education cannot be attained on a commuting basis. Furthermore, the large increase in attendance at public institutions of higher learning where tuition is free or very low indicates that the college cost figures cited cover the high-cost private colleges-the ivy league complex-where, after all, low-income families need not, and would not be too likely to, send their children, even with scholarships-Federal or otherwise.

As to the number of needy able students, the figures available are contradictory in themselves. Secretary Ribicoff says 60,000 to 100,000 outstanding students would enter college annually if they were assisted in surmounting the economic barrier. This is out of 150,000 annually who fail to go on to college. He does not mention the number who have been enabled to attend college by existing Federal scholarship loans under the National Defense Education Act. The Senate Committee on Labor and Public Welfare, in its July 31, 1961, report on amending the National Defense Education Act, said that last year 115,450 scholarship loans were made. Since these enabled those students to attend college, it cut heavily into the 150,000 overall figure cited by Mr. Ribicoff, and would appear to leave less than 35,000 students-not 60,000 to 100,000-who fail to continue their education for financial reasons.

This brings up the question of superimposing a grant program on the National Defense Education Act provisions. It would appear incongruous. The maximum scholarship amounts and cost allowances to the institutions are the same, hence there is no inducement to borrow rather than accept a free grant. Furthermore, why grants when loans are reported by the Senate committee to be so successful? The report says the loan program has:

Assisted able students to enter college despite financial need.
Helped thousands to continue and complete their education.

Enabled needy students to devote more of their energy to academic work. So glowing a report would seem to leave little or no room for a scholarship grant program. Inasmuch as the loan program is on the books, it makes more practical sense to retain it, than to introduce a grant program which is likely to replace it in due time simply on the basis of human proclivities. If something is available at no cost, why take on a personal obligation to get it?

BYPASS OF THE APPROPRIATION PROCESS

In S. 1241 back-door spending is authorized through public debt transactions. The major reason for the public debt transaction, rather than the procedure of appropriating funds, is to prevent the expenditure from coming under the scrutiny of the appropriations committees. Section 103 (c) authorizes the Commissioner to issue notes and other obligations for sale to the Treasury in order to obtain funds for loan; and paragraph (d) authorizes the Secretary of the Treasury to buy these notes from the Commissioner and to obtain the funds for this purpose by the sale of U.S. securities.

An automatic increase in the maximum amount of the Commissioner's notes outstanding is provided for into fiscal 1965. The annual increment in this maximum is $300 million.

This policy is basically unsound. It assumes a present knowledge of the volume of demand for such funds, and the rate of annual increase in that demand, which cannot now be demonstrated. Annual requirements for funds, as evidenced by bona fide applications, could be used by the appropriations committees in determining the amounts to be appropriated. The unwillingness to submit spending programs to this review suggests a fear that there would be insufficient liberality in the provision of funds.

Moreover, the use of the public debt transaction means an automatic increase in the public debt. The Treasury would be required to seek funds in the market regardless of any conditions and circumstances that might make additional borrowing unwise at the time. For example, the lending of funds to colleges for a 50-year term would logically impel the Treasury to float long-term securities in its financing of the Commissioner's notes. This would put the Treasury into competition in the market with other demands for long-term money, such as housing mortgages, corporation bonds, State and municipal issues, and so on. The supply of long-term funds in the market is limited and refunding is diffi cult enough now. Under S. 1241 Treasury action would establish a priority which could be to the disadvantage of the economy as a whole.

Whatever merit may be claimed for supporting college construction with Federal loans, that procedure certainly cannot at all times and under all conditions be assigned a priority over the demands for long-term funds in the whole

economy. This, however, would be the effect of the bill's mandatory public debt transaction. It is a weakness of this method of financing which condemns the practice, not only for college loans but for every other purpose.

It is true that under present circumstances the appropriation of funds for college loans would also result in a budget deficit which would require debt financing. But it is possible that the scope of such lending would be curtailed through the appropriations process, whereas this is most likely under direct debttransaction authorizations.

TERMS AND CONDITIONS OF S. 1241 LOANS

Some comment is pertinent regarding the loans provided for in S. 1241. These constitute back-door spending. The conditions for the loans are

1. That not less than one-fourth of the cost of the facility will be financed from non-Federal sources;

2. That the applicant is unable to secure the amount of such loan from other sources upon terms and conditions equally as favorable as the terms and conditions applicable to loans under this title;

3. That the construction will be undertaken in an economical manner and that it will not be of elaborate or extravagant design or materials. First, the requirement of one-fourth non-Federal financing underestimates the capacity and willingness of States and cities to provide for public institutions, and of alumni and friends of private institutions to support them. This arbitrary unfounded ratio simply contributes to the realization of efforts for nonFederal financing. It has almost as much paralyzing effect as no matching at all would have. Experience under the present college housing loans indicates that many institutions which had access to other funds for construction took advantage of the specially favorable terms of the Federal law. Furthermore, the crisis condition forecast is for 5 to 10 years hence, and the immediate Federal financing provided is not only jumping the gun, it is underscoring the lure to relax State-local and private efforts. If institutions of higher learning can raise in 1962 one-fourth of the extra funds for a given facility designed to meet a decade of crisis, they can certainly finance the remaining three-fourths over the remaining 90 percent of the period.

The State and municipal colleges and universities can be provided by appropriations or bond issues with full amounts needed. And financing by bond issue is also available to private institutions. The assumption that all higher educational institutions are in dire need is without foundaton.

The second condition cited is clearly disingenuous. The interest rate and maturity provisions of the proposed Federal loans are such that no private investor would be willing to match them. Consequently, the bill deliberately makes a prima facie case for the Federal loan program by, in effect, excluding other investors and by encouraging States and cities to provide from their own sources no more than the 25 percent minimum share of the cost, regardless of their ability and willingness to finance the entire construction cost of their respective colleges and universities. The bill thus cuts the taproot of non-Federal support.

Paragraphs (b) and (d) of section 103 provide a subsidy to the borrowers by setting interest rate terms below the actual cost of the funds to the Treasury. The interest charge to the Commissioner by the Treasurer is to be the higher of 22 percent or the average annual interest rate on all interest-bearing obligations forming a part of the public debt. The interest charge by the Commissioner to the colleges is to be the higher of 24 percent or the average annual interest rate. But the average interest rate is to be computed by lumping together all forms of debt paper from Treasury bills to long-term bonds. This average will obviously be a good deal less than the coupon rates that the Treasury would have to pay on the long-term bonds which would be the logical kind of debt issue to finance 50-year college loans.

The third clause of section 103 (a) opens the way to arbitrary exercise of control by the Commissioner. There are no definitions of economical construction, or of elaborate or extravagant design or materials. Section 104 (a) would defeat the objective of economical construction in some places by imposing federally determined wage and hour standards. The Commissioner would be the arbiter of standards of design and architectural taste.

13 The Federal Budget for 1958, p. 287.

CONCLUSION

The National Association of Manufacturers does not find arguments in behalf of S. 1241 convincing. It opposes this, and similar legislation, for Federal aid to higher education-both for college facilities and student scholarships. It be lieves that the combined capacities of State-local governments and private resources can and will meet the needs of America's youth for education beyond the high school; and that appropriate application of these combined resources will be forestalled by the introduction of further Federal funds for higher education. It does not believe that the Nation's concern for the quality or quantity of higher education calls for any broad-scale Federal program of aid, nor that it justifies the promotional activity for such programs by the Federal Government.

STATEMENT OF C. STANLEY LOWELL, ASSOCIATE DIRECTOR OF PROTESTANTS AND OTHER AMERICANS UNITED FOR SEPARATION OF CHURCH AND STATE, IN REGARD TO FEDERAL AID TO INSTITUTIONS OF HIGHER LEARNING

Mr. Chairman, my name is C. Stanley Lowell. I am associate director of Protestants and Other American United for Separation of Church and State. This is an organization of some 150,000 members that maintains close ties with many boards and agencies of the Protestant churches. While we are predominantly a Protestant group we also have members of Catholic and Jewish faith and also many persons of no formal religious faith-all of whom are devoted to the distinctive American principle of the separation of church and state. We have chapters and cooperating committees in all the States, maintain an educational and legal program, are currently participating in 18 lawsuits in 17 States, all concerned with church-state issues. We think of separation in terms of a "money line" between the state and the church. It is our position that funds collected by the state in taxation should not be used for the purposes of religion.

Our appearance today, like all of our appearances in these hearings, is prompted by our concern for the separation principle which has been expressed in the first amendment to the Federal Constitution and in the constitutions and statutes of some 48 of our 50 States. We shall address ourselves principally to S. 1241, a bill which we believe goes far in the direction of providing Federal subsidies for church institutions.

May I observe, generally, that we do not feel this is an appropriate moment to widen existing categories of aid to church institutions, or to create new categories of aid, as this legislation envisages. We do not feel that any time is good for this, but we consider the present moment notably inopportune. A good example of the new factor which such legislation injects into the governmental process can currently be observed over on the House side. There, in that body's Rules Committee, we have the dismaying spectacle of a church exerting pressures which have stymied the progress to the floor of one of the administration's most important bills. I am referring, of course, to the aid to education bill which has already passed the Senate but is refused access to the floor of the House by clerical partisans in a combination with others who consistently and on principle are opposed to all Federal aid to education. Their terms are that they will stop the Government from strengthening public education unless aid is given to their denominational schools. A statement issued by Archbishop Karl J. Alter on behalf of the Roman Catholic bishops of the United States during the early stages of the school aid battle declared:

"In the event that a Federal aid program is enacted which excludes children in private schools, these children will be victims of discriminatory legislation. There will be no alternative but to oppose such discrimination."

This the Catholic Church has consistently done ever since, mounting parish by parish and through all its constituent agencies and propaganda instrumentalities a pressure campaign unprecedented for a church body in the United States. Msgr. Frederick G. Hochwalt in an appearance before a House subcommittee declared that the bishops' pronouncement on aid to education constituted a "moral position" and that it would, therefore, be supported by all Catholics. I have watched the developments up here for a long time, Mr. Chairman, but I can say that never before have I observed a predicament to match this one-a church actually exerting veto power over important legislation in the Congress.

Yet, this is only a hint, only a suggestion of the kind of thing that will become routine fare here if aid for church institutions continues to be widened. This is a development that can never be checked once the Congress embarks firmly upon it. Cuts in the church assistance will be attacked as "atheistic" and "communistic." The scramble and competition for such aid and the rise of unchecked clerical machinations will bring to this Nation a scourge of ills from which we have hitherto been free. We feel that just now is an appropriate moment to say no to increased aid for church colleges.

The aid for church colleges envisaged in S. 1241 is of two kinds-50-year loans for the construction of academic facilities and supporting grants of $350 to institutions which have been selected by recipients of Federal scholarships. It is our position that all programs of direct grants or loans to church colleges are probably unconstitutional. We clarify this statement, first, by a proper identification of a church college. We suggest three criteria: (1) Ownership of property: Is the property owned by a religious denomination or a religious organization? (2) The governing board: Is the governing board or any portion thereof appointed by a religious denomination or a religious organization? (3) The purpose: Is its announced purpose to teach and propagate a certain religion? If the institution qualifies on any two of these counts, it should be deemed a church institution and as such should be disqualified for participation in Federal grant or loan programs.

Public institutions, publicly controlled, open to all and free of sectarian control are directly related to public responsibility. There would be no constitutional objection to the participation of such institutions in Federal aid programs.

It is true, Mr. Chairman, that we have had for some years a program of loans to private, including church colleges, for dormitory construction. This was passed under the rationale that it was public housing for students. No court of which I am aware has so held. Surely the broadening of this aid to include libraries and instructional buildings and perhaps even chapels, though this is not clear-could not remotely be considered as more welfare aids. They relate intimately to the program of religious study for which the school was founded. We believe, therefore, that language which the Supreme Court has repeatedly used in regard to church-state separation would bar any such loan program for sectarian colleges under the first amendment. The Court's proscription in the Everson case (1947) of any financial aid to "any religious activities or institutions whatever they may be called, or whatever form they may adopt to teach or practice religion," rules out loans or grants for buildings in which religious teaching would take place. The Everson decision forbids Congress to "pass laws which aid religion." Would not the proposed general loan program for sectarian colleges be just such a law?

Again, the Federal Government is forbidden to "participate in the affairs of any religious organizations or groups or vice versa." Does not one's banker participate in his affairs. How, then, can the Federal Government mount a loan program for these church colleges without doing so?

One issue of fundamental importance deserves attention before this committee: that is the matter of the actual church ownership and use of the church college to promote its own denominational purposes.

The basis of our constitutional objection to Federal aid to church colleges is that such institutions are a creature of the church which establishes and maintains them. They exist for the purpose of propagating the beliefs which are peculiar to that church. They exist for the purpose af advancing the cause of that church in the mind of the student and in the culture of the Nation. Indeed, we have never seen a catalog of a church college which failed to stress this fact. For example, in the bulletin of St. Louis University, an institution of the Roman Catholic Church, operated by the Jesuit order, it is set forth that one of the "broad objectives" of the Jesuit college is to impart "the command of the great religious truths, which contain not only the laws of personal responsibility, but which give meaning and coherence to the whole of life. Emphasis is placed upon the development of habits of living Catholicism as a creed, a code, and a culture. This end is sought through the content and teaching methods in the religious courses, through the interpretation of Catholicism in all fields of study, through the influence of a faculty chosen to advance this objective, and through the exercise of a living Catholicism in the various funetions and activities provided as an integral part of the educational program."

This is quite in keeping with the purpose of religious schools as set forth by Pope Pius XI in his 1929 encyclical, “Christian Education of Youth":

* with full right the church promotes *** schools and institutions adapted to every branch of learning and degree of culture. Nor may even physical culture, as it is called, be considered outside the range of her maternal supervision, for the reason that it also is a means which helps or harms Christian education.

We contend that there is no difference in substance between Federal aid to churches and Federal aid to institutions which are admittedly integral to churches.

The churches themselves have from time immemorial insisted that their colleges were directly related to their entire denominational program. In the case of the 28 Jesuit colleges of the Roman Catholic Church every member of the governing board of such institutions is a Jesuit priest. Only the Roman Catholic faith is taught to the exclusion of other faiths and every subject is avowedly permeated with Catholic dogma. It is well known that the Roman Catholic Church has a dominational rule, canon law 1374, which requires all parents of the faith to send their children to a religiously segregated school of this denomination unless the bishop is willing to permit an exception. What is not generally known is that the same rule applies also to education at the college level. Last summer Cardinal Joseph E. Ritter, archbishop of St. Louis, applied this canon to Roman Catholic students of his archdiocese. In his order published in the New York Times, June 19, 1960, Cardinal Ritter stated that "parents and students have the grave responsibility of choosing Catholic colleges where the atmosphere and the teaching are conducive to the proper end of Christian (Roman Catholic) education." His order required all Catholic students to attend Roman Catholic colleges unless they obtained written permission after a written, application to his office. This should indicate, Mr. Chairman, how basic the church college is to the purposes of the church itself. It is so basic, indeed, that no valid distinction can be made between them.

This is by no means the exception but rather the rule among denominational colleges, Mr. Chairman. Brigham Young University, an institution of the Latterday Saints, contains in its 1960-61 bulletin this statement of objectives:

"It has been the aim of the university to encourage all students to realize * * * objectives closely allied to, and derived from, the basic philosophy of Mormonism: man, the son of God, is a free agent with unlimited possibilities for eternal development under God's guidance; a never-ending search for truth and for an understanding of the truth should be among the activities of those who aspire to perfection."

Again, we read in the same publication:

"In every area of the church its leadership has been sensitive to the need of continued intellectual and spiritual growth for its members. To meet this need, church educational policies have constantly been adapted or modified to serve more fully the youth of the church."

The bulletin advises that the administrative offices of Mormon education have been established at the university and that "Brigham Young University becomes the mother institution for Latter-day Saints education."

American University is owned by the General Conference of the Methodist Church. In the school's announcements for 1960-61 we read:

"The purpose of its founders * * was to establish in the Nation's Capital a university to reflect the distinctive values of the Protestant heritage. The bulletin (1960-61) of Baylor University, a Southern Baptist institution states that "chapel attendance for four semesters is a graduation requirement. ***" The bulletin says, further:

"Any student taking a full academic load for a summer session will receive credit for a semester of chapel. Any serious irregularity in attendance will be a cause for disciplinary action. Matters pertaining to chapel are under the supervision of the university chaplain."

Many more examples could be offered. They all point to the close identity of colleges and sponsoring church. We believe that the Supreme Court's clearly enunciated doctrine of the first amendment bars such forms of direct assistance to these church agencies as are contemplated in this bill.

We turn now to the scholarship program. Scholarships won in genuine academic competition under distinterested auspices-and certainly not under the auspices of the institutions involved-could be receivable in any institution of