that employs people and pays taxes to see that this small business does not fail and go into bankruptcy but succeeds and moves forward.

Mr. PUETT. Supposedly this list here includes all the number of loans and investments, whether they be equity or loans, that is included by SBIC.

For instance, the SBIC's would study like Gulf-well, all of them, the largest number of investments that any of them have in any company and any of them have is 32. And the smallest is 5. In GulfSouthwest, for instance, they have a total of 23 loans. Well, they have 22 people on their payroll. Well, obviously to me, I collect over a thousand loans with one bookkeeper and myself. Well, this gentleman, according to this, he has 10 loans. Well, he has four people on his payroll.

I think perhaps Mr. Moore hit the nail on the head. If you want to help small businesses, well, then perhaps the SBA should be the one to lend them the money directly.

What is the difference in charging a man 8- or 10-percent interest and taking a cut of his business? Like this gentleman said, we are only loan equity. Sure, if I come in there and want to develop some land, they say: “Yes, we are going to lend you the money, but we want 20 percent of your business," 30 percent, 40 percent, 50 percent. If you think it is bad to charge high interest, is it not worse to help a man and take a cut of his business?

The CHAIRMAN. This is supposed to be money that is not available elsewhere, that could not be obtained even for this purpose elsewhere. And the requirement of a purchase of stock is not mandatory but optional. You are not required to do it under the law, if you know this. Apparently, as you stated, Mr. Puett, your testimony is purely from the public investor's point of view. Your testimony is directed to that. And you have large investments, and you have made substantial investments, I believe some 35,000 or 36,000 shares, in 3 companies in Texas. You have made these stock investments purely for stock profit purposes. This is your point of view, as I understand it? And that is legitimate and proper and all right, and you are putting your money into the companies. And your several suggestions are well taken, and the committee will certainly give them careful thought and evaluation. Mr. ROBISON. Mr. Chairman.

The CHAIRMAN. Mr. Robison.

Mr. ROBISON. I have been leafing through the letters that Mr. Puett attaches to his prepared statement. I notice one paragraph in the letter of January 7 to Mr. Bernstein, the Securities and Exchange Commissioner here in Washington, and I quote this paragraph:

It has come as a great surprise to me also that so many of these stockholders state that they purchased this stock because they thought it had quasi-Government status, and was to some degree sponsored, controlled, regulated, and underwritten by the Federal Government.

Is this, in your judgment, something that is prevalent with respect to publicly owned SBIC's?

Mr. PUETT. Absolutely. I think when this thing was promoted it was promoted as a similar situation to a bank. Well, most people had had experience with bank stock. And it had always gone up-practically always, that is. And when these people bought this stock, they had some idea that they were buying something similar to a bank stock,

something that was underwritten in some way by the Federal Government.

When I sent out-I sent out a letter to all the stockholders of GulfSouthwest, the one you read there; and I got a total of over 2,500 replies 2,500. And they were all dissatisfied but nine, and I offered the whole file here. They were very interested. The experience was great for me. I got a great experience out of receiving these letters from all of these people. And in numerous cases the people claimed that they bought the stock because of that reason. And I think they did.

Mr. ROBISON. Thank you, Mr. Chairman.

Mr. PUETT. I do not think they bought it, as I heard one gentleman say up here earlier, because they knew they were going to lose money. I do not believe anybody actually bought the stock with the idea that we are going in a high-risk business that we are actually going to lose money in.

The CHAIRMAN. Mr. Mitchell.

Mr. MITCHELL. Mr. Puett, these 25 replies that you received, what total stock ownership

Mr. PUETT. I said 2,500 replies.

Mr. MITCHELL. 2,500. I am sorry. That is what I meant to say. Mr. PUETT. Well, it was hard to tell exactly, because I put a number on the postcard, and that corresponded to the number on the stockholders list, and a large number of them, including the larger stockholders, have erased the number. But I figured that it came to about 500,000 to 600,000 shares represented, of the Gulf-Southwest stock, that is.

Mr. MITCHELL. Mr. Puett, I have here a revised schedule 14(d) which you filed with the SEC in anticipation of a proxy fight in this

matter.

Mr. PUETT. Yes.

Mr. MITCHELL. And it is all right with you if that is filed as a part of your statement here with this other information, is it not? Mr. PUETT. Certainly.

Mr. MITCHELL. Mr. Chairman, may we include this in the record? The CHAIRMAN. Without objection, it may be received in the record at this point.

(The schedule 14 (d) follows:)

REVISED SCHEDULE 14D FOR NELSON PUETT, JR.

Item I. State the name and address of the issuer:

Answer. Gulf Southwest Capital Corp., Esperson Building, Houston, Tex. Item II. (a) State the following:

(1) Your name and business address:

Answer. Nelson Puett, Jr., 5425 Burnet Road, Austin, Tex.

(2) Your present principal occupation or employment and the name, principal business, and address of any corporation or other organization in which such employment is carried on:

Answer. Real estate broker, homebuilder; Puett-Duncan Realtors, 5425 Burnet Road, Austin, Tex.

(b) State the following:

(1) Your resident address:

Answer. 3709 Eastledge Drive, Austin, Tex.

(2) Information as to all material occupations, positions, officer, or employments during the past 10 years, etc.

Answer. Builder-realtor at the same address for the past 10 years.

(c) State whether or not you are or have been a participant in any other proxy contest involving this or other issuers within the past 10 years. If so, identify the principals, the subject matter, and your relationship to the parties and the outcome.

Answer. I was a participant in a proxy contest involving Capital-Southwest Corp. with Harold Simmons and Herbert C. Oakes. I filed a 14B on or about June 1, 1963, and the extent of my participation was one letter on June 12, 1963, to the members of the board of directors. To the best of my knowledge, nothing definite was accomplished and the contest was not pursued to a conclusion.

(d) State whether or not, during the past 10 years, you have been convicted in a criminal proceeding (excluding traffic volations, etc.).

Answer. No.

Item III. (a) State the amount of each class of securities of the issuer which you own beneficially, directly or indirectly:

Answer. 25,000.

(b) State the amount of each class of securities of the issuer which you own of record but not beneficially.

Answer. None.

(c) State with respect to the securities specified in (a) and (b) the amounts acquired within the past 2 years, the dates of acquisition and amounts acquired on each date.

Answer. In the year 1962 I acquired the following:

I have sold some at various times and still hold the amount indicated in (a). (d) If any part of the purchase price or market value of any of the shares specified in paragraph (c) is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such securities, so state and indicate the amount of the indebtedness as of the latest practicable date. If such funds were borrowed or obtained otherwise than pursuant to a margin account or bank loan in the regular course of business of a bank, broker or dealer, briefly describe the transaction, and state the names of the parties.

Answer. None.

(e) State whether or not you are a party to any contract arrangements, etc., etc.

Answer. None.

(f) State the amount of securities of the issuer owned beneficially, directly or indirectly, by each of your associates and the name and address of each such associate.

Answer. No associates.

(g) State the amount of each class of securities of any parent or subsidiary of the issuer which you own beneficially, directly or indirectly.

Answer. None.

Item IV. (a) Describe the term and circumstances under which you became a participant in the solicitation and state the manner and extent of your activities or proposed activities as a participant.

Answer. In about April 1963 I became concerned about the low market value of the stock. After reviewing the annual report, it was obvious to me that the situation would not improve as long as the expenses were so exorbitant. From then until about September 1963 I had various conversations and correspondence with Mr. Butler, the chairman of the board, and Mr. Tyson, the president, concerning the high expenses, bad loans, no profits, no dividends, merger, liquidation, improvement in management, etc., etc. From these contacts with

the management it became obvious to me that they were not going to heed my pleas, or those of the others that were also trying to improve the position of the public stockholders, for a change of policy that would be for the benefit of the majority of the stockholders. I decided that the best way to impress upon the management the dissatisfaction with the present management policies and the need for new policies was to canvass the stockholders and make available to them an easy means of indicating their desires. This was the prime purpose of my canvass and I hope and expect the management to abide by the will of the majority.

It is my understanding that the board of directors are going to meet within the next 2 weeks and, should they refuse to abide by the will of the majority as is finally expressed in this canvass, I will then solicit proxies with the intention of pursuing the course of action desired by the majority.

(b) Furnish for yourself and your associates the information required by item 7(f) of schedule 14A.

Answer. I have had no transaction whatsoever with the issuer or any of the persons mentioned in item 7(f) of schedule 14A.

(c) State whether or not you or any of your associates have any arrangement or understanding with any person-(1) with respect to any future employment, etc. (2) with respect to any transaction, etc.

Answer. None whatsoever.

Item V. I certify that the statements made in this statement are true, complete and correct, to the best of my knowledge and belief.

JANUARY 21, 1964.

NELSON PUETT, Jr.

Mr. MITCHELL. Now, I believe also, you were involved to some extent in a proxy fight or an attempted proxy fight against the CapitalSouthwest Corp., another SBIC in Texas, were you not?

Mr. PUETT. I agreed to be involved in it; however, the thing did not materialize, and I did not pursue it further. But I do thinkand win it one way or another-whether it is going to be done by Congress or whether it is going to be done by general business procedures. I believe that the majority of these SBIC's will be liquidated or will be merged, and we will be out of existence unless many changes are done in the program. I believe that.

Mr. MITCHELL. In the matter of Capital-Southwest, the other one, you also filed a schedule 14(b) with the SEC in that matter, did you not?

Mr. PUETT. That may be. I do not remember.

Mr. MITCHELL. I have it here, which is part of the public files of SEC. And you do not mind that being filed as an exhibit with your testimony, do you?

Mr. PUETT. No, sir.

Mr. MITCHELL. I ask that this be made a part of the record, Mr. Chairman.

The CHAIRMAN. Without objection, it will be received into the record at this point.

(The schedule 14(b) on Capital-Southwest follows:)

STOCKHOLDERS' COMMITTEE FOR BETTER MANAGEMENT OF CAPITAL-SOUTHWEST

(If the answer to a question is "none" please write "none.")

Name: Nelson Puett, Jr.

Item 1. Issuer :

1 Items 5 and 6 infra are to be answered only by nominees of the committee for the position of director of Capital-Southwest Corp.

Issuer is: Capital-Southwest Corp., 940 Hartford Building, Dallas 1, Tex. Item 2. Identity and background:

(a) (1) Your business address:

5425 Burnet Road, Austin, Tex.

(2) Your present principal occupation or employment:

Real estate developer and homebuilder.

Name, principal business, and address of corporation in which such employment is carried on:

Self-employed.

(b) (1) Your residence address:

3709 Eastledge, Austin, Tex.

(2) All material occupations, positions, offices or employments during the last 10 years, giving starting and ending dates of each and the name, principal business and address of any business corporation or other business organization in which each such occupation, position, office or employment was carried on. Always self-employed.

(c) State whether or not you are or have been a participant in any proxy contest involving this or other issuers within the past 10 years. If so, identify the principals, the subject matter and your relationship to the parties and the outcome.

Never.

(d) Have you been convicted in a criminal proceeding (other than traffic violations or similar misdemeanors) within the last 10 years?

No.

Item 3. Interests in securities of the issuer :

(a) State number of shares of common stock (par value $1) of Capital Southwest Corp. owned by you beneficially, directly or indirectly.

Fourteen thousand one hundred.

(b) State number of shares of common stock of Capital Southwest Corp. which you own of record, but not beneficially.

None.

(c) State with respect to the securities specified in (a) and (b) the amounts acquired within the past 2 years, the dates of acquisition and the amounts acquired on each date.

Fourteen thousand one hundred. Acquired stock between March 14, 1962 and April 1, 1963.

(d) If any part of the purchase price or market value of any of the shares specified in paragraph (c) is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such securities, so state and indicate the amount of the indebtedness as of the latest practicable date.

None.

If such funds were borrowed or obtained otherwise than pursuant to a margin account or bank loan in the regular course of business of a bank, broker or dealer, briefly describe the transaction and state the name of the parties.

None.

(e) State whether or not you are a party to any contracts, arrangements or understandings with any person with respect to any securities of Capital Southwest Corp., including but not limited to joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. If so, name the persons with whom such contracts, arrangements, or understandings exist and give the details thereof.

No.