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Mr. KLUCZYNSKI. I want to thank you, Mr. Metcalfe, for that splendid statement. I am sure that everybody, not only this subcommittee, but everybody of the small business community will be able to savor the testimony you have presented to this committee this morning. It is going to be very helpful, very beneficial when we request the proper agencies to draw up legislation that will take care of these problems.

Now, let me tell you that Mr. Hillary Sandoval, the Administrator of Small Business Administration, started this program shortly after he had been nominated by the President to take care of the small business men. The first thing that he started to take care of was the minority groups, because they need help; take care of the black

man.

Let me tell you something, in the last report we had, over 41 percent of the loans given by the Small Business Administration were given to minorities, because they have the ability and the know-how and the knowledge. All they need is a little help, a little start. We have started them in business and I know that they will do very well.

I have had experience in my own business, for over 50 years. Some of my help have been minority people, and not one of them ever owed me a penny. And I helped them out where I gave them $200 or $300 when their wife was ready to bear a child, and believe me when I tell you right here this morning, not one penny is due me from minorities. So I am for them. I am doing everything possible, and I am sure every member of this committee is doing the same thing.

Give them some help and they will show you they will be good Americans and real businessmen.

Mr. Horton.

Mr. HORTON. Mr. Chairman, I just want to thank Mr. Metcalfe for his very precise statement in presenting the problems. I also want to commend you for your statement toward the end in which you indicated the majority of the black people feel that we can find an answer to these problems and we don't have to tear up the establishment in order to find the answers.

I think this is a real healthy and fine attitude, and I am pleased that you presented it in just those words.

I am sure that, as a member of the board of aldermen, you have been very much concerned about this at what you might call the local level. Perhaps you might just briefly indicate some of the work that has been done here in Chicago through the board of alderman to try to help this problem.

Mr. METCALFE. Well, of course we have our Department of Economic Development, and I guess you are going to hear from Mr. Zimmerer later. This is a comparatively new department and a new program in the city. When I say "comparatively" I guess it is 5 or 6 years old. And they have done an exceptional job in this particular

area.

And the SBA has been very kind to the black people and to the small businessmen generally in Chicago. And that has given us encouragement.

Of course, there were some rough spots. I mean at the beginning all did not succeed. And I made my recommendation to the SBA in

regard to how I thought they might be able to improve because it is terribly important from a sociological point of view that every black entrepreneur has an opportunity to succeed, and that he does succeed because if he succeeds we all succeed. This helps us.

But I don't think that we can place too much stress upon the effect of the street gang on our small businesses. Now, we have done a lot about that in the city of Chicago. There are two schools of thought. We have a unit within the police, gang intelligence unit, and there are some who feel as though it ought not to exist. I take the opposite point of view. I say it is terribly important that we address ourselves to that, because what has happened is that these gangs have developed.

We didn't really think they were too serious. They started to kill off one another and later on they started to fight over turfs. And in the meantime they are growing in numbers and they decided there is money to be made, and so they started a program of extortion.

By this time fear had already set in, in the community, and so as a result of that areas have been wiped out. And then you have that black militant who says we don't want any white entrepreneur to come into our community, and they have extorted to the point, and have coerced them to the point where they have sold out or been burnt out, as the case may be.

We have areas in Chicago that are wasteland, where heretofore they had been viable shopping areas. I invite you to go down 63d Street from Cottage Grove to Stony Island. This used to be a very stimulating community, but now because it is in the area of one of the headquarters of one of the major street gangs, I mean it is just a wasteland.

And then we find shopping centers in our best neighborhoods today that are being intimidated by these gangs, and people are afraid to come and shop. A small businessman has to close his doors at 5 o'clock. And so the person who works and doesn't get off until 5 o'clock has no place to buy the necessities and many times people go to a shopping center in a suburb if he works out in a suburb in an outlying area and does his shopping there.

This does not help the local businessman. These are some of the problems.

Mr. HORTON. What you are saying is supporting one of the contentions I tried to make: the small businessman has enough problems trying to compete in the business world today if the factors were all good. If he had no crime or anything else, he would still have a problem of competing because today, economically, it is very difficult for a small businessman to compete with the large stores, chains, et cetera. And more and more these small business people are selling out because they can't make a profit in the operation. They are going into business for someone else and closing their own business. This creates a tremendous inconvenience to the public, especially in the urban area. What you are saying is the point that I would make, which is this: Crime is almost the straw that breaks the camel's back. And I am very distressed to hear what you say about certain areas of Chicago where there are no businesses at all, just dry areas in other words, as a result of this type of criminal operation.

I am sure that Mayor Daley, for whom I have a great deal of respect, and the Chicago police, are doing everything they can to try to solve this problem. And, of course, you did mention law enforcement in your statement. I think effective law enforcement is a very important element to have in the urban areas so that people can feel free to not only walk the streets but to do business there.

Črime makes it doubly difficult when they have that type of situation confronting them. Thank you, Mr. Metcalfe, for your testimony. Mr. KLUCZYNSKI. Mr. Hungate.

Mr. HUNGATE. Thank you, Mr. Chairman. Mr. Metcalfe, it is a privilege to have you with us today.

You have mentioned success symbols. I think to some of us Ralph Metcalfe has been a success symbol for a long time. Not too long, however, for we are both young fellows. I am really pleased to have you testify. It has been a pleasure to serve with your predecessor, Mr. Dawson, and I look forward to your being in Washington.

Mr. METCALFE. Thank you.

Mr. HUNGATE. It is important, and we might argue that we have, as you mentioned, success symbols to look to and I think you do a great job in this area. I think we must also realize that not all of the white businessmen succeed, and possibly not all the black men will. And we must not become discouraged if a few of those incidents happen. We must continue to have a country where people can be a success without having to win 20 games or varicus achievements of that kind, and where the average man with ability can improve his condition.

When we discuss this particular insurance problem which we are investigating today, we should remember that some of the Supreme Court rulings in earlier times have not made it always clear, or perhaps clear enough, as to where the regulations can be, whether it can be State or Federal. In some cases these rulings have limited action the Federal Government perhaps should have taken in this field.

I was very interested in your testimony about spreading the risk in the insurance field: how chain stores because they operate, I presume, citywide or nationwide, can still maintain insurance because they have a lot of business in low risk areas as well as high risk areas. This challenges our very concept of the philosophy of insurance, whether it is meant to spread the risk.

This is the philosophy behind insurance. In the case of the small businessman where he is not in a chain, but we have perhaps as many or more small businessmen in high risk areas, low risk areas, all risk areas-if they are going to spread the risk by only taking insurance in areas where there is little risk, perhaps their proper function is not being performed. We have heard about Government interference or meddling, to which you refer. It seems like when the storm clouds break, as the stockbrokers did, they may want insurance when losses come by, they want the Government to take a look at it. I suppose the commercial airline people would want the Government to stand by. Some of us are concerned that when the skies are bright and sunny and there is a lot of money to be made, the Government isn't called in. So as I say, I think you have touched the heart of this problem and we need to reexamine our entire philosophy of what the Government's role should be and what the insurance role should be toward the small businessman and all businessmen.

Thank you very much for your contribution.

Mr. METCALFE. If we could just use the same plan as the chainstores, they have the low risk areas and the high risk areas, but it balances off. Maybe the whole insurance industry may do something similar to that, because we all have a vital interest. I mean we are interrelated. I mean this is the thing that I think we ought to keep present in our minds at all times. Those of us who live in the ghetto are not segregated in some foreign area, because many times the success of a segregated or a ghetto area or an inner city area is related to others. People have to be concerned as to their safety. They have to be concerned about their investments. They have to be concerned about many things, so one must complement the other.

Mr. HUNGATE. You make an excellent point. We are related, whether we choose to be or not.

Mr. METCALFE. Right.

Mr. HUNGATE. To me it is analogous and tends in many quarters to compare with our last depression in the late twenties and early thirties, that the farmer was largely ignored to some extent. He wasn't properly sharing in the prosperity of others at that time. And it wasn't long before we found out that if one segment of our economy is suffering it won't be long before all suffer together.

Thank you very much for your statement.

Mr. KLUCZYNSKI. Thank you, Mr. Hungate.

I would like to ask a question of Mr. Metcalfe. Do you feel that crime is hurting both black and white businessmen

Mr. METCALFE. Yes. I think it is definitely. Unfortunately we have developed a climate where crime is being accepted by too many people. Even the youngsters now have disregard for authority, and as long as they can see the profit in it and have been taught it is all right to take from one, they do a lot of rationalizing here.

I don't see them stopping at any particular street because beyond that street blacks do not live. They move into other areas. If they are crime prone then they are going to go into all communities of our areas, including the suburbs, and commit crimes.

Mr. KLUCZYNSKI. Mr. Metcalfe, do you know any area in the city of Chicago where businessmen cannot get insurance?

Mr. METCALFE. Yes, there are many areas in Chicago where it is extremely difficult. If he does, he pays probably triple the cost of it. That is what I referred to when I referred to the redlining area.

You may have your business on one side of the street and your insurance may cost you a certain amount. Then if your business was just across the street, it would be less because it would be in a different

zone.

Mr. KLUCZYNSKI. Do you think that the Federal Government should write direct insurance or subsidize the premiums, which is very, very important. And Washington is just wondering whether we in the Federal Government should subsidize the premium or should write the insurance, because it is getting so that small businessmen cannot get any insurance anywhere.

Mr. METCALFE. I don't think I can answer that question categorically, Congressman. Because I think first we have got to present the problem to the insurance industry. We have to let them know very clearly that these small businesses must have adequate insurance at

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reasonable prices. Then, if they don't do it, then we have to look into the possibility. This may be a reasonable or a powerful force to cause them to sit down and be more conciliatory.

Mr. KLUCZYNSKI. It is a problem that needs a lot of study.

The Chair recognizes the gentleman from New York, Mr. Button. Mr. BUTTON. Mr. Metcalfe, I would like to join in the thanks of the other members of this subcommittee for your testimony. I found it very, very helpful to my understanding the problem, and I certainly would like to thank you and commend you for your presentation of it. I was particularly interested in your reference to the FAIR insurance program, and I wonder if you could give us any elaboration of that?

Mr. METCALFE. If you recall, Congressman, I suggested that we look into it because, as I understand the FAIR insurance program, they attempted to disseminate the insurance and in that particular area, I think they were one of the-this program was one of the forerunners to the things we have been talking about. And I think with some modification maybe we might be able to adopt something similar to that.

But the objective, I think, is similar to what we are all concerned about.

Mr. BUTTON. Practices of the insurance industry you have described are certainly eye opening to me in this area, and I certainly feel that a great deal of remedial attention is called for.

Again, I want to express my appreciation for your statement. Mr. METCALFE. Thank you.

Mr. BUTTON. Thank you, Mr. Chairman.

Mr. KLUCZYNSKI. I want to thank you again, Mr. Metcalfe, for your wonderful testimony, and as I said before, it will be very helpful when we get to some of the agencies to write the legislation.

Thank you once again.

Mr. METCALFE. Thank you very much for the opportunity to testify. Mr. KLUCZYNSKI. Our next witness is a very, very good friend of mine, Mr. Harold Marovitz, attorney at law.

Mr. Marovitz, it is nice to have you here. You may take the witness stand and proceed as you wish.

Mr. MAROVITZ. Thank you for the compliment.

Mr. KLUCZYNSKI. Do you have a prepared statement or do you want to speak off the cuff?

The floor is yours. You go ahead.

TESTIMONY OF HAROLD MAROVITZ, CHICAGO, ILL., COUNSEL, REPRESENTING AN ASSOCIATION OF PAWNBROKERS

Mr. MAROVITZ. Well, I represent an association of pawnbrokers. The association was organized back in 1947, at one time we represented 100 percent of all the pawnbrokers in Chicago outside of the Loop area.

We at that time had 56 or 57 licensed pawnbrokers in Chicago. We have 17 members now. There are approximately 24 licensed pawnbrokers throughout Chicago, nine of them are in the Loop area.

After the problem that arose after the death of Dr. King, there were 10 shops that were completely demolished and destroyed. They

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