financial aid that he may receive from the Government, which will have to be repaid, there must be some protection to that small businessman to enable him to reestablish himself as a member of the community.

Thank you for having the opportunity to speak.

Senator WHERRY. I would like to ask you a question. You made the statement that most of these men had told you the reason they wanted to go into business was because they were tired of being kicked around and wanted to be independent.

Mr. KLOWANS. They did not give me that as a reason. I quoted that from what I heard on a radio program last night.

Senator WHERRY. That was a quotation?

Mr. KLOWANS. That was a quotation.

Senator WHERRY. Assuming that that is true, how do you think they would react if they went into business now with so much of this Government red tape and regulation staring them in the face?

Mr. KLOWANS. I sometimes fear to think of that, Senator, as to just what will happen, because, as I read their minds and their desires, I don't think they are going to take it lying down like we did after the last war.

Senator WHERRY. That is, you feel that when these men come home, these veterans who are out there in these far-away places fighting for the principles for which we are advocating, I believe, in the legislation before this committee, the right of private enterprise, the right of free economic system-when they do come home, if they take the advantages of the G. I. bill already mentioned-and I am glad to say in which I had a part-that they will want to have all of this red tape and regulation off their backs so they can enjoy the freedom of America as they have known it-is that right?

Mr. KLOWANS. I think that is very true. In addition, I think the have a psychology which is not going to tolerate too much of a burden being placed upon them. If I recognize their psychology, I believe sir, that they are more likely to say, "We demand", rather than "We ask."

Senator WHERRY. Let me ask you another question. There has been a considerable return, has there not, of old men in the service; I mean those who are approaching the age limit?

Mr. KLOWANS. Yes; quite a few; they are being discharged in great numbers.

Senator WHERRY. Are those men being taken care of now, to your knowledge, in industry employment, and other opportunities, or have you any first-hand information on that?

Mr. KLOWANS. The information which I have is first hand, and indicates that those who are physically and mentally able to work are finding employment now rather than going into business.

Senator WHERRY. Of course their going into business is more or less stopped because of the fact that most business today is still the production of war goods and there hasn't been this turning back to civilian production.

Mr. KLOWANS. That is correct. May I say this: When we speak of production and manufacture, these men who have been trained, let us say, as machinists in the Navy, men who might have been farmers or streetcar conductors before going into the armed service, want to put to use that trade, but not as an employee for somebody

else, but for their own benefit, whether it be a small machine shop, or a garage, or a repair shop.

Senator WHERRY. The purpose of this committee is to find out in a tangible way, and we want concrete evidence if we can possibly get it, the facts about those who would like to return into the field of small business, and we would like to find out why so many lost out during the war, because of the impact of the war, and what it will take to rehabilitate them; and then we are particularly interested in the thoughts that you brought to us because we want to see, if we possibly can, what evidence will be revealed here as to what inducement can be made to attract men like the veterans back into the field of small business. Do you feel that is a Government responsibility, or do you feel that these men, because of their American ingenuity, and the training they have had, will make a place for themselves, as you had to do when you came back from the First World War?

Mr. KLOWANS. You offer a very wide field there, Senator, because one of the purposes, let us say, of the three major veteran organizations now is to avoid having those men go through what we went through after the First World War. They have this advantage: There are organized veteran groups that will look out after their interests and attempt to protect them in advance. I am thinking of the little grocery stores that have gone out of business, as well as the manufacturers.

Senator WHERRY. We cover the whole scope.

Mr. KLOWANS. And I am thinking of the little hardware store, and the small independent merchants that are the backbone of our communities. That is the place these men will want to go. Maybe one man will want to open a garage, the next man a grocery store, and the next one some other one of those small businesses, which have practically disappeared from our life today.

Senator WHERRY. Have you made any study as to the difficulties that they will meet if they do not get Government aid? For example, the burden of the testimony here has been that we must revise our tax schedule if we are going to attract private enterprise in the field, of private business. Have you given that any thought?

Mr. KLOWANS. I haven't looked at it from that viewpoint because I have a feeling that the men who are in uniform today, who are in Guam and who are in Italy, if they have an even break with the other fellow, we will get along all right. There is no question about it but there is a terrific burden on the small businessman today. I happen to practice law. I represent a type of client and I know that there are difficulties with the various taxes-with the various forms, which make it difficult for them to continue their business, even without regard to labor and the other problems that are common to everyone. Senator WHERRY. In fact, running a small business has become expensive; there has been such increased costs, due to regulations, as we gather the information and the evidence, that I am wondering you have made any research into that field because that is one of the difficulties, even though they are given aid, that they will have to meet if they come into competition with private business.

if

If you haven't made a research we would be glad to have a statement from you and put it into the record later.

Mr. KLOWANS. We have made no research as far as the veterans' organizations are concerned, and any statement I make would be my own personal observation only.

Senator WHERRY. Do you think that the veterans' organization will make any such research?

Mr. KLOWANS. Well, at our State encampment there were several resolutions that were passed, which will be taken up at the national encampment in Chicago next week. Then I think along those lines there are two resolutiors, at least in California, that will probably pass the national encampment, which will be in session August 21 to 25 in Chicago, which will then put the organization on record nationally on that subject.

Senator WHERRY. I would like very much, if you have anything for the record, especially after your national convention, that you submit it to the Small Business Committee of the Senate in Washington.

Mr. KLOWANS. I will request that our antional representative in Washington see to it that it reaches the committee.

Senator WHERRY. While you are in that convention I would like to have you bring up the proposition of the disposal of surplus property.

Mr. KLOWANS. We have a resolution which was passed in California. on the question of surplus property which perhaps is selfish, but we will have a request to Congress that all surplus property disposed of be first, after appraisal, offered to honorably discharged veterans at the appraised price, and thereafter opened to the public for sale. That is, of course, a matter to help those veterans out, and it must be used in a business by the veteran himself, and not for resale.

Senator WHERRY. It is very necessary, I think, that the veterans' organization do some research. I would go further than a resolution. Mr. KLOWANS. Yes.

Senator WHERRY. I feel this: For example, take land. We have heard a lot of testimony here about the new frontier which is to bring in 6,370,000 acres of new land under water here in the 17 Western States, and which will reclaim nearly 10,000,000 acres of marginal land not now fully under irrigation. There is some land, of course, that the Government will declare surplus property. In fact, I think it was told to me just today, or yesterday, that after we left Portland we learned of the fact that the Army-I don't want to make this as a positive statement because I have no authority for it--but I understood that several thousand acres had been declared surplus. In the distribution of that land should we give the owner the first option on it, or should we give the veteran first consideration, then the owner, and then put it up for sale?

I think that there are a lot of suggestions in the legislation as to how we can help the veteran and the former property owner in connection with the land that might be freed by the Government in declaring it surplus property.

I think if you haven't given that attention it would be well to call it to the attention of your convention in Chicago.

Mr. KLOWANS. I will be glad to do so and see that the results of it are transmitted to you through our representative in Washington whom you know.

Senator WHERRY. I want to thank you very much for your presentation, and to the radio audience I want to say that the national vice chairman of the Veterans of Foreign Wars has given us very valuable information on how the veterans would like to get into small

business upon their return after fighting our battles on all the fronts throughout the world.

The next witness will be Marron Kendrick, of San Francisco. Will you please come forward? (No response.)

Then we will call on Mervyn Rathborne, secretary, California Council, Congress of Industrial Organizations, San Francisco. (No response.)

There is some reason possibly for these witnesses not appearing. We had determined at one time today to discontinue the meeting at 12 in view of the fact that Senator Murray, of Montana, who is chairman of the Small Business Committee, was informed that it was necessary for him to return immediately to Washington to sit with a Military Affairs subcommittee, of which he is chairman, to consider the reconversion legislation, which includes the demobilization and compensation insurance features, and which legislation is needed badly at this time, if and when the war in Europe might end.

I do not mean to say over the radio, or to this audience, that it is expected that the war will end soon, but it is very important that we be prepared in a legislative way to take care of demobilization, and especially compensation insurance in the event that cut-backs are cut off acutely.

If these witnesses are in the hallway, or if you get word to them we would like to hear them this afternoon.

The next witness will be Mr. Charles F. B. Roeth, reporting for the War Manpower Commission, northern California office, and he has with him Dr. Louis Bloch, of this area. Are they here? (No response.)

We will proceed with the next witness, Mr. T. Gordon Ennes, of San Francisco.

STATEMENT OF T. GORDON ENNES, REPRESENTING SMALL WOODWORKING PLANTS IN THE SAN FRANCISCO BAY AREA, SAN FRANCISCO

Mr. ENNES. I am representing a number of small woodworking plants in San Francisco and the bay area. The telephone directory of San Francisco will show some 27 small woodworking plants. The Government procurement agencies have not used the facilities of these plants except spasmodically. At one time we operated as a war production pool and thereafter our facilities were absorbed by war production.

Senator WHERRY. Was that done at the suggestion of the Smaller War Plants Corporation, or on your own initiative?

Mr. ENNES. We approached them and they accommodated us. I might say at one time we undertook the manufacture of a number of items for the flat tops, ship's furniture. We did not get through with the contract before the use of wood for such purposes was changed to steel. We completed the contract, but it was never used for the purposes intended. That left us with an organization which ordinarily would have been used on civilian economy, but we found ourselves surrounded with a number of so-called L and M orders.

Now, it so happens that some of those limitation orders are couched in language which gives particular benefit to a large manufacturer, and the same language puts us out of business.

I will be specific. In the case of L-260 (a) it limits us to 80 percent of the amount of wood we used in a certain period, and then limits us in the number of patterns we are to manufacture.

It so happens that this small group of manufacturers employing 50 or less men never did manufacture 2 specific patterns. They always have manufactured to the specific requirements of the merchant entering business in the matter of stores, offices, and restaurants. Therefore, a large manufacturer who manufactures on a production basis is now in position to do in dollar value 84 percent of the civilian work he did during a previous period, and we, by the same token, can do nothing.

Let me give you a typical case. Take Roos Bros., one of the prominent stores of this area. There are fixtures in there produced by the larger manufacturer on a quantity basis, and there are fixtures produced by the small manufacturer of this area. That producer who manufactured on a large basis can apply the 24-pattern paragraph and supply the needs of that merchant as far as they will fit his purposes; whereas, if we attempt to do so, having served that one merchant, why we are then automatically through under the limitations of that order.

We hold that unless that is rationalized, unless they recognize that we are a group of manufacturers who have produced on a tailor-made basis, and unless we are separated from the large manufacturer, we are practically through.

We have gone through earthquakes; we have gone through depressions, and some of us have gone through bankruptcy; but still we are in the game. If they will get that off of us, we can remain in it.

Senator WHERRY. Wait a minute. You mean that large business in their competition with you, or in their benefits received, has been at an advantage over your contractors?

Mr. ENNES. Definitely.

Senator WHERRY. In what respect should relief be given to you? Mr. ENNES. We should be eliminated from what is known as L-260 (a), the paragraph which says that we can only manufacture 24 of a pattern.

Senator WHERRY. Why was that order written?

Mr. ENNES. It was probably to prevent an expanding use of wood. Senator WHERRY. A critical material?

Mr. ENNES. Wood.

Senator WHERRY. Wood is a critical material?

Mr. ENNES. Now, yes. But I am calling to your attention the fact that the large manufacturer, under the terms of that limitation. order, can use 84 percent of the wood that he used previously under that paragraph. It is injurious to us.

Senator WHERRY. You mean he had a larger base period?

Mr. ENNES. No. He manufactures on a unit basis. Call it furniture, for a moment. He manufactures a dining-room table and four chairs. The four chairs are identical. The table is different. So he has there two patterns. Now he can manufacture, if you want to tie it right down to that, 84 percent, measured in terms of board feet, of what he manufactured during the freeze period because he has a repetitive design.

But when we manufacture this furniture, or these fixtures, in this courtroom here, we manufacture that which there is not another