Telegram to Fred Herman, Chairman, Small Businessmen for Ike.

[Released October 22, 1956. Dated October 19, 1956]

Mr. Fred A. Herman

Chairman

Small Businessmen for Ike

Rochester, New York

Many thanks for your telegram, expressing the concern of yourself and your associates over campaign misrepresentations of this Administration's program for small businesses in America.

The facts are plain on the record. They confirm the fact that this Administration has done more for small business than any prior administration.

This Administration believes in small business and regards its continued, successful operation as essential to our whole national economy. More than that, this Administration sees it as a way of life for millions upon millions of Americans and as something to be fostered and encouraged.

There are now approximately 4,250,000 independent business units in America--nearly all of them small--an increase of more than one-third since World War II began. This is a larger number of independent business firms, in relation to the size of the Nation's work force, than there were in 1929 or in 1939. And the number is growing rapidly. In 1955, the number of independent businesses increased more than in any year since 1948, when the surge of new business formations following World War II was coming to a close.

Small business is sharing in the prosperity of the American economy. Profits of small manufacturing corporations rose in 1955 and again in 1956.

The overriding objective of all Americans is to establish in the world a just and enduring peace. To gain this objective we must be strong in many ways, including a vigorously expanding civilian economy, sparked by the incentives that have made America grow.

In the past three and a half years America has enjoyed an unprecedented prosperity. This has offered an economic climate most favorable to the growth of small business. There is a new confidence in the air, among consumers and businessmen, among farmers, workers and investors. Confidence is the prime stimulant for all business activity, small, medium-sized, and large.

To maintain that confidence and to sustain our economic progress we must, among other things, keep steady the newly-won soundness of the dollar. In the years before this Administration assumed office, inflation was robbing every market basket, every old person on a pension, every wage earner, every owner of savings bonds or life insurance or money in the bank. Between 1945-1952 inflation had pushed up the cost of living by 50 percent. But under this Administration's fiscal and monetary policies, the racing course of inflation was stopped. During the last 3 ½ years, the cost of living has fluctuated within a narrow range--the actual increase since 1952 being less than 3 percent. This Administration will continue to conduct our national affairs so that an owner of a small business can truly say something "is sound as a dollar."

From this Administration's very first days in office, we in Washington have worked steadily and in many directions to ease the way for small businesses and to improve their opportunity to thrive and grow.

I am glad to set forth in some detail, as you request, this Administration's record and future program--in this field which is of so much concern to each of us--so that you and all Americans will better understand what we have done and propose to do.

First, we created the Small Business Administration, the first independent peace-time agency to devote itself exclusively to matters of interest to small business. This made a central focus for problems inherent in carrying on millions of small free-enterprise undertakings in America.

Second, because these problems cut across the whole area of Federal activities, we established this year a Cabinet Committee on Small Business to be responsible on a continuing basis for developing policies and getting prompt action.

Within this framework, we have taken positive steps to assist small business in these different ways:

(1) Taxes. Several changes in the tax laws have been made in recent years. The excess profits tax was allowed to expire at the end of 1953, thus eliminating a levy that had been especially burdensome on many small, growing companies. The 1954 Tax Revision included measures, some developed in consultation with small business groups, which are of real assistance to small businesses. Some of these measures were: more flexible depreciation allowances; more liberal loss carry-back provisions; fairer treatment of earnings retained in the business to aid its growth and provide more jobs; more liberal tax treatment of research and development expenditures; greater leeway in the redemption of stock to provide funds for death taxes.

(2) Federal Competition. By eliminating 234 activities of the Federal Government, which are normally private commercial business, this Administration has increased small business opportunities. The Federal Government is getting out of competition with cobblers, drycleaners, nurserymen, hotel operators, and other small enterprises. To this list will soon be added many additional instances where we will have stopped Federal competition with small business.

(3) Government Procurement. During the last three fiscal years, Federal agencies directly awarded to small business concerns contracts totalling $11.3 billion. This represents 22.2 percent of the total prime contracts awarded by the Federal Government during the period, considerably more than the 19.4 percent share awarded to small business during the fiscal years 1951-1953. Moreover, during the last three fiscal years small business received subcontracts amounting to additional billions.

I was glad to know, for example, that over 400 small business firms are working on the construction at Shippingport, Pennsylvania, of the world's first large-scale atomic plant to make power exclusively for civilian use.

(4) Government Set-Asides. This Administration has extended to other large Federal agencies--such as the Veterans' Administration, the General Services Administration, and the Interior, Agriculture, Commerce and Post Office Departments-the set-aside policy which had before applied only to the Department of Defense. Under this policy, certain governmental purchases are set aside for award exclusively to small business concerns.

(5) Unfair Competition. More than two years ago a new division was set up in the Federal Trade Commission especially to deal with the problems encountered by small businesses in their efforts to compete effectively with other and larger concerns. During its brief existence this division has already handled over 2400 complaints and requests for advice from small business. Small business also benefits from vigorous enforcement of the anti-trust laws. I am proud to say that the record of such enforcement has never been more strict and effective than under this Administration.

(6) Financial Assistance. The Small Business Administration works closely with the nation's banks in assisting reliable small businesses to obtain needed financing not otherwise available. During a period while the demand for credit has increased the volume of commercial bank lending, the Small Business Administration has approved over 8,000 small business and disaster loans totalling nearly a quarter of a billion dollars.

(7) Management Counseling. To assist small business, the Small Business Administration and the Commerce Department collect expert information on management problems. Through publications, letters, and direct interviews by hundreds of field agents, they counsel with the owners of small businesses regarding management, procurement, new products, and financing. In particular, they help small firms get on government bidders' lists.

Together with the procurement officers of all Federal Departments, the Small Business Administration organized 20 conferences in all parts of the country at the outset of the current major buying season. These meetings, which are attended by a very high percentage of small manufacturers in the nearby area, give full information on opportunities to do business with the Federal Government. I understand you personally attended the recent conference in nearby Syracuse on October ninth.

Because this Administration is not content to rest on its record, progressive and sound as it is, we have been moving ahead with the recommendations for future action contained in the recent Progress Report of the Cabinet Committee on Small Business. One of these recommendations is the extension of the term of the Small Business Administration beyond the date of its present statutory expiration. Others are:

(1) Taxes--A one-third reduction in the tax on the first $25,000 of corporation incomes; accelerated depreciation for purchases of used property; an option to an estate consisting largely of investments in closely-held business concerns to pay death taxes over a period up to ten years, in order to avoid disruption of small enterprises; an option to any corporation with few stock holders to be taxed as a partnership. This latter option would enable the owner of a small business to avoid being taxed twice on earnings received from his business.

(2) Procurement--a comprehensive review of procurement policies, procedures and legislation, with a view to increasing small business' share in government contracts; steps to encourage greater sub-contracting to small business; and measures to insure that the need for progress payments by a small business concern will not handicap its obtaining a government contract.

(3) Unfair Competition--legislation to enable closer scrutiny by the Department of Justice of proposed mergers; and procedural changes in the anti-trust laws to facilitate enforcement.

(4) Corporate Financing--to facilitate the issue by small corporations of their securities--raising the existing statutory exemption from S. E. C. registration, from $300,000 to $500,000.

(5) Technological Aid developing, in consultation with research experts, programs to keep small business abreast of the rapid advances which research has made in modern technology and of improved and efficient methods of distribution.

(6) Reports to Government--to lessen the burden of paperwork on small businesses, simplification of statistical and other reports to government, including wage-reporting for Social Security records and income tax withholding.

I have already put into operation those recommendations of the Cabinet Committee which can be activated by executive direction. The other excellent recommendations must await the next session of the Congress.

I want to thank you and the members of your organization, for this opportunity to discuss the Administration's record. We believe it shows more accomplished, and more underway, for small business than ever before. We pledge to keep moving forward. To build a strong United States tomorrow, we must have today-as a solid foundation--the prosperity of small businesses throughout the nation.

DWIGHT D. EISENHOWER