PARTICIPATION OF SMALL BUSINESS IN FOREIGN TRADE AND FOREIGN AID TUESDAY, JULY 14, 1959 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE No. 3 ON FOREIGN TRADE, FOREIGN AID AND BASIC METALS OF THE SELECT COMMITTEE TO CONDUCT A STUDY AND Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 1304, New House Office Building, Hon. Sidney R. Yates (chairman of the subcommittee) presiding. Present: Representatives Yates, Evins, Multer, Brown, and McCulloch. Also present: Irving Maness, counsel; Victor P. Dalmas, adviser to minority members, and Katherine C. Blackburn, research analyst. Mr. YATES. The committee will come to order. These are the hearings of subcommittee No. 3 of the House Small Business Committee, of which I am chairman, and Hon. Joe L. Evins, Hon. Abraham J. Multer, and Hon. Arch A. Moore are members. It has general jurisdiction over problems of small business in the fields of foreign trade, foreign aid, and basic metals. At the outset of the 86th Congress, the subcommittee determined that it would place particular emphasis in its studies on the economic impact on small business in the international trade field. Billions of dollars have been spent through Federal aid programs. Substantial purchases have been made by American companies in foreign plants, and private American investments abroad are constantly increasing. It would be well if we could learn the full consequences of the investment of American capital abroad in order to protect the interests of small business. It is important to determine whether opportunities exist in the foreign trade markets for small business and, if so, what are the obstacles precluding its participation. It would appear that small business has not taken advantage of the profit potential in the foreign trade market and the opportunities for expansion. This subcommittee, in its present studies, will attempt to determine. why small business has not achieved its potential in foreign markets. We are interested in making a full and complete study of the consequences of the investment of private American capital abroad with a view to determining the extent of such investment, the changes which have occurred therein in recent years, and the effect on domestic industries-with particular emphasis on small business. 1 Upon completion of the various phases and series of these hearings this is the first phase of our hearings-this subcommittee, at the earliest practicable date, will report to the full committee for recommendation to the Congress the results of its study and investigation together with such recommendations as it may deem advisable. At the outset, we have invited the various governmental agencies responsible for the administration of the numerous programs involved in these fields to document for us their programs and their activities, particularly in the small-business field. Congressional interest in this subject is strong. The congressional intent was demonstrated by section 504, entitled "Small Business," of the Mutual Security Act and in section 413 of the Mutual Security Act. The act specifically indicated that the President shall assist American small business to participate equitably in the furnishing of commodities and services financed out of funds authorized under the mutual security program. The executive branch of the Government, pursuant to the act, was to make information available to suppliers in the United States and particularly to small independent enterprises as far in advance as possible with respect to purchases and to make available to prospective purchasers in the nations receiving assistance information concerning small business by the creation of an Office of Small Business. Congressional intent is further indicated in the Mutual Security Act under section 413 entitled, "Encouragement of Free Enterprise and Private Participation," which states that in order to encourage and facilitate participation by private enterprise to the maximum extent practicable in achieving the purposes of the act, numerous studies were to be made. A review of the studies clearly indicates that corrective measures are necessary to increase the participation of small business. The impact of these programs on the American economy is apparent when we examine available statistics. Approximately $35 billion has already been spent by this country on the mutual security program in the last 10 years. Of that total, approximately $26 billion has been spent in this country. The subcommittee would like to know how much of this $26 billion has reached the small business community. The staff has prepared, for the information of the subcommittee and the Members of Congress, a tabulation of mutual security program funds spent for nonmilitary commodities in a 32-year period ending June 1957, in 36 States. We have tabulated the items by: (1) Dollars spent, (2) number of communities participating, (3) number of business firms, and (4) the commodities involved. We believe the market potential of small business overseas must be improved. Its participation in mutual security funds expended in the United States should be expanded in order to guarantee a broadening of the small business economic horizon. Without objection, a copy of the compilation of the mutual security program funds spent for nonmilitary commodities in the 32 years ending June 1957, prepared by the staff of the subcommittee, may placed in the record at this point. be (The tabulation referred to is as follows:) Compilation of mutual security program funds spent for nonmilitary commodities [Period: 31⁄2 years ending June 1957] Iron and steel; textile products; coal and coal products; lumber and wood products; and metallic ores and concentrates. Grain and cotton. 604 Aircraft, engines, and parts; iron and steel; electrical equipment; industrial machinery; motor vehicles, engines, and parts; construction, mining, and conveying equipment; lumber and wood products; chemicals; miscellaneous industrial products. 223 24 24 60 104 Mostly in metallic ores and concentrates industry. Not available. Lumber and wood; paper and allied products; nonmetallic minerals; manufactured vegetables and fruits. Agricultural products; cotton production; food and feed crops; tobacco; textile products; lumber, wood, paper, and allied products. Iron and steel mill materials and products; electrical equipment; industtrial machinery; agricultural machinery; construction, mining, and conveying equipment; chemicals; copper; coal products; and ordnance. Iron and steel; ordnance; industrial machines; motor vehicles; aircraft engines and parts; and food and feed crops. Tractors, construction; mining and conveying equipment; agricultural equipment; and food and feed crops. Aircraft engines and parts; crude oil and petroleum products; and food and feed crops. Coal products; tractors; food and feed crops. Crude oil and petroleum products; paper and allied products; lumber and wood products; food and feed crops. Aircraft; engines and parts; and iron and steel. Electrical equipment; industrial machinery; iron and steel; miscellaneous industrial products; textile products; paper and allied products; metal working machinery; machine tools; generators and motors; and hides, skins and leather products. Motor vehicles; engines and parts; industrial machinery; metalworking machinery; and ordnance. 34 Ordnance; metallic ores and concentrates; food and feed crops. 4,806, 000 8 9 Aircraft, engines, and parts; motor vehicles, engines, and parts; lumber and wood products; food and feed crops. Grain production; cotton production; ordnance; metallic ores and concentrates; hides, skins, and leather products. Compilation of mutual security program funds spent for nonmilitary commodities-Continued Not available. Chemicals; iron and steel; electrical equipment; aircraft, engines, and parts, other transportation equip ment. Iron and steel; aircraft, engines, and parts; miscellaneous industrial products; electrical equipment; industrial machinery: ordnance; chemical; paper and allied products; copper and copper products. Textiles; iron and steel; lumber and wood products; agricultural products; tobacco. Grain production; construction, mining, and conveying equipment. Hides, skins, leather, and leather products. Iron and steel; electrical equipment; industrial machinery; agriculture; chemicals; textile products; nonmetallic minerals; motor vehicles, engines, and parts; copper and copper products. Textiles; various industrial fields. Agricultural products; cotton; tobacco; textile products; lumber and wood products. Chemicals; textiles; agricultural products. Aircraft, engines and parts; crude oil, petroleum products; construction, mining, and conveying equipment; ordnance; cotton production; food and feed crops. Iron and steel; coal and coal products; chemicals; tobacco. Agricultural products; food and feed crops; fruits. Coal; nonmetallic minerals. Electrical equipment; iron and steel; construction, mining, and conveying equipment; ordnance; industrial machinery; tractors; paper and allied products. Wyoming.. Sources: National Planning Association, Washington, D.C.; Department of Defense; International Cooperation Administration. Mr. YATES. The committee is pleased to have with us this morning the very dynamic Assistant Secretary of Commerce for International Affairs with whom I have had some dealings as a result of my being on the Appropriations Subcommittee for the Department of Commerce, Mr. Henry Kearns. We also have with us Mr. Loring K. Macy, Director of the Bureau of Foreign Commerce; Mr. John C. Borton, Director of the Office of Export Supply of the Bureau of Foreign Commerce; E. E. Schnell |