Mr. MUELLER. Mr. Who?

Mr. MULTER. Teetor-T-e-e-t-o-r. His testimony appears at page 71 of that printed record and I quote:

We have had a department which was called the Office of Small Business, which has gone out of existence.

And the next time the question came before the committee, we directed the Department's attention to the fact that the Congressional Direcory still listed an Office of Small Business in the Department of Commerce, with a man in charge of it, and we were told that the directory had not caught up with the fact that the office had been closed and was no longer operating and that the next directory would correct it. I now have in front of me the March 1957, directory, and we still have listed, under the Department of Commerce, on page 496, Director, Office of Small Business, James L. Kelly, who is the same gentleman who is listed as assistant to the Administrator of the Business and Defense Services Administration.

Is the Office of Small Business still operating or is it not?

Mr. MUELLER. It is not operating, sir. I am sorry it has gotten to that point.

Let me say this. We do have Mr. Kelly as a very minor part of his duties act as coordinator or liaison between the Department of Commerce and the Small Business Administration, to do the very thing that you want, namely, to see that there is no duplication.

We also have numerous communications that come to the Department of Commerce from small-business men, and they are routed to him so he in turn can route them to the proper person in the Small Business Administration.

That is a very minor part of his duties. As you have indicated, he is an Assistant Director of BDSA and that is his function.

Mr. MULTER. With that assurance, and with the assurance from us we do not intend to do the things we clearly indicate we don't, I don't see what objection there can be to the language of the new bill, saying that anything you may be doing for small business should be transferred to the Small Business Administration.

Mr. MUELLER. Well, all we can say, Mr. Multer, there being no reason for it, there is an area of possible confusion.

I will be very glad to bring an organization chart of BDSA, which would show there is no such office.

Mr. MULTER. It might be helpful if you would submit that for the record.

Mr. MUELLER. I will submit it.

(The chart above referred to faces this page.)

Mr. MULTER. And if it would make you feel any better, the members of the committee think-I cannot speak for them, I can only speak for myself-but I would not hesitate to offer an amendment to make clear we do not intend to do the things by this section 115 (b) which you and I have already indicated we do not intend.

Mr. MUELLER. Well, if the matter can be clarified in that way, sir, that might be one answer, but I cannot see any reason, with due respect to you, to include it at all.

Mr. MULTER. I believe that if the committee had had the assurances that you have given to this committee here--I mean if the Small Business Committee had the assurances you are making here before the

Banking and Currency Committee, that section would not have been put in the proposed bill, but it was put in because there were intimations given to the committee that the Department of Commerce was still performing some of the functions that the Small Business Administration should be performing.

The CHAIRMAN. What section is that?

Mr. MULTER. 115 (b).

Mr. MUELLER. I might just add, sir, even this spring we have been publishing what we call E. and O. books which are used mainly by the Small Business Administration. I even cut out the publishing of those books and said that should be done by the Small Business Administration, that that was their function.

Mr. MULTER. I was going to ask if there was complete cooperation between the two agencies in preparing those books and pamphlets before they were issued.

Mr. MUELLER. They always have been. And they were issued jointly for a while, because they have connotations for other than small busi

ness.

Mr. MULTER. I believe it would be better if the small-business man who can be served by the Small Business Administration should not go running to the Department of Commerce and then be sent from there to the Small Business Administration. If he knew that was the place to which he had to go in the first place, it would save everybody a lot of time and trouble. But the Small Business Administration is a new agency, the Department of Commerce did traditionally try to serve small business, and, therefore, I suppose that is the first place they look.

Thank you, Mr. Chairman.

The CHAIRMAN. Are there any other questions, Dr. Talle?
Mr. TALLE. Not at this time.

The CHAIRMAN. Mr. Mumma?

Mr. MUMMA. No, sir.

The CHAIRMAN. Thank you. We are very glad to have your testi

mony.

Mr. MUELLER. Thank you, sir. I appreciate very much the opportunity of appearing before the committee and stating the views of the Department of Commerce.

The CHAIRMAN. The committee will now adjourn to convene Tuesday at 10 o'clock.

(Whereupon, at 11:30 a. m., the committee adjourned to reconvene at 10 a. m., Tuesday, May 21, 1957.)

SMALL BUSINESS ACT

TUESDAY, MAY 21, 1957

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C. The committee met at 10:30 a. m., Hon. Brent Spence (chairman) presiding.

Present: Chairman Spence, Messrs. Brown, Patman, Multer, Vanik, Anderson, Breeding, Talle, Kilburn, McDonough, Betts, McVey, Bass, Seely-Brown, Henderson, and Chamberlain.

The CHAIRMAN. The committee will come to order.

We will continue the hearings on H. R. 3627 and H. R. 7474.

Mr. Henderson will be our first witness.

Mr. HENDERSON. Mr. Chairman, should I proceed from here or from the witness stand?

The CHAIRMAN. Please take the witness stand.

STATEMENT OF HON. JOHN E. HENDERSON, MEMBER OF CONGRESS, REPRESENTING THE 15TH DISTRICT OF OHIO

Mr. HENDERSON. Mr. Chairman, this morning I wish to speak on behalf of H. R. 3627, the bill which I have introduced to make the Small Business Administration a permanent agency of the Federal Government.

Four years ago, this committee participated in an experiment when it recommended the creation of the Small Business Administration. To be sure, this was a carefully reasoned and calculated experiment. Nevertheless, for the first time, an independent agency of Government was created in peacetime to serve that segment of our economy upon which the free enterprise system is firmly based our several million small-business firms. It was the first time such an agency was brought into being without the backdrop provided by the temporary urgency of military hostilities.

The predecessors of the Small Business Administration were the creatures of World War II and the Korean action. Both the Smaller War Plants Corporation and the Small Defense Plants Administration were emergency measures necessitated by the economic toll which two major economic mobilizations threatened in the small-business

area.

In the creation of the Small Business Administration, the Congress recognized the continuing need for a special agency of Government during the foreseeable future when our economy was to be dominated by high defense expenditures. We also recognized that there are some problems which are peculiar to our smaller enterprises and that it is a

proper responsibility of Government to assist in the solution of these problems. This recognition was not partisan, but supported by both of our great political parties.

We now have before us the operating record of the past few years of the Small Business Administration. I believe it has been a good record. Measuring the service this agency has rendered within the scope of its authority granted by the legislation which created it, I feel confident that most of us here will agree that the Small Business Administration has a record of achievement.

The agency has operated economically. It has shown no tendency toward the empire building so common in the Federal structure. It has been sound in the administration of its programs. It has been enthusiastic in the assistance it has given. However, its zealousness to serve has not resulted in questionable programs or administrative excursions into areas which would bring it into disrepute.

For these reasons, I believe we have seen a demonstration of the administrative soundness of the concepts which underlie the Small Business Administration. Today, however, the agency's legislation has one significant deficiency. That is, of course, that while the agency is conceived as a permanent one, it is not, in fact, permanent. Its life must be extended every 2 years.

There are practical and administrative difficulties which are obvious in this aspect of the existing legislation. The first of these is the question of its relations with other departments and agencies of Government. One of the most important phases of the SBA program is the cooperative agreements the agency achieves with other agencies. As one example, I cite the "joint determination program" wherein the SBA works on a cooperative basis to stimulate the participation of small business firms in the purchasing programs of the Federal Government. It seems clear to me that while this program has achieved very good results, the permanence of the agency might have given it more leverage in the development and daily administration of this program. Öther such cooperative endeavors would be similarly strengthened if the agency were permanent in fact.

In its program of loans, it is the intention that maximum advantage should be taken of financial assistance to small business in participation with private banks. We all know that a great number of loans to small firms would not have been possible without such participation during the past 4 years. I believe that such cooperative endeavor would be stimulated and encouraged if private lenders were assured that the agency would be in existence throughout the term of specific loans under consideration.

The third point I wish to make concerns the agency's personnel recruitment problems. The SBA is a small agency in comparison with others in the Federal structure. Nevertheless, the fully effective performance of its mission demands the recruitment and retention of skilled personnel. I refer to loan examiners, economists, and procurement specialists. Needed personnel with such skills are at a premium. To attract them, a reasonable degree of job security is necessary.

As Mr. Wendell Barnes, the Administrator of the agency, has testified before this committee, this has been a notable and difficult problem.

For these and other reasons, I believe the committee should carefully consider the question of amending the existing legislation to

make the Small Business Administration a permanent agency. There are now before the committee various proposals which would provide further changes in the SBA legislation. Many of these proposals have great merit. All are worthy of careful study. It is perhaps natural that some of the suggested changes in the basic legislation may stimulate controversy.

Should the disagreement endanger or delay final action on all of the recommended changes now pending here, I urge that the committee give first consideration to the matter of the agency's performance. By such action, we can provide the basic stability the agency requires for its future operations and from this point, we can proceed to consider the other substantive changes which have been recommended.

Thank you, Mr. Chairman, for the opportunity to make this state

ment.

The CHAIRMAN. One of our colleagues on the committee gave his views on this subject.

Are there any questions?

Mr. BETTS. I think, Mr. Chairman, that Mr. Henderson made a very logical and excellent statement.

The CHAIRMAN. Thank you, Mr. Henderson.

Mr. Hill is our next witness. Apparently he is not here.

Mr. Riehlman, of New York, is the next witness.

STATEMENT OF HON. R. WALTER RIEHLMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

Mr. RIEHLMAN. Mr. Chairman, I would like permission of the committee to file a statement. I suggested in the first place reading it, but I think it would be to some degree repetitious of the testimony which has been given before the committee in the past few days. I would like to subject myself to the committee's questioning on the bill which has been presented by Mr. Multer representing Subcommittee No. 2 of the Small Business Committee. I would like to say this to the members of the full committee here today, that that bill was supported by 12 members of our full committee. I feel it is a bill which has been given thorough study by our subcommittee, and one that has great merit.

Now there are controversial changes, which differ in some degree from the administration bill, and for that reason, if there are some questions from the members of the full committee, I would be very delighted to try to answer them.

The CHAIRMAN. Without objection, your statement may be filed, Mr. Riehlman.

(The statement of Hon. R. Walter Riehlman follows:)

STATEMENT BY HON. R. WALTER RIEHLMAN

Mr. Chairman, it is a pleasure to appear before this committee and to comment on pending legislation for small business. I have a very personal interest in the problems confronting this most important segment of our economy. As a member of the Small Business Committee for 10 years, I have attempted to keep in close touch not only with the problems of small business but also with efforts on the part of the Congress and the Federal Government to strengthen the competitive position of small business in our economy.

It has been my good fortune to serve as a member of Subcommittee No. 2 of the Small Business Committee under the chairmanship of my distinguished