that the State would do that, would eliminate the objectionable Federal controls to which I have referred.

Senator SMITH. Well, if that was done, would you feel that there was value to the general approach to title I, so far as helping the credit and disposing of the district bonds that were issued under the present system in the States?

I am trying to see how far we can preserve the present State systems of finance just as far as it will go, and have the Federal Government help in that without having the Federal Government take over, either by direct grants with no return at all, or having the taxpayers of the country generally pay for these decisions.

Mr. FULLER. Well, as I said in the beginning, I believe that the attitude of most of the chief State school officers and we have word from almost all of them on all four titles would be that title I, if the interest rate could be reduced and the Federal controls removed, might well be very useful.

The interest rate at 3% percent, when only $76 million out of a total of $2 billion worth of bonds were sold at such rates, is too high to be of any real use.

I don't see any advantage in it at all, and the chief State school officers agree generally by a large majority. I have heard none of them disagree with this conclusion-I don't see why the Federal Government should have to add extra interest of one-half of 1 percent, if it really wants to help these very poorest school districts where the money to pay would come out of the local real-estate tax at the local level, with all the limitations which have prevented them, in many cases, from building school buildings, and which is the most painful tax we have at any level, local, State, or Federal.

Now, if you would reduce that interest rate and eliminate the controls and set title I off as a bill by itself, we think it would probably be of assistance. We have no doctrinaire position in our position to title I or, indeed, to any other part of the bill.

Senator DOUGLAS. Mr. Chairman.

Senator SMITH. Let me just add one more word to finish this thought.

Have you got data enough from your experience in the position you are in, to indicate what would be probably a rate of interest that ought to be substituted for this 3%, if we modified the bill?

Mr. FULLER. Well, I have suggested here that the rate ought to be the cost to the Federal Government of borrowing the money, and

no more.

Senator SMITH. Offhand, I don't see any objection to that, but I am glad to get your suggestion.

Chairman HILL. Doctor, as you know, under the REA loans there is a 2-percent rate and no additional cost. Those loans are 2 percent and no more.

I think Senator Douglas wished to ask a question.

Senator DOUGLAS. I want to ask if these very considerable Federal controls are not included in order to make the bonds more salable by private investment houses that sell to the insurance companies and other big investors, saying the bonds are not only approved by the States but also approved by the Commissioner of Education.

Mr. FULLER. I believe, Senator Douglas, that the 3% interest rate, and the high interest rate, is, specifically, to make the bonds more attractive.

I would say, however, that local school districts almost everywhere in the United States and State bonds sold under State plans for financing school buildings, such as in Washington or Florida, California, and other States have at least as good credit as Government bonds.

The rates on those local school-district obligations, and on State obligations underwriting them, are as low as Government bonds, and therefore that indicates to me that their credit is as good as the credit of the Federal Government.

Senator DOUGLAS. Mr. Fuller, would you say that one of the purposes of S. 968 or one of the effects, because I don't believe it would be a purpose one of the effects of 968 will be to increase the profitableness of private bond houses in the business which they do?

Mr. FULLER. Well, I think that bonds which are underwritten by all the property in a local school district and, coming up the line, by a State agency, and then underwritten by the Federal Government at 3% percent or slightly more, perhaps, would be a very good investment, since all these are, of course, tax-exempt securities, and these are higher interest rates than similar securities command in the open market.

Senator DOUGLAS. Are you acquainted with the series of children's books, entitled "The Peterkin Papers" which were written some decades ago by a distinguished author from Senator Smith's State? Do you remember the Peterkin Papers?

Mr. FULLER. I have seen them.

Senator DOUGLAS. And the way in which the lady from Philadelphia would help out families when they got in trouble.

Do you remember the story of the Peterkin family when they made coffee in the morning, and by mistake put salt in instead of sugar, so that the coffee was undrinkable, and the remedy which the Peterkin family used was to put an extra dose of sugar in, which in turn made the coffee excessively sweet, so they tried to counteract that by putting in more salt, and that in turn made the coffee excessively salty, and that was counteracted by putting in more sugar, and they finally got to the point where they didn't know what to do, and they called the lady from Philadelphia across the street, and she came over and gave them a bit of advice: "Throw it out and make some new coffee."

Now, my suggestion is throw out S. 968 and get on a sound basis. Mr. FULLER. Well, I believe that it will come out later in the testimony that no less than 40 of the chief State school officers would try to throw out title II and title III of this bill.

Senator LEHMAN. Mr. Chairman.

Chairman HILL. And you would certainly want title I amended very substantially and materially.

Mr. FULLER. As I have suggested here.

Chairman HILL. As you have already indicated by your testimony. Mr. FULLER. I think it could be very helpful if that were done. Senator SMITH. I was very much interested in your discussion of the titles, one by one, so we can get the benefit of your views on each title, your objection to them or any way they might be modified as far as it is practical in your judgment.

Senator LEHMAN. Dr. Fuller, I have been studying this bill very carefully. I understand it, I think, and I have become increasingly disturbed at the fact that it appears to me that this proposal is keyed much more to the maintaining of the security of any bonds which the Government may take, rather than in giving any help to the States and to the districts, or advancing the cause of education.

I am particularly concerned with regard to the control which is proposed. I think the two quotations which you have read, and many other references in the bill

Mr. FULLER. They were just illustrations.

Senator LEHMAN. Would indicate to me that under this bill authority would be given to the United States Commissioner of Education, to control the educational systems of the districts.

I made the statement the other day, and I wonder whether you would agree with it, that under strict interpretation of the provisions of this bill that apply to control, the Federal Commissioner of Education could, in order to make certain that the bonds were repaid at stated intervals or when due, say to the district:

You have got to cut out 4 or 6 or 8 teachers; you have got to reduce the salaries of such teachers as you have; or you must curtail standards of education and the curriculum as set forth by the education authorities of the State.

I do not believe that that statement of mine is by any means an exaggeration. I think the power is given to him under this provision

to

include in any contract or instrument made pursuant to this title such other covenants, conditions, or provisions as he may deem necessary to assure payment of obligations purchased under this title.

It seems to me that there is almost complete control given or authorized to be given to the Commissioner of Education to conduct any kind of an educational system that he may wish to conduct and key that to the security of the bonds which the Government has taken over at no risk to itself generally, without any loss, in fact at a profit.

I wonder whether you will subscribe in the main to that view. Mr. FULLER. Well, I would subscribe in general, but I would say this: that the discretionary power given to the United States Commissioner of Education under title I here would enable him to do many things.

However, I do not think we have ever had a Commissioner of Education, and I am sure that Commissioner Brownell would not fit into any class of commissioners, who would go so far as to try to specify details of educational programs in order to maintain the property as security for those bonds which have been issued on the basis of it. I do think, however, Senator Lehman, that the discretion here would make possible actions which would go far beyond anything that we have ever yet had in the direction you indicate.

Senator LEHMAN. I want to make it clear that what I have said certainly does not apply to our present Commissioner of Education, Dr. Brownell. I also have the feeling that in all likelihood it would not apply to any man who is appointed Federal Commissioner of Education.

Mr. FULLER. Right.

Senator LEHMAN. But you do understand that the discretion would allow him to do anything that he wished in order to maintain the

security of the bonds, and we have been fighting against Federal interference in the educational system.

We have been fighting, so far as that is concerned, against State interference with the conduct of the district schools.

Mr. FULLER. And we agree about that.

Senator LEHMAN. I certainly would not be willing to lodge that discretion of power in any unknown, unnamed, undescribed and unjudged Commissioner of Education that might be appointed in the years to come.

Chairman HILL. You may proceed, Doctor.

Mr. FULLER. Title 2, Federal credit assistance to State school building agencies:

Title 2, Mr. Chairman, is the heart of S. 968. This is so because title 1 is of extremely limited application, title 3 exists merely to provide modest grants to local school districts to enable them to quality under either title 1 or title 2, and title 4 involves only small Federal grants to the States for State administrative purposes of prescribed types.

Mr. Chairman, it is impossible for the chief State school officers to believe that title 2 would be helpful and should be enacted. Major portions of it are contrary to the policies of the chief State school officers. It has excessive Federal controls. It would result in long delays, including court tests on the constitutionality of State school building agencies in many States.

You will hear testimony later today from several chief State school officers representing States in various parts of the country, and I have a number of communications here from others who say title II would be of little help in their respective States. Many believe assistance from it would be slight and long delayed. It would place the ultimate financial burdens on the local real-estate tax in the poorest school districts of the land, and greatly increase those burdens. And the interest rates they would be paying under this bill would be in excess of interest rates in almost all instances to that which they now pay on local school district bonds.

Title II is fundamentally unsound as a device (and I quote the President again) to

give our schoolchildren as quickly as possible the classrooms they must have. It would throw the schools back on local real-estate taxes as a permanent policy. It would deny to education the modern and more adequate sources of revenue being made freely available by the Federal Government for the construction of other types of physical facilities such as highways.

The result of title II would be that the school districts least able to do so would be required to pay not only the rentals covering principal and interest on the loans, but an additional one-quarter of 1 percent to take the Federal Government's funds entirely out of the reserve fund within a few years. In addition to all this, Mr. Chairman, there would be still further charges added for maintenance and repair of the buildings and even for the administrative expenses of the State school-building agencies themselves.

Thus the extra charges in favor of the private lenders of money would also be fastened on the school districts least able to pay. The Federal Government would never need to advance any large sums

and would probably retire from the operation with a net profit in a few years. This is not a $7 billion plan as widely advertised; the total Federal grants and loans would at their peak be only a small fraction of that amount.

On the legal question-and this concerns delay in getting the buildings that the President says we need as soon as we can get them-we have been told that the Department of Health, Education, and Welfare has been advised by a firm of New York lawyers that there would be no constitutional questions about the establishment of State schoolbuilding agencies in any State.

We submit that this conclusion has ben reached on the basis of very slim judicial precedents. Persons who have had extensive experience with the questions of constitutional law affecting public schools believe that the constitutional debt limits of many States would be violated if State school-building agencies constructed schools and rented them to the local districts for 30 years under conditions which would cause their total investments to exceed the constitutional debt limits of the States. Should these agencies agree to convey the title to the local districts when their bonds were all paid, the law would be admittedly unconstitutional in many States.

But the legal advisers of the Department of Health, Education, and Welfare contend that if a lease is made for 1 year at a time and renewed each year for 30 years and then the State given the authority to convey to the local school district the title to the property

if the State so desires (sec. 209 (c) (2))—

then the constitutional objection will have been overcome in all States. Mr. Chairman, this would be doing by indirection what cannot be done directly. The supreme courts in many States would look straight through such a device to its real intentions and would declare it unconstitutional under the State constitutions.

Chairman HILL. May I interrupt you here to ask one question. Are you a lawyer? Have you had legal training and background?

Mr. FULLER. I took a doctor of law degree from the University of Chicago Law School, Mr. Chairman, in 1932 when Senator Paul Douglas was teaching classes in the east room of that same law school. I used to see him come in and go out every morning.

Chairman HILL. You didn't depend upon Senator Douglas, in all of his greatness and marvelous scope of information, to teach you the law?

Mr. FULLER. No; he was teaching economics. They were just using the law classroom.

Chairman HILL. But you got your doctor's degree in law?
Mr. FULLER. That's right.

I might say further that as I went on in school administration as a superintendent, college president, and teacher at Harvard University of Administration, and then a State commissioner, it has been my privilege to have a very great deal of contact with the legal questions in education. Also in taking a doctor's degree at Harvard University in educational administration, I did prepare my dissertation in the field of school law. For 23 years now I have made it my major interest, I would say, rather than a minor interest, particularly the public