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Since the decision of the Court of Appeals above quoted, the subchapter of the general incorporation law relating to joint-stock corporations has been extended in its scope by Congress, so that educational corporations for profit may now be incorporated as ordinary joint-stock or business corporations, and some of the recently organized educational institutions for profit have been so incorporated. THE INTENTION OF CONGRESS REGARDING COLLEGES AND

UNIVERSITIES The clear intention of Congress, therefore, is to make a wide distinction between “institutions of learning' that is, for practical purposes between colleges and universities--and all other kinds of educational corporations. Congress, following the ideas which prevail thruout the United States, regards colleges and universities as semipublic institutions and endows them with the degreegiving power, which is recognized as a semi-public function. All colleges and universities hold all their moneys and property on an educational trust and may hold gifts. of money or property in perpetual educational trust. By reason of their semi-public character, it is recognized thruout the United States that the state governments have the right to supervise and control the organization and operation of colleges and universities in the public interest, and particularly to protect the degree giving-power in any suitable manner. The failure of Congress to insert in the law proper safeguards to protect the public from the organization of sham colleges and universities which debase or pervert the degree-giving power must be regarded as an oversight. To amend the subchapter of the general incorporation law relating to “institutions of learning" so as to safeguard the public against the incorporation of sham colleges and universities will not affect adversely the other kinds of educational corporations, since these are regulated by other subchapters of this law.

THE ABUSES UNDER THE GENERAL INCORPORATION LAW

The abuses which have arisen as respects “institutions of learning" under the general incorporation law are:

That educational business corporations for profit have been incorporated, sometimes with a capital stock, calling themselves colleges or universities, and claiming in their certificate of incorporation or otherwise the right to confer academic and honorary degrees;

That visionary persons, of more or less education and standing, have filed elaborate, but unpractical, certificates of incorporation, purporting to establish colleges and universities of national or world-wide character, with power to give all kinds of usual and unusual degrees, none of which institutions has ever existed except on paper;

That persons without education or financial responsibility have filed articles of incorporation as colleges and universities and have conferred honorary degrees upon themselves or their associates; or have established concerns where instruction was given by correspondence or by word of mouth, of such kind as to be a travesty on collegiate and university education, and have conferred academic degrees therefor, or have established concerns for the mere selling of academic or honorary degrees without giving any instruction.

POSSIBLE REMEDIES

Two ways have been suggested for remedying these abuses. The first is for Congress to establish a supervising board or official for all the colleges and universities of the District-the United States Commissioner of Education being considered by some as the proper official in the District for this purpose--and to give this board or official the power to investigate all educational institutions desiring to incorporate as colleges or universities and to approve or disapprove such incorporation according as the institution conforms or not to accepted standards for degree-giving institutions. The second is, for Congress to amend the general incorporation law so that the intention of Congress, as declared by the court of appeals in the case above referred to, will be entirely clear on the face of the statute and so as to require a showing of financial resources of specific amount to be made to the District Commissioners, by persons desiring hereafter to incorporate as a college or university, as a condition precedent to the right to file a certificate of incorporation.

REMEDIES APPLIED IN STATES OF THE UNION

Both these methods have been applied with success in states of the Union. In New York and Pennsylvania, there is a supervising board for all colleges and universities, and no degree-giving institution can be incorporated unless its educational standards meet the approval of the board and unless it can show that it has at least $500,000 of resources. In New Jersey the state board of education has recently been made a supervising board for colleges and universities with power over the giving of degrees. Under a law past in that state in 1911, while President Wilson was Governor of the State, no educational institutions in the state, except those incorporated prior to 1886, are permitted to confer degrees unless their educational standards are approved by the state board of education, and persons violating the law are made subject to a penalty of $500, to be sued for and recovered by the state board of education. In Nebraska, it is required as a condition precedent to the incorporation of a college or university that a financial showing of property worth at least $100,000 should be made to the state court. In Arkansas, the legislature in 1911 provided for supervision of colleges and universities by the state board of education and gave the board control over new incorporations. In Michigan, the legislature in 1911 made the superintendent of public instruction the supervising official for colleges and universities and required persons desiring to incorporate as a college or university to make a showing to the secretary of state of property worth at least $100,000. In Massachusetts it was enacted in 1912 that the state board of education should report to the legislature on all proposals for incorporating new colleges or universities. In Maryland, the legislature in 1912 authorized the state board of educa

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tion to make a list of approved colleges and universities. So long ago as 1897 the National Education Association and the American Bar Association unanimously placed themselves on record as favoring state supervision of degree-giving institutions.

VIEWS OF COMMITTEE CONCERNING THE REMEDY TO BE

APPLIED IN THE DISTRICT

Your committee would favor a supervising board or official for all the colleges and universities of the District, with power over new corporations, and would also favor the requirement of a showing of sufficient financial resources by all institutions hereafter desiring incorporation as colleges or universities. There are, however, it is thought, such practical difficulties in the way of the establishment of a supervising board or official in the District that your committee has deemed it best to recommend only, as the best remedy now practicable, the system of requiring a showing of financial resources as a condition precedent to the incorporation hereafter of colleges or universities under the general incorporation law. It is believed that the requirement that an institution desiring to incorporate as a college or university shall make a showing to the District Commissioners that it has even quite meager financial resources say, $20,000 in the case of a college and $100,000 in the case of a university-will be sufficient to prevent substantially all the existing abuses. The publicity attaching to such a method of incorporation would, it is believed, be a sufficient deterrent to those desiring to establish sham colleges and universities, and these amounts are so low that they would not prevent any proper institution from becoming incorporated. In 1912 the Carnegie Foundation for the Advancement of Teaching in its annual report considered at length the abuses arising from the incorporation of "sham" colleges and universities in the District, and recommended as a remedy the requirement of a property showing of the above amounts as a condition precedent to new incorporations.

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THE GALLINGER BILL A bill is now pending in Congress, introduced by Senator Gallinger (Senate Bill No. 3431, 63d Congress, ist Session), which was approved by the Committee on Universities of the board of trade last year, and which provides for amending the "institutions of learning" subchapter of the general incorporation law according to the recommendation of your committee.

The Gallinger Bill is to the following effect :

1. It defines "institutions of learning,” and requires that persons desiring hereafter to incorporate as a college or university, or other institutions of learning, shall incorporate exclusively under the subchapter relating to "institutions of learning."

2. It requires that persons desiring hereafter to incorporate as an educational corporation for pecuniary profit shall incorporate exclusively under the subchapter relating to joint-stock corporations.

3. It indirectly requires that persons desiring hereafter to incorporate as an educational corporation not for pecuniary profit but for special educational purposes as incidental to benevolent, missionary, social or religious work, shall incorporate exclusively under the subchapter relating to benevolent, missionary, educational, social and religious corporations.

4. It requires persons desiring hereafter to incorporate as a college or university under the subchapter relating to “institutions of learning" to make to the Commissioners of the District a showing of financial resources of the proposed corporation-$20,000 in the case of a college and $100,000 in the case of a university,--as a condition precedent to the filing of the certificate of incorporation of the recorder's office; a certificate signed by all the commissioners stating that this condition has been complied with being required to be attached to and filed with the certificate of incorporation.

5. It specially provides that nothing in the above provision shall affect any existing corporation.

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