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MITIONAL AID FOR HURRICANE DISASTER VICTIMS`

HEARING

BEFORE THE

COMMITTEE ON BANKING AND CURRENCY

HOUSE OF REPRESENTATIVES

EIGHTY-NINTH CONGRESS

FIRST SESSION

KSU LIBRARIES 

ON

H.R. 11306

A BILL TO AMEND THE SMALL BUSINESS ACT

OCTOBER 21, 1965

Printed for the use of the

Committee on Banking and Currency

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U.S. GOVERNMENT PRINTING OFFICE ,

55 072 WASHINGTON : 1965

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COMMITTEE ON BANKING AND CURRENCY

WRIGHT PATMAN, Texas, Chairman

ABRAHAM J. MULTER, New York

WILLIAM A. BARRETT, Pennsylvania

LEONOR K. SULLIVAN, Missouri

HENRY S. REUSS, Wisconsin

THOMAS L. ASHLEY, Ohio

WILLIAM S. MOORHEAD, Pennsylvania

ROBERT G. STEPHENS, JR., Georgia

FERNAND J. ST GERMAIN, Rhode Island

HENRY B. GONZALEZ, Texas

JOSEPH G. MINISH, New Jersey

CHARLES L. WELTNER, Georgia

RICHARD T. HANNA, California

BERNARD F. GRABOWSKI, Connecticut

COMPTON I. WHITE, JR., Idaho

TOM S. GETTYS, South Carolina

PAUL H. TODD, JR., Michigan

RICHARD L. OTTINGER, New York

EARLE CABELL, Texas

THOMAS C. McGRATH, JR., New Jersey

JOHN R. HANSEN, Iowa

FRANK ANNUNZIO, Illinois

II

WILLIAM B. WIDNALL, New Jersey

PAUL A. FINO, New York

FLORENCE P. DWYER, New Jersey

SEYMOUR HALPERN, New York

JAMES HARVEY, Michigan

W. E. (BILL) BROCK, Tennessee

BURT L. TALCOTT, California

DEL CLAWSON, California

ALBERT W. JOHNSON, Pennsylvania

J. WILLIAM STANTON, Ohio

CHESTER L. MIZE, Kansas

PAUL NELSON, Clerk and Staff Director

ALVIN LEE MORSE, Counsel

CURTIS A. PRINS, Chief Investigator

NORMAN L. HOLMES, Assistant Counsel

BENET D. GELLMAN, Investigative Counsel

ORMAN S. FINK, Minority Staff Member
ADDITIONAL AID FOR HURRICANE DISASTER

VICTIMS

THURSDAY, OCTOBER 21, 1965

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C.

The committee met, pursuant to notice, at 11 a.m., in room 2128,

Rayburn House Office Building, Hon. Wright Patman (chairman)

presiding.

Present: Representatives Patman, Mrs. Sullivan, Reuss, Ashley,

Moorhead, Stephens, St Germain, Gonzalez, Minish, Hanna, Grabowski, White, Gettys, Todd, Ottinger, Cabe11, McGrath, Hansen,

Annunzio, Widnall, Fino, Mrs. Dwyer, Halpern, Brock, Clawson,

Johnson, and Mize.

The CHAIRMAN. The committee will please come to order.

This morning I have a statement to read and after that I will yield

to Mr. Widnall to make any statement that he desires.

This morning's meeting is to consider an emergency financial

authorization bill for the Small Business Administration, H.R. 11306.

(The bill, H.R. 11306, follows:)

[H.R. 11306, 89th Cong., 1st sem.]

A BILL To amend the Small Business Act

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 4(c) of the Small Business Act is amended by striking out "$1,721,000,000" and inserting in lieu thereof "$1,841,000,000".

The CHAIRMAN. In order to expedite matters I think I will ask

that the Senate bill be taken up instead. I think it would lend itself

to expedition.

The legislation would increase the SBA revolving fund by $120 million—from $1,721 to $1,841 million. This increase would correspond with the change made earlier this year by Public Law 89-78,

which increased by $120 million the limitation on loans from the

SBA revolving fund to carry on funding activities of its Investment

Division program.

When this committee considered the legislation which ultimately

became Public Law 89-78, it did not increase the overall revolving

fund authorization of SBA because at that time there was an adequate

gap between SBA funds and the revolving fund ceiling. However,

an unprecedented demand for business loans in the past several

months and heavy disaster loan requests, including loans made to

Hurricane Betsy victims, has rapidly depleted SBA's treasury.

Unless H.R. 11306, which has already passed the Senate, is acted

upon immediately, the Small Business Administration will shortly

1
2 ADDITIONAL AID FOR HURRICANE DISASTER VICTIMS

be without funds to conduct even disaster assistance programs. It

has already been forced to discontinue its financial assistance programs,

that is, loans made to small business concerns.

Earlier, this week the House passed H.R. 11539, known as the

Southeast Hurricane Disaster Relief Act of 1965. This legislation

provides a broad range of much needed relief for the disaster victims

of Hurricane Betsy. Included in the bill are key provisions providing

for financial help by the Small Business Administration. However,

unless H.R. 11306 becomes law, the Small Business Administration

provisions of the Hurricane Disaster Relief Act will be virtually

useless since SBA will not have the funds to make loans to disaster

victims.

I do not consider H.R. 11306 the ultimate answer to SBA's financial

problem. It is merely an emergency measure.

When Congress meets in January, I plan to hold hearings before

the Small Business Subcommittee to study the overall funding picture

of the agency. In addition, at that time we want to consider a proposal by Mr. Widnall to separate disaster funds from the other lending

activities of SBA. Twice during the present session, I had scheduled

hearings on these matters but they had to be canceled, unfortunately,

at the last minute.

It is my hope that the subcommittee can come up with recommendations that will aid the Small Business Administration in obtaining

adequate funds for its overall operation and to avoid the necessity

of emergency sessions to meet a financial crisis.

Before hearing from Mr. Ross Davis, Executive Administrator of

the Small Business Administration, I would like to suggest to Mr.

Davis that his agency give immediate consideration to the formation

of a highly specialized disaster task force. Such a group—which

might well include damage appraisers, construction experts, loan

officers, loan processors, stenographic help, and other personnel—

would be available on short notice to fly to any portion of the country

to immediately begin processing disaster loan applications.

Such a task force would have aircraft available, either through the

Department of Defense or the Federal Aviation Agency, so that the

entire team could move swiftly to a disaster site together. During

times when the task force was not engaged in disaster work, it would

devise ways for improving its performance and minimizing redtape

procedures and could also be used to assist in other agency programs.

The group could also .work closely with other disaster agencies—both

on the national and local level—to solve mutual problems. The task

force could be set up administratively and would not require legislation; and in view of this, I would hope that the agency will give

immediate consideration to establishing such a group.

(The Senate bill, S. 2542, referred to follows:)

[S. 2542, 89th Cong., 1st sem.]

AN ACT To amend the Small Business Act

Be it enacted by the Senate and House of Representatives of the United States of

A.merica in Congress assembled, That section 4(c) of the Small Business Act is

amended by striking out "$1,721,000,000" and inserting in lieu thereof

"$1,841,000,000".

Passed the Senate October 1, 1965.

Attest:

FELTON M. JOHNSTON,

Secretary.
ADDITIONAL AID FOR HURRICANE DISASTER VICTIMS 3

The CHAIRMAN. Mr. Widnall, would you like to make a statement

before Mr. Davis is asked to testify.

Mr. WIDNALL. Mr. Chairman, I appreciate the opportunity to make

a statement.

At this time, I would like to call the attention of the members to the

fact that on January 14, 1965, I introduced a bill, H.R. 2860, to

amend the Small Business Act to authorize additional funds to be

available exclusively for disaster loans. This was in the amount of

$200 million additional funding for disaster purposes.

At that time I sent a letter—or subsequent to that date on January

26, 1965—I sent a letter to colleagues in the House calling their attention to the fact that the SBA had only a trickle of funds for payments

in the making of loans with which to assist victims of disaster. That

was January 26, 1965. The letter also-said this situation need never

have arisen as it is evident by the recent legislative history of the

disaster relief program. Several colleagues warned the House July 16,

1962, the SBA disaster loan program should have remained separate

and distinct from other SBA loan activities. With more than 86

billion of foreign aid appropriations available for people in foreign

lands, I found it difficult to conceive no loan funds were available to

our own victims of disaster such as those that were caused by such

terrible conditions because of the floods in the northwest United

States, and I invited attention to the bill I introduced which would

segregate the funds and give $200 million additional authorization.

I received a lot of favorable comment from Members of the House

on both sides of the aisle indicating support of the measure. No

hearings were ever called on that bill.

When the special SBA disaster authorization came up earlier this

year I raised a point at that time that, though subsequently this year

there would be a request for a supplemental by the agency, we could

consider the question immediately of whether or not the funding

should be in a separate fund. I just deplore the fact that there has

been what seems to be an unconscionable delay in doing something

about this, and this is an emergency that is caused by a failure to act

earlier, when we had every bit of notice that we were going to be in

trouble in this particular area.

Now, I read in this morning's paper:

Disaster loans dry up SBA aid to Negroes. Emergency disaster loans to

Louisiana businessmen hit by Hurricane Betsy in September have dried up

funds for the SBA's regular loan programs throughout the Nation.

And then it goes on to say that because of this, we cannot fund

things for the small businessmen. I simply cannot believe that if

we had handled this wisely and if we had assumed the responsibility

that we should as a Congress, we would have run into a situation

like this. It was very, very plain earlier in the year that we were in

trouble.

What I would like to do, is to offer as a substitute for this enabling

legislation by striking out the enacting clause and substituting a

proposal to give $200 million authorization to the SBA in a separate

fund for disaster loan purposes. If that were passed in the House and

we went to conference with that, with the legislation that was passed

in the Senate, I think we could work out something suitable that

would do the kind of job that we should be doing now instead of

once again having piecemeal legislation.
4 ADDITIONAL AID FOR HURRICANE DISASTER vIcrIms

Mr. Chairman, in your opening statement you said that twice

during the year you were scheduling hearings for the supplemental SBA authorization. I do not recall any notices having ever

been received by members of the committee with respect to such

scheduling, and I would like to ask you at this time when this was

done.

The CHAIRMAN. I will be very glad to answer you, Mr. Widnall.

I appreciate your concern about this, and I am sorry about the delay.

But we got into a bill in the early part of August that has occupied

our time, and we have not been able to do everything we would like

to do. I think you have a real complaint. You called this to our

attention and I am in sympathy with much of what you said but I

did ask Mr. Foley to come up here on two different occasions; is

that right, Mr. Davis?

Mr. DAVIS. I believe that is correct. Mr. Chairman.

The CHAIRMAN. I beg your pardon?

Mr. DAVIS. I believe that is correct, Mr. Chairman.

The CHAIRMAN. He waited here each time. You see we were

going to have the whole committee and we never could get to it.

Mr. WIDNALL. If you would yield, you say you asked them to come

up two different times. That was at a scheduled meeting?

The CHAIRMAN. Yes; it was a scheduled meeting of the whole

committee and I was going to take up with the committee—Mr. Foley

was there on an emergency matter—and ask what they would like to

do about it. He was available every time we asked him to but we

never just did get to it. I am awfully sorry about it. And if it is

all right I would like Mr. Davis to comment on what I have said and

what Mr. Widnall has said, if you desire, and, in other words, persuade us, if you can, that this should be passed as quickly as possible.

I wonder if I may have consent to take up the Senate bill instead of

the House bill?

Without objection that will be done, so as to expedite the matter

so we will now consider the Senate bill.

Mr. Davis, you may proceed.

STATEMENT OF ROSS D. DAVIS, EXECUTIVE ADMINISTRATOR,

SMALL BUSINESS ADMINISTRATION

Mr. DAVIS. Thank you, Mr. Chairman and gentlemen of the committee. It is customary to start out by saying you are happy to

appear before the committee. At this time I can say wholeheartedly,

I am happy and grateful to be before this committee, and I sincerely

thank you.

Mr. Chairman, your suggestions for the future conduct of our

disaster program will receive the respectful and receptive consideration on the part of our agency. I would like to assure you of that;

and Mr. Widnall, I look forward to an opportunity to examine into

and to comment on your proposal as well.

Mr. Chairman, your statement of the need of this legislation was

so comprehensive and complete that if it will suit your purposes, I

would like to simply submit my statement and conclude my remarks

and with just the most brief kind of summary to the effect that it is

absolutely essential to the disaster program, particularly in Louisiana,

Mississippi, and Florida, but also in many other States of this country

that we get this authorization.
ADDMONAL AID FOR HURRICANE DISASTER VICTIMS 5

Without the authorization we will not have enough money to conduct this program for the balance of the year.

- The CHAIRMAN. Without objection it is so ordered. We will now

ask you some questions.

(The statement referred to follows:)

STATEMENT OF Ross D. DAVIS,. EXECUTIVE ADMINISTRATOR, SMALL BUSINESS

ADMINISTRATION

Mr. Chairman and gentlemen of the committee, I am here today in support of

S. 2542, a bill to increase by $120 million the amount authorized to be appropriated to SBA's revolving fund.

The bill would increase from $1,721 to $1,841 million the total amount of the

revolving fund authorization established by section 4(c) of the Small Business

Act for the purposes of the financial assistance programs conducted by the Small

Business Administration pursuant to that act and pursuant to the Small Business

Investment Act of 1958.

In substance, section 4(c) presently permits SBA to have as much as $1,841

million outstanding from the fund at any particular time for the purposes of the

agency's financial assistance programs under the Small Business Act and the

Small Business Investment Act of 1958. Nevertheless, it restricts appropriations

for these same purposes to $1,721 million. Since $1,645 million have already been

appropriated to the revolving fund, the existing authorization maximum of

$1,721 million limits further appropriations to $76 million.

However, due to Hurricane Betsy and other recent disasters, there is urgent

need for an appropriation of $160 million to SBA's revolving fund. In recognition of this need, and contingent upon enactment of S. 2542, the President has

requested these funds from the Congress, and they are included in the Senate

version of the supplemental appropriation bill, H.R. 11588. But the appropriation, according to its terms, can only be for $76 million unless S. 2542 is enacted,

since that is the extent of our present remaining authorization.

It may be noted that initially only $76 million was requested in appropriations,

and this is the amount which has been appropriated by the House. However,

as the magnitude of need for additional funds became more apparent, the additional $84 million for SBA was requested by the President, contingent upon

enactment of this legislation.

The need for the additional funds can be explained very simply. In comparison

with our 1966 budget estimate of $20 million for the entire year for "natural"

disaster loans, we committed funds of $48 million in the first 3 months alone,

and the total requirement in 1966 for such loans from presently declared areas is

estimated to be at least $150 million.

Current resources and those anticipated to become available during the remainder of the fiscal year from repayments and revenue on loans previously made

are totally inadequate to meet these estimated disaster loan needs in excess of the

budgeted amount and at the same time finance our other vitally important loan

programs at approved levels.

To demonstrate, we currently estimate that the loan demands on SBA from

victims of Betsy alone will total no less than $85 million. Through October 11,

1965, we have had about 16,000 interviews and have handed out approximately

13,000 application forms. Over 5,000 home loan applications and 800 business

loan applications totalling almost $42 million have been received, and we had

approved in excess of 1,400 home loans for $5.1 million and nearly 300 business

loans for $2.3 million.

Consequently, if we are to provide the needed relief by way of long-term,

low-interest rate loans to disaster victims throughout the Nation without

drastic curtailment in our regular business, development company, and investment

company loan programs, the additional funds represented by the supplemental

requests are essential.

Accordingly, I urge enactment of S. 2542.

The CHAIRMAN. It is my understanding that the Administration

is against Mr. Widnall's proposal at this time, and it is anxious to

get this $120 million.

Mr. DAVIS. I think it is so, Mr. Chairman, that we are in a position

where we must have further authorization.

The CHAIRMAN. Relief at once.
6 ADDITIONAL AID FOR HURRICANE DISASTER VICTIMS

Mr. DAVIS. Exactly.

The CHAIRMAN. Al_ right.

Any questions on this side of the aisle?

Mr. Reuss?

Mr. REUSS.* If this authorization is enacted, and having in mind

the fact that, as I understand it, the conferees on the supplemental

appropriation are now conferring, is it possible to get the resulting

appropriation into the supplemental appropriation bill or would that

take another supplemental supplemental?

Mr. DAVIS. I think we are in pretty good position on this. The

House, as you know, suggested that we receive $76 million which is

the total under the authorization. But the Senate gave us $76

million plus an additional $84 million subject to the enactment of this

particular piece of legislation. So if 

Mr. REUSS. So it is within the terms of the conference and could

be acted on?

Mr. DAVIS. Yes, Mr. Reuss, it could be.

Mr. REUSS. That is all, Mr. Chairman.

The CHAIRMAN. Any further questions?

Mr. WIDNALL. Thank you, Mr. Chairman.

As I pointed out in a House speech on January 14, 1965 when the

method of handling the SBA funds was changed so as to merge the two

funds, the disaster fund and the regular fund, a provision was included

requiring the SBA to notify the Congress when a stated amount of

disaster fund had been committed.

Has any notice been given to the House Banking and Currency

Committee as to the nature of these funds, the status of these funds

during the current year?

Mr. DAVIS. Mr. Congressman, I would have to check back to

confirm my recollection, but if I may be permitted to respond offhand

to your question, it is my recollection that this requirement was not a

continuing requirement. At the time the stated limitations were

reached, we notified the designated committees. At that point this

requirement, in effect, was dissipated. I don't believe that there is a

continuing requirement for report.

However, we certainly would have no objection to continuing a

report if this were the desire of this committee.

Mr. WIDNALL. Well, it is specifically required in the law that

Congress be notified so that we know when you are getting out of

funds and an additional authorization should be obtained, and I

don't believe that that has been done. We would have been in

better position to act quickly, I mean, if it had been done.

Let me ask you this further: In the amounts that are requested at

this time, how much is made necessary by the recent happenings in

the South and three Southern States where a very tragic catastrophe

took place?

Mr. DAVIS. We are loath at this point to put a figure, a top figure

on that disaster. Currently, we are thinking in terms of $85 million

for the Betsy disaster. But I would not like you to feel that this is

a firm figure by any means. It may go considerably beyond this as

the people move back into these devastated areas and decide to rebuild. Our best judgment at the moment is $85 million.

Mr. WIDNALL. You talked to me recently about conditions down

there, and I believe at that time you said there were 110,000 homes
ADDITIONAL AID FOR HURRICANE DISASTER VICTIMS 7

that had been affected in the area. Has there been any change in

those figures?

- Mr. DAVIS. The figure now would be, including minor damage,

which as I understand it means about $1,500 worth of damage, the

figure is now approaching 150,000 homes, so that it has been revised

upward. Our applications are continuing to come in at the rate of

250 to 350 a day, and this is unprecedented.

Mr. WIDNALL. It is conceivable that just in applications to take

care of the emergency down there you might not have sufficient funds

out of supplemental appropriations?

Mr. DAVIS. I am confident we will have sufficient funds to carry us

into the next legislative session, and we will just have to reevaluate

the situation at that point.

One of the things we do not know is the effect of the recently passed

legislation to help the people in the devastated areas by basically a

forgiveness provision of $1,800; the chairman referred to this legislation.

Mr. WIDNALL. As a longtime supporter of Small Business Administration legislation, and of the field in which they have devoted their

efforts, I sincerely feel you would be much better off if we give you a

single amount for disaster funds and if we go into conference with the

Senate and we work out something where you have segregated funds

available to take care of the emergency at this time and keep your

other funds to small businessmen throughout the country separate,

and I do intend, Mr. Chairman, to offer this amendment at this

time.

The CHAIRMAN. All right, sir. We haven't reached that point, I

don't think, Mr. Widnall. You will be recognized first.

Mr. Gonzalez?

Mr. GONZALEZ. Mr. Chairman

'

I know that this is an emergency

and all, but the experience that the ranking minority member, Mr.

Widnall, has reported, the case of the American of Negro descent in

Louisiana, is very much echoed in the case of the American of Mexican

descent in San Antonio in a recent flood we had in- the city. I have

great reservations about this SBA and, frankly, I hesitate very much

to vote for this at this time.

My experience in my district with SBA has been very disappointing.

In fact, I have felt for some time now that the loans and the help

that have been extended through SBA in my district, I don't know of

one but what a bank could not have done it.

The whole purpose and the intent of Congress, as I read the history

• of the legislation setting up SBA has either been lost sight of in the

administration of it back home or some of us up here are not reminding

the administrators what the congressional intent is.

Now, I know that we have had flood victims but the flood victims

cut across all kinds of social and economic sections, and it seems to me

if in the administering of these funds, the funds somehow or other dry

up by the time they get down to the area of greatest need, that then it

is time to relook into this whole setup before we appropriate wholesale

and in a rapid fashion, a quickie fashion, this heavy amount of money.

I have very serious reservations.

I certainly don't want to be an impediment to doing what ought to

be done. But I feel impelled to speak this way by the experiences I

have had in my own district back right at the roots, and I feel that no

matter how well it sounds up here in Washington that the only realistic

55-072-65---2
ADDITIONAL AID FOR HURRICANE DISASTER VICTIMS

way to translate the effectiveness of a congressional program is by a

total net impact it has back home at the grassroots.

The CHAIRMAN. I want to assure the gentleman that when the Con-.

gress meets again, we will go into all those questions and we will be

glad to take up any question that Mr. Gonzalez presents at that time.

Mr. Fino?

Mr. FINO. Thank you, Mr. Chairman.

Mr. Davis, recently you wrote a letter to the chairman in which

you set forth this tremendous problem of the emergency and you

stated in this letter that—

This is an emergency situation we are faced with today.

I again urge upon you the critical need for the action that has been requested.

Let me ask you, is the situation so critical that there is need to push

the panic buttons as you have done here today?

Mr. DAVIS. My answer, Mr. Congressman, is yes, indeed, it is that

critical, if we are to continue our disaster loan program and help the

people in Louisiana, Mississippi, and Florida restore their devastated

States. This is particularly true with Louisiana.

The funds presently are being made available through this legislation, if you should see fit to adopt it, will be used only for disaster

loans.

Mr. FINO. Are you telling this committee that your agency,

SBA, is the only agency in this complex government that has any

authority or has any power or has any right to help out in these

problems?

Mr. DAVIS. I am saying that we are the only agency that makes

this type of disaster loan. These are long-term, soft, low-interestrate loans to businessmen and homeowners who have suffered the

impact of these natural disasters.

Mr. FINO. Well, you are telling this committee that if you don't

get the money you can't help out these people?

In other words you are telling this committee that you must have

the money in order to help out? What about the banks? Why

can't your agency, the Small Business Administration, go down to

the banks and say, "I want you to make a loan." After all, you are

not loaning this money to these business people to help set them up

in business.

Mr. DAVIS. That is right.

Mr. FINO. Why can't you go down to these banks, go down there

and say, "Lend money to X, Y, and Z, we guarantee the money."

Mr. DAVIS. For one reason, the maximum interest rate chargeable on those soft loans is 3 percent. For another reason, this would,

in effect, frustrate the desires of the Congress as expressed in the

remission provision which you have recently passed.

In other words, I do not know offhand how we could utilize the

banks and still provide for the $1,800 forgiveness feature which the

Congress has found desirable and necessary to help these people in

in Louisiana and Florida and Mississippi.

SO-, I cannot find any vehicle other than through this legislative

proposal and through our authority to accomplish what I understand

to be the aims of the Congress in this matter.

Mr. FINO. Would you say that the ARA has no jurisdiction to go

into this field?
ADDITIONAL AID FOR HURRICANE DISASTER VICTIMS 9

Mr. DAVIS. As I understand their legislation, and of course,

I am not an expert on their legislation, they cannot fill this gap.

The Farmers Home Administration in a limited way can help certain

of the farmers, but the vast bulk of the victims will come to the

Small Business Administration.

Mr. FINO. Well, the Farm Loan Administration, if I recall correctly, when they testified before this committee, indicated that they

made loans outside the farm areas.

Why can't they go into this problem?

Mr. DAVIS. As I understand it and this would be subject to correction by the experts, they have a rather limited jurisdiction. Now, I

can illustrate the limits in this respect.

Coming again to "Betsy," when we attempted to put a figure on

the costs of this $1,800 remission figure, the Farmers Loan Administration judged their costs at approximately a half million dollars.

Our best estimate, keyed of course to the volume of lending we would

expect, would be something in excess of $70 million.

So, you see, that the burden of this program will fall on the Small

Business Administration and its resources.

Mr. FINO. Did the Small Business Administration ask the Budget

Director for an opinion on this, or their thoughts on it?

Mr. DAVIS. Yes, we have been working closely with the Bureau of

the Budget and the Farmers Home Administration, the Office of

Emergency Planning, the Housing Agency and many other agencies

on this problem, I think it is pretty clear, Mr. Congressman, that in

the absence of some substantive legislative change that if this relief is

to go forward it must come from the Small Business Administration.

Mr. FINO. That is all.

The CHAIRMAN. Mr. Widnall, do you want to offer your

amendment?

Any other comments or questions before the amendment is offered?

Mr. Annunzio?

Mr. ANNUNZIO. I would like to ask you this question. What is

the difference between the Small Business Administration and the

Small Business Investment Corporation?

Does that come under your jurisdiction?

Mr. DAVIS. It comes under our jurisdiction in the sense that we

regulate these companies, but these are privately owned, privately

operated companies that are chartered by us.

Mr. ANNUNZIO. Operating with 50 percent of the Government's

money?

Mr. DAVIS. Well, they are financed to some extent by us. Some

of them are publicly owned and have no taxpayer's money, others--

Mr. ANNUNZIO. This additional money—this appropriation for

which you are asking today—will any of this money be diverted to

the SBIC?

Mr. DAVIS. No, it will not. These funds under the appropriation

will be available only for disaster use. I would like to make this

point clear so that I don't in any way mislead you.

Mr. ANNUNZIO. I don't want to be misled. I want a yes or no

answer. I am not going to vote for this bill if one penny goes for

the SBIC. I want that positively understood.

Mr. DAVIS. I can assure you it will not.

Mr. ANNUNZIO. Thank you.

The CHAIRMAN. Mr. Brock?
10 ADDITIONAL AID FOR HURRICANE DISASTER VICTIMS

• Mr. BROCK. If I might pursue the point a second, there is nothing

in the legislation, though, that restricts it, is there, Mr. Davis?

Mr. DAVIS. No, there is nothing in the legislation. It is the nature

of the appropriations which we are getting that restricts it.

Mr. BROCK. Well, if that is the case, why would you object to the

Widnall amendment which legislatively restricts it and sets up a

special fund? It is larger in fact, and is limited to this type loan.

Mr. DAVIS. My feeling is that given the need and the position in

which this agency finds itself, and the time of the year, I must strongly

urge that this legislation be adopted in lieu of any other so that we

can be sure that this proposal will get through and the funds will be

available. I would be happy at some future time to work on and

consider Mr. Widnall's proposal.

- But I think that as of today, since I have not been able to do this,

and since as I have emphasized, the emergency requires that this

legislation go through, not from a general SBA point of view but from

the point of view of the disaster victims, I cannot find myself free to

recommend any procedure but to enact the legislation before us.

Mr. BROCK. I would simply make two points.

The first you have had since January to study the Widnall proposal

and you also have said in your own words that this will only go to

disaster loans although we don't require it and there is no guarantee

in the legislation to that effect.

And I simply fail to see what the difference is.

Why you object to it.

The CHAIRMAN. Mr. Hanna?

Mr. HANNA. May I tarry and deal with you as to what your

situation really is in terms of this portion of the legislative session?

As I understand it the appropriation measure passed by the House

would carry in it the sum fund to augment your present moneys,

is that not true?

Mr. DAVIS. That is correct.

Mr. HANNA. And that amount was $60-some

Mr. DAVIS. $76 million.

Mr. HANNA. $76 million.

In the Senate, in addition to the $76 million, the Senate version of

the appropriation measure carried an additional sum of 

Mr. DAVIS. $84 million.

Mr. HANNA. $84 million.

Now, I ask you in connection with that, and you are in a position

as far as the present appropriation measure is concerned to have the

sum of $76 million plus the $84 million 

available, 

is that right?

Mr. DAVIS. It is clear that we will get the $76 million.

Mr. HANNA. Yes.

Mr. DAVIS. But the $84 million cannot be given to us unless the

authorization is increased.

Mr. HANNA. Well, this will be a matter of the conference between

the difference in the House appropriation measure and the Senate,

will it not?

Mr. DAVIS. Not if this legislative proposal before this committee

is 

Mr. HANNA. Does not pass?

Mr. DAVIS. That is right.

Mr. HANNA. In other words, there is no authorization?

Mr. DAVIS. Exactly.
ADDITIONAL AID FOR HURRICANE DISASTER VICTIMS 11

Mr. HANNA. For anything more than the $76 million?

Mr. DAVIS. Exactly, and that is less than half of what we need.

Mr. GETTYS. Will the gentleman yield?

Mr. HANNA. As soon as I get this next point. I want to know

where I stand on this thing. If we passed the bill as suggested by

Mr. Widnall where would that place us in terms of the present status

of the appropriation measure?

Mr. DAVIS. As I understand it, and subject to again being corrected,

I do not believe that the appropriation provision which came out of the

Senate, which provided not only for the $76 million with which we

have no problem, but with respect to the $84 million, I do not believe

that that would be available to us under Mr. Widnall's proposal.

Now, this is something that concerns me very much, because---

Mr. HANNA. I think that is really at the crux of the whole matter.

If, as a matter of fact, under the Widnall proposal we are out of joint

with the appropriation matter then I am going to be very critical

about the Widnall measure.

If, as a matter of fact, his would not put us out of joint that would

give a different view of the matter. So, I think that is very important,

Mr. Chairman, that we understand it.

The CHAIRMAN. Yes, sir.

Are there any other questions?

Mr. ST GERMAIN. I would like to ask a question of either Mr. Davis

or Mr. Widnall.

In discussing the Widnall proposal or proposed amendment if this

$200 million were set aside for the specific purpose of disaster loans,

would this in effect exclude the use of any other funds now being used

for disaster loans. In other words, could you then, if at the present

time you have authority to take from your general revolving fund

money for disaster loans, should this amendment be adopted, the

Widnall amendment in the amount of $200 million for this specific

purpose, would then this preclude the use of any other funds from the

general revolving fund for disaster loans in excess of this $200 million?

Mr. DAVIS. Well, I, of course, would defer to Mr. Widnall's opinion

to 

this, 

but my understanding of the proposition is that it would.

Mr. WIDNALL. Mr. Chairman, will the gentleman yield?

Mr. ST GERMAIN. Yes.

Mr. WIDNALL. That is certainly not the intention and I do not

believe that it would.

Mr. Davis I would just like to point this out. If we pass this in

committee, if we go to conference with the Senate bill, the clear intent

of this is to make sure that there are going to be disaster funds available that are earmarked for that purpose.

Now I am very sure that within conference we can do exactly

what Nir. Hanna is worried about and get this thing straightened

out and in the end give your Administration far more authorization

to operate in the disaster area than they are getting under this bill,

and it is clear to me that if we have another disaster, unfortunate

catastrophe, somewhere here in the United States, you are not going

to be anywhere near having the funds you should have available for

this purpose. You still do not know exactly what the problems will

be in Louisiana, Mississippi, and Florida, and you indicated about

150,000 homes are affected; your present estimates are $86 million,

I believe, but you have no idea whether this is a true figure or not,
12 ADDITIONAL AID POR HURRICANE DLSASTER VICTIMS

and I think it would be very wise to act at this time rather than doing

a hodgepodge job we have been doing in the past.

Mr. ST GERMAIN. In pursuing a point, by the same token, you provide for $200 million.

At the present time the appropriations bill contains $74 and $86 million or $76 and $84 million, approximately $160 million. The appropriation bill, now the supplemental appropriation bill, is in conference. They cannot add the extra $40 million that would be

necessary in order to fulfill the provisions of your amendments.

I don't think. I could be in error, but my opinion is that $160 million is the total that is going to be added to this fund under the appro- priation bill.

Mr. WIDNALL. This is not an appropriation bill we have before us.

Mr. ST GERMAIN. It is an authorization. But without the author- ization you cannot have the appropriation.

Mr. WIDNALL. But we have authorization; there will be sufficient authorization without coming back to Congress again to handle it.

Mr. MOORHEAD. I would like to ask the gentleman from New

Jersey, is it your position that either the amendment as now drafted

or as it could be amended in conference, is such that the Appropria- tions Committee need take no further action at least so far as this supplemental bill is concerned and that money will be available?

Is that the position of the gentleman from New Jersey?

Mr. WIDNALL. It is not my position that this would interfere with the present appropriation bill that is being considered by the conference committee.

Mr. MOORHEAD. Well, does the appropriation bill which is presently in conference, that is an appropriation to SBA subject to an authorization—is it your position that if we adopt your amendment

that will be the authorization that is needed to make the appropria- tion effective?

Mr. WIDNALL. This will earmark for authorization additional

funds for emergency purposes. It will not affect the present situa- tion except to give the ability to give more to the Appropriations

Committee.

Now, I do not maintain that right now in conference as far as the SBA appropriation is concerned that you can increase that appropriation.

Mr. MOORHEAD. NO; I didn't mean that.

I mean, will your amendment if enacted breathe Eife, into the appropriation, the $84 million appropriation?

Mr. WIDNALL. Undoubtedly.

Mr. MOORHEAD. Undoubtedly, I thank you.

The CHAIRMAN. All right, any other questions?

Mr. OTTINGER. I don't quite understand the figures here. You either need an additional $84 million or $60 million. In either case why do you ask for $120 million additional rather than the amount that you actually need?

Mr. DAVIS. Well, the $120 million figure for increasing our author- ization stems from the action of the Congress which increased the

amount available for the use of funds under the Small Business

Investment Act of 1958. What happened was, in effect, we made more

money available within the total revolving fund for the use of SBIC's.

But there was not a commensurate adjustment of the overall authorAmmonir
ADDITIONAL AID FOR HURRICANE DISASTER VICTIMS 13

ization. You see, we have authorizations at two levels. So this

simply brings these two things into line.

Mr. OTTINGER. Why with the $160 million do you ask for $120

million?

Mr. DAVIS. Simply because over the years the Congress has had a

pattern of whenever they increase the amount, let us say, to be

available from the revolving fund for small business loans by $100

million, at the same time they increase the total authorization for

appropriations by $100 million; that has been the practice, and,

therefore, since we got an increase of $120 million for the purposes of

the Investment Act, there should be, let us say on the theory of

legislative neatness 

Mr. OTTINGER. I yield to the gentleman from New Jersey.

Mr. WIDNALL. Mr. Chairman, I would like to offer an amendment

to S. 2542, and a copy of this amendment has been placed in front of

each member.

I would like to make a correction in the amendment to bring it

completely up to date with the present situation.

On the next to the last line the figure $1,666 million should be

changed to $1,721 million, and the last line $1,921 million.

The CHAIRMAN. Without objection, these corrections will be made.

(The amendment referred to follows:)

AMENDMENT OFFERED BY MR. WIDNALL TO S. 2542

Strike out all after the enacting clause and insert in lieu thereof the following:

"That section 4(c) of the Small Business Act is amended by inserting after the

fourth sentence the following new sentence: 'In addition to any amounts outstanding under the preceding sentence, an aggregate of $200,000,000 may be

outstanding from the fund at any time in the form of loans made for the purposes

enumerated in section 7(b) after the date of the enactment of this sentence.'

"SEc. 2. The third sentence of section 4(c) of the Small Business Act is amended

by striking out '$1,721,000,000' and inserting in lieu thereof '$1,921,00O,000'.'

Mr. WIDNALL. I would like to move the amendment, Mr. Chairman.

Mr. GONZALEZ. Mr. Chairman, I would like to be heard both on

the amendment and the bill as amended.

I intend to vote against both because it will still give the agency

money in greater amounts without accountability.

The Small Business Administration could be one of the most

effective and one of the best servants of all of the agencies in our

Government. It can represent the little man in a giant economy

and it can help him in his time of need.

I say it can because so far as I can determine the SBA has been a

dismal failure. In San Antonio the SBA office has proved to me

time and time again that it is anything but sympathetic to the needs

of the area.

In one instance a man applied for a loan and then was denied it.

He asked for reconsideration. He was told by the SBA representative

that he should not have asked for my help in the matter because I

could do nothing about SBA decisions. I don't deny that. But

what I resent is the fact that it appeared in this case and in others

that my interest in an applicant has resulted in his being turned

down or in the very least resulted in his application receiving less

than sympathetic attention.

In another instance an SBA employee was accused of having

offered to obtain private financing after the SBA had turned down
14 ADDITIONAL AID FOR HURRICANE DISASTER VICTIMS

a loan. The SBA man had formerly held stock in that company in

question and would have taken a half interest in the venture under

his proposal. I don't know how that turned out.

But I have not investigated it for fear of jeopardizing the interest

of other applicants.

But now that SBA is paralyzed, I think, it might be a good thing to

look into these matters. It seems to me, Mr. Chairman, that the

SBA could have given us some more time on this bill. They surely

knew well in advance of last week or even the week before that they

were in trouble. Yet only after they had closed down all loan programs did they come here for an increase of their authorization. I

don't like being whipsawed and I feel that that is what is being done

here today.

We are being asked to create in great haste something that should

have had deliberate action and deliberate consideration.

Finally, Mr. Chairman, all I know of SBA leads me to believe that

it feels it is a closed corporation and not a public servant. In the San

Antonio office the average customer is given cold service, if any at all.

He would be much better treated in Scrooge's countinghouse as far

as I am concerned. I believe that SBA was constituted to render

public service. It is there to serve and not to be served; it is there to

help and not hinder its clients.

But at least in San Antonio and to a large extent here in Washington,

it is impossible to convince an SBA man that he is a public servant

and not a man who is hired to sit on his regulations, he is not a man

who is employed only to say no, but that is what has happened to this

agency.

I believe that this committee should undertake at once an effort to

ventilate the musty countinghouse that calls itself the SBA.

The CHAIRMAN. Mr. Widnall.

Mr. WIDNALL. Mr. Chairman, I move that the amendment be

-considered as read inasmuch as each member has had a chance to

read it.

The CHAIRMAN. Without objection.

Are you ready to vote? As many as favor the Widnall amendment

say "aye."

Mr. WIDNALL. I ask a rollcall.

The CLERK. Mr. Patman?

The CHAIRMAN. No.

The CLERK. Mr. Multer?

The CHAIRMAN. I have a proxy for Mr. Multer to vote no.

The CLERK. Mr. Barrett?

The CHAIRMAN. I have a proxy for Mr. Barrett; no.

The CLERK. Mrs. Sullivan?

Mrs. SULLIVAN. NO.

The CLERK. Mr. Reuss?

Mr. REUSS. No.

The CLERK. Mr. Ashley?

Mr. ASHLEY. Aye.

The CLERK. Mr. Moorhead?

Mr. MOORHEAD. Aye.

The CLERK. Mr. Stephens?

Mr. STEPHENS. Aye.

The CLERK. Mr. St Germain?

Mr. ST GERMAIN. NO.
ADDITIONAL AID FOR HURRICANE DISASTER warms, 15.

The CLERK. Mr. Gonzalez?

Mr. GONZALEZ. NO.

The CLERK. Mr. Minish?

Mr. MINISH. NO.

The CLERK. Mr. Weltner?

The CHAIRMAN. I have that proxy, no.

The CLERK. Mr. Hanna?

Mr. HANNA. Pass.

The CLERK. Mr. Grabowski?

Mr. GRABOWSKI. No.

The CLERK. Mr. White?

Mr. WHITE. NO.

The CLERK. Mr. Gettys?

Mr. GETTYS. No.

The CLERK. Mr. Todd?

Mr. TODD. No.

The CLERK. Mr. Ottinger?

Mr. OTTINGER. NO.

The CLERK. Mr. Cabe11?

Mr. CABELL. NO.

The CLERK. Mr. McGrath?

Mr. MCGRATH. NO.

The CLERK. Mr. Hansen?

Mr. HANSEN. No.

The CLERK. Mr. Annunzio?

Mr. ANNUNZIO. NO.

The CLERK. Mr. Widnall?

Mr. WIDNALL. Yes.

The CLERK. Mr. Fino?

Mr. FINO. Yes.

The CLERK. Mrs. Dwyer?

Mrs. DWYER. Yes.

The CLERK. Mr. Halpern?

Mr. HALPERN. Yes.

The CLERK. Mr. Harvey?

Mr. Brock?

Mr. BROCK. Yes.

The CLERK. Mr. Talcott?

Mr. Clawson?

Mr. CLAWSON. Aye.

The CLERK. Mr. Johnson?

Mr. JOHNSON. Aye.

The CLERK. Mr. Stanton?

Mr. Mize?

Mr. MIZE. Aye.

The CLERK. Eleven ayes, eighteen nays, Mr. Chairman.

The CHAIRMAN. The amendment is defeated.

Are you ready for the vote on the resolution?

Would you want to have a rollcall on this?

As many as favor the passage of the bill, the Senate bill, say "aye"

when your name is called.

Call the roll, Mr. Clerk.

The CLERK. Mr. Patman?

The CHAIRMAN. Aye.

The CLERK. Mr. Multer?
16 ADDITIONAL AID FOR HURRICANE DISASTER VICTIMS

The CHAIRMAN. Aye. I have a proxy.

The CLERK. Mr. Barrett?

The CHAIRMAN. I have a proxy, aye.

The CLERK. Mrs. Sullivan?

Mrs. SULLIVAN. Aye.

The CLERK. Mr. Reuss?

Mr. REUSS. Aye.

The CLERK. Mr. Ashley?

Mr. ASHLEY. Aye.

The CLERK. Mr. Moorhead?

Mr. MOORHEAD. Aye.

The CLERK. Mr. Stephens?

Mr. STEPHENS. Aye.

The CLERK. Mr. St Germain?

Mr. ST GERMAIN. Aye.

The CLERK. Mr. Gonzalez?

Mr. GONZALEZ. NO.

The CLERK. Mr. Minish?

Mr. MINISH. Aye.

The CLERK. Mr. Weltner?

The CHAIRMAN. Aye.

The CLERK. Mr. Hanna?

Mr. HANNA. Aye.

The CLERK. Mr. Grabowski?

Mr. GRABOWSKI. Aye.

The CLERK. Mr. White?

Mr. WHITE. Aye.

The CLERK. Mr. Gettys?

Mr. GETTYS. Aye.

The CLERK. Mr. Todd?

Mr. TODD. Aye.

The CLERK. Mr. Ottinger?

Mr. OTTINGER. Aye.

The CLERK. Mr. Cabell?

Mr. CABELL. Aye.

The CLERK. Mr. McGrath?

Mr. MCGRATH. Aye.

The CLERK. Mr. Hansen?

Mr. HANSEN. Aye.

The CLERK. Mr. Annunzio?

Mr. ANNUNZIO. Aye.

The CLERK. Mr. Widnall?

Mr. WIDNALL. Aye.

The CLERK. Mr. Fino?

Mr. FINO. Aye.

The CLERK. Mrs. Dwyer?

Mrs. DWYER. Aye.

The CLERK. Mr. Halpern?

Mr. HALPERN. Aye.

The CLERK. Mr. Harvey?

Mr. Brock?

Mr. BROCK. Aye.

The CLERK. Mr. Talcott?

Mr. Clawson

Mr. CLAWSON. Aye.
ADDITIONAL AID FOR HURRICANE DISASTER VICTIMS 17

The CLERK. Mr. Johnson?

Mr. JOHNSON. Aye.

The CLERK. Mr. Stanton?

Mr. Mize?

Mr. MIZE. Aye.

The CLERK. Twenty-nine ayes, one nay, Mr. Chairman.

The CHAIRMAN. Twenty-nine to one, the bill is passed.

Under the rules of the House the chairman will take such action

as may be necessary to assure early and favorable action on this bill.

Mrs. Sullivan?

Mrs. SULLIVAN. Mr. Chairman, earlier this month in the final minute of a rather stormy executive session on the banking bill I

received the committee's approval of three minor bills authorizing commemorative medals. I would like to ask unanimous consent

that a typographical error in one of the bills be corrected before we actually report it. It is H.R. 139, a bill by Mr. Pucinski to permit

the striking of medals commemorating the 1,000th anniversary of the founding of Poland.

The error is on page 1, line 9, and I ask unanimous consent that the committee approve amending the bill to strike the word "communi- cation" and msert the word commemoration".

The CHAIRMAN. Is there objection, the Chair hears none.

The committee will stand in recess subject to the call of the Chair. (Whereupon, at 11:55 a.m., the committee adjourned, subject to call of the Chair.)

0