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I don’t think he will do this because he does not want you to know the many evils defects of the bill which was sponsored by his mentor, Johnson, and which he and Patman helped push through. I will quote only one other section from Goldfinger’s memorandum. After pointing out that the money market is now tight and interest rates are very high and getting tighter and higher, Goldfinger warns that to dump the billions of dollars of participation certificates in this kind of market “would add to the tightening of the money market and to the high and rising trend of interest rates. The higher level of interest rates would affect all borrowers particularly small business, farmers, and consumers, who are already saddled by high interest rates.” As Senator Ralph Yarborough pointed out before giving his vote to the bill with “considerable misgivings”meaning, at the strong behest of Johnson; Yarborough has not spoken one word in defense of the bill since its passagethe cost of only the first sales will be one-third of a billion dollars one takes the Administration’s estimate, which of course is very conservative. It may be naive to suggest it, but one-third of a billion dollars could operate Headstart for one year, or the Neighborhood Youth Corps for more than a year. When the squeeze of tight money, when the boa of higher interest rates begin to turn Texas small businessmen and home owners purple in the face and red in the pocketbook -don’t say the press failed to tell you about what was happening: The Texas Observer is hereby telling you now, as it has been telling you for eight weeks. When your federal loan programs disappear don’t act surprised. And if you want to do something about it, those are the boys to work on: Johnson, Gonzalez, Patman. jJ The Observer received the above article by Bob Sherrill on July 19. The next day we sent copies of it to Congressmen Gonzalez and Patvan and, in a letter, quoted to them these passages from an article by M. J. Rossantfrom the morning’s New York Times: “The fact is that the little the adminis tration did do in the fiscal area has served mainly to make the credit squeeze worse. Its speedup in the collection of corporate income taxes and its initiation of a graduated withholding system for individuals, which added to the govenment’s tax take without reducing corporate or individual incomes, added to the already ebullient demand for credit. And its sales of participations in government loans has contributed to the strong upward pressure on interest rates . . . “The Democrats can rally round, indicting the Federal Reserve and charging that Wall Street bankers are conspiring against the farmer and the small businessman, but they will have trouble convincing anyone that Johnson is a supine and innocent victim of events.” The letters to Gonzalez and Patman also contained the editor’s observation that Sherrill had raised “very clearly what, it seems to me, a liberal ordinarily would raise as the true issue” and invited them to respond to Sherrill in the same issue of the Observer in which his piece would appear, this one. Congressman Gonzalez’s response follows. Gonzalez Upholds Demo Record To The Editor: I have explained as best as I could on two occasions why the Participation Sales Act was necessary, what it is intended to do, and why the Republicans opposed it on a strict party line vote. I have enough confidence in your readers to believe that they understand this legislation and I leave it to them to evaluate the criticism that has been made of it. If Sherrill and yourself want to insist that you do not understand the need, and, further, that is the work of a devilish conspiracy, then no amount of further explanation will relieve you of this affliction. Perhaps, while Sherrill and the Observer are issuing dire warnings of the plot to end federal loan programs, you can explain to each other how it is that within the past four years a Democratic Congress enacted and a Democratic President signed into law the following new federal loan programs: $30.7 million in loans to students in medical, dental and related-type colleges; $1.1 billion in loans and grants to aid colleges in financing construction of academic facilities; $275 million for loans to nonprofit groups for the construction of housing for the elderly; $375 million in grants and loans for mass transit facilities and service; –$287 million in grants for construction of nurse training facilities and loans for student nurses; A graduated increase in college student loans from $163 million to $195 million in 1969; $3.3 billion in grants and loans for public works in economically depressed areas; An increase from $1.72 billion to $1.96 billion in loans from the Small Business Administration to disaster victims; $76 million in loans to high school graduates to finance tuition at business, trade and other vocational schools; An increase from $200 million to $450 million in the amount of loans the Farmers Home Administration may insure annually; $1.65 million in loans to re-open national life insurance policies for veterans; An increase from $100 million to $200 million for loans and grants under the Small Reclamation Projects Act; The Cold War GI Bill of 1966 opened up the veterans’ home loan program to veterans who have served any time since 1955. No limitation was placed on the number of loans per year which may be approved under this bill. In the four months since the bill has been operational \(through and direct loans have been applied for and are being processed by` the VA. Now, it does not make sense to charge that the government is going out of the loan business in light of the record of 1963, 1964, 1965, and 1966 when Congress enacted perhaps the greatest combination of government loan programs in the history of the nation. It does not make sense to accuse a Democratic Administration and a Democratic Congress of leading us into a recession while they are steering us through the sixth consecutive year of economic expansion; or to imply that they are planning to “leave great blocks of the population in desperate condition” when it has in the past two years enacted social legislation that has taken decades for the people to obtain, including, just to name a few, medicare, aid to elementary and secondary education, rent supplements, the Appalachia program, the Mental Health and Retarded and Crippled Childrens Centers Act, the Older Americans Act, the Voting Rights Act, and the “Cold War” GI Bill. THERE IS A VARIETY of political analysts which creates its own dragons and then, if possible, claims the credit for slaying them. The Observer has long engaged in this sport, and I am citing the following incident for its symptomatic significance. In the May 27, 1966, issue, the Observer wrote that it had “been told by sources close to Carr’s campaign leadership that Johnson has, as it were, decreed that Gov. Connally, Sen. Yarborough, and Cong. Gonzalez be present at a statewide kickoff rally for Carr in North Texas next month.” Enter the dragon. Surely, Observer readers have a right to assume, the Observer would not print such an item if it were not true. See how devious plots are hatched? Imagine, the President! But in the June 24 issue we find this statement about the Carr rally: “Cong. Jim Wright was the master of ceremonies, but U.S. Sen. Ralph Yarborough and Cong. Henry Gonzalez were not on hand, as the Observer reported last month that they might be; a professional politician told the Observer that Carr’s office had started around the story of that possibility.” Exit the dragon, neatly slain. It is interesting to note how the Observer August 5, 1966 9