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A draft of our proposed amendment already has been brought to the attention of the Department of Justice, since we have been advised that the Department is working on a revision of this section of the bill. I am hopeful that the Attorney General will look favorably upon our proposal. The support of the administration obviously would greatly enhance the prospects for enacting a realistic bar on the grant of Federal funds for segregated or discriminatory programs or activities. The Attorney General is now scheduled to resume his testimony before the Senate Committee on the Judiciary on Thursday of th week.

It is my intention, if the opportunity presents itself, to elicit the views of the Attorney General on our amendment at that time.

Under the terms of our amendment, a policy of nondiscrimination would be required in the administration of every program or activity subsidized by Federal funds. If this requirement were violated, the funds could be denied or a suit for specific performance of the nondiscrimination requirement could be brought either by the Attorney General or by the victim of the discrimination. In addition, in order to assure elemental fairness in the administration of this requirement, any applicant for Federal financial assistance would have the right of judicial review of any final agency action denying funds because of alleged discrimination.

In my judgment there can be no justification on either legal or moral grounds for Federal tax funds collected from the pockets and pay envelopes of all our citizens without regard to race, religion, or national origin to be contributed to programs or activities administered on a segregated basis. It has always been my view that the President could put an end to such practices by the issuance of an Executive order. However, in the absence of such an Executive order a mandatory provision such as we are today submitting is essential and should be part of any meaningful civil rights bill.

This amendment would allow us to deal with this problem in a uniform and reasonable manner. I would be willing to support a provision which would automatically terminate any assistance administered in a discriminatory man

However, legislation is the art of the possible, and I know that in its present form the amendment is much more likely to obtain substantial support than would an inflexible proposal for cutoffs in every case without any opportunity for judicial review or injunctive relief.

I want to pay my tribute to the distinguished Senator from Connecticut, who has worked with such diligence on this problem, and has spoken on it out of his wealth of experience as an administrator of some of the very programs which would be affected by this amendment. It is my hope that when this amendment will secure wide bipartisan support and that Members of both parties will add their endorsement to this approach to the problem by becoming cosponsors of the amendment.

Senator ERVIN. Mr. Chairman, I would like to have inserted and printed in the record at this point a statement by John C. Satterfield, former president of the American Bar Association, analyzing this bill, entitled “Unlimited Federal Control of Individuals, Businesses, and the States," and copies of Executive Orders 10925 and 11114, entitled “Equal Employment Opportunity in Federal Government on Federal Contracts.”

Senator JOHNSTON. These will be part of the record. I hear no objection.

(The documents referred to follow :)

ner.

Unlimited Federal Control
Of Individuals, Businesses

And the States

Analysis of
"The Civil Rights Act 1963"

By John C. SATTERFIELD
Attorney at Law and a Past President (1961-1962)

of the American Bar Association

The proposed extension of federal executive and administrative control

over business, industry, individual citizens and the states by the package of legislation called “The Civil Rights Act of 1963” exceeds the sum total of all such extensions by all decisions of the Supreme Court and all Acts of Congress from 1787 to June 19, 1963. When future generations look back through the eyes of history at this legislation they will recognize ten per cent “civil rights” and ninety per cent extension of raw federal power. It is “The Trojan Horse of 1963.”

Never in the history of nations governed by elected officials has the head of any State demanded naked untrammeled power such as is embodied in this Act, except when such state was upon the verge of becoming a dictatorship. If it is enacted the checks and balances set up by the Constitution of the United States will be destroyed. The States will be little more than local governmental agencies, existing as appendages of the central government and largely subject to its control. This legislation assumes a totally powerful National Government with unending authority to intervene in all private affairs among men, and to control and adjust property relationships in accordance with the judgment of Government personnel

. It is impossible to prevent Federal intervention from becoming an institutionalization of special privilege for political pressure groups. This must lead eventually not to greater human freedom but to an ever-diminishing freedom.

Note: Although many of the major features of "The Civil Rights Act of 196.3" (re inconstitutional on their face, this review is limited to a discussion thereof as if the proposals were constitutional and became lar'. Any portion or all of this analysis mur be reproduced or used with or without quotation or credit.

Raw federal power over individuals and business There are more than one hundred federal agencies administering federal financial “programs or activities by way of grant, contract, loan, insurance, guaranty or otherwise." All acts creating such agencies and appropriating the monies therefor are amended by this bill to give authority to administrative personnel to withhold, restrict or deny participation in such programs or activities.

There are hundreds of thousands of professional men, individual business men and small businesses not now engaged in interstate commerce nor subject to federal control under the Fourteenth Amendment which affects only “state action.” The control of those engaged in interstate commerce has been heretofore limited to legitimate business purposes. If this legislation is enacted and upheld, the Constitution of the United States will have been amended (or nullified) by the deadly combination of legislative and judicial action, and the basis will have been laid for every individual who pays a license to the state or municipality and every private corporation organized under state law to become subject to control of federal personnel to bring about sociological and political ends.

The proposed legislation lays the groundwork for federal control over business, industry, individual citizens and the states, as follows:

-By legislative definition, extension of the interstate commerce clause far beyond present judicial definitions and legislative enactments.

—Placing under federal control every individual, corporation or association which pays a license tax to a state or municipality, upon a Congressional finding their every act is "state action.”

-Extending federal control to every act of every private corporation formed under state statutes, upon the theory that states “license and protect” all corporations.

-Granting federal authority to exercise financial and other controls over "education at every level from grade school through graduate school" and authorizing the United States Commissioner of Education to supervise state and local education.

-Authorizing manipulation of federal financial assistance “in connection with any program or activity by way of grant, contract, loan, insurance, guaranty or otherwise" to control all persons "participating in or benefiting from” such programs. This includes all agricultural programs, construction and sale or leasing of homes, banks served by the FDIC, labor unions, industries having government subsidies or contracts, veterans benefits, social security, etc.

-Extending federal control over all “general, special or primary elections held . . . for the purpose of electing . . . any candidate for public office.”

-Varying long accepted and recognized judicial procedures to give federal control over voting and education without a final adjudication or even a hearing.

-Setting up a new federal agency and extending powers of the present Commission on Civil Rights to exert federal pressure against individuals, municipalities and states.

-Permitting sanctions and penalties by administrative action without judicial process. Where judicial process is provided, jury trials are denied.

Banks, Savings & Loan Associations and

other Financial Institutions

Title VI amends every act of Congress “providing or authorizing direct or indirect financial assistance for or in connection with any program or activity by way of grant, contract, loan, insurance guaranty, or otherwise.” The Federal Reserve System, The Federal Home Loan System, the banks and other institutions served by the Federal Deposit Insurance Corporation, small business loans, all loans such as VA, FHA, PHA, FNMA and CHA loans are among the porgrams included. The blanket amendment covers not only the financial institutions, but their borrowers and customers who "participate in or benefit from the program or activity,” including home owners, businesses, realtors, developers, contractors and subcontractors, as well as municipal authorities.

All of these institutions and persons are placed under the control of ich administrative agency or agencies as may be designated by Executive Orders of the President or Administrative Regulations by the several agencies. Blanket authority is inherent in the Act to provide, sanctions, such as the calling of loans, the withdrawal of support of the FDIC, the withdrawal of credit by the Federal Reserve or Federal Home Loan Boards, the blacklisting for undetermined periods of banks, savings and loan associations, contractors, realtors, or any persons "participating in or benefiting from the program or activity.” The authority as to contractors is not limited to government contractors, but includes all contractors connected with any such program or activity.

The broad terms of the Act would permit withdrawal of credit, support or calling of loans and blacklisting of institutions by areas or states, regardless of the actions of individual entities. Financial life or death of almost every financial institution in the United States would be in the hands of one man i.e. the President of the United States, and his appointees.

Every major financial establishment in the country would be transformed from a business institution to an institution for social and political reform, required to carry out the dictates of federal personnel placed in charge of examining their procedures. The judgment of federal inspectors appointed to bring about social reforms would supercede the judgment of the loan committees and would require that loans be made, contracts or businesses financed and policies followed to prevent “discrimination” as found by the federal agency. No judicial proceeding would be required. Administrative procedures would be used.

These financial institutions have contracts with some agency of the United States Government by which they participate “in the programs or activities in which direct or indirect financial assistance by the United States Government is provided by way of grant, contract, loan, insurance, guaranty, or otherwise.” Title VII places under federal supervision and control “employees and applicants for employment" of all such contractors and prohibits discrimination in connection therewith. It creates a federal FEPC called “Commission on Equal Employment Opportunity.” If it were found that the ratio of emloyment of stenographers, tellers, cashiers, vice-presidents and directors of such institutions did not conform to the ratio of Negroes available for such positions, it appears that conformity to the determination of federal personnel could be required under the sanctions provided by unlimited Executive Orders or Administrative Regulations.

Agriculture This legislation amends every act providing "direct or indirect financial assistance for or in connection with any program or activity by way of grant, contract, loan, insurance, guaranty, or otherwise,” in the field of agriculture. Under its terms the federal agencies (or one to which the responsibility of administering this particular act is given by the President) may withdraw grants, call loans, withhold financing, withdraw supports, guaranties and insurance or may discontinue programs, in whole or in part.

Among the programs affected are Farm Credit Administration including Federal Land Banks and Banks for Cooperatives, Commodity Credit Corporation, Soil Conservation Service, Federal Crop Insurance Corporation, Farmers Home Administration, Rural Electrification Administration, Forestry Service, Agricultural Research Service, Extension Service and the Agricultural Marketing Service.

This proposal authorizes issuance of executive orders or administrative regulations, under which financing could be withheld, loans called, guaranties or insurance withdrawn and programs discontinued in whole or in part upon an administrative finding that any “individuals participating in or benefiting from the program or activity are discriminated against on the ground of race, color, religious or national origin.” The President is given unlimited authority to prescribe conditions to be placed in "all contracts made in connection with any such program or activity” to assure that there shall be no discrimination in employment by any contracting party. Punitive action may apply to individuals, associations, areas or states.

This Act will also place under federal supervision and regulation all establishments by farm organizations where goods, services, facilities, privileges or advantages are held out to the public for sale, use, rent or hire, which are “licensed or protected” by the state, i.e. pay a privilege license to the state, if they fall within a very greatly broadened definition of interstate commerce—far beyond the definitions adopted by the Supreme Court. Almost every farm organization in the country would be affected.

Federal intervention is authorized in the employment, advancing and firing of employees by all persons having contracts in agricultural or other programs or activities affected directly or indirectly by federal grant, loan, insurance or guaranty. The Act creates a commission called “Commission on Equal Employment Opportunity” with unlimited powers “as may be conferred upon it by the President.” Many of the penalties may be imposed by administrative action, without judicial process. Where a judicial proceeding is provided, the right of trial by jury is denied.

Business, Industry and Professional Services Through a combination of (a) an unprecedented extension of the interstate commerce clause, (b) the application of federal control to actions of every individual or corporation paying a license or privilege tax to a state (under the rejected theory that by the payment of such tax individual action becomes state action), and (c) the manipulation of federal financial power, this act would constitute an extension of federal power over individuals and business exceeding all that which has come about by judicial decision and Congressional enactment from 1787 to 1963. The extension is so vast it can only be outlined briefly here.

All acts “providing or authorizing direct or indirect financial assistance for or in connection with any program or activity by way of grant, contract, loan, insurance, guaranty, or otherwise,” are amended by Title VI

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