permit them to hire competent staffs and to reduce the risks by investing in a wide range of separate enterprises. Thus the new companies not only would provide a sound outlet for these savings, but also would supply a badly needed source of capital for small business.

Each investment company would work in close cooperation with banks in the region which it serves. It could participate jointly with local banks in financing businesses with good earnings prospects, in cases where legal loan limits or lending policies prevent the banks from providing all the funds required, or where the business needs more equity capital which banks cannot legally provide. In view of these prospective benefits for the banks, their customers and their communities, I am sure that most progressive bankers will want to take an active part in establishing the investment companies.

This program will represent a pioneer undertaking in this country. In its early years, therefore, our approach will necessarily be experimental. To help launch the program, the Federal Government should provide positive incentives and aids to the new investment companies. Thus, tax provisions should recognize their special character, particularly by permitting them to build up adequate reserves. Also, in order to assure sufficient funds in their early years, the Federal Reserve banks and their member banks should be authorized to invest in the stock of the companies.

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EXCERPTS FROM PRESIDENT TRUMAN'S SPEECH AT CHEYENNE, WYO., ON

MAY 9, 1950

(Congressional Record, May 23, 1950, pp. 7565 and 7566)

IMPORTANCE OF SMALL BUSINESS-TO PROVIDE COMPETITION

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Small and independent businesses are important to the growth of the economy. They are a constant source of new ideas. They are a constant source of new jobs.

New businesses are also important to the health of the economy. In their effort to grow by serving consumers better, they provide the vigorous competition which is the heart of our private-enterprise system.

Everyone of you knows somebody who has had a new idea and has built it into a business. He has not only made money, but his business has also provided jobs and income for the whole community in which he lives.

Our country has been made great by the boldness, the daring, and the inventive genius of men like that. Our Nation would suffer a slow decay if men with ideas did not have every opportunity to build new businesses and create new wealth.

The task of economic expansion requires using all the resources of this great Nation. Of the nearly 4 million business concerns in our country, more than 90 percent are usually classified as small. These small concerns provide jobs for over 20 million people-roughly, half of private, nonfarm employment. If we are to have an expanding economy, small business must provide its share of the additional jobs needed. In doing so, it will not only create new payrolls for workers; it will also enlarge markets, generally, for other businessmen and farmers.

We need big business in this country, as well as small business, of course. We all benefit from the tremendous output at low cost of large, efficient enterprises. But the stimulus of new and vigorous competitors is necessary to keep old enterprises efficient, and to bring the greatest benefit to consumers and the public.

Since the passage of the Sherman Antitrust Act, 60 years ago, we have sought to keep monopoly from stifling the growth of new business. The effectiveness of the antitrust laws has varied over the years with changes in our national administration. Right now, the antitrust laws are being enforced as actively as at any time in history. But, at their very best, they are only a limited and negative approach.

We will keep on using the antitrust laws, and will enforce them vigorously.

AFFIRMATIVE AIDS TO SMALL BUSINESS

But we must supplement that approach-and we must act soon-with measures which will challenge the power of monopoly, not in the courts but in the market place. The force of vigorous, effective competition is the best way to prevent monopoly. If the man with new ideas has a fair chance to put his product on the market, the buyer will do the rest. We must, therefore, take measures to assist the man with new ideas, the small enterpriser, as he starts out to challenge large, powerful, and established competitors.

The recommendations I have made to the Congress rest upon three simple principles. These are that the small-business man needs long-term credit; he needs venture capital; and he needs technical assistance.

These things are needed so that the independent businessman can do more for himself. They do not involve Government controls. They will cost the Federal Government very little.

What they will do is to give the man who wants to be his own boss a better chance to use his own initiative and energy.

PRESIDENT'S REMARKS ON LOAN INSURANCE

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In the field of credit, I propose that we should insure bank loans to small businesses, such as drugstores, filling stations, and retail stores. The local banks would decide whether or not to make the loan in each case and would share some of the risk. But, on the major part of the loan, the bank would be insured against loss. This means that banks will be able to make, safely, good loans which they now find too risky.

Thus, bankers would be able to give greater consideration to the human element in deciding whether or not to help a hometown businessman pull through a tight period. They wouldn't have to be quite so hardboiled in demanding giltedged collateral.

You know, a lot of people say, when they find out what kind of collateral they have to put up for a loan at the bank, that if they had that kind of collateral they wouldn't have needed a loan in the first place.

Now, I don't think bankers act like that just because they are mean. It's because they have to be careful. This insurance would make it possible for them to do what they would like to have been doing all the time.

This proposal is similar to the insurance that has been provided for years under title I of the National Housing Act for home-improvement loans. In that case, it has helped the banks, helped the homeowners, and the Government has made money from it. I think it will work just as well for small-business loans.

Furthermore, I propose that special investment companies be set up to make venture capital and long-term loans available to help small businesses expand when they have proved their ability. This would provide a way to pool the savings of people who cannot, individually, make such investments, but who can, through investment companies, put them to work in growing business. * * In addition, I propose that the Reconstruction Finance Corporation be given broader authority to handle cases which offer a good chance of success but cannot obtain private financing on reasonable terms.

These credit proposals are designed to make banks and other private sources of funds more effective in meeting the needs of small and growing businesses. They have been proposed by bankers and other private citizens who understand the problems of the small-business man. I hope the Congress will soon enact them.

PRESIDENT'S STATEMENT ON TECHNICAL ASSISTANCE

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In the field of technical assistance, small-business men are often a serious disadvantage. They cannot afford specialists on ther payrolls to keep up with

the latest developments in accounting and management. They find it difficult to learn about the latest research developments that affect their business. Under these circumstances, I propose that the Department of Commerce should expand the work it now does in providing technical and research assistance to small business. Thus, we would provide independent businessmen with the same kind of research assistance and skilled advice which we have provided successfully to farmers for many years.

At the same time, I propose that we should make the Department of Commerce the central Government agency for small business, as well as other business, just as the Department of Agriculture is the central agency for farm activities. This would mean that the independent businessman could go to one place and obtain the advice and services he needs.

These proposals to help small business to obtain credit, risk capital, and technical assistance should do much to increase effective competition. They should result in more independent enterprises, striving more effectively to provide goods and services the people need. As such, I believe these proposals will contribute to the strength and stable growth of the country.

I suppose it is inevitable that this small-business program will meet with determined opposition. Those who fear the rise of new competitors will not be slow in imagining danger to their privileged positions. They will hide their selfish alarm by attacking what they like to call Government interference with the economic system.

But the Government is only an instrument in the hands of the people, an instrument we use to help maintain a free, competitive, and expanding economy. That is the kind of economy all of us want.

More abundance for everyone, without the dismal cycle of boom-and-bust, is something that this Nation can have, and something we must have. To bring it about demands dynamic private enterprise, and it demands dynamic Government.

All of us, working together, can build a strong and prosperous America. And keeping our own Nation prosperous and strong is the best assurance that our struggle for prosperity, peace, and freedom in the world will end in victory.

EXCERPTS FROM PRESIDENT TRUMAN'S SPEECH AT CUMBERLAND, MD., ON MAY 16, 1950

(Congressional Record, May 23, 1950, p. 7567)

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I have asked the Congress to provide assistance to small business. All over the country, business firms are growing rapidly. The greatest growth, however, is in big business. Small companies find it hard to raise the money they need to expand, and the individual businessman who wants to set up a new company has a tough time borrowing the capital to get started.

Under the plans I recommended to the Congress, it would be much easier for small businesses to obtain funds to get started or to enlarge. I understand that your local officials here in Cumberland are working very hard to get the new industries into this area. I hope the Congress will soon enact a bill to help the growth of more new businesses, because that would help cities like Cumberland.

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I want every American to have the opportunity to work at a good job, and earn enough to support his family on his own time. I am working for that goal all the time.

I think we can build permanent prosperity here in the United States if we all work together, but it will take the hardest kind of work, and complete cooperation by the Federal Government, and by the State and city governments and businessmen throughout the country.

Mr. PATMAN. I would like to comment on the May 1950, message. It says

to increase the availability of venture capital to small independent enterprisesand winds up by saying:

In order to insure sufficient funds in their early years, the Federal Reserve banks and their member banks should be authorized to invest in stock of the companies.

Now, Mr. Truman, are you familiar with a bill, H. R. 1045, that several of us introduced to aid small business now, by using the surplus funds of the Federal Reserve banks which would not increase the national debt and would not cause any extra interest to be paid?

In other words, funds that are now idle and unused and we expect to use part of that money to help small business. Are you famíliar with that?

Mr. TRUMAN. I am sorry, Congressman Patman, I haven't read the bill. I have heard about it.

Mr. PATMAN. You know generally what it provides?

Mr. TRUMAN. I know generally what it provides but I don't know enough about it to discuss it.

Mr. PATMAN. But you are for something along that line that will give long-term loans and make it possible for venture capital to be made available to small and independent business concerns? Mr. TRUMAN. That is what I said in this statement.

Mr. PATMAN. Now I will read one paragraph from your Cheyenne, Wyo., speech which I think is very good. Of course, all the statements that you made concerning small independent business are good, but this one in particular. I am quoting:

The task of economic expansion requires usually all the resources of this great Nation. Of the nearly 4 million business concerns in our country, more than 90 percent are usually classified as small. These small concerns provide jobs for 20 million people, roughly half of private and nonfarm employment. If we are to have an expanding economy, small business must provide its share of the additional jobs needed. In doing so, it will not only create new payrolls for work, but will also enlarge markets generally for other business and farmers.

I will put all of it in the record. Now, Mr. Truman, do you view with alarm and concern the tendency toward concentration of industry now, like in passenger cars, for instance, we have had over 1,500 manufacturers of passenger automobiles in the United States and now we have only 5. Do you look upon that as one of the problems that we have to deal with, the concentration in industry toward monopoly?

Mr. TRUMAN. I think it is a very serious problem. We run into it all the time. It has always been my theory the more businesses, the better it is for the country and the better it is for the employment of the country.

The CHAIRMAN. Mr. McDonough.

Mr. MCDONOUGH. Mr. Truman, you recommend the passage of the bill that failed to pass in the last Congress, the area redevelopment bill?

Mr. TRUMAN. Yes, that is right.

Mr. MCDONOUGH. By that do you mean we should move certain labor forces from one part of the country to another or we should

develop industry in a certain part of the country where labor doesn't exist to any large extent-what I am thinking about is in the concentrated areas where we could have a major-size depression, in southern California, for instance, if any of the industry in that area were moved out of that area to some other area, to supplement the depressed condition in the other area, you would create a situation in southern California.

Mr. TRUMAN. I think that in the report of the committee on that bill there is an answer to every question you asked me. I thought it was an excellent report and I think the bill will be all right. I don't think it would do what you say it would.

Mr. MCDONOUGH. Where industry is now located in the United States, it is located there for various reasons because the natural resources are there, the power is there, the people are there, the transportation facilities are there, and if we start moving industry around in order to supplement depressed conditions

Mr. TRUMAN. I don't think that is the intention of the bill, at all. Mr. MCDONOUGH. If it were, would you recommend it?

Mr. TRUMAN. No.

Mr. MCDONOUGH. Is the statement that I read in the press in the last week attributable to you-did you state we cannot buy ourselves out of a depression, we must fight our way out of it? Mr. TRUMAN. Yes, that is exactly what I think. throw in a little change to make it run a little easier. weapons before we can go to fight.

But we have to We have to have

Mr. MCDONOUGH. Don't you think we would be helping it out a great deal if we stimulated the public-works program under the Community Facilities Act in addition to the public-works program we have already passed in Congress?

Mr. TRUMAN. It would be a help, of course it would. That is the reason I am for it.

Mr. MCDONOUGH. It would be a help but very expensive?

Mr. TRUMAN. Anything that is absolutely necessary to save the country is never too expensive.

Mr. MCDONOUGH. I can't disagree with you on that, if the country is in that condition.

Do you favor the free enterprise system in this country?

Mr. TRUMAN. Why of course. So does everybody else.

Mr. MCDONOUGH. Everybody, I can't agree with that, when I see certain things that are occurring around here.

Do you think we can improve our condition at all by supplementing the unemployment compensation in the States, the legislation now pending before the Congress?

Mr. TRUMAN. Yes; I said so in this statement.

Mr. MCDONOUGH. In other words, you believe we can buy ourselves out of the depression if we use the right tools to do it?

Mr. TRUMAN. No; I didn't intend for that implication to be put on it, at all.

You know what the trouble is with some fellows who don't like my theories of Government. They always try to make me believe something that I don't, and you can't do that.

Mr. MCDONOUGH. You don't attempt to influence other people to believe the way you do, do you?