The White House Commission on Small Business

Arthur Levitt, Jr., ChairmanChairman, Board of GovernorsAmerican Stock ExchangeNew York, New York

Ernest M. CamachoPresidentPacifica Services, Inc.Los Angeles, California

Tom ChanPresident & Chief Executive OfficerMah Chena Corp.Chicago, Illinois

AuuM.DavisSecretary-TreasurerAll Pro Broadcasting Co., Inc.Rancho Palos Verdes, California

Margaret Sutherland HanssouPresidentGENAC,Inc.Boulder, Colorado

Shepard LeePresidentLee Management Co.Auburn, Maine

,Sheldon B. LubarPresidentLubar & Co., Inc.Milwaukee, Wisconsin

Louise SauudersChairman and PresidentCharlie's Cafe ExceptionaleMinneapolis, Minnesota

Dale SightsChairman and PresidentOhio Valley National BankHenderson, Kentucky

A. Maceo Walker, Sr.PresidentUniversal Life Insurance Co.Memphis, Tennessee

Steveu E. WeinsteinChief Executive OfficerSecond Realty Co.Atlanta, Georgia

It is an honor and a pleasure to transmit to you the fmal report on the 1980 WhiteHouse Conference on Small Business.

When you signed Executive Order 12061, you brought a remarkable processinto being. Over the course of the past two years, we have seen more than 25,000small-business men and womenparticipate in discussion and debate on the prob­lems of the Small Business sector of our economy. The contributions of theseparticipants, together with the experts whom we consulted and the members of yourAdministration who gave unstintingly of their time, helped to create a White HouseConference that was the most successful ever.

This volume is in two parts. One is the Commission's Report on the SmallBusiness Economy. Theother is the Commission's Report on the WhiteHouseConference, presenting the delegates' recommendations and resolutions.

On behalf of everyone who participated in this extraordinary event, we wouldlike to thank you for calling the Conference. We believe that the goals and recom­mendations contained herein provide important directions for formulating newpolicies for Small Business, and we stand ready to help implement them in any waywe can.

JIL- ~.jJ.-0;.

~~ ~.

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Report to the President

America'sSmall Business

EconomyAgend~nfQrA~!~90

By the White House Commission on Small BusinessApril 1980

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39 REPORT ON THE 1980 WIDTE HOUSE CONFERENCE ON SMALL BUSINESS

40 1. Introduction42 The Origins of the Conference43 Task Forces and Caucuses44 Profile of the Delegates45 The Opening of the Conference46 The Conference Format46 The Final Balloting

48 2. The Results of the Conference49 Resolution I: Bill ofRights50 The Delegates' 60 Recommendations56 The 15 Top-Priority Recommendations57 The II Conference Resolutions

61 3. Analysis of the 60 Recommendations62 Capital Formation and Retention65 Minority Business Development70 Innovation and Technology72 Inflation74 Veterans in Business76 Federal Procurement78 Energy80 Women in Business82 Government Regulations andPaperwork85 Economic Policy and GovernmentPrograms87 International Trade90 Education, Training, and Assistance91 Concluding Summary

93 FOOTNOTES

97 APPENDICES98 A. White House Release Announcingthe Conference99 B. Regional Conferences and Open Forums

100 C. Task Forces104 D. Regional Delegate Caucuses .104 E. Conference Agenda105 F. Balloting Results106 G. Conference Staff108 H. List of Delegates

here is a tide in the spirit of individual enterprisein America, and it is rising.

More and more Americans are eager to startsmall, independent businesses. More and moreare deciding that only through ventures of theirown can they achieve the kind and quality of lifethat they envision. According to Dun & Brad­street/ 477,827 new businesses were incorporat­ed in 1978, and late in 1979 the annual rate wasrunning at more than 520,000--63% greater thanthe number of new incorporations five yearsbefore.

In those same five years, the number of self­employed Americans tabulated by the Bureau of Labor Statistics' leaped nearly amillion to 6.6 million-reversing a trend that had been down or flat for the betterpart of a century.

This shift is only in its infancy. Its momentum, however, holds profoundimplications for the political and social fabric of the nation, for it represents arenaissance among Americans of self-confidence, resourcefulness, and risk-taking.But frustration and dissatisfaction are motivating factors, too. As the 1980 WhiteHouse Conference on Small Business showed, the men and women who own andoperate small businesses in America are distressed by a hemorrhaging of economicills, and they feel they must assert their voice in national affairs.

Attended by 1,682 delegates and 3,600 other participants, family members,and observers, the White House Conference on Small Business convened inWashington on January 13, 1980, at the behest of President Jimmy Carter. Duringthe next four days, delegates aired a wide variety of hopes and grievances. Likeother Americans, they are deeply disturbed about inflation, counterproductive taxand regulatory burdens, extravagant growth in government bureaucracy, and thesoaring cost of credit.

Small-business people are speaking out because they know that somethingfundamental is wrong and that basic changes are needed. Hyperinflation and fallingproductivity are not temporary disorders requiring short-term palliatives. They aresymptomatic of deeper problems in our economic structure.

Some are problems of scarcity: We must fmd new energy sources, developnew supplies of raw materials, andexpand our depleting pool of capital. Some areproblems of deterioration: We must regenerate our renewable resources, renovateour aging plant and equipment, and restore our leadership in world markets. Someilrep]."o§lems of lethaI'gy:W~must stoke the embers of competition and revitalizeour llmovative genius.

Themagnitude ofthese difficulties is disheartening. But they all come down to

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"

••Small companies haveprovided an astonishing 86.7% ofthe nation's new jobs in theprivate sector."

harder in order to survive. Industry by industry, theproliferation of small enterprises strikes at inflationthrough competitive pricing, while small innovativefirms generate new technologies to leverage produc­tivity in its traditional sense. As a study by theOffice of Management and Budget shows (page21), more than half of the major innovations incontemporary life have come from individuals andsmall organizations.

Investment dollar for investment dollar, in fact,small companies produce far more jobs and as muchas 24 times as many innovations't-s-a critical con­sideration at a time when productive capital isincreasingly scarce and costly.

Small Business is critical to the nation's balanceof trade in two ways. There is mounting evidencethat in many industries where small companiesflourish, imports are unable to gain a significantmarket share-because of small companies' com­petitive pricing, high standards of craftsmanship,and the wide variety of their products.

Meanwhile, the potential for exports by smallproducers is virtually untapped-even as visitorsfrom other countries marvel at our products. De­veloping this potential would contribute greatly toovercoming the nation's trade deficit, strengtheningthe dollar, and improving the U.S. negotiating pos­ture in international affairs.

There are at least two important benefits inherentin smallness, as economist E. F. Schumacher elo­quently pointed out in his book, Small is Beautiful,'that are not easily quantified. One is that industrialactivity distributed among many small producersdisperses strains on the environment and permitsnature to recuperate more readily. The other is thatsmall-scale organizations, because they are so flex­ible, can more easily structure jobs to motivateemployees and to make work more personallymeaningful-thus achieving psychological benefitsthat accrue directly to productivity.

Small enterprise is also the chief avenue fordrawing women, Blacks, Hispanics, and otherminorities, as well as Vietnam veterans, into theeconomic mainstream. These groups, partly be­cause they have been left outside the mainstream,represent an important reservoir of fresh perspec­tives, imagination, and energy that must be broughtto bear on national problems.

Most significantly, throughits inventive talentsand endless experimentation, Small Business pro­vides the seedbed for growth. Small Business' newproducts, new services, and technological break- ,throughs-:-ineverything from energy sources and

appropriate policy for the Small Business Economy,American entrepreneurship can produce with equalvigor.

The Commission wishes to contribute to a frame­work for such a policy by drawing upon the pro­posals of the 1,682 delegates to the White HouseConference on Small Business. During five hard­working days, the delegates hanunered out 60 spe­cific recommendations to put before the President,and they voted to underscore IS of those recom­mendations as top-priority measures requiringimmediate attention.

As those recommendations show, small com­panies are aggrieved by a policy of neglect that hasinadvertently imposed obstacles and inequities thatseem to thwart efficient business operations at everyturn. The single most important message of theConference is that govemment must eliminate thoseobstacles and inequities and play a reduced role insmall-business activities.

Eleven of the top IS recommendations, for ex­ample, involve taxes, inflation, and regulation.Uppermost among the delegates' concerns is thatdisproportionately heavy taxes are siphoning awaycapital, and that misguided regulations and paper­work are siphoning away productive time andenergy. The delegates are disturbed, too, that only atiny fraction of federal research-and-developmentdollars go to small, innovative firms. They wantspecific procurement and credit measures to helpgroups outside the economic mainstream to buildbusinesses of their own. And they want channelsopened so that small-business interests can beadvanced in policymaking circles.

The role of the Commission is to cast the dele­gates' immediate concerns and tactical proposalsinto long-range goals for the Small BusinessEconomy. Adopting both the spirit and the recom­mendations of the Conference, the Commission hasderived three overall objectives for the 1980s:

• Small Business must playa larger role in nationaleconomic activity and should account for 50% ofthe gross national product by the end of the decade;

• Policymaking units such as the Economic PolicyGroup, the Federal Reserve Board, the Departmentof Treasury, Congress, and the regulatory agenciesshould recognize that small enterprises form adistinct economic structurewithin the nationalcommerce.and.should.develop. distinct. policyap­proaches.for.the Small BUsinessEconomy;

Lc...••Forthe past300 years, thecycle of resurgence in 'smallundertakings' has provided thewellspring for the nation'sgrowth. ,tJ

••A broad base of smallenterprise gives communities acushion of self-sufficiency againstnational economic trauma.,~

towns comprised of small businesses with townsdominated by large companies headquartered andowned elsewhere.

Professor Mills found that small-business com­munities had higher income levels, more balancedand stable economic lives, and greater civic partici­pation. His study showed that small-business townshad more abundant retail facilities and goods; morehome ownership, better housing, and fewer slums;better health and sanitation standards and lowermortality rates; plus greater expenditures for educa­tion, recreation, cultural, and religious activities .

Since Mills' study, goverrunent programs and 'more enlightened attitudes among many large cor­porations have raised the standards in big-companytowns. Nevertheless, a broad base of small enter­prise clearly gives communities many advantages,not the least of which can be a cushion of relativeself-sufficiency against national economic trauma.

How takeovers of local companies can depress alocal economy is suggested by a study of acquisi­tions in Wisconsin by Professor Jon G. Udell of theUniversity of Wisconsin's Graduate School ofBusiness.' The study showed that in three out offour cases, the acquired company severed its tieswith local banks, local accountants, and local attor­neys. It often cut off local suppliers and advertisingagencies to consolidate accounts with the newparent, and it frequently reduced fmancial contribu­tions to community activities. To cap it off, most ofthe companies, after being acquired, saw their owngrowth rates drop---which accelerated the localeconomic decline.

T rends TowardRegionalization

The beginnings of an extraordinary change in popu­lation movement may make Small Business farmore important to the nation's health in the future.In the I970s , the traditional patterns of migrationfrom rural areas and small towns to big citiessuddenly reversed. Several million people movedback to small towns.

One reason for this shift is the quest for a differ­ent quality of life: Increasing numbers of people arewilling to sacrifice a measure of affluence to escapethe vicissitudes of big-city life. Another reason isthat new employment has opened up in coal andmetal mining due to the energy crisis and to soaring

In sum, the Small Business Economy, althoughnationwide in principle, is in practice a loosely­connected molecular network of hundreds of localeconomies. In the future, regional business maymake more sense than transcontinental business.Small regional companies may become far morecritical to the nation's health as big corporationsbecome more internationally than domesticallyoriented.

A national policy for Small Business should takethis increasing regionalization into account. Stand­ardized measures that blanket the nation may proveunwise. Policymakers should be sensitive to region­al differences in levels and kinds of economicactivity, supplies of materials and labor, availabilityof capital, and other financial and commercialconsiderations.

Generating New Jobs

Small Business in the 1980s will have to take overmore and more of the responsibility for creatingnew employment in the U.S. economy, as growthamong medium and large companies becomes morestagnant and government struggles to slow its ownexpansion. As Carter Henderson, co-director of thePrinceton Center for Alternate Futures, testified inhearings before the U.S. House of RepresentativesSubcommittee on Antitrust, Consumers, andEmployment:

In my opinion, the future of small business inour country is going to have a great deal to dowith helping the U.S. economy remain strongas we come down after 25 years of absolutelycornucopian growth to a rather slow-growingeconomy. We are going to have to look tosmall business to pick up some of the slack toprovide not only more jobs, but jobs whichover the next decade absorb all the energy andtalents of the. biggest, best-educated, andpotentially the most capable labor force inU.S. history."

Small Business is already producing the lion'sshare of new jobs. Government's contribution tonew employment in the U.S: climbed as high as35.2% in the early 1970s but since 1975 hasdropped to about 9% as government's growth has

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_.To achieve a healthy levelof employment for Americans inthe 1980s, 11 million new jobs willhave to come from Small

Business. "

__If history is any guide, thegrowth companies of 1990 andbeyond will most likely have

.names unknown tOday."

If federal policymakers have tended to disregardAmerica's inventive talents, other nations have not.One disturbing trend is that foreign interests havebeen buying control of several of our small high­technology companies. Moreover, federal R&Dexpenditures relative. to GNP have slipped graduallyfrom 2.9% in 1967 to 2.3% in 1975,19 the latest

A study by the Office of Management andBudget" shows that more than half of the majortechnological advances this century originated fromindividual inventors and small companies. Asampling of those achievements is remarkable. Andmany of these inventions sparked major new V.S.industries and growth companies:

XerographyDDTInsulinVacuum tubePenicillinTitaniumCyclotronShrink-proof

knitted wearZipperAutomatic transmissionGyrocompassJet engine

Frequency modulationradio

Self-winding wristwatchHelicopterMercury dry cellPower steeringKodachromeAir conditioningPolaroid cameraBall-point penCellophaneTungsten carbideBakelite

figure available, while the R&D ratios of suchcountries as Japan and West Germany have beenrising. One reflection of this is that foreign com­panies and inventors have been claiming a risingproportion of V.S. patents. In 1964, only 22% ofthe patents issued by the V.S. Patent and TrademarkOffice went to foreign applicants. In 1979, thatshare reached 38%.20

Innovation has always been a hallmark of Amer­ica's strength. "Technology transfer" to othercountries has been a bulwark of our internationaltrade. Yet the nation risks losing its leadership ininnovation.

The most productive target for R&D dollars isunquestionably small businesses. Polaroid, Xerox,and countless other growth companies of the 1960sand 1970s were, after all, once small entities them­selves. A more recent success story is Small Busi­ness' development of the microelectronic industry .

In the future, new forms of data communications,laser technology, ultrasonic scanning, medical in­struments.vbiogenetics, cancer-fighting techniques,water and resources conservation, energy from re­newable resources such as sun, tides, and wind,unforeseeable discoveries to retard the agingprocess-c-thesevandmore, will be transformed intocommercialiindustries in the Small BusinessEconomy.If history is any guide, thegrowthco?l­paniesof1990 and-beyond-will most likely havenames unknown today.

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around the U.S., attended by more than 9,000small-business people so far."

What Small Business needs is education, avail-'~hllih' nf "'rI,t ..-1 fin.,.. ;......... "'.......1 ...............~ ~cc~~ ..:_._..................J ""'~ Lum .l1.l5' auu ~U.lI.lv V.l.lCl,.;UVC

trade mechanism such as export trading companiesto handle their products overseas, or programs suchas the Massachusetts Export Marketing Program.Called MASSPORT and funded by federal, state,and local monies, the program provides small ex­porters with market research, counseling aboutfinance and shipping, and also sets up trade fairsand missions.

S·mall Business' DwindlingSlice of the Pie

Since the war mobilization effort of the 1940s,Small Business' share of the nation's economic ac­tivity has been in a serious downtrend. Much of theshrinkage is due to neglect. As commentator IrvingKristol wrote in a November 13, 1975 Wall StreetJournal editorial entitled "The New ForgottenMan:"

No one is leading a crusade against him, and itis probable that no one really wants to. He ismerely being chided, harassed, ruined, andbankrupted by a political process that takeshim for granted and is utterly indifferent to hisproblematic condition. I refer to the smallbusinessman.

It is a measure of how overlooked Small Businessis that no adequate yardsticks have been developedto describe the decline. According to some guess­timates, Small Business' share of GNP was close to55% after World War n. The SBA today uses twofigures based on differing standards of what a"small" business is, and neither figure is morerecent than 1972. One indicates that Small Busi­ness' share of GNP has fallen to 40%. The othersays the share is 36.5%"

Measurements of individual business sectorsshow the same trend. Manufacturing, where thegreatest industrial concentration has occurred, hasreceived the 1110st attention. According to data fromthe Federal Trade Commission (FTC), the share ofmanufacturing assets held by small companies­those with $10 million in assets or less-felldramatically from 18.6% in 1960 to Il.l % in1976.26

Census data provide another way to look at thetrend over a shorter time span: In 1963, companieswith 500 or fewer employees captured 29¢ of everysales dollar from manufacturing; 10 years later,their share had dropped to 23'h¢. The same patternappears in retailing and wholesaling.

In other words, unless the trends for Small Busi­ness as a whole are reversed, more and more newcompanies will merely be battling over a smallerand smaller slice of the pie.

There is another set of numbers, however, thatleads to an arresting conclusion-figures on netprofits. The nation's total corporate aftertax eam­ings, as tabulated by the IRS, rose from $23 billionto $49 billion bewteen 1960 and 1976." FTCfigures for that period show that large companies,those with more than $250 million in assets, in­creased their share of profits from 59% to 73%. Theshare of profits for small and medium-sized com­panies fell from 41% to 27%.

The smallest businesses, however, bucked thetrend. Companies with less than $5 million in assetsdoubled their proportion of total corporate profitsfrom 3% to 6%. Moreover, during that same 1960­1976 period, large corporations were on a buyingspree--more than 37,500 corporate mergers andacquisitions took place just in industries over whichthe FTC has jurisdiction, which excludes communi­cations, transportation, and banking."

It is thus hard to avoid the conclusion that largecompanies have been expanding profits mostly bygaining control of other companies, while thesmallest companies have been expanding profitsthrough competitive grit and efficiency. By thatstandard, as well as the standards of new jobs andinnovations, small and new companies represent themost productive use for capital.

he six-goal program outlined on page 14 pro­vides an important policy framework for im­proving the economic environment for SmallBusiness. In this section, the Commission elab­orates on each of these goals. Also, drawingupon countless discussions with small-businesspeople at field conferences and caucuses around.the country, as well as the 60 tactical measuresrecommended by the Conference (page 50) andthe Commissioners' own expertise and experi­ence, the Commission would like to highlightseveral recommendations and advance others ofits own that it believes will contribute the most,

in a strategic sense, to achieving these goals in the 1980s.To recapitulate the Commission's views:The Small Business Economy should account for at least half of the gross

national product by the end of the decade. It must create more jobs and innovations.It must multiply its resources by drawing more people into the current of entre­preneurial activity. And it must contribute more to the U.S. balance of trade.

Current economic policies and government practices, however, undermineSmall Business' ability to produce. Some segments of the Small BusinessEconomy, such as export trade and women-owned and minority-owned business,require special stimulus. But by and large, what policymakers must do is eliminatedisincentives and inequities that now discourage productive investment and indi­vidual undertakings.

It is urgent that the Administration, the Congress, and the independent federalagencies act swiftly, for the U.S. faces economic difficulties that, although differ­ent in kind from the 1930s, are no less troubling.

Hyperinflation and falling productivity are only aspects of the problem. U.S.plant and equipment are becoming obsolete as inflation makes depreciation allow­ances inadequate to replace them. As we lose our ability to compete in globalmarkets, more and more of America's wealth moves to other nations; last year, $60billion slipped out of our hands into the pockets of oil-producing nations alone." Tocontinue consuming at higher and higher prices, we use up our savings, the poolfrom which we draw investment capital.

Capital. As the Conference delegates indicated by their top recommendations,capital is the overriding issue facing Small Business today. The problems of ob­tainiJ:J.g debt and equity illpneyfall into three categories: capital formation, access tocapital, and capital retention.

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Tax Rate17%20%30%40%46%

Tax Rate12%14%17%20%25%30%38%46%

Corporate taxes are currently scaled this way:

Taxable Income$ 0-25,000$25,000-50,000$50,000-75,000$75,000-100,000More than $100,000

The delegates considered a variety of alternativeupper limits and fmally agreed on $500,000. Such arate schedule might look like this:

Recommendation: Legislate comparable tax relieffor sole proprietorships and the self-employed.

Because four out of five small businesses are un­incorporated, the Conference delegates also pro­posed a more graduated"rate for"personal incometaxes. The purpose of the recommendation wasaddress sole proprietorships and the self-employed,For those who cannot incorporate, a simple anddirect way to ease the tax burden might-be to reducethe percentage of business income assonal income---permittingC earnings instead of the 100% currently required,

"for example, to be added to the Form 1040 tax formcalculations.

Taxable Income$ 0-25,000$ 25,000-50,000$ 50,000-100,000$100,000-200,000$200,000-300,000$300,000-400,000

"$400,000-500,000More than $500,000

The ability to attract and retain capital relatesdirectly to incentives built into the tax structure. Innumerous ways, U.S. tax laws and accountingprinciples benefit large companies, forcing smallcompanies to drain capital in order to pay a dis­proportionately large share of the nation's tax bill.

The problems range from accounting for re­search-and-development costs to estate tax rulesthat often force heirs to sell family-owned busi­nesses to bigger companies. The major areas ofimbalance, however, are in depreciation methods,inventory accounting, and tax credits.

One example is the Class Life Asset DepreciationRange method of recovering capital, which is gen­erally known as ADR. ADR can materially benefitcompanies, but its rules are so complex that onlylarge companies with huge staffs take full advantageof it. Internal Revenue Service figures" show that94% of the biggest companies use ADR, but onlyone-half of I% of companies with less than $5 mil­lion in assets use it. Partly as a result, companieswith more than $250 million in assets dednct de­preciation equal to 3.6% of their receipts, whilesmall companies' deductions equal only 1.9%. Conventional wisdom holds that any tax cut fuels

Large companies get the biggest benefits, too, . inflation by reducing federal revenues, deepeningfrom the investment tax credit and the foreign tax the budget deficit, and increasing consumer spend­credit. According to the IRS, companies with more ing. A more graduated corporate tax, however,than $1 billion in sales are claiming credits equal to would not put money into the hands of consumers61 .1% of their tax liability, while companies with but into the hands of companies to expand.only $1 million to $5 million in sales are claiming Also, most estimates offederal revenue losses arecredits equal to only 6.5%. unrealistic because they do not take into account

But the more earnings that small companies can how reinvested capital produces more taxable cor­retain, the more they can expand, develop new porate earnings as well as more jobs, thereby cut­products and services, and create new jobs. At the ting unemployment benefits and increasing personalWhite House Conference, the subject of retained tax and Social Security payments. Small Business,earnings" was the delegates' chief concern. They in the Commission's view, is especially responsiveoverwhelmingly endorsed a recommendation for a in this regard.more graduated corporate income tax as their top­priority item. Likewise, the Commission believesthat a more gradual rise in the tax rate is the single"measure that would most benefit all small corpo­rations.

This measure would provide immediate relief toall incorporated small businesses"without discrim­ination, and it would not force small-business own­ers to take specific actions to obtain the benefits.

Recommendation: Legislate a more graduatedcorporate income tax, reducing taxes at the low endof the rate schedule by pushing the top of the tax­rate stepladder from $100,000 to at least $500,000ofearnings.

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obstacles in today's capital markets. They wouldessentially be debt instruments, but a portion of theinterest payments would be related to a company'sprofits.

The terms would be negotiable, allowing ratesand payments of principal to vary according to eachcompany's needs and growth potential. When acompany was struggling in its early years, the in­terest rate could be set low. When the companybegan making money, it could pay additional inter­est from net income just as it would pay dividends.

Small companies would get the advantages of alow initial interest rate and, later, dividend-typepayouts (called premium interest) that could bededucted as an interest expense-all without givingup a portion of equity to outsiders.

Investors would get the opportunity to participatein earnings growth, could treat premium-interestincome as capital gains, and eventually would gettheir money back without having to find a buyer forthe security, as they would have to do if they heldstock.

Tax changes necessary to create SBPDs-whichare contained in Senate bill 1481-----<:ould be madesoon. According to initial estimates, the loss tofederal tax revenue would be insignificant, and nonew govermnent red tape would be required.

Regulat ions andPaperwork

The most maddening obstacles to operating a smallbusiness are inappropriate federal regulations andthe overwhelming, often incomprehensible report­ing requirements that go with them.

Goal 2: Eliminate or reduce onerous regulationsand reponing requirements that inhibit small com­panies' growth and in some cases threaten theirsurvival.

Regulation is nothing new; Congress establishedthe first independent regulatory agency, the Inter­state Commerce Commission, in 1887. But duringthe past decade, the growth of government regu­lation has been explosive, particularly in such areasas affIrmative-action hiring, energy conservation,and protection for consumers.: workers,and theenvironment.

Small-business people recognize that some gov-

••A complete overhaul ofdepreciation is desperately need­ed to begin restoring the nation'sproductive capacity. "

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ards, variances, checklists, guidelines, plans,study-sessions, public meetings, rule-makings,hearings, non-hearings, burdens of proof, ap­peals, etc. . .. to accommodate the rapidlygrowing enforcement budgets at all levels ofgovernment.

The SBA's Office of Advocacy recently esti­mated that Small Business spends $12.7 billion peryear on government paperwork. It surveyed 1,000companies and learned that those companies had todeal with 305 million government forms asking 7.3billion questions."

The Administration, the Congress, and the regu­latory agencies, in the Commission's view, shouldultimately develop a distinct regulatory policy forSmall Business. The most important initial step is todetermine exactly what impact each regulation hason small companies.

Recommendation: Require all federal agencies toanalyze the cost and relevance of regulations tosmall businesses.

Some enforcement mechanism should also beestablished to monitor the agencies' impact stud­ies-perhaps a Small Business Regulatory ReviewBoard composed of representatives from the execu­tive branch, Congress, and Small Business.

Countless government initiatives are alreadyunderway to review federal regulations and to re­duce paperwork. Only a fraction of them are onbehalf of Small Business, but those few are en­couraging. For instance, the President late last yearappointed the SBA Administrator to the RegulatoryCouncil, giving Small Business for the first time adirect line of communication to the heads of regu­latory agencies.

The President also sent an Executive Memoran­dum to executive departments and agencies (and aletter of request to independent agencies) directingthem to take into account the size and nature of aregulated business when formulating new rules andregulations, and to review existing reporting re­quirements in order to adapt them, within statutorylimits, to different-sized businesses. The SBA,working with the Regulatory Council and the Officeof Management and Budget, is coordinating theeffort.

More than 200 bills have been introduced in the96thC6ngress to provide regulatory reformorre­lief, .and measures for Small Business are includedin some of them. For instance, regulatory flexibility

••Most small businessescannot staff batteries of lawyersand accountants to fill out formsand decipher rulings.~,

for small companies--or "two-tiering"-seemslikely to be part of an onmibus regulatory reformbill. Besides exempting small businesses, tieringcould be achieved by sening different performancestandards, reporting requirements, penalties, andtimetables.

Also, regulatory reform legislation may requiregovernment to pay legal costs for small businessdefendants in civil suits that the government ini­tiates and subsequently loses. The Commissionstrongly endorses this measure. If regulators werefinancially liable for their actions, they might thinktwice before slapping on penalties.

The Commission also believes strongly that civilregulatory disputes between government and smallcompanies should be subject to federal magistratereview. Small companies now have to go throughlong and expensive battles at the regulatory agencyor in a Federal want to fightan adverse regulatory

would make the .proce:idu~·r~e:ti~~~~le~(::Jl District

decision would be final,

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The export incentives now available to smallcompanies are embodied in Domestic InternationalSales Corporations (DISCs) created under the 1971Revenue Act. The law allows a manufacturer to setup a separate DISC vehicle that pays no taxes onexport income up to $100,000 and can defer taxesindefinitely on 50% of income above that amount.Large manufacturers have taken advantage ofDISC's tax benefits, but most small companies feelthat establishing and running a DISC company istoo complicated and expensive.

The delegates interested in international tradeproposed numerous changes in DISC provisions toencourage more smallcompanies to set up such en­tities. One. would allow a double tax deduction forexpenses incurred promoting products at overseasexhibitions and trade fairs. Another would aII()\V adouble.deductionfor insurance premiums paid tothe Export-Import Bank and the Foreign.CreditIn­surancleiAs~o(:illti()n..A .thirdwould raisethe cle4ingonthe jax-exemptportion of.export .)n(:()lJ:llefrolJ:l$1()(l,()()()to$~()(l ,()(lO.•Qthe~'f()uldIiRleri)lizle •.theIll\V's formulafor the~ount>ofprofi.tithaLis

deemed .distributable incometsuchas a.dividend)• " ,•.•, ..••..•....... '-.........•..., ..•••.•. " ••......•. ' "',"",.o :.,-, '_.. -.; .' ..

tt. Because the DISC program'is controversial and complex, asimple alternative should be avail­able to small companies. "

and eliminate growth quotas that a company mustnow meet in its early years to continue to qualify asa DISC.

The Commission supports these measures. Rec­ognizing, however, that the DISC program is bothcontroversial and inordinately complex, the Com­mission feels that. a simple alternative should beavailable to small companies. For that reason, itwould like to stress two other delegate recommen­dations obscured by the complexity of the DISCproposals. .

Recommendation: Provide small companies witha direct tax advantage for marketing their productsabroad.

The object of this recommendation is to encour­age small companies to export without requiringthem to set up a separate corporation. The simplestand most direct measure would be an "exporter'sallowance," similar to such allowances used byother nations, permitting a double (or some othermultiple) deduction of costs incurred to increaseforeign sales .

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••Fedel:alprocurementsandgrants provide a tool for achievingimportant economic and social

gOals.~"

now run about $100 billion per year, while federalgrants to states and municipalities run far more thanthat. Including grants along with procurementswould more than double the amount of money sub­ject to mandatory goals. Taking that into account,the Commission views the delegate recommenda­tions as ultimate goals. To attain those ultimategoals, the Commission believes that annual levelsshould be scaled upwards to increase capacity at arealistic pace and.that interim goals are necessary.On that basis, the Commission calculates that 10%for minority businesses, 5% for women-ownedbusinesses, and at least 30% for other small busi­nesses are realistic goals achievable by 1990. Thattotals 45%, or nearly the 50% share of GNP thatSmall Business should account for by the decade'send.

Capacity is a serious problem. The Commissionanticipates that full enforcement of the law willcreate deep problems for small, minority, andwomen-owned companies not yet addressed byCongress--specifically, finding start-up capital.Banks often do not lend money against governmentcontracts as receivables, which effectively con­stricts the opportunities that PL 95-507 legislatorsintended to expand. Accordingly, the Commissionadvances these proposals.

Recommendation: Authorize the SBA to provide95% loan guarantees to small and minority subcon­tractors under PL 95-507, and to women subcon­tractors under equivalent provisions, to financestart-up costs. Also, permit companies certifiedunder the Small Business Act's Section 8(a) that winsubcontracts under PL 95-507 to apply for advancepayments and Business Development Expensesunder the B(a) programs.

The loan guarantees would apply to bank loans tocover costs between the date a subcontract is award­ed and the effective date for beginning the contract.Such a provision would require a congressionalamendment to the Small Business Act. The secondmeasure is required because 8(a) companies cur­rently cannot avail themselves of 8(a) benefits whenthey act as PL 95-507 subcontractors. Administra­tive action by the SBA is all that is needed to changethat.

Recommendation: Include penalties in contractsfor prime contractors in theeventthatthey do notmeet their specified goals for using small; minority,or women subcontractors.

Commerce, Labor, and State Departments and theOffice of Management and Budget, plus the VicePresident, the Advisors on Domestic Policy andNational Security, and the White House StaffDirector.

In addition to this measure, the Commissionstrongly urges Congress to authorize more funds forthe SBA's advocacy efforts.

There are numerous initiatives that smaIl-busi­ness people should undertake themselves-andmany are already doing so. Following the success ofthe Conference, delegates have volunteered to forma steering committee that will design a permanentorganization in Washington to represent SmallBusiness interests at the national level. Meanwhile,groups such as COSIBA (Coalition of Small andIndependent Business Associations), COSE (Coun­cil of Small Enterprises), NSBA (National SmallBusiness Association), and SBLC (Small BusinessLegislative Council), among others, are forminglegislative action groups to influence local as well asfederal govermnent policies.

The Commission wishes to advance two propos­als touching on efforts at the state and local levels.

Recommendation: Each Governor or legislatureshould appoint that state's White House Conferencedelegation as a commission to reproduce small­business conferences at the state level.

State conferences similar to the national Confer­ence in Washington would, in the Commission'sview, do more than any other single effort to unifysmall business interests. The conferences alsowould encourage owners of small companies to

participate in state and local political processes aswell as identify state and local measures that retardsmall businesses' growth.

Recommendation: Develop curricula on the Amer­ican economy in primary, secondary, and post­secondary schools to familiarize young Americanswith basic economic, business, and entrepreneurialprinciples.

The members of the Commission feel stronglythat public sentiment hostile to business is duelargely to insufficient understanding of what pro­duces prosperity, how the U.S. economy works,and how free enterprise and political democracy areinextricably entwined. More than 300 universitiesnow offer courses on entrepreneurship to collegestudents, programs that have created a wave ofyoung Americans eager to go into business forthemselves. But many economically disadvantagedteenagers never go to college, and many otherstudents arrive at college with attitudes towardbusiness already formed.

The Commission declines to prescribe specificcontent for school courses, but it believes thatcourses at pre-college levels would help instill self­reliance and self-initiative and would acquaintyoung Americans with the opportunities for indi­vidual enterprise open to them. Furthermore, thenation urgently needs to begin developing the nextgeneration of business and.community leaders now.The Commission urges Conference delegates, othersmall-business owners, and state and local officialsto develop model cutricula that could be adoptedbyschool systems around the nation.

he 1980 White House Conference on SmallBusiness, the largest such conference ever held,will be remembered for a number of accomplish­ments. One, of course, is the package of 60recommendations that the delegates developedfor the President. The other achievements areless tangible, but they are no less significant forSmall Business in the years ahead.

The most important example is that specificrecommendations would never have emergedfrom the Conference if the delegates had notachieved a spirit of unity. By their very nature,small-business men and women tend to be inde­

pendent and competitive. They had never thought of themselves as a cohesivegroup, nor had they ever had the chance to learn about each other's concerns at anational gathering. There were two previous small business conferences, butneither matched the 1980 Conference in size or importance. Neither was called bythe President, nor did they include elected delegates. And they did not succeed inbringing about a unified identity and spirit. One in 1937 ended in fistfights, whilethe other, in 1956, represented only a narrow segment of the small businesscommunity.

Small Business in America is still a chorus of many voices. The problems andattitudes of oil-company suppliers in Houston differ from those of financial ad­visors in Boston or mom-and-pop motel operators along rural highways. It was aparticularly inspiring aspect of the 1980 Conference that people of a rich diversityof backgrounds and values could discover common interests and subordinate theirdifferences in order to pull together.

That cohesion grew out of an arduous, 18-month process that also ranks as anotable achievement, for it demonstrates how traditional democratic principles canstill provide a way for citizens at the grassroots of American life to fashion anational agenda for policymakers in Washington.

The process was divided into three stages. In the first stage, some 25,000small-business men and women attended 57 regional field conferences and openforums held around the country. At those meetings, they aired a vast array ofproblems and elected 10Cll! andstate delegations.

Th,emeetings producedm,asses of information. The second stage involvedorganizing that material into manageable categories and evolving potential solu­ti9Il~ .. i':r,llsl(forces of~x.Ret1s~nY¥iOus. business fields produced a wide.variety ofigiasthatdelegatesat';~Mb~eqM~J1Jcaucuses refined into several hundred specificproposals. The final stagewas..thenational Conference in Washington, where the

41

43

_~ The 1980 Conference maycome to be regarded as thebirthplace of a new political forcein the nation."

conferences and open forums were held during theyear prior to August 1979 (Appendix B) and wereattended by. thousands of owners of small enter­prises. All told, 2,110 delegates were chosen, 60%of them at these meetings. The remaining 40% wereappointed by each Governor, U.S. Senator, andmember of the U.S. House of Representatives, plusWhite House appointments recommended by theSBA and the Commissioners.

T ask Forces andCaucuses

The next step was to shift the focus from identifyingproblems to finding solutions. To help develop theissues, the Commission early in 1979 appointednoted individuals to chair eight task forces. Thosechairs in tum assembled teams of from eight to 20knowledgeable citizens with business and govern­ment experience (Appendix C). Working with theResearch staff and with participating delegates overseveral months, the task forces prepared what cameto be known as "preliminary option papers" toorient delegate discussions at subsequent meetings,

Expert research support came from a wide varietyof other. sources. Small Business associations ofevery sort, local and regional as well as national,submitted papers and made themselves available forconsultation. Professional SBA staff memberscommented OI1dl'llftS of the option papers. Thestaffs of Senator Nelson's Select Committee-and ofthe House ColIunittee on Small Business chaired by

Representative Neal Smith (D-Iowa) contributedconsiderable expertise. The Departments of Com­merce, Treasury, and Energy, the Office of Man­agement and Budget, the White House DomesticPolicy Staff, and other agencies provided additionalinformation.

Private companies with an interest in strengthen­ing Small Business also supplied personnel andeconomic research. These included Control DataCorporation, the American Express Company, andthe American Stock Exchange as well as severalaccounting firms, Arthur Andersen, Price Water­house, Coopers & Lybrand, and Peat, Marwick &Mitchell. The American Management Associationand the University of Texas Graduate School ofBusiness helped develop a way to organize thevoluminous research material.

During October and November of 1979, the dele­gates attended 10 regional caucuses (Appendix D)to review the option papers. To provide the dele­gates with a working rather than a conventionatmosphere, the staff worked closely with theAcademy for Contemporary Problems to develop aformat for the caucuses that would not only focusthe delegates on specific issues but also begin todevelop a spirit ofunity.

Every caucus was organized into small work­shops to draft proposals in each issue area (federalprocurement policy, women in business, and soforth). With so many issues to cover, however, therisk was that the participants would not be able totreat all of them in an in-depth manner. According­Iy, each delegate was encouraged to concentrate onthe two issues that he or she decided was of thegreatest importance.

During the workshops, the delegates debated theoptions, proposed additions and deletions, and oftenintroduced entirely new ideas. At the end of eachsession, they took a "straw vote" to select fiveoptions they considered most important. The resultswere then posted publicly so that everyone couldsee which proposals were emerging with the mostsupport.

The Delegate Liaison staff provided the keycommunications link that made the caucuses work.A staff member called a Delegate Liaison Officerwas assigned to each region to help delegates under­stand the caucus format. This format proved sosuccessful and was endorsed so strongly by the del­egations that it was later adapted, on a.Iargerscale,as the way to organize the national conference.

.With the results of the caucuses in hand, the Re­search staff and the task forces revised the option

T he o peningof the Conference

The mood in the Washington Hilton Ballroom at theopening plenary session on Sunday evening, Janu­ary 13, was one of mounting excitement. Milton D.Stewart, Chief Counsel for the SBA's Office ofAdvocacy, presented the Conference rules. Com­mission Chairman Arthur Levitt, Jr. set the keynotetheme when he told the delegates:

Tomorrow moming, as we go to work, thisgreat city will slowly stir itself and begin againto process the thousands of requests fromAmericans in all walks of life who come or callhere every day, looking for help-s-asking gov­ernment to give them something more.

We, however, are here for another reason­to petition for less.

We're looking for less interference and lessharassment. We're looking for fewer intru­sions into the freedom to run our affairs andour lives according to our own collective con­science. We are here seeking a return to thefreedom and independence needed to rebuildthe American free enterprise system.

The atmosphere was charged with anticipation:The rousing U.S. Naval Academy Drum & BugleCorps, plus Secret Service men all around the peri­meter of the ballroom, set the stage for PresidentCarter's arrival. It was his first public appearancefollowing the Soviet invasion of Afghanistan sev­eral weeks before.

Introduced by SBA Administrator A. VernonWeaver, the President recalled his own origins as asmall businessman and his frustrations on encoun­tering the Washington bureaucracy. The Presidentthen emphasized the profound responsibility that thedelegates bore in their efforts to influence publicpolicy.

. what you do here, and what you say here,and what you recommend from here should bebased upon a need to pull Americans together;to consider the great human and. natllral re­sources which we enjoy; and to determineJhecourse that we must follow in the future to gi~fa better quality of life for all Americans, basedon a common effort.

••It was President Carter'sfirst publicappearance followingthe Soviet invasion of Afghanistanseveral weeks before. "

realized the only way to find solutions to theirproblems is to unite and participate."

As they waited for the results of the [mal bal­loting, the delegates heard thought-provokingaddresses on the challenges ahead by SBA Admin­istrator Weaver, Senator Nelson, RepresentativeParren Mitchell (D-Md.), and Stuart E. Eizenstat,who heads the President's Domestic Policy Staff.

Then, amid a clamor of enthusiasm, the results ofthe tally appeared. After 18 months of nationwidepreparatory work and five strenuous days in thenation's capital, the representatives of Small Busi-

. ness could see their accomplishments in their [malform-60 specific recommendations for Adminis­tration policymakers, including 15 top-priority pro-

posals for urgent action, and II roundly-endorsedresolutions.

Before Milton Stewart brought down the finalgavel, Commission Chairman Levitt summed up the

.week's achievements and emphasized the need forconcerted, determined follow-up actions. The closeof the Conference was not an end, he stressed, but abeginning. Chairman Levitt concluded:

Take with you, as you depart, the knowledgethat our deeds and efforts here are just begin­ning. They will survive only if we continue tofight with the same intensity, the same dedica­tion and the same common voice we devoted tothe task this week. We have begun.

This was the first Resolution passed by the delegates at the Conference's closing plenary session.

America'sSmall & Independent Bu.;,.... Bill of Righ••

49

The American Dream is to be an owner of one'sown business. Almost everyone has had the dreamand millions of Americans have lived it. TheAmerican Dream is the cornerstone of our 200 yearold American Heritage and also is the reason for ourcountry's position as the most economically power­ful nation in the world today. Could we haveachieved this status as a nation if We had not beenpresented with opportunity unencumbered by gov­ernment regulation? Could we have achieved thisnation's status if entrepreneurs had not had the forti- .tude and shown the initiative to take advantage ofopportunity when it presented itself? America wasfounded on the principle of each individual's fun­damental rights, i.e., Freedom of Speech, Freedomof Religion, Freedom of the Press, Freedom ofAssembly, Freedom to Bear Arms, etc., fundamen­tally, the Right to "Life, Liberty, and the Pursuit ofHappiness. " ThePursuit of Happiness can and doestake the form of one going into business for oneself,the fulfIllment of the American Dream.

Now, therefore, in consideration of the foregoingand; whereas the Small Business Community is rep­resented by some 14 million small and independentbusinesses and; whereas these 14 million businessesrepresent 100 million people and 58% of all privatesector jobs in America, and; whereas 97% of allnewly created jobs in the past 7 years have beencreated among these 14 million smaIl and inde-

pendent businesses representing 48% of America'sgross business product and; whereas 50% of all newinventions, innovations and patents are developedinthe small and independent sector of Americanbusiness....

Therefore be it resolved that said 14 million smalland independent businesses have fundamental, in­alienable and constitutional rights: (I) The right tostart, own, and manage a business without govern­ment interference. (2) The right to compete fairlyfor capital with assurance that capital will beavailable for private use. (3) The right to reward forthe risk, effort and genius necessary to make anindependent business work. (4) The right to deter­mine price just as the buyer has the right to buy ornot at that price. (5) The right to be governed byreasonable and understandable laws set forth byelected representatives, not by bureaucratic dictate.(6) The right to be innocent until proven guilty by ajury of our peers; not by administrative edict. (7)The right to equal representation with Big Business,Big Labor, and Government on matters relating toAmerica's economic policies.

Be it resolved that America's Small and Independ­ent Business Bill of Rights be enacted into law, andthat it be used as the preamble to all recommenda­tions emerging from this conference.

51

patents (as already encompassed by S .414 andS.1679); capital formation and retention; amend­ments to the Internal Revenue Code; and regulatoryflexibility .

12. Existing Federal research and developmentprocurement, assistance, and tax laws and policiesmust be modified and new laws enacted to: (l) elim­inate unfair advantages enjoyed by governmentalagencies, non-profit organizations and educationalinstitutions which compete with innovative smallbusiness in providing goods and services; (2) man­date statutorily a national policy of reliance on smallbusiness; (3) prevent the Federal government fromdisseminating proprietary information; (4) preventthe Federal government, through the use of its ownpersonnel including Federal Research Centers, fromcompeting with small business.

13. Increase the amount of Federal research anddevelopment prime contracts awarded throughsmall business set-asides by I % per year of eachagency's research and development budget, untilthe dollar value of the set-asides reaches at least10% of that agency's total annual research and de- ,velopment budget, ,

14. Clarify the "prudent man rule" to broaden itand insure that securities of small issuers are notexcluded from those securities eligible for purchaseby funds subject to ERISA, and exempt those secu­rities from plarmed asset regulation issued by theDepartment ofLabor.

15. Institute specialized capital gains treatment forgenerative capital invested in technology basedfirms starting with 25% in the first year, decreasingby 5% per year to zero after five years and, further,defer taxation on such gains whenever the proceedsfrom sale of investments is reinvested into a smallbusiness within the next twelve months,

Inflation

16. Balance the Federal Budget by statute in FiscalYear 1981 by limiting total Federal spending to apercentage of the GNP, commencing with 20% anddeclining to 15%.

n. Reform the Social Security System by includ­ing, where constitutionally possible.iall public and

private sector employees as contributors and moreclosely tie benefits to contributions to move thesystem toward actuarial soundness. Limit benefitsto the original old-age and survivors benefits.Freeze the tax base and tax rate at the January, 1980level. Eliminate double dipping.

18. Revise minimum wage standards by freezingstandards at January, 1980 levels and establishing atwo-tier minimum wage by exempting teenagers,seasonal workers and part-time workers,

19. Repeal the Davis-Bacon Act.

20. Provide greater incentives for savings and in­vestment by eliminating income tax on investmentsand interest income up to $10,000,

Veterans in Business

21. The President shall issue an Executive Orderproviding for the full and effective implementationof the provisions of the Small Business Act provid­ing for "special consideration" for veterans (Part116, Subpart A of Title 87, United States Code, PL93-237). To assist in carrying out the veterans"special consideration" provisions, such ExecutiveOrder shall establish within the Small BusinessAdministration an internal Veterans' BusinessCommittee, the majority of whose members shall beveterans and whose purpose shall be to advise andassist the SBA in the development and implementa­tion of programs and the formulation of policiesnecessary and appropriate to carry out the veterans'"special consideration" provisions of the SmallBusiness Act and regulations pertaining thereto.

Such Executive Order shall require all appropri­ate agencies and departments of the Federal Gov­ernment which engage in business assistance activi­ties, such as procurement authority, to provide"special consideration" to veterans in order tosignificantly improve the quality of assistance toveterans and to provide support to veteran-ownedbusinesses. '

22. The President should establish an InteragencyCommittee on veterans in business. Not more thanone-third of such committee shall be non-veterans.

23. 15%. of all Federal procurement contracts arid15% of all SBA Direct and GuaranteedLoang~am Funds shall be set aside for veteran applicants.

-,

Government Regulations and Paperwork

41. Congress shall exercise its oversight functionwith the assistance of the General Accounting Of­fice, instituting sunset reviews of all laws, regula­tions, and agencies, to ensure that none exceedsoriginal congressional intent. Sunset reviews, in anappropriate time frame (not less than every fiveyears), should include economic impact analysisand proposed agency budget reductions, leading tore-enactment of each agency's enabling legislationto permit its continued existence, or to reduce itssize and cost.

(a) Establish a Regulatory Review Board com­posed of representatives from the ExecutiveBranch, Congress and small business owners, withresponsibility for impact statements and costcontrols.

(b) Congress shall exercise line-item veto overregulations within a specified time through con­gressional oversight committees, with one-housefloor vote.

42. Small business should be eligible for magistratereview of agency civil penalties, and reimbursed forcourt costs, reasonable attorney's fees, and dam­ages from administrative action, if successful incivil disputes with the Federal Government, includ­ingIRS.

(a) Such costs and fees to come from the operat­ing budget of the agency.

(b) Magistrates will be appointed and be respon­sible to the judges in each Federal Judicial District.

(c) With burden of proof on the agency to defendits action.

44. All Federal agencies should have the power toimplement a tiered system of regulation. Thisshould include the power to minimize and exempt

fective monitoring of performance under the EqualCredit Opportunity Act. The Small Business Ad­ministration should make bank certification avail­able to as many commercial banks and other lendersas possible and establish targets for increasing thedollar volume of loans made to minority-owned andwomen-owned businesses, as one of the criteria forrecertification.

37. The President should intitiate by ExecutiveOrder and Congress should enact legislation estab­lishing mandatory goals and reporting requirementsfor all Federal procurements and procurements re­sulting from Federal funds and grants to states,localities and public and private institutions forsmall businesses on the basis of 50% for smallbusinesses. The 50% shall be distributed so that15% of all procurement shall be targeted for busi­nesses owned by socially and economically disad­vantaged persons (i.e., those businesses owned andoperated by Blacks, Hispanics, Native Americans,Asian Pacific Americans and other racial minori­ties), and 10% of all procurement shall be targetedfor women-owned businesses as defined in Execu­tive Order 12138. And, further, that Congressshould amend the Small Business Act to provideincentives to Federal prime contractors for subcon­tracting with women-owned businesses; provided,however, that such an act does not include women­owned businesses as a category or class of sociallyand economically disadvantaged small business.

43. The Office of Management and Budget shouldbe designated the lead agency for both Federal regu­lations and paperwork of all agencies and programs(specifically including IRS), with responsibility fortorms clearance, paperwork reduction, simplifica­tion and elimination; coordinating regulations andcost control oversight; requiring agencies to submitto OMB an economic. analysis measuring admin­

40. The Small Business Administrationshall estab- istrative and compliance costs, particularly forlish a bonding program that permits the waiver of small business, of all proposed regulations andbonding requirements for Federal contractors who . paperwork.are small business owners. This program shall beavailable to all small business owners who havebeen: (I) unable to obtain bonding from any othersource; and (2) certified as competent by the SBA.

39. Evaluate all Federal government employees inpositions which impact on women and minorities,particularly loan officers, procurement officers andmanagement assistance officers, in part on the basisof their performance on behalf of women andminorities.

38. The Small Business Administration shouldidentify existing public and private managementtraining programs, evaluate their effectiveness forwomen entrepreneurs and increase funding to thosefound to be effective.

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55

International Trade

51. Congress should broaden the tax deferraloptions of the Domestic International Sales Cor­poration and provide for the development of anAmerican Trading Company which would auto­matically qualify as a DISC. Tax deferral optionsshould include the following additional provisionsfor DISCs: (1) allow for deduction of twice themonies expended for participation in any bona fideoverseas trade fair by a DISC; (2) allow for deduc­tion of twice the amount of premiums paid toEximbank and FCIA, as legal deductions prior topayment of DISC taxes; (3) increase the $100,000exemption clause to $500,000; (4) provide for agraduated tax on "deemed distribution" from$500,000 for $50 million, and a standard rate of50% levied on over $50 million; (5) exempt newDISCs from any "deemed distribution" require­ment for at .least the first three years of operation;and (6) provide for the elimination of existingincremental provision of DISC regulations. Con­gress should provide within the tax structure an"Exporter's Allowance" or tax deduction whichwould apply in the trade of all goods abroad bygranting an allowance for 75% of the marketingexpenditures incurred by the exporter.

52. Eximbank should establish a special smallbusiness funding program through commercialbanks, and should consider discounting loans tosupport international sales and should develop a co­operative ·program with the SBA for pre-exportfinancing.

53. The Federal government should establish fieldone-stop service shops to include export services ofall Federal agencies under the guidance of the De­partment of Commerce.

54. The President and Congress should consolidateunder an existing cabinet level department, a uni­fied world trade administration. It would be respon­sible for all trade policy functions of the variousagencies and departments. Its objective would be tomaximize the international competitive strengths ofU.S. Small Business with support and goals forminority, women-owned and disadvantaged busi­ness and specific programs developed to utilize theirunits of technological, educational, cultural, Ian­guageand political expertise.

55. Congress should provide for support and ex­pand the use of all officially recognizedTrade Fairs,Exhibits, and Trade Centers abroad with smallbusiness participation; continue to encourage theDepartment of Commerce to increase the promotionof foreign buyer and foreign visitor travel to theUnited States; and develop a program utilizing thecultural, language and political expertise of allAmericans, especially ethnic groups, to assist inpreparing, implementing and utilizing a sales pack­age for use in expanding International Trade in allworld markets.

Education, Training, and Assistance

56. A Small Business Educational Task Force forentrepreneurial educational training shall be ap­pointed by the President and coordinated by theOffice of Advocacy. Task Force members shallcome primarily from small business to initiate,promote and develop the incentives for demo­graphically projectionable, formal, business plan­ning and case history-type continuingeducation andpublic awareness (through all media) in small busi­ness. Mandate to the Task Force shall be to come upwith self-liquidating (pay for themselves) programsfor the benefit of small business. This should beachieved within 120 days.

57. The Small Business Administration's manage­ment assistance program should be strengthenedand expanded by allocating a greater portion of theAgency's total resources to reflect an increasedemphasis on management assistance rather than thetraditional emphasis on financial assistance.

58. A National Policy should be established for thesupport of entrepreneurial education and training,continuing education and management assistance,provided by the public and private sector, as anopportunity for every American who wishes to ownhis or her small business and should receive recog­nition as a priority from the highest levels ofgovernment

59. Establish "One-Stop Shops" under the co­ordination of SBA for small business assistanceprograms utilizing effective information systemsand management assistance programs to serve thesmall business community on the local level, withprimary implementation occurring through the pri-

ence of that function of the Office of Advocacymust be protected so that it may continue to have theconfidence of the small business community.SBA's Advocacy budget should be devoted to eco­nomic research and analysis, as well as smallbusiness advocacy. Small business advocates,under the direct supervision of the SBA Office ofAdvocacy, shall be assigned to OMB, Federal Re­serve Board, Treasury, International Trade PolicyCommittee and other regulatory agencies.

36. (578 votes) Private lending institutions shouldbe required to provide equal access to commercialcredit for women in business. The Federal ReserveBoard should establish record keeping requirementsfor commercial loans to women which will permiteffective monitoring of performance under theEqual Credit Opportunity Act. The Small BusinessAdministration should make bank certificationavailable to as many commercial banks and otherlenders as possible and establish targets for in­creasing the dollar volume of loans made to minor­ity-owned and women-owned businesses, as one ofthe criteria for recertification.

42. (564 votes) Small business should be eligiblefor magistrate review of agency civil penalties, andreimbursed for court costs, reasonable attorney'sfees, and damages from administrative action, ifsuccessful in civil disputes with the Federal Gov­ernment, including IRS.

(a) Such costs and fees to come from the oper­ating budget of the agency.

(b) Magistrates will be appointed and be respon­sible to the judges in each Federal Judicial District.

(c) With burden of proof on the aaencv to defend- ~ -its action.

18. (553 votes) Revise minimum wage standardsby freezing standards at January, 1980 levels andestablishing a two-tier minimum wage by exempt­ing teenagers, seasonal workers and part-timeworkers.

6. (472 votes) The President, by Executive Order,and Congress, by legislation, shall establish manda­tory goals for all Federal procurements and Federalfunds or grants to states, localities, and public andprivate institutions, on a contract-by-contract oragency-wide basis for small businesses (35%); mi­nority-owned (Black, Hispanic, Native American,Asian Pacific American, and other racial minorities)businesses (15%); and women in business (10%).

46. (471 votes) Require that all government agen­cies which develop fiscal, monetary, legislative andregulatory policies/practices shall submit smallbusiness "economic impact" statements that re­quire the regulatory agencies to identify the antici­pated benefits and to justify the costs of Federalregulatory requirements to small business. In addi­tion, all regulatory policies shall be subject to sunsetprovisions to be reviewed every 5 years in order toensure that only cost effective regulations shall bemaintained and retained in the future.

Resolution 1

America's Small and IndependentBill of Rights

The American Dream is to be an owner of one'sown business. Almost everyone has had the dreamand millions of Americans have lived it. TheAmerican Dream is the cornerstone of our 200 yearold American Heritage andalso.is the reason for ourcountry's position as the most economically power"ful nation in the world today. Could we haveachieved this status as a nation if we had not been

T he 11 Conference Resolutions

presented with opportunity unencumbered by gov-ernment regulation? Could we have achieved thisnation's status if entrepreneurs had not had thefortitude and shown the initiative to take advantageof opportunity when it presented itself? Americawas founded on the principle of each individual'sfundamental rights, i.e., Freedom of Speech, Free­dom ofReligion, Freedom of the Press, Freedom ofAssembly, Freedom to Bear Arms, etc., fundamen­tally, the Right to "Life, Liberty, and the Pursuit ofHappiness" 'The Pursuit ofHappiness can and doestake the form of one goinginto business for oneself,the fulfillment of the American Dream.

57.

B. That Employees are defmed as those working1800 hours or more per year; and

C. To facilitate "flexible regulations by govern­ment," a further classification of Small Businessshall be as follows:

A. A Small Business is one that is independently­owned and operated, and the number of employeesshall be the criteria for defming Small Business;

is mandatory that "Small Business" be defmed bythis Conference and that such definition accompanythe recortunendations to the President; and further,such defmition of "Small Business" shall be:

No. EmployeesOto9

10to 4950 to 249

250 to 499

ClassABCD

Resolution 5

Be it resolved that: Small business records itsappreciation to Senator Gaylord Nelson of Wiscon­sin, Chairman of the Senate Select Committee onSmall Business; Congressman Neal Smith of Iowa,Chairman, House Committee on Small Business;Arthur Levitt, Jr., Chairman of the White HouseCommission on Small Business; the Commission­ers; A. Vernon Weaver, Administrator of the SmallBusiness Administration; and Milton D. Stewart,the first Chief Counsel for Advocacy of the SmallBusiness Administration; the White House Confer­ence staff; and all commercial concerns and indi­viduals who have significantly contributed in anyname, particularly those who have contributeddelegate liaison staff, for their efforts on behalf ofsmall business and their recognition of the impor­tance of small business to the economic strength andspirit of America, and urges them to continue thework of this Conference.

Resolution 6 Resolution 9

Resolved: That in order to implement the results of Whereas, Hawaii is the only state in the nationthe White House Conference on Small Business, it limited to two forms of ingress and egress: ocean

Whereas the precedent for comprehensive docu­mentation of all proceedings in an official documentis important to the White House Conference onSmall Business; therefore, be it resolved that theundersigned duly elected and appointed delegatesdo hereby request that all proceedings including theOpening Session, Special Discussions, Open Fo­rum, New Options presented in workshops and allother options heretofore considered by the dele­gates, as well as the Closing Session, be docu­mented and entitled the "Supplemental Report ofthe White House Conference on Small Business."

Resolution 7

Be it resolved that the President and the Congress of .the United States treat as matters of the highest na­tional priority the recommendations of this Confer­ence, with specific emphasis on the bills presentlypending in Congress, which carry out these con­cerns wherever possible.

Resolution 8

Whereas all delegates attending the regional andstate meetings of the White House Conference onSmall Business were distinctly advised that theywould be responsible for all of their own expensesfor all meetings attended; and whereas all delegatesagreed to this condition; and whereas a part of thisConference was directed to the reduction of federalspending;

Be it resolved: That this Conference go on record asbeing unalterably opposed to the Federal Gov­ernment's reimbursing delegates in any fashion forany expenses incurred for the attendance at thisConference.

Resolution 10

Whereas, Hawaii and other U. S. Pacific islandshave experienced severe economic dislocationsaffecting the total population in prior instances ofmaritime and longshore strikes that tied up WestCoast ports. The most recent significant experiencewas 175 days of interrupted shipping service fromJuly 1,1971 toDecember2,1972.

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63

••Federal tax policy is thesingle most important instrumentfor encouraging or discouragingthe flow of capital to smallbUSinesses",

outside capital and to create capital through retainedearnings.

Ideally, a small business should have a variety offinancing alternatives readily available to meet dif­ferent needs at various stages in its economic lifecycle. On the equity side, start-up capital usuallycomes from the entrepreneur's savings and "sweatequityO or from friends and relatives. Later, ayoung company might require venture capital fromminority investors, Small Business InvestmentCompanies, and the like. Eventually, the companymay raise equity capital by selling shares through apublic offering.

On the debt side, commercial banks and financecompanies provide both short-term loans to financeinventories and accounts receivable and inter­mediate-term loans to buy equipment. Banks andsavings-and-Ioan companies provide long-term debtmoney mostly by taking mortgages. Life insurancecompanies, a familiar source of long-term capitalfor big companies, rarely lend to small businesses.

Federal tax policy is the single most importantinstrument for encouraging or discouraging the flowof capital to small businesses. Taxes both on busi­ness income and on capital gains, for example,influence where investors choose to place theirmoney.

Confronting these problems, the delegates con­sidered 25 proposals that ranged from indexing thetax schedule for inflation to eliminating doubletaxation of dividends. Among the options weremeasures to scale down the capital gains tax rateaccording to the number of years that an asset isowned; to raise the ceiling on untaxed accumulatedearnings from $100,000 to $500,000; and to simpli­fy the LIFO (last-in-first-out) method of accountingfor inventories to help small businesses reduce taxeson artificially inflated inventory profits.

The delegates debated applying the 10% invest­ment tax credit equally to used as well as newproperty, and they discussed clarifying the "pru­dent man rule" that in the past has discouragedmanagers of such large investment pools as pensionfunds and employee benefit plans from investing insmall ventures. They also considered a tax credit forcreating new jobs, a 90% SBA guarantee for small­business revenue bonds, and ways that commercialbanks could pool small-business loans to sell themin secondary markets.

There was so much interest in capital problemsthat the delegates would unquestionably have votedseveral of these proposals among their top recom­mendations if the Conference rules had not required

__ Inflation has pushedreplacement costs so far beyondhistorical costs that traditionalcapital recovery schedules arenow inadequate. "

sell their interests and defer taxes if they reinvestedin another small business within a given period oftime.

Roll-overprovisions for small businesses are in­cluded in four bills in the House and two in theSenate. A tax credit for initial investment is afeature ofH.R.3975, 5.655, 5.487, and 5.3975. Areduction in capital gains taxes specifically to helpsmall companies is included in 5.2221.

Recommendation 5: Provide tax incentives in theform ofa new security called a Small Business Par­ticipating Debenture (SBPD) to provide a source ofcapitalfor small businesses.

This recommendation embodies a wholly newfinancing concept and scored ninth in delegatevoting. The complexities of Small Business Partici­pating Debentures are explained on page 28. Essen­tially, SBPDs would be debt instruments, similar tobonds, whose yields would rise in relation to a smallcompany's profits, similar to dividends.

The tax changes necessary to create SBPDs areincluded in S. 1481 .

M inorit y BusinessDevelopment

Two decades since the beginning of the civil rightsmovement, economic self-determination still seemsunattainable to many Black, Hispanic, Asian andPacific American, Native American, and membersof other U.S. racial minorities. Since 1970, theeconomic gaps between minority and non-minoritygroups have been widened. White families had amedian income of $10,694 in 1969, for example,while the median for Black families was $6,837. By1978, the median for white families had risen 72%to $18,368, but Black family income rose only 59%to $10,879. 4 1

Minority businesses are concentrated in low­growth and low-margin industries such as retailtrade, services, and nonindustrial construction.According to the Lowry Report, a 1979 study pre­pared for the CommerceDepartment byJamesH,Lowry & Associates, 6()% of minority-owned com,panies are in retail or service sectors, Only 28.5%of minority enterprises are in high-growth sectors

65

numerous options andfocused heavily on mandatingpercentage goals for federalprocurement and grantdollars.,.,

case that challenges the J 0% quota for minorityparticipation set out in the Public Works bill.

the Minority Business Development proposals andfinished fourteenth among the delegates' 15 top­priority measures.

It would involve three basic changes in either theSmall Business Act or the Federal Procurement Pol­icy Act, or both. One would be to include federalgrants to states and municipalities under presentprocurement regulations. Another would be to givewomen-owned businesses a share in federal pro­curement and grant monies. The third would be toestablish mandatory goals, a measure also includedin Recommendations 23, 26, 30, and 37. Furtherdetails on this recommendationare supplied on page34.

Two bills involving these matters are currentlybefore the House, H.R.2447 and H.R.2836. A con­stitutional however, looms over the issue

••The delegates' finalrecommendations combined

Native

This recommendation.receivedthe mostvotes.of

Recommendation 6: The President, by ExecutiveOrder, and Congress, by legislation, shall establishmandatory goals forall Federal.procurementsandFederal funds or grants 10. states, localities, andpublic-andprivateinstuutions, on a contract-by­contract or-agency-wide basis

••Minority contractors aredenied public construction con­tracts because they cannot obtainsurety bonds and are deniedbonds because they have notperformed contracts..,.,

6'7

special federal insurance program for minoritybusinesses in fmancial difficulties, and a uniformdefinition of minority business for govemment pro­grams in general.

Their five final recommendations combined nu­merous options and focused heavily on mandatingspecific percentage goals for federal monies to go tosmall, minority, and women-ownedbusinesses.

••SBICs and MESBICs inrecent years have tended to relendtheir money to small companies athigher interest rates instead ofinvesting in equity.~~

In the delegates' view, the above recommenda­tion would add substance to the intent of the law byrequiring a description identifying each item to besubcontracted on the assembly, subassembly, andcomponent levels. Also, the SBA Administratorcurrently is responsible for negotiating goals withthe heads of departments and agencies. The dele­gates recommend shifting that responsibility, alongwith well-defmed enforcement powers, to an asso­ciate administrator who could devote more time andeffort to the role.

The President recently sent a memorandumurging all department heads to implement the spiritas well as the letter of the law.

Recommendation 9: Congress shall (1) adopt aSBIC and MESBIC Investment Tax Credit Act toprovide a 50% tax credit for corporations and indi­viduals who invest in any issue of equity securitiesof SBICs and licensed MESBICs; and (2) authorizeMESBICs to borrow long-term loans from the Fed­eral Financing Bank at subsidized interest rates.

The purpose of this recommendation is to attractmore money to Small Business Investment Com­panies (SBICs) and Minority Enterprise SmallBusiness Investment Companies (MESBICs),which in turn invest in small and new businesses,The concept behind employing a tax credit to stimu­late .equity investment in today's capital markets isdescribed on page 28.

Also of great concern to the delegates is.the debt/equity ratios; of.companies Jn which SBles ..andMES~les InvestBecause most SBle and MESllIefunds are borrowed, these vehiclesfind.itdifficultto invest in equity, which provides no currentreturn

to cover the cost of the loans. Thus SBICsandMESBICs in recent years have tended to relendtheir money to small companies at higher interestrates. Of $32 million invested by MESBICs in1978, for example, $17 million was in the form ofstraight debt, and another $14 million was in theform of debt with equity." 'Ihe delegates feel that atax credit for equity investments in SBICs andMESBICs would provide more interest-free fundsto purchase small companies' shares and therebyreduce their debt/equity ratios.

Giving MESBICs access to the Federal FinancingBank would open up a new source of capital forMESBICs and put them more on a par with SBICs..

Recommendation 10: The President, by Execu­tive Order, or Congress, by legislation, shall estab­lish a National Minority Economic Commission toprovide a centralized focus to the Federal effort toassist minority business enterprise. This Commis­sion, a majority of which shall consist of non­government contractors, shall report directly to thePresident.

As conceived at the Conference, a NationalMinority Economic Commission would consist of25 commissioners representing. Blacks, Hispanics,Native Americans, Asian and Pacific .Americans,and other racial minorities. If adopted.the measuremight require reorganizing existing programsatthe'SBA and at the Minority Business DevelopmentAdministration ..'.' Analternativerwouldibe tostrengthen .the .InteragencyCouncil-forMinorityBusiness Enterprise; which already performs manyofthe functions of the proposed Commission.

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Recommendation 11: Support and urge passageof S .1860, the Small Business Innovation Act of1979, and companion bill H.R.5607, as presentlydrafted with flexibility for minor future amend­ments, covering: small business research anddevelopment set-asides; small business innovationand research programs (as already encompassed byH.R.5126 and S.1074); patents (as already encom­passed by S .414 and S .1679), capital formation &retention; amendments to the Internal RevenueCode; and regulatory flexibility.

As the delegates' omnibus innovation proposal,this recommendation won broad support and wasvoted the sixth most important among the Confer­ence's top 15 measures.

Both S:1860 and its companion bill would amendthe Small Business Act. They also would requirechanges in the tax code and patent laws, and theywould provide for regulatory flexibility. Thus thebills must be considered by three committees ineach house-s-the Judiciary as well as the Financeand Small Business Committees in the Senate, andthe Judiciary, Small Business, and Ways and MeansCommittees in the House. As a result, compromisescould delay passage or split the bills into smallerlegislative packages.

Recommendation 12: Existing Federal researchand development procurement; assistance, 'and taxlaws .and policies must be modified and new lawsenacted to: (l)eliminate unfairadvantages enjoyedby governmental agencies; .non-profitorganizationsandeducationalinstitutions which compete..with. .innovative small businessinprovidinggoods andservices; (2)mandatestatutorllya national-policyof.

reliance on small business; (3) prevent the Federalgovernment from disseminating proprietary infor­mation; and (4) prevent the Federal government,through the use of its own personnel includingFederal Research Centers, from competing withsmall business.

Although different in spirit and approach, thisrecommendation addresses issues encompassed byRecommendation II. Its support at the Confer­ence came largely from delegates who feel that toomany federal research contracts are awarded touniversities, foundations, and government itself.The SBIR program at the heart of S.1860, includingchanges in patent laws, could alleviate many of thecompetitive problems by promoting small-businessresearch. No other legislationdealing with this issueis pending.

Recommendation 13: Increase the amount ofFederal research and development prime contractsawarded through small business set-asides by onepercent per year of each agency's research anddevelopment budget, until the dollar value of theset-asides reaches at least ten percent of thatagency's total annual research and developmentbudget.

Underlying this recommendation is a widespreadbelief, shared by minorities, women, and veterans,that only specific percentage goals will promptfederal agencies to award contracts to small com­panies. Set-asides are also proposed in Recom­mendations II and 31.

The recommendation above would require anExecutive Order to executive agencies and newlegislation for independent agencies. The Presidenthas already directed executive agencies not to ex­clude small businesses unfairly from competing forcontracts. Currently, these agencies must publicizebidding opportunities and report to the Office ofManagement and Budget on each year's progresstoward increasing small companies' share of R&Ddollars. The agencies are not, however, compelledto meet any specific targets.

Recommendation 14: Clarify the "prudent manrule" to broaden it and insure that-securities ofsmall issuers are notexcluded from those securitieseligible for purchase by fundssubjecttoERlSA,andexempt those securities from planned assetregula­tion issued by the Department ofLabor,

reviewing the 1981 budget and trying to bring it intobalance.

Recommendation Ii: Reformthe Social SecuritySystem by including, where constitutionally possi­ble, all public and private sector employees ascontributors and more closely tie benefits to con­tributions to move the system toward actuarialsoundness. Limit benefits to the original old-ageand survivors benefits. Freeze the tax base and taxrate at the January 1980 level. Eliminate doubledipping.

This recommendation ranked eighth among the15 top-priority measures. The subject is of particu­lar concern to small-business people because theircompanies are usually labor intensive, and payrolltaxes represent a heavy cost over which small­business owners have no control.

The object ofPL 95-216, enacted in 1977, was tomake the Social Security system fiscally sound, andto do it more by increasing rates rather than byreducing benefits. The Conference recommendationstrives to do both. A major aim of the delegates is toinclude federal workers who are not presently re­quired to contribute to Social Security. A prohibi­tion against "double-dipping" would requirepeople who simultaneously collect benefits fromSocial Security and another retirement program tochose between the two, thus reducing the drain onSocial Security revenues.

The recommendation would require amendmentsboth to the Social Security and to the 1954 InternalRevenue Code. Moreover, a recent study by a con­gressional commission recommends that public em­ployees be brought into the Social Security system.

Recommendation 18: Revise minimum wagestandards by freezing standards at January, 1980levels and establishing a two-tier minimum wage byexempting teenagers, seasonal workers and part­time workers.

Thirteenth in the Conference voting, this recom­mendation addresses an issue discussed on page 20.IE would require an amendment to the 1938 FairLabor Standards Act. The most recent amendments,in 1977, raised the minimum wage rate to $3. 10 perhour and calls for an increase to $3.35 per hour onJanuary 1,1981.

Bills to change the minimum wage must gothrough the House Educationand Labor Committeeand the Senate Labor Committee. Any attempts to

••Byand large, delegates inthe Inflation workshops concen­trated on measures thatthey feltwould benefit the nation as a

whole.~,

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75

vide' 'special consideration" to veterans in order tosignificantly improve the quality of assistance toveterans and to provide support to veteran-ownedbusinesses.

Recommendation 22: The President shouldestablish an Interagency Committee on veterans inbusiness. Not more than one third ofsuch committeeshall be non-veterans.

As the delegates envisioned it, such an Inter­agency Committee would include officials from theSBA, the Veterans Administration, and the Officeof Federal Procurement Policy as well as Com­merce, Agriculture, Defense, Education, Labor,and other departments. It would meet at least fourtimes per year to review federal efforts for veteransin business and would make recommendations toofficials on how to improve veteransprograms.

Its chief difference from the White House Vet­erans Federal Coordinating Committee would bethat at least two-thirds of its members would beveterans.

This proposal, the veterans' omnibus recom­mendation, received the most votes of the fiveselected by the veterans' workshops. It has threeaims-to implement veterans' benefits mandated byPL 93-237, to create a veterans committee withinthe SBA, and to require other federal agencies toassist veterans, especially in procurement areas.

The SBA has recently taken action under PL 93­237's veterans provisions. It has 475 veteran-ownedcompanies on its computerized Procurement Auto­mated Source System (PASS), which matches pro­curing officials' needs with small companies'capabilities." And the White House recently ap­pointed the SBA to the White House VeteransFederal CoordinatingCommittee.

Recommendation 23: 15% of all Federal Pro­curement contracts and 15% of all SBA Direct andGuaranteed Loan Program Funds shall be set asidefor veteran applicants. The SBA shall be responsi­ble for utilizing the Procurement Automatic SourceSystem (PASS) and other Federal Procurementsource listings to implement veterans' set-asides.

ernment and in many instances suffered disabilities,Vietnam-era veterans feel the government shouldprovide them with special assistancein return.

No figures are available on howmany disabled orVietnam veterans have started businesses of theirown. But some 9 million Americans, or 29% of thenation's total veteran population, served during theVietnam years from 1964 to 1975. Roughly 14%are Blacks and Hispanics, and more than 500,000are disabled, or 20% of the total 2.5 million dis­abled veterans in the country."

The Small Business Act of 1975 (PL 93-237)requires the SBA to give "special consideration" toveterans. The delegates who participated in theConference workshops on Veterans in Business felt,however, that few attempts have been made by theSBA or by the Commerce and Labor Departments,the Veterans Administration, or the General Serv­ices Administration to counsel veterans on startingand owning small businesses.

The delegates emphasized that disabled veteranshave the greatest need for assistance, followed byVietnam veterans in general. They discussed a widevariety of measures to focus SBA programs on vet­erans' unique problems. As their fmal recommenda­tions indicate, they were also concerned aboutreceiving more federal procurement contracts andabout including disabled and Vietnam veterans un­der all legislation and agency regulations that applyto "socially and economically disadvantaged"groups.

Recommendation 21: The President shall issuean Executive Order providing for the full and effec­tive implementation of the provisions of the SmallBusiness Act providing for "special consideration"for veterans (Part 116, Subpart A of Title 87,United States Code, PL 93-237). To assist in car­rying out the veterans "special consideration"provisions, such Executive Order shall establishwithin the Small Business Administration an in­ternal Veterans' Business Committee, the majorityof whose members shall be veterans and whosepurpose shall be to advise and assist the SBA in thedevelopment and implementation ofprograms andthe formulation ofpolicies necessary and appropri­ate to carry out the veterans' "special considera­tion" provisions of the Small Business Act andregulations pertaining thereto. This recommendation promulgates set-aside

Such Executive Order shall require all appro- ' goals in two areas, SBAloansand federal procure­jiriate agencies and departments of the Federal ments.The 15% level is only slightly higher thanGovernment which engage in business assistance the proportion of veterans in the U.S. population,activities, such as procurement authority, to pro- , which is about 13.6%. Forthe second half of 1980,

Recommendation 26: The Federal Governmentshall be required by statute to contract out to smallbusiness those supplies and services that the privatesector can provide. The government should notcompete with the private sector by accomplishingthese efforts with its own or non-profit personneland facilities. Small business generally~50%

which shall include the following: minority-ownedbusinesses 15%, business owned by women 10%.

This recommendation is substantially the same asRecommendation 6, 30, and 37, except that it doesnot apply to federal grants to states and munici­palities. Instead, it reflects the delegates' opinionthat government itself, as well as nonprofit organi­zations, should not compete against small compa­nies in providing supplies and services.

Recommendation 27: Procurement agenciesshould break down large requirements (includingthose for research and development) into smallerparts wherefeasible to permit solicitationfrom,' andawardto, smallbusinesses.

Current regulations call. for a "breakout" ofprocurement items .that small companies could-pro­vide. But these regulations are not being fullyimplcmentedandenforced.·Onestumblingblock isinsufficient ·technical '.<lIld engineering •. expertiseamong the procuring agencieS'Q'ovnsmail,businessrepresentatives,'who are-not-always able to perceivewhichcontracts. would beappropriate for small

contractors. The SBA's new PASS system couldimprove this situation significantly.

Recommendation 28: The Federal Governmentshould contract out supplies and services to privateindustry (particularly small and minority business)and should not compete with the private sectoreither through the use of its own personnel orthrough non-profit organizations such as the Fed­eral Research Centers. educational institutions orother non-profit entities.

This proposal is an elaboration of the secondprinciple included in Recommendation 26 above.

Recommendation 29: The Office of FederalProcurement Policy should develop a new set ofprocurement regulations applicable to procure­ments under a special amount from all businesses.This "second-tier" regulation should eliminateclauses. procedures. reporting requirements, etc..applicable to large systems procurement which arecurrently imposed on small businesses. as well; andto the extent possible; apply to subcontracts withsmall businesses.

The "second-tier" concept in this proposal isvirtually identical to the "tiering" principleembodied in Recommendations 44 and. 45 •pro­duced by the workshops on Government Regu­lations and Paperwork, and also implied inRecommendation 46 from the workshops on

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79

i.Delegates viewedtheenergy crisisas due lessto fuelshortagesthan to strategic mis­management of supplies.~~

covered electricity, individual entrepreneurs haveinvented the rotary drilling bit, the petroleum re­fining process, gasoline, air conditioning, and theelectric transformer, among other examples .:

Delegates in the energy workshops viewed theenergy crisis as due less to fuel shortages than tostrategic mismanagement of supplies, and they ex­pressed more concern about having reliable suppliesthan about rising prices.

They discussed ways to simplifyand reduce regu­lation of small companies, measures to make gov­ernment information more readily available, anddivestiture of gasoline service stations by big oilcompanies. Butby and large they focusedon broadissues in the national interest, specifically on

. government planning and the administrationof pol-icies to make the U.S. self-sufficient in energy assoon as possible. To this end, the delegates empha­sized strongly that small companies should play agreater role in energy exploration, production, andresearch.

Recommendation 31: The Federal Governmentshould open public lands to energy exploration andproduction under regulations which provide rea­sonable environmental protection, with:

(a) a 30% small business set-aside(b) fixed time limits for statutory environmental

analysis(c) a 5-year limit on lease terms to encourage

rapid development.

The concept behind this recommendationis basedon estimates that most of the undiscovered fossilfuels in theU.S. lie beneath public lands. A set­aside for small companies is a principle alsoincluded in Recommendations 11 and 13 regardingfederal research-and-development funds.

Item (b) reflects the delegates' belief that theDepartment of Interior has taken undue time tocomplete environmental studies mandated by theWilderness Act and the Federal Land Policy andManagement Act, both of 1976. A time limit onleases is a measure used in other nations to preventlarge companies from gaining coutrol of federallands and letting themlie undeveloped.

These measures would require amendments to thetwo 1976 acts mentioned above.

~eColDD1endation 32:. Government must use any'f~1¥ tax income from energy production and devel­opment for the future production and development

Recommendation 36: Private lending institutionsshould be required to provide equal access to com­mercial credit for women.in business. The FederalReserve Board should establish record keepingrequirements for commercial loans to women whichwill permit effective monitoring of performanceunder the Equal Credit Opportunity Act. The SmallBusiness Administration should make. bank certifi­cation available to as many commercial banks andother lenders as possible and establish targets forincreasing the dollar volume of loans made to

bers of women are choosing to face these obstacles minority-owned and women-owned businesses, asand start businesses of their own. one ofthe criteriafor recertification.

Acknowledging the potential of women-ownedbusinesses" the President in May 1979 signed Ex- This recommendation finished eleventh on theecutive Order 12138establishing a new policy to aid delegates' top-15 list. Because the Equal' Creditwomen, which is being overseen by an Interagency Opportunity Act of 1974 already prohibits lendingCommittee on Women's Business Enterprise. discrimination on the basis of sex, the proposal

Subsequently, the President created the new SBA actually has only two components that would re­position of Associate Administrator for Women's quire changes.Business Enterprise. . One would oblige banks to keep records on busi-

The new policy has touched off a series of gov- ness loans that could be monitored to see whetheremment initiatives. For instance, the SBA targeted women-owned companies are being treated fairly$50 million in direct loans to women applicants in (page 36). This could be done by Federal Reserve1980 and also set up a program offering women administrative action or by congressional Iegisla­mini-loans of less than $20,000 under flexible tion. No current legislative proposals address thisterms. The Commerce Department's Economic issue.Development Administration, the Agriculture De- The second component deals with an SBA pilotpartment's Farmers Home Administration, and the program-the "bank certification program"-to letFederal Home Loan Bank Board have all initiated banks take over the responsibility of evaluatingprograms to increase credit for women in business. potential borrowers. The measure is designed to cut

In addition, the SBA and several other agencies down paperwork now duplicated by the SBA andare developing management and technical assist-the banks and to speed up the process of obtainingance programs for women, and both the SBA and SBA-guaranteed loans. Women are worried, how-the. Office of Federal Procurement.Policy__ have ever, that banks-will be-less inclined-than-SBA--to----------

-taken steps to bring more women-owned businesses grant them loans. The difficulty is that establishinginto the procurement process. targets and monitoring them tends to create more of

At the Conference, the delegates consideredmore the paperwork and bureaucratic slowdowns that thethan 35 measures, ranging from govemment guar- bank certification program is intended to reduce.antees for private venture-capital funds for women'sbusinesses (similar to SBICs and MESBICs), toways to persuade private industry to contract with. Recommendation 37: The President should initi­women-owned businesses. They discussed mea- ate by Executive Order and Congress should enactsures to include more women in the SBA's Small legislation establishing mandatory goals and re­Business Development Center program and in its porting requirements for all Federal procurementsProcurement Automated Source System (PASS). and procurements resulting from Federalfunds andAnd they debated recommending a legislative grants to states, localities and public and privateamendment to include women under the procure- institutions for small businesses on the basis of50%mentprovisionsofPL95-507. for small businesses. The 50% shall be distributed

Their final choices focused on credit, procure- so that 15% of all procurements shall be targetedment, training, bonding, and the performance of for businesses owned by socially and economicallyfederal employees on behalf of women. disadvantaged persons ti.e., those businesses

owned and operated by Blacks, Hispanics, NativeAmericans, Asian Pacific Americans and otherracial minorities), and 10% ofall procurement shallbe targeted for women-owned businesses as definedin Executive Order 12138. And, further, that Con­gress should amend the Small Business Act to pro­vide incentives to Federal prime contractors forsubcontracting with women-owned businesses;pro­vided, however, that such an act does not includewomen-owned. businesses as a category or class ofsocially and economically disadvantaged smallbusiness.

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8~

panies' concerns and to suggest changes and simpli­fications in tax forms. And the Securities andExchange Commission has set up an Office ofSmall Business Policy to alter compliance standardsoriginally directed at large companies.. The delegates' chief interest was making govern­

ment more sensitive to the impact of regulations onsmall businesses. The principal themes in the work­shops concerned better management and oversightof regulatory agencies, thorough-going economicanalysis of the effect of regulations, and ways toadd flexibility to regulations and reporting require­ments for small businesses.

Delegates raised questions about which govern­ment body--Congress, an executive agency, orsome sort of review board-should have overall re­sponsibility for controlling regulations. They alsodiscussed how agencies could provide more timelyinformation about pending rules to give smallenterprises more chance to comment, or even tohelp develop rules and forms directly. And theytalked about measures to give small companiessome relief in the costly, time-consumingprocess ofadjudicating disputes with regulators.

Recommendation 41: Congress shall exercise itsoversightfunction with the assistance ofthe GeneralAccounting Office, instituting sunset reviews of alllaws, regulations, and agencies, to ensure that noneexceeds original congressional intent. Sunset re­view, in an appropriate time frame (not less thanevery five years) should include economic impactanalysis and proposed agency budget reductions,leading to re-enactment of each agency's enablinglegislation to permit its continued existence, or toreduce its size and cost.

(a) Establish a Regulatory Review Board com­posed ofrepresentativesfrom the Executive Branch,Congress and small business owners, with respon­sibility for impact statementsand cost controls.

(b) Congress shall exercise line-item veto overregulations within a specified time through con­gressional oversight committees, with one-housefloor vote.

This recommendation ranked fifth on the dele­gates' final ballots. Its clear message is that Con­gress should assume additional responsibility tomake sure that agencies adhere to the intent of leg­islation. The proposal combines several measures.

"Sunset review" of laws, regulations.rand agen­cies, with the aim of eliminating as 'many as possi­ble, is encompassed in several legislative bills,

including H.R.5858, S.262, and S.2l47, the latestversion of an omnibus regulatory reform bill. Legis­lation would apply to congressionally-createdinrl"'n..,.nrlon+ ........"" ;""".u p u. u.5 U J.'-'03.

Also, sunset review already is included in twoExecutive Orders, 12044and 12174, which apply toCabinet departments and executive agencies (suchas the SBA and the Environmental ProtectionAgency).

Provisions for a Regulatory Board are in congres­sional bills, but not for a board that would includesmall-business owners.

Proposal (b), which would permit Congress toveto regulations on the strength of a floor vote ineither the House or the Senate, is a politically con­troversial issue. It raises complex constitutionalquestions, for it might alter traditional checks andbalances among the executive, legislative, andjudicial branches ofgovernment.

••Rules and forms havebecome such a headache even togovernment itl;elf that hundreds ofproposals have emerged to cutback the workload.~tJ

Recommendation' 45: When developing rules,forms and guidelines, regulatory agencies mustconsult with small business representatives fromaffected industries and advocates assigned to eachagency.

(a) Consult SBA Office of Advocacy and smallbusiness trade associations who should be givensufficient authority and time (90-180 days prior topublication of notice of proposed rule-making) toinfluence regulators if a proposed rule and/or formwould have an impact on small business.

(b) Such proposed rules should reflect lessformaladministrative procedures for small business.

(c) Agencies make available timely informationand assistance, within 30 days in writing.

This is the delegates' proposal to playa greaterrole in the formulation of regulations and reportingrequirements. The concepts are generally covered inthe omnibus S.2147; however, 60 days is the periodmost likely to be established. Small businesses needfar more advocacy in government activities thataffect them, and it is crucial that pertinent informa­tion be adequately disseminated in time for smallcompanies to comment on proposed rules.

Econom ic Policy andGovernment Programs

Economic policy is principally fashioned by thePresident's Economic Policy Group, the FederalReserve Board, and Congress. For several decades,the thinking underlying policy has emphasizedmacroeconomic measures to stimulate giant corpo­rations and consumer buying-measures that appearincreasingly outdated (page 10). Policymakers haveneglected Small Business, partly because small­business owners did not perceive themselves to be acohesive, identifiable constituency with commoninterests. Accordingly, they did not trouble to maketheir views known in nationalpolicymaking circles.

The 1980 White House Conference on SmallBusiness has proved to be a dramatic tuming pointin this. regard. Not only did the Conference dele­gates express their concerns; they also transformedthose concerns into constructive proposals forfederal action. Small-business people are now de­termined to develop regular channels for ventilatingtheir opinions inWashington.

••Small-business people are •determined to develop regularchannels for ventilating theiropinions in Washington. "

In the Conference workshops on Economic Pol­icy and Government Programs, delegates focusedon ways to elevate the SBA to levels of greaterpower within the federal hierarchy, to strengthenthe SBA's Office of Advocacy, and to get small­business advocates assigned to federal agencies.They emphasized the need for impact statementsdemonstrating the effects of economic and regula­tory policies on small businesses. They also stressedthat antitrust laws should be strengthened and thatgovernment programs for small businesses be con­solidated and streamlined.

Recommendation 46: Require that all govern­ment agencies which develop fiscal, monetary,legislative and regulatory policies/practices shallsubmit small business "economic impact" state­ments that require the regulatory agencies to iden­tify the anticipated benefits and to justify the costs ofFederal regulatory requirements to small business.In addition, all regulatory policies sholl be subjectto sunset provisions to be reviewed every 5 years inorder to insure that only cost effective regulationsshall be maintained and retained in thefuture.

The delegates made this proposal number 15 intheir selection of measures for immediate attention.It calls for economic impact statements and sunsetreview of regulation, as well as implying tieredregulation, . all ofwhich dovetails with Recom­mendations 41; 44, and 45 from the GoverntnentRegulations and Paperwork workshops.

As with those proposals, many of'.this recom­mendation's features are already covered by Execu­tive Order and by pending legislation.

85

direct proposal to strengthen the SBA's advocacyefforts. It is virtually identical to Recommendation47.

These measures could be set in motion by anExecutive Order, or they could require a combina­tion of Executive Order and new congressionallegislation.

Recommendation SO: Small business representa­tion in economic and regulatory decision-makingshould be increased. This should include, but not berestricted to the following steps by the President:

1. Seek the Counsel ofthe SBA Administrator andrepresentative small business executives in devel­oping policy.

2. Appoint a small business executive as a senioradvisor on the White House Domestic Policy Staff.

3. Direct that small business advocates be as­signed to the OMB, FRB, Treasury Department andregulatory agencies, under general guidelines fromthe Office ofAdvocacy at the SBA.

4. Appoint small business persons to all nationalboards, commissions and advisory committeeswhose work impacts on small business.

This proposal reflects the desire of small-businesspeople to participate more actively in developingeconomic policy in order to have their intereststaken into account. Although worded more gener­ally, it is substantially the same as Recommenda­tions 47 and 49, except that it asks to have a smaII­business advisor appointed to the Domestic PolicyStaff as well as to other boards, commissions, andcommittees affecting small businesses. Executiveaction rather than legislationwould be required.

I nte....tIonal Trade

International Trade received limited attention at theConference. Fewer than one out of five delegatesrepresented manufacturing, and because exportinghas never been a high priority in the U.S., mostdelegates were unfamiliar with export opportuni­ties. Small Business' potential for contributing toexports, however, is crucial for the U.S. tradebalance and is explained in depth on pages 22~23

alJ.d pages 32-34.In September 1978, the President announced a

••Many small-businessowners want legislation thatwould give new teeth to theRobinson-Patman Act, the"Magna Carta of SmallBusiness.",~

87

__Information abouthowtoexport is nowscattered amongnumerousgovernment agencies,and potential exporters have adifficult timefinding out what isavailable.~~

loan programs under Section 7(a) of the SmallBusiness Act.

Eximbank and SBA already have announced apilot project to provide eligible small exporters withrevolving credit lines.

Recommendation 53: The Federal governmentshould establish field one-stop service shops to in­clude export services ofall Federal agencies underthe guidance ofthe Department ofCommerce.

Information about how to export is now scatteredamong numerous government agencies, and poten­tial exporters have a difficult time finding out whatinformation is available. In this recommendation,the delegates propose that the government set upsingle, centralized offices in major cities that wouldprovide a complete spectrum of government infor­mation and would offer the services of a team offoreign-trade experts from the Commerce Depart­ment, the' SBA, Eximbank, the Internal RevenueService, the Overseas Private Investment Corpora­tion, and the Foreign Credit Insurance Association.Under this proposal, Commerce would be the co­ordinating agency.

Recommendation 54: The President and Con­gress should consolidate under an existing cabinetlevel department, a unified world trade administra­tion. It would be responsible for all trade policyfuncti0THotthe various agencies and departments.Its objectivew.oUld be ~o maximize the internationalcompetitivestrengths of u.s. Small Business withsupport and goalsforminority, women-owned and

disadvantaged business and specific programs de­veloped to utilize their units of technological, edu­cational, cultural, language and political expertise.

This recommendation proposes a broader ap­proach to the problem of scattered federal programsfor foreign trade. It asks for a unified World TradeAdministration under an existing federal depart­ment. The World Trade Administration would es­tablish foreign trade as a major national priority,bring trade policy into a single focus, eliminate theduplication and complexity of the present system,and emphasize small-business exports. It wouldalso administer the one-stop service shops proposedin the previous recommendation.

Since the Conference, the SBA has requested anExecutive Order that would formally establish anIIlteragency Committee on Small Business Exportsand Investment, chaired by SBA Administrator A.Vernon Weaver. The committee's members willinclude officials from Commerce, Agricnlture,Treasury, Eximbank, OPIC, and the Office of theU.S. Special Trade Representative. The proposedExecutive Order also would appoint AdministratorWeaver, along 'with five small-business exporters,to the President's Export Council.

RecoDlDlendlltion 55: Congress should providefor support and expand use ofall ojJiciallyrecog­nized Trade Fairs, Exhibits, and TradeCent~r~

abroad with small business participation; continuetoe,,;courage. the DeP9rtmentot COmJ11.erce to, in:crease. the promotion offoreig,,;buyerand/oreig,,;visitor travel to the United States;.anddevelop a

89

The concept behind this recommendation envi­sions a partnership among government, educationalinstitutions, and business to launch a national pro­gram. The government's principal role would be tocoordinate policy. It would also supply resourcesand incentives to businesses and universities, whichin turn would develop specific approaches to entre­preneurial training and management assistance.

Government participants would include the SBAalong with the Departments of Commerce, Labor,and Education. No federal initiatives, legislative orexecutive, currently exist along these lines.

RecommendationS': The Small Business Ad­ministration's management assistance programsshould be strengthened and expanded by allocatinga greater portion ofthe Agency's total resources toreflect an increased emphasis on management as­sistance rather than the traditional emphasis onfinancial assistance.

In this recommendation, the delegates stated thatmanagement training is as important to small busi­nesses as the SBA's loan programs. The proposal isrelated to, and somewhat in conflict with, Recom­mendations 47 and 49 from the workshops onEconomic Policy and Government Programs. Thoserecommendations state that advocacy should be theSBA's principal concern, and 49 proposes that theadditional money and personnel for advocacy comefrom the streamlining that the SBA would achieveby expanding its pilot bank-certification program(page 86).

Recommendation 58: A National Policy shouldbe established for the support of entrepreneurialeducation and training, continuing education andmanagement assistance, provided by the public andprivate sector, as an opportunity for every Ameri­can who wishes to own his or her small business andshould receive recognition as a priority from thehighest levels ofgovernment.

This recommendation was fashioned in tandemwith Recommendation 56. It calls for the nationalpolicy that 56's proposed task force wouldimplement.

Recommendation 59: Establish' 'One-StopShops" under the coordination of SBA for smallbusiness assistance programs utilizing effectiveinformation systems and management assistanceprograms to serve the small business community of

the local level, with primary implementation occur­ring through the private business sector, existingagencies and existing organizations.

One-stop shops would be single offices in majorcities that would offer a complete spectrum of as­sistance programs to small-business people. Repre­sentatives from such government bodies as theSBA, the Commerce Department, the InternalRevenue Service, and the Export-Import Bank, toname a few, all would be available in one locationto help smaIl businesses with financing, federalprocurement opportunities, construction bonding,accounting, tax reports, export possibilities, andnumerous other subjects. The one-stop shops wouldalso act as cleatinghouses for information aboutgovernment and private-sector programs. The sameidea is encompassed in Recommendation 53, andadditional explanation can be found on page 32.

Recommendation 60: Congress should enactlegislation that would provide tax credits or othertax incentivesfor:

A. Expenses incurred to educate small businessowners and operators regarding the managementofbusiness.

B. Expenses incurred to conduct continuing edu­cation and training and to provide on-the-jobentrepreneurship experience.

The idea behind these proposed tax incentives isto encourage successful business people to helpeducate and train small-business managers andentrepreneurs--that is, to open channels for busi­ness people to help each other under the programsoutlined in Recommendations 56, 58, and 59.

ConCluding Su..,....ry

The 60 Conference recommendations are the prod­uct of an unprecedented nationwide appeal forsolutions to problems that beset Small Business,problems that are becoming increasingly acute. Theeffort began with 25,000 small-business men andwomen expressing their concerns at meetingsaround the country, and it culminated,later, in delegates casting their ballots at the nationalConference in Washington.

The participants represented a broad spectrum of

91

FOOTNOTES

I. "Monthly New Business Incorporations," Dun& Bradstreet, March 3, 1980.

2. "Employment & Earnings," Bureau of LaborStatistics, U.S. Department of Labor, January 1975and January 1980.

3. David L. Birch, "The Job Generation Process,"MIT Program on Neighborhood and RegionalChange (Cambridge, 1979), p. 9.

7. C. Wright Mills and Melville J. Ulmer, "SmallBusiness and Civil Welfare," Report ofthe SmallerWar Plants Corporation to the Special Committee toStudy Problems ofAmerican Small Business, SenateDocument 135, February 13, 1946.

8. Jon G. Udell, "Social and Economic Conse­quences of the Merger Movement in Wisconsin,"Graduate School of Business, The University ofWisconsin (Madison, May 1969).

11. "Statistical Abstract of the U. S. 1979,"Bureau of the Census, U.S. Department of Com­merce, pp. 408-412.

12. David L. Birch, "The Job Generation Proc­ess," MIT Program on Neighborhood and RegionalChange (Cambridge, 1979).

Bureau of Labor

10. "Future of Small Business in America," A Re­port of the Subcommittee on Antitrust, Consumers& Employment, Committee on Small Business,U.S. House of Representatives, November 9, 1978,p.4.

9. Allaman and Birch, "Definition of MigrationAreas Used in the Inter-Area Migration Project,"Working Paper of the MIT-Harvard Joint Center forUrban Studies (Cambridge, August 1975).

13. "EmploymentStatistics, U. S. Department

4. "Science Indicators," National Science Founda­tion, 1979.

5. E.F. Schumacher, Small is Beautiful: EconomicsAs IfPeople Mattered, Harper & Row (New York,1974).

6. Based on "1977 Preliminary Statistics of In­come," Internal Revenue Service, and "MonthlyNew Business Incorporations," Dun & Bradstreet.The figures cited are necessarily estimates, for nosource adequately measures the number of U.S.businesses or the number of small businesses. IRSfigures include inactive companies, companies thatare controlled by large corporations but that fileseparate tax returns, and all individuals who fileScheduleCvtax forms.vregardless of whether theyareself-elIlployed. Census statistics enumeratecompanies and business "establishments," butthose figures do not take into account the fact that acompany may own one or more "establishments,"such as retailbranches or manufacturing sites. Also,Census figures excludesole proprietorships and theself-employed.

93

42. "Federal Programs for Financing MinorityBusiness," A Report of the Department of theTreasury, December 1978..

43. Ibid.

44. Data from American Association ofMESBICs,Washington, D.C., 1979.

45. Data fromEconomic DevelopmentAdministra- .tion, U.S. Department of Commerce, 1979.

46. "Tables of Federal Procurement,"InteragencyCommittee Report to the President, 1978~79.

47. Data from American Association ofMESBICs,Washington, D.C., 1979.

48. "Presidential Review. Memorandum on Viet­nam Era Veterans," Committee Print No. 38,Committee on Veterans Affairs, U.S. House of,Representatives, October 16,1979, PP. 12-13.

49. ·Office of Procurement, U.S. Small BusinessAdministration, March 1980.'

50. Data from U.S. Small Business Administration,1980.

51. U.S. Small Business Administration AnnualReport FY 1978.

52. "1974 Energy Report for Small Business,"National Federation of Independent Business,Washington, D,C.

53. Data from American Association of PetroleumGeologists, Washington, D.C., 1979.

54. Data from National Oil Jobbers Council, Wash­ington,p.C., 1979.

55. Data from Service Station Dealers of America,Washington, D.C., 1979. .

56. Size Standards Division, U.S. Small BusinessAdministration, 1979.

57. "Employment & Earnings," Bureau of LaborStatistics, U.S. Department of Labor, February1980.

58. GeorgeT. Solomon and Bruce G. Whiting,"Casualties of Ignorance: The Dilemma of SmallBusiness," The Proceedings of the Small BusinessInstitute Director's Association National Confer­ence, August 1978, p. 143.

Appendix B:Regional ~onferencesandOpen Forums

Regional Conferencesand Open Forums

*Asterisks designate Regional Conferences. Allother meetings were Open Forums.

1978* 1. Boston, MA

2. Little Rock, AR* 3. Denver, CO

4. Pittsburgh, PA5. Cleveland, OH6. Charlotte, NC7. Columbia, SC8. Miami, FL9.SanJuan,PR

* 10. Houston, TX11. Boise, ill12. Portland, OR13. San Diego, CA14. Las Vegas, NY

* 15. Los Angeles, CA16. Oklahoma City, OK17. New Orleans, LA

197918. Birmingham, AL19. Jackson, MS

* 20. Dallas, TX21. Louisville, KY22. Nashville, TN

* 23. Atlanta, GA24. Cherry Hill, NJ25. Wilmington, DE26. Phoenix, AZ27.AJbuquerque,NM28. Buffalo, NY

Aug. 17-18Sept. 8Sept. 22-23Sept. 29Sept. 30Oct. 5Oct. 6Oct. 12Oct. I3Oct. 2~-24Nov. 6Nov. 8Nov. 16Nov. 17Nov. 27-28Dec. 6Dec. 8

Jan. 10Jan. 12Jan. 23-24Feb. 1Feb. 9Feb. 15-16Feb. 22Feb. 23Mar. 1Mar. 2Mar. 8

* 29. Seattle, WA* 30. New York, NY

31. Baltimore, MD32. Wichita, KS33. Minneapolis, MN34. Des Moines, 1A35. Indianapolis, IN36. Omaha, NE37. St. Louis, MO

* 38. Kansas City, MO39. Honolulu, HI40. Charleston, WV41. Richmond, VA42. Detroit, Ml

* 43. Philadelphia, PA44. Milwaukee, WI45. Anchorage,AK46. Salt Lake City, UT

* 47. San Francisco, CA48. Billings, MT49. Fargo, ND50. Casper, WY51. Sioux Falls, SD

* 52. Chicago, 1L53. Concord, NH54. Augusta, ME55. Montpelier, VT56. Hartford, CT57. Providence, RI

Mar. 22-23April 5-6April 10April17April18April 27May 4May 9May 11May 24-25June 1June 6June 8June 14June 22June 26July 6July 11July 16July 23July 25July 30Aug. 1Aug. 9Aug. 16Aug. 17Aug. 21Aug. 23Aug. 29

Innovation and Technology

Chair:Ralph BergerSkinner & Shennan Laboratories, Inc.Waltham, Massachusetts

Members:Julian J. BussgangScanatronLexington, Massachusetts

Daniel A. Cronin, Jr.Ampersand AssociatesBoston, Massachusetts

James S. Hostetler, Esq.Chapman, Cuffand PaulWaltham, Massachusetts

Joseph S. IandiorioAttorney at LawWaltham, Massachusetts

Paul M. KellyMassachusetts Development Corp.Boston, Massachusetts

John A. KleppeScientific Engineering Instruments, Inc.Reno, Nevada

Robert S. LeeHotwatt, Inc.Danvers, Massachusetts

Arthur S. ObennayerMoleculon Research Corp.Cambridge, Massachusetts

HanyG. ParsSISA, Inc.Cambridge, Massachusetts

Lewis ShattuckSBANEWaltham, Massachusetts

__ Wendell F. SmithMarketing CatalystsWeston, Massachusetts

Leonard ZionSISA, Inc.Cambridge, Massachusetts

Veterans

Chair:James PechinCenter for Community EconomicsSanta Rosa, California

Members:Ronald DrachDisabled American Veterans:Washingt()n,p,C.

Michael R. EibenComputer Service, Inc.Chicago, Illinois

Andrew G. InterdonatoSuburban Development and Construction Co.Fort Washington, Maryland

Darryl KehrerAmerican Association of Minority Veterans

Program AdministratorsWashington, D.C.

Austin KirbyThe American LegionWashington, D.C.

Michael MilitelloMulligan'sBuffalo, New York

Frederick W. SmithFederal Express Corp.Memphis, Tennessee

Tom WincekVietnam Veterans FoundationWashington, D.C.

Federal Procurement

Chair:Rex M. BallH. T.8. Architects and EngineersOklahoma City, Oklahoma

Commissoner:Ernest M. Camacho

Members:Alfred C. W. DanielsAerospace Design Co.Bedford, Massachusetts

Lola DickermanAttorney at LawBoston, Massachusetts

Robert GladstoneGladstone AssociatesWashington, D.C.

Charles E. HanesBurlingame, California

George MurphyEducational Computer Corp.Stratford, Pennsylvania

Dale NelsonBuilding Maintenance ServiceDes Moines, Iowa

101

Steve NelsonConsultantDowney, California

Buck WongArcata Associates, Inc.Burlingame, California

Energy

Chair:William M. ElmerTexas Gas Transmission Corp.Point Clear, Alabama

Members:Christopher BurkeU.S. Small Business AdministrationWashington, D.C.

Lana BattsAmerican Trucking AssociationWashington, D.C.

Alan DarrowNational Oil Jobbers CouncilWashington, D.C.

JosephJ. GrishNational Congress of Petroleum RetailersSouthfield, Michigan

Glenn HawkinsNational Ocean Industries AssociationWashington, D.C.

Frank JordanIndependent Petroleum Assn. of AmericaWashington, D.C.

Marc N. KelleyTexas Gas Transmission Corp.Owensboro, Kentucky

Dan MyersNational LP Gas AssociationRosslyn, Virginia

John RogersRogers, Nagel & LanghartDenver, Colorado

Glenn SeayInstitute of Gas TechnologyChicago, Illinois

Richard L. SecorEast Ohio Gas Co.Cleveland, Ohio

Nahum G. SharHofor Tobacco Corp.New York, New York

Maurice SonnenbergConsultantNew York, New York

WiIliam TobinMASSPORTBoston, Massachusetts

Education, Training and Assistance

Members:Leonard BlackshearAssociated Enterprise Development, Inc.Baltimore, Maryland

LarryBramblettSmall Business Development CenterUniversity ofGeorgiaAthens, Georgia

E. J. BrodyBrody Truck Rental, Inc.Baltimore, Maryland

Diane DowningInstitute for Constructive CapitalismUniversity ofTexasAustin, Texas

Orlando EppSBA National Advisory CouncilKailua, Hawaii

103

Frederick RiceUniversity ofWisconsinMadison, Wisconsin

Nicholas SiropolisBlychem Spartan IndustriesCleveland, Ohio

Dan SteinhoffUniversity ofMiami"Coral Gables, Florida

Jeffrey SusbauerCleveland State UniversityCleveland, Ohio

AppendixF:Balloting Results

/'Number of votes received by each option during Number of favorable and unfavorable votes re-balloting by delegates at the Closing Session of the ceived by each resolution during voting by delegatesWhite House Confetence on Small Business, Janu- at the Closing Session of the White House Confer-ary 17, 1980. (Each delegate voted for the 15 ence on Small Business. (Each delegate votedoptions which he/she considered to be the most separately on each resolutioi.)important. )

Votes Option Votes Option Resolution Favorable Unfavorable NoReceived Number Received Number Number Votes Votes Opinion

1129 I 297 51 I 1185 106 9818 2 294 21 2 1158 129 13807 16 278 34 3 1033 258 9799 3 272 45 4 1157 131 12757 41 255 10 5 1205 90 5746 II 251 55 6 1029 255 16681 4 239 35 7 1031 238 31675 17 188 49 8 951 333 16646 5 185 28 9 1056 219 25597 47 138 48 10 972 285 43578 36 135 12 II 1064 210 26564 42 117 54553 18 110 40472 6 109 29471 46 97 59441 19 95 58410 7 83 57403 44 81 60400 56 78 14388 20 76 38385 33 69 13363 50 68 53359 32 65 15352 26 53 52343 27 52 39335 43 38 30334 31 24 25315 8 22 24315 37 9 23308 9 8 22

105

107

Howard Hughes, Dorothy James, Lewis Johnson,Nancy Kaye, Jeffrey Kelley, Irene Keys, ShelleyKing, Richard Lani, Betty Lipshutz, Julie Mason,Eugene McCarthy, Martha Mitchell, DavidMleczko, Tony Pappas, Jerry Parker, RichardReiman, Rob Rives, Coleman Scott, David Smoak,Wattie Sternburg,Harvette Tate,Sarah Tunnell, SueNancy Watson, Steve w nne. AdrienneWilliams,and Scott Zarrow.

Logistical Staff George Spalding* Harry L. Tyner*Dayton, Ohio Cleveland, Ohio

Lynn M. Gialanella* Antoinette D. Williarns*Festus, MissouriWashington, D.C.

Media Relations StaffSarah HendrixJoyce Williams*North Manchester, Indiana

John Dixon* Upper Marlboro, MarylandRichard J. Hutto Washington, D.C. Leaford C. Williams*Savannah, Georgia

Florence Graves* Washington, D.C.Thomas E. Johnston* Waco, Texas Ernest Withers*McLean, Virginia

John F. Moro* Los Angeles, CaliforniaElise P. Knapp Alexandria, VirginiaWashington, D.C.

Carol C. NetterMaxine Mennen* Pittsburgh, Pennsylvania

Research and Policy Staff

Los Angeles, CaliforniaCharlotte S. Reed* Owen Bimbaum*

Deborah J. Moore Blissfield, Ohio Washington, D.C.Indianapolis, Indiana

Susanne Roschwalb* J. Robert Cutter*NancyW. Moore Washington, D.C. Richmond, IndianaGainesville, Georgia

Patty Steele Marianne A. FlaggT. Clay Phillips Columbus, Ohio Arlington, VirginiaOrlando, Florida

Kenneth O. HarrisRussell E. Rabalais

Minority Affairs StaffPortland, Oregon

Baton Rouge, LouisianaJeanne Hickie

Miles F. Rassiga* Moises M. Carrasco, Jr.* Laurel, MarylandHerndon, Virginia Brownsville, Texas Bonnie C. KellStacy Richards Joseph De Alejandro* Kensington, MarylandGrove City, Pennsylvania Novaato, California Robert J. SchmittJanna Riley Charles A. Holland, Jr.* New Britain, ConnecticutLittle Rock, Arkansas Cooksville, Maryland

Mary KYoungJudith Simon Salgado Ernestine Inabinet* Gainesville, FloridaLos Angeles, California Salley, South Carolina

A number ofpersons--some of whom were detailedfor specific purposes from other government agen­cies, private businesses, and educational institu­tions-served as members of the staff at times otherthan during the National Conference. Includedamong them are: Susan Babcock, ChristopherBrescia, Ida Boyd, Hermeyone Brown, DelacyCox, John Cross, Audrey Davis, Marian Diggs,Marla Dodson, Peter Emerson, Charlotte Eppich,Stephen Farris, JamesFeely, Nicholas Friendly,Forrest Gunn, Gay Gunter, W. Edward Hair, GaryHernandez, Carole Higginbotham, Cynthia Howar,

Other Staff

Russell Anderson Eric P. Campman Joseph Fox Hardy G. KuykendalWalnut Creek Paramount San Diego San Diego

'. Noel A. Anenberg Michael Cardenas Michael H. Francisco James Kemble LafleurLos Angeles Fresno Los Angeles San Diego

Donald Lewis Anthony Sanford E. Chambliss Robert A. Fredericks Edward L. LammerdingWalnut Creek Monterey San Bernardino Sacramento

Daniel G. Archuleta Edwin Chan: Don L. Gevirtz Don Y. F. LeeLos Angeles San Francisco Los Angeles Oakland

Sam Arellano Peter S. C. Chan Robert Gordon Betty LinChatsworth Mountain View Azuza San Francisco

Art Arroyo Jesus Chavarria Ralph J. Grant Virginia LittlejohnWhittier Santa Barbara Oakland Berkeley

Gordon L. Austin Vernal Claiborne Reinhold Grassl David C. LizarragaLaMesa Carson Long Beach Los Angeles

Albert Avoian Ronald F. Clark Elihu Harris George S. LockwoodTorrance Los Angeles Oakland Monterey

LaVolia Baker Bryan Coleman Roy Herron ArikeLoganSan Francisco Bakersfield Bellflower Inglewood

Louis H. Barnett Earl Cooper Jack Hochadel Richard W. LongSan Francisco Los Angeles Fountain Valley EI Cajon

Herbert Baum Comer J. Cottrell Frank E. Hollar Dominic LongoLarkspur Carson San Diego EIMonte

Caesar Beltran Charles V. Covington Louis B. Horwitz John C. LopezSanta Ana San Francisco Anaheim Alhambra

Terry E.Bibbens Albert H. Davies Francis J. Hughes Richard LopezMountain View Redwood City San Francisco Los Angeles

Devon Blaine Eddie R. Dillard Lolita F. Hunt David K. LowLos Angeles Oakland Hayward San Francisco

Russell E. Blewett James Mitchell Dills James J. Jamison Arline M. LowenthalRancho Cucamonga Sacramento Modesto San Diego

Jewel Boswell-Hudson Joseph Michael Dolphin James C. Johnson Manuel LozanoMenlo Park San Diego Oakland Anaheim

Theodore F. Brayer Elaine W. Donaldson Richard W. Johnson Marsha L. MartinSan Francisco Covina Santa Paula Oakland

James B. Brewer Zelda Eliot Frederick E. Jordan Charles F. MattesOakland San Diego San Francisco Conna

Betty L. Briggs Mary G. Elwood Emest J. Jubela Whitman MayoHayward Beverly Hills Escondido Inglewood

James Lynn Brown Joseph Fremont Ervin, Jr. Edward R. Justice Rita Mills McCoyLong Beach Anderson Monrovia San Diego

George A: Buljan Donald H. Erwin Frank Kawabe A. Clay McGowanRoseville San Diego Los Angeles San Diego

Charles E. Bull Rudolph I. Estrada Wayne G. Kees Robert J. MenicucciSan Francisco Los Angeles Santa Barbara Burlingame

Salvatore P. Busalacchi Joseph Farber Dale L. Kirkland Robert G. MerrickKentfield Costa Mesa Oakland Sunnyvale

William R. Byars Timothy Herbert Fine c. D. Knowles Leo G. MeskisMountain View San Francisco Campbell Fort Bragg

Manual Caldera Bernard James Fischer William W. KolitzRichard K. Miller

Hawthorne Tustin Lynwood San Diego

Ely Callaway Barbara FouchKripalani

MariaL.Temecula Hollywood

San FranciscoLos Angeles

109

Shirley Anne Ortega John Franklin Carr Joseph Chester Rakiec Jerry Davis, Jr.LaJara Danbury Milford Washington

Sil D. Owens Cornell E. Champion Lillian Scales Ivan EImerAurora Hartford Hartford Washington

Duane Darwin Pearsall Cannelita E. Clinton Richard F. Schneller Jose Carlos GomezGolden Stamford Essex Washington

Jay Rasplicka Ruth Cohen Juan A. Scott HelenD. GouinArvada Norwalk New Haven Washington

SandraRoberts Daniel Coughlin Fred·Seeman Susan HagerDenver Westport Taftville Washington

William R. Roberts Frank W. Dworak, Jr. Donald J. Shean Brenda J. HamerDenver Wallingford Bethel Washington

Max Romero N. Donald Edwards Robert J. Smith Jacob R. Henderson, Jr.Littleton Stamford Bloomfield Washington

R. Stephen Schermerhorn Whitby K. Ellsworth Gail Stockham Timothy L. JenkinsDenver Putnam Stamford Washington

Howard B. Selby, ill Conrad G. Fleisher Terrence P. Swain Jannie L. JohnBoulder Waterbury Hamden Washington

Alfred Charles Stansberry James R. Gardella Mansfield Tinsley Tilley Richard H. LagerDenver East Norwalk Bloomfield Washington

A. Emmet Stephenson, Jr. Murray A. Gerber Socrates E. Vargas Susan J. LoomisDenver Rocky Hill Bridgeport Washington

Ken Valis Betty R. Hollander Robert Harrington Werme Robert J. MacNaughtonDenver Stamford South Norwalk Washington

Jane Van Deren Sanders W. Howse Nicholas Wood James D. McKevittDenver Hartford Bridgeport Washington

James H. Vincent Mary Ann Johnson Rosemary E. R. MilIerYuma Stamford Delaware Washington

Janet Weir Fred I. Kent, IIDavid G. Burton

Neil OffenDenver North Canaan

MilfordWashington

Lisa Whatley Harvey L. KoizimCarolynJ.Fausnaugh

Jerome W. PageCommerce City Westport

NewarkWashington

WilliamJ. Whatley Arthur LumsdenWilfred W. Martin

Dana R StebbinsCommerce City Hartford Washington

DoverCharles S. Wilke Douglas W. MacKay

Converse MurdochThomas S. Watson, Jr.

Denver StoningtonWilmington

Washington

Carol Ann Wilson-Triano Frank A. MarshallCarter L. SchellingBoulder Danbury FloridaNew Castle -R. G. Wyckoff Miguel J. MartinezSanford A. Solomon Donald BarnettDenver DurhamDover Jacksonville

John A. Yelenick R. S. S. McKoskyThomas C. VarellaDenver Branford Nikki BeareWilmington South Miami

J. Westbrook McPhersonWallaceA. WaiteWeston Ron J. Bergsten

Connecticut Dover Tampa

Charles Nathaniel AtkinsonShaw Mudge, Sr.

William F. Ward Armand J. BerthiaumeStamfordNew Haven Wilmington Hialeah

Stanley A. BlanchardJ. Ralph Murray

Samuel M. BloomStamford District ofColumbiaWest Granby MiamiElsie Palmieri

Robert L. Bolden Stratford Patty S. Abramson Herbert H. Boltin, Jr.Hartford Washington Dade City

ChristopherH.BuckleyMiles Pennybacker

Blellna A. Cunningham Dooald C. BrandvoldNaugatuck

WestportWashington Jacksonville

111

Ronald Tigner JohnM. Rife Alvin J. Boutte William F. FitzgeraldAtlanta Waimanalo Chicago Joliet

Henrietta Tumquest Thomas Sakata William Brady EdJ. FizerAtlanta Honolulu Bloomington Chicago

Florencia E. Walker F. Patrick Sylva Barbara J. Burrell Marshall FrankelAtlanta Honolulu Chicago Skokie

Solomon W. Walker, II Aileen Wada Rolando Capdevila Timothy James FrisbyAugusta Honolulu Franklin Park Elk Grove

Felker Ward, Jr. Jose Cardoso Don FullertonAtlanta Idaho Chicago Chicago

Charles E. Whalen, Jr. - Luis Ramon Garcia-CamiloJ. Gordon Brookover

Nelson CarloGainesville Chicago Chicago

BoiseMiltonJ. White

K. Danny FouladpourDaniel Casey John W'

o

Gay, IIAtlanta Oak Brook Peoria

BoiseMelba R. Williams

Mike M. GoffinPeter John Censky William Getz

Athens Chicago MolineBoise

Hawaii Samuel C. HaddockRafael Chagin Lois J. Gilmore- MoscowChicago Chicago

Robert J. Baer Linda Clark Garland C. GuiceHonolulu Boyd Irven Hill

Flossmoor ChicagoBoise

Leonard R. Bennett Gilbert Coleman Allan E. HarrisHonolulu Lloyd D. Howe

MountVemon HarveyBoise

Fred W. Bennion Janice Colon . Kamilah HassanHonolulu James W. KaIbus

Chicago ChicagoNampa

James M. Brock Eunice M. Conn John HinesWailuku James Carl Kern

Niles ChicagoCaldwell

George B. CarterFred C. Rathbone

Edward J. Costin Alvin H. Hogan, Sr.Aiea Oak Lawn Chicago

FruitlandLee T. L. Chang Cimena M. Cummings John G. HolubHonolulu Milan W. Ryder

Chicago Loves ParkWeiser

Murray W. ColeMarilyn Saxvik

Charles A. Davis Douglas C. JergerKailua Chicago Chicago

BurleyJohn B. Connell

Carl H. ShaverLamount Davis G. Ron Jones

Honolulu East Saint Louis South ElginBoise

Thorn De WaeleNorman J. Zuckerman

Thomas E. DePinto Philip P. KaiserLahaina Park Ridge Chicago

BoiseBert Dohmen-Ramirez Stephen C. Diamond John W. KendrickHonolulu Chicago Chicago

Orlando C. EppIllinois

Joseph Koss- Frank DiazKailua Diego Aguirre Chicago Bensenville

TheresaA. Godfrey ChicagoRobert M. Doench Stanley V. Koziara

Kailua Robert M. Atols Chicago Mount Vernon

Gerald Hennings Schiller ParkNormaJ. Douglas BurylJ. Lazar

Honolulu Howard N. Bernstein Elk Grove Chicago

Richard Kuwada Schiller ParkJames H. Edelen Winifred E. Lowery

Honolulu JoanB. Beugen Waukegan Chicago

Joseph V. Miccio Chicago James N. Farley James H. LowryHonolulu Sherman Beverly, Jr. Des Plaines Chicago

Dan Newland Deerfield James Fletcher Laurence F. MagesHonolulu ':'Frank B. Brooks Chicago Chicago

Henry Otani ChicagoLeon A. Finney Raymond Margolies

Hila Melvin W. Boldt Chicago ~ark Ridge

William F. Remular Des PlainesVern I. McCarthy, Jr.

Honolulu Itasca

113

Raymond E. Walton, Jr. Sharon F. Poindexter Paul J. Martin Brace GodfreyIndianola Wichita Owensboro Baton Rouge

Juli A. Weber H. W. Bill Reece Tommy Cook McIntosh Ralph P. Guerra, Jr.Des Moines Scandia Paducah Chalmette

Connie Wimer Hale T. Ritchie Maurice E. Meisner Louis B. HarrellDes Moines Wichita Louisville New Orleans

Donn Williams James R. Roath Elaine M. Musselman J. B. Horne

Davenport Kansas City Louisville Gretna

W. P. St. Clair Charles D. Neblett Byron R. Hughey

Kansas Neodesha Russelville New Orleans-Richard BarreraDaryl K. Schuster Joan Seitz Pate Betty Hutchison

Shawnee MissionLiberal Lousville Lake Charles

Frank J. BeckerClifford Stone Michael J. Roby Robert L. Jeansonne

ElDoradoEl Dorado Princeton Baton Rouge

Warren D. BottenbergLeroyC. Tombs Warren W. Rosenthal Linda G. Johnson

HoltonBonner Springs Lexington New Orleans

K. P. Brasted, IIRaymondE. Walton John P. Sawyer, Sr. Richard E. Johnston

WichitaWichita Louisville Belle Chasse

Donald L. Wenger Paul C. Seltman NealW. Kaye

Frank L. Carney Sabetha Florence Harahan

WichitaAlberta E. Wolf Louis O. Scheu, Jr. Kenneth J. Lacho

Barbara J. Culbertson Ellis Louisville New Orleans

Mission 10 S. Zakas Joseph V. Shipman Pratt Landry

Dale L. Flax:beard Wichita Louisville New Orleans

Overland Park William Allen Stone Ben Louviere, Jr.

Donald R. Forsyth KentuckyLouisville Harahan

Junction City Linville Tarter George L. Luffey

Edward S. GarberFranklinD. Carter Somerset Monroe

Kansas CityLouisville

Floyd C. Taylor Troy O. McConnell

Dale W. GordonD. Leroy Chewning Frankfort Shreveport

WichitaHopkinsville

Bruce C. CottonMahlon R. Mcllwain

Barry Greenstein Louisiana Metairie

Overland ParkLexington

Constantine Curris Nelson D. AbellRuth A. Menutis

Samuel A. Hardage New Orleans

WichitaMurray Monroe

Scott R. Duncan Mitchell Albert, Jr.W. C. Merikle

Dale A. Hedrick Lafayette

LenexaLouisville Baton Rouge

James G. Frederick DouglasJ. Ash, Sr.Aaron Mintz

JoAnne Oppenheimer Hershman New Orleans

LeawoodWest Liberty New Orleans

Harvey L. Grawemeyer J. Dudley Atkinson, illDimitry Morvant

Biddy HurlbutNew Orleans

TonganoxieLouisville Baton Rouge

RobertE. Nims

Melva Lee James Michael J. Grisanti Paul M. Bass New Orleans

Kansas City Louisville New OrleansHarry D. Richardson

Thomas M. JoyceStuart M. Grossman Leonard L. Bums Baton Rouge

MarysvilleLouisville New Orleans

Louis Selig, Jr.

M.K.KusmanJerry S. Ikerd Dennis A. Cross Baton Rouge

Overland ParkSomerset New Orleans

Adrienne Thomas;

Joseph Lira Patrick R.Lancaster Margarette R. Dupont New Orleans

Kansas City Louisville New OrleansDave C. Tyndall

Billy Q. McCrayJ. C. Laswell Louis H. Edwards

Wichita Owensboro Plattenville

J. P. Mauzy Harry L. FusilierHaskell Walker

Bruce K PendletonLafayette

Kansas CityOwensboro Crowley

Joe E. WallaceShreveport

115

Ralph E. Stoddard, Jr. Henry Garcia Mary Jo Walsh JohnM. LambWestwood Detroit Detroit Minneapolis

Mino Sullivan Marvin Gladstone Jacquelin E. Washington Gordon C. LewisMetheun East Lansing Detroit Edina

David A. Tonneson John K. Hendry DavidJ. Willett Robert M. LinsmayerWakefield Plymouth Wayne Saint Paul

Roger E. Travis Ruby June Huddy WayneH. Williams W. Matthew LittleHingham Haughton Lake Lansing Minneapolis

Joseph E. Trodella Thomas Kuber Al McFarlaneBUrlington Menominee Minnesota Minneapolis

Oliver O. Ward Edward J. LaneMyrle S. Anderson

Thomas R. Moorhouse

Andover FarmingtonMoorhead

Eden Prairie

Alice Sizer Warner David J. MackieRichard Atwood

Carl F. NielsenCambridge Detroit

MinneapolisSaint Cloud

James Ormond Woodbridge Edward MahoneyBeverly Braun

Donald W. PennertzHathorne Detroit

Saint PaulAlexandria

Arthur W. Young, Jr. George MallasNoelann Brown

Collin C. Peterson

Edgartown Mount ClemensSaint Paul

Detroit Lakes

George J. Zahka Jehan MansurRalph Edwin Bruins

Leon Rankin

Boston FlintRichfield

Brooklyn Center

Walt McMurtryMarcia J. Bystrom

Susan SandsMichigan Detroit Saint Paul

Minneapolis

Henry J. Andries Sydney B. MeletLloyd G. Cherne

Robert D. Sparboe

Troy FlintEdina

Litchfield

William P. Baer Margaret MinottA. C. Al Claseman

Lee N. Sundet

Troy KalamazooSaint Paul

Minneapolis

Haley Bell R. Dale MoretzJanet Deming

Corinne L. Stefanson

Detroit JacksonMinneapolis

Moorhead

Michael Berry Richard W. OlsonKaren Desnick

Thomas Tipton

Detroit Traverse CityMinneapolis

Minneapolis

Judson Bradford William F. PickardDennis Dotson

Herbert F. Trader

Holland DearbornMankato

Minneapolis

Johnetta C. Brazzell David RabenWillis K. Drake

John S. Tschohl

Rochester DetroitMinnetonka

Bloomington

WallaceJ. Bronner Frank R. Rudlaff, IIIDaryl Erdman

Reiko Weston

Frankenmuth Bloomfield HillsKasson

Minneapolis

Carlton A. Brooks Harold M. RuppAlfreda Garibaldi

Pontiac Bay CityMinneapolis Mississippi

Percy L. Carr Walter J. RussellRoxanne Givens Marjorie A. Abrams

Ben Harbor LansingEdina Brookhaven

EIvin J . Carson Richard B. SanfordJim Gustafson Sharon B. Bell

Detroit KalamazooDuluth Columbus

E. Bruce Cheadle Philip C. SimsRoger Lynn Halverson Robert J. Boland

Grand Rapids DetroitMinneapolis Pascagoula

Nathan Conyers Robert L. StarksCharles Henderson Leonard L. Bouler, Jr.

Detroit Saint JosephDuluth Jackson

Roger Curry Jeffrey A. Stone Marlene M. Johnson William B. BrannanBenton Harbor Detroit

Saint Paul Canton

Robert G. Dalton John Vander Ploeg Neel C. Johnson -John N. DenneryDetroit Kalamazoo

Saint Paul Jackson

Edward Deeb Nellie M. Varner Joyce Yamamoto Klepp W. W. Gresham.Tr.Detroit Detroit Saint Paul Indianola

Lydia Demski Abraham S. Venable

Saint Joseph Detroit

117

WilliamJ. Gerhold Edward F. Ortiz Harvey Cohen George S. O'ConnorColumbus Las Vegas Jersey City Newark

Thomas Haiston Evan Williams Olive S. Cram Gloria F. PagliughiScottsbluff Las Vegas Camden Vineland

Robert Kimbler Hill Don Woolbright William Dalton Andrew ParettiOmaha Las Vegas Interlaken Newark

John A. Johnson Frederick J. Duffy Robert Melvin PastoreBellevue New Hampshire Brant Beach Union City

Allen E. Jones John C. Ekarius Gelorma E. PerssonOmaha Charles H. Burnham Brick Little Silver

DurhamArthur L. Knox James E. Felton Wiley J. PickettLincoln Jay C. Edwards Newark Pennsauken

PortsmouthDonald L. Lowe Stanley S. Fischman Charles H. Reynolds, Jr.Omaha Herbert Fajors Riverside Lakewood

ManchesterPatrick McCarthy David C. Forward Richard S. RingerOmaha WilliamE. Fletcher Medford Clark

NashuaBarney McGuire Richard R. Gallagher Sue RosenblattOmaha Robert H. Grip Lakewood East Brunswick

PeterboroughFrancis D. Moul Ellen Galserman Bernice RosmarinSyracuse E. Leo Kanteres Livingston Edison

ManchesterJ. Robert Mullen Sidney Goodwin William Saller, Jr.Omaha Evelyn E. Marconi Camden Bridgewater

PortsmouthNorman A. Otto B. L. Griffin James Smith, Jr.Lincoln Thomas D. McCarron Edison Rahway

PortsmouthSharron J. Roncka Margaret J. Harris Charles A. SpencerOmaha Paul R. McQuade East Orange Cherry Hill

DoverWilliam L. Wilke Myron R. Hirsch Ernest TangeriLexington Stuart N. Shaines Elizabeth Fords

PortsmouthKen Wortman Henry Jacobs Midred TuffieldAurora Herbert B. Stebbins Paterson Cliffside Park

ManchesterHarry C. Jones Mark Watson

NevadaKathleen Ward Short Hills SeabrookLittleton- Regina W. Joseph Ralph Weiger

William H. Bailey William E. Wetzel, Jf. Newark New VernonLas Vegas Durham

Fred W. Jurash Gary WellmannCharles Bilich George I. Wiggins Medford WhippanyLas Vegas Sunapee

Robert J. Levine Robert James WhelanJohn Buchan East Brunswick TrentonWinnemucca New Jersey

Nancy A. Luetzow Douglas W. WoodsonArturo B. Cambeiro Mays Landing CranfordLas Vegas Robert Frank Bladis

Springfield Elizabeth T. LyonsJohn Flanigan

Hamilton V. Bowser New Brunswick New MexicoReno

East Orange Eugene Macchi Henry A. AlanizJoy M. HamannRobertBurd Ho-Ho-Kus RoswellLas VegasWashington Walter MacKinnon Ben B. AlexanderThomas L. Jackson Wayne

Las Vegas Robert E. Carr HobbsCherry Hill Michael D. Matteo Mike AnayaDennis P. Jaeger Cherry Hill

Las Vegas Nunzio E. Cernero MoriartyTrenton RoseC. Nini GeorgeT. DunaganJohn A. Kleppe Princeton

Reno Dudley Wesley Christie CarlsbadNewark Joseph A. Novoseller

Arthur C. LurieJoseph W. Cironi Lakewood John P. Gallegos'

Las Vegas Santa FeMorristown

119

Jack L. Miller Charles L. Brunow Martha S. Failing Albert M. M. LeeGatlinburg Dallas Houston San Antonio

R. W. Nourse, Jr. Pat L. Burr Jose Fernandez John N. LeedomNashville San Antonio Houston Dallas

Inman E. Otey Betty J. Byram John Fonteno, Jr. Pat LeganNashville Beaumont Houston San Antonio

Ellen C. Peete Herman L. Byrd Lillie Fontenot Kermit V. LewisMemphis Huntsville Houston Houston

John W. Proffitt Frederick C. Caldwell PaulO. Gaddis Mary E. LockeAlcoa Corpus Christi Richardson Houston

Bruce Reagan Clarence M. Calloway Gilbert D. Gaedcke Joe LoeGatlinburg Houston Houston Fort Worth

Audrey J. Roberts Morton S. Carson Ruben Garcia James H. LunzMartin Houston Laredo San Antonio

Harold W. Schmitt George T. Cates Jesse E. Gloster Antonio P. MaciasKnoxville Manchaca Houston San Antonio

Arthur N. Seessel, Jr. Raul R. Cisneros Art Greenhaw James L. MarshallMemphis Raymondville Mesquite Houston

Tom Segroves Clyde Clark, III John L. Guess C. Ray MasseyShelbyville Dallas Houston Houston

Landon Smith Bruce E. Collier James W. Gustafson Johnny MataMemphis Lubbock Houston Houston

Jack F. Stringham, II Richard S. Contreras Carol S. Hadnot Marion L. MayoNashville Fort Worth Austin Texarkana

JodyWade Alan Cook Page C. Haines Donna McFarlandMemphis Waco Houston Mount Pleasant

George B. Winters Pete V. Cortez Ernest L. Haywood, Jr. Arlington McRaeKnoxville San Antonio Dallas Houston

Ronnie L. Cox Charles A. Homsy Thomas K. Mercer

Texas Sweetwater Houston Houston- Albert E. HopkinsBert Adams

Charles Cross Chris MillerIrving Houston Fort Worth

Austin

Ruby W. AddisonJack P. Cunningham T. A. Hudgins TommyJ.MiIlsHouston Houston Killeen

Houston

Kathleen B. AlexanderJames D. Dannenbaum Harry H. Hurst, Sf. Jeannie MoffattHouston Houston Houston

Houston

Billy R. AllenDeborah Deberry-Kershaw Roy D. Jackson, Jr. Ruben R. MontemayorDallas Houston San Antonio

DallasCharles De Leon Rex V. Jobe Prentis M. Moore

Gerald B. Alley San Antonio Dallas HoustonFort Worth

Joy Dillon Joannia Johnson Robert G. MuzykaDonald R. Atkins, Sf. Houston Dallas ArlingtonHouston

JohnW.Dodd John W. Jones Harold NedellJerry G. Bartos Dallas Houston BellaireDallas

Vicki S. Downing Vicki Keltner Charles NeilWilliam P. Boone Dallas Houston LubbockAustin

George G. Eddy, Jr. Joe W. Kirven Betty W. OrrellPalmer Bowser..Jr: Austin Austin DallasHouston

Walter J. Boyer, Jr.Savador Esparza Melvyn Klein David R. Pinkus

RichardsonHouston Corpus Christi Dallas

Marcus P. Eubank R. LaRoche J. Pizzitola

EulessHouston

Theodore M. Lawe Gloria Pruett-AndersonDallas Denton

;125

Michael J. Ziglar John C. Gayton David Shaw J. Kenneth McDonaldRichmond Seattle Seattle Martinsburg

Russell Sydney Gideon Art Simmons James E. McDowell

Washington Seattle Seattle Huntington

John Allen Gilmore Carol Ann Smith Robert MyersWillie J. Allen Seattle Seattle HuntingtonSeattle

Emett R. AltheimerJohn M. Goodfellow Gary L. Smith William Adam RiceSeattle Bellevue Charleston

Tacoma

Ozzie L. AndersonRay Guerrero Wesley D. Snowden Marvin J. Smith, Sr.Seattle Bellevue Charleston

Seattle

Juan-Miguel AvenaMary L. Halberg Kristen R. Taylor Floyd Ray StilesBellevue Renton Kingwood

Bellevue

RoyA. AventMoises Hernandez Bud Thorp Charles Harry ThomeOlympia Tacoma Fairmount

SeattleLarryHillis Emile R. Van Hout William Turnbull

Leo Mason Bowman Everett Seattle HuntingtonRichland

DamellBoyd.James W. Johnston Reynaldo Z. Venegas Jack T. TurnerMercer Island Bellevue Morgantown

Richland

Gary Don BrackettMargaret Mitsue Kihara Thomas R. Waters James P. VaughanSeattle Bellevue Parkersburg

TacomaElizabeth Konarski Fawn W. Watkins Don A. Wagenheim

Alan Bradley Issaquah Seattle WheelingSpokane

Wayne MacRae Arthur L. Wilkerson William E. WitscheyAndrew LeeBranch Seattle Renton New MartinsvilleSeattle

Dale W. BullArthur Mazzola Gerald Wong

Seattle SeattleOlympia Wisconsin

Mel CarterT. J. Meenach, Jr. Gary Donald Wright

SpokaneSpokane Marysville Helen I. Barnhill

MichaelJ. Mitchell, JI. Dale H. Zeigler Milwaukee

Michael Clanton Seattle Bellevue John S. BellSeattle

Charles O. MorganButler

Douglas L. ClarkOlympia

Kirkland WestVirginia Elroy P. Bennett, Jr.

Geneva A..NobleMilwaukee

Sten Crissey SeattleClarence Allen, Jr.

Nelson E. Boon, JI.Seattle Ronceverte

Ernest OmriFrankesviile

Bertram Daley SeattleBill Bailey

Robert W. BrennanSeattle Saint Albans

G.M.Paris,Sr.Madison

Roger Currie Dennis BothellHerbert A. Buckley

Catharo P. BrownYakima Daniels

Patricia A. PattonMilwaukee

Charles E. Eddington SeattleRohert Burke

Spokane Wheeling John F. BrushMilwaukee

David A. EdererDouglas A. Pearson McDonald Cary

SeattleSeattle Charleston William O. Casto, ill

George ReitemeierMilwaukee

Eloy M. Estudillo Philip E. ClineSunnyside

Spokane Huntington Felmers O. Chaney

Earl G. ReubelMilwaukee

Michael H. Fagin SteilacoomEdwin L. D.Dils

Bellevue Parkersburg Charles C. Chouinard

Dale RodgersSturgeon Bay

J. P. Francis Elmer A. Fike

KentYakima Nitro Adrienne E. Davis

Howard M. RuddellMilwaukee

Reginald S. Frye Port AngelesEloise Jack

Seattle Charleston Frits G. Dinesen

Leslie SavltchSouth Milwaukee

Charlie Funk Dianne Jones

SpokaneSeattle Morgantown William Duwe

Oshkosh

:;1.27

Alan D. Fabian Lewis G. Kranick William J. Tetzlaff Kim I. MelroseNew Berlin Milwaukee Wauwatosa Casper

Elaine Gabower Werner H. Maahs Patricia R. Thomas Mary Hoben RohdeJanesville Menomonee Falls Milwaukee Cheyenne

EdwardJ. Gaffney Mabel R. McClanahan Dean A. Treptow Charles RossaWaukesha Appleton Brown Deer Sheridan

Jack Gardner Jay E. Meili Kenneth P. Urso Thomas L. StaleyMilwaukee Port Washington Madison Casper

William J. Grady Jerry W. Moody Charles Walker John VetaBrookfield Mauston Milwaukee Cheyenne

George F. Griffin Fred Nelson Herman WilliamsAmery Viroqua Milwaukee OthersLen Griffith Maxine D. O'Brien Rita D. Wlodarezk -Janesville Portage Monona Luther Benjamin

St. Thomas, VITed Grob, Jr. Russell A. Olson Fred A. ZieglerGrafton Madison Fond lu Lac Amadeo I. D. Francis

St. Thomas, VIThomas P. Guszkowski Gordon I. PearsonMilwaukee New Berlin Wyoming

Joseph D. McDonaldAgana,GU

Paul E. Hassett Hamilton A. PinkallaMilwaukee Milwaukee Roger O. Courtney Michael McNulty

Torrington London, EnglandSaundra R. Herre Robert M. PratschRacine Suamico Gus Fleischli Joseph M. Pereira

Cheyenne Pago Pago, ASEmily.J . Hill John Redgrave

Eldon GarverRacine BeloitTorrington

Roger G. Hill Frederick H. RiceRacine Madison Herbert K. Harris

GreybullC. Willard Howe Eldon H. RoeslerMilwaukee Nashotah Allan R. Haworth

RivertonAlfred H. Knief Robert L. Rybarczyk

Douglas MarquissWest Allis SchofieldGillette

John L. Komives Rudy E. SmallMilwaukee Green Bay

George R. StinsonRacine

128

Vermont Ann M. DufferErich WendlRichmondVictor Puente

Corpus ChristiArlingtonGar M. Anderson Tim Finnegan

TrumanG. Reed Morris F. Womack Montpelier RichmondPasadena Friendswood

Michael H. Bernhardt Richard A. FarrierConnie Reyes Hayden Woodard Rutland StauntonSan Antonio Junction

Ralph DesLauriers Leroy S. GaillardPaul J. Ricca E. Thomas Wooten Bolton NorfolkArlington Carrollton

Elizabeth M. Dunsmore Everett V. Goings, Jr.James W. Rice Swanton CharlottesvilleHouston Utah

Harry H. Holland E. Richmond Harris, Jr.- Bethel LynchburgAlbert R. RodriguezCharles W. 'AkerlowAustinSalt Lake City Harold John Howrigan John B. Harris

Frank A. RollinsLawrence E. Alder Fairfield Petersburg

HoustonSalt Lake City Robert D. Ide M. Ronald Helms

Jerry D. Rucker Robert G. Arnold Saint Johnsbury PetersburgDallas Salt Lake City Karen E. Kent Preston T. HolmesRobert T. Sakowitz Burlington RichmondGordon S. Bird, Jr.Houston Blanding Nancy E. Lang Michael K. JonesIrving Schwartz Howard E. Bird Burlington DanvilleEI Paso Salt Lake City Barbara Ann Mair A. Neil KirbyCharles W. Seely Burlington Falls ChurchAnn Marie BoydenFort Worth

Salt Lake City Joanne McCrea Stanley 1:.. KrejciJohn C. Sewell Montpelier AlexandriaPeter CookeDallas Salt Lake City Marion Milne William H. Long, Jr.Trudy L. Shay Barre NorfolkPaul P. EardleyDallas Saint George William S. Preston, ill T. W. ManningJenneifer G. Sheffield James A. Eberhardt Burlington PortsmouthHouston Salt Lake City E. Frank Wall Alvin H. MillerNita Harmon Smith Glenn L. Edwards Montpelier UrbannaDallas Salt Lake City Gordon R. Wilkinson S. WarrenRichard, Jr.Dianne L. Snyder Clair R. Hopkins Montpelier NorfolkDallas Salt Lake City

Allen Roots, Jr.Calvin W. Stephens Thomas N. Hori Virginia RichmondDallas - Arthur Rosenfeld

LaytonLinton Beasley

NorfolkCharles O. Stine Earl A. Miller LynchburgTyler OremHarvey Boltwood Eric P. Schellin

T. G. Swarb Tats Misaka Alexandria ArlingtonHouston Salt Lake City

Edwin B. Brooks, Jr. Charlotte H. ScottWilliam R. Thomas Adrian H. Pembroke Richmond CharlottesvilleDallas Salt Lake City

BaxterB. Taylor, Jr.Joseph L. CasonRichmondHerbert A. Train Ray S. Robinson RoanokeCorpus Christi Salt Lake City

Michael Clark John E. TaylorJesse Trevino David L. Tomlinson Richmond AlexandriaMcAllen Salt Lake City

William E. Confroy Herman E. ValentineCharles B. Uzeta Eldon Weber Halifax Virginia BeachEl Paso Midvale

Francis T. WestJames Di CiccoMartinsvilleBernardino Vasquez, Jr.

Ernest I. Wilson WilliamsburgSan AntonioSalt Lake City

John E. WhiteLuther I. DickensWoodbridgeGeorge Veloz

VernK. Yoho RadfordMidlandSalt Lake City

Wilbur S. Doyle Gail WilliamsMalcolm Watson

Martinsville FairfaxDallas

J. B. Wisniewski, Jr.Springfield

126

Juan H. Cintron J. L. Schaefer, III Ivery Simmons, III Robert C. AndrewsSanjuan Warwick Columbia Nashville

Alejandro ColI William T. Sisco James E. Still, Sr. Bob BakerSan Juan Westerly Greenville Dandridge

Jorge Colon-Nevares Alfonse C. Votolato Robert M. Tallon, Jr. Frank J. BanksSanjuan Providence Florence Memphis

Victor M. Defillo John M. Trask, Jr. Earl B. BlasingameRio Piedras Beaufort Adamsville

South CarolinaJose A. Franceschini Carl M. Tucker, III Dale R. BoringHato Rey Rodney Albert Pageland Harriman

Manuel F. IglesiasOrangeburg

Willie Williams T. B. Boyd, IIISanturce HowardF. Burris Columbia Nashville

Willys K. JuliaRockHill

John P. Brown, Jr.Santurce Sol Cohen South Dakota Nashville

Ana MendezWalterboro

J. Richard ChambersHato Rey Daniel W. DuBose Thomas E. Aman Nashville

Darlington AberdeenCarlos F. Mendia J. Stuart CollierPonce Mason K. Edwards Joseph L. Anderson Memphis

Greer Sioux FallsDoris Stadzeski Bill F. CookSanturce Herbert V. Fielding Richard E. Barnes Springfield

Charleston Sioux FallsJohn B. Crimmins, Jr.

Rhode Island Charles E. Fraser Stephen L. Boyer ChattanoogaPierreHilton Head Island

William E. CrookWilliam B. Anderson Richard E. Greer Beverly J. Bruce Old HickoryEast Providence Greenville Mitchell

James K. DockeryF. Robert Black H. S. Jarvis Earl Chesnick BrentwoodProvidence Columbia Redfield

Paul Freeman, Jr.Joseph L. Casinelli Clarence R. Jolly, Jr. William E. Dorsey NashvilleProvidence Edgefield Redfield

Edward F. GordonRichard D. Cesana

Carl Lane Kilgus Peter L Gregory ShelbyvilleEast Greenwich HumboldtBamberg

Rebecca M. GrahamEarle F. Cohen T. R. Mcconnell Roy D. Nyberg NashvilleNewport Columbia Sioux Falls

Robert HairstonRobert A. Comerford J. E. McKenney Laurie Reiners MemphisKingston

Columbia Rapid City

Stephen E. Crowley Jack G. RentschlerPaul Harper

Benjamin L. Mims, III NashvilleWarwick

Edgefield Sioux FallsN. S. Holiday, Jr.

Charles R. DouglasThea Walker Mitchell Kay Riordan Nashville

ProvidenceGreenville Keystone

C. Paul HowseJoseph G. E. Knight

Elrid M. Moody Christine Roberts MemphisWarwick PierreHilton Head Island

Jesse B. HunterDonald A. Lopes

William H. Orders Robert Samuelson NashvilleProvidence

Hilton Head Island FaithRichard Manson

Michael R. MarraSandii Peterson TedJ. Thoms Nashville

ProvidenceGreenville Sioux Falls

Herbert MarkelClifton A. Moore

John C. Rhine, Jr. MemphisProvidence

Greenville TennesseeLanny E. Mauldin

Joseph H. O'Donnell, Jr.George M. Richardson Jack Adams Dayton

WoonsocketKingstree Lewisburg Henry B. McAdams

Joseph E. OleanHarrison Rearden Jim Adams Memphis

WesterlyColumbia Paris Elliott L. McElroy

Thomas J. Riggs, Jr.Jack M. Scoville William E. Akin Pulaski

PawtucketColumbia Nashville Charles T. Miller

Memphis

124

Ohio Joanne Kaufman Nicholas C. Siropolis Robert Aitken Kemp- Cleveland Cleveland EnidRichard R. Andray

GeorgeKeil"Ioledo H. R. Smith William KennedyShelby Middletown Muskogee

Larry V. BallwegAnneL. M. LampDayton Rod Stewart Jerry M. LysingerAkron Cincinnati Tulsa

Don H. BardenLorain Melvin W. Lanzer Roy Taylor Wiliiam E. Mabray

Napoleon Cincinnati MuldrowJack A. Bares

John Robert LeoneChagrin Falls W. G. Thornton, Jr. Neal A. McCalebCleveland Cincinnati Edmund

Richard BarrettYoungstown David L. Martin Lyman H. Treadway James E. Miller

Cincinnati Cleveland TulsaRichard J. BauerToledo A. S. Martindale Frank Watson Tom Pate

Toledo Columbus WilburtonK. Michael BenzCleveland Charles R. McDonald T. W. Welles Alonzo L. Ponder

Willoughby Cleveland Oklahoma CityStephen F. Black

C. J. McLin, Jr.Cleveland Harry E. White Gary L. RoyalDayton Waterville Oklahoma City

John W. BlattToledo walter N. Mirapaul Darwin B. Wilkof Glen Stiles

Akron Canton Oklahoma CityWilliam F. BowenColumbus J. Wayne Moore Chester S. Zajac Marvin A Yeager

Springfield Cleveland TulsaThomas D. BrownColumbus Burton D. Morgan

HudsonOklahoma OregonEdward Carmody

Cincinnati William M. Nelson, Jr. -Cleveland William H. Allen, Jr. Bruce H. Anderson·Ronald B. Cohen

John A. NewtonTulsa Eugene

ClevelandCleveland J. Philip Boyle, Jr. Ted Achilles

Fred M. CrosbyRichard W. Norton, Jr.

Oklahoma City West LinnCleveland

Fostoria Clark H. Boyles, Jr. Robert W. BoyerDaniel D. Dell, Sf. Oklahoma City PortlandCincinnati A. George Palmer

Cleveland JamesG. Calcote John R. BradshawLeo Demsey

Vincent M. PanichiMangum Portland

ClevelandBeachwood Randal W. Clark, Jr. Herbert Broussard

Joe DonofrioJohn Pershing

Tulsa PortlandToledo

Youngstown Myrtle Clayton Ruth L. BrownellAnthony J. Dragonette Oklahoma City SalemByesville John K. Pfahl

Columbus Charles H. Cooke John BurnettJohn C. Ellsworth

Frederick R. PostOklahoma City Corvallis

WilloughbyToledo Leo Wayne Cravens Edward B. Butcher

Mary Jane FabishClinton A. Reph

Oklahoma City PortlandCleveland

Amherst Joe Dodson Warren Y. ChungGerry Galloway Oklahoma City PortlandWorthington Edward H. Richard

Cleveland Merwin M. Hargrove AlanL. ColeMilton J. Garrett

John D. RodemanTulsa Portland

ClevelandToledo C. Wayne Hill Hank Crawford

JackR. Graf Wewoka SalemColumbus Lynne Joy Rogers

Shaker Heights John Marshall Hobbs Alan M. DirectorJohn P. Grantham Ardmore PortlandChardon Robert P. Ross

Centerville Michael K. Hynes Elon E. EllisJohn R. Hall Frederick PortlandPortsmouth IrwinJ. Silverman

Toledo Doyle D. Jackson Ron FraedrickFredR. Harrell.Br.

Marian S. SinselWeatherford Eugene

Highland HeightsLogan

122

Vidal Garcia Arch J. Brick Beatrice A. Fitzpatrick Bill JosephSanta Fe Watertown Ne.wYork City New York City

Robert B. Hertzler Ollie L. Bryant Peter Fleischmann Robert KatzAlbuquerque New York City Buffalo Brooklyn

Robert J. Hoffman Sy Buckner Audrey Frazier Kaye KynionAlbuquerque Garden City New York City KewGardens

Arthur Janpol Sharnia Buford Gerald J. Garner Joe LappAlbuquerque New York City Harrison LeRoy

Ned Miller David John Burgos Raymond Abel Garraghan Stephen D. LassarAlbuquerque Melville Kingston New York City

Edward J. Myslik, Jr. Le Roy N. Callender Joel Gerstel Louis LaunAlbuquerque New York City Rockaway Park New York City

Charles E. Nolan, Jr. Raymond M. Cantwell Anthony H. Gioia Marvin Leffler

Alamogordo Ithaca Buffalo New York City

James R. QuillenMichael Carnevale Earl G. Graves Leslie Levi, Jr.

AlbuquerqueElmira New York City Brooklyn

Ed RomeroDavid Castro-Blanco Wilson Greatbatch Richard Lewisohn

AlbuquerqueNew York City Clarence New York City

Richard S. RoybalBuster Celestino Elton L. E. Green Clarence C. Loftin, III

EspanolaAstoria East Elmhurst New York City

William B. RussellDavid Chang Kevan M. Green Yvonne G. Love

AlbuquerqueNew York City Tonawanda New York City

Bill D. TremblyRichard Grant Clark Edward A. Greenberg Eugene Lubin

AlbuquerqueCazanovia New York City Yonkers

John B. Cline Darryl Greene Virginia MapelSwormville New York City New York City

New YorkSamuel Cohen Dorothy Harris Joel P. Martin

S. T. Abrilz, Jr. Yonkers Buffalo New York City

Deer Park Lawrence J. Cormier Alexandria Hatcher John W. Matthews

C. M. Ahearn, Jr. Jamaica New York City South Hempstead

New York City Carlo S. Corsuti John E. Hayes, Jr. Edward J. McDermid, II

Maria S. Alba Brooklyn Syracuse Buffalo

New York City Robert L. Cox Joan Logue Henry Dardis McNamee

John Aldeborgh West Hempstead New York City Albany

Poughkeepsie Robert B. Crews, Jr. James Alfred Heyliger George J. Measer

Phillip D. Anderson New York City Saint Albans Williamsville

Syracuse Cornelius Cummings Juda Hollins Isabel Medina

Alfred E. Anscombe Rochester Bronx Melville

Amherst Gregory R. D'Angelo L. Bruce Hopewell Michael Militello

Luis M. Barcelo East Rockaway New York City Buffalo

New York City Frank J. Davidson Peter G. Hurd Charles Miller

Gwendolyn Bennett Great Neck Buffalo Amsterdam

New York City James J. Dell'Orto Laurie H. Hutzler Daniel B. Mitchell

Ismael Betancourt, Jr. New York City New York City New York City

Bronx Robert J. Dermody Patrick Iannotta Vito Paul Montecalvo

Shahara Ahmad Bey Syracuse Bethpage Utica

New York City James C. Donaldson, Jr. Eugene Delaney Jackson Nicholas J. Moon

Terrance-G. Blou~t Bethpage New York City New York City

New York City Shennan K. Edmiston, Jr. Harvey P. Jamison Mike A. Moreno

Harold A. Brandt Brooklyn Brooklyn Bronx

Manhasset Robert L. Endy Sydney Tucker Jones, III Rogers Morgan

Robert L. Brannon, Jr. Nyack Albany New York City

New York City Donald M. Eversoll John E. MossHauppauge Rochester

120

Dee W. Haggard Raymond J. Campbell EarlE. Kopp Beverly J. VogtMeridian Kansas City Kansas City Saint Louis

Orville M. Lister Stephen Clark Lionel Jack Kunst John E. Wagner, Sr.McLain Saint Louis North Kansas City Kansas City

Edward F. Mitcham, Jr. Charlotte Smith Cohen Lawrence A. Lewis Charles C. wimesJackson Saint Louis Fenton Kansas City

John Milton Mothershed Constance D. Colemen Josephine M. LockhartBatesville Kansas City Saint Louis Montana

Paul E. Nuckolls Nettie Cunningham Leonard LunaMeridian Saint Louis Grandview Helen E. Alexander

Great FallsJack R. Reed, Jr. O. Les Cunningham Lawrence A. MarlerTupelo Kansas City Maryland Heights George D. Anderson

HelenaThomas E. Sanders James Dawson Donald L. MaxwellJackson Kansas City Karin Bratlien

Webb City MissoulaW. Eugene Simmons

G. Carole DeSenneRichard C. McBride

Tylertown Lake Saint Lollis E. B. BrownKansas City Great Falls

Donald A. StewartRichard A. Dohack

James K. MellowMeridian Saint Louis Harvey W. Bryan

Saint Louis Wolf PointMelvon Taylor

Richard D. DunlapThomas A. Monks

Jackson Jefferson City Bob CraneCape Girardeau Helena

Matthew W. Thomas, Jr.C. R. Fraction, Sf.

Chris W. NattingerJ. Stephen DavisJackson SpringfieldSaint Louis Billings

H. M. ThompsonJack Garagnani

Thomas H. NichollJackson Kansas City Allen L. Donohue

Saint Louis Great FallsJames W. Turner

Joseph GonzalezBasil L. North, Jr.

Jackson Kansas City Robert O. EvansSaint Louis Bozeman

Ted C. WeillWilliam R. Gould

Ronald L. PiercyTylertown Gladstone John H. Jardine

Saint Louis WhitehallLiles B. Williams

Harold Guller Russ E. PriceJackson Kansas City Charles Jeniker

Saint Louis ButteCharles L. Young

Lawrence Albert HadleyRichard Quinn

Meridian Marshall Ed NurseKansas City Helena

Wallace S. HartsfieldMichael J. RainenKansas City Jerry Plunkett

Missouri Kansas City Butte

Charles A. HazleyAlbert C. Roland

Marjorie P. Allen Saint Louis Donald R. RobertsKansas City Kansas City Libby

Vivian D. Barnett James S. HedgesHaID. Roper

George B. SchotteSaint Louis Springfield Joplin

Butte

Hector Barreto Norman B. HjerstedCurtis H. Sims. Jr.

Finn E. WalstadIndependence Kansas City

Kansas CityGreat Falls

Patricia L. HowardOllie Mae Stewart

Charles E. Baumstark Saint LouisHermann Liberty

NebraskaRobert L. James

James ThomasEd Bivins Saint LouisKansas City Saint Louis John C. Barnhart

Ralph T. Thomas OmahaG. Lawrence Blankenship Robert L. Jones

Kansas CitySaint Louis Kent B. BroyhillKansas CityJames I. Threatt Omaha

Stephen R. Blum Inez Y. KaiserKansas City

Carthage Kansas City Jesse R. Davis

Luva D. Vaughan BellevueFreddie Mae Brown Dick Kelly

IndependenceSaint Louis Edina K. Michael Dishman

Carmine A. Vignola OmahaBernard Burdman James P. Kirk

Jefferson CityKirksville Kansas City Robert A. Edwards

Bellevue

118

Harry A. Warner E. J. Brody Harold Brown Robert S. Lee

Covington Baltimore Boston Danvers

Jesse Wilson, Jr. Bernard S. Browning Julian J. Bussgang Walter H. Lind

Plaquemine Rockville Lexington Belmont

Robert Bushman Earl D. Campbell Ronald P. Masnicki

Maine Monkton Boston Agawam-Milton Albert BaileyMichael G. Callas Francis R. Carroll Richard L. McDowell

Presque IsleHagerstown Worcester Boston

Tracy C. Coleman J. Alden Cheever John McGrathRobert L. Bull Silver Spring Norwood BostonTemple

Theodore S. ChadbourneRobert F. Dashiell Dave Chiorgno Ed Molin

BethelBaltimore Pittsfield Newburyport

John W. Gomolisky Norman Comins Andrew M. MonahanBruce A. Chalmers Rockville Lawrence NorwoodBridgton

Thomas M. ChappelBehrl Hirschman Shirley E. Coverdale Thelma Cromwess Moss

Laurel Wellesley Hills DorchesterKennebunk

Richard E. DykeAndrew Interdonato Daniel A. Cronin, Jr. Thomas F. Murphy

Fort Washington Boston AttleboroPortland

Otto Karl Lange Paul W. Cronin Arthur S. ObennayerPeter B. Garsoe Parsonsburg Lawrence CambridgePortland

Edward P. HardingJoseph K. McGeady James E. Curry, Jr. Robert Emmet O'Connor

Baltimore Lowell HoustonicPortland

Bennett KatzJames H. Mclean, Jr. John J. Curtin, Jr. George Shing-Tan Pan

Baltimore Cambridge WestonAugusta

Edward L. Modlin Alfred C. W. Daniels Edward H. PendergastRichard G. Kendall Gaithersburg Bedford BostonAuburn

Linda MaxwellArthur C. Morgan David Dawley Allison A. Platt

Cumberland Westminster CambridgeTemple

Daniel D. Morse Lola Dickerman Gerald F. PortanteDouglas Smith Silver Spring Boston ActonDover Foxcroft

TinaOdom James Donelan Charles.PuliaficoHalsey Smith Silver Spring Orange WebsterLewiston

Roland L. SuttonPeter Payne George A. Doyle Donald H. Ramsbottom

South ParisAnnapolis Holden Fall River

Robert N. Santoni, Sr. Oliver Clarence Eckel John C. RennieGerald M. Tabenken Baltimore Cambridge BurlingtonBangor

John TelowSamuel W. Seidel Ann J. Eskesen Richard A. Rogers

LewistonSalisbury Swampscott Worcester

Margaret T. Shaffer Thomas G. Feenan Frank C. Romano, Jr.LawrenceJ. Ward Potomac Quincy RowleyLewiston

George C. Uzzell Jude Goldman Rollins W. Ross

Silver Spring Cambridge Braintree

MarylandJ. B. Vallandingham, Jr. Budge Hall, Jr. Eugene Roundtree

Michael G. Abercrombie Frederick Hyannis Hingham

Salisbury Raymond D. Watts Richard T. Horan Robert S. Royster

Frances S. Abernathy Rockville Boston Cambridge

Rockville Ann Odette Whitlow Ronald H. Johnson Warren C. Scott

Richard Bernstein Lutherville Lexington Hingham

SalisburyMassachusetts

Faye D. Kass Lewis A. Shattuck

Leonard BlackshearNewton Waltham

Baltimore Mattie May Adams James F. Lafond Donald E. Sneed, Jr.

Leon BridgesBoston Springfield Boston

Baltimore Ralph Berger Richard G. LeeWaltham Needham Heights

116

H. Sam McGrier Frank J. Turk, Jr. James P. Keith David WebsterChicago Joliet Jeffersonville Elkhart

Lester H. McKeever, Jr. Beatrice Watson JahoP.Kelly,Jr. Marvin WeissChicago Chicago Indianapolis Merrillville

Sandra M. McNeil Eve Weinberg Edgar A. Kuhlenschmidt AlenG. WyssChicago Chicago Evansville Fort Wayne

Norman W. Nagel Philip J. Wicklander William LehmanDeerfield Chicago South Bend Iowa-Dean Alan-Olson Lois K. M. Willard James E. Meek

Robert W. AllsopRockford Chicago KokomoCedar Rapids

Richard D. Pettibone Arlene E. Williams Rodney W. MorganChicago Chicago Hammond Ramona Barry

Carter LakeVerne H. Phillips Conni Williams Larry E. Nunn

Cornelius Bodine, Jr.Peoria Chicago ColumbusSioux City

Sol P. Povla G. A. Williams William W. OliverWesley H. BoldtSkokie Marion BloomingtonDes Moines

Barbara G. Proctor Joseph A. Williams Don PetruccelliRalph BooneChicago Chicago Fort WayneBlakesburg

Frederick B. Rabenstein L. W. Williams Paul J. PfisterJim Collison. Ottawa Chicago Terre HauteMason City

David P. Ransburg L. Charles Woods William T. RayBarbara J. FischerPeoria Chicago IndianapolisCedar Falls

Mariano Rivera Marvin Wortell Mike RendaciWayneF. FoxChicago Chicago ClintonDes Moines

Phillip C. Rizzo Marguerite Young Wayne H. RobbinsDoug GetterOakbrook Chicago BedfordDes Moines

James P. Rossnagel HermaRossHarold W. GodbersenPeoria Indiana HammondIda Grove-Judith K. Schindler

Paula N. AuburnLaurel J. Short

Jon P. HaddockChicagoSouth Bend

Fort WayneClimbing Hill

William R. Schirring, Jr.Robert Batteast, Sr.

James L. SiegmannJoel C. HanesSpringfield

South BendGoshen

Mason CityNorbert E. Schwarz L. H. Smith

Victor P. JunkerRockford Elbert L. Bradshaw IndianapolisIndianapolis Waterloo

Alan Robert SegalJames H. Bryant, Jr.

Milo E. SmithArnold E. LevineChicago

VincennesColumbus

Des MoinesLawrence Selig

John L. CoddingtonVan P. Smith

David E. LingeChicagoIndianapolis

MuncieCedar Rapids

WandaM. SharrieffAlvin L. Cohen

Stan F. StitgenWarren J. McEleneyChicago

IndianapolisElkhart

ClintonRichard H. Simpson

John EasleyDonnie R. Taylor

Bud MillerPeoria HopeIndianapolis Burlington

Robert G. Smith Jane TitusOreana Harry D. Frick, Jr. Lebanon Richard E. Myers

Monticello CoralvilleCharlie Soo

Conrad R. HedgesRichard J. Van Mele

Barnes O'DonnellChicagoTerre Haute

South BendCedar Rapids

K. C. SummersJohn P. Hiler

Edward B. WagnonMaryPaulsonMattoon Muncie

LaPorte StocktonHarry Swift

Robert K. HookerJoseph M. Waldman

Herman RichterChampaignAnderson

BloomingtonMilford

Garland TaylorDavid H. Hovey

James A. WalkerDavid H. SwansonChicago

Terre HauteClayton

Ames

114

Samuel H. Brody David L. McDuffie Ralph Birdsong Karl HillHollywood Orlando Smyrna Forsyth

Willie Calhoun Eddie L. Mills D. C. Blount Joseph R. HudsonMiami Saint Petersburg Atlanta Atlanta

James B. Claiborne -q,Uen T Morris Rutha L. Bradley Edward D. IronsAtlantic Beach racks .........lU~ Atlanta Atlanta

Beth Collier Frank L. Morsani Larry R. Bramblett Robert Earl JamesMiami Tampa Athens Savannah

Allan B. Cowart F. J. Nahoom Alan Burnham Dianne Harvey JohnsonPensacola Tallahassee Atlanta Savannah

Sarah T. Deben Albert Novak Jo Carrcr Nancy L. JohnsonCoral Gables Pompano Beach Norcross Decatur

Robert A. Dishell Laura O'Brien Harvey Cohen A. J. KennedyNorth Bay Village Miami Albany Atlanta

David L. Ellsworth William G. Price Gerald W. Crane Kim KingWinter Haven Immokalee Decatur Atlanta

Don R.Everett Patrick Range Earl Crick Jacob S. KammanPerry Miami Valdosta Atlanta

David Fincher Martin J. Roess Paul A. Dangar, Jr. H. V. Lamon, Jr.Miami Saint Petersburg Marietta Atlanta

William H. G. France Wayne H. L. Rohlfing Hugh M. H. Dash Richard LiptonDaytona Beach Longwood Atlanta Atlanta

M. Dan Grant, Jr. Margaret St. Germain Sara Davis Margaret K. LupoFort Lauderdale Coral Gables Alma Atlanta

B. Ernest Griffin W. M. Sanderlin John Dillard Sam MassellJacksonville Orlando Dillard Atlanta

William Gullifcrd.Jr. Don Schulstad Janet L. Douglas W. B. McKenna, Sr.Jacksonville Tampa Atlanta Savannah

John P. Hall, Jr. Claire L. Shulman Samuel R. Dunlap, Jr. D. V. MullinsGreen Cove Springs Miami Gainesville Atlanta

Robert W. Harper Nathaniel Smith, Jr. Mark Fine Jimmy D. NeSmithWinter Park Fort Walton Beach Atlanta Warm Springs

Charles J. Hawkins Dan Steinhoff Sharon Hillary Fleming Solon P. PattersonOrlando Coral Gables Atlanta Atlanta

Doris J. Hoffman Henry E. Thompson W. C. Flewellen, Jr. Lamar J. PedisFort Lauderdale Boynton Beach Athens Cordele

Norma S. Hunt Gene A. Whiddon Stephen G. Franklin, Sr. Barry PhillipsMiami Fort Lauderdale Atlanta Atlanta

Richard K. Kornmeier Renee Ann 'wright Stanley Fulwiler Leon L. PolsteinFort Lauderdale Dunedin Peachtree City Atlanta

Dale Ledbetter Fran L. Wyatt-Cooke Frank L. Giordano Neil L. PruittPompano Beach Pensacola Stone Mountain Toccoa

James L. Lewis Stephen S. Green Deborah L. Ray .'Jacksonville Georgia Savannah Atlanta

Joe Liszka - J. Hamilton Guillory James B. RhoadsKey West Richard K. Babush ' Atlanta Atlanta

AtlantaEvodio Llevada

W, Bryan Ball, Jr.C. C. Hagy Charles R. Sanders

Miami Atlanta MaconAtlanta

Linus W. Llewellyn Sandra Hanner H. Hammond StithMiami J. B. Barnard Atlanta Atlanta

HinesvilleGeorge W. McCleary, Jr.

Edwin A.Robert L. Harwell, II V. C. Sullivan, Jr.

Miami Bethea Atlanta AlbanyAtlanta

Kenneth R. ThompsonCarrollton

112

C.A.Musson Richard D. Robins Bradford Troutman Thomas Packard BrockNorth Hollywood Los Angeles. Van Nuys Longmont

Edwin S. Nakamura Henry S. Rose Wilfred T. Ussery George CarlinEmeryville Los Angeles San Francisco Greeley

Edward M. Nakata Charles R. Rozum Thomas M. Vail William Lorton CookRanchoPalosVerdes . Walnut San Jose Denver

Elayne Nathanson Donald E. Rumsey Shirley A. Vaine J. Frank Cordova, Jr.Malibu Santa Clara San Diego Pueblo

Morten H. Nielsen Maxwell H. Salter Robert L. Vamer David L. EdwardsFresno Los Angeles Los Angeles Boulder

LaVernA. Niedfeldt Herbert J. Sawyer Yoshihiro Vchida Gene E. FischerSantaCruz San Jose San Jose Fort Collins

Remi C. O'Connor Philip A. Schaefer SamuelJ. Wallace Gerald T. GoodwinSan Diego San Francisco Oakland Denver

Cathy O'Neill Phillip D. Schlosser D. Gary West DanF. GrossLos Angeles Cucamonga Modesto Denver

Robert F. Palmer Hans Schollhammer Garland S. White ~argaret().tlanison

Newport Beach Los Angeles Van Nuys Denver

Ronald L. Pardini Gerald R. Seeman Henry T. Wilfong, Jr. Gerald HughesWalnut Creek City ofIndustry Los Angeles Pueblo

Jack Wayne Pearson Ted Short Clarence E. Williams BetteJackson HurlbutLivermore Fox Hills Sacramento Denver

James Pechin Dione Smith John C. Williams George S. IrvinSanta Rosa Beverly Hills Los Angeles Denver

Leonard J. Pellman George L. Smith Claude Willis Robert W. JacksonLemon Grove Richmond Berkeley Denver

Lloyd Perry Hal W. Smith Ralph M. Wood, Jr. DonL. JamesOakland Tarzana Redondo Beach Durango

Mary Ann Petery Woodrow Smith, Jr. Ted E. Wright Marjorie Molloy JansenSelma Los.Angeles Van Nuys Golden

Charlie Piano Leandro P. Soto HaroldYee Walter L. JonesVallejo San Rafael San Francisco Denver

James Pinkerton Gloria H. Spungin Edwin V. W.Zschau Thomas KentLodi Los Angeles Sunnyvale Boulder

Pat Plant Steven L. A. Stallings Frederick V. KroegerSan Francisco Los Angeles Cojorado Durango

Earl R. Price Michael D. Strongin Robert L. AlvaradoP. A. Livingston

San Bernardino Los Angeles DenverDenver

Mary Quiroz Fred S. Studwell Lonnie William ArbuthnotKenneth David Logan, Jr.

San Diego Sun Valley LamarBoulder

Douglas J. Ramsey Don Woodrow Sturtevant Lucius A. Ashby, Jr.Jose Ubaldo Lucero

Harbor City San Diego DenverGrand Junction

Syliva L. Rascon CaroleSumne~Appel Andrew R. BartholomewGlenda Wilhelma S. Lyle

San Diego Los Angeles DenverDenver

Richard O. Rasmussen ChekF. Tan WandaNell~cBee

Canoga Park San FranciscoRodney F. Benson Fort CollinsBoulder

Chase R. Revel JoyceM. Tan Jack D. BerryRobert Wade Murphree

Los Angeles Glendale Grand JunctionDenver

Frank~.Reid John L. Thousand Laurence BitnerDeward R. Niehans

Fullerton Santa Ana WalshColorado Springs

Humberto R. Rivera Audrey E. Travis Steven K. BosleyJordan Obertler

Los Angeles South EI Monte BoulderArvada

110

AppendixH:List of Delegates

Alabama Homer J. Urquhart, Jr. Edward R. FeddernHomewood Phoenix

Hugh L. AllredJames H. Walker Victor H. Frank

CullmanEufaula Phoenix

Ramon Arias Curtis Charles GielowDecatur Alaska

Phoenix-Jan Bates Ron Bergt Jo AnnBrown HansenTuscaloosa Anchorage Tucson

Wallace C. Bush, Jr. Brad Bradley Henry HawsHopeHuU Anchorage MesaPowellBrewton Lee Elliott Fisher Craig HostermanDothan Anchorage PhoenixAlan F. Clark Perry Green Martin J. JacobsBirmingham Anchorage PhoenixR. H. Culpepper Pete N. Jeans Gay Conrad KruglickCullman Juneau Mesa

Leola Early Doris Kadish Murdo L. Martin, Sr.Birmingham Anchorage Scottsdale

Joyce B. Herring FrankM. Reed Garnet EdwardPassageBirmingham Anchorage Phoenix

Hanson H. Howard Albert C. Swalling Kim Alan RichardsHuntsville Anchorage Tucson

William N. Ledbetter Gerald W. Wolf Philip A. RobbinsAuburn Anchorage Phoenix

Rexie A. Lightsey William Ransom Wood Henry RodriguezSylacauga Fairbanks McNeal

James A. Lovell Jerry Lee Woods Steven W. StrawFairfield Anchorage Flagstaff

E. Philip Mangum Neil F. SwaringenMontgomery Arizona Phoenix-Frank L. Mason Ray T. Bailey Ross L. TylerBirmingham Tucson Winslow

Patrick Raymond Lyle Melvin H. Borovay Carol E. WardTalladega Glendale Phoenix

G. Ferrell Patrick J. Campbell Brandon, Jr. Ralph A. Watkins, Jr.Birmingham Tucson Phoenix

LoisR. Reid Joseph A. Castillo Julia S. ZozayaTrussville Tucson Phoenix

W. J. Rhodes Nathan C. CollinsMontgomery Phoenix Arkansas

Percy Mims Rogers, Jr. James J. Conner Leon L. AdamsFlorence Tempe Little Rock

Gordon H. Shumard, Jr. Taylor A. Day John L. AnthonyAuburn Tucson EI Dorado

Robin Swift Danny Doyle James BeaversAtmore Nogales Clinton

William L. Tharpe Daniel W. Eckstrom Russell O. BlackBirmingham Tucson Prairie Grove

108

Samuel H. Blackwood, Jr.Tuckerman

Victor L. CaryFort Smith

William L. FerrenPine Bluff

Norma June GraysonLittleRock

Clarence A. HamiltonLittle Rock

Frank HensleeLittle Rock

Wetzel C. LaGroneRussellville

John Perry LeeClarendon

Brenda PercifulLittle Rock

Raymond A. Pritchett, Jr.Maumelle

PatM. RileyLittle Rock

Albert H. RusherBrinkley

Ben P. Talbot, Sr.Magnolia

Sterling Woodward TuckerLittle Rock

Robert M. TwyfordBatesville

Charles F. WattsVan Buren

FredJ. WeaverNorth Little Rock

R.J. WillsLittle Rock

Lucille WilsonMalvern

California

George J. AdamsLos Angeles

La VerdaO. AllenOakland

Monte AlexanderLos Angeles

Renette Delores AndersonLos Angeles

AppendixG:Conference Staff

At the time of the National Conference in January (Those Persons indicated by an asterisk served on1980, the White House Conference on Small Busi- the Conference staff through contractual arrange­ness was served by a staff representing a variety of ment or on detail from another government agencywork experiences and geographical backgrounds. or private business.)

Staff Leadership

Michael K. CaseyDirectorWheeling, West Virginia

Sarah M. CooperDirector of Conference LogisticsWashington, D.C.

John Y. DevereauxStaffDirector1£ Mars, Iowa

Doris Dozier-CrenshawDirector of Minority AffairsMontgomery, Alabama

Robert L. FirthDeputy Director, Delegate RelationsRoanoke, Virginia

Heidi A. HansonDirector of Commission LiaisonBirmingham, Alabama

John W. HendersonCongressional Liaison DirectorFairfax, Virginia

John R. KirklandDirector ofResearch and PolicyMarianna, Florida

James V. Manning*Director ofDelegate RelationsAtlanta, Georgia

Linda SundroDeputy Director, ResearchWashington, D.C.

Administrative Staff

Janet de MichaelisCorona del Mar, California

Vicki EngelmannSloan, Iowa

Brent GladingArlington, Virginia

Rhoda GormanSilver Spring, Maryland

Mamie A. HillChicago, Illinois

Elinor Ann Janous*Fairfax, Virginia

Mindy JanousFairfax, Virginia

Daniel J. JuarezAlbuquerque, New Mexico

Fran KeithLittle Rock, Arkansas

Shirley Elise Macon*Washington, D.C.

Cheryl Ann Puryear*Washington, D.C.

Rose L. Walker*Arlington, Virginia

Pixie WesthovenChevy Chase, Maryland

Anita WiesmanAlexandria, Virginia

Patrick H. WilliamsWashington, D.C.

106

Delegate Liaison Staff

Michele Greco Boldt*Alexandria, Virginia

Doug BrownIowa Falls, Iowa

Pam BrownCharlotte, North Carolina

JohnM. Carlin*Washington, D.C.

DonM. Currin*Atlanta, Georgia

Gene L. Graves*Annandale, Virginia

HelenHall*Jackson, Mississippi

Mary A. JeffcoatWashington, D.C.

Anna J. Jenkins*Silver Spring, Maryland

Harolyn S. LandowWashington, D.C.

Gary Pell*Pittsburgh,Penns0vania

William L. Rogers*Darien, Connecticut

Anthony Salzman*New York, New York

Thomas R. Stadler*Dayton, Ohio

October 3 Philadelphia October 19 Kansas CityOctober 5 Boston October 23 ChicagoOctober IO New York City October 26 .DenverOctober 12 Atlanta October 30 Los AngelesOctober 16 Dallas November 2 Seattle·

AppendixE:The Conference Agenda

AppendixD:Regional Delegate Caucuses

ThursdayJanuary 17

WednesdayJanuary 16

TuesdayJanuary 15

104

MondayJanuary 14

SundayJanuary I3

Introductory Introductory Synthesis Sessions:Issue Sessions . Issue Sessions Monday Issue

Workshops. Closing

.

Synthesis Sessions:Plenary

Issue Issue Tuesday IssueSession

Workshops Workshops Workshops

Special TopicDiscussion

Luncheons Luncheons

• Delegate Forum.

• Special Topic• IssueWorkshops • IssueWorkshops Discussion• Public Forum • WhiteHouse • WhiteHouse

• Registration • WhiteHouse Conference Conference• WhiteHouse Conference Exposition .Exposition

Conference ExpositionExposition

Special Topic Special TopicDiscussions Discussions

WelcomeReception

Opening Corcoran Gallery WhiteHouse DelegatePlenary of Art Tour BanquetSession Reception

.

3

4

9

2

7

6

5

1 p.m,

9

8a.m..

10

10

12 noon

11

Women in Business

Chair:Joanne McCreaConsultantMontpelier, Vermont

Commissioner:Louise Saunders

Members:Patricia T. CarbineMs. MagazineNew York, New York

Thelma Cromwell-MossAA Glassmobile, Inc.Dorchester, Massachusetts

Bruce EnderwoodBaskin-RobbinsBurbank, California

Mary HoughtenSouth Shore BankChicago, Illinois

Marlene JohnsonSplit Infinitive, Inc.St. Paul, Minnesota

Linda L. KohlerFlorida Containers, Inc.Sebring, Florida

Barbara Gardner ProctorProctor Gardner Advertising AgencyChicago, Illinois

Elva QuijanoPlaza BankSan Antonio, Texas

Charlotte TaylorConsultantWashington, D.C.

Government Regulations and Paperwork

Chair:Robert KruegerNew Braunfels, Texas

Commissioners:AnnM.DavisShepard Lee

Members:Donald AlexanderMorgan, Lewis & BockiusWashington, D.C.

James C. CalawaySouthwest Minerals, Inc.Houston, Texas

Ruben C. EstradaNational Economic Development Assn.Tucson, Arizona

Ralph MurrayIDL, Inc.Pittsburgh, Pennsylvania

Edward H. RichardMagnetics International

. Maple Heights, Ohio

William RuckelshausWeyerhauser Corp.Takoma, Washington

Paul VerkuilTulane University Law SchoolNew Orleans, Louisiana

Margaret Scarbrough WilsonScarbrough's Department StoreAustin, Texas

Economic Policy DevelopmentandGovernment Programs

Chair:Howard SamuelsHoward Samuels EnterprisesNew York, New York

Commissioner:Margaret Sutherland Hansson

Members:Sam BeardNational Development CouncilNew York, New York

John BowlesKidder, Peabody &Co., Inc.New York, New York

James L. HayesAmerican Management AssociationNew York, New York

JayS. KamenCoopers & LybrandBoston, Massachusetts

Thomas S. KleppeBethesda, Maryland

Paul KoltonFinancial Accounting Standards

Advisory CouncilStamford, Connecticut

William C. NorrisControl Data Corp.Minneapolis, Minnesota

102

William Pound, DeanSloan School ofManagementMassachusetts Institute ofTechnologyCambridge, Massachusetts

Frank SavageThe Equitable Life Insurance SocietyNew York, New York

A. A. Sommer, Jr .Wilmer, Cutler & PickeringWashington, D.C.

Albert T. SommersThe Conference BoardNew York, New York

Ernest WalkerUniversity ofTexasAustin, Texas

Emily WomachThe Women's National BankWashington, D.C.

International Trade

Chair:Thomas M. ReesAttorney at LawWashington, D. C.

Commissioner:Tom Chan

Members:J. Hallam DawsonCrocker Citizens BankSan Francisco, California

Charles B. DorfDorf International Ltd.New York, New York

Stanley EpsteinAnglo-American Aviation Co.North Hollywood, California

Marshall FrankelMarshall International Trading Co.Skokie, Illinois

Edward GaffneyOrtho-KeneticsWaukesha, Wisconsin

Ray ton GeraldMinority Equity Capital Co., Inc.New York, New York

Frank LadueMcCracken Concrete Pipe Machinery Co.Sioux City, Iowa

AppendixC:Task Forces

Capital Formation

Chair:Edgar F. Heizer, Jr.

Commissioner:Sheldon Lubar

Members:Richard CummingsAlliance Enterprises Corp.Philadelphia, Pennsylvania

Marvin DickmanArthur Andersen & Co.Chicago, Illinois

William R.·Hambrecht

Hambrecht & QuistSan Francisco, California

Gamet KeithPrudential Insurance Co. of AmericaNewark, New Jersey

BruceA. MannPillsbury, Madison & SutroSan Francisco, California

Gerald MehlmanKaplan, Livingston, Goodwin,

Berkowitz & SelvinBeverly Hills, California

Edward H. PendergastHurdman and CranstounBoston, Massachusetts

Marion SandlerGolden West Financial Corp.Oakland, California

.Dean TreptowBrown Deer BankBrown Deer, Wisconsin

John S. WadsworthMorgan Stanley & Co., Inc.New York, New York

Minority Business Development

Chair:John ProcopeNew York Amsterdam NewsNew York, New York

Commissioner:A. Maceo Walker, Sr.

Members:Berkeley BurrellBooker T. Washington FoundationWashington. D.C.

Earl GravesBlack Enterprise MagazineNew York, New York

Ragan HenryAttorney at LawPhiladelphia. Pennsylvania

Jesse Hill, Jr.Atlanta LifeAtlanta, Georgia

Eugene JacksonNational Black Network NewsNew York, New York

George JohnsonJohnson ProductsChicago, Illinois

William J. Kennedy illNorth Carolina Mutual Insurance Co.Durham, North Carolina

Walter McMurtryIndependence Capital Formation, Inc.Detroit, Michigan

Lyle MarshallDrummond Distributing Co.Compton, California

100

Ernesta ProcopeE. G. Bowman Co.New York, New York

Charles ReynoldsAtlantic National Bank:Norfolk, Virginia

Hector VasquezJamaica, New York

Inflation

Chair:William D. BarthArthur Andersen & Co.Chicago, Illinois

Commissioner:Dale Sights

Members:Elaine W. DonaldsonDonkirk Tool Supply, Inc.Covina, California

William C. DunkelbergPurdue UniversityWest Lafayette, Indiana

Richard RahnThe American Council for Capital FormationWashington, D.C.

Mark RollinsonDykema, Gossett, Spencer,

Goodnow & TriggWashington, D.C.

John M. WaltersdorfTri-State ElectricHagerstown, Maryland

Valerle YeagerAmerican Research and DevelopmentBoston, Massachusetts

Appendix A:White. House Press ReleaseAnnouncing the Conference

For Immediate Release April 6, 1978 The following is the text of the President's letter toSen. Nelson:

Office of the White House Press SecretaryTo Senator Gaylord Nelson

1HE WHITE HOUSE

The White House today announced that thePresident will call a White House Conference onSmallBusiness, to be held in Washington during thefall of 1979.

The week-long conference will bring togetherseveral hundred representatives of small businessfrom across the country, to be selected duringregionalmeetings. They will hold discussionstogether, and with Administration officials, to.exchange ideas and develop recommendations tosubmit to the President.

The Conference was announced by A. VernonWeaver, Administrator of the Small BusinessAdministration, and Senator Gaylord Nelson(D-Wisc.), chairman of the Senate Small BusinessCommittee.

The President acted on a Senate Resolution and atthe requests of Weaver and Nelson. Senator Nelsonwas instrumental in the resolution's developmentand its passage in the Senate.

Weaver praised the contributions ofboth theSenate Small Business Committee and the HouseSmall Business Committee, chaired by Rep. NealSmith (D-Iowa), for their continuing efforts onbehalf of small business.

In a letter to Senator Nelson, the President statedthat "such a conference can help us identify themany special problems facing small business anddesign an agenda that addresses them in aconstructive way. "

* * *

I have carefully reviewed your October 1976memorandum recommending a White HouseConference on Small Business, as well as theadditional memorandum of last autumn. Thismaterial and our recent discussion have satisfied methat such a conference would be very constructivefor the nation's 14 million small and independentbusinesses. Therefore, Iintend to call a WhiteHouse Conference on Small Business, as suggestedby Senate Resolution 105 which you authored.

I believe such a conference can help us identifythe many special problems facing small businessand design an agenda that addresses them in aconstructive way. As you know, the 14 millionsmall businesses representa much larger part of our

. economy than is commonly recognized. Theyaccount for over 50%of all private employment,43% of the gross national product and over half ofall inventions.

You have been a leader in devising ways to helpthis important sector of our economy grow andprosJler. Administrator Vernon Weaver of the SmallBusiness Administration will be working closelywith you in preparation for the White HouseConference.

Sincerely,

JIMMY CARTER

98

14. U.S. Small Business Administration AnnualReport FY 1978.

15. "Future of Small Business in America," A Re­port of the Subcommittee on Antitrust, Consumers& Employment, Committee on Small Business,U.S. House of Representatives, November9, 1978,pp.6-7.

16. Figures for FY 1979, Office of Procurement,U.S. Department of Energy.

17. "Science Indicators," National Science Foun­dation, 1979.

18. "Technological Innovation, Its Environmentand Management," Report of the Panel on In­vention & Innovation to the Secretary of Com­merce, U.S. Department of Commerce, January1967, p. 18.

19. "National Patterns of R&D Resources. Fundsand Personnel in the United States, 1953 through1978-79," National Science Foundation, 1979.

20. Report of the Commissioner of Patents &Trademarks, FY 1979, U.S. Department ofCommerce.

21. Data from International Trade Administration,U.S. Department of Commerce, 1980.

22. Ibid.

23. "Survey of Business Needs in Export Market­ing-Survey of Federal and Non-FederalSourcesofAssistance," U.S. Department of Commerce,March 1978.

24. Interagency Conference Report, Small BusinessAdministration, 1979.

25. "Small Enterprise in the Economy," SmallBusiness Administration, December 1978.

26. "Quarterly Financial Report," Federal TradeCommission, 3rd Quarter, 1979.

27. "1976 Preliminary Statistics of Income, Corpo­ration Income Tax Returns," Internal RevenueService, June 1979.

28. FTC Report, note 26 above.

29. Data from International Trade Administration,U.S. Department of Commerce, 1980.

30. "Survey of Current Business," Bureau of Eco­nomic Analysis, U.S. Department of Commerce,March 1980.

31. 1974 ADR Data, Office of Industrial Econom­ics, U.S. Department of Treasury.

32. "The Challenge of Regulatory Reform," Re­port of the Domestic Council Review Group,Executive Office of the President, January 1977.

33. Murray L. Weidenbaum, "The Future ofBusiness Regulation: Private Action and PublicDemand," AMACOM, 1979, p. 23.

34. KennethW. Chilton andMurray L. Weidenbauru,"Small Business Performance in the RegulatedEconomy," Working Paper #52, Center for theStudy of Small Business, Washington University(St. Louis, February 1980), p. 1.

35. Ibid, pp. 16-17.

36. "The Effects of Domestic Policies of theFederal Government upon Innovation by SmallBusinesses," Advisory Committee on IndustrialInnovation Final Report, U.S. Department ofCommerce, September 1979,p. 257.

37. "Government Paperwork and Small Business:Problems and Solutions," Office of the ChiefCounsel for Advocacy, U.S. Small Business Ad­ministration, December 1979.

38. Office of Management Assistance, U.S. SmallBusiness Administration, from Dun & Bradstreetstudies.

39. "Minority-Owned Businesses," Special Re­ports MB 72-4, Bureau of the Census, U.S. De­partmentofCommerce, 1975.

40. Hearings before the Subcommittee on GeneralOversight & Minority Enterprise, Committee onSmall Business, U.S. House of Representatives,February 19, 1980.

41. "Current Population Report P-60," Bureau ofthe Census, U.S. Department of Commerce,November 1979.

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industries, regions, backgrounds, and interests, andthey reached their conclusions in 134separate Con­ference workshops. The final recommendations re­flect that diversity. Some of the options appear to bein conflict with one another, specifying differentmeasures to achieve the same ends or proposing tovest equivalent powers in different agencies; somerecommendations press for less govemment spend­ing and less government interference in small­business operations, while others seem to requestmore. Moreover, the Commission recognizes thatsome of the proposals may be less politically andeconomically feasible than others in today' s infla­tion-battered environment.

But it is not these contradictions, in the Commis­sion's view, that should weigh in the considerationof federal policy. Rather, it is the aims, the frustra­tions, and the desires underlying the delegates' rec­ommendations. Those messages form the true"sense of the Conference," and they convey theprincipal themes that the Commission has sought tounderscore.

Ultimately, what is most important is that SmallBusiness in America has been neglected for toolong, and now it is suffering unparalleled diffi­culties that are sapping the vitality of the nation.The objective for policymakers must be to alleviatethose difficulties, not just for the benefit of theowners and operators of small businesses but for thefuture of the nation as a whole. In that regard, theachievements of the Conference, taken together,constitute an unqualified plebiscite for action.

The Commission thus strongly endorses the callof President Carter for representatives of the Con­ference to convene in 1982, in order to monitor theprogress of implementation and to evaluate recom­mendations in the light of changing economicconditions. And it respectfully requests theAdministration's assistance to ensure that the 1982gathering will be as vigorous and constructive as the1980 White House Conference on Small Businessso triumphantly proved to be.

90

program utilizing the cultural, language and politi­cal expertise of all Americans, especially ethnicgroups, to assist in preparing, implementing andutilizing a sales package for use in expanding In-ternational Trade in all world markets. .

The key element in this proposal is the use oftrade fairs and exhibits to familiarize foreign buyerswith the products of small U.S. companies. Manysmall-business people around the country havehailed such exhibits by the Commerce Departmentas the most effective way to promote their goodsand services. The cost of participating, however,can be prohibitive to small exporters. Federal sup­port could take the form of reasonable rent forexhibit space and perhaps low-interest loans tocover transportation and hotel costs.

Also, this recommendation reflects the delegates'belief that, because customs and business practicesdiffer from country to country, the U.S. govem­ment should draw upon Americans of varying eth­nic backgrounds to develop overseas marketingtechniques tailored to different nations-techniquesthat small U.S. exporters could then adopt in theirown marketing programs.

E.

ducation, Training,and Assistance

It is a commonplace of economics that small busi­nesses suffer considerable instability and a high rateof failures. Many new companies go out of businesswithin five years, often due to lack of managerialexpertise (page 32).

Owners of small businesses are sometimes des­perate for assistance. But most private programs aregeared to develop corporate executives. And publicprograms for small-business men and women thatare currently available--such as those provided bythe SBA-are limited and reach only a fraction ofthe entrepreneurs in need. For example, the govem­merit's Office of Personnel Management spendsmore money training civil servants each year thanthe cumulative total of SBA's budget for education'and-training since the' agency was established in.1954."

. Part of the problem is that the SBA is an ex­tremely small government agency. Although it has

96 offices around the country, the agency's entirestaff numbers only 4,490 employees. The staffconcentrates mostly on fmancial and procurementassistance for small businesses, and the agency hastried to provide management assistance mostlythrough universities and volunteers from the privatesector.

The SBA currently has five training and assist­ance programs. Its Small Business Institute relies onuniversities and sends out graduate students inmanagement to help small companies. For the pastfew years it has also experimented with pilot SmallBusiness Development Centers at 16 state univer­sities. It has two programs using volunteers toadvise small-business owners. One is SCORE, theService Corps of Retired Executives. The other, amuch smaller program, is ACE, the Active Corps ofExecutives. The last-and the only arrangementthat is fully funded by the SBA-is its call­contracting program, under which the agency con­tracts with private management consultants who areon call for trouble-shooting assigmnents to' helpspecific small companies in particularlydire straits.

The subject of education, training, and assistancewas added to the Conference agenda at the requestof the delegates. Unfortunately, the delegates hadlimited time to develop specific proposals.

Nevertheless, the workshops produced someclear themes. One is the need for a systematic,national program of education to encourage entre­preneurship, one that would entail not only initialeducation but also continuing management assist­ance and some means to update specific skills. Ingeneral, the delegates expresseda strong desire forassistance from the private sector instead of fromgovernment. Closely allied to education, in thedelegates' view, is the need to improve publicawareness of the problems and potential of smallbusiness.

Recommendation 56: A Small Business Educa­tional Task Force for entrepreneurial educationaltraining shall be appointed by the President andcoordinated by the Office ofAdvocacy. Task Forcemembers shall come primarily from small businessto initiate, promote and develop the incentives fordemographically, projectionable, formal, businessplanning and case history-type continuing educa­tion and public awareness (through all media) insmall business. Mandate to the Task Force shall beto come up with self-liquidating (payfor themselves)programs for the benefit of small business. Thisshouldbe achieved within 120 days.

national policy to provide direct assistance to U.S.exporters and to reduce domestic and foreign bar­riers to U.S. trade. The proposals emphasized moreexport credit and larger export promotion programsby the Commerce, Agriculture, and State Depart­ments, fewer government-imposed disincentivessuch as export controls for foreign policy purposes,and clarification for exporters of the Foreign Cor­rupt Practices Act, the National EnvironmentalPolicy Act, and the antitrust laws.

The program has already resulted in an SBAjEximbank revolving credit pilot program and in aconcerted effort by Commerce, SBA, Eximbank,and the Overseas Private Investment Corporation toeducate small-business people about export op­portunities at field conferences held around thecountry.

Meanwhile, numerous tactical measures to helpsmall exporters are included in eight congressionalbills-H.R.3895, S.2040, S.2104, S.864, S.1499,S.1663, S.918, and S.1744.

At the Conference, delegates concerned aboutinternational trade discussed a wide variety ofmeasures, from ways to focus national policy tospecific tax incentives to stimulate small-businesstrade in foreign markets. They considered morefavorable tax treatment, for U.S. citizens livingabroad so that small companies could afford to sta­tion employees in foreign markets. They proposedfederal grants to establish local or regional organi­zations such as Massachusetts' MASSPORT pro­gram. And they discussed more representation forSmall Business on such government policy groupsas the President's Export Council.

Their final recommendations focused on tax mea­sures, better loan and educational programs, greateruse of trade exhibits, and a more organized gov­ernment approach to export programs.

Recommendation 51: Congress should broaden- the tax deferral options of the Domestic Inter­

national Sales Corporation and provide for thedevelopment of an American Trading Companywhich would automatically qualify as a DISC. Taxdeferral options should include the following addi­tional provisions for DISCs: (1) allowfor deductionof twice the monies expended for participation inany bona fide overseas trade fair by a DISC: (2)allow for the deduction of twice the amount ofpremiums paid to Eximbank and FICA, as legaldeductions prior to payment of DISC taxes; (3)increase the $100,000 exemption clause to$500,000; (4) provide for a graduated tax on

"deemed distribution" from $500,000 for $50 mil­lion, and a standard rate of50% levied on over $50million; (5) exempt new DISCs from any "deemeddistribution" requirementfor at least the first threeyears ofoperation; and (6) provide for the elimina­tion of existing incremental provision of DISCregulations. Congress shouldprovide within the taxstructure an "Exporter's Allowance" or tax deduc­tion which would apply in the trade of all goodsabroad by granting an allowance for 75% of themarketing expenditures incurredby the exporter.

This recommendation received the most votes ofany of the five International Trade options. It isreally three separate proposals. One is to make sixchanges in the rules governing DISCs. One is toencourage exporters to set up American TradingCompanies along the lines of trading companies inother countries. The third is to offer special taxdeductions called an "exporter's allowance" tocompanies that export directly without using theDISC structure.

All of these proposals are discussed at length onpage 33. Each would require specific legislativeamendments to the tax code and, in the case ofAmerican Trading Companies, revisions in theantitrust laws.

Recommendation 52: Eximbank should establish, a special small business funding program throughcommercial banks, and should consider discountingloans to support international sales and shoulddevelop a cooperative program with the SBA forpre-exportfinancing.

This recommendation proposes three differentloan programs. Under the first, commercial bankswould advance monies under a guarantee fromEximbank and the Foreign Credit Insurance Associ­ation. As in the SBA's bank certification program(page 81), the banks would evaluate credit worthi­ness and process the loans, thus eliminating gov­ernment involvement. As a result, export financingwould be spread through the local level instead ofbeing concentrated in Washington and the majormoney-market centers.

Under the second program, Eximbank wouldmake direct loans to small exporters that would bediscounted to compete with the favorable loan ratesprovided by other nations to their exporters.

The third program-SBA loans to help a smallcompany start exporting-would be similar to SBA

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Recommendation 47: The Office of Advocacymust be maintained, reinforced and expanded sothat activity be not less than 5% of the SBA salaryand expense budget. The legislative mission ofAd­vocacy must be considered the number one priorityof SBA and the Office ofAdvocacy. The independ­ence ofthat function of the Office ofAdvocacy mustbe protected so that it may continue to have theconfidence of the small business community. SBA'sAdvocacy budget should be devoted to economicresearch and analysis, as well as, small businessadvocacy. Small business advocates, under thedirect supervision of the SBA Office of Advocacy,shall be assigned to OMB, Federal Reserve BoardTreasury, International Trade Policy Committeeand other regulatory agencies.

On the delegates' ballots, this recommendationranked tenth among the top-priority items. Itamounts to a strong endorsement of the SBA's Of­fice of Advocacy, which was not created until 1975but has developed increasing influence among fed­eral agencies and legislators on Small Business'behalf. Many of the elements of this proposal coin­cide with those in Recommendations 49 and 50.

The measures included in this recommendationcould be implemented by administrative changeswithin the SBA or by Executive Order.

Recommendation 48: The merger and acquisi­tion antitrust laws should be amended to: (l) inhibitmonopoly and conglomerate growth of giant com­panies, provided safeguards are built in to protectthe needs of small business, (2) prohibit dual dis­tribution that adversely affects wholesalers, distrib­utors, dealers, retailers, and franchises; and (3)prevent the termination of non-renewal of whole­salers, distributors, dealers, retailers and fran­chisees without good legal cause.

Presumably, the legislation to fulfill the aims ofthis recommendation already exists. The ShermanAntitrust Act of 1890 and the Clayton Act of 1914were written to inhibit industrial concentration thatreduced competition. The Robinson-Patman Act of1936, which came to be known as the "MagnaCarta of Small Business," is the legislation ap­plicable to parts (2) and (3) above. The act speci­fically addressed discriminatory pricing by bigsuppliers and big customers that cut small com­panies out of the marketplace.

Many small-business owners, however, feel thatthe act has lost its effectiveness over the years. They

want legislation that would give antitrust effortsnew teeth, but they do not want to foreclose oppor­tuhities for owners of small companies to sell equityto larger corporations.

Recommendation 49: The SBA shauld be direct­ed to implement thefollowing changes:

(a) The duties of the Administrator of the SBAshall include the additional function of chairing anew group, within the Executive Branch, to beknown as the "Economic Policy Planning Commit­tee for Small Business" to advise the President ofsmall business matters. The new committee shallconsist of the following: high level representativesof the Department of Commerce, Treasury, andCouncil ofEconomic Advisors.

(b) The SBA Bank Certification Program shouldbe expanded so that the SBA can devote more of itsresources in terms ofpersonnel andfunding to smallbusiness advocacy.

(c) The Office ofAdvocacy must be maintained,reinforced and expanded so that activity be not lessthan 5% ofthe SBA salary and expense budget. Theindependence of the function of the Office ofAdvo­cacy must be protected so that it may continue to .have the confidence of the small business commu­nity. Small Business Advocates should be assignedto OMB, the Federal Reserve Board, the TreasuryDepartment and regulatory agencies, under generalguidelines from the Office ofAdvocacy ofthe SBA.

There are three elements in this recommendation,which together add up to a request for a greateroverall role for the SBA, its Administrator, and itsadvocacy function.

The first describes a small-business economicpolicy committee similar in its membership to theSteering Committee of the Economic Policy Group,except that this committee would be chaired by theSBA Administrator.

The second relates to a pilot program in whichbanks instead of the SBA determine which small­business applicants qualify for SBA loan guarantees(page 81). The banks, rather than the SBA, wouldthen handle the paperwork involved in processingthe loans. The aim of the pilot program is to speedup the lending procedure, but it would also have theeffect of freeing a great deal of the SBA's time andbudget for other pursuits. The delegates feel strong­ly that the money and personnel should be shifted toadvocating small businesses' interests in other areasof government.

The third element in the recommendation is a

84

Recommendation 42: Small Business should beeligible for magistrate review ofagency civil penal­ties, and reimbursed for court costs, reasonableattorney's fees, and damages from administrativeaction, if successful in civil disputes with theFederal Government, including IRS.

(a) Such costs andfees to come from the operat­ing budget ofthe agency.

(b) Magistrates will be appointed and be respon­sible to the judges in each Federal Judicial District.

(c) With burden ofproofon the agency to defendits action.

Delegates voted this proposal number 12 on theirlist of 15 top-priority measures. A full explanationof each point in the recommendation can be foundon page 31. Currently, each agency has its ownsystem for adjudicating claims or penalties, whichis often so complicated that small companies fre­quently accede to an agency's demands solely toavoid the cost and titne required to challenge aruling. -

The recommendation would require two legisla­tive changes. One, to expand the jurisdiction offederal magistrates to decide disputes between smallcompanies and federal agencies, is embodied inH.R.5103 and S.615. The second, involving thereimbursement of legal fees and court costs, isincluded in H.R.2846, S.I444, and S.265, whichalready has passed the Senate.

Recommendation 43: The Office ofManagementand Budget should be designated the lead agencyfor both Federal regulations and paperwork of allagencies and programs (specifically including IRS),with responsibility for forms clearance, paperworkreduction, simplification and elimination; coordi­nating regulations and cost control oversight; re­quiring agencies to submit to OMB an economicanalysis measuring administrative compliancecosts, particularly for small business, of all pro­posed regulations and paperwork.

In many respects, OMB could effectively moni­tor regulatory reform, for it understands how dif­ferent federal agencies operate and can exertconsiderable influence through its budget-makingoperations. As the delegates envisioned it, OMBwould be a kind of traffic cop coordinating require­ments and negotiating conflicts amongagencies.

But to be effective, OMB-which is part of theexecutive branch-would have to have jurisdictionover independent agencies as well as executive

••As the delegates envi­sioned it, OMS would be a kindoftraffic cop coordinating require­ments and negotiating conflictsamong agencies. "

agencies. Bringing independent agencies underOMB 's purview would require new legislation.

.Recommendatlon 44: All Federal agenciesshould have the power to implement a tiered systemof regulation. This should include the power tominimize and exempt small business from variousregulations and reporting requirements as well. Allnew regulations should be designed to take intoaccount the size and nature of the regulated busi­ness. All present regulations should be reviewed tosee if they are still required.

Although stated in general terms, this recom­mendation represents the long-term goal of thesmall business community (page 31). The conceptof "tiering" is also included in Recommendations29, 45, and 46. The approach is being tested byexecutive agencies as a result of an ExecutiveMemorandum issued in November 1979. It is alsothe thrust of S.299 and H.R.4660.

82

Again, this recommendation has two compo­nents. The first, like Recommendation 6 and 26,would establish mandatory percentage shares of

, federal procurements and grants to states andmunicipalities (page 34). It would involve substan­tial increases in paperwork and staff at every con­tracting agency, particularly the SBA, the GeneralServices Administration, and the Defense Depart­ment. No legislation is pending on this matter.

The second thrust is to offer prime contractors ongovernment projects a cash incentive for subcon­tracting to women-owned businesses (page 36).Such a measure would require either congressionalaction or an Executive Order. The InteragencyCommittee for Women's Business Enterprise iscirculating a proposal along these lines amonggovernment agencies.

Recommendation 38: The Small Business Ad­ministration should identify existing public andprivate management training programs, evaluatetheir effectiveness for women entrepreneurs andincrease funding to thosefound to be effective.

The SBA already provides funds for trainingwomen in business through such programs as itsSmall Business Development Centers, the Ameri­can Women's Economic Development Corporation,and the American Association of Community andJunior Colleges. The delegates would like to havealternative training programs with more funding.

Recommendation 39: Evaluate all Federal gov-- ernment employees in positions which impact on

women and minorities, particularly loan officers,procurement officers and management assistanceofficers, in part on the basis oftheir performance onbehalfofwomen and minorities.

The aim of this recommendation is to make gov­ernment employees more accountable to the citizensthey serve. A method could be developed by theOffice of Personnel Management and applied atevery government agency with relatively littleexpense, since personnel departments alreadyevaluate employees in other ways.

Recommendation 40: The Small Business Ad­ministration shall establish a bonding program thatpermits the waiver of bonding requirements forFederal contractors who are small business owners.

This program shall be available to all small busi­ness owners who have been:

(l) unable to obtain bonding from other source,and

(2) certified as competent by the SBA.

Obtaining surety bonds is one of the biggest dif­ficulties for new and small companies that want tofulfill federal contracts and subcontracts (page66). The purpose of this recommendation is to pro­vide alternatives for small contractors who cannotget bonds in conventional ways. Under this pro­posal, the ability of a small business to fulfill acontract would in effect be insured by the SBAinstead ofby a private company.

G-overnment Regulationsand Paperwork

When small-business people talk about wanting lessgovernment interference in their operations, thearea that they emphasize most is regulations andpaperwork. Proliferating rules and mountains offorms have become such a headache even to gov­ernment itself that hundreds of congressional andexecutive proposals have emerged in the past coupleof years to cut back on the workload. Many ofthese, along with their relevance to small busi­nesses, are explained on pages 29-31.

So many steps have been taken by individualagencies that only a few can be enumerated here.The SBA's Office of Advocacy, although it has nodirect enforcement powers, is trying to serve noticeon regulatory agencies when proposed rules have adirect impact on small companies. The Office ofAdvocacy has also undertaken a massive attempt tocatalogue and computerize, for cross reference, thepaperwork burden of numerous small businesses.

The Department of Commerce is compiling itsown regulations into a computerized index and isalso analyzing the effect of regulations on selectedindustrial sectors of the economy. The Environmen­tal Protection Agency has taken the lead in trying tomeasure quantitatively the costs and benefits ofregulation, a difficult task in the EPA's health andsafety field. The Treasury Department, whose in­ternal Revenue Service generates about 78% ofgovernment paperwork, has established a SmallBusiness Advisory Committee to relay small com-

••Women feel that the tradi­tional business community is notyet readyto acceptthem on anequal footing.~,

of energy in the private sector, until the U.S. isenergy self-sufficient. Small business should havetax exemptions andappropriate set-asides.

Under this recommendation, government shouldplow back all revenue from the recently-enactedwindfall profits tax on major oil companies intoresearch and development, exploration, and pro­duction of more fuel. The delegates were concernedthat energy tax revenues would be used for socialand other federal programs. Tax exemptions andset-asides for small companies are a follow-up tothe principle proposed in the previous recom­mendation.

This proposal would require amendments to thewindfall profits tax legislation.

Recommendation 33: The U.S. Governmentshall encourage the immediate expansion ofnuclearand coal-powered electric generating capacity.Research efforts directed toward power technologyshould be expanded.

This recommendation received the most Confer­ence votes of any energy proposal, finishingtwenty-first in the balloting. It essentially endorsespresent trends in national energy policy. Many stepsin these directions have already been undertaken,particularly conversion of power plants from oil tocoal.

Recommendation 34: Congress should encour­age substantial direct and investment tax credits forthe implementation ofall forms ofconservation andalternative energy. Additionally, investments of upto $150,000 per year should be expensed.

The delegates were enthusiastically willing toreduce energy waste by installing conservationdevices. But they were equally strong in their con­tentions that such efforts should not put a seriousfinancial strain on their companies.

This recommendation proposes to reduce thatstrain through tax credits and an immediate write­off of smaller investments in energy-saving equip­ment. These would require legislative amendmentsto present Internal Revenue Service ConservationTax Credit regulations.

Recommendation 35: Action should be taken toimmediately remove price and allocation controlson crude oil and all petroleum products.

The participants in the energy workshops weredeeply concerned that controls on energy prices andfuel allocation would severely impair small busi­nesses' operations. Basically, this recommendationendorses Administration proposals currently beforeCongress.

Women In Business

Although women constitute 48% of the workforce,v they own only a fraction of America'sbusinesses. Census data for 1977 show that womenowned 4.8% of U.S. businesses and accounted foronly I% of total business receipts. Roughly 98% ofwomen-owned businesses were sole proprietor­ships, many of them eating-and-drinking establish­ments, retail shops, and food stores and markets.Almost half were tiny, with sales of less than$5,000 per year.

Women feel that the traditional business commu­nity is not yet ready to accept them on an equalfooting and that they suffer cultural disadvantagesoperating in a male-dominated environment. Theyhave difficulty entering markets and obtainingcommercial loans, government contracts, and man­agement assistance. Nevertheless, increasing num-

80

••Small companies drill 90%·of the wildcat wells, discover 75%of new domestic fields, andaccount for 55% of new oil and gasreserves.,~

Economic Policy and Government Programs. In thisinstance, it applies only to procurement regulations ".

Recommendation 30: Congress should alsoadopt legislation establishing separate mandatorygoals for alifederal procurements andfederalfundsor grants to states, localities. and public and pri­vate institutions on a contract by contract basis oragency-wide basis for smali business (35%), minor­ity-owned (Black, Hispanic, Native American,Asian Pacific American or other racial minorities)businesses (15%), and women in business (10%).

This recommendation duplicates Recommenda­tions 6, 37, and in a more specific vein, 26.

Small companies include producers as well as con­sumers of energy, which makes energy a vital issueon two counts.

On the one hand, small businesses are often thefirst businesses to be hit, and the ones hit thehardest, by fuel shortages, price increases, andregulatory actions. A study by the National Fed­eration of Independent Business (NFIB) demon­strates that a small company with $50,000 in annualsales spends four times as much per sales dollar forenergy as companies with $1 million or more insales"-which means that the small company has adifficult time raising prices to absorb the additionalcost without making its products uncompetitive.

On the other hand, small producers play promi­nent roles in America's energy industries. Despitewidespread publicity about the dominance of majoroil companies, small companies drill 90% of thewildcat wells, discover 75% of new domestic fields,and account for 55% of new oil and gas reserves."More than three-quarters of the nation's gasoline isdistributed by 12,000 oil jobbers> and 175,000 in­dependent service-station operators," while homeheating oil is almost entirely marketed by compa­nies with fewer than 20 employees.56

Small businesses are significant factors, as well,in the production of energy from other sources andin the development of energy-saving techniques.Small companies have always been crucial to inno­vation in energy fields. Since Ben Franklin dis-

-.

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76

the SBA has earmarked $25 million in loans forveterans, or about 7% of the dollar amount of itstotal loans.50

No data are available on veterans' share of pro­curements. Earmarking a percentage of procure­ments for a particular group, however, is alsoincluded in Recommendations 6, 26, 30, and 37involving women and minorities.

Recommendation 24: All legislation on regula­tions affording special treatmentfor women, minor­ities, the socially and economically disadvantagedor other special groups, should be amended to alsoprovide priority for qualified veterans, includingdisabled veterans. Qualified veteran status I'"aloneshall entitle the veteran to equal treatment andinclusion in any such category or class.:

This recommendation reflects, in general terms,the desire of some veterans to receive prioritytreatment on a par with women and minorities. Asworded, however, it is not clear who "qualified"veterans would be. Present law implies priorities forveterans but does not specifically regard them associally or economically disadvantaged. No furthercongressional or executive proposals relating to thisissue currently exist.

Recommendation 25: SBA regulations shallinclude all disabled and/or Vietnam veterans intheir definition of "socially and economicallydisadvantaged.' ,

This is a more specific version of the previousrecommendation. It specifies disabled and Vietnamveterans and applies solely to the SBA. It wouldinvolve administrative changes at SBA rather thannew legislation.

Federal Procurement

In the SmaIl Business Act of 1953, Congress spe­cifically stated that:

The Government should . . . insure that a fairproportion of the total purchases and contractsor subcontracts for property and services forthe Government (including but not limited tocontracts or subcontracts for maintenance,

••Small Business' share ofprocurement dollars has fluc­tuated erratically, from 17.2% in1969 to 24.4% in 1978. The mostrecent figure is down again-to22.2%.,.,

repair, and construction) be placed with small­business enterprises.

More than a quarter of a century has passed sincethe law was enacted. During that period SmallBusiness' share of federal procurement dollars hasfluctuated erratically-from 20.3% in 1967 to17.2% in 1969, for instance, to 24.4% in 1978. Themost .recent figure is down again: In 1979, smallcompanies received 22.2% of the monies that thegovernment spent on goods and services.51 YetSmaIl Business accounts for something in the vicin­ity of 40% of gross national product.

Current government initiatives to increase smallcompanies' share of procurements revolve aroundPL 95-507 and the Office of Federal ProcurementPolicy (OFPP), which are described on pages34-36 and on page 66. In addition, the SBA hasinaugurated its Procurement Automated SourceSystem (PASS), a computer bank that keeps closetrack of federal procurement needs and matchesthem up with small companies. Using the PASSsystem, the SBA has set a target of 30% of pro­curement dollars for small businesses in 1981.

The delegates' deliberations in Federal Procure­ment workshops paralleled those in workshops onMinority Business Development (pages 65-69) andon Women in Business (pages 80-82). They alsowere similar to discussions on small companies'share of research-and-development funds and fed­eral land leases under Innovation and Technology(pages 70-72) and Energy (pages 78-80).

alter the 1977 amendments would encounter strongopposition by labor groups, and it is unlikely thatthe Administration or Congress would address theissue in an election year. Accordingly, no proposedlegislation now exists to freeze the minimum wagelevel or to exempt part-time or seasonal workers.Two bills, however-H.R.5080 and S.1107­would reduce the wage for teenagers, a measurethatlost by only one vote in the House in 1977.

Recommendation 19: Repeal the Davis-BaconAct.

This measure ranked sixteenth in the Conferencevoting.

The Davis-Bacon Act established minimumwagestandards in the construction industry-nationalstandards that do not take into account differencesin regional or local wage rates. Small companieshave a difficult time absorbing these excess laborcosts, which often force them to hire fewer workersor to lose opportunities to bid on constructionprojects entirely.

Repeated attempts have been made to repealDavis-Bacon during the past decade, most recentlyin 1978, but Congress voted them down.

Recommendation 20: Provide greater incentivesfor savings and investment by eliminating incometax on investments and interest income up to$10,000.

Delegates believed that this measure would en­courage savings rather than consumption (page26) and thus help curb the current inflationaryspiral. The proposal would require legislation toamend the Internal Revenue Act.

Veterans in Business

Because of their years in military service, manyveterans of the U.S. Armed Forces must postponeeducation and work experience. Record numbersofyoung veterans during the past decade have availedthemselves of education and training programsunder the G.I. Bill. Many have then turned to entre­preneurial ventures--only to face subtle discrimina­tion because of their service in Southeast Asia.Moreover, having given years of service to the gov-

••Many veterans have turnedto entrepreneurial ventures-onlyto face subtle discriminationbecause of their service inSoutheast Asia. tJtJ

74

The first measure recommended above--broad­ening the "prudent man rule"-has been partlyaccomplished. The prudent man rule goes back to acommon-law notion that an investment managermust exercise prudence when investing someoneelse's money. Under the 1974 Employee Retire­ment Income Security Act (ERISA), managers ofpension funds were at first constrained from in­vesting in any small company on the grounds thatsmall companies were too risky. This constructionof the law effectively excluded small companiesfrom some of the nation's largest capital pools.

The Labor Department, which enforces ERISA,issued a clarifying interpretation assuring institu­tional investors that a portion of pension fundportfolios could be invested in small ventureswithout fear of regulatory action. The managers andtrustees of pension plans, however, want furtherclarification.

Meanwhile, in another action, the Labor Depart­ment has proposed rules known as "plan assets reg­ulations" that would effectively constrain pensionfund investments in a different way. Pension planstypically put money into fledgling companies byinvesting in venture capital pools. The proposedrules would make the managers of venture capitalfirms "plan fiduciaries" subject to ERISA regula­tion, which would keep pension funds out of ven­ture capital pools.

Recommendation 15: Institute specialized cap­ital gains treatment for generative capital investedin technology based firms starting with 25% in thefirst year, decreasing by 5% per year to zero afterfive years and, further, defer taxation on such gainswhenever the proceeds from the sale of investmentsis reinvested into a small business within the nexttwelve months.

This recommendation combines two investmentconcepts that would require amendments to the taxcode.

The first concept is that the longer an investorkeeps his or her money in a technology company,the lower the tax would be on the gain when theshares are sold. Currently, 60% of any capital gainis excluded from taxation. Under this proposal, the60% would rise in annual increments to 100% afterfive years, making the tax rate zero. But the slidingscale would apply only to direct investment (asopposed to buying shares in secondary markets) tohelp a technology company grow. The virtues ofsuch a measure are that it would reward owners of

technology companies who have plowed profitsback into the business for many years, and it wouldcounteract artificial gains created by inflation.

The second concept is the roll-over provision dis­cussed under Capital Formation and Retention onpage 64-except that in this recommendation thetax deferral would apply only to investments intechnology companies.

Inflation

The options debated by the Conference delegatesfell into two categories-measures to combat infla­tion on a national scale through changes in fiscaland monetary policy and federal wage standards,and measures to help small businesses cope withinflation.

Most of the options in the latter group aimed atexpanding retained earnings through specific taxcuts and were virtually the same as those discussedin the Capital Formation and Retention workshops.The options included simplified and accelerateddepreciation rules, simplified inventory accounting,changes in estate and gift taxes, opposition to avalue-added tax, indexing the tax code for inflation,and tax credits for research and development.

By and large, however, the delegates in the in­flation workshops concentrated on measures thatthey felt would benefit the nation as a whole. Theseinvolved restricting growth in the money supply tothe same rate as increases in national productivity;reforms in minimum wage standards and the SocialSecurity system; revisions in Civil Service employ­ment practices; and as many as seven differentapproaches to balancing the federal budget.

Recommendation 16: Balance the FederalBudget by statute in Fiscal Year 1981 by limitingtotal Federal spending to a percentage of the GNP,commencing with 20% and declining to 15%.

This recommendation ranked third in the Confer­ence balloting. A statute to balance the budgetwould require a new law or an amendment to the1974 Congressional Budget and Impoundment Con­trol Act. There is no proposed legislation now inCongress that would do precisely what the dele­gates' recommendation specifies. Currently, how­ever, both the Administration and Congress are

72

••A proposal to supportS.1860, the Small BusinessInnovation bill, was voted the sixthmost important recommendationat the Conference.~,

Innovation and Technology

The V.S is the world leaderin science, engineering,and technology, but its leadership has been waningin recent years (page 20), especially as other nationshave developed government policies to fosterinnovation.

Innovation is crucial to improving productivity inevery sector of the economy, to developing entirelynew industries, and to strengthening the V.S.balance of trade. It can solve the difficulties in­volved in preserving the environment, and it iscentral to developing new sources of energy. Tech­nology is also key to revitalizing inner cities­through new types of building design and construc­tion, solar energy devices, urban farming and small­scale food processing, computer-based educationtechniques, health care, and private delivery ofwelfare services.

After decades of taking V. S. technologicalsuperiority for granted, the government has nowembarked on a major overhaul of federal laws andpractices to spur innovation. In April 1978, theWhite House began a thorough review under theauspices of the Commerce Department to identifywhat measures should be taken. Hundreds of peoplefrom industry, labor, academia, and public interestorganizations contributed suggestions and analyses.Among the many policy objectives that the Presi­dent identified were revamping the patent system,clarifying antitrust policy, fostering small innova-

tive companies, improving federal procurement,and streamlining regulation.

Congress has developed a great deal of interest inpromoting innovation and technology. Numerousbills are currently before both houses.

The most comprehensive is S;I860, the SmallBusiness Innovation bill, which proposes numerouschanges in federal practices under a small businessinnovation research (SBIR) program. The SBIRprogram would make more federal research-and­development funds available to small companies,and it would be overseen by the Director of theOffice of Federal Procurement Policy working withthe SBA and the National Science Foundation. Inaddition, the bill addresses several financial topics,from capital gains on shares of small companies todeductions for research and experimentation.

Among the other bills, S. 1697 would reform thepatent system, while S.414 seeks to organize thepresent hodgepodge of policies concerning rights togovernment"financed inventions. S. 1250, theNational Technology Innovation bill, would es­tablish an Office of Industrial Technology thatwould set up Centers for Industrial Technologyaround the U. S. through a program of grants tononprofit applicants.

The options studied by the Conference delegatesconcentrated largely on problems of finding capitaland were in many instances identical to proposalsdiscussed in the Conference workshops on CapitalFormation and Retention. But delegates were alsoconcerned about streamlining the Patent Office,retaining rights to inventions made under federalresearch grants, and making the distribution offederal R&D funds more equitable and subject tofewer delays.

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__ Delegates felt that,because "maximum practicableopportunity" is unspecific, PL 95­507 is not adequately beingimplemented.~,

Recommendation 7: The President shall directthe Office of Management and Budget (OMB) toestablish, as part of the budget process, a formalreporting and goal setting system, requiring alldepartments and agencies to specify and separatelymake public the resources they plan to make avail­able to small businesses, minority-owned (Black,Hispanic, Native American, Asian Pacific Ameri­can, and other racial minorities) businesses, andwomen in business. The departments and agenciesshall also be mandated to publicly report the levelsofattainment ofthese goals.

The Administration's current practice is to holdindividual department and agency heads account­able for meeting minority business objectives. Theaim of establishing a more formal reporting systemand putting OMB in charge is to give the Adminis­tration more precise measures of what monies areactually channeled to minority businesses and howefforts to promote the overall health of minorityenterprise are faring.

Because many minority companies do business indeclining urban areas, such a reporting systemcould be used to assess other programs as well.Setting goals and making them public, in the dele­gates' view, are necessary to prod agencies toaction.

Recommendation 8: Congress and the ExecutiveBranch shall ensure the effective implementationand enforcement ofPL 95-507 by adopting the fol­lowing changes/recommendations: (1) requiringthelaw or implementing regulations to provide that theprime contractor set forth a narrative descriptionofthe sub-contract or sub-contract item; and (2)giving the Associate Administrator for MinorityBusiness, within the SBA, the clear authority toenforce and monitor comoliance with PL 95-507.

PL 95-507 requires the low bidder or otherwisesuccessful recipient of a large federal contract tosubmit, before the contract is awarded, a subcon­tracting plan setting forth percentage goals for usingsmall and minority companies. The contracting of­ficer must then decide if the plan provides the"maximum practicable opportunity" for small andminority business. Delegates felt strongly that,because "maximum practicable opportunity" isunspecific and arbitrary, the law is not adequatelybeing implemented. Further elucidation of PL 95­50Tsproblems can be found on page 34.

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such as manufacturing, wholesaling, and transpor- variation on 8(a), the SBA arranges small businesstation. Moreover, in every industry, gross sales for "set-asides," federal prime contracts and subcon­minority companies average far below those of non- tracts to be awarded to small businessesdirectly.minority companies. The third program is based on Public Law 95-

Minority entrepreneurs are handicapped by in- 507, which was enacted in 1978. A year earlier,adequate capital, limited opportunities to buy busi- President Carter directed the Interagency Councilnesses, insufficient management training, disjointed for Minority Business Enterprise to coordinateand diffused government assistance programs, and efforts to triple, within two years, minority busi­difficulty marketing outside minority communities. nesses' share of federal procurements from $1.1Other problems exist in specific industries. For billion to $3.3 billion, or from 1.6% to 4% of tota!instance, surety bonds are required by law on vir- dollars. PL 95-507 provided the legislative frame­tually all public construction projects and by choice work for this policy.on a large number of private projects. That require- The law requires prime contractors to set percent­ment has created a vicious cycle for minority con- age goals for subcontracting to small and minoritytractors, who are denied contracts because they businesses before a federal procurement contractcannot obtain bonds and are denied bonds because can be awarded. Also, the law obligates the SBA'sthey do not have a track record of performing Small Business Institute and Small Business Devel­contracts. opment Center programs to offer minority busi-,

Federal efforts to assist minority enterprise con- nesses much-needed management and technicalcentrate on providing financial and procurement assistance, including planning, loan packaging,opportunities. The Small Business Administration accounting and marketing assistance, and helphas three financing programs. Its 7(a) program, finding equity and debt financing.under Section 7(a) of the 1953 Small Business Act, Two other important organizations furtheringgrants direct loans or 90% loan guarantees to small minority business are the Commerce Department'sbusinesses. From 1970 to 1978, minoritybusinesses Minority Business Development Administrationreceived 26,536 loans totalling $1.7 billion-14% (MBDA) created last year, and the National Minor­of all 7(a) loans and 10.6% of their total dollar ity Purchasing Council (NMPC) formed eight yearsvalue.s ago by Commerce officials anda private group of

The SBA also offers economic opportunity loans Cfiicagobusiness people.under the 1964 Economic Opportunity Act. This MBDA's major thrust will be to nurture medium­program loaned $914 million to small businesses sized minority businesses by locating capital forfrom 1970 to 1978, three-quarters of it to minority acquisitions and expansion, developing manage­businesses." ment training programs, and advocating minority

Thirdly, the SBA licenses Minority Enterprise interests before regulators. NMPC, now based inSmall Business Investment Companies (MESBICs) New York, encourages corporations to buy goodspursuant to Section 301(d) of the 1972Small Busi- and services from minority-owned businesses, andness Investment Act. MESBICs are privately- it has set a target of $3 billion in such purchases forowned venture capital vehicles that since their 1980.inception have invested more than $82 million in In the Conference workshops, delegates con-minority businesses." sidered more than 30 proposals touching on finance,

In addition, the Commerce Department's Eco- management assistance, federal procurement, andnomic Development Administration (EDA) makes other government efforts to assist minority enter­fixed-asset loans maturing up to 25 years. From prise. They considered which agency, SBA or1970 to 1977, minority businesses received about MBDA, should oversee federal minority-business12.5% of the $270.7 million in EDA loans." efforts. They debated other proposals to establish a

There are three major programs to help minority National Institute for Minority Entrepreneurialbusinesses obtain federal procurement contracts. Development, to establish Small and DisadvantagedUnder the Small Business Act's Section 8(a), the Business Councils in each of the 10 federal regions,SBA contracts directly with a federal procuring and to elevate the SBA Administrator to a Cabinet­agency and then subcontracts on a sole-source basis level position and appoint an Undersecretary forto a minority-owned business. Procurements under Minority Business.8(a) have risen from $8.8 million in 1969 to $743 The delegates also discussed a new idea for amillion in 1978.46 Under the second program, a cooperative bank to help minority retailers, a

66

expand or to replace obsolescent plant and equip­ment is being drained away by inflated tax pay­ments. The simplest and fairest solution would be tospeed up depreciation, as is done in most otherindustrialized nations.

The delegates proposed that an accelerated andsimplified system should permit immediate write­offs for certain investments, particularly thoserequired by government (for antipollution equip­ment, for example). To ensure that such a systemwould benefit small companies, they proposed thatalimit be set on the amount ofwrite-offs a companycould take in any given year.

No fewer than eight bills are presently pending inCongress. The proposed "10-5-3" depreciationplan (page 28) is included in H.R.4646 and S.1435.

Recommendation '3: Revise estate tax laws toease the tax burden on family-owned businessesandencourage the continuity offamily ownership.

This recommendation ranked fourth among the ,delegates' 15 top-priority proposals. Many small­business owners work hard to build their businessesfor their children, and the delegates were concernedthat the heirs of a business frequently must sell thecompany to pay estate taxes.

The greatest obstacle to changing estate and gifttaxes is a conviction among some legislators thataccumulated wealth should not be passed to subse­quent generations. On the other hand, companiesthat must be sold from an estate often are purchasedby larger companies, which increases economicconcentration.

H.R.5402, S .1825, and four other bills have beenintroduced in Congress to reform estate and gift taxlaws.

Seventh in the delegate voting, this recommenda­tion embraces two separate ideas. The first, a taxcredit for direct initial investment, is a new conceptand is explained in detail on page 28. The second,known as the "capital gains roll over," could workseveral ways. In a broad application, the seller ofany capital asset would defer capital gains taxes ifthe proceeds were reinvested in a small business. Anarrower application would be to permit owners of asmall business, including people who are retiring, to

them to narrow their selections to five recommenda­tions. All of the five that they fmally chose receivedheavy support and ranked among the nine highestpriority proposals at the Conference.

Recommendation 1: Replace the present corpo­rate and individual income tax schedules with moregraduated rate scales, specifying the graduatedcorporate tax scale up to $500,000.

Recommendation 2: Adopt a simplified acceler­ated capital cost recovery system to replace thepresent complex Asset Depreciation Range (ADR)regulations with provisions such as (A) immediatelyexpensing capital costs less than a specifiedamount, (B) immediately expensing governmentmandated capital costs, and (C) the creation of amaximum annual benefit that may be derived from -the system. Recommendation 4: Provide a tax credit for ini-

- tial investment in a small business and permit defer-The delegates chose this as their second most ral of taxes for roll-overs of investments affecting

important recommendation, and the problems it small businesses.addresses are discussed in more detail on page27.

Present rules for depreciating the costs of plant,equipment, and other assets extend the write-offsover too long a period and are so complicated thatsmall businesses rarely use them. The problem isthat depreciation is based on historical costs of plantand equipment rather than on replacement costs.Inflation has pushed replacement costs so far be­yond historical costs that traditional capital recoveryschedules are now inadequate. Capital needed to

This recommendation, the most important tocome out of the Conference, received 1,129 dele­gate votes representing 67% of the delegate body.

There are two separate ideas within this proposal.The delegates concentrated on a more gradual risein the income tax rate for corporations and lateradded individual income taxes to the recommenda­tion to address unincorporated businesses, whichcomprise at least five out of every six small busi­nesses in the country. A more graduated corporatetax would help expand the retained earnings avail­able to a small company for reinvestment, andretained earnings are the soundest and most reliable

<, source of business capital.Four bills to graduate the corporate tax schedule

further are now in Congress-H.R.2913 andH.R.4140 before the House Ways and Means Com­mittee, and S.1288 and S.2136 before the SenateFinance Committee.

64

he analyses of the recommendations in the en­suing pages are arranged according to the 12issue areas that delegates debated in individualConference workshops. Each section begins withshort summaries of the issues and of recent gov­ernment initiatives, followed by a sampling ofoptions that the delegates discussed but did notinclude in their final selections.

Several issue areas overlapped one another.Those involving women, minorities, and veter­ans were tied in with federal procurement, forexample, while capital formation, inflation, in­novation and technology, and international trade

were closely related. As a result, many of the delegates' final recommendationshave similar objectives, and the analyses include a great deal of cross-referencing.

Taxes and inflation were the delegates' major concerns. No fewer than sevenof the top nine recommendations address taxation directly. The delegates felt thatgeneral tax relief rarely benefits small businesses. The measures that they proposedemphasize tax changes targeted specifically for small enterprise. Three of the top15 recommendations deal with inflation on a national scale, pertaining to majorissues of fiscal policy and federal wage standards. More than a score of otherproposals deal with inflation's direct impact on small companies.

The delegates were deeply concerned about federal regulations and paperworkas well. Five of the top 15 recommendations specify more flexible regulatory andreporting requirements for small businesses, and 15 of the 60 touch on the issue toone degree or another.

Other prominent themes that emerged from the delegates' deliberations in­cluded: greater advocacy of small business interests in federal policymaking; amore equitable share of federal research-and-development dollars for small com­panies that are innovative and technologically-oriented; equal access to businesscredit for women entrepreneurs; a fairer portion of procurement opportunities forboth minority-owned and women-owned businesses; and more alternatives forentrepreneurial training and management assistance.

Capital Formation and Retention. The delegates' chief preoccupation was withproblems of fmding and retaining capital. Capital from outside sources is alwaysmore difficult to obtain for small businesses than for large ones, yet small com­panies-particularly young and expanding ones-rarely have sufficient earnings tosupport their growth. Current economic conditions have exacerbated the problems.Inflation and expensive credit have made it increasingly difficult both to find

62

60

shipping and air transportation. Hawaii is less than20% self-sufficient in food stuffs, building materi­als, and household items. It is totally dependent onimports for medical supplies, baby foods, fertilizer,most animal feed, and other essential goods. Its24,950 small business firms maintain extraordinary(and costly) inventories in anticipation of shippinginterruptions; the high cost of warehousing and fi­nancing such inventories is absorbed by consumers.

Whereas, it is estimated that less than 7% of mari­time and longshore workers on the Pacific Coastwould be involved in continuing normal shipping toHawaii and other U.S. Pacific islands. Thus federalguarantees of continued shipping could not beclassed as "strike breaking" inasmuch as any strikecould remain 93% effective.

Whereas, the U.S. Senate passed by a vote of 58 to37 just such a measure as now proposed in July,1974. The same bill failed to get out of committeein the U.S. House of Representatives.

Now, therefore, be it resolved by the delegates ofthe White House Conference on Small Business thatFederal legislation is required to assure continuednormal surface shipping to Hawaii and other U.S.Pacific islands during any strike or lockout of suchservice on the West Coast because more than 80%of essential goods for these islands passes throughWest Coast ports.

Resolution 11

Be it resolved that the delegates to tltis Conferencehave an obligation to respond to the action of thePresident in calling it and in advising us that heplans to reconvene a meeting of at least some of usin at least two years to respond with a program toimplement the actions taken here;

And be it further resolved that as representatives ofmillions of small business men and women whocould not be here with us and who are not yet ade­quately represented in either government or theprivate sector's organized life; and further that tltisConference represents for many of us the first timewe have ever had the opportunity to meet togetherwith small business people from other parts of thecountry than our own, from other industries thanour own, and from other ethnic and gender groupsthan our own; and that in that regard our greatestneed is to carry forward the unifying strengtheningeffect of our work together here so that it may,bereflected in national policy changes.

We herewith resolve as follows:

That each delegation be asked to designate twomembers of a Small Business National UnityCommittee to be responsible for keeping the dele­gates informed about the progress of our imple­mentation work; and further that existing nationaland regional small business organizationsbe invitedto participate in the work of the committee throughthe designation of two small business representa­tives from each (including two organizations ofwomen and two organizations of minority groups);and further that the Office of Advocacy be request­ed to provide such information and assistanceas it isauthorized to provide to all small business groups;and the charge of this Conference to the SmallBusiness National Unity Committee shallbe:

To maintain effective communications among thedelegates and all elements of the small businesscommunity, organized and unorganized, to workfor the implementation of the proposals of this Con­ference and to serve the continuing needs and inter­est of small business so that it shall at least achievethe power and unity in the making of national deci­sions which its numbers and significance in theeconomy warrant.

58

Now, therefore, in consideration of the foregoingand; whereas the Small Business Communityis rep­resented by some 14 million small and independentbusinesses and; whereas these 14 million businessesrepresent 100 million people and 58% of all privatesector jobs in America and; whereas 97% of allnewly created jobs in the past 7 years have beencreated among these 14 million small and independ­ent businesses representing 48% of America's grossbusiness product and; whereas 50% of all newinventions, innovations and patents are developedinthe small and independent sector of Americanbusiness....

Therefore be it resolved that said 14 million smalland independent businesses have fundamental, in­alienable and constitutional rights: (I) The right tostart, own, and manage a business without govern­ment interference. (2) The right to compete fairlyfor capital with assurance that capital will beavailable for private use. (3) The right to reward forrisk, effort and genius necessary to make an inde­pendent business work. (4) The right to determineprice just as the buyer has the right to buy or not atthat price. (5) The right to be governedby reasonableand understandable laws set forth by elected repre­sentatives, not by bureaucratic dictate. (6) The rightto be innocent until proven guilty by a jury of ourpeers, not by administrative edict. (7) The right toequal representation with Big Business, Big Labor,and Government on matters relating to America'seconomic policies.

Be it resolved that America's Small and Independ­ent Business Bill of Rights be enacted into law, andthat it be used as the preamble to all recommenda­tions emerging from this Conference.

Resolution 2

Whereas the National Labor Relations Act nowaffects the majority of Small Businesses; whereasthe economic and other impacts of the NationalLabor Relations Act on Small Business are propor­tionately greater; whereas the concerns and voiceofSmall Business should be heard and considered inthe formulation of the National Labor Policy;

Be it resolved that: A reassessment of the NationalLabor Relations Act and its effect on Small Busi­ness be made in regard to creating a two-tiered

National Labor Policy which takes into considera­tion the special problems of Small Business in the1980's.

Resolution 3

Whereas, The White House has sponsored its firstWhite House Conference on Small Business, andwhereas this has been one of the most successfuland meaningful conferences ever convened, andwhereas the impact of the recommendations of thisConference will forever affect the future of Amer­ica' be it resolved that the White House Conferenceon Small Business request the President of theUnited States, by Executive Order, to issue aCommemorative Stamp to advertise, publicize andcelebrate this occasion.

The theme of the stamp shall be: "Support SmallBusiness"-"Help Build America" -White HouseConference on Small Business 1980.

Let the stamp show the faces of people of SmallBusiness who are the people of America. The colorsof the people shall be Red, White, Black, Brown,and Yellow; and the arrangement shall be only asappropriate for the piece of art.

Resolution 4

Whereas, it has been several decades since anynational administration has focused upon the role ofSmall Business in the American economy; andwhereas, President Carter is the first President ofthe United States to call a White House Conferenceon Small Business; and whereas, the delegates tothis Conference represent the largest gathering everassembled to review, discuss, and seek solutions tothe problems of Small Business in America; andwhereas, the delegates, after careful deliberation,have drafted proposals and recommendations toguide future growth and prosperity of Small Busi­ness in this nation; therefore,

Be it resolved that the delegates to the White HouseConference on Small Business congratulate andsupport the efforts of the President for changing theclimate for Small Business within the government,for calling this Conference, and for his accomplish­ments and hopes for bettering the Small BusinessCornmunity of America.

56

The 15 Top-Priority Recommendations

(b) Congress shall exercise line-item veto overregulations within a specified time through con­gressional oversight committees, with one-housefloor vote.

17. (675 votes) Reform the Social Security Systemby including, where constitutionally possible, allpublic and private sector employees as contributorsand more closely tie benefits to contributions tomove the system toward actuarial soundness. Limitbenefits to the original old-age and survivors bene­fits. Freeze the tax base and tax rate at the January,1980 level. Eliminate double dipping.

11. (746 votes) Support and urge passage ofS.1860, the Small Business Innovation Act of 1979,and companion bill H.R.5607, aspresently draftedwith flexibility for minor future amendments, cov­ering: small business research and development set­asides; small business innovation and research pro­grams (as already encompassed by H.R.5126 andS.1074); patents; retention; amendments to theInternal Revenue Code; and regulatory flexibility.

5. (646 votes) Provide tax incentives in the form ofa new security called a Small Business ParticipatingDebenture (SBPD) to provide a source of capital forsmall businesses.

(a) Expenses incurred to educate small businessowners and operators regarding the management ofbusiness; and

(b) Expenses incurred to conduct continuingeducation and training and to provide on-the-jobentrepreneurship experience.

4. (681 votes) Provide for a tax credit for initial. investment in a srrall business, and permit deferral

of taxes for roll-overs of investments affecting smallbusinesses.

1. (1,129 votes) Replace the present corporate andindividual income tax schedules with more gradu­ated rate scales, specifying the graduated corporatetax scale up to $500,000.

41. (757 votes) Congress shall exercise its over­sight function with the assistance of the GeneralAccounting Office, instituting sunset reviews of alllaws, regulations, and agencies, to ensure that noneexceeds original congressional intent. Sunset re­views, in an appropriate time frame (not less thanevery five years), should include economic impactanalysis and proposed agency budget reductions,leading to re-enactment of each agency's enablinglegislation to permit its continued existence, or toreduce its size and cost. 47. (597 votes) The Office of Advocacy must be

(a) Establish a Regulatory Review Board com- maintained, reinforced and expanded so that ac­posed of representatives from the Executive tivity be not less than 5% of the SBA salary andBranch, Congress and small business owners, with expense budget. The legislative mission of Advo­responsibility for impact statements and cost . cacy must be considered the number one priority ofcontrols. SBA and the Office of Advocacy. The independ-

3. (799 votes) Revise estate tax laws to ease the taxburden on family-owned businesses and encouragethe continuity of family ownership.

16. (807 votes) Balance the Federal Budget bystatute in Fiscal Year 1981 by limiting total Federalspending to a percentage of the GNP, commencingwith 20% and declining to 15%.

2. (818 votes) Adopt a simplified acceleratedcapital cost recovery system to replace the presentcomplex Asset Depreciation Range (ADR) regula­tions, with provisions such as (A) immediatelyexpensing capital costs less than a specifiedamount, (B) immediately expensing governmentmandated capital costs, and (C) the creation of amaximum annual benefit that may be derived fromthe system.

60. Congress should enact legislation that wouldprovide tax credits or other tax incentives for:

vate business sector, existing agencies and existingorganizations.

54

small business from various regulations and re­porting requirements as well. All new regulationsshould be designed to take into account the size andnature of the regulated business. All present regula­tions should be reviewed to see if they are stillrequired.

45. When developing rules, forms and guidelines,regulatory agencies must consult with small busi­ness representatives from affected industries andadvocates assigned to each agency.

(a) Consult SBA Office of Advocacy and smallbusiness trade associations who should be givensufficient authority and time (90-180 days prior topublication of notice of proposed rule-making) toinfluence regulators if a proposed rule and/or formwould have an impact on small business.

(b) Such proposed rules should reflect less formaladministrative procedures for small business.

(c) Agencies make available timely informationand assistance, within 30 days in writing.

Economic Policy and Government Programs

46. Require that all government agencies whichdevelop fiscal, monetary, legislative and regulatorypolicies/practices shall submit small business "eco­nomic impact" statements that require the regula­tory agencies to identify the anticipated benefits andto justify the costs of Federal regulatory require­ments to small business. In addition, all regulatorypolicies shall be subject to sunset provisions to bereviewed every 5 years in order to ensure that onlycost effective regulations shall be maintained andretained in the future.

47. The Office of Advocacy must be maintained,reinforced and expanded so that activity be not lessthan 5% of the SBA salary and expense budget. Thelegislative mission of Advocacy must be consideredthe number one priority of SBA and the Office ofAdvocacy. The independence of that function of theOffice of Advocacy must be protected so that it maycontinue to have the confidence of the small busi­ness community. SBA's Advocacy budget shouldbe devoted to economic research and analysis, aswell as small business advocacy. Small businessadvocates, under the direct supervision of the SBAOffice of Advocacy, shall be assigned to OMB,Federal Reserve Board, Treasury, InternationalTrade Policy Committee and other regulatoryagencies.

48. The merger and acquisition anti-trust lawsshould be amended to: (I) inhibit monopoly andconglomerate growth of giant companies, providedsafeguards are built in to protect the needs of smallbusiness; (2) prohibit dual distribution that ad­versely affects wholesalers, distributors, dealers,retailers, and franchises; and (3) prevent the termi­nation or non-renewal of wholesalers, distributors,dealers, retailers and franchises without good legalcause.

49. The SBA should be directed to implement thefollowing changes:

(a) The duties of the Administrator of the SBAshall include the additional function of chairing anew group, within the Executive Branch, to beknown as the "Economic Policy Planning Commit­tee for Small Business" to advise the President ofsmall business matters. The new committee shallconsist of the following: high level representativesof the Department of Commerce, Treasury, andCouncil ofEconomic Advisors.

(b) The SBA Bank Certification Program shouldbe expanded so that the SBA can devote more of itsresources in terms of personnel and funding to smallbusiness advocacy.

(c) The Office of Advocacy must be maintained,reinforced and expanded so that activity be not lessthan 5% of the SBA salary and expense budget. Theindependence of the function of the Office of Advo­cacy must be protected so that it may continue tohave the confidence of the small business commu­nity. Small Business Advocates should be assignedto OMB, the Federal Reserve Board, the TreasuryDepartment, and regulatory agencies, under generalguidelines from the Office ofAdvocacy of the SBA.

50. Small business representation in economic andregulatory decision-making should be increased.This should include, but not be restricted to thefollowing steps by the President:

I. Seek the Counsel of the SBA Administratorand representative small business executives indeveloping policy.

2. Appoint a small business executive as a senioradvisor on the White House Domestic Policy Staff.

3. Direct that small business advocates be as­signed to the OMB, FRB, Treasury Department andregulatory agencies, under general guidelines fromthe Office of Advocacy at the SBA.

4. Appoint small business persons to all nationalboards, commissions and advisory committeeswhose work impacts on small business.

52

The SBA shall be responsible for utilizing the Pro­curement Automatic Selection System (PASS) andother Federal procurement source listings to imple­ment veterans' set-asides.

24. All legislation or regulations affording specialtreatment for women, minorities, the socially andeconomically disadvantaged or other specialgroups, should be amended to also provide priorityfor qualified veterans, including disabled veterans.Qualified veteran status alone shaIl entitle the vet­eran to equal treatment and inclusion in any suchcategory or class.

25. SBA regulations shall include all disabled and/or Vietnam veterans in their definition of "sociallyand economically disadvantaged. "

Federal Procurement

26. The Federal Government shall be required bystatute to contract out to small business those sup­plies and services that the private sector can pro­vide. The government should not compete with theprivate sector by accomplishing these efforts withits own or non-profit personnel and facilities. Smallbusiness generally-50% which shall include thefollowing: minority-owned businesses 15%; busi­nesses owned by women 10%.

27. Procurement agencies should break down largerequirements (including those for research and de­velopment) into smaller parts where feasible topermit solicitation from, and award to, smallbusinesses.

28. The Federal Government should contract outsupplies and services to private industry (particular­ly small minority business) and should not competewith the private sector either through the use of itsown personnel or through non-profit organizationssuch as the Federal Research Centers, educationalinstitutions or other non-profit entities.

29. The Office of Federal Procurement Policyshould develop a new set of procurement regula­tions applicable to procurements under a specialamount from all businesses. This "second-tier"regulation should eliminate clauses, procedures,reporting requirements, etc., applicable to largesystems procurement which are currently imposedon small businesses, as well; and to the extent pos­sible, apply to subcontracts with small businesses.

30. Congress should adopt legislation establishingseparate mandatory goals for all federal procure­ments. and Federal funds or grants to states, local­ities, and public and private institutions on acontract-by-contract basis or agency-wide basis forsmaIl business (35%), minority-owned (Black, His­panic, Native American, Asian Pacific American orother racial minorities) businesses (15%), andwomen in business (10%).

Energy

31. The Federal Government should open publiclands to energy exploration and production underregulation which provide reasonable environmentalprotection with: (a) a 30% smaIl business set-aside;(b) fixed time limits for statutory environmentalanalysis; and (c) a 5-year limit on lease terms toencourage rapid development.

32. Government must use any new tax incomefrom energy production and development for thefuture production and development of energy in theprivate sector, until the U.S. is energy self­sufficient. Small business should have tax exemp­tions and appropriate set-asides.

33. The U.S. Government shall encourage theirnmediate expansion of nuclear and coal-poweredelectric generating capacity. Research effortsdirected toward power technology should beexpanded.

34. Congress should encourage substantial directand investment tax credits for the implementation ofall forms of conservation and alternative energy.Additionally, investments of up to $150,000 peryear should be expensed.

35. Action should be taken to immediately removeprice and allocation controls 'on crude oil and allpetroleum products.

Women in Business

36. Private lending institutions should be requiredto provide equal access to cornmercial credit forwomen in business. The Federal Reserve Boardshould establish record keeping requirements forcommercial loans to women which will permit ef-

TheDelegates' 60 Recommendations

Capital Formation and Retention

1. Replace the present corporate and individual in­come tax schedules with more graduated rate scales,specifying the graduated corporate tax scale up to$500,000.

2. Adopt a simplified accelerated capital cost re­covery system to replace the present complex AssetDepreciation Range (ADR) regulations, with pro­visions such as (A) immediately expensing capitalcosts less than a specified amount, (B) immediatelyexpensing government mandated capital costs, and(C) the creation of a maximum annual benefit thatmay be derived from the system.

3. Revise estate tax laws to ease the tax burden onfamily-owned businesses and encourage the conti­nuity of family ownership.

4. Provide for a tax credit for initial investment in asmall business, and permit deferral of taxes for roll­overs of investments affecting small businesses.

S. Provide tax incentives in the form of a newsecurity called a Small Business ParticipatingDebenture (SBPD) to provide a source of capital forsmall businesses.

Minority Business Development

6. The President, by Executive Order, and Con­gress, by legislation, shall establish mandatorygoals for all Federal procurements and Federalfunds or grants to states, localities, and public andprivate institutions, on a contract-by-contract oragency-wide basis for small businesses (35%); mi­nority-owned (Black, Hispanic, Native American,Asian Pacific American, and other racial minorities)businesses (15%); and women in business (10%).

7. The President shall direct the Office of Man­agement and Budget (OMB) to establish, as part ofthe budget process, a formal reporting and goal set­ting system, requiring all departments and agencies

to specify and separately make public the resourcesthey plan to make available to small businesses,minority-owned (Black, Hispanic, Native Ameri­can, Asian Pacific American, and other racial mi­norities) businesses, and women in business. Thedepartments and agencies shall also be mandated topublicly report the levels of attainment of thesegoals.

8. Congress and the Executive Branch shall ensurethe effective implementation and enforcement of PL95-507 by adopting the following changes/recom­mendations: (I) requiring the law or implementingregulations to provide that the prime contractor setforth a narrative description of the sub-contract orsub-contract item; and (2) giving the AssociateAdministrator for Minority Business, within theSBA, the clear authority to enforce and monitorcompliance with PL 95-507.

9. Congress shall (I) adopt a SBIC and MESBICInvestment Tax Credit Act to provide a 50% taxcredit for corporations and individuals who invest inany issue of equity securities of SBICs and licensedMESBICs; and (2) authorize MESBICs to borrowlong-term loans from the 'Federal Financing Bank atsubsidized interest rates.

10. The President, by Executive Order, or Con­gress, by legislation, shall establish a NationalMinority Economic Commission to provide a cen­tralized focus to the Federal effort to assist minoritybusiness enterprise. This Commission, a majority ofwhich shall consist of non-government contractors,shall report directly to the President.

Innovation and Technology

11. Support and urge passage of S. 1860, the SmallBusiness Innovation Act of 1979, and companionbill H.R.5607, as presently drafted, with flexibilityfor minor future amendments, covering: small busi­ness research and development set-asides; smallbusiness innovation and research programs (as al­ready encompassed in H.R.5126 and S.1074);

50

TheConference Format

Beginning Monday morning, the delegates settleddown to the hard work of hashing out differingopinions and shaping recommendations.

As in the caucus format, each delegate chose twoissues on which to concentrate. The delegates firstattended panel discussionson individual issues. Thepanels were moderated by delegates and featuredtop-level federal officials in policymaking or regu­lation, who aired their perspectives on the issuesand described current legislation and other govern­ment initiatives already under way. Then the dele­gates broke up into workshop groups of not morethan 40 to debate options and to discuss theirpolitical and economic feasibility-sessions that ranmorning and afternoon for two days.

Later, hundreds of delegates worked into theevenings at extra sessions on two special topics.One was on defining what a "small" business is,the other on ways to implement post-conferenceactivities.

Both groups submitted resolutions at the closingplenary session that were overwhelmingly adopted.The resolutions process afforded delegates a way tobring ideas before the Conference that did not fallnaturally into any of the 12 issue areas. In the end,the Conference passed 11 resolutions (page 57).Public forums were held each day, as well, for non­delegates who wished to contribute comments orrecommendations but who could not take part in thedelegate proceedings.

Interspersed among the delegates' labors were avariety of other events. Luncheon speakers includedsuch distinguished officials as Deputy CommerceSecretary Luther H. Hodges Jr., Treasury SecretaryG. William Miller, Senator Nelson, and Alfred E.Kahn, Advisor to the President on Inflation.

In their free moments, the delegates could strollthrough the White House Conference Exposition,65 booths set up by 43 private and government ex­hibitors with information on everything from metricconversion and international trade to ways to workeffectively through the federal bureaucracy.

Numerous receptions for delegates were held inthe evenings. The most stunning of these were awine-and-cheese reception at the internationally­renowned Corcoran Gallery of Art, which broughtdelegates together with members of Congress and

their staffs in an informal manner, and a special tourof the White House personally hosted by RosalynnCarter.

T he Final Ballo.lng

Tuesday night the workshop moderators gatheredfor long, intense negotiations to put together thefirst round of ballots for the next morning's issue­synthesis sessions.

At those meetings, the delegates involved in eachof the issue areas voted for their five top-priorityoptions. Because most delegates had concentratedon two issues, the synthesis sessions were repeatedto permit voting on both topics. The ballots fromboth sessions were then rushed to on-site computerterminals provided by Control Data.

The results: Five top recommendations in each of12 issue areas, or 60 recommendations altogether.

A new ballot was then printed so that all thedelegates could, at Thursday's closing plenary ses­sion, vote for the 15 recommendations they feltrequired the government's immediate attention.

The national media watched this process withfascination. More than 350 newspaper and maga­zine reporters covered the Conference, generatingmore than 3,000 articles. Radio interviews andassessments of the Conference reached an estimated40 million listeners. The three major televisionnetworks broadcast news of the Conference to anational audience that was unmeasurable.

Delegates' comments in press articles conveyedtheir sense of achievement. The Wall StreetJournal, for example, quoted Mary E. Deiner, headof North Carolina's 39-member delegation, on theConference process in this fashion: "It may havestarted out as one of the most beautiful publicrelations schemes for an election year, but it hasturned into a much greater force.... " Thomas R.Moorhouse, a delegate from Minnesota, toldanother paper that he was "amazed that the averageguy can have input into the decision-making proc­ess." Clay McGowan from Chico, California,echoed that sentiment. "Big business has hadplenty of representatives," he said. "Now it's timefor small business. Business people have finally

46

••Logistics hadto accommo­date caucuses for 57 delegationsand 67 simultaneousworkshops. "

By Number of EmployeesFewer than 5 271 12.8%nproffl"ot-.........ates5-24 632 30.025-49 314 14.950-100 231 10.9More than 100 321 15.2Unknown 341 16.2

As delegations began arriving in Washington for thestar! of the Conference, it was clear that interest in By Type ofBusinessthe proceedings was enormous. Not only was it the Manufacturing 384 18.2%largest White House conference ever held, it was Wholesaling 128 6.1also the most logistically complex. Most of the Retailing 271 12.8activities were to be held at the Washington Hilton, Service 855 40.5but the total number of people attending the Confer- Construction 105 5.0ence was so huge---more than 5,000 altogether- Agriculture 21 1.0that numerous workshops, luncheons, and other Other 163 7.7meetings had to be held at the Sheraton Wash- Unknown 183 8.7ington. The arrangements had to accommodate notonly caucuses for 57 different delegations but also By Race67 individual workshops running simultaneously for White 1,396 66.2%two days. Black 333 15.8

The delegates came from all areas of the country Hispanic 72 3.4and represented all categories of industry. Some of Other 35 1.7them owned businesses with as few as one or two Unknown 274 12.9employees, while others had more than 100. Serv-ice companies were the most heavily represented, By Sexreflecting the strong service orientation of Small Men 1,766 83.7%Business as a whole. In addition, some delegates Women 329 15.6came from state and local governments, trade and Unknown 15 0.7

44

papers. Then, early in December of 1979, the headsof all the delegations met in New York, where theyreviewed and subsequently endorsed both the issueagenda and the Conference procedure. The NewYork meeting proved to be crucial to the later suc­cess of the Washington Conference, for the dele­gates gained for the first time a clear sense of whatcould be achieved.

professional organizations, and universities. Thefollowing is a profile of the delegate body preparedby Weems & Co.

Total delegates: 2,110

Number of PercentDelegates ofTotal

delegates debated, amended, deleted, and combinedthose options to produce their final 60 recom­mendations.

The Conference itself was not a back-slapping,partying sort of convention. It was a hard-workingfive days from Sunday afternoon registration onJanuary 13, 1980, through the closing plenary ses­sion on Thursday, January 17. Delegates spent longhours in workshops, hammering out proposals forspecific legislative and executive actions touchingeverything from obscure tax provisions to federalspending and staffing policies. Deliberations con­tinued into the evenings with informal caucuses andlobbying. Many delegates burned the midnight oilworking on amendments, drafting resolutions, andnegotiating alliances in the true spirit of nationalpolitical action.

In the end, they produced sharply-focused pro­posals in 12 areas of major concern: capital forma­tion and retention; inflation; federal regulations andpaperwork; innovation and technology; energy;federal procurement policy; minority businessdevelopment; women in business; veterans in busi­ness; international trade; education, training, andassistance; and federal economic policy and gov­ernment programs. They also learned a great dealabout how Washington works. And they discoveredthat ranking bureaucrats, Senators and Congress­men, agency heads, and White House staffers werereceptive to their views.

When the final Conference sessions ended andthe delegates left Washington, it was with a solidsense of achievement and a deterntination to keepbuilding upon their new-found unity. Many dele­gates now are enthusiastically organizing ways tocontinue pressing their interests at state as well asfederal levels. If Small Business can keep thatmomentum going, the 1980 Conference may cometo be regarded as the birthplace of a new politicalforce in the nation.

T he Origins ofthe Conference

The concept for a national conference to air SmallBusiness grievances and to develop constructiveproposals from small-business people themselvesgrew out of conversations in Wisconsin betweenSenator Gaylord Nelson (D-Wisc.), who chairs theSenate Select Committee on Small Business, and

Jimmy Carter during the 1976 Presidential cam­paign. On April 6, 1978, the White House issued apress release (Appendix A) and set the conferencemachinery in motion by announcing that:

The President will call a White House Con-ference on Small Business to be held m-w~as=h~----Iington. . .. TIle week-long conference willbring together sS~veral hundred representativesof small. business from across the country, tobe selected during regional meetings.

President Carter elucidated the idea further in aletter to Senator Nelson:

I believe such a conference can help us identifythe many special problems facing small busi­ness and design an agenda that addresses themin a constructive way. As you know, the 14million small businesses represent a muchlarger part of our economy than is commonlyrecognized.

(

A month later, the President issued ExecutiveOrder 12061 establishing the Commission. A Con­ference staff was assembled and organized accord­ing to three basic functions-research, delegaterelations, and logistics, plus smaller teams to handlepress and congressional relations (Appendix G).The President designated A. Vernon Weaver, Ad­ministrator of the Small Business Administration, tooversee the activities on the President's behalf.

To meet the President's charge that recommenda­tions come from small-business people rather thanfrom academic or government circles, 57 regional

42

40

__ The Fed should welcomeany opportunity to tilt credit moretoward production instead oftoward consumption. "

PL 95-507 contracts currently may include bonusincentives for prime contractors if they meet theirsubcontracting targets. The Office of Federal Pro­curement Policy should institute correspondingdisincentives that penalize prime contractors whofail to meet their targets. Further, a prime contrac­tor's track record at meeting targets should weigh inthe calculation of profit margins on subsequentcontracts.

The Commission would like to press one furtherrecommendation on behalf of women entre­preneurs.

Recommendation: Extend the enforcement provi­sions of the 1974 Equal Credit Opportunity Act tocommercial lending in order to help women obtainfinancing for their own businesses.

The biggest problem for women in business is, asit is for other small-business people, obtainingcapital. As numerous studies have shown, however,women face more difficulties getting bank loans dueto the small amounts requested and to loan officers'insufficient exposure to women in business.

The Equal Credit Opportunity Act was intendedto give women equal access to bank credit. But theFederal Reserve Board has construed the Act toapply largely to consumer loans. It should apply to

,commercial loans as well. The Fed should welcome! any opportunity to tilt credit more toward produc­,tion instead of toward consumption.

P ubi'" PoilCymaking

The owners of America's small businesses arelearning that they must participate more in theformulation of govemment policies to make theirviews known for the benefit not only of Small Busi­ness but of the nation as a whole.

Goal 6: Provide channels to institutionalize SmallBusiness' voice in policymaking at both federal andstate levels.

Small Business should, as the Conference dele­gates pointed out, have representatives at manyfederal agencies. The most significant step, in theCommission's view, would be the following:

Recommendation: The President should appointthe SBA Administrator to the Executive Committeeofthe Economic Policy Group.

The Economic Policy Group is the Administra­tion's highest advisory body on overall economicissues. Its membership currently includes theCouncil of Economic Advisors, the Advisor to thePresident on Inflation, the heads of the Treasury,

36

Recommendation: Allow small companies to poolresources to form jointly-owned American ExportTrading Companies.

American Export Trading Companies wouldprovide economies of scale by consolidating ware­housing, shipping, freight forwarding, and otherservices. They would supply international marketresearch, advertising, insurance, legal assistance,and expertise on overseas fmancing and foreign cur­rency exchange. They would handle foreign orders,payments, and all manner of documentation, in­cluding foreign permits and licenses.

The tax measures and antitrust exemption neces­sary to create such companies are included inS.2040 and S.1663.

Mi_ies and Women

• Although they form 20.2% of the V.S. popula­tion, members of disadvantaged minority groupsowned only 4.3% of all V.S. businesses as of 1975.Minority-owned enterprises accounted for only0.7% of all business receipts."• Women comprise 48% of the nation's work force;but as of 1977 they owned only 4.8% of all busi­nesses, according to figures from the CensusBureau. Women's enterprises accounted for a mere1% of business receipts-and almost half of allwomen-owned businesses generated less than$5,000 in sales per year.

The difficulties facing women, minorities, Viet­nam veterans, and others are largely attitudinal, andmany of their battles for fair and equal treatment arebeing fought on battlefields other than Small Busi­ness. Nevertheless, the Commission feels that thegovernment must open more opportunities for themunder the free enterprise system, for the nationneeds their fresh thinking and energy in entrepre­neurial pursuits.

Goal 5: Employ procurement and credit measuresto assist groups who have found it difficult to getinto business.

Federal procurements and grants to states andmunicipalities provide a tool for achieving impor­tant economic and social goals. The Commissionbelieves that this tool-which involves both directcontracts and subcontracts with prime contractors-

should be used to develop small enterprise in gen~

eral, but particularly to help women and minoritiesin business.

Section 211 of Public Law 95-507 took a giantstep in the right direction. It requires federal con­tractors to provide an acceptable plan for subcon­tracting to small and minority enterprises before aprocurement contract is awarded. The delegates tothe White House Conference, however, were ve­hement in their contentions that Section 211 is beingneither implemented nor enforced-and indeed,congressional oversight hearings have revealed thatsince the law was enacted in October, 1978, federalagencies have awarded at least $8.8 billion in con­tracts to prime contractors who have not compliedwith Section 211.40

Because women do not constitute a minoritygroup, PL 95-507 does not specifically includewomen under its provisions. Thus Congress shouldpass a separate amendment to the 1953 SmallBusiness Act to give women-owned businesses fairopportunities to fulfill direct federal contracts and toprovide incentives to federal prime contractors forsubcontracting with women-owned companies.

The delegates also voted heavily for amendingSection 211 to apply to federal grants to states andmunicipalities as well as to procurements. Thatwould shift some of the responsibility for encour­aging small and minority business from the federalgovernment to the local entities that receive federalfunds. It would bring small and minority businessowners into direct contact with state and local offi­cials, which would increase their procurement op­portunities and draw them into local governmentprocesses. And as these companies grew, theywould help reduce local unemployment and expandthe revenue base for state and local entities.

Based on the ineffectiveness of Section 211 sofar, the delegates strongly endorsed mandatorygoals. Voluntary and good faith efforts, they rea­soned, do not work: Procurement authorities viewvoluntary goals as ceilings, but mandatory goalsmust necessarily be viewed as floors-minimumlevels that must be attained. The delegates recom­mended that 15% of all procurement and grantdollars should go to minority businesses, 10% towomen-owned businesses, and 35% to other smallbusinesses.

The Commission endorses all of the delegate rec­ornmendations in principle. The levels of the man­datory goals, however, seem unrelated to availablecapacity in the small-business community or to anyspecific period of time. Also, federal procurements

34

32

E duc at ionand ManagementAssistance

Most people who go into business for themselvesare initially inexperienced about business principlesand practices. According to Dun & Bradstreet, 50%of all business failures are due to management de­ficienciesv-s-lack of planning, inadequate controls,poor accounting, and an inability to read and under­stand financial statements.

Goal 3: Encourage private-sector initiatives toimprove Small Business managementand entrepre­neurial skills in order to reduce failures andimprove productivity.

Sophisticated business-school programs aremostly devoted to training executive talent for bigcorporations, while government and academic pro­grams for Small Business, as small-business peopleperceive them, are often more theoretical than prac­tical in an operating sense. The message from theConference delegates was loud and clear: Theywant practical assistance on the local level fromsuccessful business men and women in the privatesector.

Recommendation: The SBA should coordinate thedevelopment of private-sector, self-sustaining, for­profit Small Business Resource Centers by settingup pilot projects in a limited number of cities in1980 and 1981.

The pilot projects should be located in differentregions around the U.S. They would develop a con­sortium of private interests around existing smallbusiness organizations such as chambers of com,mercealong with such national, regional, and localassociations as the National Federation of Inde­pendent Business (NFIB), the National SmallBusiness Association (NSBA), the IndependentBusiness Association of Wisconsin (IBAW), theSmaller ·Business Association of New England(SBANE), and Cleveland's Council of SmallerEnterprises (CaSE).

Because of strong mutual interdependence, thereis every reason for business people to learn to helpeach other. Among big companies that might join aconsortium to start Small Business Resource Cen­ters are national and local accounting firms; man­agement consultants; computer service companies

that can package inventory and cost control, budget­ing, payroll, and other services for groups of smallcompanies; big manufacturers who depend on largenumbers of suppliers or component subcontractors;packaged-goods producers, credit card companiesand the like, who have an important stake in seeingthat small retailers are well-managed; insurancecompanies; venture capital firms; companies thatcould benefit from productivity technology; andcompanies on the lookout for new products.

The Resource Centers should act as clearing­houses for information and assistance on a completerange of problems, from raising seed capital and

. obtaining performance bonds to learning what pro­curement and export opportunities are available.They should'help women and minorities and aidnew entrepreneurs as well as existing small­business owners. As the Commission envisionsthem, the Small Business Resource Centers wouldnot compete with but complement the SBA's cur­rent Small Business Development Center program(page 90).

International Trade

Goal 4: Promote Small Business opportunities insuch areas of critical national priority as interna­tional trade, new energy sources, and innovativetechnologies.

The Conference delegates devoted considerableattention to the problems of high-technologycompanies. One of their recommendations urgedCongress to pass S.1860, the Small Business Inno­vation bill, and its companion bill in the House,H.R.5607, to help innovative and high-technologycompanies in a wide variety of ways (page 71). Fewdelegates paid much attention to international trade,however, which indicates how unfamiliar small­business people are with export opportunities.

The Commission feels that policymakers shouldemphasize international trade heavily in the comingdecade. U.S. exports equal only 7.5% of GNP, thelowest percentage of any industrial nation. Exportsshould rise to at least 12% of GNP by 1990, theCommission believes, and Small Business shouldcontribute a great deal to that increase. According­Iy, the Commission wishes to focus on stimulatingsmall companies to export.

••Requirements are devel­oped to regulate large companieswithout understanding how smallcompanies differ.,~

ernment regulation is essential for maintaining anorderly society. Butthere are now 90 agencies issu­ing thousands of new rules each year.32 Dr. MurrayL. Weidenbaum of Washington University's Centerfor the Study of American Business calculates thatU.S. businesses spent $97.8 billion in 1979 tocomply with federal requirements."

There are no precise figures for small businesses'share of the cost. But Dr. Weidenbaum and hiscolleague, Kenneth Chilton, in a new study entitled"Small Business Performance in the RegulatedEconomy, .. note that:

A great deal of government regulation hasdisproportionately adverse effects on smallbusiness.

One of the most serious threats to the con­tinued existence of small firms is the require­ment for major capital expenditures to meetenvironmental or workplace safety standards.Less frequent, but no less serious, are regula­tions that reduce the market for a firm'sproduct, such as a ban on a product, or a per­formance standard that precludes the use of theproduct for its normal market application."

The problem is largely that requirements aredeveloped to regulate large companies withoutunderstanding how small companies differ. As theChilton/Weidenbaum study points out, small com­panies rely on short-term borrowings to financetheir operations, which severely restricts theirfinancial ability to meet regulatory requirements.And they do not have the same ability to absorb thecosts by raising prices. The study cites this example:

If a large company has access to bond marketsand borrows one million dollars to meet regu­latory capital expenditures at a 10 percent rate,the annual amortization of principal plus inter­est on a 20-year bond would amount to approx­imately $96,500 a year. The same amount of

money borrowed by a small finn 011 a lO-yearterm loan basis at a 15 percent rate wouldrequire principal and interest payments of$193,000 a year--<1ouble that of the firm withaccess to bond markets. Furthermore, thesmall firm does not have the same ability topass along those increased costs to the con­sumer. The large firm with large productionquantities and less than proportional regulatorycosts can pass along its increased costs with asmall increase in unit pricing. In other words,capital expenditures mandated by governmentregulation produce artificial "economies ofscale. "

Particularly in manufacturing industries, regula­tion promotes economic concentration and some­times forces small companies out of business. Oneexample in the Chilton/Weidenbaum report is thefoundry industry, which produces castings for capi­tal equipment. It is a Small Business industry com­posed of 4,200 companies, 75% of them with fewerthan 50 employees. From 1968 through 1975, atleast 350 foundries shut down. In a survey of manyof those companies, 34% "cited EPA (Environmen­tal Protection Agency) regulations to be partly ortotally to blame for the closing of the firm. "35

The paperwork that goes with regulation is also amajor drain on small-business owners' ·time andenergy. Overlap and duplication are rampant. Someagencies require separate reports for local, regional,and federal offices. Unlike large corporations, mostsmall businesses cannot staff batteries of lawyers,accountants, and clerks to fill out forms and to deci­pher masses of rulings. As the Advisory Committeeon Industrial Innovation stated in a recent report forthe Commerce Department"

It is virtually impossible for the strugglinginnovator to comply with the never-endingforms, mandated reports applications, investi­gations, inspections, permits, licenses, stand-

30

Recommendation: Devise a simplified and accel­erated Small Business Asset Recovery System togive small, independent companies more equitabledepreciation deductions.

The Conference delegates' second most popularrecommendation addressed the problem of retainingcapital from a different angle-by speeding up andsimplifying depreciation schedules.

The Jones-Conable bill presently before Con­gress, the so-called "10"5"3" proposal, wouldspeed up writeoffs and simplify the present morassof depreciation rules by instituting a lO-year write­off for structures, a five-year period for capitalequipment, and a three-year period for autos andtrucks.

The delegates came close to endorsing this billbut chose a more general wording because they feltthe proposal, as written, would benefit capital­intensive companies more than small businesses,which are often labor intensive.

Both the delegates and the Commission arestrongly in favor of simplification. The need, as theCommission sees it, is for an asset recovery plantailored specifically for Small Business.

Further, the Commission believes that the grow­ing obsolescence of America's plant and equipmentis an alarming problem that requires prompt atten­tion. The idea that depreciation provides sufficientfunds to replace aging and obsolescent plant andequipment has been made ludicrous by inflation. Inthe Commission's view, a complete overhaul of theapproach to depreciation is desperately needed tobegin restoring the nation's productive capacity.

The Conference delegates, in stressing capital re­tention, spoke for successful small-business ownersalready established. Considering the long-termstrategic requirements for the Small Business Econ­omy, however, the Commission feels that encour­aging initial capital investment is equally critical.

To this purpose, the Commission makes threerecommendations, two from the delegates' list andan additional one. None of the three should produceany significant revenue loss for the Treasury. All ofthem would encourage equity-type investment, Andall should be adopted immediately.

Recommendation: Provide a tax credit for directequity investment in new small business corpo­rations.

Because of the high inflation rate, most sophisti­cated investors are increasingly looking for immedi-

ate tax advantages. This tax credit would work inthe following hypothetical manner: An individualwho buys shares in a qualified new stock issue,offered publicly or privately, would deduct from hisor her income tax that year up to 10% of the invest­ment or $750, whicheverproved smaller.

Such a credit would provide an incentive forinvestors and would help balance small companies'excessive debt/equity ratios. The credit would applyonly to direct investment in a company. It would notapply to purchases of shares on stock markets, orpurchases of shares in what are called "secondary"offerings made by existing investors in a company.

The Conference delegates included this recom-o mendation among their 15 top-priority measures.Three Senate bills, S.655, S.487, and S.3975,advocate such a credit for investment.

Recommendation: Permit Subchapter S compa­nies to have up to 100shareholders.

Under Subchapter S of the tax code, qualifyingcorporations can pass net income or loss through tostockholders. As in a partnership, stockholders thenreport their portion of the income or loss on theirindividual tax returns. This elintinates double taxa­tion of corporate income and perntits shareholdersto deduct corporate losses against personal income.

At present, however, Subchapter S companiescannot have more than 15 stockholders, whichseverely restricts their use for new companies. Byexpanding the limit to 100shareholders, this vehiclecould attract a great deal of capital for a widevariety of new enterprises.

The Subchapter S structure is particularly adapt­able to innovative new companies in high technol­ogy fields. These companies typically have largeresearch and development costs in their early yearsbut, unlike big corporations, have little or noincome to deduct them against. As a Subchapter Scompany, they could pass R&D costs on to share­holders and compete more equitably with maturecompanies.

An expansion of the Subchapter S limit on share­holders is recommended by Senate bill 2168.

Recommendation: Provide certain tax incentivesfor a new security known as a "Small BusinessParticipating Debenture" (SBPD).

Although awkwardly named, SBPDs wouldcombine the best characteristics of debt with thebest characteristics of equity to overcome numerous

28

tt. Small businesses arebeing ravaged by both the illnessand the cure-both inflation andmeasures to fight it. ."

The first involves the nation's dwindling pool ofsavings. The second is the question of where smalland new companies can get loans or find seedmoney by selling shares of stock. The third is howexisting companies can retain more earnings forreinvestment-which in tum expands the savingspool.

When people or companies save, their money isreinvested to develop new resources and industrialcapacity. They retain a portion of old wealth tocreate new wealth in a constantly replenishingcycle, much as a farmer retains part of his crop fornext season's seed.

That cycle has come to a near halt, however, andcapital formation has become a national crisis. Pub­lic savings reached an unprecedented low of 3.3%of disposable income during the fourth quarter of1979.30

As in the case of any resource, scarcity touchesoff a pushing and shoving match, and small busi­nesses are being shouldered out of the arena. Thepast decade's roller-coaster fmancial markets, theconcentration of capital in giant, conservatively­oriented investment institutions, and the decline inthe number of regional brokerage firms have allcontributed to reducing the capital available to smallcompanies. Investors, squeezed by inflation andhigher tax brackets, are intent on fmding immediatetax benefits and on preserving capital rather thanrisking money in new ventures or even in conven­tional investments. Many of the largest banks areconcentrating on large loans to large corporations,because small loans are simply too costly to processand service.

Inflation is also squeezing small companies' cashflows by pushing up costs, inflating the value ofinventories, and expanding accounts receivable.Small companies' traditional recourse is to borrow,but current credit policy has pushed interest rates tohistoric highs that few small companies can afford.

In short, small businesses are being ravaged bothby the illness and by the putative cure: by inflationand by the Federal Reserve Board's measures tofight inflation. And small companies have neitherthe internal resources nor the access to national andinternational money markets that big companieshave to fall back on.

Goal!: Equalize the tax burdenson Small Businessrelative to large corporations in order to increasenew-business starts and to supply existing smallcompanies with more retained earnings for re­investment.

26

jI

II

I

\

"

24

22

The Potential for Ex......

Figures from the Department of Commerce" showthat only 8.3% of the nation's 300,000 manufac­turers export regularly, and a tiny fraction ofthose-about 1,900 companies-account for 84%of U.S. exports. In Commerce's view, at least20,000 small companies that are not exporting nowcould easily sell their products overseas.

U.S. trade deficits, meanwhile, have rangedduring the past three years from $24.7 billion toalmost $29 billion, the highest in our history." U.S.exports as a share of GNP are only 7.5%, the lowestof any industrial nation.

Small producers offer unique characteristics forinternational trade. They produce a great variety ofproducts, often of exceptionally high quality. Theycan penetrate small markets and profit from them inways that large companies fmd difficult. They aremore flexible in meeting foreign customers' specialpackaging and labeling requirements. Because theyare smaller and more entrepreneurially oriented,they can adapt more quickly to fluctuating marketconditions.

But few small producers consider exporting, be­cause the U.S. market has always been huge andhungry enough to absorb everything they couldproduce. The mechanics of international trade-notto mention the languages and currency exchangerates-seem forbidding and complex, while learn­ing about markets and financing opportunities isdifficult. Federal foreign-trade programs, forexample, are scattered among seven differentagencies, each with its own bureaucratic maze. Andunlike many nations, the U.S. has never providedincentives to small companies in the form of sub­sidies, tax credits or deferrals, or as in Japan, directsales help.23

Many small producers have long believed that theExport-Import Bank required applicants for exportfinancing to meet sales minimums far above thecapacities of small firms. Eximbank, however, hasdeveloped new programs specifically for smallcompanies, as has the Overseas Private InvestmentCorporation (OPIC), which counsels and providesfinancial aids for direct investment in developingcountries. With the Commerce Department and theSmall Business Administration, Eximbank andOPIC have been staging a series of InteragencySmall Business Export and Investment conferences

••By the standard of com­petitive grit and efficiency, smallcompanies represent the mostproductive use for capital. "

slowed. II As for the private sector, data fromFortune Magazine show that the nation's 1,000largest corporations contributed only half of 1% ofthe new jobs created from 1969 to 1976. Mediumand large businesses together accounted for about9% of the total, or 13.3% of the private sector'sshare.

In the same period, businesses with fewer than500 employees generated 86.7% of the private sec­tor's new jobs, and the majority came from verysmall companies. A study> of Dun & Bradstreetrecords by MIT's David Birch shows that 66% ofemployment growth came from businesses with 20or fewer employees. And most of those companieswere less than five years old-that is, fresh entre­preneurial ventures.

At the start of the 1970s, the Bureau of LaborStatistics' count of unemployed Americans stood at2.8 million, or 3.5% of the work force. Today, inthe early months of the 1980s, some 6.3 millionpeople are unemployed-more than double thenumber a decade ago-and the rate is 6%.13 Clearly,the nation's producers are not creating enough newjob opportunities.

If we are to achieve anything approaching ahealthy level of employment for Americans in the1980s, the leverage for public policy lies in spurring

, entrepreneurship and existing small companies. Theneed for new jobs will likely decline a bit in thecoming decade, but the problem is nevertheless abig one.

Population growth following the postwar "babyboom" has returned to more normal levels, and theinitial repercussions of women entering the work­force have passed. By current estimates, the U.S.will need 1l.8 million new jobs in the 1980s toaccommodate net increases in the workforce, plusanother 2.3 million to take up the slack of the 1970sand push the unemployment rate down to 4%, thelevel that most economists consider a healthy target.That adds up to 14. I million new jobs overall.

If the contributions from government and largecompanies continue at present levels, however,some II million new jobs will have to come fromSmall Business, or an average of 1.1 million everyyear.

To perform such a feat, Small Business needsthree things. One is the capital to create more andmore new businesses. Another is greater retainedearnings for existing small companies so they canreinvest and grow. The third is management train­ing to reduce the number of business failures.

Also, because small businesses are so rooted in

community and neighborhood life, they have al­ways been able and willing to provide jobs forteenagers, part-time workers, the elderly, and thedisabled, many of whom are not included in gov­ernment emplo~ment figures. But the current mini­mum-wage level of $3.10 per hour, plus severeinflation in other costs, has forced small-businessowners to cut back such hiring drastically. This hascontributed to rising economic and social problemsin many areas of the country. For the long-termhealth of the nation's communities, it may provewise to provide for flexible mininum-wage stand­ards to increase employment.

I nnovatlve Brilliance

Small Business receives an inequitably small shareof the government's $99.2 billion procurementbudget. That share has fluctuated from year to year,according to SBA figures." It was 17.2% in 1969,for instance. Today it is 22.2%.

But Small Business' share of research and devel­opment expenditures is another matter. Figurescompiled by the House Committee on Small Busi­ness> indicate that small-companies have beenreceiving less than 3.5% of federal R&D dollars,which totalled $28 billion in 1978. In some in­stances, R&D budgets border on the irrational.Experimentation in solar energy devices, forinstance, is almost the exclusive province of smallcompanies and individual inventors. Yet only 1.6%of federal funds for solar energy development wentto small concerns in 1979.16

On the other side of the ledger, Small Businesshas demonstrated incomparable innovative fertility.A National Science Foundation study'? disclosedthat, for every R&D dollar, small companies pro­duce four times more innovations than medium­sized companies and 24 times more innovationsthan large companies. As President Carter hasstated:

. there is a lot that can be done to channelresearch and development funds to the smallbusiness entities of America. We've done ananalysis that shows the Government gets amuch better return on its investment.

20

__Small regional companiesmay become more critical to thenation's health as big companiesbecome more internationallyoriented.~,

prices on world metal markets. Meanwhile, world­wide demand for U.S. agricultural produce is stimu­lating new opportunities in farming.

Small-scale entrepreneurs, who habitually re­spond to change and adapt far more readily than bigcompanies, are following the trend with new retail,service, and construction businesses---which in turncreate more employment opportunities to attractmore people.

This shift is leading to increasing regionalizationwithin the Small Business Economy. Furthermore,higher and higher gasoline prices will weigh againstnationwide distribution networks, which havefavored giant manufacturers, and will tend tobenefit regional distribution patterns and localproducers.

This regionalization is not according to states butto much smaller geographic areas. Working fromthe Bureau of Economic Analysis' 160 areas, DavidL. Birch, who heads the Massachusetts Institute ofTechnology's Program on Neighborhood and Re­gional Change, has so far distinguished 315 smallregions of relative self-sufflciencyv-c-t'islands," asBirch describes them, of economic cohesion thathave a minimal amount of trade and exchange fewworkers with neighboring regions.

Another trend that may add a significant dimen­sion to this picture is a shifting focus among manygiant corporations. Their growth during' the pastseveral decades has depended mostly on spiralingconsumer demand. But double-digit inflation anddwindling savings are corroding the underpinningsof consumer buying power. As Business Weekstated in its cover story dated January 28, 1980:

The appetite of the U.S. consumer for moreand more goods made this country's factorieshum, as well as those of Europe, Japan, andthe Third World, creating more than a quarter­century of unprecedented economic growth.

But the golden age of the consumer is over.. . . The American credo that each generationcan look forward to a more comfortable lifethan its predecessor has been shattered.

For that reason, many giant corporations perceivetheir prospects to lie in developing consumer mar­kets abroad. Their focus is on building facilitiesnear those markets. To the extent that large com­panies are generating new jobs and improving pro­ductivity, the benefits are accruing mostly incountries such as Korea, Taiwan, the Philippines,Mexico, and Brazil, to name a few.

18

-,

he Small Business Economy is so imbedded ineveryday existence that it is easily overlooked.Like the ecosystem of the proverbial pond, it ishard to see yet teeming and complex. There areabout 12 million small-business operations in theU.S.: or more than 97% of all American com­panies. Nine million are sole proprietorships,two million are corporations, and one million arepartnerships. They provide livelihoods for morethan 100 million Americans and account forroughly 40% of our gross national product.

But statistics hardly do justice to the diverseways that people depend on small concerns every day for goods and services.

Small enterprise runs the gamut from comer news-vending to developingoptical fibers. Small-business people sell gasoline, flowers, and coffee-to-go. Theypublish magazines, haul freight, teach languages, and program computers. Theymake wines, motion pictures, and high-fashion clothes. They build new homes andrestore old ones. They repair plumbing, fix appliances, recycle metals, and sellused cars. They drive taxicabs, run cranes, and fly helicopters. They wildcat foroil, quarry sand and gravel, and mine exotic ores. They forge, cast, weld, photo-

_engrave, electroplate and anodize. They also invent: antipollution devices, quality­control mechanisms, energy-saving techniques, microelectronic systems-a listwould go on for volumes.

Such operations typically are run by the people who started and own them.With a direct emotional as well as financial stake, owner/managers usually areinvolved in day-to-day operations. More often than not, they know their em­ployees' names and family concerns. They deal face-to-face with customers,suppliers, and neighbors every day and are accountable to them in ways that largecorporations rarely are. In addition, many owner/managers of small businessesbecome involved in community affairs, and more than a few of them go on toresponsible roles at state and federal levels.

Healthier Communities. As a result, small companies are deeply rooted in theircommunities, regions, and neighborhoods and are the most vital ingredients in thepulse and morale of local economies. Through their Personal ways of doing busi­ness, grocers, druggists, restaurateurs, apparel merchants, bakers, real estateagents, booksellers, and dry cleaners all weave together the fabric of communities'daily life and enrich that life with the diversity of their products and services.

The tighter the weave, of course, the tougher the cloth. A study of postwarindustrial concentration by the distinguished sociologist C. Wright Mills' contrasted

16

••The most importantmessage of the Conference is thatgovernment must playa reducedrole in small-businessactiVities.~~

• Federal policymakers should adopt supply-sideeconomic measures to fight inflation by encourag­ing Americansto save, invest, and produce.

As can readily be seen, these three objectives areinterrelated. The first, a larger role for SmallBusiness, is the Commission's overriding aim. Theother two objectives address imbalances in currentpolicy that must be altered to achieve the first.

With these objectives in mind, the Commissionalso feels that specific goals are important to focuspolicymaking in the coming decade. It has evolvedthese goals from the six major themes in theConference recommendations. Accordingly, theCommission proposes that the following six-pointprogram be developed for the Small BusinessEconomy:

Goal 1: Equalize the tax burdens on Small Businessrelative to large corporations in order to increasenew-business starts and to provide existing smallcompanies with more retained earnings for re­investment.

Goal 2: Eliminate or reduce onerous regulationsand reporting requirements that inhibit small com­panies' growth and in some cases threaten theirsurvival.

Goal 3: Encourage private-sector intiatives toimprove Small Business management and entrepre­

neurial skills, in order to reduce failures andimprove productivity.

Goal 4: Promote Small Business opportunities insuch areas of critical national priority as inter­national trade, new energy sources, and innovativetechnologies.

Goal 5: Employ procurement and credit measuresto assist groups who have found it difficult to getinto business.

Goal 6: Provide channels to institutionalize SmallBusiness' voice in policymaking at bothfederal andstate levels.

In preparing this report, the Commission en­countered two major difficulties that suggest howseriously Small Business has been neglected. One isa severe lack of reliable data. The Small BusinessAdministration (SBA) has begun to develop a database on Small Business, but much of it must bederived from 1977 census figures that the U.S.Census Bureau has not yet collated. Thus it couldbeseveral years before an adequate data base is avail­able. Only then can econometricians devise thestatistical microscopes and barometers necessary tomonitor the Small Business Economy accurately.

This state of affairs prompts the Commission toadvance at the outset one recommendation that itfeels is of paramount importance.

Recommendation: A thorough data base on SmallBusiness must be developed. The Commission urgesall government agencies to assist the SBA in thisproject. It also requests that the SBA be grantedformal authority to solicit assistance from theprivate sector to expedite the task.

The second difficulty that the Commission facedis related to the first. No standard measure of"small" is wholly satisfactory, for smallness variesbetween service and manufacturing sectors andfrom industry to industry. Some measures are basedon asset size, while others are based on sales or onthe number of employees. The SBA is trying todevelop industry-by-industry measures, not only of"small" companies but also of discernible sub­categories such as "micro" companies. In theinterim, the Commission adopts a general standard,unless otherwise stated, that small, independentcompanies are those that have fewer than 500 em­ployees and are not controlled by a bigger entity.

14

· protein development to biogenetics and gerontol­ogy-will create the frontier industries and newmarkets for the nation's next great expansionarycycle.

Indeed, under a balanced economic policy, SmallBusiness can transform the coming decade into oneof the great flowerings of entrepreneurial spirit inour history. Already, in towns and cities and neigh­borhoods across the continent, Americans are roll­ing up their shirtsleeves.

But initiatives must come quickly. The Commis­sion cannot stress this too strongly: The spirit ofindividual enterprise must be nurtured, not crushedby outdated policies. If it is crushed, the agonies ofeconomic readjustment for the nation in the 1980s,along with the much-discussed malaise in the na­tional will, can only be deepened and prolonged.The scars to the American psyche could, like thoseleft by the Great Depression, take a generation ormore to heal.

TheBirth.lght Eco........

The chief prerequisite of refocusing policy is toperceive that Small Business is not the lower part ofa single economic pyramid. The old notion thatpriming Big Business helps everyone, because thebenefits will "trickle down" through the pyramid,is not working. The reason is that the U.S. has, infact, evolved two economies.

One is of many small entities interwoven in thedaily life of neighborhoods and communities. Theother is of gargantuan organizations colliding innational and international spheres. The SmallBusiness Economy and the Big Business Economyinteract and intersect in innumerable ways. But theSmall Business Economy .is different in both prac­tice and culture.

Just as it is quicker to adapt to new trends, it isfirst to be hit by economic downcycles. It differs inits economic handicaps, financial difficnlties, andregulatory burdens. It differs in its personal ways ofdoing business, its accent on craftsmanship, its dis­tribution networks, its advertising media, and evenits life-styles, oriented strongly toward self-relianceand independence.

Small Business is, in a deep sense, our BirthrightEconomy. It is through individual enterprise that weseize those rights of liberty and opportunity that we

cherish--the freedom to take our lives into our ownhands and pursue prosperity by our own lights; thechance to take risks on our own behalf. And themore people who assume risk and responsibility,the more citizens there will be with a direct stake infortifying democratic government.

There has always been an analogy in the Ameri­can mind between competitive markets and demo­cratic processes, for both are healthiest when theyare open to the greatest variety of participants andideas. Both, as the framers of our Constitution andBill of Rights understood well, are founded on adiversity of decision-making and initiative.

That diversity is also the source of extraordinaryeconomic resilience. Two generations after ournation's birth, the French social philosopher Alexisde Tocqueville, the keenest observer of U.S. affairsin his day, ascribed the unique vitality of Americanlife to its "multitude of small undertakings. "

The knitting together of pioneer communities bytraders and merchants, the building of turnpikes andcanals, the initial stages of industrialization, eventhe growth of retailing and the great postwar con­sumer boom-all were sparked by the inventivenessand ingenuity of individuals. Time and againthroughout the past 300 years, it has been the cycleof resurgence in "small undertakings" that hasprovided the wellspring for the nation's growth.

AFra_- to. Policy

By taking the short view, government policymakershave lost sight of this regenerative process. Restor­ing the process is so vitally important to the nationthat it transcends the narrow concerns of specialinterest groups. It is essential to the well-being ofevery American, to large businesses as well assmall, and to the underpinnings of democraticgovernment.

An important step toward fostering the entrepre­neurial spirit is to recognize that Small Businessforms a distinct economy within the complex inter­actions of national commerce. A precedent can beseen in how government policymakers recognizedthat farming is different from other economic sec­tors. When they developed a wholly separate policyfor U.S. farming, they were able to turn the Ameri­can Agricultural Economy into the most astonishingproductive engine the world has ever seen. With an

12

two basic challenges--Americans must start pro­ducing again, and they must start saving again.

The members of the White House Commissionon Small Business share a deep conviction that thespirit of individual enterprise is our most vital re­source. A flourishing Small Business Economy isabsolutely essential if we as a nation are to ride outthe transitions of the 1980s. Small Business cangive our communities an even keel of economicstability. It can supply the bulk of the nation's newjobs. And it can incubate new formulas for thenation's growth.

Unfortunately, current economic policy weighsagainst it.

T he Double Tilt. Against Small Business

Government in recent decades has tended to viewAmericans as employees and consumers rather thanas entrepreneurs and producers, a philosophy ofcollectivism at the expense of individualism. As aresult, there are two fundamental imbalances inpostwar economic policy-a kind of double tilt that,largely through inadvertence, has permitted theclimate for small, independent ventures to deteri­orate badly.

One is a tilt favoring the nation's largest corpora­tions. The tax code, accounting principles, creditpolicies, procurement practices, export incentives,even business-school programs, have all evolvedover the years to support Big Business.

The other is a tilt toward managing the demandside of the economic equation to the neglect of thesupply side-alternately whetting and suppressingthe appetite to consume rather than quickening theadrenalin to produce.

A debate is currently raging among policymakersover "demand management" versus "supply man­agement. " Demand-side economists believe thatthe way to avoid recessions is to stimulate demandwith federal deficits, easy credit, and tax cuts forconsumers, while the way to fight inflation is toreduce demand through budget cuts, high taxes, andcostly credit. With inflation now at crisis levels, thisapproach clearly has not worked.

Supply-side economists emphasize productivity.They hold that the way to fight inflation is to reducethe costs of regulation, ease credit for productive

purposes, and cut taxes in ways that encouragesavings and investtnent.

Traditional economists view "productivity" as amanufacturing problem of leveraging a worker'soutput with machines and technology; that is,putting capital and fuel to work to make peoplemore productive. But that view developed whencapital and fuel were inexpensive relative to labor,and when the U.S. economy was based firmly onmanufacturing. The U.S., however, has becomeincreasingly service oriented, and capital and fuelnow are expensive relative to labor. These changesrequire new ways of understanding productivity:putting more people to work, for example, to makecapital and fuel more productive instead of the otherway around.

The issue, in the Commission's view, is not tojettison demand-side techniques for supply-sidemeasures but to integrate both under a policy thataddresses declining productivity and hyperinflationas two sides of the same coin. The Administration,the Congress, and the Federal Reserve Board havetaken some laudable steps in the right direction. Butso far the efforts have been tentative and frag­mented.

The priorities of policy must be reordered to en­courage Americans to replenish the nation's wealthinstead of squandering it. Small Business--which isheavily service oriented, labor intensive, and capitalpoor----possesses vast productive potential. What isneeded are fiscal and credit measures that re­emphasize savings and investment and that bringSmall Business' potential into full play.

Small_lness. Vital Roles

Small Business is critical to the nation in a multitudeof ways.

A vibrant interplay of numerous small enter­prises, for instance, would revive urban areas andprovide communities with the fiber and self­sufficiency to withstand national economic turmoil.

New and existing small companies in recent yearshave provided an astonishing 86.7% of the nation'snew jobs in the private sector'-a critical con­sideration at a time when government anti-inflationefforts are tempered by fears of creating massiveunemployment.

As has often been noted, small companies work

10

·.i ....awise and frugal go~ernment, .which~hCl'.1 restrain men.from injuring oJ:le another,

." .whichs"allJe~veth~motl'!e~isefree toregu~ .'I~letheit.oWQ'pUrslJit~ofill~u~tty·aildim- ; '. .

provement,·:and shall nortakefromtl'iemou,th. of labor thebreailltJat it has earn~d~'"

",' "{' -- ,

-Thomas Jefferson!801 Inaugural Address

8

CONTENTS7 COMMISSION REPORT ON THE SMALL BUSINESS ECONOMY

8 1. The ComingEntrepreneurial Decade10 The Double Tilt Against Small Business10 Small Business' Vital Roles12 The Birthright Economy12 A Framework for Policy

15 2. The SmallBusinessEconomy16 Healthier Communities17 Trends Toward Regionalization19 Generating New Jobs20 Innovative Brilliance22 The Potential for Exports23 Small Business' Dwindling Slice of thePie

24 3. The Commission's Goals and Recommendations25 Capital29 Regulations and Paperwork32 Education and Management Assistance32 International Trade34 Minorities and Women36 Public Policymaking