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The second book was published in 1925, on the same subject. I have written numerous articles which have been published in various scientific journals, and since then my researches have continued throughout the period.
Mr. KOPPLEMANN. Have you recently made any investigation of this subject?
Dr. BECKMAN. An investigation of the subject of credit?
Dr. BECKMAN. Yes. The most recent one was that made for the Business Advisory and Planning Council of the United States Department of Commerce on “Credit Requirements of Small Industry for Recovery”.
The purpose of that study, apparently, was to find out what the true facts of the situation were with regard to credit difficulties, which we have heard complained of by small business men. That study was completed at the end of October.
Mr. KOPPLEMANN. Has that yet been published?
Dr. BECKMAN. I do not think so; I do not think it has been published yet.
Mr. KOPPLEMANN. Let me make just one more observation. I think that report should be made a part of the record of these hearings. It appears to be the most complete national report recently made on the subject. I have seen a summary of the report, but I have not been able to secure the complete report.
It seems to me this committee ought to have the benefit to be derived from such a report. It will be very helpful to the committee.
The CHAIRMAN. What arrangement will there be for the publication of that report other than incorporation in your statement here?
Dr. BECKMAN. I do not know; I have not been consulted on that matter.
For the past several months the members of the Business Advisory and Planning Council have been studying that report, and that was the last statement I heard from them.
The CHAIRMAN. How large will that report be?
Dr. BECKMAN. It covers approximately 200 pages of double-spaced typewriting.
The CHAIRMAN. It is not too voluminous to be conveniently incorporated in your statement?
Dr. BECKMAN. I do not know about that.
Dr. BECKMAN. The investigation was started, before I had any connection with it, by the small-industries committee of the Business and Advisory Planning Council. Then I was called in and was appointed Chief Economist in charge of that survey and was asked to prepare the report, and to see that the statistics and other findings were properly presented.
Mr. Williams. To whom was that report submitted; to anybody?
Dr. BECKMAN. I submitted that on October 29 to the council. Of course it is the prerogative of the people who initiated the investigation to do with the findings as they see fit.
Mr. WILLIAMS. Who initiated it?
Dr. BECKMAN. They represent approximately 52 of the business leaders of this country, among whom are the two Harrimans, for example; Mr. Aldrich, of the Chase National Bank; General Wood, of Sears, Roebuck; and other people of that caliber.
Mr. WILLIAMS. It has no Governmental connection whatever? Dr. BECKMAN. It is very difficult for me to determine that.
Mr. WILLIAMS. Let me ask you this question: Has it any official Governmental connection?
Dr. BECKMAN. All I know is that the Council members are appointed by the Secretary of Commerce, and they are supposed to act in an advisory capacity to the Secretary, and the reports which they make are generally transmitted to the President.
The CHAIRMAN. You do not object to letting the committee have a copy of that report, do you?
Dr. BECKMAN. I have a copy here from which I was going to read some excerpts, merely conveying my own ideas, since the report has not yet had any official status.
The CHAIRMAN. That report for the present is in executive circles? It is not available for publication, is it?
Dr. BECKMAN. I do not know.
Mr. Williams. Has it been submitted to the Department of Commerce?
Dr. BECKMAN. Apparently not yet.
The CHAIRMAN. I think that will be a matter for us to deal with later on.
Mr. REILLY. Can you not give us the gist of that report in a short statement? Very few people will read a 200-page report.
Dr. BECKMAN. The report begins with a 20-page summary which gives the main conclusions, but it does not, naturally, present the supporting evidence, nor the factual information.
For example, throughout the report I have incorporated a number of excerpts from letters written by the reporting manufacturers in order to show what they think about the subject. I did not want to presume to give my personal opinion. There is a good deal of statistical data throughout the report, and from its contents the reader can determine, in his own judgment, as to the value of the information.
The CHAIRMAN. Has that report been submitted to the Secretary of Commerce?
Ďr. BECKMAN. I do not know. I do not know whether it is finished or not.
The CHAIRMAN. Have you not finished your part of it?
The CHAIRMAN. You do not know what the others have done, or when they will be through with it?
Dr. BECKMAN. No; I do not know that.
Mr. Sisson. Is this report entirely relevant or material, all of it, to the particular purpose of this bill we have before us, or is that a report made on other things as well as on the matter of relief which some other Government agencies furnish?
Dr. BECKMAN. Here is a copy of the report. It is a report dealing with the credit difficulties and the credit situation of small manufacturers. It is confined to small manufacturers only, and deals with the reasons why they are having these difficulties, and whether they could not secure financial assistance from existing sources, or from agencies set up by the Government during the depression.
The findings, to my mind, are entirely relevant to the subject under discussion.
The CHAIRMAN. Gentlemen, I suggest that we permit Professor Beckman to go on with his statement, and we can later decide what we want to do with the report.
Dr. BECKMAN. The invitation to appear before you gentlemen came just recently, when I was in Washington on other business in connection with the census work, and therefore I have had no opportunity to write out a statement. So I shall have to speak to you extemporaneously, or from notes and I should like, Mr. Chairman, to have an opportunity to look over the material before it is finally published and make whatever corrections may be necessary.
And besides that, I feel that you will probably be more interested in an extemporaneous presentation of the subject matter than in a carefully prepared statement.
There are three major points which I would like to discuss briefly with you this morning, which have a direct bearing upon the matter at hand.
One of them is that in my opinion the small businessman is such an important factor in our economic system that no lasting recovery is possible without him.
The second point is that the small businessman is in special need of financial assistance at the present time in order to bave recovery. And the third point is that H. R. 5918, in my opinion, will supply the special needs of the small businessmen of this country.
In commenting briefly on the first point, namely, that the small businessman is such an important factor that no recovery of a national and widespread scope is possible without him, I would like to call attention to the fact that the small businessman is the most important business unit in the United States, despite the recent development of chains and department stores and other types of consolidated and merged organizations. Even in normal times, 97 percent of the manufacturing plants are regarded as small, although these 97 percent of the plants regarded as small employ 48 percent of the industrial workers of this country. That means, parenthetically, that 3 percent of the plants, presumably, have control of 52 percent of the workers in manufacturing plants.
An N. R. A. report estimates that about 91 percent of all business enterprises, construction, manufacturing, retailing, wholesaling and all the others, are considered small, in that they have a tangible worth of $50,000 or less.
I would like to read one paragraph from the report on credit requirements of small industry for recovery. It is in the summary part of it, where I have concluded that (reading]:
The existence of the small manufacturer is necessary to prevent monopolistic abuses, unless undue Federal regulation and control of industry is resorted to. Thus, continued welfare of the small manufacturer is socially desirable and whole
It tends to deflect criticism from the industrial giants, allay fear of control by the few, and maintains a balance in our economic life. Benefits from their continued profitable operation also inure to the numerous small communities in which many small manufacturers are located, through deposits of funds in local banks, stabilization of employment, and through the consumption of locally produced materials. Small industry is so intimately woven into the economic and social fabric of the Nation that no recovery is believed possible without the assurance of its economic well-being.
Not only is small industry an important factor in small communities but even in large cities, as shown by excerpts from an editorial in Commerce, which is the publication of the Chicago Association of Commerce, in which the following words appear:
In Chicago 10,201 industries were classed as small industries employing fewer than 250 men
There is no quarrel between the two groups, large and small. They need each other, and as long as they exist there will be neither monopolies nor battles to the death by the Titans that succeed them.
In most of the small industries there is a close relationship between worker and employer, sometimes amounting to close friendship, and there is a need for this type of employment for many men. It gives them a backing of sympathetic cooperation of a protective nature and enables them to rear their families with assurance and to live lives free from worry.
There is no question in my mind as to the importance of the small business unit. In compiling data for the wholesale census, and looking over this morning the material of the retail census, I found the facts concerning the position of the small business unit most striking.
Despite the growth of chains and other large-scale retail institutions, we find, for example, that over 60 percent of the retail business in this country even today is still transacted by the small independent retailer, leaving out the department stores and mail-order houses; and if you will add the department stores and all other independents, 85 percent of the retail business is still in the hands of independents.
I was asked recently to make a speech on the subject of the small business man before a group of oil people, and I was very much surprised to find that even in the gasoline business over 70 percent of the filling stations are owned by independents, whereas normally we think of these stations as being owned by industrial giants.
It seems to me that those of us who have thought in terms of General Motors, or the United States Steel Corporation, or other such giants in American industry, will have to revise our thinking a little bit. While they are important, the small-business man still constitutes the backbone of this Nation.
For that reason I concluded that no recovery of a lasting character is possible unless the small-business man has an opportunity to continue in business.
The second point referred to was the fact that the small-business man is in special need of financial assistance to bring about recovery.
You are all familiar with the various conditions which have prevailed in the United States since 1929. During this period the smallbusiness man has been severely restricted in his operations. It was an era, as you all know, in which our national economic outlook was dominated by fear and hesitation. It was a period of growing unemployment, bank failures, credit restrictions, collapsing commodity and stock prices, slashing of wages, and cutthroat competition.
One shock followed another. Catastrophe pursued catastrophe until all economic ambition was stifled.
Upon his inauguration, the President inherited a banking and economic system which was practically on the vergy of collapse.
During this entire period the small business man had lived on his fat and flesh; and when his working capital became seriously and dangerously depleted, he faced ruin and failure.
In order to avert this serious danger and prevent complete national economic collapse, it was necessary for the present administration to take heroic steps, which, by their very nature, in individual cases, placed further restrictions on the operations of the small-business
While, generally, the N. R. A. codes and actions taken by other newly created governmental agencies may have had a most beneficial effect, they resulted, nevertheless, in certain impositions upon the struggling small business enterprises, with no compensating advantages. The higher wages, lower hours, trade-credit restrictions, and rising inventory prices which resulted from some of these activities could not be met by a great many of the small-business men unless they could secure the necessary financial assistance.
Mr. Ford. My correspondence does not warrant that statement. Take my district, for instance. Everybody I have heard of wants the N. R. A. continued. You are saying it restricted them, and I judged from the way you said it that you thought they would not want it continued.
Dr. BECKMAN. I did not intend to bring in any argument about the N. R. A. I am myself very much in favor of the further extension of it, but I am also in favor of certain compensating advantages.
As a matter of fact, I think the administration particularly realized that something must be done to compensate small businessmen who had to pay higher prices for the raw materials that they used for their inventories, by offering them special facilities so that they could secure eredit. That is not an essentially inherent defect in the N. R. A. It simply means that if you are going to have higher prices for commodities and also higher wages and fewer hours, there is more expense in the operation of a business, and that expense must be financed. That is the only point I am trying to make.
This situation naturally developed an unwholesome attitude on the part of many businessmen. And righ there, Mr. Chairman, I would like to read one excerpt which was selected as typical from the report on credit requirements, and we have many of them of that kind in our files.
This excerpt is from a letter from a manufacturer, who had this
Our Government has given assistance to the poor, the farmer, the small homeowner, the banks, the railroads, the foreign departments, and so forth. But the little fellow who occupies the position in the very center of activity—the man who has risked all, the man who has vision, the man who has made real sacrifices to build industry and to whom all must look for recovery-has simply been overlooked completely except for tax purposes. He has exchanged places with “the forgotten man.
Whether I subscribe to that particular view is a different story.
Mr. Ford. Every man who wrote an identical letter of the kind you have referred to is now writing in and saying, “For God's sake, continue the N. R. A.” So it must have been something more than restricting them.
Dr. BECKMAN. He did not refer to the N. R. A. All he wanted was some financial assistance so he could
This is stating no objection to any of the “new deal” agencies, which have, as we all know, many admirable features in them. But so far as the compensating advantages are concerned, it seems from the very suggestions that have been made, that there is universal agreement on that subject among those who have made these various reports to which I shall refer briefly. There is a general agreement tht there is a special need which must be fulfilled.