Congress next week to increase the present statutory debt ceiling of $275 billion.

Senator WILLIAM F. KNOWLAND, of California, acting Republican floor leader, said he expected the Government's financial situation to be canvassed at a White House meeting early next week. He refused to guess whether action on a debt limit bill would delay congressional adjournment beyond the present July 31 target date.

Senator WAYNE MORRIS, Oregon, Independent, told the Senate that if the administration tried to raise the debt limit Congress might remain in session until Christmas discussing the issue.

Mr. BYRD, who has been cooperating with administration financial officials, said in a memorandum prepared at the request of colleagues that he expected Federal spending in the current fiscal year, which began July 1, to reach about $74 billion. He said he doubted receipts would exceed $64 billion. FEARS 10-BILLION DEFICIT

"Unless Congress increases taxes, the Government is going to be faced with another $10 billion deficit and it will be almost impossible to balance the budget in the next year," Senator BYRD said.

George M. Humphrey, Secretary of the Treasury, has been aiming at a balanced budget by July 1, 1954. Some other Republicans have contended that taxes can be reduced next year, when control of Congress will be at stake in the November election.

Senator BYRD said that unless there were substantial changes in the world situation, the outlook for the fiscal year beginning next July 1 was going to be as bad as this year's "and maybe worse."

Asserting that the Treasury would lose $4 billion in revenue over a year's time from expiration of the excess-profits tax and a 10-percent cut in income taxes-both due next January 1-Mr. BYRD said income in the next fiscal year probably would not exceed $60 billion.

"With expenditure in fiscal 1954, which began July 1, 1953, of $74 billion, it is therefore evident that we must reduce expenditures in fiscal 1955 (beginning July 1, 1954) to the extent of $14 billion, which I do not believe is possible," Mr. BYRD said.

MAY SEEK HIGHER LIMIT

"Therefore we may expect another large deficit in fiscal 1955, making three huge deficits in succession. These three deficits will run the debt up to at least $285 billion and there is no assurance that there will be a balanced budget for fiscal 1956 (beginning July 1, 1955)."

Senator BYRD said in his memorandum that in estimating the present year's income at $64 billion he was not taking into account the expiration of many excise taxes next spring and that 5 percent would go off the corporation taxes next April 1, unless Congress acted in the meantime. His guess that the Federal debt might rise to $285 billion in the next 2 years indicated the Eisenhower Administration might be faced with the necessity of seeking a substantial increase in the statutory debt limit of $275 billion.

A $5,900,000,000 borrowing on tax anticipation certificates has boosted the Treasury's total debt to a peacetime peak of $272,413,436,115.14. Secretary Humphrey blamed past spending policies for the high debt, but Senator BYRD's estimates indicated that, instead of reducing the indebtedness, the Eisenhower administration was likely to increase it substantially in the next 2 years.

Senator MORSE in a Senate speech, said Secretary Humphrey had had to reverse his field on a "hard money" policy and had "funneled in about $6 billion in easy credit" in selling the tax anticipation certificates. These short term certificates were bought up mostly by corporations, which will use them to meet tax bills next spring.

MARTIN IS DOUBTFUL

WASHINGTON, July 18-Representative JOSEPH W. MARTIN JR., Speaker of the House of Representatives, said today there was little likelihood this Congress would increase the legal ceiling on the national debt. He said the administration had not advised him if there were any plans for seeking to raise the ceiling, in any case, he said, he does not expect Congress could do anything about it before adjourning at the end of this month. "I hope it can be avoided," Mr. MARTIN added.

Mr. MORSE. Mr. President, I also ask unanimous consent to have printed in the RECORD at this point as a part of my remarks an editorial entitled "A Glimmer in the Gloom," which appears in today's issue of the Wall Street Journal. It also refers to the pronouncement by the Senator from Virginia [Mr. BYRD]. I may say that the observations of the Wall Street Journal on this general subject should in my judgment be heeded by the Eisenhower administration.

There being no objection, the editorial was ordered to be printed in the RECORD, as follows:

A GLIMMER IN THE GLOOM

It is a gloomy prediction, this one of Senator BYRD'S that the Government's deficit is going to get bigger instead of smaller next year and that Congress is more apt to be raising taxes than cutting them. It is all the more gloomy because it grows out of hard figures that so far refuse to go away.

Mr. BYRD yesterday reported on some of his arithmetical homework. Adding up potential Government expenditures for the present fiscal year (ending June 30, 1954) he got $74 billion. After allowing for the tax reductions scheduled to come automatically next January, he estimated receipts at no more than $64 billion. This would leave a deficit a bit higher than that estimated by the Treasury.

The Senator estimated that in the following year the Treasury would lose $4 billion from those same tax cuts, so that 1955 revenue would not exceed $60 billion. "With expenditures in fiscal 1954 of $74 billion,” he said, “it is therefore evident that we must reduce expenditures in fiscal 1955 (beginning next July 1) to the extent of $14 billionwhich I do not believe is possible."

Senator BYRD is a man who treats figures respectfully and he probably knows more about the budget than any other Member of Congress. What he says is not to be easily dismissed.

Indeed, if there is any glimmer at all in this gloom it is that a good many other Congressmen have also begun to take a sober look at the same arithmetic.

Tomorrow the House will take up the report of its Appropriations Committee on the foreign aid bill. In this report the committee says:

"With the exception of a balanced budget accomplished during the 80th Congress, this country has operated on a deficit for so long that, unfortunately, too many individuals are taking it for granted. They have become accustomed to the term.

"At the risk of seeming academic, the committee must reiterate the thought that only a balanced budget and a sound economy can give us and the other free nations of the world the strength with which to wage a continuing war on communism, be it hot or cold."

The committeemen themselves were not academic. When they met on Saturday they cut $1.1 billion out of President Eisenhower's request for foreign aid funds. The $4.4 billion measure is now nearly $3 billion below

the original request of the Truman administration.

This, it should be noted, is not an isolated action. President Eisenhower has been cutting back on the Truman requests and Congress has been cutting back on the Eisenhower requests.

We have been disillusioned too often not to realize that Congress may mellow its economy mood. But it has done enough already to make it clear that Senator BYRD'S fears are shared by others. Certainly it is true that neither this administration nor this Congress takes a deficit for granted.

And there a hopeful prospect glimmers, The even through a $14 billion obstacle. dangers to be most feared are those unadmitted. They are great difficulties indeed which cannot be overcome once recognized and met with resolution.

Mr. MORSE. Mr. President, I also ask unanimous consent to have printed in the body of the RECORD at this point in my remarks an article entitled "The Outlook-Appraisal of Current Trends in Business and Finance," published in today's Wall Street Journal.

There being no objection, the article was ordered to be printed in the RECORD, as follows:

THE OUTLOOK-APPRAISAL OF CURRENT TRENDS IN BUSINESS AND FINANCE

Congress has made some rather notable progress towards regaining control of the Government's expenditures.

The Senate Appropriations Committee has approved a bill to provide $34.5 billion for the Defense Department in the current fiscal year. It added neglible sums to the Housepassed bill. But the $34.5 billion is still $1.2 billion less than President Eisenhower proposed and $6.2 billion less than President Truman budgeted. Since the President himself cut $5 billion from the Truman defense budget, it is reasonable to suppose that administration forces will not seriously object to the new-money provision for military ends on the scale that Congress obviously favors. In itself this military appropriation bill is no more than a preliminary step toward budget balancing. There are unexpended balances of previous military appropriations in an estimated amount of $57 billion. Some undisclosed but probably major part of the balances have been "committed" for expenditure over several coming years through long-term contracts. But if and as new money appropriations can be and are reduced, actual defense outlay will be brought down. It is worth mention that on motion of Senator BYRD the Senate committee adopted a requirement that the Defense Department deduct from its appropriation whatever expenditures it makes abroad out of the counterpart funds derived from the operations of the Mutual Security Agency.

Meanwhile, the House Appropriations Committee has just cut $1.1 billion from the President's requested foreign-aid program. The committee admonished that the strength to fight communism could come "only from a balanced budget and a sound economy." President Eisenhower asked for a little more than $5 billion; the committee voted for $4.4 million.

All these amounts are well below the $7.5 billion President Truman budgeted for fiscal 1954 (the current year)-so much so in fact that President Eisenhower is contending against any reduction in the new-money appropriation he requested for this purpose. The amount must still be passed upon by the House itself and the Senate-and perhaps also by a conference committee if the two Chambers pass bills that differ.

It still appears uncertain that any such slash in foreign aid as some Members of Congress have stoutly advocated will come about

On superficial indications it would appear that the President has become less economyminded than the congressional leaders. Probably he is not less devoted to the cause of budget balance and a dollar of stable exchange value now than when he was inaugurated, but he regards taxes as the safer avenue of approach to it for the time being. He has had his way with an extension of the misnamed excess profits tax to the end of 1953 and continued income taxation of individuals at present rates to the same date. He has already indicated his objection to later reductions in some other tax rates provided for in existing law.

Determined, after his defeat on EPT, to get at least a little tax relief now, Chairman REED of the Ways and Means Committee has introduced a bill to allow corporations a longer time in which to pay their accrued income taxes for a given year. That time of grace was decisively shortened by the Mills law of 1950. But such a measure would be of little help to big or little business units. Whatever the timing of payment, a corporate taxpayer must keep on hand in cash or short term paper its reserves against tax liability, instead of being free to reinvest such earnings in the undertaking. And, Mr. Eisenhower would doubtless argue, it is no time to postpone tax collection when the Treasury is running a commodious deficit.

The excess-profits tax is a horse of another color. Its title is disingenuous, it bears unequally and unfairly on individual enterprises and it creates hardships for small and recently established undertakings. Excess profit has never been rationally defined and never will be while a private enterprise economy endures. The President conceded all this (see his message of May 20) but his thesis was that the Government simply cannot afford to give up EPT revenue now instead of 6 months later. However, he has impliedly pledged himself not to ask for its reenactment in January. Tax relief of any substantial sort must be regarded as out until the turn of the year. The administration has as good as promised it for delivery early in 1954.

Allowing for the usual effects of midsummer heat and the vacation season, no serious cloud has appeared over the business horizon. The rate of automobile production, which many observers regard as the master key to the duration of a boom, is well sustained, though its continuation through the fourth quarter of the year is a matter on which opinions differ widely. The Iron Age reports that "pressure" for steel products has eased but that they are not going begging for takers by any means.

F. A. KORSMEYER.

Mr. MORSE. Mr. President, I ask unanimous consent to have printed in the body of the RECORD as a part of my remarks an article entitled "Humphrey Backs Forecast of Higher 1954 Revenues," published in today's New York Journal of Commerce. After the Secretary of the Treasury gets through with all his alibiing, in endeavoring to "pass the buck," so to speak, as I said Saturday afternoon, to the Truman administration, the fact remains, and an analysis

of his own figures shows, that starting out with his hard-money policy, and the increase in the interest rate on Government bonds, which never should have been made, he, by such action as that, has increased the national debt.

I venture to say to my Republican and Democratic friends that if the administration comes forward with a proposal to increase further the national debt, following the suggestion that we raise the statutory debt limit to $290 billion, as against the present ceiling of $275 billion, we ought to proceed to give the present administration a long seminar in fiscal policies, backing up the observations made by the Senator from Virginia.

There being no objection, the article was ordered to be printed in the RECORD, as follows:

HUMPHREY BACKS FORECAST OF HIGHER 1954 REVENUES TREASURY SECRETARY STILL STANDING BY EISENHOWER $68.5 BILLION ESTIMATE FOR CURRENT FISCAL YEAR-NEARLY $6 BILLION ADDED TO NATIONAL DEBT WASHINTON, July 19.-Secretary of the Treasury George M. Humphrey said today that he still is standing by President Eisenhower's May 20 forecast of a $68.5 billion Federal Revenue total in fiscal 1954.

But the Secretary made his reaffirmation in guarded fashion. "We see no reason yet to change the estimate," he said.

Mr. Humphrey discussed the fiscal 1954 prospect as he made public a breakdown of the disappointing revenue collections for fiscal 1953, which ended June 30. Tax collections in 1953 were down $2.839 billion from President Truman's January budget estimate and were about $2 billion below Mr. Eisenhower's revised estimate of May 20. FISCAL 1954 RECEIPTS LIKELY TO BE HIGHER Secretary Humphrey said, however, that current corporate profit and national income figures "give assurance that receipts for the year will be above those in 1953." The 1953 receipts total came to $68.369 billion, before deduction of $3.151 billion in tax refunds.

"Corporate profits in the first quarter of this calendar year," he said, "are now estimated at an annual rate of about $3 billion above last year's total. Likewise, national income in the first 3 months of 1953 is estimated at an annual rate of about $305 billion, an all-time high, and $14.5 billion above the 1952 level."

In comparing the actual 1953 receipts to the total estimated by President Truman, Secretary Humphrey placed the difference at $3.5 billion. This estimate shows net receipts, not tax collections, however, and is swollen by the fact that the Treasury under Mr. Humphrey paid out $640 million in tax refunds that Mr. Truman had budgeted for the next fiscal year.

The breakdown made public by Mr. Humphrey shows that corporate income and excess-profits tax collections came to $21.548 billion, an increase of $81 million from 1952, while individual income tax collections amounted to $32.521 billion, up $2.641 billion from 1952.

Excises rose $1.080 billion from 1952 to $9.973 billion in 1953, while all other receipts (net) were up $136 million to a total of $4.327 billion.

The 1953 collections were the highest in history, but the Government still ended the year on June 30 with a $9.389 billion deficit.

TREASURY ADDS BILLIONS TO NATIONAL DEBT the weekend added nearly $6 billion to the WASHINGTON, July 19.-The Treasury over national debt, bringing it to a peacetime record high of $272,361,259,803.91.

That is about $1,700 for every man, woman, and child in the country.

The boost made it appear likely that Secretary of the Treasury Humphrey will have ends, to increase the $275 billion ceiling set to ask Congress, before the present session by law on the national debt.

However, Mr. Humphrey, in a statement announcing the increase, did not refer to the ceiling.

CLERGYMAN DEFENDS KOREAN UNITY-SCORES WAR HYSTERIA

Mr. FLANDERS. Mr. President, it has never been clear to me that the desire for peace in Korea at any price is universal. I have cited evidences of that from time to time on the Senate floor, including a letter from a Vermont mother whose son was killed in Korea. I should like to give further evidence of this by reading into the RECORD a news release from the National Association of Evangelicals, dated July 14, 1953. The release is based upon information received directly from Korea. The article reads:

CLERGYMAN DEFENDS KOREAN UNITY-SCORES WAR HYSTERIA

Returning to the Nation's Capital today, Dr. Clyde W. Taylor, secretary of affairs of the National Association of Evangelicals, reported on a midwest conference of American and Korean Christian leaders regarding the future of that unhappy land. Dr. Taylor expressed great concern over the effect of the hysterical fear of another world war, especially on the part of some of our allies, and its results on the peace talks in Korea. This fear threatens to destroy perspective and discount the importance of ethics and righteousness. Dr. Taylor commented: "This is a most dangerous reaction on the part of Americans who should be leaders in the I do not believe that the great majority of continuing fight for freedom everywhere. Americans who glory in their own unity and independence are willing to deliberately perpetuate the division of one of the greatest little freedom-loving nations in the world." He recalled the words of an American patriot purchased at the cost of slavery and chains?” who asked, "Is peace so precious as to be

One of its outstanding pastors having fled from the north to Seoul, Dr. Kyung Chik Han, now pastor of the 4,000-member Yong Nak Presbyterian Church of Seoul, speaking at the conference, said, "We know from bitter and hard experience that you simply cannot trust the Communists and, please remember, we are all Koreans." Also present at the conference was an outstanding Presbyterian military chaplain who reported, "There is no difference between South and North Koreans-they are one people." He then explained that he had worked at the prisoner-of-war camps and out of approximately 100,000 prisoners of war, 20,000 were Christians and many thousands of the others were studying Christianity. He stated that during his 3 years of work among these prisoners of war they had established 15 Bible institutes in the camps with over 3,800 students studying for the ministry. In 1 such camp 6 daybreak prayer meetings with a daily average attendance of 1,500 each, met for many months praying for release into their own country. The chaplain concluded his remarks by stating: "When Syngman Rhee freed 27,000 prisoners of war he was simply welcoming back into his country his own countrymen and of these over 30 percent were professed Christians, all of them bitterly opposed to communism."

Dr. Taylor concluded by saying, "I believe that God is on the side of Syngman Rhee. I fear that America will some day

hang her head in shame if we fall here. Can America be true to herself and to her God in a compromise with diabolical communism, being coerced into a denial of the very freedoms that have made America great?”

SOVIET TRADE

Mr. HUMPHREY. Mr. President, I have in my hand a dispatch dated July 17, 1953, under the caption "Soviet Trade." I think this news dispatch is very revealing. It again sets before us the challenge which our Government and other free governments now face because of the technical offensive of the Soviet Government in undermining the trade positions of Western European countries as well as of our own country. I read only a few lines from the dispatch:

Soviet Russia is waging an economic peace offensive and is succeeding because "our own American policies are forcing a situation under which East-West trade becomes a necessity for the economic survival of Western Europe."

That is the view expressed by Warren Lee Pierson, Chairman of Trans-World Airlines and Chairman of the United States Council of the International Chamber of Commerce, in a report on the recent ICC Congress in Vienna, which the Russians attended as observers.

Mr. Pierson goes on to point out that the Russians pushed the idea of renewed East-West trade at Vienna in quiet backcorridor talks, and he called on the United States Congress to institute a more liberal world-trade policy to "expand the volume of imports of manufactured goods, increase the flow of private investments for economic development abroad, and encourage our friends abroad to stand on their own feet."

Mr. President, on other occasions in the Senate I have brought to the attention of my colleagues the most serious thing which I think our Government faces, namly, the cleverly designed peace offensive of the Soviet in weakening the trade relationship between the United States and other lands. I am somewhat shocked to see that during the coming year, which is a crucial and critical year, our Government has taken a position that it will do nothing except to tie to what we have.

Mr. President, I ask unanimous consent that the entire dispatch be printed in the RECORD at this point.

There being no objection, the dispatch was ordered to be printed in the RECORD, as follows:

NEW YORK.-Soviet Russia is waging an economic peace offensive and is succeeding because our own American policies are forcing a situation under East-West trade becomes a necessity for the economic survival of Western Europe.

That is the view expressed by Warren Lee Pierson, chairman of Trans-World Airlines and chairman of the United States Council of the International Chamber of Commerce, in a report on the recent ICC congress in Vienna, which the Russians attended as ob

servers.

"Most Europeans today would prefer not to rely upon American aid," Pierson declared. "The world is impatient for a resumption of normal trade which now is prevented by ideological differences. The Soviets are aware of this."

Noting that the Russians pushed the idea of renewed East-West trade at Vienna in quiet, back-corridor talks, Mr. Pierson added:

"The American public might as well adjust itself to the fact that there will be an increase in East-West trade."

He called on the United States Congress to institute a more liberal world-trade policy that would "expand the volume of imports of manufactured goods, increase the flow of private investments for economic development abroad and encourage our friends abroad to stand on their own feet."

"We can challenge the Russians with an economic offensive of our own," he said. "The economic potential of the free world is much greater than that of our adversaries."

MESSAGE FROM THE HOUSE

A message from the House of Representatives, by Mr. Maurer, its reading clerk, announced that the House had passed, without amendment, the following bills of the Senate:

S. 122. An act directing the conveyance of certain property to the city of Rupert, Idaho;

S. 498. An act to authorize an agreement between the United States and Mexico for the joint operation and maintenance by the International Boundary and Water Commission, United States and Mexico, of the Nogales sanitation project, and for other purposes;

S. 630. An act to authorize the conveyance for public-school purposes of certain Federal land in Gettysburg National Military Park, and for other purposes;

S. 967. An act to extend the duration of the Hospital Survey and Construction Act (title VI of the Public Health Service Act);

S. 1433. An act to extend the benefits of certain provisions of the Reclamation Project Act of 1939 to the Arch Hurley Conservancy District, Tucumcari reclamation project, New Mexico; and

S. 1981. An act to continue in effect certain provisions of section 6 of the act of February 4, 1887, as amended, relating to military traffic in time of war or threatened war, for the duration of the national emergency proclaimed December 16, 1950, and 6 months thereafter, or until such earlier date as may be established by concurrent resolution of Congress.

The message also announced that the House had agreed to the report of the committee of conference on the disagreeing votes of the two Houses on the agreeing votes of the two Houses on the amendments of the Senate to the bill (H. R. 5690) making appropriations for additional independent executive bureaus, boards, commissions, corporations, agencies, and offices, for the fiscal year ending June 30, 1954, and for other purposes; that the House receded from its disagreement to the amendments of the Senate numbered 9 and 24 to the bill and concurred therein, and that the House receded from its disagreement to the amendments of the Senate numbered 3, 11, 13, and 25 to the bill, and concurred therein, each with an amendment, in which it requested the concurrence of the Senate.

CREATION OF SMALL BUSINESS ADMINISTRATION

The Senate resumed the consideration of the bill (S. 1523) to create the Small Business Administration and to preserve small-business institutions and free, competitive enterprise.

Mr. CAPEHART. Mr. President, the business before the Senate is Senate bill 1523, which was introduced by the able Senator from Minnesota [Mr. THYE). This bill contains two titles. Title I provides for dissolving the Reconstruction Finance Corporation. Title II provides for establishing a new small-business agency to replace the Small Defense Plants Administration, to be known as the Small Business Administration, and gives that agency the right to loan money to small business concerns.

Mr. President, I have placed on the desk of each Senator a memorandum showing exactly what happens to each function of the RFC under the provissions of this bill. I think I should read it, because I am certain that Senators will be interested in knowing precisely what is going to happen to the several functions of the Reconstruction Fiance Corporation.

Title I of the bill, as I have stated, deals exclusively with the liquidation of RFC. Here is what happens under the bill to the RFC, an agency which has been in existence since 1932:

First. In the case of Federal Civil Defense Administration loans, they will be transferred to the Treasury Department.

Second. In regard to what is known as 302 defense loans, meaning loans under section 302 of the Defense Production Act, under the bill which we are considering, the President is given the right to designate to which agency he wishes to transfer that function. The reason for that is that in the original Defense Production Act, by section 302, we gave the President the right to designate the agency to handle such loans, and he designated the Reconstruction Finance Corporation. So we are simply returning the power to the President to designate the agency.

Third. Tin: Here, again, we will have the same circumstances as we have under section 302 loans if this bill is passed. The President will designate the agency to handle the program.

Fourth. Rubber: There, again, the President designates the agency, as the Rubber Act of 1948 gave him the right to do. In that instance he designated the RFC. So, if, and when the RFC is liquidated, the President will again designate some other agency.

Fifth. The abaca program: There, again, the President designates the agency, as in the cases of the three which I have just mentioned.

Sixth. Disaster loans: They will be handled, under the proposed legislation now being considered, by the new Small Business Administration.

Mr. HUMPHREY. Mr. President, will the Senator from Indiana yield at that point?

Mr. CAPEHART. I yield.

Mr. HUMPHREY. What is the relationship of the disaster loans which may be necessitated by such things as floods, earthquakes, or something of that sort, to the Small Business Administration? I am not being critical of the bill. I merely want to know how they become relevant to the activities of the Small Business Agency.

Mr. CAPEHART. Disaster loans for many years have been handled by the RFC.

Mr. HUMPHREY. agency?

As a banking

Mr. CAPEHART. Not only as a banking agency, but as the agency which designated who would get the money and in what amounts. In fact, Congress designated the RFC as the agency to handle disaster loans, and authorized and then appropriated a certain amount of money for that purpose. Under the bill now being considered, since the RFC would be liquidated, if Congress agrees, the Small Business Administration would take over exactly the same functions, and in the same way, as the RFC previously handled them.

Mr. HUMPHREY. I can see how it might be necessary to find a place for such an activity as the disaster-loan service of the Government, but how would it fit in with the Small Business Administration? The RFC became a large banking instrumentality, handling loans in varied lines of activity. All I am asking is, is there any better place to put disaster-loan activities than under the Small Business Administration? Mr. CAPEHART. I rather doubt it, I rather doubt it, for the simple reason that ordinarily disaster loans are small loans, made to small businesses, nonprofit institutions, and persons who are in distress as a result of floods and other disasters. I should think that the Small Business Administration could deal with that subject much better than could the Treasury, for example, or the Department of Commerce. The Small Business Administration will be close to smallbusiness men. I doubt if a better agency than the proposed new agency could be found to handle loans of this character which heretofore have been made by the RFC.

Mr. HUMPHREY. I wish to thank the Senator from Indiana. My feeling was that when there was need for a disaster loan in an agricultural area, it should be handled by the Farmers' Home Administration. Under the bill, loans will be handled primarily for business establishments, factories, railroads, and so forth, that may require loans because of a major flood.

Mr. CAPEHART. Yes. I understand I understand that the average disaster loan in the past has been about $3,000, and the total amount loaned has been about $18 million. So I would say the making of such loans belongs in the Small Business Administration, which can have offices scattered throughout the United States. I do not know how many offices there will be, but certainly they will be close to small-business men.

In time of flood, it is always the little fellow who gets washed out. I doubt that a better agency could be found to handle such loans.

Mr. HUMPHREY. What about the case of a farmer who might need a disaster loan? Could that also be cleared through the Small Business Administration?

Mr. CAPEHART. Yes. Yes. For example, I remember there occurred in Indiana a few years ago a hurricane which destroyed a number of houses in a small

town, and then destroyed a great many barns and houses on farms. The RFC handled that situation. Under the proposed legislation, the same Small Business Administration would do exactly as the RFC did.

Mr. HUMPHREY. Would that operation be handled by the Small Business Administration under a separate fund?

Mr. CAPEHART. There would be a separate fund of $25 million earmarked for disaster loans only. The outstanding balance in the past has been about $18 million.

Mr. HUMPHREY. Do I understand correctly there would be no conflict between the proposed activity and the Farmers' Home Administration, as related to the Department of Agriculture?

Mr. CAPEHART. None whatever, because the Small Business Administration would do nothing more than what the RFC had done in the past with respect to small-business loans.

Mr. HUMPHREY. In other words, the activities of the Farmers' Home Administration would not be reduced by the new activity?

Mr. CAPEHART. It would have absolutely nothing to do with it, because all that is being proposed is that the new agency be given power to do that which the RFC had been doing insofar as small-business loans are concerned.

Mr. HUMPHREY. I merely wanted to have the legislative history of the bill made clear.

more than $600 million. True, there have been 5, 6, or 7 bad loans, such as the Lustron and Kaiser-Frazer loans, and perhaps 3 or 4 more we have heard about. But can the Senator from Indiana give any reason why, when a group of people in a small town want to borrow money to build, for example, a hotel, they cannot do what has been done in a great many other places-go to the RFC and borrow from a half million to a million dollars?

Mr. CAPEHART. The RFC was originally created as a depression measure in the best interest of all the people, and was designed primarily to lend money to banks, insurance companies, railroads, and large corporations. There have now ensued from 12 to 14 years of exceptionally fine business conditions. The national income at the moment is the highest in the history of the United States, and the country is very prosperous. The thought is that at present the big fellow can probably take care of himself, and I would say that anyone who wanted to build an 800-room hotel would be a pretty big fellow.

Mr. LANGER. It is the town I am talking about, the people of which get together in an effort to construct a needed project.

Mr. CAPEHART. It would seem as though the big fellows today, under existing conditions, could well finance themselves. In this instance we are proposing to establish a new agency to lend

Mr. CAPEHART. I yield. Mr. LANGER. I understand from what the distinguished Senator from Indiana has said that the new agency is going to do everything the RFC did.

Mr. CAPEHART. The Small Business Administration can do everything the RFC has done, except that it is limited to small-business loans of not more than $200,000 to any single concern.

Mr. LANGER. If RFC is abolished, where will people go who want to borrow $300,000?

Mr. CAPEHART. If RFC is abolished, and the proposed legislation is passed, limiting loans to $200,000, such persons would have to be satisfied with a maximum of $200,000.

Mr. LANGER. Let us consider the situation in the Northwest, as I explained it to the Senator from Indiana the last time the matter was before the Senate. Mr. CAPEHART. Yes; I remember the occasion.

Mr. LANGER. There was nowhere else in the world for people in the town of Williston, who wanted to build a hotel, to turn except to the RFC. A hotel costing $800,000 has been built. Oil has been discovered in that region, and if the hotel had not been built, I do not know where the people who have flocked there would have been housed.

The RFC was established under the leadership of the Republican Party, when Herbert Hoover was President. I simply cannot understand why any Republican would wish to abolish RFC, in view of all the good it has done. It has been a great success. It has made a profit of great success. It has made a profit of

to make this a 100-percent small-business men's agency, to help persons who need $5,000, $10,000, $20,000, $25,000, or $50,000 loans, who cannot possibly secure them in any other way. At the moment there is no need to have an agency to lend $1 million, $2 million, $3 million, $5 million, or $8 million.

Mr. LANGER. Mr. President, will the Senator yield further?

Mr. CAPEHART. I yield.

Mr. LANGER. The distinguished Senator from Indiana will recall that the average RFC loan has been $25,000, so why is it necessary to have a new agency to handle such small loans?

Mr. CAPEHART. That has been the average. But, of course, the RFC at one time loaned, in the case of Kaiser-Frazer, as high as in the neighborhood of $100 million. I think a $80 million loan was made to the Baltimore & Ohio Railroad. The RFC has made some very, very large loans. While perhaps the average has been $25,000, I would say that 90 percent of the money the RFC has loaned has covered not more than 10 percent of the total number of loans.

Mr. LANGER. Mr. President, will the Senator yield further?

Mr. CAPEHART. I yield.

Mr. LANGER. I simply wish to call the Senator's attention to the fact that the debt of the farmer today is more than it was during the depression. In North Dakota we are in worse shape today than we were in 1932 and 1933 so far as farm loans are concerned. During that time not a single insurance company would lend a dollar in North Dakota. If the pending bill passes, we shall be stifling and wrecking the economy of every small State of the Union, in my opinion.

Mr. CAPEHART. I yield. Mr. THYE. I cannot follow the last statement made by the Senator from North Dakota.

Mr. LANGER. What part of the statement could not the Senator from Minnesota follow?

Mr. THYE. I cannot understand the Senator when he says that if the bill is passed, it will do great injury to the farmers of North Dakota.

Mr. LANGER. I submit that the Senator is mistaken. It helps the farmer to have a fine town close to his land. If there is nearby a small town of four or five thousand people, with fine business buildings and a fine hotel, it certainly helps the farmers in that locality.

Mr. CAPEHART. I must disagree with the able Senator in his argument that the Federal Government ought to lend money to build hotels or business

Mr. THYE. Mr. President, will the Senator from North Dakota please explain himself? His general statement could be very detrimental.

Mr. LANGER. I shall be delighted to explain it, so that the simplest man, with the tiniest mind, can understand it.

The prosperity of every small town in the Northwest depends upon the prosperity of farmers. That is No. 1.

During the depression a farmer could obtain absolutely no credit anywhere. Moreover, we established the RFC under the leadership of Mr. Hoover so that some of the big fellows could borrow money. Ninety-four million dollars was loaned to Charles G. Dawes, of Chicago, in the hope that some of the money would trickle down to the little fellow.

The prosperity of such towns as Williston, Fargo, and other towns is dependent upon the prosperity of the farmer. Those towns wish to develop. They have various projects. Under the provisions of the pending bill they could not borrow more than $200,000 unless they went to some big insurance company and paid whatever interest the insurance company might charge. During the depression insurance companies would not even lend money to the farmers of my State. As Governor at that time I went to every insurance company in the United States. I remember what I was told in New York by representatives of the Equitable Life Insurance Co. They said, "The only State in which we will lend money is Iowa."

If this bill passes we shall be in the position of compelling all the towns in rural States to go to some large insurance company or to a bank big enough to make a $200,000 loan. In my State there is not one bank that could lend $200,000. If a town in North Dakota wanted to borrow enough money to build a project costing more than $200,000, whether it be a hotel or anything else, it would be compelled to borrow it from some large insurance company or bank. Mr. CAPEHART. It is my understanding that the RFC has never loaned money to farmers, so we can eliminate the farmers from this consideration. Mr. LANGER. That is correct. Mr. CAPEHART. Let us talk entirely Let us talk entirely about the cities. The RFC has never loaned money to farmers.

Mr. LANGER. That is correct. Mr. CAPEHART. The farmers do not enter into this picture.

Mr. LANGER. Only indirectly. Mr. CAPEHART. Therefore the bill would have no effect on the farmers one way or the other. It would not make

other State.

Mr. LANGER. But it has been done for 20 years.

Mr. CAPEHART. I doubt if very much money has been loaned in North Dakota for such purposes.

Mr. LANGER. I am in receipt of a telegram from Mr. W. O. S. Davidson, telling about four big business places in Williston.

Mr. CAPEHART. That is four. How many more have been built?

Mr. LANGER. That is four in North Dakota. I presume there are many such instances in the State of Indiana.

Mr. CAPEHART. I doubt whether a single loan has been made to build a hotel or business property in Indiana.

Mr. LANGER. I should like to see the record. I think my distinguished friend would find that he is mistaken.

Mr. CAPEHART. There may be an exception or two. But generally speaking, I doubt if very many such loans have The Small Business Adbeen made. ministration could lend up to $200,000; and a bank could participate to the extent of $200,000. The bank could lend $200,000. That would make a total of $400,000.

Mr. LANGER. Will the Senator name a single bank in my State which could participate in a loan of that size?

Mr. CAPEHART. I am not that familiar with North Dakota; but I was always under the impression that it was a fine, prosperous State, with many prosperous small businesses and many fine, prosperous farms. I have driven through the State; I have flown over it; and I have traveled through it by railroad. I was much impressed with the prosperity and appearance of the State.

Mr. LANGER. One reason was that the RFC was available to make loans to develop towns within the State of North Dakota.

Mr. CAPEHART. Does not the Sena

tor agree that with business as fine as it has been during the past 15 years, the it has been during the past 15 years, the average merchant in his State is in pretty good shape?

Mr. LANGER. My answer to that is this: Let the Senator go to Minneapolis, to the hometown of the distinguished Senator from Minnesota [Mr. THYE). I was there not long ago. I found seven business places closed, with "for rent" signs on them.

I repeat that from the standpoint of prosperity the farmers of the Northwest are worse off than they were in 1932. They owe more today than they did in 1932.

Mr. CAPEHART. A week ago Saturday I made a speech with respect to the farmer, to which the able Senator

from North Dakota listened. I said in that speech that we would have a depression in this country if we permitted farm prices to continue to go down.

I do not know of any Senator who is more solicitous of the welfare of the American farmer than is the able Senator from North Dakota. I certainly admire him for seeking to take care of the little-business people in his State. I think he should do so. No one intends to do anything that will hurt them; but it is our best judgment that at the moment a limit of $200,000 is sufficient. Let me say again, as I said when the bill was debated 2 or 3 weeks ago, that if we find that during certain periods of deflation a limit of $200,000 is not adequate; we can always amend the law so as to increase it to $300,000, $400,000, or $500,000, if conditions call for that sort of action at that time.

We must bear in mind that the House has already passed a similar bill, in which it placed a limitation of $100,000 to a single borrower. The Senate Banking and Currency Committee increased the limit from $100,000 to $200,000, because it was felt that $100,000 was not sufficient. We feel that $200,000 is sufficient. If I am a Member of the United States Senate and Chairman of the. Senate Committee on Banking and Currency at some future date, and it is proved that $200,000 is not sufficient, and that there is a great demand for larger loans, which would be in the public interest, I shall be one of the first to recommend that the limit on loans be increased.

Mr. THYE. Mr. President, will the Senator yield?

Mr. CAPEHART. I yield.

Mr. THYE. There is provision for a $25 million disaster fund. Disaster loans can be made up to that amount.

Mr. CAPEHART. I do not think the able Senator from North Dakota was speaking about disaster loans.

Mr. THYE. The disaster loan fund could meet any conceivable emergency need with respect to which the RFC could have been used to extend aid in the form of loans. In the pending bill there is provision for an emergency disaster fund.

Mr. THYE. When the committee recommended a limit of $200,000, I was more than pleased with that provision in the bill, because our best judgment when we drafted the Small Business Administration bill was that $100,000, or possibly $150,000, would reach every conceivable type of small-business man who might be seeking a loan.

This measure is declared to be a smallbusiness man's bill. If we go beyond $100,000 or $150,000, in making loans, we tend to enter the field of unlimited aid. Therefore when the committee recommended a limitation of $200,000 in the pending bill, that was far in excess of what we had hoped for when we introduced the proposed legislation. It certainly should meet every conceivable type of small-business man's need. I believe that that statement would apply to North Dakota or any other State.

Let me say to the distinguished Senator from North Dakota that the RFC