Evening star., 1942-03-26
Roosevelt Opens Way
To Give Small Firms
Full War Role
U. S. Agencies Authorized
To Make or Guarantee
Production Looms
By JOHN C. HENRY.

President Roosevelt to-day
cleared the way for full partici'
patton of small production enter
prises in the war effort, author
lzing a relaxation Of peacetime
credit rules for both public anc
private financing of contracts
awarded to small firms.
The step was taken by issuanc.
of an executive order which permit!
the War Department. Navy Depart
ment or Maritime Commission tt
make or to guarantee loans which
firms may require for operationa
purposes in war production. Th'
President acted under the First Wa
Powers Act of 1941.
The Presidents order pointed ou
that the three agencies named have
available to them funds appropri.
ated by Congress which may be usee
for making or guaranteeing loans
and specifies further that the Fed
eral Reserve banks and the Recon
struction Finance Corp may be en-
ployed to expedite and facilitate thu
program.
Effect Is Explained.
Without regard to peacetime law
It Is further directed that the three
procurement agencies may enter intt
contracts with the Federal loan or
eanizations or with any ~othel
financing institution" guaranteeing
principal and interest of loans made
to war-production enterprises where
operations by the latter are deemed
essential.
THE basic purpose of the order
an accompanying White House
statement said, "is to put working
capital financing on a war basis
Up to now peace-time restrictions
on bank and credit agencies have
made it difficult for them to finance
war production, although the banks
have been anxious to use their
resources for prosecution Of the war y
Remarking further that full pro-
duction of the Nations smaller busi-
nesses is essential to victory" the
White House statement emphasized
that the projected loans will not be
made by peace time credit rules or
standards.
Peace time Rules Won't Apply.
They will be made by production
men. wherever additional financing
is essential for additional produc-
ton. Peace-time restrictions on
credits cannot hold up production
of war supplies needed by the armed
forces" the statement concluded.
Mr.. Roosevelt signed the order in
the presence of representatives of
the three executive agencies
affected. and of three Senators who
have been particularly active in the
movement to assist small business.
The latter were Chairman Murray
of the Special Senate Small Business
Committee; Senator Mead, Demo-
crat, of New York, and Senator
Capper, Republican, of Kansas.
Also present were War Shipping
Administrator Emory S. Land, Un-
dersecretary Of War Robert P. Pat
terson and Undersecretary of the
Navy James " Forrestal
The White House said Chairman
Donald M. Nelson of the War Pro-
duction Board joined with the three
procurement agencies in the opinion
that this step will greatly speed the
production accomplishments of
small business and subcontractors
SubcontractOrs Aided.
On leaving the White House, Mr..
Patterson explained that heretofore
the War Department had power to
make or guarantee loans up to 80
per cent of amounts involved in time
contracts. The new program would
remove the percentage restriction
and also permit assistance to sec
ondary contractors
Mr.. Patterson explained the De-
fense Plant Corp. already is making
loans for production facilities, but
the new program contemplates ex-
tending assistance in working cap
ital.
After the war" he said, 1--WE may
find ourselves with some money on
the string, but in the meantime we
will get the guns, tanks and planes
which we must have. We are look
ing on this from production view
point and it is very sound policy
from this viewpoint
Legislation Pending.
Meanwhile, legislation to gear small
plants and factories into the war
program was pending in the Senate
Senator Taft, Republican, of Ohio
said it would probably increase costs
. great deal, but probably is worth it. ~
He referred to the bill to establish
q S10O,000,00 smaller War Plants
Corp" which was favorably re-
ported by the Senate Banking Com
mittee yesterday. The committee
refused to give Secretary of Com
merce Jones, who is also Federal
loan administrator, control over the
proposed new agency.
Senator Taft, one of the two Re-
publicans on the Small Business
Committee which sponsored the
legislation, predicted that split
ting up war contracts so that
many small plants should share
in them would enable many little
fellows to survive who otherwise
could not
Senator Murray said the bill would
give small business an active repre-
sentative on the w. P. B. and enable
$4,000 of the $4,000 manufacturing
concerns of the country to take some
part in war production.
The measure would authorize Mr.
Nelson to appoint special deputy
in charge of small business problems,
and five directors of the new corpo-
ration that would loan 100000, 900
to small business.
The corporation would act without
profit as prime contractor and sub
divide the contracts among small
factories.
u. S. to Finance go Pct.