supplies costs for each veteran, regardless of whether the total enrollment represents an increase over the prewar load or not. The customary fee, regardless of its size, is paid without question under the law, even to institutions whose total enrollment increased little or none as compared to prewar. Our institutions are not in this category, since all have low customary fees.

However, the following figures indicate what the additional load and costs of land-grant institutions actually were. All the figures are from United States Office of Education reports on land-grant institutions for the years 1938-39 and 1947-48.

In 1938-39 land-grant institutions enrolled 262,000 students in regular session. In 1947-48 their enrollment was 523,000, an increase of 261,000. Approximately

51 percent of the 1947-48 enrollment were veterans under the GI bill.

In 1938-39 total educational and general expenditures of land-grant institutions (which include many items other than instructional costs) were $145,113,886. In 1947-48 the figures were $433,638,000. Neither figure includes the cost of plant extension.

In 1938-39 expenditures classified under the heading "Instruction" by the Office of Education were $66,394,000. In 1947-48 they were $161,314,886, an increase in round numbers of $94,380,000. Payments to land-grant institutions by the Veterans' Administration in 1947-48 were $85,500,000. These figures include payments made for books and supplies furnished to veterans through the institution, and which were therefore not compensation for teaching personnel and supplies to the institution. The best estimate is that $15,500,000 was for this purpose. This leaves a figure of $70,000,000 as compensation to the institutions for teaching personnel and supplies. This amount includes many items of customary fees paid by all students (such as those for health services, recreation, etc.), but if it is accepted as the figure for reimbursement for instruction, the landgrant institutions failed by more than $24,000,000 in 1947-48 to be reimbursed for their increased instructional cost ($94,000,000) as compared to 1938-39. Allocating half the increased cost to nonveteran students, the loss was $12,000,000 on instructional costs for veterans in that year. Veterans generally were enrolled in more expensive courses (engineering, for example) than nonveterans (including women students). The Veterans' Administration does not compensate institutions for large sums essential to instruction but not covered by teaching personnel and supplies. These items, such as administration, libraries, plant operation and maintenance, and organized activities relating to instruction, cost land-grant institutions a total of $74,000,000 in 1947-48. They also spent $85,505,000 for plant extension (of which $1,270,000 was from all Federal sources; none from the Veterans' Administration).

The figures are from United States Office of Education (Interior) Circular No. 183, pages 1 and 18; and from Bulletin 1949, No. 8, United States Office of Education, pages 14, 15, 34, 35, and 39.

NOTE. This committee was told that land-grant institutions "got money" for "plant extension" in 1947-48 to the extent of $20,000,000 in "transfers from current receipts." The statement was made in somewhat less reckless form than to the House committee, which was told that this represented a "profit," the implication being that it was a profit on the veterans' educational program.

The figure of $20,000,000 in transfers from current receipts for plant extension in 1947-48 will be found on page 36, column 8, Bulletin No. 8, 1949, United States Office of Education, which is a report on 1947-48 operations.

If the committee will refer to the same bulletin, page 30, showing income of land-grant institutions, it will be noted that there are 11 different headings under which the income of land-grant institutions are classified. The figure "Transfer from current funds" of $20,000,000, referred to above, includes the total of all types of transfers from current receipts classifications to plant extension. These include the operation of dormitories, athletics receipts, invested endowments, sales of dairy and other farm products from experimental and teaching farms, and unrestricted private gifts. The classification "Plant extension" includes purchase of land, equipment, utility lines, buildings, and additions to buildings. Such transfers from current receipts are and always have been part of the normal operations of educational institutions, and no inference whatever can honestly be drawn from such a figure without a detailed accounting break-down of each institution's operations. It may be added that no land-grant institution makes a profit. All funds of whatever nature are used in the educational program of the institution.

Question. Do the Morrill-Nelson and Bankhead-Jones funds have an endowment character?

Answer. There are four related acts of the Congress which are pertinent: (1) The first is the Morrill Act of 1862, which gave land to the States, the land to be sold and the proceeds used to provide a permanent fund for the "endowment, support, and maintenance of at least one college where the leading object shall be, without excluding other scientific and classical studies, and including military tactics, to teach such branches of learning as are related to agriculture and the mechanic arts, in such manner as the legislatures of the States may respectively prescribe, in order to promote the liberal and practical education of the industrial classes in the several pursuits and professions of life."

There is no dispute about the endowment character of this fund.

(2) The second is the second Morrill Act, of August 30, 1890. This act provided a permanent annual appropriation now amounting to $25,000 annually for each State. Its subtitle states that its purpose is "the more complete endowment and support of the colleges for the benefit of agriculture and mechanic arts, established under the provisions" of the act of July 2, 1862. The text of the act states in section 1 that the funds are to be paid "for the more complete endowment and maintenance of colleges of agriculture and the mechanic arts * * *"

Section 2 states that the sums appropriated "for the further endowment and support of colleges" shall be annually paid.

Section 3 says that "if any portion of the moneys received * * * for the further and more complete endowment, support, and maintenance of colleges" be diminished or lost, it shall be replaced by the State or Territory to which it belongs. (3) The third is the Nelson amendment of March 4, 1907, which is an amendment to the 1890 act.

The title says the act provides "for the more complete endowment and maintenance of land-grant colleges."

The act is in two paragraphs. The first provides a permanent annual appropriation "for the more complete endowment and maintenance" of agricultural colleges. The second paragraph states the manner of payment of the "sum hereby appropriated to the States and Territories for the further endowment and support of the colleges The act further states that the expenditure

of such funds shall be governed in all respects by the acts of July 2, 1862, and of August 30, 1890.

(4) The fourth act is part of the Bankhead-Jones Act of June 29, 1935. Section 22 is pertinent. The title of the act uses the words "for the more complete endowment and support of land-grant colleges.'

Section 22 opens by saying: "In order to provide for the more complete endowment and support of the colleges * * * entitled to the benefits of the act * * * approved July 2, 1862, as amended and supplemented." The funds are required to be expended for the purposes of the act of July 2, 1862, as amended and supplemented. From the above it is clear that not only the title but the text of each act clearly states that the funds appropriated are to have an endowment character; and that the acts are all related.

The acts of 1890 and 1907 provide permanent annual appropriations, while the 1935 act authorizes annual appropriations.

The first Morrill Act provides that the funds coming to the colleges under it may not be used to build buildings or buy land.

The three later acts provide that the funds appropriated under them are governed by the 1862 act, and also defines the purposes for which they may be used. These purposes are for instruction "in agriculture, the mechanic arts, the English language, and the various branches of mathematical, physical, natural, and economic science, with special reference to their applications in the industries of life, and to the facilities for such instruction."

Senate Committee Report No. 1028, Fifty-first Congress, first session, on Senate bill 3714, also may shed some light on the intention of the Congress with respect to the funds in question. The following is quoted from the Senate committee report:

"The object of the bill is to place the system of colleges for the benefit of agriculture and the mechanic arts, established under the law of July 2, 1862, upon a basis of assured support for all time.

"These institutions are now thoroughly established and have already demonstrated that they must be accepted as among the chief agencies through and by which the new and practical industrial education of the people is to be accomplished. Although in the popular mind they are intimately associated with the advancement of the fundamental pursuit of agriculture, yet they are equally devoted to the diffusion of scientific education as applied to the mechanic arts, and thus they embrace within their jurisdiction the whole field of the practical application of science to the wants and welfare of man.

"Perhaps, contrary to the general impression, the proper equipment of these colleges is far more expensive, being at least 10 times greater than that of an ordinary classical institution. A college of agriculture and the mechanic arts is not a cheap affair, and the sooner we awake to the idea that it will and ought to cost something to spread that knowledge of facts and principles which will change the drudgery of common toil to the dignity and delight of intellectual and ennobling occupations the better.

"To accomplish this is the work of the great system of institutions in whose support we urge the passage of this bill.

"Just in proportion as their mission is accomplished shall we find the people seeking the pleasure, profit, and honor of life in the prosecution of those pursuits which produce for the general good, and which must always embrace the mass of the population.

"The passage of this measure, which is introduced by the distinguished father of this system of colleges, will place them upon a sure foundation so long as we are a nation, and link his name with theirs in one common immortality."

This language in the Senate committee report was specifically adopted by the House committee in its Report No. 2697, Fifty-first Congress, first session, the House recommending the passage of the bill without amendment.

The facts, Mr. Chairman, seem to be quite clear.

The Congress in all the acts in question characterized the funds as "endowments" both in the title and the text of the bills. Funds under the 1890 act as amended in 1907 are permanent annual appropriations; under the 1935 act the appropriation is authorized but not carried in the language of the act. The Attorney General ruled in 1899 that the funds made available annually must be expended annually and are "in the nature of an annuity to be used from year to year."

Webster's dictionary says that "endow emphasizes the idea of that which is bestowed (often permanently) as a gift."

It is not my desire or purpose to engage in a technical discussion of the meaning of the word "endowment."

However, the record shows that in all the legislation involved the Congress used that language to characterize these funds, and that the committee reports on the 1890 act show clearly the intent of the Congress that these be permanent funds for the general purposes indicated; the authority of any succeeding Congress to change any act of a previous Congress being always, of course, clear.

I also call your attention to the report of the Federal Security Agency on House bill 6823, which later became H. R. 7057 and was passed by the House, as this report appears on pages 1330-1331 of the House hearings.

I quote from this report:

"Whatever may be said as to the merits or demerits of the position of the Veterans' Administration and the land-grant colleges, the net result of the reductions now being made by the Veterans' Administration is to convert the Morrill Act grants, to the extent of the deduction, to the special purpose of the GI bill and of the veterans educational program with which that bill is concerned-and from the broader objectives which underlie the Morrill Acts and amendments to those acts. We do not believe that this conversion of the Morrill Act grants from a broad to a special purpose is a decision which should be left to administrative discretion or to administrative interpretation. If it is the intent of Congress that Morrill Act funds be considered in determining what is fair and reasonable compensation to the colleges under the GI bill it should make specific provision to that effect, and in so doing itself modify the original purposes of the Morrill Act and of the amendments thereto" (end of quotation).

Question.-Do Morrill-Nelson and Bankhead-Jones funds become State funds when used for the purposes of the acts?

Answer. Two decisions of the Comptroller and the Comptroller General are pertinent: 24 Comptroller's Decision 403, and Comptroller General's Rulings 684. Both have been cited in material inserted in the record, the second including the language "When it has paid the money over to the States, the Federal Government has parted with its right to control the custody and disbursement of these funds, except insofar as proper accounting therefor may make necessary." The representative of the office of the Comptroller General who appeared before this committee has not disputed the correctness or intent of these citations. He has also said that he does not believe that State funds or nonpublic funds should be deducted in estimating the cost of teaching personnel and supplies, although the Veterans' Administration has asserted this authority, while maintaining that the Morrill-Nelson and Bankhead-Jones funds should be deducted.

It is our belief that these positions are inconsistent.

It is our further belief that the power of making regulations, interpreting the law, making findings of fact, and auditing, all entrusted to governmental agencies not subject to any court or other review, is a dangerous power, in relation to education, since it leaves in the hands of the Administrator the final decision as to whether he has or has not followed the intent of the Congress, or violated the express provisions of the act against exercising "any supervision or control, whatsoever * * * over any educational or training institution".

COST OF THIS MEASURE

Representatives of the Veterans' Administration have estimated the cost of this measure at a total of 10 million dollars retroactively, and at about 2 million dollars a year currently.

We believe the cost will be approximately 5 million dollars retroactively, and not to exceed 14 million dollars currently, with a sharp decline in future.

No calculation we have been able to make, on the highest possible basis, would exceed 64 million dollars for the past period.

Senator HILL. Doctor, at this time I believe you wish to present Dr. Lunden; is that correct?

Dr. ADAMS. Yes, sir.

Senator HILL. Dr. Lunden, will you come around and sit by Dr. Adams. Doctor, I believe you are the Comptroller of the University of Minnesota?

Dr. LUNDEN. That is correct, sir.

Senator HILL. We will be very happy to hear you. Proceed in your own way.

STATEMENT OF LAURENCE R. LUNDEN, COMPTROLLER AND ASSISTANT SECRETARY OF THE BOARD OF REGENTS, UNIVERSITY OF MINNESOTA

Dr. LUNDEN. Mr. Chairman and members of the committee, I would appreciate it if I might be privileged first to read a reasonably brief prepared statement, and I will then try to answer any questions that my competence permits.

As you know, I am L. R. Lunden, comptroller and assistant secretary of the board of regents of the University of Minnesota. I am also chairman of the joint committee of business officers of the Association of Land-Grant Colleges and Universities and the National Association of State Universities. Due to illness, I did not participate in the hearings held by the Committee on Veterans' Affairs of the House of Representatives in connection with H. R. 7057. I have, however, read the report of the hearings on this bill and have, likewise, read from the Congressional Record and debate that took place in the House of Representatives when H. R. 7057 was moved for passage. I doubt that much that is new can be added at this time. The issues have been clearly drawn and well documented. The problem now is to determine how the ledger "tis so" and "tain't so" adds up. This should be done dispassionately and in an atmosphere free from suspicion and recrimination. I was happy to note that this atmosphere prevailed for the most part in previous considerations of this matter.

The proposed legislation, H. R. 7057, has clear and unequivocal language. It has been supported in writing by the Association of Land-Grant Colleges and Universities and by candid and forthright testimony offered by Dr. Arthur S. Adams and Mr. Lloyd E. Morey.

I concur with what the association has written and with what these gentlemen have said.

The issues upon which favorable consideration of H. R. 7057 rests can be briefly stated in terms of, (1) Are the funds provided for under the terms of the amendments to the original Morrill Act endowment in character? (2) Will the inclusion of such funds in arriving at the estimate of teaching costs result in duplicate payment by the Government to land-grant institutions? It is my belief that funds provided by these amendments are endowment in character. It is also my belief that no duplicate payments result.

Opponents of H. R. 7057 set great store by an opinion of the Attorney General of the United States. This opinion was rendered in 1899 and its applicability to the matter under consideration apparently arises from the language, "The moneys appropriated by the act of August 30, 1890" are in the nature of an annuity to be used from year to year" and cannot be "accumulated or converted into an interest-bearing fund."

Whether the interpretation of this language would be different were the statement in context, I do not know because I have not read the opinion. Your distinguished predecessors in the Congress of the United States must have meant something when, without exception, we find reference to "providing for the further endowment and support of colleges of agriculture and mechanic arts." I believe, therefore, that Members of this Congress must from their own experience and judgment be the ones to pass upon the implications of such language as used so many times. Moreover, I am not sure that there is anything about an endowment which makes it necessary that the funds **** be accumulated and converted into an interest-bearing fund." Within the applicable Webster definition of endowment, "That which is bestowed or settled on a person or institution," is room for inclusion of the funds under discussion. Because we as business officers work in an atmosphere of maintaining the integrity of endowment and trust funds, we view with genuine concern the ruling of the Veterans' Administration which to us violates the integrity of our endowment support.

It is my judgment that the allowance of the Morrill-Nelson and Bankhead-Jones moneys in no way causes a duplicate payment by the Government to land-grant institutions. I believe there is only one circumstance where a duplication could and would result and that is if the Government paid to a land-grant institution any sum in excess of 100 percent of actual costs of instruction. At my institution the formula prescribed by the Veterans' Administration would yield $5.59 per student credit-hour. That is the estimate of the allowable costs plus the 15 percent override. If we give consideration to other elements of costs, even confining results to the noncontroversial elements such as general administration, physical plant, and wage costs of related nonteaching personnel, the costs per student credit-hour at the University of Minnesota would approximate $10.30. When it can be demonstrated that the Government is paying land-grant institutions only about 54 percent of actual costs, it seems to me to be clear that the Government is not paying anything twice.

I would interpolate another thought, which is not in my prepared statement, and that is-and I say this advisedly-that it is my opinion that the formula for the determination of estimated costs of teaching