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This file contains:
Haldeman to Henry Day re:cabinet selections. 1 pg. [Letter], 12/10/1968
Haldeman to Elliott DeGraff re: Martin Anderson. 1 pg. (1 duplicate) [Letter], 11/27/1968
Haldeman to Joseph Di Fiore re: Cabinet. Pg. 1. [Letter], 12/10/1968
Haldeman to Joseph Di Nero re: administration. Pg. 1. [Letter], 12/10/1968
Haldeman to John Eisenhower re: dark ages. 3 pgs with attachments. [Letter], 1/6/1969
Haldeman to Charles Farrington Jr. re: invitations to the Inauguration. 2 pgs.with attachments. [Letter], 12/21/1968
Haldeman to James Foy re: foreign policy. 2 pgs. With attachments. [Letter], 12/16/1968
William Blakely to Harry Flemming re: administration. 3 pgs. With attachments. [Letter], 12/6/1968
Haldeman to Peter Flanigan re: Frank Markoe's resume. 2 pgs with attachment. [Memo], 12/13/1968
Haldeman to John French re: cabinet.1 pg. [Letter], 12/10/1968
Haldeman to Congressman Charles Gubser re: White House Fellows Program. 1 pg. [Letter], 1/21/1969
Haldeman to Bryce Harlow re: Small Business Investment Company Industry. 11 pgs with attachments. [Memo], 12/27/1968
From unknown to National Association of Small Business Investment Companies member re: support of Small Business Investment Company. 2 pgs with attachment. [], 9/26/1968
Nixon to Elliott Davis re: small business. 5 pgs. [Letter], 7/11/1968
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26126720
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WHSF: Returned, 31-4
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document
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1
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26126720
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title
WHSF: Returned, 31-4
description
This file contains:
Haldeman to Henry Day re:cabinet selections. 1 pg. [Letter], 12/10/1968
Haldeman to Elliott DeGraff re: Martin Anderson. 1 pg. (1 duplicate) [Letter], 11/27/1968
Haldeman to Joseph Di Fiore re: Cabinet. Pg. 1. [Letter], 12/10/1968
Haldeman to Joseph Di Nero re: administration. Pg. 1. [Letter], 12/10/1968
Haldeman to John Eisenhower re: dark ages. 3 pgs with attachments. [Letter], 1/6/1969
Haldeman to Charles Farrington Jr. re: invitations to the Inauguration. 2 pgs.with attachments. [Letter], 12/21/1968
Haldeman to James Foy re: foreign policy. 2 pgs. With attachments. [Letter], 12/16/1968
William Blakely to Harry Flemming re: administration. 3 pgs. With attachments. [Letter], 12/6/1968
Haldeman to Peter Flanigan re: Frank Markoe's resume. 2 pgs with attachment. [Memo], 12/13/1968
Haldeman to John French re: cabinet.1 pg. [Letter], 12/10/1968
Haldeman to Congressman Charles Gubser re: White House Fellows Program. 1 pg. [Letter], 1/21/1969
Haldeman to Bryce Harlow re: Small Business Investment Company Industry. 11 pgs with attachments. [Memo], 12/27/1968
From unknown to National Association of Small Business Investment Companies member re: support of Small Business Investment Company. 2 pgs with attachment. [], 9/26/1968
Nixon to Elliott Davis re: small business. 5 pgs. [Letter], 7/11/1968
citationUrl
collections
Richard M. Nixon's Returned Materials Collection
Returned White House Special Files
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yes
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26126720
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ocrText
Richard Nixon Presidential Library
White House Special Files Collection
Folder List
Box Number
Folder Number
Document Date
Document Type
Document Description
31
4
12/10/1968
Letter
Haldeman to Henry Day re:cabinet
selections. 1 pg.
31
4
11/27/1968
Letter
Haldeman to Elliott DeGraff re: Martin
Anderson. 1 pg. (1 duplicate)
31
4
12/10/1968
Letter
Haldeman to Joseph Di Fiore re: Cabinet. Pg.
1.
31
4
12/10/1968
Letter
Haldeman to Joseph Di Nero re:
administration. Pg. 1.
31
4
01/06/1969
Letter
Haldeman to John Eisenhower re: dark ages.
3 pgs with attachments.
31
4
12/21/1968
Letter
Haldeman to Charles Farrington Jr. re:
invitations to the Inauguration. 2 pgs.with
attachments.
Wednesday, February 27, 2008
Page 1 of 3
Box Number Folder Number Document Date
Document Type
Document Description
31
4
12/16/1968
Letter
Haldeman to James Foy re: foreign policy. 2
pgs. With attachments.
31
4
12/06/1968
Letter
William Blakely to Harry Flemming re:
administration. 3 pgs. With attachments.
31
4
12/13/1968
Memo
Haldeman to Peter Flanigan re: Frank
Markoe's resume. 2 pgs with attachment.
31
4
12/10/1968
Letter
Haldeman to John French re: cabinet. 1 pg.
31
4
01/21/1969
Letter
Haldeman to Congressman Charles Gubser
re: White House Fellows Program. 1 pg.
31
4
12/27/1968
Memo
Haldeman to Bryce Harlow re: Small
Business Investment Company Industry. 11
pgs with attachments.
31
4
09/26/1968
From unknown to National Association of
Small Business Investment Companies
member re: support of Small Business
Investment Company. 2 pgs with attachment.
Wednesday, February 27, 2008
Page 2 of 3
Box Number Folder Number Document Date
Document Type
Document Description
31
4
07/11/1968
Letter
Nixon to Elliott Davis re: small business. 5
pgs.
Wednesday, February 27, 2008
Page 3 of 3
December 10, 1968
Mr. Menry L. Day, President
Day Mines, Inc.
Wallace, Idaho 83873
Dear Mr. Day:
Thank you for taking time to express in a most concise
manner your feelings regarding the Cabinet selections
of the next administration. I have forwarded them to
the appropriate staff members and you can be assured
that they will be considered along with the other re-
commendations we have received.
Again, thank you.
Cordially,
H. R. Haldeman
Assistant to the
President-elect
HRH/mc
November 27, 1968
Mr. Elliott D. DeGraff
President
Ambionics, Incorporated
416 Southern Building
Washington, D. C. 20005
Dear Mr. DeGraff:
Thank you for your letter of November 20th.
I have forwarded it to Mr. Martin Anderson,
the head of our Research Department. I am
sure that he, or the appropriate member of
his staff, will be incoontact with you shortly
to further discuss your ideas.
Cordially,
H. R. Haldeman
Assistant to the
President-elect
HRH:jc
cc: Martin Anderson
December 10, 1968
Mr. Joseph E. Di Fiore
510 Southeast 13th Avenue
Deerfield Beach, Florida
Dear Mr. Di Fiore:
Thank you for your suggestions on the Cabinet. I
have forwarded them, along with those of several
others, to our people concerned in this area. I
am sure they will be appropriately considered.
Cordially,
H. R. Haldeman
Assistant to the
President-elect
HRH/mc
December 10, 1968
Mr. Joseph G. Di Nero
1347 Shakespeare Avenue
Bronx, New York 10452
Dear Mr. Nero:
Thank you for taking the time to write and express
your views and concerns on problems confronting the
new administration. We can assure you that we
share them.
Thank you too for expressing your best wishes to the
President-elect.
Cordially,
H. R. Haldeman
Assistant to the
President-elect
HRH/mc
January 6, 1969
Mr. John S. D. Eisenhower
Valley Forge
Pennsylvania 19481
Dear John:
Although you asked me not to answer your
letter of December 16th, I want to say that
your experiences in the "dark ages,' as you
call them, are most useful and helpful to us,
and I find that we keep turning back to the
procedures and people of those days as we
try to put this whole thing together.
I appreciate your emphasis of the necessity
of keeping a record of every conference with
the President, and I am sure you are absolutely
right in that we must find a way to do this
that fits with his method of working. One way
or another, we will find a way to do so.
Thanks very much again for your help and
very best regards.
Cordially,
H. R. Haldeman
HRH:ds
JOHN S. D. EISENHOWER
Válley Forge,
Pennsylvania 19481
16 December 1968
Mr. Robert Haldeman
Office of the President-Elect
THE PIERRE HOTEL
New York, New York
Dear Bob:
Thank you for your letter. Quite obviously every President
organizes his staff according to his own personality. Therefore our
experiences in the dark ages are useful as references only.
I would like to repeat one point, however: if you don't have
someone keeping a record of every conference with the President,
Mr. Nixon will later regret it. He will some 'day need these records
for his own protection and as references when he will inevitably
write his memoirs.
Please do not bother to answer. I have said my piece.
Sincerely,
John
JSDE: jht
cc: The Honorable Bryce Harlow
December 4, 1968
Mr. John S. D. Eisenhower
Valley Forge,
Pennsylvania 19481
Dear John:
Thank you very much for the memorandum regarding
the staff Secretariat in the White House. The outline
of how you operated, and the suggestions you have for
our upcoming operation, are most valuable. As you
well know, it is a monumental task trying to figure
out how best to approach this whole thing.
Because of a number of differences in the way Dick
works, I am going to have to work out a staff arrange-
ment somewhat different from what yours was, but
obviously the basic needs are the same.
Thank you again for writing. Hope to see you soon.
Cordially,
H. R. Haldeman
HRH:jc
December 21, 1968
Mr. Charles Farrington, Jr.
Vice President
National Environment Corporation
Union Bank Square
Orange, California 92668
Dear Charlie:
I am passing your letter requesting
invitations to the Inauguration to:
Mr. Robert McCune
Office of the President-Elect
Federal Office Building #7
Seventh & H St., N.W.
Washington, D.C.
Bob is handling the arrangements for
the Inauguration and will do all he can
for you.
Hope to see you soon. In the meantime
have a Merry Christmas.
Cordially,
H. R. Haldeman
Assistant to the
President-elect
HRH:ds
ee: Robert McCune
NATIONAL ENVIAGNMENT CORPORATION
UNION BANK SQUARE ORANGE, CALIFORNIA, 92668 CABLE: CLARCO TELETYPE 910-595-1566 (714) 547-9781
December 18, 1968
Mr. H. R. Haldeman
Office of the President-Elect
450 Park Avenue
New York, New York 10022
Dear Bob:
While I realize you are probably not directly involved in this -- and
therefore would prefer not to take up any of your time with it -- I would
appreciate your advising me as to how it would be possible to obtain invita-
tions to the Inauguration for both myself and my wife, as well as the
President of National Environment, Mr. Henry D. Clarke, Jr. and Mrs. Clarke.
Hopefully, my credits as a long-time working Republican and unwavering
Nixon supporter are well-enough established. I should tell you, though, that
Henry Clarke, while never involved in the "nitty-gritty" of Republican poli-
tical activity, has been a more than sufficient supporter in terms of
financial aid and comfort.
Thank you, Bob, for any help you can give me on this.
With warmest personal wishes, I am
Sincerely,
Charlie
Charles Farrington, Jr.
Vice President
CF:nad
December 16, 1968
Mr. James A. Foy
427 Seventy-sixth Street
North Bergen, New Jersey
Dear Mr. Foy:
Thank you very much for your letter suggesting that
we follow the foreign policy of the Johnson Ad-
ministration. However, each administration must set
its own course. This we intend to do.
Cordially,
H. R. Haldeman
Assistant to the
President-elect
HRH/mc
427 Seventy-sixth Street
North Bergen, New Jersey
December 10, 1968
Dear Mr. Holdeman:
As one of President Elect Nixon princple
aides I want to urge you to u E your influence
in have Mr. Nixon follow the foreign policy of
the Johnson administration.
President Johnson, Vice President Humphre:
and Secretary Rusk & Chifford have indeeed
carried out a wise and prudent foreign policuy
which I urge you to carry out during the next
foru years.
Dest wishes.
Sincerely
I'll James A. Foy
For
December 6, 1968
Dear Mr. Flemming:
It was most flattering to receive the letter from
Mr. Nixon relative to the recruiting effort for the
new Administration. At the risk of displaying gross
immodesty, I am returning a detailed, although self-
endorsed, resume on McMahon, supported by a recent
article in the press somewhat germane to government.
It is always difficult to isolate the precise situation
that will turn one on for party and country in the face
of a snug and remunerative hearth warmed by big
business. The low mortgage rate on the old homestead
and two teenage daughters in love are also strong
California adhesives.
In my case, I suspect that challenge alone would not be
enough; I experience this each day commuting by crowded
freeway. A chance to make a meaningful contribution on
a daily basis, to be exposed to an exciting environment
for innovation, to pursue a job inadequately performed
by predecessors yet possessing the potential to improve
the lot of us; these are conditions which justify 3, 000
mile moves, 18-hour days and teary teenagers.
Specifically, I have no idea where I might strike a blow
for democracy. The thought of an association with the
Vice President-Elect stimulates my creative proceeses
- 2 -
immediately if for no other reason than to attempt
to compensate for the premature and misguided
public judgment. There is also the strong possibility
that those of my ilk serve best who only sit and pay taxes.
In any event, my qualifications are attached for all to
see. If you get a chance, please convey my personal
greetings to Bob Haldeman and tell him to give me a
"V" for volunteering.
Sincerely yours,
Mr. Harry Flemming
Office of the President-Elect
Richard M. Nixon
Washington, D.C.
Encl.
HARRY FLEMING
BOB HALDEMAN
Dec. 7, 1968
Please note the attached correspondence
from William W. Blakely.
It is possible that he might be good to use
in screening or recruiting.
MEMORANDUM
TO: Peter Flanigan
FROM: H. R. Haldeman
December 13, 1968
I enclose memorandum from Franklin Lincoln sending us Frank
Markoe's resume, for your attention.
HRH/mc
encl.
December 16, 1968
Mr. Walter Forward, Executive Vice President
Royal Hawaiian Management Corporation
457 South Robertson Boulevard
Beverly Hills, California 90211
Dear Buzz:
Thank you very much for your letter and enclosures recommending
Victor M. Carter for the position as Ambassador to Japan.
I have forwarded your letter to Mr. Peter Flanigan, who is handling
a particular part of the staffing phase of the transition period.
Mr. Carter will hear from us as soon as possible.
Thank you also for your congratulations on the Nixon victory. The
next four years will provide many new challenges that are as yet
unthought of. It is good to know that we have your support as we
approach them.
Best wishes.
Cordially,
H. R. Haldeman
HRH/mc
ec E. Flanigan
December 16, 1968
Mr. James A. Foy
427 Seventy-sixth Street
North Bergen, New Jersey
Dear Mr. Foy:
Thank you very much for your letter suggesting that
we follow the foreign policy of the Johnson Ad-
ministration. However, each administration must set
its own course. This we intend to do.
Cordially,
H. R. Haldeman
Assistant to the
President-elect
HRH/mc
December 10, 1968
Dr. John D. French, Director
Brain Research Institute
The Center for the Health Sciences
Los Angeles, California 90024
Dear Jack:
I was glad to receive your letter. Comments of
the quality of one such as yourself are always
welcome. I have forwarded your suggestions to
Mr. Peter Flanigan who is doing most of the basic
screening in the areas of secretaries and assistant
secretaries at the Cabinet level I am sure be
too will welcome the impute you offer.
Thank you too for your congratulations and best
wishes. While I am sure the challenge ahead looms
large, I eagerly look forward to meeting it.
Sincerely,
H. R. Haldeman
HRH/mc
January 21, 1969
Dear Congressman Gubser:
Thank you for your letter concerning
Mr. Philip Euler's application in the
White House Fellows Program which
you mailed to me in New York.
It is a pleasure to forward this to
Mr. Stephen P. Strickland, Executive
Secretary, Commission on White House
Follows, Civil Service Commission
Building. 1 am certain he will be happy
to advise Mr. Euler If there is any
further action he should take.
With warm regards,
Sincerely,
H.R. Haldemas
Assistant to the
President
Homorable Charles S. Gubser
House of Representatives
Washington, D.C.
INCOMING TO Mr. Stephen P. Strickland.
RH:ny
MEMORANDUM
December 27, 1968
TO:
BRYCE HARLOW
FROM:
BOB HALDEMAN'S OFFICE
The attached correspondence is further to Mr. Gray's earlier
letter on the same subject. He is aware that the correspondence
has been forwarded to you.
Please forward this correspondence to Mr. Anderson, if you think
it is appropriate.
D. L. Stephens
Secretary
December 27, 1968
Mr. L. P. Gray, III
Suisman, Shapiro, Wool,
Brennan & Gray
325 State Street
New London, Connecticut 06320
Dear Mr. Gray:
In Mr. Haldeman's absence, I have
taken the liberty of passing your letter
of December 23, 1968, to Mr. Bryce
Harlow and Mr. Martin Anderson.
Sincerely,
D. L. Stephens
Secretary to Mr. Haldeman
LAW OFFICES
SUISMAN, SHAPIRO, WOOL, BRENNAN & GRAY
CHARLES SUISMAN
325 STATE STREET
MAX M. SHAPIRO
LOUIS C. WOOL
NEW LONDON, CONNECTICUT 06320
TELEPHONE 442-4416
JAMES F. BRENNAN. JR.
AREA CODE 203
LOUIS PATRICK GRAY, III
S. JOEL SUISMAN
MARILYNNE G. WOOL
December 23, 1968
DALE P. FAULKNER
THOMAS B. WILSON
ANDREW BRAND
IN REPLY REFER TO:
OUR FILE #
Mr. H. R. Haldeman
Office of the President-Elect
450 Park Avenue
New York, New York
10022
Dear Bob:
As a follow-up to my recent letter, I am enclosing a brief
summation of the position of the Small Business Investment Company
Industry. This is submitted to acquaint you with the record of the
Industry and the nature of the problems confronting the Industry.
The summation ties in with the President-Elect's letter to
the Industry President dated July 11, 1968, a copy of which was
forwarded to you with my recent letter. You will recall that you
referred that letter to Messrs. Greenspan and Anderson of the Staff.
In the summation I have included the legislative package
proposed by the Industry. In keeping with the expression of interest
contained in the President-Elect's letter to the Industry President, I
have recommended that the appropriate members of the Staff meet
with Industry representatives at the earliest opportunity in order to
hammer out a legislative package to be forwarded to the Congress by
the Nixon Administration as soon as practicable after January 20, 1968.
This is a program that is sound, makes money for the Federal
Government (the taxpayer), can have a direct impact in developing
minority businesses, and is loaded with favorable political mileage
in that it also impacts directly upon the economic health and &velopment
of small businesses throughout the Nation.
Mr. H. R. Haldeman
Page Two
December 23, 1968
Here is an opportunity for the Nixon Administration to
run with the ball and establish at long last a viable partnership
between the Federal Government and private capital envisioned
by the Eisenhower Administration and the Congress in the legis-
lation which created the Industry in 1958.
I am sending along three extra copies of this letter and the
summation for your internal distribution purposes.
With my best wishes and warm respect,
Sincerely
L. P. Gray, III
LPG:wd
Enclosures
Prepared By: L. P. Gray, III
12-23-68
THE SMALL BUSINESS INVESTMENT COMPANY INDUSTRY
PROBLEM:
The President-Elect is on record favoring a positive and
aggressive approach to the problems facing the small businessmen
and the Small Business Investment Companies of the United States.
THEREFORE, a Nixon Administration legislative package ought to
be presented to The Congress of the United States as early as may
be practicable after January 20, 1968.
SOURCE:
Refer to the letter of The President-Elect dated July 11, 1968,
and addressed to Mr. Elliott Davis, President, National Association
of Small Business Investment Companies; and to thetelegram of The
President-Elect and also addressed to Mr. Davis. (Copies attached
as Exhibit A.)
INDUSTRY ORIGIN:
The Small Business Investment Company Industry was
created by the Small Business Investment Act of 1958 and observed
its 10th anniversary on August 21, 1968.
WHAT IS AN SBIC?
(a) A corporation established by private individuals with
private capital and licensed by the Federal Government to do business
as a Small Business Investment Company in accordance with the Act
and the Regulations issued thereunder.
Prepared By: L. P. Gray, III
12-23-68
(b) Prior to the enactment of the Small Business Investment
Act of 1958, the Federal Reserve Board established that the Small
businessman was not getting the financing that he required in order to
compete and maintain his position in the Nation's growing economy.
(c) The intent of the Eisenhower Administration and the Congress
was to provide the small businessman with the venture capital financing
required via the private sector of the economy with a minimum of
government funds.
(d) The SBIC's constitute the first national grass-roots system
of equity and debt financing for small businessmen in the Nation's history.
Small businessmen, for the first time, have a recognizable place to go
for the "hard-to-find" kind of money which is provided big business by
the traditional national money market.
WHAT HAS THE SBIC INDUSTRY ACCOMPLISHED?
(a) Leveraged government loans of $250 Million to SBIC's
into a total investment of $3 Billion in small businesses.
(1) $1. 3 Billion in SBIC investments, making it possible
for small businesses to borrow an additional $1. 7 Billion
from banks and other lenders.
(b) The $1. 3 Billion SBIC investment represents over 30, 000
financing transactions to small businesses.
(1) This financing was in the form of loans, capital
stock purchases, and convertible debentures.
(2) Average equity position of the SBIC's in the small
business concerns financed is estimated to be 15 to 20%
on the basis of the original investment.
(3) Interest rates on debt financings have averaged about
8% with equity rights and about 9% without equity rights.
(c) Created jobs and created them cheaply. Each $100, 000. of
SBIC financing is now resulting in more than 20 new employees being hired
by the small business concern receiving SBIC financing - or one new
job for every $5, 000. 00 SBIC investment. The SBIC's cost for creating
new jobs is lower than that of any other program in the Federal arsenal.
- 2 -
Prepared By: L. P. Gray, III
12-23-68
(d) Helped small companies to grow and to grow much faster
than the national averages - an extremely important consideration if
small companies are not to lose ground to big companies in our
expanding economy. The small business concerns aided by SBIC
financing:
(1) Have increased employment - 2, 022 small business
concerns have increased employment by 41, 219 jobs, or
53. 5% since original SBIC financing.
(2) Have increased assets - assets of 2, 164 small
business concerns have grown $525 Million, or 50% with
SBIC financing.
(3) Have increased gross revenues - gross revenues of
1, 884 small business concerns have jumped more than
$500 Million, or 49. 1% with SBIC financing.
(4) Have increased profits - profits of 1, 859 small business
concerns have climbed $13 Million, or 56.2% with SBIC
financing.
WHAT HAS BEEN THE COST TO THE FEDERAL GOVERNMENT?
(a) Annual cost to Government - $6. 5 Million.
(b) Additional Income generated by SBIC program - $12. 5 Million.
(c) Interest income to Government - $1. 2 Million.
(d) Total profit to Government - $7. 2 Million.
(e) The Small Business Administration has concluded that the
SBIC program is clearly a very efficient and beneficial means of aiding
economic growth.
WHAT IS THE INTERNAL CONDITION OF THE SBIC INDUSTRY?
POSITIVE FACTORS
(a) Return on invested capital reached 6% in Fiscal 1968, up
from 2. 4% in Fiscal 1967, and 2. 5% in Fiscal 1966; a break-through
appears to have been achieved.
(b) Unrealized appreciation on SBIC investments jumped to
$141 Million from the year earlier $109 Million.
Prepared By: L. P. Gray, III
12-23-68
(c) Profitability came solely from realized gains on investments,
rather than from interest and other income.
(1) 441 reporting SBIC's had income from operations
of $12. 7 Million.
(2) They offset this by reserving $13. 7 Million for losses and
$1. 3 Million for income taxes.
(3) This results in a net deficit of $2. 3 Million from
operations.
(d) Smaller SBIC's (capital under $300, 000. 00) made a profit
for the first time ever - a profit of 1.1% on their capital.
(e) SBIC industry chalked up-a-positive retained earnings figure
for first time since 1961.
ADVERSE FACTORS
(a) Private capital in SBIC's dropped for fourth straight year
and is now at its lowest level since September, 1961.
(1) Private capital on 3-31-68 was
$343 Million.
(2) Private capital on 3-31-67 was
$392 Million.
(3) Highpoint occurred on 9-30-64 when private capital
in all SBIC's added up to
$465 Million.
(b) Fiscal 1968 least active year for SBIC's since SBA began
compiling data for Fiscal Year ending 3-31-63.
(1) For FY ending 3-31-68, SBIC's disbursed
$143 Million.
(2) For FY ending 3-31-67, SBIC's disbursed
$164 Million
(3) For FY ending 3-31-66, SBIC's disbursed
$221 Million
(4) For FY ending 3-31-65, SBIC's disbursed
$187 Million
(5) For FY ending 3-31-64, SBIC's disbursed
$220 Million
- 4 -
Prepared By: L. P. Gray, III
12-23-68
(c) Number of reporting SBIC's lowest since 9-30-61, illustrating
dramatically the attrition in the industry during the past 4 years.
(1) Latest SBA tabulations indicate that there were 441 reporting
SBIC's on 3-31-68; high point for the industry was 9-30-64
when 664 SBIC's filed reports.
(2) A steady decline since then brought the number of
reporting SBIC's down to 548 on 3-31-67.
(3) Present indications are that further departures will
decrease the number of active and reporting SBIC's through
the end of FY 1969.
(4) License surrenders and mergers are likely to be
higher than numbers of new licensees for the remainder of
present Fiscal Year.
(d) SBA's money cupboard is bare - no dollars are available for
lending to SBIC's; outlook for immediate improvement is dim. No dollars
have been disbursed on SBIC loan applications since July 1, 1968. Loan
applications to SBA from SBIC's are approximately $20 Million. SBA
has not been able to raise dollars from institutional lenders under its
100% guarantee program. Tightening money market has thwarted SBA's
efforts as no long term money shows up at 6. 5% --- even with the Federal
guarantee.
WHAT DOES THE INDUSTRY PROPOSE?
A legislative program as follows:
1. The establishment of a Small Business Capital Bank.
2. Amendments to the Internal Revenue Code of 1954 to:
A. Provide a statutory reserve of at least 10% against
losses on all SBIC financing instruments, equity as well
as debts;
B. Clarify the personal holding company surtax
exemption;
C. Extend the "pass-through" privilege to all SBIC's,
public and private alike;
- 5
Prepared By: L. P. Gray, III
12-23-68
D. Liberalize the diversification requirements for
SBIC's electing to be taxed as regulated investment
companies;
E. Permit the accumulation of SBIC earnings and profits
tax free provided they are utilized for additional loans
and investments;
F. Permit SBIC's to be shareholders in Subchapter S
Corporations; and
G. Extend Section 1243 to permit an election to treat a
loss on any SBIC financing instrument as an ordinary loss
rather than a capital loss.
3. Amendments to the Small Business Investment Act of
1958 to:
A. Begin "third-dollar" financing with the first dollar
of private investment;
B. Authorize SBA to give a 90% guarantee on loans and
investments made by SBIC's in certain public policy
areas such as those to ghetto businessmen, to combat
air pollution and to stimulate urban rapid transit;
C. Authorize SBIC's to establish special discretionary
portfolios up to one-third of their assets for loans to
or investments in eligible small business concerns without
regard to SBA regulations relating to: (1) overline
loans and investments, (2) minimum period of financing and
maximum amortization, and (3) Purchases of outstanding
securities privately or on the open market;
D. Permit SBIC's to require proprietary interests
in unincorporated small business concerns;
E. Provide that the Associate Administrator for
Investment of SBA be appointed by the President, subject
to Senate confirmation, to serve a five-year term, and
that the acts of such Associate Administrator be subject
only to review by a three-man Board to consist of the
Administrator of SBA and two other full-time Board
members to be appointed by the President, subject to
Senate confirmation, and to serve staggered six -year
terms as members of the Investment Division Board;
6 -
Prepared By: L. P. Gray, III
12-23-68
F. Provide appeal to the Investment Division Board
on action of the Investment Division rejecting an SBIC
funds application or calling outstanding loans; and
G. Authorize SBIC's to issue debt instruments that
will qualify as capital for purposes of borrowing from
SBA and for determining loan limits.
4. Amendments to the Federal securities laws to:
A. Grant appropriate exemptions for SBIC's from the
Investment Act of 1940; and
B. Permit SBIC's to sell portfolio securities in
publicly-owned companies without registration under
the Securities Act of 1933 where such securities or
predecessor securities are held for three years or more.
RECOMMENDATION:
Although the SBIC Industry proposes to carry its own legislative
program to the Congress, I strongly recommend that the Nixon Administration
designate Staff members to meet with Industry leaders just as soon as
possible to hammer out a legislative package acceptable to the Nixon
Administration and to the Industry.
Regardless of the Positive Factors cited herein, the Adverse
Factors are such that private capital continues to leave the SBIC program
in ever increasing amounts. The program has demonstrated its capa-
bility and ought not to be abandoned and left to fend for itself before the
Congress.
The partnership envisioned by the Eisenhower Administration
and the Congress in 1958 has never been fully realized. Now is the time
to build that partnership on the Industry's proven record of service to
the small businessmen of the United States.
- 7 -
A SEMI-MONTHLY LETTER FOR
SMALL BUSINESS INVESTMENT COMPANIES
September 26, 1968
Dear NASBIC Member:
Richard Nixon gives wholehearted support for SBIC capital bank in
a telegram to NASBIC president Elliott Davis. The GOP nominee for President
praised the industry's "record of assistance to small business" and noted
that the industry requires "the infusion of more private capital
"
The full text of Mr. Nixon's wire follows:
"Warm congratulations to you and to your colleagues on the occasion of the
10th anniversary of your industry. Your record of assistance to small busi-
ness concerns is noteworthy, and you have made a solid contribution to the
development of individual enterprise and the creation of employment oppor-
tunities. The infusion of more private capital is required to assist you in
building upon your successful record to date. To attract private capital so
that you may assist the many small business concerns now in need, you may be
assured that a Nixon Administration will explore with your industry and con-
sider carefully the concept of meaningful Government guarantees rather than
placing reliance on Government funds as a source of additional dollars. I
continue to share your interest in and enthusiasm for the establishment of
a Small Business Capital Bank. Sincerely. Richard Nixon'
Prospects for SBIC tax bill get dimmer and dimmer as the days pass
without any action on Capitol Hill. Senate Finance Committee hasn't sched-
uled any hearing on the bill yet, deapite promises made to Senator Spark-
man two weeks ago (see News, 9/11/68). House Ways and Means Committee has
indicated it will not meet again this year.
Only hope lies in quick Senate hearing and vote to add our bill
to a measure already passed by the House and in getting House agreement to
accept the Senate amendment. We can't be optimistic about that prospect at
this time, although --
NASBIC officials met with top Treasury officials on Sept. 24 with
hope that Treasury would support SBIC measure. Under Secretary Barr and As-
sistant Secretary Surrey held to Department's position that primary responsi-
bility for SBIC tax bill lies with SBA. They say Treasury will remain neu-
tral and take no position for or against the proposal.
New SBIC with 18 branch offices in 13 States has been licensed by
SBA. Equilease Capital Corporation will have its main office in New York
and will begin operations with $500,000 in private capital. It is a wholly-
owned subsidiary of Equilease Corp., probably the largest small equipment
leasing company in the U. S.
Equilease twins are part of complex making up Eltra Corp., a di-
versified firm, listed on the New York Stock Exchange. Eltra ranked #210
on Fortune's 1968 list of 500 largest industrials. Chief officers of Equi-
lease Capital will be: President George A. Halmos, Executive Vice President
Norbert S. Weissberg.
NASBIC News is published twice every month by the National Association of Small Business Investment Companies,
537 Washington Building, Washington, D. C. 20005. Telephone: (202) MEtropolitan 8-3411. Elliott Davis, President;
Walter B. Stults, Executive Director; Allan Neece, Jr., Assistant Executive Director. Annual subscriptions, $25 (free to members).
STATEMENTS ON SMALL BUSINESS
BY
PRESIDENTIAL CANDIDATES
*
*
*
Hubert H. Humphrey
Richard M. Nixon
Nelson A. Rockefeller
*
*
*
National Association of Small Business Investment Companies
537 Washington Building
Washington, D.C. 20005
July 22, 1968
N
NIXON FOR PRESIDENT COMMITTEE,
P.O. BOX 1968, TIMES SQUARE STATION,
NEW YORK, NEW YORK 10036
PHONE (212) 661-6400
July 11, 1968
Mr. Elliott Davis
President
NASBIC
537 Washington Building
Washington, D. C. 20005
Dear Mr. Davis:
I want you to know how much I appreciate
your thoughtful letter of May 28, 1968 affording
me an opportunity to set forth some of my views
on national policies needed to secure for small
business an expanding share of the national economic
output.
This is a vital issue of great interest to
millions of American small businessmen who are
engaged in the struggle to survive and grow despite
the increasing concentration of economic power
occurring now in our society.
The issue is also of great interest to many
more Americans who desire to become small businessmen,
to savor ownership, to participate in our free
enterprise system, and to participate in the profits
which are the great motive power of our fantastically
productive economy.
In order to secure for the small businessman
an expanding share of the national economic output,
we do require now the creative interaction of the
public and private sectors, of government and people,
dedicated to the exploration of new and imaginative
means of activating the real resources of America.
Government at all levels will have to join
a true partnership with private enterprise in meeting
the challenge, if the small businessmen of America
are to experience a reversal of the downtrend in
growth which they face today.
Mr. Elliott Davis
-2-
July 11, 1968
Government money - the tax dollars of its
citizens - cannot alone provide the response to the
challenge. Government can help to provide the
incentives, the policies, and the broad general
framework within which private enterprise will meet
the challenge. This is the proper role of government.
Actually doing the job is not - because private
industry can do it better.
Too often America appears to be the champion
of the status quo rather than what we are - the
boldest architects of change and progress civilization
has ever known.
During the years of the Eisenhower Administration
a first step was made to harness the Federal Government
and private enterprise in a partnership to assist the
small businessman to obtain equity capital, long term
debt, and management assistance. This first step resulted
in the enactment of the Small Business Investment Act of
1958 by the Congress of the United States. A serious gap
in the Nation's financial arsenal was filled, and another
segment of the myth of the status quo was channeled into
oblivion.
Thus began a pioneering program. Prior to 1958
there had not existed an institutionalized source of
venture capital for the small businessmen of America.
There is none today, except for the Small Business
Investment Companies formed by private individuals,
funded with private capital, and licensed by the Federal
Government to do business in accordance with the terms
and provisions of the Act.
The history of the operations under the Act,
and the financial reports of the Small Business Investment
Companies, reveal that every dollar of Federal funds
committed to the program attracted almost two dollars of
private capital.
After a growing period of almost ten years,
the Small Business Investment Company Industry is coming
of age and is proving to be a much needed form of
financial institution. Reports from 1, 381 small business
firms assisted by Small Business Investment Companies
indicate that they have increased their employment by
11,800 jobs since they received their original financings
from these Companies.
Mr. Elliott Davis
-3-
July 11, 1968
I am well aware that the SBIC Industry has
made available to more than 25,000 small business
firms more than $1.2 billion in financings to assist
the growth and development of these firms. I am also
well aware that the leaders of the SBIC Industry and
private commentators and Industry analysts believe
that the program must be improved substantially if
the SBIC Industry is to survive.
Despite the proven success of the SBIC
Industry in carrying out the purpose of the Congress
of the United States in enacting the legislation
which gave birth to the Industry, many of the largest
companies in the Industry are dropping out of the
program. Nearly $200 million dollars in private
capital have left the Industry since the Act became
effective in 1958.
The Small Business Investment Act Amendments
of 1967 were enacted to meet some of the problems
faced by the SBIC Industry and the Small Business
Administration of the United States in developing a
viable partnership to assist the small businessmen
of the United States. These amendments resulted from
legislative proposals sent to the Congress by the
Executive Branch - the first positive proposals sent
to the Congress since the legislation creating the
Industry was enacted.
Nevertheless, in spite of a proven record
of success and remedial legislation enacted last
year, Companies are leaving the SBIC Industry and
taking with them hundreds of millions of dollars
of venture capital. For reasons valid to them, the
managers of these Companies, seasoned in the high
risk arena of venture capital financing, are moving
the bulk of their assets from under the umbrella of
the Act. While some plan to continue to operate
SBIC's as subsidiaries, others do not plan to
reorganize themselves in this manner.
I am convinced that the Industry is at the
most crucial period it has ever encountered in its
short life-span.
Mr. Elliott Davis
-4-
July 11, 1968
Obviously, many Agencies of the Federal
Government and many Federal policies have a considerable
impact upon the operations of the SBIC Industry. The
complexities inherent in a strong, centralized Federal
Government increase the magnitude of the challenge to
implement that which I believe Congress intended - a
true partnership between the Federal Government and
the SBIC Industry.
It appears to me that the SBIC Industry has
not been able to meet the most fundamental test of
any Industry; it has not been profitable enough, or
achieved enough stability, to:
(a) Maintain within the Industry the private
capital originally committed;
(b) Attract much needed additional private
capital;
(c) Encourage the formation and licensing
of significant numbers of new SBIC's,
even though many areas of the Nation
are not adequately served by SBIC's.
In keeping with my views expressed in the
earlier paragraphs of this letter, the Federal Government
has the responsibility to provide a climate within which
the partnership contemplated by the Congress may survive
and thrive. I do not envision, nor do I recommend to
your consideration, a policy which would provide unlimited
Federal Funds. Further, I do not believe that the managers
of SBIC's expect, or desire, an unlimited availability of
Federal Funds to sustain a partnership consisting of the
Federal Government and proven managers in the private
sector dedicated to closing the small business equity gap.
You do have the right to expect - and the
Federal Government has the duty to provide - the long range
policies designed to enhance the orderly and seasoned
growth of an Industry created to operate in a risk arena
not attractive to the financial institutions existing prior
to the debut of your Industry; nor is this high risk arena
attractive to them today.
I believe it to be the responsibility - and the
duty - of the Small Business Administration, the
Treasury Department, the Bureau of the Budget, and the
Mr. Elliott Davis
-5-
July 11, 1968
Securities and Exchange Commission to give continuous
and serious thought to ways and means designed to
simplify the SBIC program and legislative package,
to make the SBIC program more profitable, and more
productive.
The small business existing, and those
developing, must have ready access to a stable, long
range equity money market. In this connection, I
believe that careful consideration must be given to
the establishment of a "Small Business Capital Bank";
such an institution, of course, to be studied and
planned by the responsible leaders of your Industry,
the responsible leaders of our other existing financial
institutions, and the responsible Governmental Agencies
and Departments acting in concert, and cooperating to
further strengthen our economy by assisting those who
are most in need of assistance.
Your Industry and the small businessmen of
the United States may be assured that the Executive
Branch of a Nixon Administration will approach these
problems jointly, and with each of you, to attain the
long range objectives required. Such an approach will
rest upon the principles I set forth in the opening
paragraphs of this letter.
Sincerely,
Richard High
Richard M. Nixon