However, in order to provide adequate protection to both the veterans and the Government, it is felt that the Administration should have the authority to enter into contracts respecting rates. It would still be required that the institutions be approved by the appropriate State agencies.

Similar recommendation is made with respect to the use of correspondence courses and correspondence schools. It seems only appropriate that there should exist authority to protect against overselling of such courses.

The matter of assistance of State institutions is one which deserves reexamination. It was assumed originally that the States would meet their normal program and that the Federal Government should meet any additional cost by reason of the educational provisions of the Readjustment Act.

Under the language of the last proviso of paragraph 5, title II, many of the State institutions and State legislatures have been based upon such assumption. Many of the institutions have attempted to charge their nonresident rates, or other rates based upon the estimated cost of affording instruction. The veterans have objected because of the provisions of section 1505 of the act on the ground that if there should later be provided a benefit in the form of adjusted compensation or bonus, the deduction therefrom of the amount paid to the State institutions above the customary charges would result in the veteran being charged with a greater cost for his education than would be the fact if he attended the institution as a citizen rather than a veteran. The amendment proposed by the Veterans' Administration would, it is believed, provide a better formula for determining the assistance necessary, and would also provide that such additional cost would not be subject to the provisions of section 1505. This seems only fair. The Congress may decide upon an entirely different approach, as, for example, affording authority to contract with the institutions for additional services as is now the case under Public Law 16.

There are, of course, some minor technical changes proposed with respect to both Public Law 16 and title II of Public Law 346, intended mostly for the purpose of clarification and perfection of administrative techniques. In general, except with respect to the four main points above discussed, the operation of the educational provisions has proved quite satisfactory.

Perhaps it is safe to say that the greatest amount of interest has been evidenced in, and the greatest amount of controversy has arisen over the loan-guaranty provisions of title III of the act. The financial journals and the public press generally have displayed prominently criticisms and suggestions concerning such provisions. These range all the way from minor modifications with a view to expedition of administrative procedures, to the entire elimination of the provision or the transfer of the functions to other governmental agencies. Particular emphasis has been placed by some upon the transfer of the home-loan functions to the Federal Housing Administration. I have made no recommendation with respect to this matter for the reason that I feel it is the duty of the Veterans' Administration to perform to the best of its ability those functions and responsibilities placed upon it by the Congress. Concededly, from the standpoint of purely

functional operations, all responsibilities of the Veterans' Administration could be transferred to other agencies.

I believe, however, that it has been and will continue to be the view of the Congress that all veterans' benefits as such should be administered by one agency rather than being scattered among a number of agencies. Whether the loan provisions should be considered as a veterans' benefit is the question which some feel should be given further consideration. It would seem to be readily apparent that so potentially vast a program cannot be accomplished by any agency without the development of appropriate administrative machinery. It seems only logical to think that such machinery may be developed in one agency as well as in another. Some argue that greater efficiency may be obtained by centralization of responsibility in accordance with functions. Others insist with equal firmness that the veterans' program can be administered more sympathetically and understandingly by the agency responsible for all veterans' benefits. Some would attempt to combine the two ideas by making the Veterans' Administration responsible, but having the work performed by other agencies. It seems clear to me that the responsibility must carry with it the policy making as well as the administrative functions.

Great misunderstanding has existed from the very beginning with respect to the loan features of the act. In some way, the impression was broadcasted, even to the most far-flung battle fronts, that all the discharged veterans had to do was to take his honorable discharge certificate to some place and be handed out $2,000. Consequently, disappointment is expressed when he finds out that he has to go through the ordinary procedures with respect to getting a loan. It should be kept in mind, too, that the act was intended, as the name implies, as a readjustment measure. Literally, the guaranty provision was intended to provide what ordinarily is required as a down payment in connection with purchasing a home, farm, business, et cetera. In other words, the guaranty took the place of the purchaser's equity. It must be remembered, too, that the governmental security provided was a guaranty and not an indemnity. In other words, the Government, to the extent as to the amount guaranteed, absorbs the loss instead of sharing it with the creditor. Further, the act provided stringent safeguards with respect to the veteran, as well as the Government in requiring that the loan must be a practicable one and that the purchase price must not exceed the reasonable normal value as determined by proper appraisal, of the property purchased. This later provision was intended to protect not only the Government and the veteran, but to mitigate against the recognized inflationary tendencies of the other provisions.

In operation, it has been demonstrated that in many locailties houses cannot be purchased at a price representing reasonable normal values. In the agricultural field, land values are such that practically no farms can be purchased on such evaluation. The provision is of lesser importance in connection with business loans, but the difficulty of the act with respect to this type of loan is that it contemplates a secured loan, while the ordinary business loan partakes of the nature of a character loan.

Notwithstanding the above-named difficulties, it is believed that the present act will operate satisfactorily with some changes in pro

cedure now being perfected-and minor modifications in the act as follows:

1. It seems clear that the 2-year limitation should be extended. It is inflationary and I think it can be readily recognized that many veterans will not, within 2 years after their discharge or the end of the war, be in a position to take advantage of this readjustment provision. 2. It seems that a more realistic approach should be made to the question of present values and that reasonable normal value requirements should apply to the amount of the loan rather than the amount of the purchase price. That is to say, if the veteran, for reasons satisfactory to himself, desires to pay the market price, he should be permitted to do so, but the amount of the loan should not exceed the reasonable normal value. This will afford protection to the Government and should go as far as is wise in protecting the veteran against inflationary values. Of course, a limit could be placed, but it should be recalled that the act otherwise required that the loan be a practical one.

3. The provisions respecting farm loans should be somewhat broadened so as to include feed and supplies and improvements on land as well as buildings, and those with respect to business loans should be considerably broadened as to include, in proper cases, inventory and working capital.

4. It is believed, however, that at least with respect to non-realestate loans, the guaranty provisions should be replaced by provisions for insurance. In fact, certain interests have urged that the entire title III be rewritten to afford insurance of real estate as well as nonsecured loans, the Government insuring such loans 100 percent, but with the maximum liability of, say, $2,000. It is believed that this would not be practicable with respect to real-estate loans because it would afford full protection only to the extent of a $2,000 loan, or such other limit as may be placed on the Government's liability, in an individual case. On the other hand, it is not believed that it would be sound for the Government to insure all real-estate loans 100 percent, bearing in mind that the purchaser has no real equity therein.

5. A somewhat minor item, but one which causes great administrative difficulties, is the provision of the present act respecting the payment of the first year's interest on the portion of the loan guaranteed. It would be much less expensive if this provision were changed to authorize simply the payment of a flat sum representing the amount of interest on the guaranteed portion for 1 year. This could be paid either to reduce the amount of the loan or to cover costs of closing the loan as may be deemed most desirable.

There are other modifications which will be explained in detail later. Coming now to the provisions of the House bill, the Veterans' Administration, as explained in the report, is opposed to the fundamental changes proposed. Specifically, we are opposed to removing all safeguards, both for veteran and the Government, and leaving the matter wholly to the discretion of the creditor and the purchaser. Under such wide open grant, the Veterans' Administration or some other governmental agency would simply be responsible for paying losses. There would be absolutely no selection as to credit risks. The House bill apparently attempts to offset such inflationary provisions by transforming the "guaranty" into an "indemnity."

- While the language is not clear that what is called a guaranty is intended as an indemity, the language of section 505 of the bill appears to spell out the fact that the loss would be shared by the creditor and the Government in the ratio of the amount of the guaranty to the amount of the loan. That is to say, if the loan were for $4,000, 50 percent thereof would be guaranteed.

Under the present act, if the veteran should default and the unpaid balance of the loan were $4,000, the Government's liability would immediately attach in the amount of $2,000.

Under the terms of the bill, the amount of liability would be determined after foreclosure or sale, and if the entire loss were $2,000, the Government would be liable for 50 percent thereof, the remainder being borne by the creditor.

While, as stated, it seems to be the intent of the language employed, it is not entirely clear and, therefore, the exact meaning might not be ascertainable until a case had been carried to the highest court, and the act judicially interpreted. If an indemnity only is intended, I do not believe lending institutions would find the loans attractive. If, on the other hand the Government is to guarantee loans with no control or selections of risks, then I would recommend that such losses be paid by the Treasury without requirement that the claims be processed by any other agency.

It will be noted that there is absolutely no provision in title III of the House bill for implementing regulations to be issued by the Veterans' Administration. There are many other technical deficiencies in the bill, but these are matters for consideration when the committee considers the details thereof.

Titles IV and V of the act are reenacted without amendment. While no recommendations have been made to, or cleared by, the Bureau of the Budget, there are some minor deficiencies in the readjustment allowance provisions of title V.

For example: Some dissatisfaction has been expressed over the fact that an unemployed veteran may receive readjustment allowance if he becomes ill while unemployed, whereas if he loses his job because of illness, he is not considered available for work and therefore is not entitled to readjustment allowance.

The act also does not provide for advancement of funds to the States in order to enable them to pay the readjustment allowances under the agreement authorized. Consideration also should be had to the fact that the amounts provided are entirely too high in certain of the Territories and possessions.

To be specific, $20 a week in Puerto Rico or the Philippines is out of line with the prevailing economy in such possessions. In another committee, representations are being made with respect to placing the Philippine benefits on a peso rather than a dollar basis, but the matter is one which properly may be brought also to the attention of this committee.

Finally, it is desired to invite specific attention to the amendment to title VI; namely, section 1506.

While the Veterans' Administration could not very well object to having its regulations reviewed informally by the Congress-in fact all regulations on the Readjustment Act were submitted informally to the World War Veterans' Legislation Committee of the House

and the Finance Committee of the Senate before they were issuedit does seem pertinent to suggest that such statutory requirement would subject the executive department of the Government to the legislative in a manner somewhat different than was apparently intended by the Constitution.

Further, if the committees, as distinguished from the Congress, should construe an act differently than the administrative official construes it, this might or might not be considered as impinging upon the functions of the judicial department of the Government. Of course, except as to contracts, perhaps, the Congress has the legislative power to amend statutes found unsatisfactory. However this may be, it seems apparent that an impossible situation would arise under the proposed section 1506 if one of the congressional committees should approve the regulations and another committee should disapprove. An administrative officer certainly, and possibly the courts, might be handicapped by such conflicting committee actions. Conceivably, it might be quite embarrassing for an administrative officer to carry out the views of the committee of one of the Houses of Congress diametrically opposite to the views of a committee of the other House.

While somewhat lengthy, this summarization of the proposals is only a generalization and leaves for further explanation the innumerable details of the pending bills and counterproposals. The Solicitor, and the administrative officials concerned with the several operational responsibilities, will explain the specific amendatory recommendations and suggestions at the pleasure of the committee. I think I may, however, briefly give you the following statistical information with respect to

1. Vocational rehabilitation under Public Law 16.

2. Education and training under Public Law 346.

3. Loans guaranteed under title III.

4. Readjustment allowances under title V.

If you would like to have those statistics, I will put them in the record.

Senator JOHNSON. Yes; we would like to have them, sir.

General BRADLEY. Vocational Rehabilitation under Public, No. 16, part VII, on August 31, 1945: Cases in file, 104,602; applications approved pending induction, 9,225; applications approved declined induction, 3,347; in training at the present time, 16,102.

Mr. ODOм. I might explain that point because of the vast discrepancy between the first and the second.

By cases in file is meant those that have been rated as pensionable and the form for applying for the vocational rehabilitation has been forwarded to them, but they have not as yet been returned.

Is that correct, Mr. Stirling?

Mr. STIRLING. That is correct in part.

The break-down of the 104,602 applications is as follows:

Pending, 29,731. In this group there are 5,464 cases where advisement has not been initiated, 15,042 where advisement has not been completed, and 9,225 pending induction.