far more material available for the little fellow. At least, that is the theory. There is no reason to think it is not sound, because it worked out in World War II, and there will be far more material available for the little fellow than there is today. In other words, he will not be worse off; he will be much better off than he is today.

Senator SCHOEPPEL. Well, let us hope.
Secretary SAWYER. Well, I hope so.

Senator SCHOEPPEL. Here we have been granting a lot of certificates of necessity under this amortization, and it is going to a great many pretty big concerns. Do you think or feel-and again I am not criticizing, but I am wondering that permitting this type of expansion to go in will channel more of the civilian side of this economy into these larger business hands, thereby choking more of these thousands and thousands of small businesses? That is rather speculative, but a lot of folks have fears along that line and are expressing them to some of us.

Secretary SAWYER. To answer your question, I do not think so, but I will say this, Senator: Strangely enough, most of the criticism. we have had in connection with the certificates of necessity has come from small loans we have made, and not the big ones. That sounds astounding, but that is true. In one or two cases I personally ap proved loans to small businesses for just that reason, because I wanted to be sure the certificates were not going all to the big ones, and we have been criticized in some quarters for having done that on the theory they did not have the resources, they did not have the experience, to justify the granting of a certificate of necessity. The truth of the matter is, of course, that a certificate of necessity does not give a businessman a dime. He still has to get his materials. He has to not only get his raw materials; he has to get his materials to build his plant, and I think the actual construction of plant capacity based on these certificates of necessity will be far less than people think. I also think that its benefits are somewhat overrated, because in the long run, and unless tax rates are greatly reduced as the years goand I do not believe they will be the concern will pay just as much taxes to Uncle Sam as it would if it did not have anything except the normal depreciation.

Senator SCHOEPPEL. Mr. Sawyer, one other phase of this thing that I am hopeful, as the chairman said awhile ago, might be worked out through legislation, and how or where it can be fitted into this thing I do not know, but certainly we do find that on the procurement side on certain phases of the military there is no disposition, I believe, to fool with an ordinary small-business concern. I have had some of them say to me in utter candor-and I must be appreciative, because at least they are honest and truthful about it-"we do not want to fool with small businesses. Let us give it to the big fellows, because we do not have to worry about it at all."

Secretary SAWYER. Exactly.

Senator SCHOEPPEL. And that is the thing that is causing a lot of this disruption. If there were some way that this could be screened without tying up the process of getting this stuff to the military. A lot of it apparently is on the military lag side; it is not on the must side some of it. That is one of our big problems, and it is causing, a lot of dislocation, because there is no disposition on the part of some of these military agencies to fool with them at all. I do not know how you are going to remedy that.

Secretary SAWYER. I think one suggestion which might be madeand I will follow up my commitment to the chairman-would be to have representatives of, we will say, NPA or Commerce, much more closely aware of what the military is doing than they are today, not ordering the military to do anything, but knowing what is going on. I have had several suggestions made to me that the solution of this problem was to have small-business operations set up within the Department of Defense. Personally, I do not think so, because of the very matter you just mentioned. The incentive of the Department of the Defense is to get the job done. Their primary interest is not in protecting the small-business man; their primary interest is to get the matériel which is necessary to wage a war-the one we have or a bigger one that might come. It seems to me that whatever is set up with reference to representing the small-business man should not be within the Military Establishment itself. In other words, I do not say it does no good, and I do not impugn the motives in the slightest of the military, and I do not claim that they are not honestly interested in trying to do somehing for the little-business man, but I think we are more likely to get results.

As the chairman said awhile ago, everybody talks about the smallbusiness man but very little is done for him.

The CHAIRMAN. Sometime ago I introduced a bill to set up a Coordinator, and have never gotten very far with it. Suppose in this bill we set up a Coordinator under Mr. Wilson-by law, I mean-and make the military also subject to him as they are to Mr. Wilson.

Secretary SAWYER. I would like to give that a lot of thought. The CHAIRMAN. We talk about these things, and I take my hat off to you for what you have done, and I know what your Department did when we first met nearly a year ago. You opened up your offices when we had the military down there; and I admit, Senator Schoeppel, that we have not accomplished what all of us wanted to-not that the military is against it. You say the military fellow is interested in one thing to get the job done as quickly as possible.

Secretary SAWYER. I think specifically, as I said to Senator Schoeppel, it may be; and I will present to you a specific suggestion that, if we could have men in the military representing the small-business group in Commerce, who had no job, as far as promoting the war effort, but who could watch the contracts that were let and the method of their letting, especially in connection with the negotiated contracts, I think we might produce a very substantial result for the little fellow. Now, at the moment, that is my thinking on it, but I will give you a specific statement on that, if you would like to have it.

The CHAIRMAN. Yes; I hope you will, not only a specific statement but a recommended amendment to this law, if you feel that you could go that far.

Secretary SAWYER. I think so.

(The following was later received for the record :)

Hon. BURNET R. MAYBANK,

Chairman, Committee on Banking and Currency,

United States Senate, Washington 25, D. C.

MAY 16, 1951.

DEAR MR. CHAIRMAN: Pursuant to your request, made when I appeared before the Committee on Banking and Currency of the Senate on May 7, 1951, I am herewith submitting a draft of proposed amendatory legislation to cope with

the problems confronting independent small business in the current period of partial mobilization.

The suggested draft would:

1. Establish a single governmental point of coordination to deal with the problems of small business;

2. Provide small business with a responsible spokesman at the highest level of decision making on the defense mobilization program;

3. Make available to the governmental organization concerned with small business procurement problems authority to participate in the development of procurement policies and procedures, review proposed procurement actions, facilitate the acceptance of defense contracts by small business, and promote subcontracting;

4. Provide a mechanism for systematic and careful preview by the small business organization of the impact of materials conservation and limitation orders upon small business enterprises and to propose feasible relief therefrom;

5. Provide the Congress with periodic reports to enable it to assess readily the specific accomplishments, or shortcomings, of the small business program.

If such a program is adopted by the Congress and authority for its administration is delegated to me by the President, I am prepared to effect the program by focusing responsibility in a strong and effective organization in the Department of Commerce which would report directly to me. As I indicated before your committee, additional funds would have to be made available to enable me to fulfill the enlarged responsibilities.

If these suggestions which I am submitting at your request are adopted by the Congress, it is my belief that independent small business will receive more consideration in policy decisions concerning defense mobilization, obtain a more equitable share of defense contracts, and receive more adequate consideration in the preparation of materials controls orders, and in the administration of priorities assistance.

If I may be of any further assistance, please do not hesitate to call upon me. Sincerely yours,

CHARLES SAWYER.

PROPOSED AMENDMENT TO DEFENSE PRODUCTION ACT

SEC. -. It is the sense of the Congress that the objectives of this Act will be furthered by

(a) The fullest possible use of independent small business enterprises in defense procurement; and

(b) Careful consideration of the effect upon independent small business enterprises of materials conservation and limitation orders.

SEC. -.

In carrying out this policy the President shall

(a) Coordinate and determine the means by which the productive capacity of independent small business concerns can be most effectively used for national defense and essential civilian production;

(b) Require all governmental agencies to provide upon his request detailed information with respect to the placing of defense procurement contracts; and (c) Require all governmental agencies to consult with him in the issuance of orders limiting production by business enterprises in order that independent small business concerns will be most effectively used in the production of articles, equipment, supplies, and materials for national defense and essential civilian purpose.

SEC. The President shall, whenever he determines such action necessary(a) Consult with appropriate governmental agencies concerning the development of procurement policies and procedures;

(b) Review proposed procurement actions to ascertain their suitability for placement with independent small business enterprises;

(c) Obtain detailed information as to the methods and terms which holders of prime procurement contracts use in letting subcontracts, and obtain detailed information as to the extent to which such prime contractors entered into subcontracts, and take action to promote the letting of subcontracts by prime contractors to small-business concerns;

(d) Certify to governmental financial agencies and guaranteeing agencies the amount of funds required to convert to defense production any plant of an independent small-business concern interested in obtaining the funds necessary to provide for such conversion;

(e) Certify to Government procurement officers with respect to the adequacy of production facilities and credit, of any independent small-business concern to perform an individual Government procurement contract or to participate in specific classes of Government produrement;

(f) Make and maintain a complete inventory of all productive facilities of independent small business concerns which can be used for defense and essential civilian production, and in connection therewith to arrange for the use of the facilities of any appropriate group or agency, governmental or nongovernmental; (g) Obtain from any Federal department, establishment, or agency engaged in defense procurement or in the financing of defense procurement or production such reports concerning the letting and methods of letting contracts and subcontracts and making of loans to business concerns as he may deem pertinent in carrying out his functions under this Act;

(h) Obtain from suppliers of materials detailed information pertaining to the method of filling orders and the bases for allocating their supply for the purpose of assisting independent small businesses to obtain materials for defense or essential civilian production from its normal sources;

(i) Make recommendations to the appropriate Federal agencies to insure a fair and equitable share of materials, supplies, and equipment to independent small business concerns for the benefit of the defense program or for essential civilian purposes; and

(j) Determine within any industry the independent concerns, firms, persons, corporations, partnerships, cooperatives, or other business enterprises, which are to be designated "small business concerns" for the purpose of effectuating the provisions of this Act.

SEC.. In any case in which an independent small business concern has been certified by or under the authority of the President with respect to the adequacy of productive facilities and credit to perform a specific Government procurement contract, the officers of the Government having procurement powers are directed to accept such certification as conclusive, and are authorized to let such Government procurement contract to such concern without requiring it to meet any condition with respect to productive facilities and credit other than such conditions as may be included in such certificate.

SEC. Special consideration in proceedings under the Renegotiation Act of 1951 shall be given to the holders of Government prime contracts, and holders of subcontracts thereunder, who subcontract to independent small business

concerns.
SEC. The President shall make a report every six months with respect to
operations under this Act to the President of the Senate, and the Speaker of the
House of Representatives. Such report shall include such information and such
comments and recommendations, with respect to the relation of independent
small business concerns to the defense effort, as the President may deem
appropriate.

-.

SEC. The President may delegate the power and authority conferred upon him by this amendment to a single officer or agency. Such single officer or agency may be authorized by the President to redelegate the power and authority to a single officer and agency.

Senator SCHOEPPEL. Thank you, Mr. Sawyer. I certainly appreciate your views.

The CHAIRMAN. Senator Bennett.

Senator BENNETT. Thank you, Mr. Chairman.

Secretary SAWYER. Of course, Mr. Chairman, I might add that anything of that sort would take some money. I mean, you cannot do that without more men, and you would have to pay them salaries and so forth; but we can do it.

The CHAIRMAN. Mr. Secretary, we are going to lose a lot of tax money from these small businesses if you put them out of business. There are some good people there. There are some people in New England that have come in to see me about having to lay off people and who have to shut down their plants because they cannot get the steel.

Senator SCHOEPPEL. That happens all over the Midwest.
The CHAIRMAN. The South, too.

www

Senator BENNETT. Mr. Sawyer, I am interested to know whether there is in operation in the Department of Commerce a study or a program looking forward to the day when this CMP must come off. You are concerned with getting it on, and I think business is very much concerned to know under what circumstances it will come off. Suppose we could sit down here and say that on January 1, 1953, we would have an adequate steel supply to take care of the military and, say, maintain civilian business at the current 1951 level. Would you be interested then in removing the controls on steel? I do not want to put words in your mouth, but is there any study going on against that time?

Secretary SAWYER. First, may I say, Senator, that I am very skeptical about studies.

Senator BENNETT. Maybe that is the wrong word, then.

Secretary SAWYER. I have spent 3 years here in Washington as Secretary of Commerce, and have seen literally dozens of studies which have cost the American taxpayer millions of dollars, employed large staffs who have spent a great deal of time and consulted many economists, lawyers, and others, the net result of which is the study was put on the shelf and was never looked at at all; or, if it was it was not looked at at the right time.

My feeling about the problem that you suggest, as far as I am concerned, is that I do not want my Department cluttered up with people who are making studies. I want them to get the work done. I want them to put controls on as they are needed; I want them to take them off as rapidly as they can, and I do not mean by that, of course, that the thing should not have thought and planning. It is getting it now; and, as far as the time when we will not need controls, I myself am not wise enough to know, and I doubt very much whether anybody else is. I think it would be a waste of the taxpayers' money and of your and my time for us to undertake to make a study as of today as to the time when we can begin to take off steel controls.

After World War II, or as it closed, you know there was a great deal of concern about reconversion and how rapidly business would be able to come back and absorb labor and go from war to peace, and all that. In my opinion, if the public officials who exercise the control adopt the policy which I shall adopt-and I have no reason to think that they will not-that is, to decontrol as rapidly as possible, I think the American businessman will be able to take care of himself when that happens, even if he does not have a 2-year notice on it.

Furthermore, if he has a 2-year notice that you are going to decontrol, there is not any force in the world that can make you go through with that program if subsequent events prove that it is unwise.

Senator BENNETT. My use of the word "time" was probably illadvised. But I am concerned with the fact that when we pass laws and set up controls they have a way, apparently, of staying and staying on. At least, that has been my impression of it, and it takes almost an earthquake, or something of that kind, to shake them loose. I have been in business until I came to the Senate, and we faced in our little business, which was a paint-manufacturing business, during World War II some shortages of raw materials because some of the materials we made paint out of were needed in the airplane industry