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HEARINGS

UNIVERSITY OF CAL,

BERKELE

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BEFORE A

SUBCOMMITTEE OF THE
COMMITTEE ON BANKING AND CURRENCY
UNITED STATES SENATE KF

26
EIGHTY-SEVENTH CONGRESS

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B3
19660

ON

S. 902

A BILL TO AMEND THE SMALL BUSINESS INVESTMENT ACT

OF 1958, AND FOR OTHER PURPOSES

JULY 31 AND AUGUST 2, 1961

Printed for the use of the Committee on Banking and Currency

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COMMITTEE ON BANKING AND CURRENCY

A. WILLIS ROBERTSON, Virginia, Chairman JOHN SPARKMAN, Alabama

HOMER E. CAPEHART, Indiana PAUL H. DOUGLAS, Illinois

WALLACE F. BENNETT, Utah JOSEPH S. CLARK, Pennsylvania

PRESCOTT BUSH, Connecticut WILLIAM PROXMIRE, Wisconsin

J. GLENN BEALL, Maryland
HARRISON A. WILLIAMS, JR., New Jersey JACOB K. JAVITS, New York
EDMUND S. MUSKIE, Maine

JOHN G. TOWER, Texas
EDWARD V. LONG, Missouri
MAURINE B, NEUBERGER, Oregon

MATTHEW HALE, Chief of Staff

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SUBCOMMITTEE ON SMALL BUSINESS

WILLIAM PROXMIRE, Wisconsin, Chairman A. WILLIS ROBERTSON, Virginia

J. GLENN BEALL, Maryland JOHN SPARKMAN, Alabama

WALLACE F. BENNETT, Utah PAUL H. DOUGLAS, Illinois

JACOB K. JAVITS, New York EDWARD V. LONG, Missouri

JOHN G. TOWER, Texas MAURINE B. NEUBERGER, Oregon

CONTENTS

Page

2

5
103
108

S. 902

Draft bill.

H.R. 6672.

H.R. 6673.

Statement of-

Cary, William L., Chairman, accompanied by Byron Woodside, Com-

missioner, Securities and Exchange Commission.

Horne, John E., Administrator; accompanied by Keith Hanna, Assist-

ant Administrator (Controller); Jerome S. Plåpinger, Deputy Gen-
eral Counsel; and Phil David Fine, Deputy Administrator for the
Investment Division, Small Business Administration.
Maxwell, Arthur F., chairman, small business credit committee; ac-

companied by Charles T. O'Neill, Jr., assistant to general counsel,

American Bankers Association

Ruvelson, Alan K., president; accompanied by Stewart W. De Vore,

first vice president; James W. Howard, second vice president; and

Charles Noone, general counsel, National Association of Small Busi-

ness Investment Companies.-

Salik, Charles E., president and chairman of the board of directors;

accompanied by Bernard Koteen, general counsel, secretary, and

director; and Robert S. Green, counsel, Electronics Capital Corp..

Statements, letters, etc., submitted for the record by=

Association of Registered Bank Holding Companies, Mills B. Lane,

Jr.: Statement.-

Cary, William L., Chairman, Securities and Exchange Commission:

Statement before House committee on H.R. 6672.

Commerce Department: Report on S. 902 -

Federal Deposit Insurance Corporation: Letter on bank amendments.

Federal Reserve: Letter on bank amendments --

First Capital Corp. of Chicago, James J. Saxon:

Letter to chairman.

Proposed amendment to section 302(b), Small Business Invest-

ment Act.

General Accounting Office: Report on S. 902.

Given, Howard C., Waste King Corp., Los Angeles, Calif.: Letter to

subcommittee

National Association of Small Business Investment Companies:

Article, "Ailing Town Lures Fishing Rod Firm”.

Statement of Mr. Howard.

Letter and memorandum to SEC on section 30(f), Investment

Company Act.--

Letter and supplemental memorandum to SEC on sections 17

(a) and (d), 18(c), and section 30(f), Investment Company Act.

Letter on appearance-

H.R. 6672.

H.R. 6673

Suggested revision, section 10(a), H.R. 6672.

Suggested revision, section 10(c), H.R. 6672
National Federation of Independent Business, George J. Burger, vice

president: Telegram to Senator Proxmire.

Salik, Charles E., president and chairman of the board of directors,

Electronics Capital Corp.: Statement-

Securities and Exchange Commission: Letter and memorandum on

S. 902

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SMALL BUSINESS INVESTMENT ACT 1961

MONDAY, JULY 31, 1961

U.S. SENATE,
COMMITTEE ON BANKING AND CURRENCY,
SUBCOMMITTEE ON SMALL BUSINESS,

Washington, D.C. The subcommittee met, pursuant to call, in room 5302, New Senate Office Building, at 11:05 a.m., Senator William Proxmire (chairman of the subcommittee)

presiding, Present: Senators Proxmire, Sparkman, Bennett, and Tower. Senator PROXMIRE. The subcommittee will come to order.

The Small Business Subcommittee today begins hearings on S. 902, a bill to amend the Small Business Investment Act of 1958. This bill was introduced by Senator Sparkman for himself and Senators Long of Louisiana, Humphrey, Morse, Bible, Randolph, Engle, Bartlett, Williams of New Jersey, Moss, Saltonstall, Javits, Cooper, and Smathers.

Our witness today will be Mr. John E. Horne, Administrator of the Small Business Administration.

On Wednesday morning, August 2, we will hear testimony from private witnesses, and on Wednesday afternoon we will hear testimony from Mr. William L. Cary, Chairman of the Securities and Exchange Commission.

This committee has followed with interest the progress of the small business investment program. That program has a very important role to play in providing needed equity and long-term credit to small businesses.

The program is developing slowly but in the past few months the increase in the number of small business investment companies being formed has been improved, though it still falls far short of what we hoped for and expected.

The major purpose of this bill is to provide the legal framework that will enable this program to move ahead more rapidly.

When this committee last heard testimony regarding this program in June and July 1959, relatively few companies had been formed, and the ones that had been formed had been in operation only a short time. Consequently, we could not then get a clear picture of the effectiveness of the program or the practical adaptability of the act.

Now we hope we will be able to get a clearer picture of the operations of these companies and weigh the relative strengths and weaknesses of the program and the act.

This bill represents amendments to the act which were suggested in a unanimous report of the Senate Select Committee on Small Business dated April 27, 1960, more than a year ago. The committee also has received letters from private organizations suggesting other amendments.

Without objection, I will insert in the record at this time a copy of the bill S. 902, also a draft bill sent us by the administration, and comments of the interested agencies.

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