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Mr. MAVERICK. I want to say that Public Law 457, which is the Surplus Property Act, says that the Smaller War Plants Corporation— and this is Congress speaking

is hereby specifically charged with the responsibility of cooperating with the Board * * making surveys from time to time and bringing to the attention of the agencies and the Board the needs and requirements of small business and any cases or situations which have resulted in or would effect discrimination against small business in the purchase or acquisition of surplus property by them and in the disposal thereof by the agencies.

It also says this:

The Smaller War Plants Corporation is hereby authorized and directed to consult with small business to obtain full information concerning the needs of small business for surplus property.

Again I quote the extensive duties required by Congress.

The Smaller War Plants Corporation shall have the power to purchase any surplus property for resale.

* * *

That is a power that we hope not to exercise at all, or not to any great extent.

Then it says:

The Smaller War Plants Corporation is hereby authorized, for the purpose of carrying out the objectives of this section, to make or guarantee loans to small business enterprises.

In other words, we are tied in specifically, under a direct order and legislation of the Congress of the United States, to do the things that we are mentioning here. It is no illusory liaison or mythological link. It is the absolute "McCoy." It is work which we must do under the law, and, of course, want to do well.

APPLICATION OF HEARING

Mr. CASE. Mr. Chairman, in listening to the testimony so far I have not been able to determine in my own mind from a functional standpoint whether this is a hearing for the Department of Commerce, the Reconstruction Finance Corporation, or for an agency that supplements or overlaps all the others, or as to whether or not this is a purely wartime agency or a peacetime agency. I would like to ask Mr. Maverick a question or two about that.

Is this a wartime proposition or a peacetime proposition that you are dealing with?

Mr. MAVERICK. Mr. Case, I cannot answer that, because it is asking me something in the alternative, involving two things which in neither case are directly alike.

SUGGESTED CHANGE IN NAME OF AGENCY

Mr. CASE. You stated yesterday that the first thing you wanted to do was to change the name from Smaller War Plants Corporation to Small Business Corporation.

Mr. MAVERICK. Indeed, that is one of my wishes. But I do not think it relevant to this appropriation. Probably I should not have included that in this record, although I still stand by it.

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But in direct answer to your question, the Congress has extended the life of this Corporation to December 31, 1946, and therefore we have duties until December 31, 1946, and the law clearly defines those duties.

Mr. CASE. Are the duties that you are performing designed to serve as a wartime or a peacetime agency?

Mr. MAVERICK. I do not think anybody can answer the question as to whether the Nation is at war or whether VE-day has come, or will ever come. It's this way: Our country is in trouble, and it is going to be in trouble for some time to come; in this trouble period we have specific duties that concern surplus property, contract termination, reconversion, interim loans, but always, in the first and last place, assistance to small business. And that will last for the next year and a half; the law says so, Congress says.

SERVICE IN RECONVERSION PERIOD

Mr. WOODRUM. Is it not perfectly obvious that Congress, in passing this law which you have spoken of, showed that it meant that this Corporation was to be of service to small business in the reconversion period?

Mr. MAVERICK. Yes, sir.

Mr. WOODRUM. It speaks of handling surpluses, contract termination, and what not, which shows pretty clearly the congressional intent that you were to function through the period of reconversion?

Mr. MAVERICK. Yes, sir. And I want to say this, Mr. Woodrum and Mr. Case, that when you ask me if this is a peacetime agency or a wartime agency, I can say that we are not going to have peace, as we understand it, in the immediate or even reasonably soon foreseeable future, because when we get Germany knocked out, we have Japan to knock out. The terms "wartime" and "peacetime" are irrelevant. The point is that we are going through a reconversion period which is connected with the war, or the aftermath of war, or the part of reconstruction in the peace we hope to come.

Mr. CASE. The relevancy of the question is this, that the Appropriations Committee as a whole is called upon to make appropriations for the Department of Commerce, the Reconstruction Finance Corporation, and various other agencies of government; and if the Appropriations Committee has any responsibility to the Congress it has to see that it does not make overlapping appropriations.

Mr. MAVERICK. All right, sir. I want to make this statement. In Washington, D. C., there are 18 credit agencies for farms. There are 5,000 different farm credit establishments throughout the United States. It has often been said that they overlap. As a matter of fact, they do not. In this particular case, the Smaller War Plants Corporation has been dedicated to a specific task-the specific task of attending to the needs of small business. You can make a loan of $10 at the National City Bank in New York City. But nobody does it. They go to the Morris Plan Bank. We represent the little people. That is our job; we are fitted for it by experience, and we like our jobs.

TECHNICAL ADVISORY SERVICE

Mr. CASE. In the statement that is made in regard to your Technical Advisory Service it is stated that it is to provide a technical advisory

service for small concerns requesting aid in the solution of technical manufacturing problems, using for this purpose the facilities of governmental, industrial, and educational laboratories and research institutions, assisting small business to make use of alien patents, and so forth. Would you say that that work is not being done by the Department of Commerce?

Mr. MAVERICK. I would say specifically and pointedly that it is not being done by any other Government agency at all, and that it never was done by any other agency, and that we originated it and we are proud of it, and we boast about it, and boast about it properly, because it is one of the greatest things that has ever been done in America. Mr. TABER. Right at that point: what is the Alien Property Custodian talking about it for?

Mr. MAVERICK. The Alien Property Custodian took over alien patents. With their aid we assisted with 40,000 of those patents and went around the country showing them to little businessmen. We have many in use that would not have been in use except for the Smaller War Plants Corporation.

Mr. TABER. How many licenses have been granted?

Mr. MAVERICK. I don't know, Mr. Taber; but there are 40,000 of them. Many are no good.

Mr. TABER. They told us yesterday that they had issued licenses for 300.

Mr. MAVERICK. That may be considerable.

RESPONSIBILITY IN PRESENTING SMALL BUSINESS

Mr. CASE. Would you say it is your responsibility to represent small business in the acquisition of surplus property?

Mr. MAVERICK. Mr. Case, I do not exactly understand your question. Mr. CASE. Your responsibility with regard to surplus property is to serve small business and make it aware of what items are for sale? Mr. MAVERICK. Yes, sir; I think that is part of it. I cannot say that is all.

ARTICLE IN PATHFINDER MAGAZINE

Mr. CASE. I have in my hand the curent number of the Pathfinder magazine, dated April 30, 1945, which has an article headed "The $100,000,000,000 war sale," and it tells of four sellers. It says [reading]:

Meanwhile four agencies-the Reconstruction Finance Corporation, the Commerce Department, War Food Administration, and the Maritime Commission— are "quietly" selling as much as possible, trying to get it into the hands of users while goods are scarce. They have on hand $2,000,000,000 in surplus goods. At the bottom of the page is a picture showing an exhibit of tools, pottery, and stirrups, typical of Commerce Department surplus goods sales to dealers.

I am wondering if that is not in the same field that you have been describing as being part of your work.

Mr. MAVERICK. In a sense, yes sir; and it is parallel to the fact that when we started out the War Department and the Navy Department did not pay any attention to little business, and Congress in its wisdom created the Smaller War Plants Corporation. We have increased,

since I have been with the Corporation, the procurement on prime contracts with the Navy from 8 percent to 25 percent, and for the Army from 12 percent to 24 percent.

Mr. CASE. I am not questioning the fact that you are performing some appreciable services to small business, several instances of which have come to my attention. I am merely wondering whether you are not doing something that other agencies are supposed to do and have fallen down on the job, or whether you are performing a service that no one else is charged with responsibility for.

Mr. MAVERICK. Mr. Case, the answer, as well as I can say, is no. We are performing a service and will perform a very valuable service, and we are specifically charged to do these things. I believe, from what I know of this matter, having had a year and a half experience now, that the duty we have in surplus property disposal and the duty in reconversion will be much more important than we had during actual wartime, because proper distribution of surplus will help to keep us from getting into depressions if we see that little business is protected.

KEEPING ALIVE COMPETITIVE ENTERPRISE

Mr. CASE. Yesterday at one point you stated that you regarded it as having the responsibility of keeping alive competitive enterprise, or you referred to the spirit of competitive enterprise.

Mr. MAVERICK. Of course I was giving my personal opinion in favor of free enterprise. I think that a man in a small town has as much right to be financed as has a giant concern in New York City or Chicago.

Mr. CASE. What competition do you offer to the small-town banks? Mr. MAVERICK. None. We offer them participation in loans. We do not have the opposition of small-town banks; small-town banks are our friends. We help them and we boost them. When the hearing was held before the Banking and Currency Committee of the Senate the American Bankers Association entered no protest against the continuation of the Smaller War Plants Corporation. That is going some, when the American Bankers Association does not protest.

QUESTION OF DUPLICATION OF WORK OF RECONSTRUCTION FINANCE

CORPORATION

Mr. CASE. Is there any duplication of work with the Reconstruction Finance Corporation in your Legal Section in passing on loans?

Mr. MAVERICK. No, sir. We do not have any connection with the Reconstruction Finance Corporation except that they do some of the legal work of closing our loans. In the beginning they helped us and we appreciate it. I now think we ought to do it ourselves. I think every Government agency ought to do its own work. But the way you ask the question, the answer is that we have no competition whatever with the R. F. C. in the legal part.

Mr. CASE. In the portion of your statement that deals with the work of the legal branch, you review the responsibility you have in passing on contracts, and then in the section on methods of operation you speak of loans that are under $25,000; that if they meet with the approval of the regional loan agent he transmits the data to the Recon

struction Finance Corporation with instructions to close the loan in accordance with the agreed terms and conditions. When this loan goes to the R. F. C. does their legal department pass on it?

Mr. MAVERICK. Only in writing up the papers to see that the formal things are taken care of. The discretionary power in making the loan has already been adjudged by our people.

When we first started out we did not have a legal staff organized. We have a legal staff in Philadelphia and it is working out fine, and we ought to have one all over the country.

RESPONSIBILITY OF LEGAL STAFF IN PREPARATION OF LOANS AND LEASES

Mr. CASE. You say that the legal staff is responsible for the preparation of loans and leases, and also of legislation.

Mr. DENIT. Are you referring to page 11 of the justifications, Mr. Case?

Mr. CASE. Page 10 and 11. That is where you find the general

statement.

Mr. DENIT. The legislative function is handled by the office of the general counsel as such, but within the office of the general counsel there is the office of the chief loan attorney, whose work is of an operating character. His office performs the same function, with regard to loans that are handled in Washington as the R. F. C. is performing in connection with loans in the field. That is to say, the chief loan attorney's office prepares appropriate resolutions and mortgage agreements, and so forth in connection with the loans which the board itself passes right here in Washington. They are all loans over $25,000. Mr. CASE. On loans under $25,000 do you go into the legal phases of them at all?

Mr. MAVERICK. Through the lawyers of the R. F. C. We accept their word, because they have got good lawyers.

Mr. CASE. Does the Reconstruction Finance Corporation have anything to say as to whether or not they will grant a loan?

Mr. MAVERICK. No. They have not anything to say about it. Mr. Price, chief loan agent, can tell you about that.

Mr. PRINCE. We simply hire the attorneys of the R. F. C. to close our loans and we reimburse them. That is all there is to it. Instead of hiring other attorneys who were not available when we started, we simply hire their attorneys. If we did not use them we would use others.

Mr. CASE. The Reconstruction Finance Corporation has nothing to do with whether or not a loan shall be granted?

Mr. PRINCE. We send them the terms and conditions.

Mr. CASE. Yesterday, Mr. Maverick, you said you wished you had the authority of the Reconstruction Finance Corporation to increase funds available to you without requiring an act of Congress. When you can turn loans over to the Reconstruction Finance Corporation and require them to grant them on your approval, what does that result in so far as the outstanding capital of the R. F. C. is concerned? Mr. MAVERICK. It has no relation whatever to authorized capital. The Reconstruction Finance Corporation has absolutely nothing to do with our loans at all, except that their lawyers merely write up the papers for us, just like any other firm of lawyers, such as Jones,

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