to area assistance programs. It states that its objective is to "avoid" as well as alleviate the effect of economic dislocation or disaster. It is designed to meet an economic crisis in the early stages before the financial condition of the community has deteriorated to a point where the community becomes eligible under an area-assistance program. It provides financial assistance on an emergency basis when such financial assistance is not available from any source. The President would be the office relied on to invoke the provisions of this bill.

In concluding I wish to say that two factors have prompted me to give very close attention to this legislation in these first months of my term in Congress. As I have said the business community in my State is comprised overwhelmingly of small firms. My own district has been hard hit by the closing of textile plants and resulting hardships all along the line. My efforts to help our people secure managerial help and information has not proved altogether rewarding. Attempts to acquire really substantive information on the problems of small firms and how they can overcome these problems in order to survive, have been rather discouraging. Ás I looked more deeply into these questions, and meanwhile confronted our problems at home, it seemed to me that the difficulties which I seek to resolve in my three bills are quite general ones, affecting many part of the Nation.

I am very grateful for your patience and courtesy and I am confident that this distinguished committee will give these proposals fair and serious consideration. I hope that they will be helpful to you in the formulation of amendments to the Small Business Act.

Mr. COFFIN. I shall appreciate that, Mr. Chairman.

The bill that Mr. Multer has just finished explaining is in my opinion an excellent bill, and it is so good that I would like to see it a little bit better.

I think that this is an important piece of legislation that you are considering, and that this is an excellent opportunity to enable this agency to grow from babyhood to manhood and use the experience that we have gone through in the past 4 or 5 years.

I have introduced three bills and I would like to discuss the ideas of those bills as possible amendments to the bill that the subcommittee has brought out and has explained to you.

In my opinion, after having read the records of your hearings and the questions and the answers, I have seen no adequate reason why the suggestions that have been made would not improve such bill as you finally enact.

My first suggestion is contained in H. R. 5651, and that directs SBA to make extensive comprehensive and continuing studies in certain problems of small business and to report twice a year to Congress on the results of these studies.

The important word is "direct." The Multer bill pays attention to the needs for studying, but it keeps that provision permissive.

Sitting here this morning, listening to the colloquy, it occurred to me there was ample evidence why we needed a direction to make these studies. You will remember the discussion about the question, "What is small business?" I suppose we could talk all day as to different definitions. That is one avenue where further study by the agency might reveal pretty sensible bases for definitions. It might be made by industries or some other way. But I am convinced we have not reached the final answer to the question, "What is small business?"

Then on the question the chairman asked of Mr. Multer, "How much of our national income is produced by small business?" we had to face the fact we do not know the total answers as yet. We know how much the small manufacturing plants contribute, but we did not know the total answer. Not too long ago, Mr. Vanik asked Mr. Barnes the effect on small business of the change in interest rate and the answer

was by no means a conclusive one, if you will remember. There are questions concerning deflation, inflation, availability of credit, availability of materials and supplies, cost factors, labor problems, management and personnel problems, and many other problems that we don't know the answers to.

It is not enough to allow SBA to make studies. They can make studies now. Any agency that is charged with a course of action can make studies.

The point is they have not done it, and they are not likely to. Mr. Barnes conceded in the hearings when he was asked by one of the members-I think this was on the Senate side-when he was asked about this bill of mine to direct the SBA to make studies, he said he had developed some new type of program or activity, but then he said this:

The demand, however, of the other programs seems to absorb the funds, because it is the volume of work that cannot be escaped.

And I think that will always be the case if we say only to the Administrator, "You have the authority to make studies."

We are never going to solve the problem of small business until we have a continuing and rather well-planned research and study program. Indeed, in the whole area of technical assistance, the fund and activity for this important type of work has dropped almost in half.

Therefore, Mr. Chairman, I have suggested that in this bill there be incorporated language which will direct the Administrator to make these very basic studies and to report on them to Congress, twice a year.

In that way, and only in that way, are we going to come up with final answers, instead of reaching around in the dark.

It is not quite enough for the Small Business Administration to put out its semiannual reports and to quote Dun and Bradstreet as to the cause of business failure. The Small Business Administration does not know what the cause of business failure is. It is taking Dun and Bradstreet's word for it, and I suggest if you are going to have the Small Business Administration as a real tool, it has got to know the answers to these questions from its own research.

The second idea, the second bill which I introduced, which could be part of this bill, this bill which has evidenced so much competent work from your Subcommittee No. 2, is H. R. 6953 and that provides for a separate program of financial assistance to nonprofit development groups. The SBA has already made loans to nonprofit development groups. It has made eight loans. But there are in this country today 3,000 such groups and of those, there are approximately 2,000 active

ones.

Now, eight loans is some activity, and indeed it is remarkable that the Small Business Administration has done that, because there is no specific authorization in the act for this type of loan.

The language of the act merely read that loans may be made to enable small business to meet its problems, and stretching that language, the Administrator has made loans on these particular occasions. I see no objection, however, no possible objection to clarifying the law. Certainly if the law should be clarified in the case of companies which pool their efforts, as Mr. Multer has told you, then there can

be no possible objection to clarifying the law to make it perfectly clear that under proper circumstances a development group can qualify for a loan.

The third idea which would be incorporated in this bill is contained in H. R. 5650, that would expand the power of SBA to make loans in cases of economic dislocation, as well as disaster from flood or fire. This is not a substitute for the area assistance bill, or what we used to call the depressed areas bill. The purpose of this is to supply the SBA with a tool which it can use in time to prevent an area from becoming a depressed area and meeting all of the requirements which such a bill would involve.

If a mill shuts down or if an industry moved out of the community, the businessman who had the difficulty would be able to come to the SBA and say, "I need X dollars to buy some equipment which would modernize my plant and make me competitive." And a loan of that sort, with requirements less disastrous than under the disaster provision, would enable that man to retool and modernize and compete again to save that community from going on the road downhill. It is in my opinion a poor tool, and the logic which authorizes aid in loans in the case of physical natural disasters applies when you have economic disasters or economic dislocations.

Under this the President would have authority to designate an area as an area of economic dislocation, and once he had done that, and that would have to be in the discretion of the President, then the standards applicable to loans would come into play, and the Administrator would apply the economic dislocation provision.

These three ideas, then, are things that could be done to strengthen this bill that do not, of themselves, involve money. The first one is the direction of making studies. To me, it is of basic importance.

It

may be hard to see, but I think that we have been in this field now, for so many years, and the very fact that we do not have authentic definitive answers to these questions that you gentlemen have been asking proves the need for making studies under forced draft.

The second idea of making loans available to development groups is an idea which would enable these thousands of groups throughout the country, who are bent on self-help, or else they would not have organized in the first place-would help these groups to help themselves. And it would clarify a portion of the existing law which is at best vague. The final tool I would like to see added to the bill is something that would enable the Small Business Administration to move into an area of economic dislocation and lend its assistance so it will never become a depressed area, with its 8 percent of unemployment for a period of months or years.

I want to conclude by thanking you very much, Mr. chairman and members of the committee, for being so patient. I know that this concludes a long series of hearings and testimony, and I can say nothing more important in conclusion than that this bill, as you may amend it in your wisdom, is one of the most constructive pieces of legislation that I think can come out of this Congress.

The CHAIRMAN. We are very glad to have the benefit of your views, and I am sure they will be considered by the committee when we go into executive session.

Mr. COFFIN. Thank you very much.

The CHAIRMAN. We have a rollcall in the House, as soon as it con

venes.

Mr. MULTER. May I say, Mr. Chairman, Mr. Coffin was very kind to appear before our Small Business Committee No. 2, and gave testimony there, just as he has here. It was very helpful.

Mr. COFFIN. Thank you, Mr. Multer.

The CHAIRMAN. Our next witness is Congressman Weaver of Nebraska. We are very glad to have you before our committee, Mr. Weaver.

Mr. WEAVER. Thank you, Mr. Chairman, and members of the committee.

STATEMENT OF HON. PHIL WEAVER, A REPRESENTATIVE IN CONGRESS FROM THE FIRST DISTRICT OF NEBRASKA

Mr. WEAVER. Gentlemen of the committee, I appreciate this opportunity of appearing before your committee to urge favorable consideration of the various bills including H. R. 6645 and H. R. 4441, which I introduced to give the Small Business Administration permanent

status.

Everyone will agree, I am sure, that the small-business man of America is a most necessary link in the conduct of our business pursuits. As such, his activities sustain, to a great extent, the economy of every hamlet, village, town, and city throughout our country. His financial status must be sound if he is to share fully in the overall prosperity of our Nation. The Small Business Administration can best help him attain this objective if it is a permanent agency with useful services available for his guidance. Suggestions and recommendations pertaining to financial problems and production methods, as well as technical assistance, have been both helpful and valuable to him. Only big business can afford to buy such services as these. This agency has genuinely made a substantial constribution to our smallbusiness people since its inception in 1953 when it was first established on an interim basis. It is important now that we renew and continue indefinitely its operations.

Time will not permit me to elaborate further in this respect but I would like to point out in particular that the loan phase of this agency has been of real significance and assistance to the small-business man. With extended drought conditions such as we have had in Nebraska, farmers and small-business people have not and are not prospering and what affects the one affects the other. Loans through this agency have, in many instances, been directly responsible for keeping a number of our good citizens in business. This continues employment and promotes community betterment. The privilege of credit has enabled them to make adjustments and to survive economically not that they have been neglectful through any fault of their own but because they have been the vicitims of the scourge of the elements.

In conclusion, I am certain that all of you gentlemen, when considering these facts in their proper perspective, will unanimously and favorably report this measure now before you for consideration.

The CHAIRMAN. Thank you, Mr. Weaver. We will consider your views in the executive sessions of the committee.

Our next witness is Congressman Porter of Oregon.

STATEMENT OF HON. CHARLES 0. PORTER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON

Mr. PORTER. Thank you, Mr. Chairman.

I have introduced three bills-H. R. 6144, H. R. 6145, and H. R. 6146-designed to breathe life into the Small Business Administration because the record shows the administration's present use of this agency has not met the plight of small business.

The Small Business Administration, established in 1953, is one of the newer agencies of our Government. It is charged with the duty to assist, and protect insofar as possible the interest of small-business concerns in order to preserve free competitive enterprise. This agency is authorized to make loans to small firms, to assist them to obtain Government contracts, and to counsel them on problems of management, finances, production, and the like.

The agency is crippled by the administration's indifference to small business. For example, although on August 7, 1956, the President's so-called Cabinet Committee on Small Business issued a number of recommendations designed to strengthen small business, these suggestions have remained largely in the recommendation stage.

Certainly it is clear that the committee has recommended certain tax reforms for small business and these tax reforms were greeted by the administration with enthusiasm prior to election. We now find, however, that much needed tax relief for small business no longer has the enthusiastic support of the administration.

My worthy colleague, the Honorable Frank M. Coffin of Maine, whose identical bills are before you, has rightly pointed out that the temporary status of the Small Business Administration hampers the effectiveness of its programs and recommends it be made a permanent agency.

The first bill, as noted above, amends the Small Business Act of 1953 to direct the Small Business Administration to make extensive, comprehensive and continuing studies of the problems of small business and to file semiannual reports on the results of such studies. This proposal not only directs the agency to face up to and to report on the basic problems of small business; it also provides greater authority to that agency to employ private persons and organizations to conduct studies and perform research.

There should be no excuse for the Small Business Administration to fail in its basic duty to report in a competent and intelligent manner on the problems of small business.

The second bill will authorize the Small Business Administration to make loans to local private nonprofit organizations formed to assist, develop, and expand the economy of any locality or area. Under this proposal sound and secured loans may be made, without limitation on amount, to private groups such as development credit corporations and industrial foundations to help local organizations to help themselves to establish new industry in their area and to strengthen existing enterprises.

The third bill authorizes the Small Business Administration to make loans found by the President to be necessary to avoid or alleviate the effect of an economic disaster upon a community or industry by granting the same kind of financial assistance available in the event of a natural catastrophe.