HEARINGS BEFORE A UNIVERSITY OF CALIFOR BERKELE SUBCOMMITTEE OF THE COMMITTEE ON BANKING AND CURRENCY UNITED STATES SENATE EIGHTY-SEVENTH CONGRESS FIRST SESSION ON S. 902 KF 26 B3 19610 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 CONTENTS 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. Plapinger, 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- Ruvelson, Alan K., president; accompanied by Stewart W. De Vore, 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, Cary, William L., Chairman, Securities and Exchange Commission: National Association of Small Business Investment Companies: Letter and supplemental memorandum to SEC on sections 17 (a) and (d), 18(c), and section 30(f), Investment Company Act. Financial structure and current borrowing power of licensed Proposals received and processed, chart.. Letter on section 302(b) of bill.. Letter on Mr. Salik's testimony. Letter on section 10 of S. 902__ Letter on bank amendment_ SMALL BUSINESS INVESTMENT ACT-1961 MONDAY, JULY 31, 1961 U.S. SENATE, COMMITTEE ON BANKING AND CURRENCY, 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. 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. 1 |