the civil-service laws and may fix their compensation without regard to the Classification Act of 1949. One such person shall be compensated at a rate of not to exceed $14,000 per annum and five such persons shall be compensated at rates of not to exceed $12,000 per annum. All other officers and employees shall be appointed in accordance with the civil-service laws and their compensation fixed in accordance with the Classification Act of 1949.

(d) To the fullest extent practicable, the Coordinator shall utilize the facilities of small business advisory boards created to assist and counsel Federal agencies, and he may utilize the services of Federal, and, with their consent, State, regional, and local agencies, and utilize such voluntary and uncompensated services as may from time to time be needed.

SEC. 302. The Coordinator shall have power, and he is hereby directed, whenever and to the extent that he determines such action to be necessary

(1) to make, or arrange with the Bureau of the Census, or such other governmental agency as may be possessed of the necessary personnel and facilities for the making of, a complete study of all productive facilities of independent small business enterprises in the United States which may be used for national defense, the needs of the Federal Government, or civilian purposes; and to develop a definite criterion based upon census statistics and other data to determine what is a small business enterprise, and recommend to the Congress the enactment of a clear definition of small business that will be uniformly interpreted by all the executive agencies;

(2) to direct the attention of officers of the Government having procurement powers to the potential productive capacity of small business enterprises and to recommend to the Congress remedial legislation to correct any inadequacy in the present laws relating to the protection of the interests of small business enterprises;

(3) to take such action as will result in the granting of such Government contracts to small business enterprises operating small plants as will provide them with a sufficient incentive to engage in production for the national defense and Government procurement, thereby eventually lowering the per unit cost to the Government; and

(4) to certify to procurement officers of the Military Establishment or other procurement officers with respect to the competency, or the capacity and credit, of any small business enterprise or group of such enterprises to perform a specific Government procurement contract, and such procurement officers are divided to accept such certification as conclusive, and are authorized notwithstanding the provisions of any other law, to let such Government procurement contract to such enterprise or group of enterprises without requiring it to meet any other requirements with respect to competency, capacity, and credit, such as the furnishing of performance bonds. (5) to supervise the establishment of rules and regulations by Government agencies pursuant to title II of this Act to insure that a fair and substantial portion of the supplies or services purchased, or contracted for, shall be furnished by small business enterprises and to encourage bids by small business enterprises by publishing and mailing requests for bids and notification of awards to all interested small business enterprises. Procurement officers are directed to supply the Coordinator with such information as the Coordinator may request to accomplish this purpose.

SEC. 303. The Coordinator is hereby directed to consult with the various Federal, State, and local agencies and with independent small business enterprises and associations thereof with a view to recommending to the Congress appropriate legislation designed to further theinterests of independent small business enterprises.

The Coordinator shall promote the adoption of policies by the executive departments designed to encourage the growth and development of independent small business enterprises consistently with our traditional national system of free enterprise, and he shall recommend to the Congress the enactment of specific legislation to accomplish this result. While the Congress is determined to insure that independent small business enterprises obtain a fair share of Government contracts, the Congress is fully aware of the fact that the eventual success of independent small business enterprises is dependent upon their ability to compete in the market place and that the Government should confine its endeavors to the removal of the barriers which impede the efforts of small business enterprises to compete fairly and equitably with larger business enterprises of equal benefit to the national welfare.

SEC. 304. The Coordinator shall make an annual report of his operations under this Act to the President, the President of the Senate, and the Speaker of the House of Representatives. Such report shall include such information, and such comments and specific recommendations for legislation, with respect to the relation of independent small business concerns to the national economy as the Coordinator may deem advisable.

SEC. 305. There is hereby authorized to be appropriated such funds as may be necessary to carry out the functions of this title.

SEC. 306. As used in this title, the term "small business enterprise" means any business enterprise (a) the number of whose employees does not exceed five hundred, except that the Coordinator shall, where appropriate, specify a smaller number for any particular trade or industry; and (b) whose position in the trade or industry of which it is a part is determined by the Coordinator not to be dominant. In determining whether an enterprise is a small business enterprise, there shall be considered the relative size and portion of the business in relation to the trade or industry in which it is engaged, the size and nature of the area of its operation, the size and independence of the group supplying capital or holding ownership or control of the business; and no enterprise shall be considered to be a small business enterprise which is affiliated through stock ownership or otherwise with any other enterprise in the same trade or industry which is determined to be dominant in the trade or business in which it is engaged.

[S. 3625, 81st Cong., 2d sess.]

A BILL To make capital and credit more readily available for financing small business, foster competition, and coordinate Federal aids to small business, and thus to promote, foster, and develop the domestic and foreign commerce of the United States, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Small Business Act of 1950".

DECLARATION OF POLICY

SEC. 2. It is the policy of the Congress

(a) to foster the development and growth of independent small-business enterprises with the objective of enabling them to make their maximum contribution to productive investment and employment and to the economic stability and growth of the Nation;

(b) to make capital and credit for such enterprises more readily available in adequate amounts and on reasonable terms;

(c) to facilitate maximum participation of private financial institutions and investors in financing these enterprises;

(d) to supplement the existing facilities of banks and other private financial institutions by providing for the establishment of privately owned national investment companies;

(e) to help independent small enterprises compete effectively and thereby contribute positively to restraining growth of monopoly and concentration of economic power;

(f) to improve the efficiency and competitive strength of these enterprises by making available more adequate technical and managerial aids; and

(g) to improve the coordination of Federal financing aids to these enterprises with private financing facilities, with other Federal aids to business, and with over-all credit and economic policies.

TITLE I-INSURANCE OF LOANS FOR SMALL BUSINESS

AUTHORITY TO INSURE

SEC. 101. The Secretary of Commerce (hereafter referred to in this Act as the Secretary) is authorized upon such terms and conditions as he may prescribe to insure such financial institutions as the Secretary finds to be qualified by experience or facilities and approves as eligible for credit insurance against loss of principal and interest which they may sustain as a result of loans made by them to small-business enterprises.

OVER-ALL LIMIT OF INSURANCE

SEC. 102. The aggregate principal amount of loans with respect to which insurance may be granted under this title shall not exceed $250,000,000 outstanding at any one time: Provided, That on or after July 1, 1951, the President may increase this limit to not more than $750,000,000.

SCOPE OF INSURANCE AND INSURANCE RESERVE

SEC. 103. The insurance granted under this title shall provide for the reimbursement of losses

(a) not in excess of 90 per centum of the unpaid balance of any loan, including the net interest accrued at the time of default; and

(b) not in excess of the insurance reserve of the insured institution according to the records of the Secretary at the date the claim for reimbursement of loss is approved for payment.

The insurance reserve of each institution shall be initially computed as 10 per centum of the total amount of loans on which premiums have been paid and shall be diminished by the amount of claims approved for payment. The insurance reserve, if any, to the credit of any financial institution may, from time to time, be further diminished, but only pursuant to the contract of insurance between the Secretary and such insured institution.

MAXIMUM PREMIUM CHARGE

SEC. 104. The Secretary shall fix a premium charge for the insurance granted under this title in an amount not to exceed 12 per centum per annum of the net proceeds of each loan, payable in advance, at such time and in such manner as may be prescribed by the Secretary.

TYPE OF LOAN COVERED

SEC. 105. (a) Insurance under this title shall provide for the reimbursement of losses only with respect to loans bearing such interest, having such maturities, and subject to such other terms and conditions as required by regulations in force at the time the insurance is granted.

(b) No insurance shall be granted under this title with respect to any obligation if the total outstanding amount of all loans under this title to the borrower would exceed $25,000 or if the obligation has a maturity in excess of five years and thirty-two days.

(c) No insurance shall be granted unde this title for any loan for agricultural purposes, as determined in accordance with regulations issued by the Secretary after consultation with the Secretary of Agriculture or for any loan with respect to which insurance is available under the National Housing Act, as amended.

(d) Any obligation with respect to which insurance is granted under this title may be refinanced or extended with continued protection under this title in accordance with such terms and conditions as the Secretary may prescribe, but in no event for an amount or an additional term or terms in excess of the maximum provided for in this section.

TRANSFER OF INSURANCE BETWEEN INSTITUTIONS

SEC. 106. The Secretary, under such regulations as he may prescribe, may transfer to any financial institution approved by him any insurance in connection with any loans which it may purchase from another approved financial institution.

REVOLVING FUND

SEC. 107. (a) The premiums and other moneys received by the Secretary in the course of operations under this title shall be deposited in a revolving fund in the Treasury of the United States. The revolving fund shall be available for defraying the operating expenses incurred under this title, and for the payment of claims in connection with the insurance granted under this title.

(b) For the purposes of carrying out the provisions of this title, there are hereby authorized to be appropriated to the revolving fund provided in this section

(1) the sum of $10,000,000 for the initial establishment of the revolving fund; and

(2) such further sums, if any, as may become necessary for the adequacy of the revolving fund.

(c) The Secretary shall pay annually into the Treasury, as miscellaneous receipts, interest on any sums appropriated to the revolving fund which have not been repaid into the Treasury as provided in subsection (d). The Secretary of the Treasury shall determine the interest rate annually in advance, such rate to be calculated to reimburse the Treasury for its costs in connection with such appropriated funds, taking into consideration the current average interest rate which the Treasury pays upon its marketable obligations.

(d) At least annually, any balance in the revolving fund in excess of an amount determined by the Secretary to be necessary for requirements of the fund and for reasonable reserves to maintain the solvency of the fund, shall be paid into the Treasury as miscellaneous receipts, and any outstanding balance in the amounts appropriated to the revolving fund shall be reduced by the same amount.

(e) The Secretary, with the approval of the Secretary of the Treasury, may invest and reinvest such p rtions of the revolving fund as he may determine to be in excess of current needs in any interest-bearing securities of the United States or in any securities guaranteed as to principal and interest by the United States, and the income therefrom shall constitute a part of the revolving fund.

NATIONAL INVESTMENT COMPANIES AS AGENTS

SEC. 108. In granting and administering insurance under this title, the Secretary may designate and utilize as his agent any national investment company established under title II of this Act, on such basis, including the payment of fees, as may be agreed.

EXEMPTION FROM SECTION 24 OF THE FEDERAL RESERVE ACT

SEC. 109. Loans made by national banks with respect to which insurance is granted under this title shall be exempt from the provisions of section 24 of the Federal Reserve Act relating to real estate loans.

ADMINISTRATIVE PROVISIONS

SEC. 110. In the performance of, and with respect to, the functions, powers, and duties vested in him by this title, the Secretary, notwithstanding the provisions of any other law, except provisions of law applicable specifically to Government corporations, may

(a) sue and be sued in any court of record of a State having general jurisdiction, or in any United States district court, and jurisdiction is conferred upon such district court to determine such controversies without regard to the amount in controversy: Provided, That no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the Secretary or his property;

(b) under regulations prescribed by him, assign or sell at public or private sale, or otherwise dispose of for cash or credit, in his discretion and upon such terms and conditions and for such consideration as the Secretary shall determine to be reasonable, any evidence of debt, contract, claim, personal property, or security assigned to or held by him in connection with the payment of insurance heretofore or hereafter granted under this Act, and to collect or compromise all obligations assigned to or held by him and all legal or equitable rights accruing to him in connection with the payment of such insurance until such time as such obligation may be referred to the Attorney General for suit or collection;

(c) deal with, complete, renovate, improve, modernize, insure, or rent, or sell for cash or credit upon such terms and conditions and for such consideration as the Secretary shall determine to be reasonable, any real property conveyed to or otherwise acquired by him in connection with the payment ́of insurance granted under this Act;

(d) pursue to final collection, by way of compromise or otherwise, all claims against mortgagors assigned by mortgagees to the Secretary in connection with real property by way of deficiency or otherwise. Section 3709 of the Revised Statutes, as amended (41 U. S. C. 5), shall not be construed to apply to any contract of hazard insurance or to any purchase or contract for services or supplies on account of such property if the premium therefor

or the amount thereof does not exceed $1,000. The power to convey and to execute in the name of the Secretary deeds of conveyance, deeds of release, assignments and satisfactions of mortgages, and any other written instrument relating to real property or any interest therein heretofore or hereafter acquired by the Secretary pursuant to the provisions of this Act may be exercised by the Secretary or by any officer or agent appointed by him without the execution of any express delegation of power or power of attorney. Nothing in this section shall be construed to prevent the Secretary from delegating such power by order or by power of attorney, in his discretion, to any officer or agent he may appoint;

(e) prepare annually and submit a budget program as provided for wholly owned Government corporations by the Government Corporation Control Act, as amended;

(f) maintain an integral set of accounts which shall be audited annually by the General Accounting Office in accordance with the principles and procedures applicable to commercial transactions as provided by the Government Corporation Control Act, as amended: Provided, That financial transactions of the Secretary, including the settlement of insurance claims and transactions related thereto and vouchers approved by the Secretary in connection with such financial transactions, shall be final and conclusive upon all officers of the Government; and

(g) acquire, in any lawful manner, any property (real, personal, or mixed, tangible or intangible), whenever deemed necessary or appropriate to the conduct of the activities authorized in this title.

TITLE II-NATIONAL INVESTMENT COMPANIES

ORGANIZATION OF NATIONAL INVESTMENT COMPANIES

SEC. 201. (a) National investment companies may be formed for the purposeof operating under this title by any number of persons not less than five, who shall subscribe to the articles of incorporation of any such company; except that any company in whose stock one or more Federal Reserve banks invest shall be formed by a Federal Reserve bank, which alone shall subscribe to the articles of incorporation. The total number of national investment companies formed by Federal Reserve banks pursuant hereto shall not exceed the number of Federal Reserve banks and branches thereof.

(b) The articles of incorporation of any national investment company shall specify in general terms the objects for which the company is formed, the name assumed by such company, the area or areas where its operations are to be carried on, the place where its principal office is to be located, and the amount and' classes of its shares of capital stock; and the articles may contain any other provisions not inconsistent with this title that the company may see fit to adopt for the regulation of its business and the conduct of its affairs, including provision for cumulative voting in the election of directors. Such articles and any amendments thereto adopted from time to time shall be subject to the approval of the Board of Governors of the Federal Reserve System (hereinafter called the "Board").

(c) The articles of incorporation and amendments thereto shall be forwarded to the Board for consideration and approval or disapproval. In determining whether to approve the establishment of such a company and its proposed articles of incorporation, the Board shall give due regard, among other things, to the need for the financing of independent small-business enterprises in the area in which the proposed company is to commence business, the general character of the proposed management of the company, the number of such companies previously organized in the United States, and the volume of their operations. After consideration of all relevant factors, the Board may in its discretion approve the articles of incorporation and issue a permit to begin business.

(d) Upon issuance of such permit, the company shall become and be a body corporate, and as such, and in the name designated in its articles, shall have power

(1) to adopt and use a corporate seal;

(2) to have succession for a period of thirty years, unless extended as provided in this section, or unless sooner dissolved by the act of the shareholders owning two-thirds of the stock or by an Act of Congress, or unless its franchise becomes forfeited by some violation of law or regulation issued! hereunder;