DEFINITION OF LITTLE BUSINESS

Mr. CANNON. We have covered the situation many times, but give us, more by way of a résumé, a description of little business. What is little business?

Mr. MAVERICK. Mr. Chairman, we have adopted more or less a number by saying that little business is under 500 people.

This happened yesterday in Harrisburg. It is an actual occurrence, and it sounds good to me. I walked into the office and sat down and listened to a man talk. He said:

We have 420 employees and we have been offered a contract by the Navy, and we do not want to take the contract because if we do we have nobody in Washington to represent us. We are going to turn it down unless you tell us we can still get help from the Smaller War Plants Corporation.

I wanted to see whether the district manager had any brains or not. I didn't say anything. He told this man:

You go on and get the business and we will continue to help you.

The point I want to make is that any business is a little business that is not dominated by some far distant establishment on Wall Street or in Chicago. If it is in the State of Virginia or Missouri or Texas, or in a single region, and it is owned and operated by the people around there, it is little business.

Mr. CANNON. You still adhere to the maximum limitation of less than 500. What is your minimum number?

Mr. MAVERICK. The minimum number is one.

Mr. CANNON. Every man up and down the street who runs a shoestring stand would not come within that?

Mr. MAVERICK. He would. We could not make such a man a loan, because he is not a producer of essential war material or essential civilian production. But we would have an interest in anybody that is a little businessman.

EFFECT IN REDUCTION IN ESTIMATE REQUESTED OF BUDGET BUREAU ON WORK OF CORPORATION

Mr. WOODRUM. Your budget now is $8,000,000?

Mr. MAVERICK. Yes, sir.

Mr. WOODRUM. And you asked the Budget Bureau for $9,732,800? Mr. MAVERICK. Yes, sir.

Mr. WOODRUM. What activities and what opportunities do you think you are not going to be able to take advantage of because of this difference in what you asked for and what they gave you? Specifically, how are you going to be crippled?

Mr. MAVERICK. I will answer it generally and then I will ask Mr. Denit to answer it more specifically from an operational viewpoint.

I am absolutely convinced from what I know about the necessary personnel in handling surplus property that there will not be enough personnel to handle it, because it is going to come like an avalanche and a flood. We must prepare for peace as we did for war, or rather we should make heavy preparations for peace that we have no Pearl Harbor of peace.

Mr. WOODRUM. This gives you something less than 100 additional personnel?

Mr. MAVERICK. I think it is less than that.

Mr. DENIT. It is less than that. In addition to that, there are the surplus property matters and contract terminations on which we are working day and night.

Mr. MAVERICK. I want to say this-and Mr. Denit can give the details of what he thinks is right when I complete this point. I have this feeling. Suppose you appropriated $1,732,800 more, as you did last time. We are not going to spend it if we do not have to use it. I could not say that a year ago. But we have now established a record and a reputation by actual facts of not spending more money than we need. What I'm afraid of is that with a sudden realization of the end of the war-and I think the war, from a military point of view, is over in Europe, because we have had military success and we are going to beat the Germans-when that realization comes and they begin to drop soldiers out and cut-backs flood the nation, we are going to have a heavy need for money. I really think the necessity is going to be considerably more than is anticipated. The proof of the fact is that it was recognized by the Budget Bureau that if we were working on the basis of surplus property and contract terminations and actual operations-it was recognized that these operations were being eliminated. It was further recognized that if we did go into operations it would take more money than they gave us. I think it fair to say that was a specific admission on their part, that if we did go into operations on a substantial scale we would have to have more money. It is a question of policy. I cannot say what the policy of the new President is, but it is a question, whether the Corporation has this policy or whether the President has, or whether they are ready to go into the operation of getting ready for reconverson. It is my belief that the policy is to get ready and to have the money set up.

But I am not going to kick. Whatever you do is all right with me, because I think we will get by, and I have confidence in Congress. Only I am worried that Congress act in time for things to come.

I would like to have you give some facts on that, Mr. Denit.

Mr. DENIT. The Budget Bureau, as Mr. Maverick has indicated, would not permit us to include in the budget anything except the planning function on reconversion programs. That was the reasonng of the Bureau.

We provide for procurement programs and other basic operations practically 70 percent of our total funds. The position of the Budget Bureau was that we should take the personnel and the money allocated to obtaining procurement participation for small business and convert A to the new programs when, as, and if they hit us.

That would be an ideal situation-except that procurement will tot die off in proportion to the demands of surplus property disposal and contract termination. We only have $113,374 out of this entire

get allocated to surplus property disposal and contract terminatoon. We have worked out an agreement with the Reconstruction Finance Corporation within the past couple of weeks to have a repreatative of the Corporation at each of 35 disposal points, the operaton being to see to it that there is a maximum matching of small busis demand against the supply.

We have been able to assign 35 men to those jobs, because we would Lave to weaken our procurement operations around which our entire Program is revolving at the moment. We cannot wait until procureBut is cut back to a point where we have 35 free men. Our rate of

expenditure therefore will have to double in places if we are to cope with the present demand.

REQUESTS FOR ADDITIONAL PERSONNEL

Mr. MAVERICK. I would like to say something that is not exactly relevant to this point, but it seems to me it is relevant to our general budget.

I have got my pride mixed up in this now. I want to make a good reputation as an administrator, besides wanting to do a creditable job for the perpetuation of the American way. I found when I came to Smaller War Plants Corporation that every one of our executives did the human thing-they were constantly screaming for one thing, and that was "personnel." Personnel is sometimes a foreign word for people you can do without, or can't get, anyhow. So I go out to the regions and I generally take Mr. Denit with me, because he is the administrative officer. We check through the books and records. We see what is actually being done or not done. In some cases we have found that the people that were bellowing the loudest for personnel did not need it. We told them so. I have this regular speech that I make to our people, I say:

You are working for the Government of the United States. I used to be in business, and I didn't work as hard then. Then I was elected to Congress, and I worked harder than I ever did in my life. Now I am in an executive position for the Government and I am not working as hard as I was in Congress, but twic or three times as hard as when I was in business. So you people just do twice a much work; work late some nights, and you will finally get the job done.

We have actually done two or three times as much work with the same personnel as we did before. Of course that comes by experience Any dumbell, but especially an intelligent man, after he gets exper ence, knows more and does more.

What we are trying to do is to get ready for extraordinary demand at the end of the war. I can say to you that if we do not need th money we are not going to spend it. We won't anyway; but th Budget is a very efficient institution. To get money, even thoug appropriated, we have to go after them very aggressively and, to get and prove it, and "justify" it all over again. We justify every penn we spend. If we don't, we don't get it. The Budget doesn't budg unless we prove we are right.

PROSPERITY OF SMALL BUSINESS IS IN THE NATIONAL INTEREST

Mr. LUDLOW. I think it is in the national interest that small busine should prosper. In the dog-eat-dog competition to follow the w what is the chance of the small businessman as against the big co petitor?

Mr. MAVERICK. The chance of the small businessman after the w is going to be very bad unless he gets as much assistance as the farm does. He has got to get technical advice. Technical advice necessary, because we are in an industrial and scientific age a civilization. He cannot afford to have a laboratory. Some co panies spend sometimes a million and sometimes ten million dollar year on laboratories.

Say a veteran comes back and establishes a business. He make loan of $4,000. He is not going to have a very big laboratory on th

FEDERAL LOAN INSURANCE FOR LITTLE BUSINESS ADVOCATED

In addition to that, we have advocated, and I am going to advocate it until it is an accomplishedmt, a system similar to the Federal Housing Administration; that is to say, an insurance system, where loans can be made on a guaranteed basis to little business. It will have a tendency to lower the interest rates somewhat. Oh, they talk about the efficiency of little business. A little businessman pays in some parts of Texas 8 percent interest. Around here he pays 6 percent interest. But the big business man borrows on Wall Street at from 2 to 7 percent, some as low as seven-eighths of 1 percent. They have got the laboratories and the low rates of interest. That is their "efficiency."

If Congress will set up a system of insurance it will not interfere with the banks at all; that is, insurance like that of F. H. A. and like Congress has put over half a dozen times. If the S. W. P. C. is the agency to handle it, we can see to it that the little country bank and small banks can make money, more money than ever.

Mr. LUDLOW. Will that be analogous to the Federal Housing Administration?

Mr. MAVERICK. Yes, sir. It would be analogous to the Federal Housing Administration's insurance of loans, and it would be sound financially, in my opinion. There are something like 340,000 employees of little banks in this country, and there are about 14,000 little banks. There are a few big banks and an enormous number of little banks. That means that the Government would not interfere with those 14,000 banks, but would assist them.

PROPOSED LEGISLATIVE CHANGES THAT WOULD BE HELPFUL TO SMALL BUSINESS

Mr. LUDLOW. What sort of legislation would you think would be helpful to small business to enable them to recover and prosper after the war?

Mr. MAVERICK. I would say that there are three things that I personally would like to have.

First, I would like to have the name of our agency changed to some such name as Small Business Corporation.

Second, that loans be insured similar to the program of the F. H. A. Third, that there be ability to loan more money out of capital stock; that is, some conservative plan of rediscounting paper.

Fourth, that there be certain extension of powers, for instance, in surplus property. The law says that you can lend money in connection with surplus property. I do not know whether that means to sell a piece of machinery for a thousand dollars or whether it means an additional thousand dollars to get the business started. In other words, there ought to be certain extension in the ability to loan money. Mr. LUDLOW. Do you think that there might be a legitimate advantage to small business by a revision of the tax laws? I have specifially in mind raising exemptions and cutting excess-profits taxes.

Mr. MAVERICK. Yes, sir; and let me call that the fifth point, if you please.

I went before Congress and stated that the excess-profits taxes should be eliminated up to $25,000. I think it ought to be up to

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$50,000. That is what I think now, when I think about the enormity of business, because many big businesses have a period of 5 years, we will say, whenever they have a certain earning capacity. This makes it so that they are never stuck hard. But little business doesn't even get started. Suppose a veteran comes back who has some brains and experience and he makes $25,000. You take it all away. He says, "What's the use of working?"

So we have got to do something to get him and every other energetic person started.

I would like to suggest a sixth point, and that is the extension of the Technical Advisory Service of the Smaller War Plants Corporation.

I am not saying that we ought to have an agent in every county in the United States, because it has got to be gradual; but the Department of Agriculture has an extension agent in every county in America, and they have all the colleges at their disposal. The farmers of America could not do without this.

So the sixth point should be the extension of the technical advisory service and management service. We know we have got to have it for veterans-indeed it should be for all taxpayers. By all means we should accumulate the information gotten during the war, which includes the Office of Production Research and Development, the Office of Scientific Research and Development, the various research divisions of the Army and the Navy and also the Department of Agriculture which has seven divisions of scientific research, many of which are purely industrial, like synthetics and the fibers, and things of that kind. These services should be available to the taxpayers, because they have to pay for them. It would be a crime against our children to waste these invaluable services.

Mr. LUDLOW. I would like to say for the record that I heartily endorse your very sound facts, as I regard them, in reference to the excess-profits tax and the liberalization of the situation as a help to small business.

Mr. MAVERICK. Thank you, sir.

NEED FOR SIMPLIFICATION OF GOVERNMENT CONTROLS AND DIRECTIVES

Mr. LUDLOW. What can you say about the possibility of helpfulness to small business by simplification of governmental controls or, probably a little further than that, by the removal of a good many of the bureaucratic directives and controls?

Mr. MAVERICK. Mr. Ludlow, in the Office of War Mobilization and Reconversion it was provided that if allocations and the like were made, there should be a certain amount set aside for little business. It has been our constant wish and desire, and our program, to see that there are certain exemptions granted to small concerns. The burden on a small concern in filling out numerous forms is much greater than on a big concern. The small concern has no representative in Washington. We have the feeling that there should be certain exemptionsplus affirmative representations-to benefit small business.

The spot reconversion order, which provided for giving aid to certain types of small concerns and those in distress, was put over by the Smaller War Plants Corporation with the cooperation of the War Production Board. The spot authorization really helped until this hysteria came up because of the Battle of the Bulge. We expect to