This whole question certainly, Mr. Chairman, is a very general issue, but it is related to this whole question of Federal taxation. Naturally the more we have the Federal Government doing, the more money they are going to have to take from the States-they cannot get it anywhere else let's say, the less money resources there will be for States to assume their own obligations. In some areas that may be entirely justified, but in the area of education I think we have a unique situation here. We are not talking about physical things like highways and so on. We are talking about something that affects the minds and lives and attitudes of our children, and I think that is a particular point that is involved.

Certainly, though, we recognize that if this trend toward larger and larger Federal expenditures continues, whether it be for education or anything else, it is going to have some limiting effect on the States to do the job they should be doing.

Mr. BAILEY. I heard the statement on the floor of the House some days ago, and nobody questioned it, that the income to the Federal Government over the 6 years since the present administration took over was $232 billion more than the last 6 years of the Democratic administration. How much of that $232 billion has gone to the cause of education? What has been the increase in the Federal support for education? Does it reflect that the schools have gotten their share of this $232 billion?

Mr. WATSON. I think you have a different situation. That is the point I want to emphasize.

Mr. BAILEY. Let me do a little bit of reading right here: Sources of school revenue, of current operating funds, local taxes supply 58 percent. State legislatures provide about 38 percent, and the Federal Government appropriations amount to approximately 4 percent. For many years local revenues have been declining proportionately while the percentage from State and Federal sources has been increasing. Mr. MILES. That is correct.

Mr. BAILEY. Do you know what I am quoting from? Listen to this:

Revenues derived from the general property taxes are relatively unresponsive to the economic cycles. This means that public schools to the extent that they are supported by property tax are experiencing a continuing lag in the economic progress of the Nation.

Do

you have any idea where this comes from?

Mr. MILES. A witness of yesterday probably.

Mr. BAILEY. I think this publication is put out by the chamber of commerce. Do you not have a little publication called "News and Cues"? Is that not a chamber of commerce publication.

Mr. MILES. That is correct.

Mr. BAILEY. I am quoting from the chamber of commerce.

Mr. MILES. That is quite correct, sir, but the point is that the States have been assuming this tremendous increase in responsibility and they are the ones that are constitutionally responsible for doing something. It is in their constitutions or statutes to do so.

Mr. BAILEY. But the State figure remains firm.

Mr. MILES. It has been increasing. That is what it says there. Mr. BAILEY. I am talking about the Federal Government that is standing still and not making its increased contribution.

Mr. MILES. It is not in the Federal Constitution that it should do so, sir.

Mr. WATSON. I think that is a fundamental issue. That is the role the Federal Government and the responsibility the Federal Government has in the financing of public education. It is our conviction that the Federal Government does not have that responsibility for the financing of public education.

Mr. BAILEY. What are the two ingredient parts of this whole program? Is it not better classrooms and better teachers?

Mr. WATSON. Right, and how the communities can better provide for those.

Mr. MILES. This is a better quality of education, Mr. Chairman. I believe there are many schools in which by better using the existing classrooms they could change the quality of education tomorrow if the school boards only decided the curriculum should be modified.

Mr. BAILEY. What are your objections to the Metcalf-Murray bill? What you have been giving? Have you got any specific objections? Mr. MILES. Specifically and without going on with this question of local and fiscal capacities, which is in the written testimony: Specifically in regard to that bill, it proposes, as I understand it, simply to allocate to the States-unassigned as to how it is spent except for construction or salaries, and it is up to their discretion-"x" amount of dollars per pupil; $25 up to eventually $100 for the States and communities to use as they see fit in these areas.

Mr. BAILEY. You gentlemen will have to agree there are no Federal controls there.

Mr. WATSON. No, there are no absolute Federal controls in the sense that they are dictating how they should use it. But they are requiring that the money be spent on one of two things. That is Federal direction. The purpose is naturally to improve our schools, to improve construction and to raise salaries. What assurance is there that a community that is hard pressed to meet its other financial obligations would not use its present school revenue in another way; that the money would not have been diverted to other needs, to other areas, and in the final analysis the teachers would get no more in the long run than they got to begin with?

Mr. BAILEY. That is the same problem you have in the State legislature: Who gets what little money is available, with all of these other demands for matching Federal road moneys and various other matching funds?

Mr. WATSON. That is right, and this gets to a basic point. If I may-and I know your time is short for you; but-let me just summarize, because it relates to this particular question.

Our present legislation, referring specifically to the Murray-Metcalf bill, is based on the assumption that you have the advantage of a thorouogh and objective study, factual information showing a shortage of classrooms and so on. Analysis reveals that uncertain conditions exist, and the way that it is presented as being a national emergency is certainly questioned by us. While recognizing local and individual circumstances we doubt that the States are unable to cope with this problem. Recognizing the problem in its proper perspective, we do not believe that the Federal Government has resources, in any event, that are not available to the States. Certainly we know that that is

not so.

We hold as untenable, then, these points. Evidence shows remarkable, and increasingly remarkable, accomplishment in construction, relatively and actually, and in improving teachers' salaries and in improving education generally. This is a trend we would expect to continue and for which our educational people in the States and communities are to be congratulated.

We believe that any "massive infusion" of Federal funds would not stimulate but would, in the long run, actually deter local effort and local interest, in the example of the Murray-Metcalf bill and the point I just mentioned. If they have "X" millions of dollars coming from the Federal Government to be used for education, certainly that money will be used for education. But their own money which might have been used for education, or might have been raised for education if they had to, would probably be diverted elsewhere. And it could very well be that those funds would be dissipated without the appreciable improvement of education itself, in construction or salaries, at all.

Mr. BAILEY. They would have to build school buildings and they would have to increase teachers' pay before they could get the Federal money.

Mr. WATSON. To the extent that that money was involved; yes. Mr. MILES. And that is Federal direction, may I say?

Mr. BAILEY. The point you are making is, there is no incentive to local participation?

Mr. MILES. There is no incentive locally.

Mr. BAILEY. What else is wrong?

Mr. MILES. And if the Federal Government is going to allocate taxpayers' money, which is what it means, it must assume responsibility, in our judgment, as to how it should be used.

Mr. BAILEY. Now you want to get us into the difficulty of Federal control?

Mr. WATSON. The inevitability of Federal control is one of the principal reasons why we oppose Federal financing of public education. This leads, as we say, to control eventually, we believe, of the educative process itself.

Already, in the National Defense Education Act, with the pronouncements, to begin with, that there would be no control of any sort, educational people themselves are saying there is a degree of control as to what they shall teach and the way in which it shall be taught.

Mr. BAILEY. There are some Federal controls in it. You are speaking now of the Defense Education Act of 1958. But there are Federal controls even more severe in Public Laws 815 and 874, and we have not destroyed the Constitution or interfered too much with the American way of life.

Mr. WATSON. That is a very limited sort of thing totally, though— again, recognizing a peculiar situation. We did not destroy it by providing Annapolis and West Point either, but that is a different type of situation I think.

Mr. BAILEY. Would you be opposed to the committee reporting out the administration's bill?

Mr. WATSON. Are you referring to the providing of bond facilities and so on? I would, but for an entirely different reason. Well, no,

it is the same reason in effect. But I think that bill is administratively unworkable.

If I had to make a choice of the devil or the deep blue sea, I would rather see something like that than an outright grant of "X" dollars to be used any way they wanted to.

Mr. BAILEY. That is in keeping with the chamber's attitude, because Senator Murray referred to it as a bankers' bill rather than for the boys and girls.

Mr. WATSON. Although I was with the Federal Reserve bank once, I was in personnel work, but I am not much of a banker, I cannot comment authoritatively on that point. I suspect that was a little exaggerated remark, however.

We are not pumping for that bill or any other bill, but we believe that the Murray-Metcalf bill would not accomplish the purposes it is intended to accomplish. Furthermore, by getting in on such a largescale basis as that-and the definition of what "massive" means enters into this; billions of dollars is pretty massive-the Federal Government has its foot in the door of public education in this country, and, in our belief, it would inevitable, in time, lead to at least a degree and should, if they are going to allocate these moneys-of control of the educative process itself.

Mr. BAILEY. I still insist that so far as Federal controls are concerned, the Murray-Metcalf approach is the least offensive, of course. Now, take the administration's bill. They agree with the States to finance half of the interest and retirement paid on a 25- or 30-year bond issue. There is a provision in there that at the maturity of the bonds they still freeze 50 percent of the levying authority of that school district for an additional 10 years.

Do you say that is not interference with local self-government, the worse kind of interference? And in the enacting clause of their legislation they have a provision that there shall be no Federal interference.

Mr. WATSON. I know. But it is that sort of thing, Mr. Chairman, that I believe some legislators I know of want to have-federally controlled education through Federal bureaucracy.

Mr. BRADEMAS. May I ask one question, Mr. Chairman?

Do I understand, in summary, sir, that if the U.S. Chamber of Commerce is opposed to Federal aid to education, which you have said, and if the chamber of commerce is in favor of increased expenditures on education, which your statement also says, and if it be true that the chief source of funds for education in our country is the local property tax

Mr. MILES. No.

Mr. BRADEMAS. It is where I live-or State tax, both State and local taxes.

Mr. WATSON. The tax could be sales tax or anything.

Mr. BRADEMAS. Then it must be a fair conclusion, on the basis of these assumptions, that the U.S. Chamber of Commerce favors increases in the local property tax and favors increases in the State taxes throughout the United States.

Mr. WATSON. Where there is the demonstrated need for that very thing; but there are many areas where there is no need at all.

Mr. BRADEMAS. I just want to know what to tell folks back home, because I am going to have to tell them that as far as the chamber of commerce is concerned, the chamber of commerce wants to raise their property tax.

Mr. WATSON. Is he putting words into my mouth?

Mr. MILES. Yes.

There is only one source of taxation for the Federal Government as well as the State governments, and that is the wealth or property of the people within States or communities. The States have the same taxing powers, with the exception of our foreign trade the same taxing powers that the Federal Government has, and we have always advocated the broadening of the tax base. There are places where the property tax is a minor part, and there are other States in which it is a major part of the source of school revenues. There are extremes. We are not going to say we are in favor of raising everybody's property tax. Of course not. There are some instances where property taxes are almost beyond paying now. There are others in which, as in the 14 States that have homestead exemption laws, where they can have much more property tax.

But I would want to say one more thing about the Murray-Metcalf bill. It is an interesting fact that in the fourth year of the operation of that bill, if enacted into law, it will be taking three-quarters of a billion dollars out of the 15 States which the Office of Education reports now to have 44 percent of the need for classrooms and 54 percent of the substandard teachers. In terms of that phrase of putting money where the children are—it is not good legislation.

Mr. BAILEY. Those are things I am sure will receive the attention of the full committee before legislation of that kind is reported out. Doctor, it is necessary for me to get over to the Public Works Committee before they close up. I cannot say I have agreed with everything you have had to say this morning but I have enjoyed the open and frank manner in which we could let our hair down and discuss some of these things.

Mr. WATSON. Thank you..

Mr. BAILEY. It is the American way of doing things. About the only comment I could make is that you had a few different arguments from what they have been offering the past 12 years that I have been listening.

Mr. WATSON. Well, we are adaptable. But we do thank you very much, and you can see that in presenting this information, as I said to begin with, we were presenting a type of information to contradict some that we feel has received a lot more attention than it deserves.

Mr. BAILEY. The next witness will be Mr. H. A. Stansbury, managing director of the West Virginia State Chamber of Commerce. Will you identify yourself and proceed with your testimony?

STATEMENT OF H. A. STANSBURY, OF THE WEST VIRGINIA CHAMBER OF COMMERCE

My name is H. A. Stansbury and I am managing director of the State Chamber of Commerce at Charleston, W. Va.

We desire to be recorded as opposed to all of the numerous bills pending in the 86th Congress which aim to provide Federal funds to

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