Mr. BARNES. In essence that, but more generally this: What we have tried to do is simplify and get in one place some information on how to do business in foreign trade, some of the advantages of it. There are tax advantages. There are ways and means that are open to small firms through the Webb-Pomerene Act, through the Western Hemisphere Corporation Act.

Mr. EVINS. Is that information obtained largely from the Department of Commerce sources, or from where it is acquired?

Mr. BARNES. No, sir; the Department of Commerce has, of course, a large operation in the foreign trade field and has the information on specific subjects dealing with foreign trade. But the matters to which I refer are for instance, the Webb-Pomerene Act is in the Federal Trade Commission.

The Western Hemisphere Corporation is in the Bureau of Internal Revenue.

In no one place that I know of was information on these various techniques of engaging in foreign trade collected and explained in a simple manner that a businessman could understand.

Having read it, he would then, thereafter, deal with the Department of Commerce as to his particular business.

Mr. EVINS. Could you give the committee concrete evidence of what results have come from it, as far as obtaining business for small business in this field?

Mr BARNES. We could assemble information as to what has come from the International Cooperation Agency in the form of purchases or information on purchases. I am not sure but what the staff already gets those releases, however.

Mr. EVINS. In other words, you supply business with the information, but you do not know the results.

Mr. BARNES. Yes.

Mr. EVINS. Now, Mr. Barnes, concerning the Fish and Wildlife Service of the Department of the Interior, has it been my information that the policy did not allow or approve loans of a recreational nature; that is, if they bordered on a recreational nature, they would not be approved? Does this mean that you are broadening the loan policy now that loans might be made to fishing docks and recreational facilities in the wildlife area?

Mr. BARNES. The overall policy is still in existence about recreation as such; but in the examination of certain specific areas it has been determined that this general rule does not preclude the particular business or industry from seeking a loan. This has been determined in several areas such as certain types of hotels where the hotel is actually a business, and operating all year, or most of the year; the ruling has been made in connection with the licensees or concessionaires in public parks and in certain other specific businesses.

Now, with fisheries the problem is a different one. We have made loans to businesses where it was pretty clear that a business was actually being conducted, not just a recreational service. But the fisheries loan program relates to, first, men that are in the fishing trade, who have boats and go off on extended trips, and it is not a recreational thing at all. It is a business.

Mr. EVINS. Certainly the shrimp business in New Orleans and the fishery business in the East and the West is a small business and it

is a very vital segment of business, but I wonder if the policy of the Administration was to make loans in the recreational field.

You say you are cooperating with the loan policy of the Fish and Wildlife Service of the Department of the Interior.

Mr. BARNES. That is a specific law that authorizes the Fish and Wildlife Service to make certain types of loans.

Mr. EVINS. Now, Mr. Barnes, another agency you mentioned cooperating with is the Department of Health, Education, and Welfare and with representatives of the American Medical Association.

Now, what does the American Medical Association recommend with respect to loans for small business? I have never known of them recommending any loans to small business-the American Medical Association.

Mr. BARNES. Out of these conferences were developed our policies for making loans to privately owned hospitals, nursing homes, and clinics that were operated for profit.

We received applications from several parts of the country in which there was a nursing home, the owner of a nursing home or convalescent home, seeking to expand it or seeking to refinance it or to improve its service to the public in some way and improve its facilities.

As you know, there is the Hill-Burton Act which provides funds for hospitals that are public in nature.

Mr. EVINS. On a matching-fund basis for the construction of the hospital.

Mr. BARNES. Yes, sir; but after thorough examination we were convinced that the owner of a small hospital-that is privately owned hospitals and the owners of nursing homes and convalescent homes were in a business like any other business, more like a motel, really, or hotel business than anything else, and so we felt that in all justice to them, since they were not, in many instances, eligible for HillBurton funds, that we should make loans to them.

Mr. SEELY-BROWN. Will Mr. Evins yield at that point?

Isn't it fair to state that many of these private nursing homes carry, in fact, a large number of, if you will, State patients, or patients for whom the various States help provide the money to keep the patient in the home and it was actually cheaper to have the Small Business Administration make a loan to the nursing home directly, rather than to have that nursing home go to the State for help and have the State then in turn go to the Federal Government for help?

Mr. BARNES. Yes, sir; and of course these are loans. The other is a grant program.

Mr. SEELY-BROWN. Exactly.

Mr. BARNES. This will be repair and there is no burden on the public if the loans are repaid.

Mr. SEELY-BROWN. In other words, it is enabling a private nursing home to accept to a larger degree than was normally possible a public responsibility in helping care for the sick patients.

Mr. BARNES. I think it is fair to state that many people that have participated in developing this program, and may I say that the American Medical Association was very helpful in helping us arrive at criteria that would enable us to make safe loans.

As you know, some of these homes were marginal and we do not have the technical knowledge that is available from these other associations, and it is the feeling of many who have worked with this

program that by improving the standards and the facilities that are available to the public from these private nursing homes and convalescent homes, that it will be possible to reduce the cost of medical care substantially. This for the reason that operative patients, or the chronic patients who do not have something severely wrong with them can be moved out into these homes operated for profit where the daily charge is substantially less than the big hospitals, where they must have so much other equipment and where there is a large charity load.

I feel that this is one of the important things that we have done this year in developing a program of this sort.

May I say that there are applications coming in from all over the country which bear out the interest in it.

Mr. EVINS. With the rates which the doctors charge and the success which they are having, I should think that private capital and credit would be available to them. I should not oppose it but I was inquiring into your activities in that field.

Mr. BARNES. We do not make the loan unless we are convinced that there is no private source of funds available.

Mr. MULTER. I was going to interrupt just long enough to ask Mr. Barnes to invite the other members of his staff to join him at the table so that they can be of help to him from time to time if he desires to turn to any of them for answers to any specific questions that they can fill in on.

Now, Mr. Evins.

Mr. EVINS. I yield to Mr. Hill.

Mr. HILL. Thank you, Mr. Evins. It is necessary that I go to another meeting, but before I leave I want to say, first of all, how delighted I am that this administration has come to the same conclusion that we have had all along in this committee of ours, that the Small Business Administration should be made a permanent organization.

I think of two points I should mention at this time. One is that with a permanent agency it will afford an opportunity for the Small Business Administration to attract qualified small-business personnel throughout the entire United States which will be efficient in handling every type loan application.

Second, I am certain when the Small Business Administration becomes a permanent agency, which I hope will not be too difficult an accomplishment, that you will be able to work out a better, and I should say more efficient, operation in an active and a direct manner, and with the full cooperation of our local financial institutions.

Now, I frankly confess that the banking institutions of this country are not too interested in tying into a loan proposition when the organization directing the lending activities is a temporary agency of the Government.

I hope everyone understands that has been one of the difficulties under which you have labored since the establishment of the Small Business Administration.

Those are the two things, Mr. Evins, that I wanted to mention before I left for my other meeting. Thank you very much. Mr. MULTER. Thank you, Mr. Hill.

Mr. Evins.

Mr. EVINS. Mr. Chairman, you state, Mr. Barnes, that the Budget Bureau is in effect supervising the type of reports that you give to

small business, or acquire from them. Just what does the Budget Bureau do in that area?

Mr. BARNES. The committee recommended and the Small Business Administration itself has pointed out several times that one of the problems of the small-business man is the number and the quantity and the length of reports he must make to Government agencies.

The Cabinet Committee recommended that whatever could be done to cut down the number of reports and their length, that that be done, be underaken through a study.

The Bureau of the Budget was assigned the task of making that study. They deal not with the reports that we require but with reports that all Government agencies require.

Mr. EVINS. To simplify the questionnaires and the forms and reports that small business have to fill in and supply the Government. Mr. BARNES. Yes, sir.

Mr. EVINS. Mr. Barnes, on page 6 you state that the policy is being amended to extend loan eligibility to certain other types of firms previously excluded from the loan program. That borders on what I touched on a while ago, about recreational loans being included.

What types of loan are being approved now under your loan policy that were not approved previously? Theaters, you mention.

Mr. BARNES. Yes. Four-wall theaters, privately owned hospitals and nursing homes, trade and business schools, and then we have developed a number of, in effect, special programs to meet particular situations such as the trucking firms and the loans to corn packers and to others.

Mr. EVINS. When you include theaters in the category for loans, then you have broadened the policy for recreational things. It is a business; certainly a theater is a business, a very vital and important business, but it is of a recreational nature. Your loan policy now would provide loans for recreation and amusement and entertainment. Mr. BARNES. To that extent, yes, and a while ago I said there had been some exceptions to that rule. What we are trying to do, what the Loan Policy Board is doing, after careful analysis of congressional debate on this subject, and the statutes and everything, the Loan Policy Board's function as we see it is in effect to determine the area in which there is public interest in making a loan.

Now, this may include certain types of recreation, may exclude other types. It is a matter of opinion, but if you would like to be supplied with the legal opinion, it is a matter of opinion as to what the public has an interest in.

But this is a function that has been delegated by the Congress to the Loan Policy Board.

In each of these decisions that is in effect what they are doingMr. EVINS. How many times a year, Mr. Barnes, does the Loan Policy Board meet, approximately?

Mr. BARNES. We meet at least once a month and we meet oftener, if there is business to justify it, and there may be informal consultations by phone or otherwise.

Mr. EVIN. Do Mr. Humphrey and Mr. Weeks attend these meetings, or are they attended by their designees?

Mr. BARNES. Their designees are Mr. Fritz Mueller, of the Department of Commerce, Assistant Secretary for Domestic Affairs; and Mr. Laurence Robbins, Assistant Secretary of the Treasury.

Mr. Weeks and Mr. Humphrey attend whenever there may be reason. They also consult by phone whenever the occasion arises and I have not hesitated to consult with them directly.

Mr. EVINS. Shall I proceed, Mr. Multer?

Mr. MULTER. Surely.

Mr. EVINS. I notice on page 10, Mr. Barnes, regarding losses, you indicate what is it, $5,153,918 in losses on 153 loans? Have you written them off as uncollectible?

Mr. BARNES. No, sir.

Mr. EVINS. I was going to ask you just what the agency is doing in the area of I see the figure $70,000 in principal balance of business loans have been charged off. Besides the $70,000, could you give us the current figure of in arrears 60 days or more?

Mr. BARNES. That is contained right in that paragraph.

There are loans that are delinquent, loans that are in liquidation, and loans that have been charged off.

As to the loans that are delinquent, there may be nothing seriously wrong with them. It may be for one reason or another one has had to miss a payment; for example, perhaps he was engaging in construction and did not get the building finished in time and he started out in arrears of a month or so. We do not think that there will be losses with most of the ones that are merely delinquent.

The ones that are in liquidation are the ones in which there probably has been definite legal action taken, mortgage foreclosure has been filed, etc.

Mr. EviNs. This $70,000 has been written off as uncollectible, is that the last year or the past 2 years?

Mr. BARNES. Since we started, down to date.

Mr. EVINS. What procedure, just for the information of the committee, does the Administration go through in the collection of a loan that appears uncollectible? What are the mechanics? Is the United States district attorney employed?

Mr. BARNES. First, if the payment is not received on the day it is due, a notification goes out to the borrower. That is by tickler system. That is followed at regular intervals of 5 or 10 days. Then if there is no response or not an adequate explanation, and all collection efforts fail, we would take appropriate legal action.

That is done by referring it from our office to the Federal district attorney in the area where the borrower lives. Thereafter, collection procedures are in his hands. We supply the technical information he needs and consult with him, of course, through counsel stationed at our own regional offices, but the responsibility is with the Department of Justice.

Mr. EVINS. I have been interested in your set-aside program and your procurement program and I made some notes here.

We, sometimes, on the committee-like they say on television—like to get the answers; we don't always applaud the good; we question the others.

I have appreciated your statement. Thank you, Mr. Chairman.
Mr. MULTER. Thank you, Mr. Evins.

Mr. SEELY-BROWN. I have quite a few questions, Mr. Chairman, but the first question that I would like to ask would be: Could you, Mr. Barnes, describe the collateral requirements when the small