known to have been organized. This compares, of course, with some 17 State credit development corporations, of which 9 are active, 1 is authorized and organized, and 7 are authorized but not yet organized. Senator CLARK. Is it your impression that the State development corporation movement is growing?

Mr. BARNES. Yes, sir. It has expanded from one which originally started in Maine, I think about 1949. Throughout the New England States it expanded by 1954, and then to New York State in 1955. This last winter saw 6 or 7 throughout other parts of the country, including the Carolinas.

Senator CLARK. Excuse me for interrupting you, because we had a good deal of testimony on that and I wanted to be sure your view was the same as the State development corporation people's, that this is a growing movement.

Mr. BARNES. Yes. Still testifying relative to the local corporation

Senator CLARK. Yes.

Mr. BARNES. It has been our policy to promote the activities of, and cooperate with, local development corporations which are interested in furthering the growth and expansion of industry in their communities. Such corporations will increase not only the well-being of their communities, but also the well-being of the Nation by giving industries the advantages of optimum use of natural resources, freight rates, labor supply, proximity to markets, and other economic advantages.

At the same time, the Small Business Administration will not promote the relocation of industries in which the primary incentive is a local subsidy, or where relocation is either from an area of present labor surplus, or where the relocation will cause serious unemployment.

While the Small Business Administration is sympathetic with the purposes and activities of development corporations and is most anxious to render all possible aid, the assistance it renders must, of course, be within the limits of our statutory authority. The Small Business Act of 1953, as amended, gives no authority to make loans to development corporations as such, and development corporations are not small business concerns within the meaning of the act.

On the other hand, under accepted rules of statutory construction, it is proper to interpret the provisions of such legislation as broadly as is reasonably possible, so as not to deprive of assistance those intended to be assisted by such legislation.

Accordingly, recognizing that some deserving small business concerns might best be aided by indirect assistance through the medium of a loan to an intermediary local development corporation, usually for the construction of a building which is leased to the small business, we consider applications for loans to such corporations where the corporation submits a firm plan-that is, one already in existence satisfactory to the Small Business Administration, establishing that the proceeds of the loan will assist a small business concern which is otherwise eligible under the Small Business Act and our loan policy statement.

In keeping with this policy, the Small Business Administration will not authorize a loan to a development corporation for the con

struction of facilities with which there is not a firm plan, and where there is no lessee, and which in the future would be merely held out as an inducement for business concerns, whether existing or to be formed, to be located in the community in which the corporation is interested.

Senator CLARK. How many such loans have you actually made to or through local development corporations?

Mr. BARNES. We have made 16 such loans to local development corporations, in all of which there were the terms of agreement between the local corporation and a business concern already in existence and already firmed up before they applied to us. None of the funds loaned provided moving costs for any, and in practically every instance what was involved was the construction of a local building to house this business.

I submit for the record a list of these loans.

Senator CLARK. May I see them for a minute?

Mr. BARNES. Before we made those loans to the local corporations, in every instance except one, I think, the local corporation was able to have a local bank, or sometimes 2 or 3 banks, participate with the Small Business Administration in the loan.

Senator CLARK. The memorandum referred to by Mr. Barnes will be printed in the record at this point in his testimony. (The document referred to follows:)

SMALL BUSINESS ADMINISTRATION

Business loans approved to local development corporations cumulative through May 31, 1957

Bacon County Industrial Development 75 percent participation... May 3, 1957
Association, Inc., Alma.

Kentucky:

Minnesota:

Alexandria Developers, Inc., Alexandria... Pine City Development Corp., Pine City.. Nebraska:

$30,000 42, 750 45,000

90 percent participation... May 28, 1954

166, 667

40,000

Committee for Metcalfe County, Inc.,
Edmonton.

90 percent participation... Apr. 23, 1957

75,000

David City Co., David City..
Pennsylvania:

Altoona Enterprises, Inc., Altoona.
Do.

South Carolina:

Wagener Holding Corp., Wagener..
Tennessee:

Macon Industrial Corp., LaFayette.
La Follette Development Corp., La Follette.
Virginia:

Little Cedar Building Corp., Lebanon.

Total approved, 15 loans for

1 Canceled in full subsequent to approval.

Alabama

Arkansas.
Georgia

Kentucky.

Minnesota.

Nebraska.

Pennsylvania.

South Carolina.

Tennessee.

Virginia..

Recapitulation by States

Total

Source: Office of Controller, Budget and Reports Division, June 11, 1957.

Senator CLARK. Mr. Barnes, I note for the record that the total appears to be 15 loans. I think you said 16.

Mr. BARNES. Yes, sir. We approved one the day before yesterday. Senator CLARK. Just to get that on the record, how much was that one for?

While that information is being obtained, the total of the 15 loans is $1,304,417. The earliest loan was made in 1953 and the latest one, as Mr. Barnes has just told us, was made only yesterday.

Mr. BARNES. There was one loan of $60,000, which may appear on the list, to the Branchville Industries in South Carolina.

Senator CLARK. No. That is not on the list.

Mr. Barnes, can you give us a general statement as to the term of these loans within the maximum and minimum?

Mr. BARNES. The term of each of those loans, according to my recollection, is between 5 and 10 years, with the average term being toward the upper limits-nearer 10 years.

Senator CLARK. Are they balloon-type loans, or do they call for equal amortization payments?

Mr. BARNES. I think not more than 1 or 2 have a balloon-type payment on the end. You see, by having these general rules that the community must have a firm project in mind; that we will not pay moving costs; and that in general it must comply with our law and our loan policy, these local groups have obtained the help of banks in the financing, and all except one or two, I think, have bank participation.

Senator CLARK. I notice your statement does not give the interest. rate. Can you give us any maximum or minimum limitation there? Mr. BARNES. All of those loans are between 5 and 6 percent.

Senator CLARK. Do you want to say anything more about the State development companies?

Mr. BARNES. Yes, sir. I have here other schedules, if you do not have them already, showing a schedule of the number of loans approved and disbursed by State development companies to date, cumulative through December 31, 1956.

Senator CLARK. Do you have a copy of that statement before you? Mr. BARNES. No, sir.

Senator CLARK. The memorandum entitled "Loans of New England Development Corporations and New York Business Development Corporation"-participated in by the Small Business Administration? Mr. BARNES. No. Those are direct loans made by the State development corporations to business within their States. That schedule does not contain the activity of North Carolina. We have just received information the State Development Credit Corporation of North Carolina has loaned about $2,500,000 in funds. I do not know how many loans that represents, but they would be added to the schedule that has been submitted.

Senator CLARK. The memorandum furnished by Mr. Barnes will be filed with the record, since it has no reference to loans actually made by the Small Business Administration, and I do not see any real point in putting it in the record, unless you would like to have it in. Go ahead, Mr. Barnes.

Mr. BARNES. This schedule may be in the same category. It is for the information of the committee, and gives the number of loans the Small Business Administration has made in the same States, or the States where the corporations are authorized.

Senator CLARK. I think it would be useful, after all, to have these two memorandums placed in the record, the first of which shows the loans made by 6 of the State development credit corporations, in none of which the Small Business Administration participated, and the second of which shows the loans made by the Small Business Administration in those 6 States and a number of other States.

Mr. BARNES. Where development corporations have been authorized. Senator CLARK. Where development corporations have been authorized. Those schedules will appear in the record at this point in Mr. Barnes' testimony.

(The documents referred to follow :)

Loans of New England development corporations and New York Business Development Corp., cumulative through Dec. 31, 1957

Business loans approved in States where State development credit corporations are active or about to become active, cumulative through May 31, 1957

Mr. BARNES. In summary, on my testimony about the development corporations, generally, the Small Business Administration

Senator CLARK. Excuse me, Mr. Barnes. I am sorry to interrupt you, but my understanding is you have made only one loan to a State development corporation. Is that correct?

Mr. BARNES. That is correct. We have had only one application. Senator CLARK. Did you tell us what State that was from?

Mr. BARNES. I beg your pardon. We have made only one loan in participation with a State development credit corporation. We will not loan to a State development credit corporation since they are a financial institution, but we will participate with them in a loan. We had one application, which was from the State Development Credit Corporation of Connecticut, and we approved that loan.

Senator CLARK. But many of the loans which you made in the same States resulted from referral to you by the State development credit corporation of the particular applicant?

Mr. BARNES. Yes, sir. And in turn we have made referrals in each of the States.

Senator CLARK. Now, go ahead and summarize.

Mr. BARNES. In summary, the Small Business Administration will participate with statewide credit development corporations in loans made by them which meet the Small Business Administration criteria and come under the law under which we operate. We will not make a loan to a statewide development corporation for the purpose of enabling it to relend funds.

As to local development corporations, we will make loans to local development corporations in connection with a specific project for the construction of a building or facility, or something of that order; but not for the purpose of relending their funds.

Thus, in connection with S. 2185, which proposes to lend funds to local corporations, and perhaps State corporations, as well, I would recommend opposing that bill because it provides funds for relending purposes. I believe that under the present law, there is sufficient au