percent of all the youngsters who have come to it. The Job Corps today is graduating 400 kids a week. These 400 a week are kids who came in in bad shape, came in physically bad, psychologically bad, medically bad, et cetera, and who are coming out now capable of going out and getting jobs.

I fact, they are going out and getting jobs at $1.68 an hour on the average.

Now, I think that is an incredible accomplishment, and I can tell you this, that the superintendent of schools of Pittsburgh, Dr. Sidney Marlin, who is on the National Advisory Council of OEA, stated in a meeting just 2 days ago that he thought this was an incredibly good record.

Senator CLARK. He is an extremely competent school administrator, one of the best we have.

Mr. SHRIVER. That's right, one of the best in the United States. This retention rate, in fact, is better than the public school rate and particularly much better than the vocational school retention rate. It is better, actually, than colleges in retaining kids coming in as freshmen. The structure which has been created in Job Corps centers has been successful in attacking these youngsters and keeping them long enough to remake them.

Senator KENNEDY of Massachusetts. Are you satisfied, Mr. Shriver that the OEO has done a satisfactory job in establishing a basis of understanding between the Job Corps program and the nearby localities.

Mr. SHRIVER. The answer to that is, "No."

Senator CLARK. Before the witness answers, your time is up, Senator.

Mr. SHRIVER. Oh, I took all of his time, did I not?

Senator CLARK. Pretty much.

Mr. SHRIVER. Could I answer that question?

Senator CLARK. Yes, indeed.

Mr. SHRIVER. The answer is, "No," we are not doing and have not done everything in every location-all that should have been done to explain the Job Corps to the local people. There is a great difference in how that particular task has been carried out. The General Electric Corp., for example, out in Clinton, Iowa, has done what appears to me to be an extremely exemplary job.

A General Electric representative was meeting in our office a while ago and brought in a document showing what they had done in community relations. I was there at 11 o'clock Sunday morning. There were five members of a city council there: the mayor, the chief of police, the chamber of commerce. They were enthusiastic about the opening of a Job Corps center.

I told them even though they are heated up over it-if I could refer to this chart for a minute-it is in this blue book, so-called Management Summary of our programs. There is a chart which gives the profile of a Job Corps enrollee.

What does it show? It shows that on the average, his achievement in school is at the 4.7 grade level; that he has been in school for 7 years; that 80 percent of them have never seen a doctor or dentist in their lives; that 47 percent who were eligible for military service flunked the examination, 30 percent for educational difficulties, 17 percent for physical difficulties; that they were underweight.

Now here is an interesting thing in view of the charges that there is a great deal of arrests and so on, that these are difficult kids; 63 percent of them had no previous record of any brush with the law; 27 percent had minor brushes or antisocial behavior: 10 percent had one serious conviction; 45 percent were from broken families; 65 percent from a family where the head of the household was unemployed; 50 percent from families on relief. They themselves were unemployed-unemployed, not underemployed-and when they were employed they were earning about 80 cents an hour.

Now, in a period of about 9 months that youngster has been transformed in the way I have just described; namely, he puts on about 2 years of academic work. He goes from a kid who could earn on the average 80 cents an hour intermittently to a youngster who gets $1.68 an hour, on the average, regularly.

Where they were thrown out of the military they get in; 60 percent of them get jobs; the remainder go back to school. They put on anywhere from 10 to 15 pounds physically, each kid, and to show why the costs of the Job Corps are sometimes high-or in some people's minds are high-we spend on the average $360 for medical and dental treatment for every kid in the Job Corps. That is how badly off they are; 35 percent of them, for example, need glasses; they have never had them in their lives.

Senator CLARK. Thank you, Mr. Shriver.

Senator Javits is recognized for 10 minutes, plus the time taken to answer your last question.

Senator JAVITS. I hope not to require too much time.

Now, Mr. Shriver, you may not yet be in a position to comment, but I sent to you an amendment which I am introducing along with a number of my colleagues, to establish an Economic Opportunity Corporation. This is an endeavor to bring the private enterprise system into the poverty war through a $1 billion corporation, which would be 60-percent private, 40-percent U.S. Government. Have you had an opportunity as yet to consider that proposal?

Mr. SHRIVER. Well, Senator, as you said, I did not get the bill until last night or yesterday afternoon, so I really have not had a chance to give it a great deal of study in depth, but I would say this: That I would be extremely interested if a corporation of that type could actually make money for the stockholders.

If I understood it correctly, it would be a corporation that would be primarily involved in training poor people and it may be that private enterprise can find a way to do that at a substantial profit to the people who would invest in the corporation, and if so, that would be an interesting development.

(The following memorandum was subsequently supplied for the record :)

MEMORANDUM FROM THE OFFICE OF ECONOMIC OPPORTUNITY WITH RESPECT TO A PROPOSED AMENDMENT TO ESTABLISH AN "ECONOMIC OPPORTUNITY CORPORATION”

The amendment would add a new title IX to the Economic Opportunity Act providing for the establishment of a public-private corporation known as the "Economic Opportunity Corporation." The Corporation would engage in the War on Poverty on a profit-making basis and would be initially capitalized at $1 billion. The Federal Government would be authorized to purchase up to 40 percent of this stock ($400 million) and the balance would be sold to the public.

The Corporation would be run by a Board of Directors consisting of nine members. The President of the United States would appoint four of these members (subject to Senate confirmation) and at least one of these must be "of the poor." The other five members would be elected annually by the stockholders.

The Office of Economic Opportunity looks with favor upon any proposal that may result in mobilizing additional resources of private industry for a role related to the war on poverty. Although we believe "private" participation of firms and individuals already far exceeds what would have been thought possible several years ago, there are undoubtedly ideas in this area that merit further consideration. There is, in this respect, no reason why attention should not be given to potential programs that might be carried on by new businesstype organizations, operated without subsidy or public contract and with a view to securing at least a modest profit.

A proposal for a major new government or government-assisted corporation cannot, however, be accepted simply on grounds that the corporate approach may have some utility in connection with the War on Poverty. To do so, would in effect shift to the corporation decisions on a multitude of questions which are appropriately for decision by the Congress. It is particularly important, in our opinion, that any such proposal be carefully evaluated in terms of the specific problems with which the corporation would deal and the specific activities in which it would engage. This is necessary in order to determine whether the program or programs to be carried on in fact require or justify this form of organization, to permit a realistic assessment of the revenue producing potentialities and to weigh the need for relaxing customary appropriation restrictions.

Consideration of specific problems or activities is also necessary in order to determine whether some or all of the operations which the Corporation might carry on could not be carried on as effectively through existing law or proposed changes in the law, such as the amendments which the Administration has proposed in the Public Works and Economic Development Act for the purpose of increasing job opportunities in areas of concentrated unemployment within our cities. It is necessary furthermore, in order that some of the particular limitations that may be involved in the use of this kind of mechanism will be recognized in the beginning and their implications fully discussed. For example, if a specific return on capital is anticipated or required, a corporation might well find that many or most of the kind of programs which it could undertake would have enhanced prospects of success if their focus was shifted from the poor to include the large numbers of people who occupy an economic level at least slightly above the poverty line. The extent to which this should be done, however, presents a major question of policy from the standpoint of the Federal Government's priorities. It is not, in our view, the kind of question that should be left to corporate or "business" judgment, at least where the corporation involves an investment of Federal funds which could be employed for programs that are limited to the poor. As with other questions mentioned above, it is sufficiently basic to warrant the most careful attention of the Congress in the beginning.

An evaluation in terms of specific problems or activities is important, finally, in order to identify particular Federal policies that may be involved in the operation of the Corporation and to determine whether those policies should or should not be subject to the "business judgment" considerations which the Corporation would normally be expected to follow.

In the case of training programs, for example, as well as economic development activities, existing governmental programs are subject to certain restrictions relating to projects that may involve the relocation of firms or the training of people for jobs in industries having relatively high labor turnover or requiring a relatively low level of skills. In the case of job assistance programs, there are restrictions relating to the displacement of other workers and the maintenance of existing rates of pay and conditions of unemployment. In the case of credit programs there are restrictions relating to the availability of credit from existing sources. In the case of programs involving the construction of housing and in some cases other types of facilities, existing programs are subject to restrictions relating to the availability of other housing for persons displaced and requirements for relocation assistance to families, individuals and business firms. In the case of most activities, there are requirements for an equitable distribution of funds among States and within States. In the case of the great

variety of activities that can now be carried on under community action, there are requirements for local participation of residents of the areas and members of the groups served for which the proposed Corporation (with one "poor" person among a board of nine) would provide no parallel.

All of the above restrictions or policies, and many others as well, involve matters whose applicability to any Corporation needs to be weighed, both for the purpose of determining whether limitations should be imposed and, if so, whether their application involves the kind of balancing of interests that would be better made in a frankly governmental rather than a business context.

In light of the above considerations, and the complexities they suggest, we cannot now recommend enactment of so broad and sweeping a proposal as that contained within the amendment. In reaching this conclusion, we have taken account of the fact that the proposed Corporation has been described as similar to the Communications Satellite (Comsat) Corporation. There are of course similariBut there are also critical differences between the two. A consideration of these differences in our opinion weighs heavily against the desirability of the proposal and in effect underlines many of the points noted above.

ties.

First, it should be noted that, while there are some structural similarities between Comsat and the proposed Corporation, there are major differences in financing. Comsat does not involve the purchase of stock by the Federal Government. The proposed Corporation, on the other hand, would involve a Federal investment of $400 million. When this investment is added to the obvious importance of the mission which would be assigned to the proposed Corporation, it would seem clear to us that the amendment warrants the most searching scrutiny in terms of just what the Corporation would do and just how its operations would fit into other Federal policies and programs.

Second, while we do not wish to overemphasize the importance of the proposed Corporation's potential for making a profit, it is nevertheless a consideration that must be weighed in examining its prospects for success as an investment for helping the poor. Here also there is a difference between Comsat and the venture contemplated in the amendment.

The difference does not stem from the fact that Comsat in the beginning represented a "sure thing"-which may not have been the case. It is rather that the rewards of "success" are apt to be so different and to have significantly different program implications. In the case of Comsat, success may have been a risk but a promising return on the investment was assured if the venture was a success from the standpoint of its technical objectives and purpose. In the case of the proposed Corporation, on the other hand, "success" in terms of the objective of eliminating poverty is likely to produce no such assured return. To the contrary, the "price" of success is likely to be acceptance on a continuing basis of a multitude of individual very high risks-in the form of persons requiring extensive assistance or projects involving large numbers of such persons. Achieving any profit at all in such circumstances is apt to involve a deliberate concentration on those undertakings which are most likely to produce an assured return for a minimum investment. This might be desirable-though probably still not very profitable-from the standpoint of the investors. But it would not be desirable from the standpoint of the basic objective of aiding those who need assistance the most. In fact, as suggested above, the need for "success" from an investor's standpoint is likely to create a continuing pressure for programs that are not limited to the poor at all.

Third, assuming that the public does buy the more than half a billion dollars worth of stock allotted for public subscription, there is still another difference between the Comsat enterprise and the proposed Corporation which we believe presents a significant problem. This difference relates to the function to be performed by the two corporations as spelled out in Comsat's charter and in the proposed amendment.

Under Public Law 87-624, the Comsat Corporation is authorized to

"(1) plan, initiate, construct, own, manage, and operate itself, or in conjunction with foreign governments or business entities a communications satellite system;

"(2) furnish, for hire, channels of communication to United States communications common carriers and to other authorized common carriers, foreign and domestic; and

"(3) own and operate satellite terminal stations when licensed by the Commission * * *"

The statute then lists certain authorities which are included in these basic functions.

While these "purposes and Powers of the Corporation" are expressed in somewhat general terms in P.L. 87-624, they have a clear and exact meaning to persons in the communications industry. This cannot be said of the "Powers of the Corporation" as stated in the amendment which would establish the Economic Opportunity Corporation. The amendment would authorize the Corporation to engage in training programs, assist redevelopment projects involving the poor, and provide assistance for small business concerns. These are, in themselves, very broad powers. But the Corporation would also be given a mandate to "engage in such other activities as the board of Directors determines are effectively designed to reduce poverty in the United States." In this latter regard we note the following in the press release issued at the time the amendment was offered.

"The Corporation would be specifically empowered to carry out any programs that the directors feel are appropriately and effectively designed to reduce poverty in the United States. This could include programs such as the Job Corps and Manpower Development and Training Act on-the-job training programs. But it could also go beyond these to develop whatever new programs it determined to be desirable." [Emphasis supplied.]

For all practical purposes, therefore, it would appear that the Corporation is given what amounts to a blank check for doing anything its directors determine would assist in reducing poverty. Whether its programs are of a "business" character appropriate for a government corporation would be decided by the Corporation itself. Its programs, moreover, might duplicate existing programs, they might operate in a manner inconsistent with those programs, and they might include a variety of activities which would not receive Congressional approval if proposed as Government programs. It seems to us that, for a corporation that would exist only by virtue of its Federal charter and for which the Federal Government would spend nearly half a billion dollars in addition to funds otherwise committed to the elimination of poverty, this represents an unusual and excessive grant power.

Fourth, not only would the proposed Corporation appear to have a comparatively broader basic grant of authority than Comsat, but it would also seem to be far less subject to Federal regulation and control. Comsat is subject to a relatively detailed statement of Federal policy, as set forth in section 102 of the Communications Satellite Act of 1962. That Act provides specifically for Federal coordination, planning and regulation (sec. 201). It further provides for enforcement actions against the Corporation should it engage in any action, practices of policy inconsistent with the policies of the Act or activities authorized under it. The proposed Corporation, on the other hand, would seem to be subject to no such restraints, even though it involves a large investment of Federal funds in corporate stock for which Comsat provides no parallel. The only Federal influence, in fact, would seem to be that derived from the Government's minority representation on the board of directors. Even the provisions of the Government Corporation Control Act (31 U.S.C. 841 et seq.) would not be made applicable. In the case of mixed-ownership Government corporations, this requires an annual audit by the Comptroller General and a filing of audit reports by the Congress.1

This absence of control is all the more notable in view of the basic concept of the Economic Opportunity Act that there should be a concentrated and coordinated assault on poverty. Section 611 of the Economic Opportunity Act authorizes the Director of this Office to call upon other Federal agencies to supply such statistical data, program reports, and other materials as he deems necessary to discharge his responsibilities under the Act and to assist the President in coordinating the anti-poverty efforts of all Federal agencies. The section also requires all agencies of the Federal establishment to cooperate with the Director

1 Fully-owned Government corporations are required under the Act to have their budgets submitted to the Congress for approval. Recommendations have been made, as for example by President Eisenhower in his budget messages of 1958 and 1959, for extending these latter requirements to mixed-ownership Government corporations as well. Given the nature and purpose of the proposed corporation, it would seem that any consideration of controls should probably include at a minimum the budget controls provided under the Government Corporation Control Act for wholly-owned corporations. These have been applied, for example, to the Federal National Mortgage Association which is legally a mixed-ownership corporation.