I have only one question to ask you with regard to one of the latter suggestions that you make in this testimony. You speak about $2,000 scholarships and a proposal for a $2,500 additional payment to the college because of the fact it is alleged that the student comes in and places an extra burden upon the college, that the cost of educating that student is more than the tuition that the college charges, and, therefore, it is necessary to have additional money.

You suggest that it might be all right in such case to give $2,000 to the student, which, because of the additional $2,500 would be $4,500, and let him pay it to the college of his choice.

Well, let me take a hypothetical situation: Mr. X decides to go to a Catholic or Methodist university, A or B. And he finally decides on B, and he then, as a conduit, turns over to college B the $2,500 and keeps the $2,000 to pay his living cost and books and what not. The $2,500 is still Federal taxpayers' money.

My question is: Have we, in any way, voided the burden of your argument if we simply turn that student into a conduit, because university B would never get the money directly from the Department of Health, Education, and Welfare or the U.S. Office of Education or the U.S. Treasury, whoever is designated to pay it, until the student makes a decision.

Once the student makes his decision and registers then the money automatically flows from the Federal agency to the university. So what we are dealing with, it seems to me, is a matter of procedural form and manner of substance.

If your argument is sound, that is, the taxpayer ought not be called upon to pay in taxes any money that is funneled into the religious school, I do not see what difference it makes whether the student is the funnel or the Department of Health, Education, and Welfare is the funnel.

Dr. LOWELL. I think, Mr. Chairman, that the conduit principle is avoided because of the merit basis of selection. Now if you had a program of scholarships or fellowships such as originally was proposed in New York State, and I think they have tried to modify it some since, but there, at least in its original form, you did have a straight conduit principle; that is, anybody who could get into college anywhere, any private college in New York, could get $200 as a student incentive gift by the State.

Then the private college would raise its tuition $200 and he would take it over and give it to the college. The student was no better off but the college got an additional $200.

Now, that, in my opinion, is the straight conduit principle. But here in this situation, you have, let us hope and assume, the merit principle involved, so that if this student wins a genuine merit test, academically speaking, he is awarded a scholarship.

Now then, as a mature individual, he chooses his school and let's say he chooses a church school. He is an adult, he does not have to go anywhere. He is under no compulsion, but he chooses a church school.

Now then, it is true that some of the money which is paid to him would go in the form of tuition in payment to the school, but I do not call it a conduit principle, because of the basis of selection which is on the basis of straight academic merit.

I would call it "conduit" if it just went promiscuously to everybody. Then I would add this further point, where I think our proposal helps. That is that the Government is, by this arrangement, released from doing business with the institution and interlocking its business processeses with that of the church institution.

The money goes to the student. The student does what he wills, but there is no contact whatever between the Government and the church school itself.

Senator MORSE. I am glad to get your explanation of your state

ment.

I am going to read your statement.

However, to explain my point of view in regard to it: You say, if the cost of giving the student higher education is $2,000, plus $2,500, why not appropriate the whole amount to the student and let him pay it over to the college?

My point is that the college never would get it either under your plan or the bill's plan until the student made the decision of choice. Once he made the decision of choice we all know then that to get into B college, which in my case was either a Catholic or Methodist college, he would have to pay an additional $2,500 which the Federal Government makes available to him to transfer to the college.

And I just raised the question whether or not there is, in fact, any substantive difference from the procedure whereby after he selects his college he notifies the Federal Department of jurisdiction and says "I have selected B college" and he fills out the form, notifying them that he selected it and the Department then sends the check to B college.

But we have made our respective points there. I am inclined to think that the substance is the same.

Do you have anything else to add?

Dr. LOWELL. No, sir.

Senator MORSE. Thank you very, very much.

Dr. LOWELL. Thank you, Mr. Chairman.

Senator MORSE. Our next witness will be Dr. C. E. Carlson, executive director of the Baptist Joint Committee on Public Affairs.

STATEMENT OF C. EMANUEL CARLSON, EXECUTIVE DIRECTOR OF
THE BAPTIST JOINT COMMITTEE ON PUBLIC AFFAIRS

Senator MORSE. We are delighted to have you here.
Mr. CARLSON. I appreciate the chance to come again.

Senator MORSE. You are familiar with the procedure of this subcommittee. I am running a little bit behind now.

Not because you are the witness but because there are others sitting out there, I want to say that the chairman will do his best to speed it up. Proceed in your own way.

Mr. CARLSON. Mr. Chairman, I appreciate very much the opportunity to come before the subcommittee again, this time to clarify some specific points with reference to the NDA.

We have previously made some statements regarding S. 1021 and we want to make the application of those princples as clear as we can with reference to the present consideration. We are encouraged with the significant interest that is being demonstrated in the administra

tion and legislative leadership in this whole area of church-state relations.

This, as you know, has been a longstanding concern in our viewpoint and is a matter of very deep concern in recent years. We appreciate particularly the tendency to take the long-range view of what we do, because it appears to us that in recent years we have been inclined to deal in expediency in terms of particular situations, and then some years later we discover that we have done, as a nation, more than we intended to do.

So I want to say in behalf of the joint committee that we appreciate very much the fairness with which this committee and others in the Congress are giving their attention to this problem.

Now, the purpose of this statement is to request a careful analysis of two features of the National Defense Education Act as enacted in 1958 and as now proposed for reenactment.

Both have to do with church-state relations, an area which has been much discussed and considerably clarified since the 1958 enactment.

At a meeting of the Baptist Joint Committee on Public Affairs, March 6-7, 1961, the committee voted to request the elimination of all theological and religion graduate fellowships from the program established by title IV. When a "National Defense Education Act" undertakes to train theologians or specialists in the church-related disciplines for the sake of national security, a confusion develops both as to the ultimate commitments and the appropriate means. In the thinking of the Baptist Joint Committee, theological education is beyond the proper scope of Government programing.

Senator MORSE. I have offhand great difficulty in seeing justification for a granting of a scholarship-fellowship that you know is going directly for the purpose of educating a clergyman.

Mr. CARLSON. At the present time few such fellowships are being offered. The overall graduate fellowship program would not suffer much loss if the church-state line were held firmly at this point. On the other hand, if the Government training program in this field continues it will unavoidably confuse the lines of distinction and could in due time serve as "precedent" for a serious effort to influence religious thought and pattern.

While the instances of administrative insensitivity on church-state relations in this program have not been numerous, there have been enough such cases as to merit clarification in the legislation at two points. In our opinion, programs in religious disciplines should not be approved. Neither should applications and subsidiaries be approved for institutions that are primarily geared to religious objec tives.

At this point we would remind the committee that under the Housing and Home Finance Agency housing loans are not available for chapels or for divinity schools. This policy was established after careful deliberation subsequent to the initial legislation.

The Baptist Joint Committee also voted to urge that the loans to church-related secondary schools for science equipment and remodeling (title III) be omitted from any new legislation in this field. The joint committee holds that if Government participation in the longterm credit needs of church institutions is desirable, then such provisions should be handled as credit legislation related to the banking

function and not handled as part of an educational aid program. Church-state relations show a constant tendency to erosion at the point of loans.

While the institutions of society may be inadequately served by current banking law, those inadequacies should be considered in the context of bona fide credit rather than aid. The Housing and Home Finance Agency loans for dormitory projects were devised in this context, and are administered as a credit operation.

Loans to non-income-producing facilities would be less desirable and more difficult to collect. The clear separation of credit relations from public aid would greatly reduce the current confusion and misunderstandings.

Our information indicates that very few loans have been sought under title III of the National Defense Education Act for science equipment and facilities, in comparison with the dormitory loan demand. This development brings into clear focus the clear distinction between the self-amortizing program handled under the Housing and Home Finance Agency as a long-term credit for facilities that are income producing, as contrasted with credit for facilities that do not produce income.

Expansion of instructional facilities merely increases the operating cost of an institution and reduces, rather than augments, the available funds for repayment. This kind of loan, then, is more likely to develop hardship conditions and foreclosure. Government operation of the properties would not be possible for lack of authorization.

In view of the proliferating of loan suggestions for church-related institutions, the Baptist Joint Committee believes that the future of our principles of freedom and interfaith good will would be best served if these credit proposals were removed from the aid context and treated as bona fide credit relations which can be administered on credit principles. This would largely avoid the complications of religious interest blocs and religious pressures for forgiveness or interest rate adjustments.

The extent of the Government's involvement in the banking function need not be a church-state problem if the involvement with church institutions is simply that of the banker dealing equitably with all institutional interests. On the other hand, if Government undertakes to reach objectives of public policy regarding public educational needs through the expenditure of public funds to church institutions either as loans or as grants a church-state issue has arisen.

Through the years Baptists have viewed free public education as a normal and necessary part of the democratic process. These schools must be seen in their relationship to the economy and the social and political skills of a free society.

The admission of churches or their institutions to an interposition, standing between the public authority and the public mind, will be a serious change in the course of our Nation's history. Accordingly, we hope that the Federal Government will hold tenaciously to the policies prescribed in nearly all the States, using public funds for public institutions only.

A fragmentation of education can come in either of two ways. Financial policies could be adopted which encourage churches and other private agencies to undertake elementary or secondary schools as part of their propagation of special interests.

This might produce scores of systems of education, all weak and poor. On the other hand, support to special interests or objectives within the institution can fragment the educational process within the school while dissipating the public resources on projects which make no major contribution to public policy.

I am saying, Mr. Chairman, that we do not believe that our churches hold any particular competence to improve the status of American science and technology. We believe this must be handled as part of our economy and part of the culture of which we are a part.

And we are happy to have it so handled.

We believe that the historical evidence is ample for sustaining the wisdom of the American tradition on this point. No nation has developed a strong industrial and commercial democracy without a good program of public education. On the other hand, while the strengthening of American public education is being stymied by special institutional interests, the economic totalitarian governments are moving rapidly toward leadership.

Whether school support should be raised on a State or nationwide basis is not our major concern, but we are concerned that adequate educational facilities be freely available to all the people without religious differentiation and under the administration of freely elected public officials. To Baptists these issues are not matters of constitutional interpretation primarily, and we make no superior pretence in that field.

They are matters of public policy and of national wisdom. They are matters of freedom and voluntary religious participation for those who have genuine convictions. They are also matters of continued freedom of the churches in a free society.

Senator MORSE. Mr. Carlson, I am going to ask that the paper attached to your statement, "Position Paper on Fringe Benefits in Aid to Education" be inserted in the record. I give you my assurance that it will be carefully studied by both the committee and the staff and it will be understood that the first statement will be incorporated at this point in the record.

Again, I want to compliment you for what I think is a very objective statement that you have made here this morning on the position of the group which you represent, and we are indebted to you for it. Senator Yarborough, do you have any questions?

Senator YARBOROUGH. No questions, Mr. Chairman.

Senator MORSE. Senator Case?
Senator CASE. No questions.

Senator MORSE. Senator Pell?

Senator PELL. No questions.

Senator MORSE. I want you to know, Senator Pell, we are honored by your presence. Although you are not a member of the subcommittee, you have full rights of participation in this hearing.

So any time you want to ask a question, please feel free to do so.
Senator PELL. Thank you.

Senator MORSE. Thank you, Mr. Carlson.

Mr. CARLSON. Thank you very much, Senator.