MY DEAR SENATOR GEORGE: The department of education, National Catholic Welfare Conference, welcomes the opportunity to offer comment and recommendations in reference to Public Law 346 and House Act 3749.

In the enactment of Public Law 346 the Congress of the United States has exhibited commendable, foresight and prudence by anticipating the veteran's readjustment problems well in advance of the avalanche of discharges which we are now experiencing. In passing this law, Congress did not consider it to be a payment to the veteran for a service which can never be adequately compensated in a material way, but as an act of justice to assist him once more to take his place in civilian life which was interrupted by the war. The public was quick to sense this idea when it dubbed the law the GI bill of rights. It would be unfortunate, therefore, if through unwise though well-meaning amendments the veteran were to be given the impression that this law is to be a type of largesse from the Federal Government.

Recommendations are being made to the committee to liberalize the educational benefits through the modification of the existing Public Law 346. The department of education wishes to submit its opinion concerning two of these suggested changes:

1. The elimination of the 25-year age limitation.

2. A modification of section 1505 which would make deductible from any future compensation none, or only a part, of the tuition fees charged to the Veterans' Administration.

Whether or not the 25-year limitation should be eliminated depends upon the number of veterans over 25 years of age at the time of induction who have made legitimate requests for a course of study other than a refresher or retraining course. A sufficient number of reasonable requests might warrant a change in the law which would make the full educational benefits available to those who seek them. If there are only a few such requests, there does not appear to be a sufficient reason for risking an invasion of the schools by veterans whose previous contact with formal education is so remote that a return to school would be of little service in their readjustment to civilian life.

The department of education suggests that section 1505 be modified so that the differential between the amount paid in special contracts with the Veterans' Administration and the school's established tuition fee be not deductible from any future compensation. Although this change may somewhat alter the broad intent of the law, it is necessary in the interest of school systems which, without the revenue from tuition charges in excess of the established fees, cannot provide the specialized training suitable for the veteran's education. Presently such school systems would rather refrain from making any special provision for veterans than risk the accusation that they had discriminated against them by charging a fee, deductible from any possible future bonus, in excess of what was charged the nonveteran pupil.

The liberalization of the law should be accompanied by additional safeguards to protect the veteran and the Government from exploitation through irresponsible institutions of learning. Changes already incorporated into the law by Act 3749 may lead possibly to abuses which would expose the veteran to utter disillusionment when he discovers that certain very promising education courses proved to be a waste of time and effort. Any school which offers instruction valued at more than $500 for a period of less than 30 weeks should be carefully investigated by the Veterans' Administration in cooperation with recognized accrediting agencies.

The department of education recommends that subsistence allowances be fixed at not more than the median rates reported by the colleges as needed for board and room either on or off the campus. Married veterans with one or more children should be granted a subsistence allowance for each child.

The department of education hopes that the suggested changes in the law are in keeping with its broad purpose and will work for the general welfare of all veterans.

Very sincerely yours,

FREDERICK G. HOCHWALT, Director.

Senator JOHNSON. I will also insert in the record at this point a telegram from Theodore H. Silbert, executive vice president, Standard Factors Corp., 270 Madison Avenue, New York, N. Y.

(The telegram referred to is as follows:)

RALPH FREDERICK,

NEW YORK, N. Y., October 10, 1945.

Senate Office Building, Washington, D. C. Regret, because of inability to make plane connections, I am unable to be present at hearing on Thursday re GI bill of rights as suggested by you. Strongly urge for the particular benefit of veterans and banking and financing institutions nationally that the amendment to the GI bill should provide that accounts receivable and inventories be acceptable to the Government for automatic loan coverage. Such an amendment would permit additional hundreds of thousands of veterans to go into business for themselves. Suggest this telegram, if possible, be incorporated in the record.

THEODORE H. SILBERT, Executive Vice President, Standard Factors Corp.

Senator JOHNSON. Mr. Brannan.

STATEMENT OF CHARLES F. BRANNAN, ASSISTANT SECRETARY OF AGRICULTURE, ACCOMPANIED BY J. E. WELLS, JR., DEPUTY GOVERNOR, FARM CREDIT ADMINISTRATION, AND ROBERT W. HUDGENS, ASSOCIATE ADMINISTRATOR, FARM SECURITY

ADMINISTRATION

Mr. BRANNAN. I am grateful to this committee for the opportunity to present the Department's views regarding H. R. 3749.

The Department of Agriculture is primarily concerned with title III of this bill, entitled "Loans for the Purchase or Construction of Homes, Farms, and Business Property," and my comments will be confined to this title, and in particular to sections 500 and 501, which contain the general provisions for the guaranty of all types of authorized loans, and section 503, which specifically applies to agricultural loan guaranties.

Our concern stems from the fact that we are interested in any and all legislation which is designed to assist those veterans who elect to reestablish themselves on the farms of the Nation and also from the fact that this Department has, by delegation from the Administrator of Veterans' Affairs been engaged in carrying out the above-numbered sections of the act relating to this function.

Although H. R. 3749 would reenact many of the provisions of the Servicemen's Readjustment Act of 1944, it proposes the repeal of several of its provisions which we believe highly desirable and changes the application of others in such a way as to defeat the original

intention.

PROTECTION OF VETERANS AGAINST EXPLOITATION

The bill before this committee does not provide the veteran with the safeguard and impartial information and advice regarding the values of farms, farm equipment, or livestock to be purchased by him that are available under the present act.

Language designed to afford protection against the purchase of land and equipment at excessively inflated prices and to guide the veteran away from incurring debt loads beyond his ability to repay are to be found in the present GI Act. For example:

The act now provides that before the Administrator of Veterans' Affairs guarantees the prescribed portion of a loan to a veteran he shall determine certain facts. These findings include:

(a) That the property he buys will be useful in and reasonably necessary to his proposed operation;

(b) That the ability and experience of the veteran are such that there is a reasonable likelihood of his success; and

(c) That the purchase price of the property does not exceed its reasonable normal value as determined by proper appraisal.

The bill also proposes that such findings, in general, shall be made, but specifies that these findings are to be made by the lender.

Only certain established lending institutions and such other lenders as may be approved by the Administrator of Veterans' Affairs may exercise this function for the Government and the veteran under this bill, and while these institutional leaders generally may be expected to deal fairly with veterans, the opportunity is present for some lenders to countenance the sale of property to veterans at unreasonable prices and allow them to be saddled with excessively heavy debts without limitation or review.

It is also to be especially noted that the bill has omitted the word "normal" as one of the elements of the present finding regarding the amount of the purchase price.

This finding would be changed to read:

The price shall not exceed the reasonable value as determined by the leader's appraisal.

There is always the possibility for wide variation in the opinions of reasonable men as to the "reasonable value" of a particular item of property. Land may have a "reasonable value" when judged by its long-term earning capacity. It may have a greatly different "reasonable value" when judged by present market conditions or immediate resale potentialities. Under the proposed amendments there would be no uniformity in any county, State, or throughout the Nation in the determinations of value.

It is clear from the legislative history of this portion of the present act that the Congress inserted the term "normal" for the purpose of indicating that the Administrator of Veterans' Affairs, or the agency he should designate to assist him in approving farm loans for guaranty, should take into consideration other factors than the current market price in determining the value of land, and that the Congress recognized that land prices were at the present time well above the averages for previous years and that there may be some adjustment downward from the peak which land prices had reached during the war or may reach in the immediate postwar period.

During the past Congress has used the term "normal" in legislation dealing with loans on farms, and its concept is generally understood for this purpose in the farm-mortgage lending field; hence, we believe some relationship of guaranteed loans to normal values should be retained in the legislation. Further, some reference of the relationship of current market prices to normal values should be helpful to the veteran who will assume the obligation.

Senator MILLIKIN. Would you say that, generally speaking, farm lands are now priced at an abnormal level?

Mr. BRANNAN. The figures of the Bureau of Agricultural Economics show they are well above, running as much as, in some cases, perhaps 100 percent or more above the prewar values of agricultural land.

We in the Department do not take the position that what the prices of lands as they prevailed before the war, let's say 1935 to 1939, are the prices to which lands are going again after the readjustment of this war takes place. But by the same token we do not say that the price of wheat will go back to the 1935 to 1939 level.

We all hope, and I am sure the Congress intends, by much of the legislation that it has before it, that we shall maintain a higher price level for farm products, and that there will be a corresponding reflection of those prices in farm land prices.

But I do think that the general concensus would be today that the prices at which farms are selling in many parts of the country are above what would be normal over a long period of time, taking into consideration the years prior to the war, the war, and subsequent to the war.

Senator MILLIKIN. That raises a point that bothers me some because I would like to think that the inflation we are in in many directions is only temporary and that we are going back to what might be called normal as to level of prices. But there is also much opinion that it is not temporary, that we are in for a continuing inflation.

The optimists hope that it will be very gradual. The pessimists think we are going into a progressive inflation. If we get to specu lating about those things too much, how is the soldier going to get a farm?

Mr. BRANNAN. Well, Senator

Senator MILLIKIN. I mean, who can say that the price of farm lands isn't going to rise gradually for a rather long period of time? Certainly, if we are in for long-term inflation, then it may be reasoned that farm lands will be in for long-term inflation and I think quite an argument could be built up for that.

I am not putting forth an argument for either side. I am trying to settle in my own mind what is the proper criteria on which a farm purchased for a serviceman may be realized, what is the proper criteria by which to judge the purchase of farm lands by servicemen.

As I say, I would like to think that we are going to get out of this inflation, but who is in position to say?

Carrying the argument a little further, if we turn down the application of a serviceman to make a farm purchase today because we think the price is going lower, suppose those who say it will continue to go higher for a long period of time are right; then we have perhaps rendered a disservice to the serviceman.

Mr. BRANNAN. Of course.

Senator MILLIKIN. We get into an enormous field of speculation, and how can we cut through that to get a solid foundation on which to proceed?

Mr. BRANNAN. It is my understanding that this, or any comparable language in the bill is designed not to state with definite certainty what the trend is going to be, and what the veteran can actually pay out of the earnings of that land for the land over the period of his repayment schedule, say, maybe 30 to 35 years, if some of the patterns of the repayment which are not prevalent and recognized by the Congress were adopted, but the Congress has provided for in the Department of Agriculture a bureau known as the Bureau of Agricultural Economics, in which we have a group of people who study these things, and do as best they can to predict-I mean, to forecast-what would be the general trends.

At least they can go back over the history and tell us what happened in previous decades following the previous wars, and leading up to those wars, but that isn't the final criterion.

Senator MILLIKIN. Can they tell us, for example, whether or not we are going to balance our Budget, and if so, when?

Mr. BRANNAN. No.

Senator MILLIKIN. If they can't predict that, how can they predict what the value of lands or anything else will be?

Mr. BRANNAN. Well, Senator, they can, perhaps, help us by saying that the price of farm commodities prior to the war were such and such; they were during the war such and such.

Now, at least, your veteran, or any individual who is about to buy a farm ought to take these factors into consideration, because your farm is your home and your business combined, and you are going to pay for your farm out of the operations of that farm, out of what you can take out of the soil with the use of your hands, and take the products of that soil to the market place.

Senator MILLIKIN. At the prices you can get.

Mr. BRANNAN. Yes.

Senator MILLIKIN. There comes the great question. What is the price going to be?

Mr. BRANNAN. If we can give the benefit of what knowledge is being developed from time to time in those fields, I think we have gone as far as we can go.

Senator MILLIKIN. I fully agree, he should be advised.

Mr. BRANNAN. Yes.

Senator MILLIKIN. I am just wondering what is the language we can put into this act that would protect the veteran. Frankly, I haven't any language that would produce that result, and I am not so sure that there is any language that can be put into the act to produce that result, because I don't think any man today can predict whether we are merely in a little temporary inflation, or whether we are going to go into more and more inflation, because that centers around the things I mentioned, when we are going to balance our budget, if we are going to balance it.

There are factors that can't possibly be calculated at this time. I am just wondering how you can soundly advise a man as to when he should buy.