mittee. It is my business as chairman to try and conduct the hearings so that the people of America will know exactly what is in the bills and the people will have a chance to determine what legislation is necessary or is not, in the wisdom of the committee, in the interest of small business in the country.

I just wanted to make that perfectly plain for the record, because some time ago I did not see how it was possible for us to finish these hearings, but now, looking into the future, as I see it, from the desire of the administration to bring up the tax bill, it means we are going to be here for quite a long time.

I would like to see the committee complete the hearings, at least, this year, and determine what to do with the bill, whether or not they want to report it. That is a matter for the committee to decide; whether they want to report parts of the bills or all of the bills.

But it does seem that we are going to be here for quite a while, since the Finance Committee will be holding hearings on the tax bill. The Appropriations Committee will be holding hearings, and some of us are members of that committee. They will probably be completed next week, so I think this committee will have the time to complete this work by the end of July.

Senator Robertson?

Senator ROBERTSON. Mr. Chairman, I can fully understand your desire and the desire of this committee to give all interested parties an opportunity to be heard upon these six bills designed to aid small business. I agree with you that we may be here until the middle of August and, if we did not have anything to do but attend hearings of the Banking and Currency Committee during that time, it would be one thing. But if we are going to be tied up with the appropriations bill, first in committee and then on the floor, for the next month, I do not see how members of the Appropriations Committee are going to follow that appropriation bill and be on the floor to vote as amendments are offered to each supply bill that is in the omnibus bill, and give this proposed legislation the time and attention which it fairly deserves.

I, therefore, agree with the first position taken by the chairman, that it would be a physical impossibility for us to conclude action on the bill at this session, and my opinion on that has not changed.

Everybody knows that the House is up with its program. Everybody knows that every Member of the House is up for reelection. I am not so optimistic as to believe that we can hold the House in session one day after we have finished the conference reports on the appropriations bill and on the tax bill.

I do not believe that the policy committee of the Senate will vote to take up any other controversial legislation until those two major bills have been disposed of.

We also have before us a resolution to transfer the RFC to the Department of Commerce. The House will vote this week on a disapproving resolution and my advice is that there will not be 219 Members of the House to vote against that resolution.

The Senate Committee on Executive Expenditures has reported out a disapproving resolution without recommendation, and there is considerable doubt in my mind that the Senate will muster 49 votes in favor of that disapproving resolution.

Then, if I am correct in those two assumptions, we will have a principal lending agency in the Department which will be authorized by one of these bills to make loans to small business.

Therefore, it would seem to me to be the better part of wisdom to see what happens on that reorganization bill and then see what the distinguished Secretary of Commerce can do in the way of making sound loans to small business through his supervision of the RFC, which has all the powers to make loans to small business covered by any of these bills, except a provision in one bill to relax the security which must be required, which clearly is of doubtful soundness.

The CHAIRMAN. Might I say this, Senator, so far as the RFC is concerned, I am not suggesting, nor have I suggested, what this committee will do about any of these bills. The only thought I had was that, in view of the fact that the appropriations bill will be completed next week, I believe, and we are going to be here a long time, as I see it, I thought we could have hearings to enlighten this committee on what sort of legislation they wanted to report out, or if they didn't want to report it, not to report any at all.

There has been no assurance made to me that we would report any bill that has been brought up.

As far as the RFC is concerned, I attended a subcommittee meeting yesterday afternoon before we had the Treasury-Post Office meeting, and Senator Fulbright stated then, as I remember, that it would take only 3 days more for him to complete the hearings on the reorganization of the RFC. That means that the subcommittee intends to submit to this committee certain legislation regarding the RFC, if and when the reorganization plan is passed. I do not know how many Senators are going to vote for the reorganization plan or how many are going to vote against it. But Senator Fulbright is going to make a report to this committee on the RFC, which will probably contain certain thoughts on legislation. The report has not been written yet. We met yesterday afternoon, and he said it would take three more days. He is working on that.

Insofar as the Lustron investigation is concerned, of course that is going to take a long time in that subcommittee.

What I thought we could do in this committee, the full committee, bacause most members of the full committee are on the Small Business Committee, is that we could at least have the hearings here so that those who wanted to be heard on both sides could be heard and have ample time, sometime between now and the 15th of August, to do that. Of course, if the Congress recesses sometime before that, as I sincerely hope they will, that will put an end to it. I just wanted to keep faith with those who have bills here.

Senator ROBERTSON. I understand that, and I want to keep faith, too, but I think we ought to give priority to the most important and most essential things.

The next observation I would like to make, Mr. Chairman, is this: In the May issue of the National City Bank bulletin, they said that what small business needed more than capital was experienced and able management, and that the best aid Congress could give to small business would be tax reduction.

Later that month, the Guaranty Trust Co. came out with their bulletin and said they had made a survey of New York State, of the small businesses that had failed. As I recall, they ascertained that

over 90 percent of those failures were due to poor management and not to lack of capital.

The CHAIRMAN. I am going to agree with you that is the kind of testimony I would like to get here for this reason: I read an article the other day saying that business was so good that small business needed no legislation. Whether that is a fact, or not, I do not know. What I want to find out here is, What are the facts?

I want to say this in fairness, in justice, and in appreciation of what these larger banks have done: Transamerica, when we had them here on bank holdings, you remember that I questioned them on small business and the small-business loans they had made in California. I was amazed to see how far they had gone into the small-business loans, according to the statements they had.

I understand that Chase National Bank and National City and several of them have set up branches to look after small business. I think it has been done because there has been so much talk about small business and so many bills introduced, there have been so many hearings held by the Joint Economic Committee and so many hearings held by the Small Business Committee, there have been so many hearings held around here that it has been brought to the front of the thought of these larger banks. I do not know, but I want to find out. Senator ROBERTSON. I understand it is the desire of all the Members of Congress to do something for small business. But if it be true that the best aid we can give to small business is to give them tax relief, it is in the House tax bill. If it stays in there and is enacted into law, corporations with a net income of $5,000 get a definite cut. Corporations that are subject to that notch, which was never a scientific thing, which goes up to 50 percent when the over-all rate is only 38 percent, between $25,000 and $50,000, will get relief. They get relief up to $167,000, and any corporation with a net income of more than that is no longer small.

The CHAIRMAN. Let me ask you this: In that bill they are going to raise the taxes, too, on the bigger corporations. That, in turn, will help small business, if that passes, will it not?

Senator ROBERTSON. It is calculated to slow the big ones down some, 15,000 of them.

Now, we have about 500,000 corporations and there have never been more than half of them that had any net taxable income. Fifteen thousand of them have a net taxable income of above $167,000. They have been paying 38 percent and the House bill provides that they should go up to 41 percent, and they get hooked for about $425,000,000 to offset that amount of excise cuts.

But if we really want to help small business at this session, the best help I think we could give, if we can arrange so that we do not substantially add to a distressing deficit, would be to do it in this pending tax bill, and I assume that we can work it out.

Now, my third observation is this: The chairman and I and Senator Sparkman have taken the position that the Congress should not attempt to act on FEPC because we have not had any hearings on it. I worked for a couple of months on the bank holding bill early in the spring, in which I was very much interested. We had a lot of testimony and a lot of conflicting views. I tried to reconcile them and finally came up with a new bill of my own. When I presented that before the subcommittee, the point was raised: We should not report

that bill out because we have had no hearings on it, and I had to concede the justice of that position.

We arranged to have hearings and then decided that we were so busy with a multitude of other matters that that would just have to wait until next session; that we could not dispose of it at this session. The CHAIRMAN. The fact is that the committee itself could not agree among themselves.

Senator ROBERTSON. Well, we did not agree, and we are not going to agree on these six bills before us now.

The CHAIRMAN. I am not suggesting what the committee will do, Senator. All I wanted to do was have the hearings.

Senator ROBERTSON. So this is a pattern. No matter what hearings we have, no matter how many days we keep that distinguished gentleman behind the recording machine with the gas mask over his face at $25 or $30 a day, we have it all to do over again next year, bring all of these industrial witnesses in here, print this record at $25 or $30 a page. We have all of that to do over again next year.

I did not object when I understood we would have 2 days of hearings and let a preliminary statement be made to kind of summarize the problem for us, but I frankly did not anticipate that we were going to sit down here for another month and bring industrial witnesses from all over the Nation here to make a 1,000 or 1,500-page record which we will discard next year and go over it all again. And probably, whether we wanted to or not, we would have to do it, because by next year conditions would be so materially changed that what now looks like a good program would maybe be an improper one or an inadequae program 6 months from now.

That is the reason, Mr. Chairman, with all due deference, that I could not enthusiastically endorse any proposal that we stay on this thing until we hear everybody who wants to be heard.

The CHAIRMAN. Senator Sparkman, do you have thoughts on the matter?

Senator SPARKMAN. Mr. Chairman, I certainly think we ought to proceed with the hearings, myself. We all recognize there are problems confronting small-business men. That does not mean we are endorsing any one of these particular bills or the omnibus bill, which is S. 3625, as I understand. But I certainly think we ought to go into the matter thoroughly and then we can make up our minds whether we want to put out legislation.

That is all I have to say.

The CHAIRMAN. I was not suggesting any legislation. I was only talking about the hearings.

The first witness is the Secretary of Commerce.

Mr. Secretary, we are very pleased to have you here. I presume have a written statement?

you

Mr. SAWYER. Yes, Mr. Chairman.

The CHAIRMAN. If you will proceed in your own way, we will appreciate it. Is this directed at any particular bill, or at all the bills? Mr. SAWYER. It is directed in particular at S. 3625.

The CHAIRMAN. Will you proceed in your own way?

Mr. SAWYER. I would prefer, Mr. Chairman, to read this statement and then be questioned after, if you care to do so.

The CHAIRMAN. That is perfectly all right.

STATEMENT OF CHARLES SAWYER, THE SECRETARY OF

COMMERCE

Mr. SAWYER. As head of the executive department most directly concerned with the problems of the business community, I am appearing before this committee in support of statutory provisions designed to assist small business and thereby to strengthen our national economy. Among the several measures under consideration, I am particularly interested in the proposed Small Business Act of 1950, which has been sponsored by four Senators and, in the House, has been introduced by several Representatives in addition to the chairman of the Committees on Banking and Currency and Small Business.

This measure incorporates many of the features of other smallbusiness bills now before the Congress, among them bills previously introduced by the chairman of this committee, Senator Maybank, and by Senators Lucas and O'Mahoney. It is, furthermore, wholly consistent with the program of the President, and with the objectives of small-business legislative proposals set forth in his recent message on this subject.

Small business comprises nearly 90 percent of American business establishments, employs nearly half of our nonagricultural workers, and handles over one-third of the total volume of business. Even more important, small business is the seedbed from which the industry and commerce of the United States have grown and must continue to grow. It is a principal avenue through which new ideas and fresh infusions of competition reach the vitals of the American enterprise system. For the very reason that it represents a multitude of individual sources of initiative, it contributes both vitality and flexibility to the economy and thus constitutes a basic element of our national strength in a world where the institutions of freedom are challenged by monolithic states. We are concerned here, therefore, not only with a large segment of our national economy and the cornerstone of its vitality but with a fundamental aspect of our national life. We have come increasingly to appreciate how fundamental is the relationship between our national institutions and our national strength. It is the vitality of our economy that has made the United States the industrial leader of the world and it is only as we safeguard that vitality and maintain the vigor and growth of our economy that we can look forward with confidence to maintaining our leadership and all it means today for the free peoples of the world.

There is a public interest in the health of small and independent business and the conditions under which it is conducted. Concern for competition and for safeguarding the conditions that must prevail if small and independent businesses are to continue to be launched and continue to grow into larger businesses was crystallized in the Sherman Act of 1890. That act has been followed by related statutes which today make up our trade regulatory law. Sixty years later, however we are still seeking how best to reconcile the tendencies of our economy toward concentration with the requirements of the general welfare. We are still seeking to avoid the dangers of undue concentration of economic and financial power without losing the manifest public benefits which American industry has demonstrated can be won through large-scale production and distribution.