This allows them to operate on a more stable level and is a device that seems to offer opportunity for most of the major field crops, provided the necessary actuarial data can be obtained, and provided cooperation is widespread enough to allow administration at a reasonable cost.

MEASURES TO CREATE A WIDER APPRECIATION OF THE VALUES AND BENEFITS OF RURAL LIFE

So far we have discussed measures designed to provide employment or security for displaced or low-income farm people, and measures designed to raise and stabilize the returns obtained from commercial production. We now turn to a discussion of measures that should operate to the benefit of farm people generally.

Extend the Benefits of Technology to Lighten the Burden of Farm Labor and to Make Farm Life More Attractive.

One of the most interesting possibilities is to be found in the development and adaptation of technical devices in such a way as to lighten the burden of farm labor and to make rural life more attractive, or at least to make the technical facilities available to rural people more nearly comparable with those available to the urban group. Perhaps one of the most desired, and at the same time one of the most spectacular, developments in this field is the extension of electricity to an increasing number of farm homes. Since the inauguration of the rural electrification program in 1935, the proportion of farm homes supplied with electric light service has increased from around 10 percent to approximately 29 percent and the prospect is for further steady development in this field. This development has been brought about chiefly by the redesign of transmission lines and electrical equipment in such a way as to cheapen very materially the cost of rural electricity, and by the development of a means of organizing and financing rural electrification cooperatives at a very reasonable cost.

At present, of course, attention usually is focused on the advantages of electricity as a source of light, but because of the development of low-cost radios and refrigeration units and the increasing amount of electrical equipment used on the farm, the possibilities in this field appear bright.

This leads to a second development on which it seems increasing attention should be centered-that is, the development of machines and machine techniques that will extend the benefits of technology to the small farm operating unit.

In the past, the benefits of many of the technological developments have been most marked and, in many cases, almost restricted to operating units of considerable size. This has been especially true of tractors and tractor equipment. One of the most hopeful developments in this field is the small rubber-tired, general-purpose tractor with equipment to match. And it seems that engineering research should be pointed more and more toward the development of efficient small-scale equipment, rather than concentrated on a hunt to find better largescale equipment.

Stabilize Rural Settlement so as To Develop a More Permanent Rural Life.

A second series of measures that should benefit rural people generally, and also are especially conducive to the national welfare, is to be found in those lines of activity that tend to stabilize rural settlement and to develop a richer and more continuous rural culture.

The effort to conserve our soil and forest resources in such a manner as to allow the development of a stable and continuing agriculture should receive continuing stress. In the past we have generally felt that our supply of land was almost unlimited, and in an effort to build rapidly and to maintain a relatively high rate of profits and interest, soil exploitation has been common. Since the World War, however, we have come increasingly to the realization that our soil resources are no longer unlimited and that the social consequences of continued exploitation and deterioration are by no means desirable. This, in turn, has directed attention toward the need for conservation and we are now beginning to endeavor to work out means and methods by which our soil and water resources can be best conserved.

The development of conserving systems of land use that will allow sustained productivity of the agricultural staples, or of grass, or of timber, would do a great deal to cut down internal rural migration and allow the development of a stable type of rural occupancy that leads to the development of better rural facilities and to a much improved tenure system.

Attention should be given to this need for better rural facilities. Owing to the fact that our agriculture has been exploited, and that our pioneering psy

chology had led a large number of people to look for a return in the form of increased land values rather than in the form of a stable and satisfying rural life, the rural facilities such as roads, schools, and to a marked extent rural housing, have not been developed adequately even in the better farming sections of the United States.

We must develop a permanent agriculture to allow for a needed investment in roads, houses, and other rural service and living facilities. Farm prices and farm income must be maintained at such a level as to allow the needed investment. In this connection, the development of techniques and machines that make the benefits of technology available to farm people, as discussed above, is quite important.

Educational and Other Measures to Enhance Values in Rural Life.

Finally, our attitude toward rural life must be such as to make it as attractive as urban life. This means that we need to consider measures that will develop a more mature consideration and wider appreciation of the value and benefits of rural life. These measures might include:

(a) The development, either through private initiative or under public auspices, of new or experimental patterns of rural life, especially in areas or among classes of farm people where current methods and patterns obviously are unsatisfactory. Some of the developments in this field were discussed earlier-as, for example, labor allotment cottages or self-sufficing small holdings, self-help cooperatives. rural training, handicrafts, cooperative farming, etc. But it would be very desirable to be able to do some work in this field of a frankly experimental nature in which new methods and new combinations could be tried out without being subjected to continuous pressure of a program that is designed to alleviate or solve some particularly distressing problem within a relatively short period.

(b) The direction of an increasing amount of attention toward the use of leisure time in such a manner as to develop a better organized and integrated community life. Current technological developments could, if applied in a given way, simply result in a smaller number of farmers producing a larger output with a continuation of long hours and low living standards-in fact, if technology is itself the goal this is what might be expected. But in America we have always believed that technology should result not only in an increased output and more economical production but also in shorter hours of work and in order to allow more time to develop a fuller family and community life. And certainly at present this type of development is needed among farm people as much or more than among the other classes of the nation.

(c) If we are to develop a rural life in which the technical and other elements are integrated in the most desirable manner, we must work toward developing a rural life that is generally recognized as a desirable way of living. In part this depends upon the development of technical methods that will lighten the burden of farm work; in part it depends upon the maintenance of prices and income at a level that will give farmers equal economic opportunities with other classes; and in considerable part it depends upon the manner in which farmers and others think of farm life and upon the development of a stable and satisfying rural culture.

This, of course, calls for a reorganization of a great deal of the thinking of almost all classes in the country and a very considerable reworking of educational ideals and methods. It means that rural youth must be interested not only in the material comforts of life but they must also be trained in such a manner as to derive considerable satisfaction from the fact that they themselves are an important part of one of the classes whose work is most fundamental to our American civilization-our agricultural group.

SUMMARY

In our consideration of problems and remedies, we should not assume that industrial expansion-the best way to absorb those who have no particular desire to remain in agriculture-has ceased for all time.

Something like a huge defense program may be a key to industrial expansion; if so, certain of the suggested remedies no longer will be needed so badly.

But of several considerations we should be mindful: Industrial expansion through armament expansion may be temporary and lead only to a recurrence of the problems we have been encountering; we should seek permanent stability for American farming; over a long period, it should be possible for the United States to adjust its economy in a way that will permit expansion of production in industry and agriculture. That would make possible a higher level of living for the entire population. That is our goal.

INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER

TUESDAY, FEBRUARY 25, 1941

UNITED STATES SENATE,

TEMPORARY NATIONAL ECONOMIC COMMITTEE,

Washington, D. C.

The committee met at 10:35 a. m., pursuant to adjournment on Monday, February 24, 1941, in the caucus room, Senate Office Building, the chairman, Senator Joseph C. O'Mahoney, presiding.

Present: Senator Joseph C. O'Mahoney (chairman); Senator James M. Mead, New York; Representative B. Carroll Reece, of Tennessee; Sumner T. Pike, Commissioner, Securities and Exchange Commission; Joseph J. O'Connell, Jr., special assistant to general counsel, Department of the Treasury; George Comer, Department of Justice; Joseph T. Sheehy, assistant chief examiner, Federal Trade Commission; Joseph Meehan, Department of Commerce; E. A. Sheridan, executive assistant to the Chairman, Securities and Exchange Commission; H. Dewey Anderson, executive secretary of the committee.

The CHAIRMAN. The committee will please come to order.

We are scheduled today to hear from the Securities and Exchange Commission on the subject of small business. Commissioner Pike, of the Securities and Exchange Commission, and also a member of this committee, will be in charge. Mr. Pike.

STATEMENT OF SUMNER T. PIKE, COMMISSIONER, SECURITIES AND EXCHANGE COMMISSION

Mr. PIKE. Thank you very much, Senator.

I might explain that the matter of small business has been handled partly by the Department of Commerce and partly by the S. E. C.; that is, in the original studies. The S. E. C. Division has been disbanded since the studies were completed, and the presentation as made by me may not be entirely adequate. I will do the best I can. [Reading:]

The subject of small business has been assigned to the Securities and Exchange Commission for study. In making this report I want first to say that the views expressed here have not been considered by the Commission as a whole and do not therefore necessarily represent their views. Secondly, it should be stated that neither this report nor our studies pretend to cover the entire subject of small business. Because of the limited time and resources at our disposal we have not attempted a complete study of small business, and we are not in this report attempting to cover the entire subject. There are many aspects of small business which we have not explored. The small-business problem needs continuing study. It cannot be met by occasional examinations such as this one. For the purpose of this presentation it should therefore be made clear that we are concerning ourselves solely with the financial aspects of the problem.

Even within this restricted area our studies could not be as exhaustive as we would have wished. It has been necessary to confine ourselves largely to statistical studies and to the sampling of the small-business situation in what we believe to be representative communities in various parts of the country. From this sampling, however, we can draw certain conclusions.

First, it appears that certain important avenues of credit which were formerly available to the small businessmen have disappeared or that their characteristics are so altered as to make them not readily recognizable. This conclusion, however, must be based largely on conjecture, for few records are available. It seems probable that the small businessman of 20 or 30 years ago received both new capital and long-term credit from either his local bank or the wealthy man in the community. Now most banks limit their accommodations to short-term credit, and the wealthy man leans toward limiting his investments to nationally known securities, with an eye to the income-tax schedules. A small business can usually obtain loans for working-capital needs, such as inventory and the like. But the business which needs to modernize its plant by putting in up-to-date machinery in order to meet changing competitive conditions is too frequently up against it. Banks usually won't do this kind of business, and the normal investment-banking channels presently available to big business are not open to small business. Investment bankers throughout the country have been slow to gear their facilities to the financial needs of small business.

Another aspect of the problem is fairly clear. This is that the established small businessman is extremely wary. He often needs money but usually does not want a partner. He wants a creditor. He does not want to relinquish any part of his control over his business. And he wants the benefits of leverage for his own investment which accrue as a result of having debt above it. This may be unfortunate. Many persons feel strongly that debt money is dangerous money because of the heavy defaults-bankruptcies-which may occur in periods of deflation. But I doubt that we can, or should, compel a businessman to take a partner if he does not want one; and equity money is partnership money. This reluctance to accept equity money exists to a much greater degree in the case of established enterprise than in the case of new ventures. An inventor, for example, will usually take almost any kind of money to get started.

Small businessmen are, for the most part, individual capitalists who have too frequently come to feel that their problem is the same as that of the great industrialist-and that the gist of the problem is simply "taxes and regulation." Of course, I recognize that it is to the advantage of big business, large in dollars but small in number, to attempt to convince small business, with its great numbers, that their problems are identical. But I do not believe the problem of small business is essentially the same as that of large business and I think that this committee has seen evidence in many fields to indicate the existence of great differences. In general, I think it may be said that small business covers just about everything that is definitely not big business and the problems are just about as varied as there are numbers of small businesses.

We must probably face the fact that in many instances those who feel that they are most entitled to financial assistance are too often the very ones least entitled to it. Probably not very many propositions which show a real promise of profit go without some sort of aid-especially where the management has real ability and is able to present its case well.

One great difficulty undoubtedly arises from the bald fact that not all persons who think they are businessmen really belong in that category. Bookkeeping and accounting methods are too frequently so substandard that the boss himself doesn't know where his money is until after it is all gone. An excellent salesman is not necessarily a good business manager, yet many companies are run by men who are good salesmen or other types of specialists but unskilled in or ill-adapted to business management. We simply must face this fact. We have all known personally too many men like that-good honest men who simply do not have the kind of managerial ability or experience which is essential to the success of any business enterprise. No amount of financial assistance can help this kind of man for very long.

This Government has not stood still in its efforts to meet the broad problem of small business. The activities of the Antitrust Division of the Department of Justice and the Federal Trade Commission in recent years have done much to relieve the pressure of unfair and oppressive competitive practices upon the small businessman. Perhaps these benefits have not been completely felt in all small business circles, but they are certain to bring real relief in many fields. And certainly a great part of the work of this committee in its studies of the numerous