maintenance" of those institutions. The basis for the position taken by the land-grant institutions is more fully set forth in the enclosed memorandum of the Association of Land-Grant Colleges and Universities on this subject, in all of which the University of Illinois and the writer concur.

I am informed (not having been personally present) that on February 1 Mr. W. L. Ellis of your staff spoke in opposition to the measure. He stated (or at least implied) that land-grant institutions are "profiting" from the veterans program through payments made by the Federal Government. He referred to figures taken from the 1947–48 report of the United States Office of Education on land-grant institutions, emphasizing particularly that $20,000,000 was spent for "plant extension" out of "transfers for current receipts."

Many State institutions receive appropriations from their State in lump sums and not separated as to current expense and plant additions. Such sums must go into "current income" but out of that income transfers may and are made to plant extension. By no stretch of the imagination can it be inferred that the institutions have made an "operating profit" which has made it possible for them to assign such amounts out of net current income to plant additions, after direct operating expense.

Universities and colleges, being nonprofit organizations, do not enter depreciation on plant and equipment as an operating cost. On the other hand, expenditures for replacements, rehabilitation, and minor improvements are regularly met out of current income. If depreciation were allowed on the $900,000,000 plant of the land-grant institutions, it would at least equal the sum reported as having been appropriated out of the current income of these institutions for "plant" expenditures.

At the University of Illinois (as shown on pages 78 and 79 of the 1948-49 report sent to you herewith) the total operating income for 1939-40 was $8,577,576; in 1948-49, $39,208,938. Instructional expenditures increased from $4,415,298 to $15,531,483. Of the latter figure, as shown on page 21, the sum of $3,768,547 was paid by the Government for instruction of veteran students; and yet veteran enrollment in that period made up approximately 50 percent of total enrollment.

It is also noted from other figures on pages 78 and 79 that additional large amounts of money were spent from other sources (special State appropriation, etc.) for plant additions. Included in this total is a certain amount ($1,025,033) appropriated out of current funds, but such appropriations came from unitemized State current appropriations or from other unrestricted income and not out of veterans' tuition.

A more or less similar picture would be found to exist, I am sure, in every landgrant college. At the University of Illinois, it costs the State of Illinois more than twice the maximum amount paid by the Federal Government for each veteran for operating expenses alone not including the large sums the State has found necessary to expend to expand facilities for instruction. The State has been proud to make this contribution to a great cause. The service has been rendered without "profit" by it. Every dollar received or earned under the contracts with the Veterans' Administration has been needed for the purposes contemplated by the law, has been used in accordance with the intent of Congress, and has accomplished a thoroughly worthy purpose. No institution has been overpaid. No institution could have done this work without such assistance, and the veterans could not have been served without it.

It is perhaps not out of the way to comment on the methods and points of view followed by your investigators. In a recent examination of our accounts, it was noted (although we have not been furnished with a copy of the report) that they appeared to take cognizance of every questionable item however small that might be of advantage to the Government. They seemed to refuse, however, to take cognizance of any such items, large or small (and there were some), which, however equitable and justified, might be of advantage to the institution. I submit that such an audit and position are entirely unsound in principle as well as in equity. There are two parties to the contract and each party is entitled to equity under it. If adjustments are needed to secure that equity, they should be recognized in both directions. Can public institutions as well as private agencies continue to bargain in good faith with the Federal Government under such conditions?

The adjustment claimed by the Veterans' Administration for these Federal funds is not an equitable demand. The contracts in question are compensation for services. The amount of compensation provided does not exceed the amount that the Administrator is permitted under the law to allow. It is materially less 1 Accounted for as "plant" expenditures.

than the cost of services rendered. It is materially less than is being paid by the Administrator without question or inquiry to many private institutions of the country, the tuition fees of which are materially larger in every instance than the largest fees charged in the State institutions.

Your office is doing a great injustice to the land-grant institutions of the country, in which the Federal Government has a definite interest, in bringing charges of profiteering, unauthorized application of funds, and other criticisms not justified by the facts. Some errors have occurred in the great volume of calculations incident to these contracts, but I doubt if any case can be found anywhere in which such errors have been made with intent to be unfair to the Federal Government.

The land-grant institutions and the Congress are entitled to a more fair and accurate appraisal of their situation by your office than has been presented by your representative before the Committee on Veterans' Affairs or by your auditors when examining records and accounts of such institutions.

Respectfully yours,

LLOYD MOREY, Comptroller.

Senator HILL. Do you have any questions, gentlemen? Is there anything you would like to add, Dr. Adams?

Dr. ADAMS. No, sir.

Senator MORSE. Mr. Chairman, I would like to ask-I will ask it also of the Veterans' Administration witness, but I would like to ask it of President Adams-in this decision No. 812, the first part of the paragraph reads:

On May 3, 1945, a bill to amend part VII and VIII of Veterans Regulation No. 1 (a), as amended, to liberalize and clarify vocational rehabilitation and education and training laws administered by the Veterans' Administration and for other purposes, was presented by this Administration to the Committee on World War Veterans' Legislation and this proposed measure was introduced on the same day in the House as H. R. 3119 by Mr. Rankin, chairman of the committee. Such bill provided for authority in the Administrator to readjust payments to institutions furnishing education or training "in consideration of increased or decreased enrollment and available contributions to meet such costs, whether from public or private funds." When this proposed legislation, following consideration in committee, was passed by the House on July 18, 1945 (H. R. 3749), the original provision, as referred to in the foregoing, to the effect that contributions to institutions of public or private funds be considered in the determination of charges to the Veterans' Administration for the education or training involved, had been eliminated

even though recommended by the Veterans' Administration apparently

and the bill, H. R. 3749, Seventy-ninth Congress, as the same passed the House, did not include, as had been proposed by this Administration, any direction for or reference to consideration of contributions from other sources, public or private, in relation to costs from which proper charges were to be calculated against the Veterans' Administration for education or training.

In other words, in the bill that was proposed in 1945, the expression of intent which the Veterans' Administration subsequently found by a remarkably imaginative amount of reasoning, I want to say, existed in the original bill but was not included in the act passed by Congress in 1945, that I think, is a pretty good bit of negative evidence of the intention of Congress not to grant to the Veterans' Administration the discretion which they subsequently exercised in decision No. 812. Yet, having been denied that expression of intention in the bill in 1945, the Veterans' Administration then goes back to the original act and by, I say, a most remarkable process of imaginative reasoning, reaches the conclusion that results in what I think is this gross discrimination against the land-grant colleges of this country.

If I speak with some emphasis on this, I speak because I am incensed about it. I do not like to see injustices such as this develop in any bureau of our Government. Our combined objective, both as a Congress and as a bureau, in this instance ought to be to do what we can in helping the veterans reach the objectives intended by Congress when the original act was passed, and ought also to be of as much assistance to these institutions as we can be.

There have just been too many instances of the Veterans' Administration throwing road blocks in the way of these educational institutions, to please me. I think the time has come for the Congress to make as clear as can be made clear that we do not want any more of that kind of administration out of the Veterans' Administration. We want them to get together and cooperate with these colleges in the spirit of the intent of Congress expressed in the legislation already passed. That is why I think it is of great importance now that this issue has been raised in the way it has been raised by the Veterans' Administration, that this Congress make undeniably clear to the Veterans' Administration that we do not want the type of accounting that they are advocating in their present position to be carried on to the discrimination of the land-grant colleges.

Senator HILL. Anything further, Senator? Do you have anything further, Dr. Adams or Dr. Lunden? If not, we are very, very much obliged to you.

Now there are some Senators who have evidenced their interest in this bill who may wish to file a statement for the record. If there be no objection on the part of any member of the committee, the clerk can advise these Senators that if they wish to file a statement with us, we would be delighted to have that statement.

We heard from the Veterans' Administration and the Comptroller General's Office at the hearing last week. Does either the Veterans' Administration or the Comptroller General's Office wish to add anything?

Senator MORSE. I would like to ask some questions of the Veterans' Administration.

Senator HILL. All right. Do you prefer any particular witness? Senator MORSE. I never select my witnesses.

Senator HILL. All right.

Senator MORSE. I would like to know if the Veterans' Administration has anything to add, anything over and above the statement of last week plus decision No. 812, in regard to the conclusion that it reached concerning the intent of Congress in the original act, in view of the paragraph that I just read, or the part of the paragraph I just read to Mr. Adams, concerning the clause that was in the bill first proposed in 1945 which was subsequently stricken during the legislative history of the bill.

I will put my question this way. In view of the action that was taken in 1945, what weight if any did the Veterans' Administration give to the action on H. R. 3119 as negative evidence of the intent of Congress?

FURTHER STATEMENT OF G. H. BIRDSALL, ASSISTANT ADMINISTRATOR FOR LEGISLATION, VETERANS' ADMINISTRATION

Mr. BIRDSALL. There is an angle in connection with the Administrator's decision 812, and you placed your finger, sir, on the interpretation of the legislative history in the decision which is contained in the paragraph you first mentioned and the following or ensuing paragraph. In connection with that, just to make certain, I ran through that history again this morning, the detailed legislative history.

The situation should be mentioned that after the bill passed the House without the provision which had been forwarded by the Veterans' Administration, and bearing in mind that prior to that submission to Congress the interpretation had been that the authority existed to regulate on that subject, the Senate committee reported the bill out with an amendment which incorporated this authorization which had been sent over, but however added other language to that which could be construed as including other than instructional costs and supplies.

Now, the history is silent except for the conference report which shows a decision was made to drop all of the language, which left the law in its former position, and under that the Solicitor's interpretation approved by the Administrator was that it left the authority to regulate in regard to instructional costs and supplies.

Now, if there is any desire on the part of the Solicitor to amplify what is contained in 812, or whether he can, he might be given the opportunity to do so, it could be inserted in the form of a letter addressed to the committee, if you so desire.

Senator MORSE. I think he should have that opportunity.

Senator HILL. We will be very happy to have him write us, as you have suggested. If he has nothing further to say or no amplification, why, he can so advise us in a letter. If he does have further amplification, why, he can set it out in a letter.

(Discussion off the record.)

Senator MORSE. Mr. Birdsall, do you think there is a basis for my presuming that in 1945, when the Veterans' Administration sent over the proposed language, the Veterans' Administration at least was in doubt as to the meaning of the original act?

Mr. BIRDSALL. I would not want to be final on that, because that would be a matter, I think, that the Solicitor should bring out strongly, but it would seem that it was a desire to clarify the law in accordance with that which was believed to be the proper interpretation of law. Senator MORSE. In other words, they thought that a clarification was needed in order to support an interpretation which they apparently desired to make of the original act.

Mr. BIRDSALL. The affirmation by legislation.

Senator MORSE. I know of no other reason for their making the recommendation in the first place. Having failed to get their proposed clarification through, I have great difficulty in seeing how, with the language being dropped out in conference, they could reach the conclusion that it was the intent of Congress on a matter about which they themselves were in doubt, as evidenced by the fact that they were making a recommendation for clarification-they should go ahead and render the decision which they rendered.

I do not know, unless these departments insist that we must do everything affirmatively, how the Congress could have made its intent any clearer than by dropping the very language that the Veterans' Administration wanted in connection with this issue. I think it is at that point that a lot of confusion develops between us and the Veterans' Administration. I am sorry to have to speak the way I have spoken this morning because my record is one of trying to work with you men in the Veterans' Administration. You are so dead wrong on this issue that I think it only proper to call your attention to another matter that I think would avoid this kind of a difficulty between the Senate committee and the Veterans' Administration.

I refer to your hearings over on the House side. In colloquy between you and Mr. Stirling and Mr. Patten, the following was said:

Mr. PATTEN. Since this advisory committee is supporting the land-grant colleges and since you say that you in the Veterans' Administration report have not taken a definite stand either for or against this bill, I wonder if you are perhaps convinced yourselves that the bill is of merit. Do you have any thought on that? Mr. STIRLING. I think Mr. Birdsall should explain the position of the Administrator on that.

Mr. BIRDSALL. I could not go beyond the report of the Veterans' Administration on this particular measure. The Administrator does not take a position for or against the bill. The Bureau of the Budget made no objection to the report.

Now, I call attention to that colloquy to give this bit of advice for whatever it is worth. I am willing to have it stand on what it is worth.

I think our relationships could be greatly improved if we could sit down in advance with the Veterans' Administration on problems concerning legislation that the Veterans' Administration is administering, and have them tell us wherein the legislation needs to be improved, and get their recommendations for improvement.

case.

They are the ones on the firing line, and they should point out by way of specific recommendations what needs to be done, before problems get to the point of conflict, such as has developed in this I say this to you, Mr. Birdsall, because I think you know the high opinion I have of the job which you are doing in the Veterans' Administration I have this one friendly criticism to make. I do not think that the Veterans' Administration recommends enough to this subcommittee of the Senate as to what ought to be done to improve veterans' legislation.

I cited that colloquy because it is the typical answer that we get from the Veterans' Administration, that "we do not make recommendations." If you fellows are not the ones qualified to make recommendations before problems actually arise, I do not know what group in Government is.

To be sure, we can go through the long, tedious process of digging it out ourselves as a committee, but I would like to receive from the Veterans' Administration more recommendations as to how we, as members of this committee, can be of better service to you and the Veterans' Administration before the problems are thrown in our lap. I cannot believe that if this problem, in the very early stages before decision 812 ever came out, had been discussed with this subcommittee and a similar committee over in the House, that you could not have obtained a pretty good idea from the Members of Congress what their intent was in the original act that would not