APPOINTMENT OF A SPECIAL COMMITTEE TO STUDY THE PROBLEMS OF AMERICAN SMALL BUSINESS

ENTERPRISES

MARCH 18, 1949.-Ordered to be printed

Mr. MAYBANK, from the Committee on Banking and Currency, submitted the following

REPORT

[To accompany S. Res. 29]

The Committee on Banking and Currency, to whom was referred the resolution (S. Res. 29) authorizing the appointment of a Special Committee To Study the Problems of American Small Business Enterprises, having considered the same, report unfavorably thereon and recommend that the resolution be not agreed to.

I. SCOPE OF THE RESOLUTION

The resolution would authorize the creation of a Special Committee To Study the Problems of American Small Business Enterprises in order to continue the work of the special committee bearing the same name which expired by law on January 31, 1949.

II. GENERAL STATEMENT

Your committee has given thorough consideration to this resolution and to Senate Resolution 55 bearing upon the same general subject matter. Your committee deems wise to allow the standing committees to resume full jurisdiction of the subject matter of these resolutions for reasons that will appear at length in the following observations. This action is consistent with your committee's favorable report upon Senate Resolution 33, as amended (S. Rept. No. 14, 81st Cong., 1st sess., Jan. 27, 1949).

Three million six hundred and fifty thousand small business concerns in the United States are owned and operated, on the average, by two and one-half persons. This constitutes a total of 9,125,000 persons,

or 92 percent of our entire economy. These concerns employ about

65 percent of all commercial and industrial wage earners and produce about 45 percent of our entire output. (See S. Con. Res. 14, 80th Cong, 1st sess., passed Senate July 3, 1947.)

Your committee believes the time has come to progress from action consisting mainly of analyses, studies, reports, and recommendations upon small business, to practical legislative action designed to save small business enterprises from gradual extinction in America. Your committee believes that favorable action by the Senate upon Senate Resolution 33, as amended and favorably reported on January 27, 1949, allowing your committee to resume fully its functions and duties pertaining to small business, will expedite practical legislative action to relieve small business enterprises and allow them the opportunity to prosper. These functions have been exercised in part since 1940 by a special committee which did not possess the requisite jurisdiction to report specific legislation to the Senate and thereby facilitate and expedite action upon its recommendations.

III. THE LEGISLATIVE REORGANIZATION ACT AND SPECIAL COMMITTEES

It is not within the scope of this report to review at length the conditions which existed before, and which led to the passage of, the Legislative Reorganization Act of 1946. Members of the Senate are fully aware of those conditions. However, it appears appropriate to discuss briefly at this point the effect of that act upon the policy of the Senate in reference to the continuance of special committees.

Two years ago, when the question of renewing the life of the Small Business Special Committee was before the Senate, the then senior Senator from New Mexico, Mr. Hatch, who is now a Federal judge, expressed his views upon the matter as follows:

The inadvisability of designating special committees has already developed. There is no question about what was intended by the Legislative Reorganization Act. That has been debated so long and so effectively that it is hardly necessary to renew the old arguments. But as a lawyer and as one who has made some study of and research into the terms of the Reorganization Act and into the general law covering the subject, I should like to have the opportunity of standing before a court, arguing the intent and purpose of the Reorganization Act, and obtaining an unbiased and unprejudiced opinion from men trained in the law, whether or not special committees are authorized or intended by that act. I should welcome such an opportunity.

As a matter of fact, Mr. President, Senators speak glibly-and I use that term inoffensively as though no Reorganization Act had been passed. They do not realize that a complete revolution has occurred in the rules of the Senate.

The Senator from Ohio [Mr. Taft], chairman of the steering committee, argued that it had been the custom in the past to set up special committees, and he enumerated, as I recall, about four. Of course that had been the custom. Of course it had been done. Of course the Democrats had done it during the time they were in power; but those were the very evils at which the Reorganization Act was directed. Can there be any doubt about that, Mr. President? Any person who read the debates that took place, who read the reports of the committees, who reads the newspapers, knows that that was intended.

The committee work of the Senate has been so heavy throughout the years that, under the old rules and the old practice, none of us could properly discharge our duties on all the committees to which we had been assigned.

It was to get away from that evil, to get away from that very condition, that the law was passed and the limitation provided that no Senator should serve on more than two committees, with the exception of the Committee on the District of Columbia and the Committee on Expenditures in the Executive Departments, whose members might serve on three committees.

One may argue until he is black in the face that it was not intended to do away with special committees, but nevertheless reason and intelligence and knowledge

of the conditions that existed all must lead to the conviction that it was the intention that Senators should serve upon two committees only. Whether they be standing committees or whether they be special committees, the result is the same. If a Senator served on two standing committees and on five special committees― which I understand is contemplated-there would recur the same old evil which resulted from the former practice, and nothing would have been accomplished through the passage of the Reorganization Act except to increase the salaries of the Senators themselves and to create for themselves a retirement fund.

Perhaps, Mr. President, those are harsh words. They are plain words, and I speak what I believe to be the absolute truth (Congressional Record, Senate, Jan. 24, 1947, p. 585).

The Joint Committee on the Organization of Congress in its report (No. 1011, 79th Cong., 2d sess., dated Mar. 4, 1946) dealing with the whole subject of congressional reorganization declared (p. 6):

We recommend that the practice of creating special committees of investigation be abandoned.

The La Follette-Monroney bill as passed by the Senate contained this provision in section 126:

No bill or resolution, and no amendment to any bill or resolution, to establish or to continue a special or select committee, including a joint committee, shall be received or considered in either the Senate or the House of Representatives. The House deleted that provision from the bill.

Representative Monroney, who was in charge of the bill in the House, when discussing the grant of subpena power to all standing committees, explained the subject as follows:

Mr. Chairman, this was rather carefully considered by the House committee, and our set-up is considerably different from the set-up in the Senate. The Senate is plagued with a great many special committees. It is a rash that has broken out there which practically destroys the continuity and the power of the standing committees. In order to get away from that outbreak of special committees, the Senate wrote in this provision for subpena power by their standing committees (Congressional Record, p. 10073, July 25, 1946).

The original section in the bill prohibiting special committees had been proposed by the joint committee of the Senate and the House. It was enacted by the Senate. Thus, the Senate made known its position on the subject of special committees.

Obviously, the Senate could hardly insist that the House should express a similar view with respect to its own committee situation which, as explained by Representative Monroney, was different.

The Vice President of the United States, when he was the senior Senator from Kentucky, explained the concurrence of the Senate in the House amendment to the La Follette-Monroney Act as follows:

The Senator [Senator Taft] is correct in stating that when the bill passed the Senate it carried a provision against the creation of any special or joint committee. The bill then went to the House, where the provision was eliminated. It came back to the Senate when we were on the verge of adjournment, and we almost had to accept the House amendment or get no legislation at all along that line.. Senator La Follette, of Wisconsin, was operating almost at the point of a gun, in the sense that the bill had to be handled in the best way possible, and he yielded in regard to that and other House amendments in order that we might get some legislation. I do not believe that anyone has contended that the pending resolutions [including a resolution to continue the Small Business Committee for 8 months] violate the La Follette-Monroney Act, but they violate the spirit in which the Senate acted when it considered the question originally and placed in the bili a prohibition against the creation of special committees. (Congressional Record, Senate, Jan. 13, 1947, p. 285.)

To that, Senator Lucas added:

* *

Mr. President, I undertake to say that this resolution does violate the spirit of the La Follette-Monroney Act. * I respectfully submit that under the Constitution of the United States we in the Senate of the United States have the right to make our own rules. The La Follette committee recognized that when it made the report, for it proposed that certain sections of title I be enacted by the Congress:

"(b) With full recognition of the constitutional right of either House to change such rules (so far as relating to the procedure in such House) at any time, in the same manner and to the same extent as in the case of any other rule of such House."

In other words, we do not have to follow the Reorganization Act at all. The House makes its rules, and the Senate makes its rules. So far as the matter of following any part of the La Follette-Monroney Act is concerned, we in the Senate would not be compelled to do so under the Constitution of the United States. But when we review the debates on that subject which were held in this body, no one can gainsay that the Senate did not abolish special committees. I do not refer to what was said on the last day of the session, when practically every Member of the Senate had his bags packed, ready to go home. There was no time for debate or even a conference. Senator La Follette accepted the House version in order to get something. But I refer to what was said when this matter was debated at length.

There we find statements and conclusions which will prove to every reasonable and prudent mind that the spirit of the Senate of the United States on special committees, as expressed at that time, certainly is being violated by these particular resolutions (Congressional Record, Senate, January 13, 1947, pp. 285, 286).

Your committee believes that the Legislative Reorganization Act of 1946 was passed to eliminate the conditions that made for inefficiency, waste, and confusion. It was specifically directed against overlapping of committee jurisdiction and multiplicity of congressional committees. The Senate intended and resolved in the future to keep inquiries and investigations within the particular committee that would consider the legislation and report it to the Senate. Long experience had dictated the need for this reform.

As the La Follette-Monroney bill passed the Senate, with section 126 of the bill, it would have been necessary for the Senate to suspend the rules to set up a special committee.

The bill excepted from its provisions the Joint Committee on Atomic Energy. The bill encouraged joint hearings of the standing committees of the two Houses. Senator La Follette explained the sufficiency of those provisions as follows:

However, I express it as my opinion, for whatever it may be worth, that at any time when a matter of great consequence, such as atomic energy was when it first became a subject for consideration, and still is, for that matter, I have no doubt that the Senate and the House would suspend the rules to meet a situation of that kind.

The reason why we have drawn this tight ban is that we know full well, from long experience, that unless there is a ban, to obviate which very extraordinary action such as suspending the rules is required, we will not check the tendency to appoint select committees of both the House and the Senate, and joint select committees, of which we now have a considerable number in both Houses, and I anticipate that as time goes on, unless the action here proposed is taken, they will multiply in geometric progression.

** if a subject of vital importance comes up, and it is obvious that & special committee should be created, there will not be undue difficulty in having the rules of either House suspended for that purpose. But I fear that if we did not have this ban we might conceivably reorganize and reduce the Senate committees, and find our whole purpose and object defeated by a rash of select and special committees in the future, which would put us right back where we started. In the light of those observations made by one of the sponsors the legislation; in view of the differences in the set-up of committees

of