection to the change at the bottom of page 9.

Mr. MULTER. As a matter of fact, there was some question raised that without this in the law someone might question your authority to consult with representatives of small business, and surely it is the intent that you be permitted to get as much advice as you can get, both get and give?

Mr. BARNES. Yes, sir.

Mr. MULTER. Passing to the bottom of page 10, we have already discussed and you have given us your reasons as to why you think there should be no change in the matter of making the loans, as to whether there be collateral security or merely reasonable assurance of repayment?

Mr. BARNES. Yes, sir.

Mr. MULTER. We will pass that and go to page 11. I think that is merely a technical correction.

Mr. BARNES. Technical change; yes, sir.

Mr. MULTER. On page 13, subdivision C, it now reads: "Defense or civilian production" instead of "defense production." That liberalizes and broadens your authority and you agree with that change, do you not?

Mr. BARNES. Yes, sir.

Mr. MULTER. On page 15 we have the provision as to the advisory boards. I think you have already explained the reasons why you prefer to have the right to have big business sit in with you on these advisory committees?

Mr. BARNES. Yes, sir.

Mr. MULTER. The next change on that same page, we have taken out the requirement that there be a Presidential directive to you to make studies.

Mr. BARNES. Yes, sir; but no Presidential directive to make studies is required under the present act.

Mr. MULTER. So that you can make the studies on your own initiative?

Mr. BARNES. That is all right, sir.

Mr. MULTER. On page 19, there is a change in section 113. You have indicated that by regulation you have made the same or similar requirement?

Mr. BARNES. Yes, sir.

Mr. MULTER. Is there any objection to the provision being put into the statute?

Mr. BARNES. No, sir.

Mr. MULTER. As a matter of fact, if it is in the statute it strengthens your hand, and then the other agencies can't back down on their agreement?

Mr. BARNES. Yes, sir.

Mr. MULTER. I am not implying that they will, but you never can tell when there might be a personality clash and they might want to change the procedure. This will make it certain.

Now, on the bottom of page 20, you refer to the change there, which is subdivision B of section 115, and you said that is rather ambiguous and that you thought we ought to be specific as to what functions we want to transfer from Commerce to your Department?

Mr. BARNES. I meant to go further than that. We have had an agreement between Commerce and SBA as to these functions and activities, and have been living under it for 2 or 3 years, and it has been working very well. There is a possibility of overlapping, for instance, in certain of the publications, and things like that, but we have worked cooperatively on that and I don't believe there is any trouble. We have, in each area, clearly delineated what we do and what the Department of Commerce does, and I don't think of any function they have that needs at present to be transferred, and I would be fearful that this language would, I know, cause them a great deal of concern, because many of their services are available both to small business and large business, and small business gets very many advantages from them, and I don't think it was the intention of the committee to transfer that type of thing to SBA. Therefore, I asked that you at least hear testimony from the Department of Commerce to hear their suggestion as to how that could be clarified, if you believe it is necessary.

From my point of view, it is not necessary at all.

Mr. MULTER. So far as you know, section 115 (a) is being adhered to and there is no duplication by your agency of any work the Department of Commerce does?

Mr. BARNES. That is right, sir; yes, sir.

Mr. MULTER. The committee certainly doesn't intend to have you take over the census-taking activities of the Department of Commerce, but other than their census-taking activities and publication of matters that may be of interest to business generally, or to small business specifically, is there any other function that the Department of Commerce is performing which belongs in your Department?

Mr. BARNES. I don't believe there is, sir. Their Foreign Trade Section is peculiarly one that Commerce should carry on, and Small Business gets many advantages from it, but there is nothing in that that should be transferred.

Likewise, their technical offices are ones that collect technical reports and papers on research. They are available to all size industry, and that is as it should be. So I don't believe that this is needed. I think that all has been transferred that should be.

Mr. MULTER. If they are not duplicating anything that you are doing and you are not duplicating anything they are doing, then of course, subdivision B of section 115 will be ineffective, but if they are, it will accomplish a transfer, and I think it should.

The committee put this in because we were somewhat disturbed by something that was said to us by a representative of the Department of Commerce, that they were still performing some of the functions that you perform, and should perform, which are directly put under your authority by the act. Among other things, acording to many past congressional directories, they had a man assigned as Director of

the Office of Small Business. What do they need an Office of Small Business today for, with the SBA doing the job?

Mr. BARNES. Well, a number of agencies have such an officer, and he is usually just a liaison type officer and handles coordination of small business programs within that particular department.

In this particular case they have, I think, 1 man or 2 men in that particular office, and they-well, rather than deal with their functions, I understand that Commerce itself is going to testify before you tomorrow. I think they should answer that question, as to what his functions are.

Mr. MULTER. You made no mention of the Budget Bureau in your statement. Has your statement been cleared with the Budget Bureau? Mr. BARNES. Yes, sir, my basic statement has been cleared, and the Budget Bureau has no objetcion to the comments I made on H. R. 7474, with the exception of the fact that they understood that it had been prepared rather hurriedly, and that it might be subject to correction in case there were any lapses on the part of the person delivering it.

Mr. MULTER. What are you referring to as being prepared hurriedly?

Mr. BARNES. The comments I gave the other day on it.

Mr. MULTER. Oh, yes, we all understand that you had comparatively little time in which to do it, between the time you got it and the time you had to come up here. As I said to you privately, I will repeat for the record, particularly having in mind the little time you had, it was an excellent analysis of the bill, and you were very fair in your comments about it.

Thank you, Mr. Chairman.

Mr. BROWN. Mr. Barnes, we want to congratulate you on your splendid statement. We appreciate your views. You may be excused. Mr. BARNES. Thank you, sir.

Mr. BROWN. The committee will adjourn to meet tomorrow morning at 10 o'clock.

(Whereupon, at 4:30 p. m., the committee adjourned to Friday, May 17, 1957, at 10 a. m.)

SMALL BUSINESS ACT

FRIDAY, MAY 17, 1957

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C. The committee met at 10 a. m., Hon. Brent Spence, chairman, presiding.

Present: Chairman Spence, Messrs. Brown, Patman, Multer, Reuss, Breeding, Talle, Kilburn, Betts, Mumma, and Bass.

The CHAIRMAN. The committee will be in order.

Mr. Mueller, the Assistant Secretary for Domestic Affairs, Department of Commerce, is the witness this morning.

Mr. Mueller, if you have a prepared statement, you may read it without interruption and subject yourself to interrogation after you are finished.

Mr. MULLER. Thank you, sir.

STATEMENT OF HON. FREDERICK H. MUELLER, ASSISTANT SECRETARY FOR DOMESTIC AFFAIRS, DEPARTMENT OF COMMERCE

Mr. MUELLER. Mr. Chairman and gentlemen of the committee, at the outset I wish to tell you how deeply we appreciate the opportunity to appear before this committee to discuss with you the legislation you are now considering dealing with the problems of small business and how the Federal Government can best assist in the solution of these problems.

As you know, the basic charter of the Department of Commerce is to foster, promote, and develop both the foreign and the domestic commerce of the United States. Our mission concerns itself with business of every kind and character-big, medium sized, and small, and certainly in the discharge of this historic responsibility we are keenly interested in giving every posible assistance to any segment of the commercial community of this country which may have a problem.

As you further know, for some time the executive branch has been engaged in the study of the problems of the small-business men and has reached some conclusions concerning steps which we feel should be taken to assist him in the solution of his problems. The development of this program requires legislation to extend the Small Business Act and to empower the Small Business Administration to do certain things.

In examining the legislation before you, we find that the provisions in H. R. 6645 by Mr. Hill of Colorado faithfully implement the ideas which the executive branch has developed on this subject, and is con

sistent with the program of the President. Therefore, we appear before you this morning to ask your serious consideration of Congressman Hill's bill and to convey to you our deep feeling that the interests of the small-business man would be best served by the prompt enactment of H. R. 6645. Secretary Weeks has written a letter to you, Mr. Chairman, in support of this measure.

We should also point out we have made a very careful examination of H. R. 7474, by an important member of your committee, Congressman Multer. This measure also contains many of the provisions which we believe would be helpful to the small-business man. But we do want to point out that it contains some provisions which give us very serious concern. For this reason, we feel we must oppose certain provisions of this piece of legislation.

In particular, Congressman Multer's bill has two provisions which, upon detailed examination, we believe would in the long run prove to be disadvantageous to the small-business man-the very person that all of us are trying to help. If I may, I would like to discuss these provisions with you gentlemen briefly in order to make clear the basis for our concern. I shall take these matters up in what we believe to be their order of importance.

First, section 103 (d) of Mr. Multer's bill (H. R. 7474), in effect, abolishes the Loan Policy Board as it functions pursuant to the legislation under which the Small Business Administration currently conducts its affairs.

The current Loan Policy Board is composed of the Administrator of the Small Business Administration, the Secretary of the Treasury, and the Secretary of Commerce. As you know from the abundance of testimony heretofore adduced concerning the functions of the Loan Policy Board as presently constituted, it functions on the broadest possible policy basis.

It does not pass upon the individual loans to the small business people but establishes loan policy from time to time as national conditions dictate within which the lending function is conducted. The function which the Loan Policy Board presently performs for the Small Business Administration is closely analogous, if not identical, to the role such boards play in lending institutions generally.

Here, they have historically demonstrated their effectiveness throughout the country. For such a board to be effective in providing such broad policy guidance, it is necessary for it to be comprehensively informed of the financial conditions of areas served and to be similarly aware of industrial conditions and commercial opportunities in these

areas.

It is for these reasons that membership on the Board of the Secretary of the Treasury and the Secretary of Commerce is valuable in helping small business in solving their particular problems. They bring to bear their intimate day-to-day knowledge of the money markets of the country, including such matters of availability of money, interest rates, and many other factors which must be considered from time to time in the establishment of sound loan policy. Likewise, the Secretary of Commerce contributes from his current detailed knowledge of industrial conditions and commercial opportunities provided to him by the commercial fact-gathering agencies in the Department of Commerce which report to him daily.