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than we usually think. We had this multiplicity of institutions established yeans ago when it would not cost any more than high schools now. One session of the Legislature established eight institutions of higher learning in Texas. Just took a few dollars. Local ambition and local pressure dominate instead of the state's point of view and the State's need.

Finally, may I say this development of a university is a long process. The University of North Carolina has built up a reputation in this country over a period of years. There is very grave danger that the educational standard of the State of North Carolina will be impaired by this financial situation. Your problem and not mine. But let me say that if these institutions are carried to the point where they lose their outstanding men, it will take another generation to build back to present standing. Just can't be done. My plea is that you don't ruin them completely. Save the better men. Maintain the personnel that has contributed to the building up of the institutions in this state. That is very important. I feel that I should tell you that. You will find no word in our report of one instituiion being subordinated to the other. Each institution will find its place by larger service to the state. That is the real task. We don't talk about engineering to the one or the other. It may seem like injury to make some changes. We are thinking about what is the service than can be rendered to the State of North Carolina. I believe in higher education. I am partisan. It is absolutely out of the question for any state in the Union to rise to the higher levels of influence unless it has a good strong program of higher education. The study reported shows very distinctly that many of the institutions of the South are not holding their outstanding men and women. They are being drafted off by Northern institutions. I am from the North. I think it is extremely unfortunate for the South. The problems of the South are going to be solved by the people form the South. Everything possible should be done to keep these men and women here. You can't afford to have them move North.

I would like to say that the University of North Carolina is the outstanding University of the South. I believe it can rise to much higher levels if we can get this unity of spirit. I believe in the things I am saying. I say God speed to you in what I believe is one of the outstanding opportunities that faces any group of men in the United States."

Dr. Kelly next addressed the Board. He said:

"The Office of Education is keenly interested in this proplem because it sees in this activity in North Carolina something of general interest and inportance to the states of the Union. At least twelve states would be glad if they were like North Carolina. We are interested in this as a national movement. Some developments that have been going on with respect to this coordination of higher education within a given state. There are three trends now.

1. Getting a good deal better understanding of the relationship between state control and state financial support of education. The history of this country with respect to education is exceedingly interesting in that regard. The State of New York has what it called the Regents of the State of New York controlling the University of the State of New York.

2. States like Virginia did not think of them as coming under state support. As those institutions grew in importance and needed more funds the State has come with more and more appropriations to the institutions. From the beginning Virginia has felt state scholarships should be established.

3. States further west feeling that, after all, since the state was to control elementary education and high school it should control university education, therefore university wholly supported through the states. This is true in Oklahoma and other states.

Now we are coming more and more to realize control of higher education is a state function that the states cannot evade, because higher education largely determines citizenship of the state.

Two differentiations of administrative units. Education in this Country has been topsy. European education has not had