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March 16, 1944 To - CHAIRMAN 1CCLES From - MR. CLAYTON After hearing from Mr. Lubell that he had received a confidential copy of a bill to establish a permanent Government agency with a capital of one billion dollars to assist small business, I took it on ifiyself to obtain a copy of the bill. This I did through calling the office of one of the staff men on the Senate Small Business Committee who had been down here last year in connection with previous versions of the Mead Bill. I was referred to Mr, Silverman, Counsel for the Cosmiittee, and called him on the telephone. Without disclosing the source of my information, 1 told him of what I had heard and asked whether his Coiraaittee was sponsoring the bill and, if so, whether they considered it in harmony with the Baruch Report. I also added that we would be interested to know of any such proposal because of the suggestion which you had made to the Baruch Committee and which the Baruch Report has recommended. Since the discussion developed the fact that I had been active in the preparation of your proposal, Mr. Silverman became very frank and said that he would like to have me look over the bill and, subject to clearance with the Committee, would send me a copy in the mail. I received a copy of the bill yesterday and it is a "honey". It would amend the Smaller War Plants Act, changing the name of the Corporation to Federal Smaller Business Corporation, enlarge the capital to one billion dollars, extend the life of the Corporation until July 1, 1948, and authorize it to make loans for any purpose to any type of business and invest in its stock. It is an ambitious proposal in the small business field and seems fantastic at first blush. However, for the past several days I have reviewed quite carefully the voluminous testimony before the House and Senate Committees on the bill to set up the Smaller War Plants Corporation. In no instance could I find any Senator or Representative who dared to speak against the bill. Whenever a specific provision was questioned, the Congressman would take particular pains to say that he was in favor of the bill but just wanted to clarify the meaning of the provision* As you know, that bill passed the Senate unanimously and the House by an overwhelming majority.* To my mind, this testifies to the very strong political appeal in any measure to assist small business. Hence, I think this new bill cannot be laughed off. In fact, if the proposal is to be beaten, it can only be done by proposing an ambitious and liberal program of financial aid to small business through more conservative agencies, such as the RFC and the Federal Reserve System. (*) As a matter of fact, the vote in the House was 346 to 0, with 84 not voting. -£At this stage the bill is furnished on a confidential basis but I have no doubt that before long it will be public information. At any rate, as soon as it is proper I think it would be highly salutary to send a copy of the bill to the Chairman and Presidents of all the federal Reserve Banks and to the Federal Advisory Council. The Smaller War Plant people are enthusiastic and aggressive. I have just seen the text of a speech to be delivered by ChairBan Maury Maverick before the American Business Congress at the Waldorf Astoria Hotel Friday, March 17. His talk is politically appealing, brief, picturesque and dynamic. With a man such as Maverick to head up the drive for public support and with the demonstrated strength of the Small Business Committees in both the Senate and the House, this bill has a very good chance of becoming law, in my opinion. Meanwhile, Messrs. Vest, Smead and I have agreed on a text of a "Plan for Industrial Loans by Commercial Banks Guaranteed by Federal Reserve Banks" and a draft of a bill, both of which can be sent to the Federal Reserve Banks as soon as you approve. Please advise when you are ready to go over these papers.
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