From August 1953 through March 1957, a total of 19,123 joint set-asides has been earmarked for small business, from which 14,157 awards were made, resulting in 22,115 contracts to small firms. The value of the contracts awarded is approximately $1 billion. The number of set-aside actions increased 105 percent for the 9 months ending March 1957, compared with the same period of the previous year. Likewise, contract awards resulting from these set-asides for the same period increased twofold.

Increased emphasis placed by SBA on subcontracting is reflected in the 48 percent increase in the number of contacts made during the nine months ending March 1957, as compared with last year.

The number of firms assisted to bid on specific procurements increased 73 percent.

Additional sources of supply furnished for bidders lists on which small-business competition was needed increased 46 percent for the 9 months period being compared.

The number of applications received for certificates of competency increased 34 percent and COC's issued increased 11 percent over the 9 months period of the previous fiscal year.

The increased number of loans and other types of small-business cases involving technical production assistance, is observed in the 46percent increase in loan appraisals and other technical surveys related to these items.

There has been a continued increase in the number of requests received from small firms for Small Business Administration smallbusiness publications; 3,331,600 management and technical publications have been distributed since August 1953.

There has been a 93-percent increase in the number of requests to the agency for products assistance; 802 new products were listed in the agency's products list circular during the 9 months ending March 1957, and 2,956 requests were received by the agency for information and data on the items so listed.

The magnitude of the job of assisting the greatest possible number of small firms is highlighted when one considers that there are more than 4 million small business concerns, including approximately 300,000 small manufacturers. It has been necessary to give the greatest emphasis to activities which are far-reaching in scope and which benefit the largest possible number of small firms. The top priority in the procurement programs has been given to that phase which involves setting aside certain Government purchases for competitive award to small firms.

During the past year the personnel of the Small Business Administration have had to devote the maximum share of their time and energy in meeting an increased demand for the agency's services in the financial and technical assistance fields, and to making refinements in these programs which experience has indicated were necessary. However, in spite of the increased workload under our programs, we have worked diligently to find new ways to further the interest of small business.

Many of the activities of this Agency have been conducted in cooperation with other Government agencies with the Small Business Administration serving as spokesman and advocate of small business.

I would like to mention just a few of the principal areas in which we believe these cooperative efforts have been most effective.

By working with the Securities and Exchange Commission on the revisions of regulation A, we have promoted the extension of simplified registration of security issues to a larger number of small businesses interested in obtaining equity capital.

We have cooperated with the Fish and Wildlife Service of the Department of the Interior in establishing a fisheries loan program. We have worked with the Department of Agriculture on the drought-disaster loan program. I have been serving at the request of the Department of Agriculture as a member of the Committee of Rural Development Program and SBA is taking part in the activities planned by this committee.

With the assistance of the Medical Facilities Branch in the Department of Health, Education, and Welfare, we have developed a program of loans to privately owned hospitals, nursing homes and medical and dental laboratories.

In collaboration with the Departments of Commerce, Justice, Export-Import Bank, Federal Trade Commission, International Cooperation Administration, and Internal Revenue Service, we have developed and published much information of value to small business in the form of management and technical assistance publications, particularly in the fields of income taxation and opportunities for small business in international trade.

The Small Business Administration is giving its full cooperation to the General Services Administration in a comprehensive review of procurement policies and procedures of all Government departments and agencies.

The Small Business Administration and the Department of Commerce jointly are developing plans for a conference on technical research and development and distribution for the benefit of small business to be held in Washington, D. C., on September 24-26, 1957. It is our belief that this conference will carry out the President's objective for widening the opportunities for small business through research both in the field of product development and in the field of marketing and distribution.

The Small Business Administration is cooperating with the Bureau of the Budget in a study of the reports and statistics required of small business by the Government.

Let me turn now to the legislation pending before this committee Since the enactment of the Small Business Act of 1953, there have been several changes made by the Congress in SBA's existing authority. In 1955, for example, the agency's maximum lending authority was increased from $150,000 to $250,000 and was further extended by recommendation of this committee to include a program of pool loans whereby a group of small-business concerns could borrow in excess of $250,000 for the purpose of establishing facilities to produce and secure raw materials or supplies.

In 1955, the disaster-loan authority was extended to include disaster loans to victims of drought. The same legislation fixed a maximum interest rate of 3 percent on disaster loans and a maximum of the "rate prevailing in the area where the money loaned is to be used," but not to exceed 6 percent on business loans.

This act also provided for the Department of Defense to make monthly reports concerning the share of funds going for small

business concern contracts, and further provided for the issuance by the Small Business Administration of a certificate to "smallbusiness concerns.'

Section 214 of the act was expanded to include in the joint determination programs the concept of maintaining the Nation's productive capacity.

In 1956, the disaster-loan authority was increased from $25 million to $125 million and was amended to provide that loans for both residential and business purposes could be made for periods not to exceed 20 years, and further that the maximum interest rate on the Small Business Administration share of the loan shall be 3 percent.

The committee is now considering H. R. 6645, a bill introduced by Congressman William S. Hill, of Colorado. This bill has received unanimous support from all the agencies in the executive branch. It establishes the Small Business Administration as a permanent agency and clarifies portions of the existing statute.

The Small Business Act which authorizes the establishment of the Small Business Administration was passed by the Congress in 1953. The original legislation provided that all authority under the act would terminate June 30, 1955. In the latter year, Congress amended and extended the act to July 31, 1957, at which time this law will terminate.

Operation and experience under such temporary legislation have revealed a number of limitations which hamper the efficient operation of the Small Business Administration:

(1) There is a tendency to regard SBA programs as temporary expedients. As the expiration date of the Small Business Act approaches, some institutions no doubt hesitate to join with the agency in participation loans. This hesitation may be founded in the uncertainty that a bank committed to participation in a long-range loan program may incur unanticipated expenses arising out of the shift of responsibilities from SBA to a successor.

(2) Governmeint agencies may be reluctant to embark on longrange programs with SBA because they may find themselves burdened with additional responsibilities which they are not prepared to assume if SBA should be terminated.

(3) A short-range temporary agency encounters personnel problems which can be alleviated by longer tenure. The demand for SBA loans has practically doubled within the past year and it is anticipated that this higher level of activity will continue into the future. It has been difficult to obtain a sufficient number of qualified financial specialists to carry forward the agency's financial assistance program. If one trained employee is lost today, he may be replaced only with extreme difficulty because such employees are not attracted to a Government agency operating under a termination date effective in the near future. For the same reason there is a lack of incentive for longer range training programs to increase the efficiency of the

agency.

(4) It appears clear that the Small Business Administration will have important and continuing responsibilities in any defense program. However, integration of the Small Business Administration into national defense planning is made difficult by the temporary nature of the agency.

(5) Experience has indicated that better relations with the business world can be established if it is clear that the Administration's small-business program is a continuing one.

It thus appears clear that establishing the Small Business Administration as a permanent agency will strengthen all of the agency's small-business programs. H. R. 6645 continues the agency's Loan Policy Board. As you know, this Board is composed of the Administrator of the Small Business Administration who serves as Chairman, the Secretary of the Treasury, and the Secretary of Commerce, or their designees. This Board has been performing an essential function by establishing policies which have assisted the Small Business Administration to meet the credit needs of small-business

concerns.

At the same time, the Board provides a means for coordinating the agency's policies with those of other Government departments. Contrary to some misconceptions concerning it, the Board does not supervise the administrative activities of the Small Business Administration or take any part in its management. It functions only in developing the overall lending policy of the agency.

I have found it difficult to understand the criticism directed at the Loan Policy Board. Most actions taken by the Board have resulted in liberalizing our existing programs.

The Small Business Administration in lending public moneys must be guided by the requirements of what is in the public interest. The determination of what constitutes the public interest can best be determined by the collective judgment of representatives of those Government agencies having substantial responsibilities in the business and fiscal affairs of the Nation.

I have found the Loan Policy Board to be of great assistance to me in the administration of the lending program of the Small Business Administration and its deliberations and actions have been marked by a spirit of cooperation and harmony.

I have submitted to this committee a section by section analysis of H. R. 6645, which, I believe, is self-explanatory. I would like, nevertheless, to call the attention of this committee to certain differences between H. R. 6645 and the present Small Business Act.

1. In section 202, which enunciates the policy of the Congress in enacting the Small Business Act, the present statement in that section. that a fair proportion of the total purchases and contracts for supplies and services for the Government be placed with small business has been revised to state that a fair proportion of the total purchases and contracts for property and services for the Government, including but not limited to contracts for maintenance, repair, and construction, be placed with small business. This revision makes it clear that the policies laid down by Congress and the activities of the Small Business Administration are extended to all types of Government contracts. These will include in addition to the usual supply contracts, contracts for research and development, and for all types of maintenance and construction including the construction of highways.

2. H. R. 6645 strengthens the Small Business Administration's disaster program in several respects. Recruitment of temporary personnel to serve in disaster areas is made easier by authorizing the payment of transportation expenses of such temporary personnel from

authorized, draws any order or issues, puts forth, or assigns any note, debenture, bond, or other obligation, or draft, bill of exchange, mortgage, judgment, or decree thereof, or (3) with intent to defraud participates, shares, receives directly or indirectly any money, profit, property, or benefit through any transaction, loan, commission, contract, or any other act of the Administration, or (4) gives any unauthorized information concerning any future action or plan of the Administration which might affect the value of securities, or, having such knowledge, invests or speculates, directly or indirectly, in the securities or property of any company or corporation receiving loans or other assistance from the Administration shall be published by a fine of not more than $10,000 or by imprisonment for not more than five years, or both.

"SEC. 115. (a) The Administration shall not duplicate the work or activity of any other department or agency of the Federal Government and nothing contained in this Act shall be construed to authorize any such duplication unless such work or activity is expressly provided for in this Act.

"(b) All small business functions not heretofore transferred to the Small Business Administration by the Department of Commerce are hereby transferred upon the effective date of this Act.

"SEC. 116. If any provision of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder of this Act, and the application of such provision to other persons or circumstances, shall not be affected thereby.

"SEC. 117. There are hereby authorized to be appropriated such sums as may be necessary and appropriate for the carrying out of the provisions and purposes of this Act.

"SEC. 118. All laws and parts of laws inconsistent with this Act are hereby repealed to the extent of such inconsistency."

The CHAIRMAN. We have with us this morning Mr. Wendell B. Barnes. He informs me he has a ticket on a plane that leaves at 1:05 and wants to get away not later than 12:15. I told

Mr. PATMAN. Mr. Chairman, would we have another opportunity to question Mr. Barnes? Obviously we can't cover the entire bill this morning.

The CHAIRMAN. Yes. He said he would come back.

Mr. PATMAN. Today is Tuesday. If he leaves at 1 o'clock, when can we talk to him again?

The CHAIRMAN. In the latter part of this week.

Mr. BARNES. I would be back tomorrow and available the day after tomorrow.

The CHAIRMAN. The day after tomorrow?

Mr. BARNES. Yes, sir.

Mr. PATMAN. That is all right.

The CHAIRMAN. We are here to consider the extension of the Small Business Act. We would hear you, Mr. Barnes. If you have a statement, you may proceed to read it.

Mr. BARNES. Thank you.

The CHAIRMAN. Without interruption, if you so desire.
Mr. BARNES. Thank you, Mr. Chairman.

STATEMENT OF HON. WENDELL B. BARNES, ADMINISTRATOR OF THE SMALL BUSINESS ADMINISTRATION

It is a pleasure to meet with this commitee to discuss in general the programs of the Small Business Administration and to comment on certain legislation now being considered by this committee.

I would like to emphasize the progress which the Small Business Administration has made in each of its major areas of service: Assistance to small-business concerns with their financial problems; financial assistance to disaster victims; assistance to small firms in