(b) For the purposes of this part, the Council shall be an "agency" within the meaning of the appropriate definitions of such term in title 5, United States Code.

ELIGIBLE ITEMS

SEC. 223. (a) The Council may provide indemnification under this part with respect to

(1) works of art, including tapestries, paintings, sculpture, folk art, graphics, and craft arts;

(2) manuscripts, rare documents, books, and other printed or published materials;

(3) other artifacts or objects; and

(4) motion pictures or audio and video tape;

which are (A) of educational, cultural, historical, or scientific value and. (B) the exhibition of which is certified by the Secretary of State or his designee as being in the national interest.

(b) Items eligible for indemnification under this part shall be covered by an indemnity while on exhibition in the United States. For the purposes of this subsection, the term "on exhibition" includes that period of time which begins at the point when the eligible items leave the premises of the lender or place designated by the lender and ends when such items are returned to the premises of the lender or place designated by the lender.

SEC. 224. (a) Any person, nonprofit agency, institution, or government desiring to obtain an indemnity for eligible items under this part shall make application therefor in accordance with such procedures, in such form, and in such manner as the Council shall, by regulation, prescribe.

(b) An application under subsection (a) shall

(1) describe each item to be covered (including an estimated value thereof);

(2) show evidence that the items are eligible under subsection 223(a); and

(3) set forth policies, procedures, techniques, and methods with respect to preparation for, and conduct of, exhibition of the items, and any transportation related thereto.

(c) Upon receipt of an application under this section, the Council shall, if such application conforms with the requirements of this part, approve the application; and when so approved, the application shall constitute a contract between the Council and the applicant pledging the full faith and credit of the United States to pay any amount for which the Council becomes liable under such agreement.

SEC. 225. (a) Upon receipt of an application meeting the requirements of subsections (a) and (b) of section 224, the Council shall review the estimated value of the items for which the indemnity is sought. If the Council agrees with such estimated value, for the purposes of this part, the Council shall, after approval of the application as provided in subsection (c) of section 224, issue a certificate evidencing an indemnity as provided in subsection (b).

(b) Coverage under this part shall only extend to loss or damage in excess of the first $25,000 of loss or damage out of a single incident.

(c) There shall be no premium rates on any indemnity issued under this section.

SEC. 226. (a) The Council shall issue regulations providing for prompt adjustment of valid claims for losses which are eligible for indemnification under this part, including provision for arbitration of questions of the dollar value of damages involving less than total loss or destruction of covered objects for which a certificate of indemnity has been issued.

(b) In the case of a claim of loss with respect to an item which is the subject of a certificate of indemnity under section 225, the Council shall certify the validity of the claim and the amount of the loss to the Speaker of the House of Representatives and the President of the Senate.

SEC. 227. There are hereby authorized to be appropriated such sums as may be necessary (a) to enable the Council to carry out its functions under this part, and (b) to pay claims certified pursuant to subsection 226(b).

SEC. 228. The Council shall report annually to the Congress (a) all claims actually paid pursuant to this part during the preceding fiscal year, (b) pending claims against the Council under this part as of the close of that fiscal year, and (c) the aggregate face value of contracts entered into by the Council which are outstanding at the close of that fiscal year.

EFFECTIVE DATE

SEC. 229. This part shall become effective-days after the enactment of this Act. Representative BRADEMAS. It is a great pleasure to have our friends and colleagues from the Senate Special Subcommittee on the Arts and Humanities chaired by the gentleman from Rhode Island, Claiborne Pell, with us today.

Our two subcommittees have traditionally held joint hearings on the reauthorization of the National Foundation on the Arts and Humanities and have found it to be a mutually beneficial experience.

It is altogether fitting and proper that in the 10th anniversary year of the signing of the National Foundation on the Arts and the Humanities Act we are continuing these oversight and extension hearings.

When President Johnson signed the bill in 1965, he spoke of the importance of arts and artists to the national spirit. "Art is a nation's most precious heritage, for it is in our works of art that we reveal to ourselves, and to others, the inner vision which guides us as a nation."

Since that time, the question of the Federal Government's assistance to the arts is not the matter of severe congressional debate it once was. The amount of that assistance, though, remains very much an issue. Still, the National Endowment for the Arts only accounts for two tenthousandths of 1 percent of the national budget.

While the amount our Federal Government now spends on arts activities is decidedly small, its impact is significant. Often the small amount that goes across the country to our cultural institutions makes the difference between survival and closing the doors. This is even more true in a time of economic recession.

Today we shall hear from the Chairman of the National Endowment for the Arts, Miss Nancy Hanks, and from representatives of State and local arts agencies.

Tomorrow, we will continue these hearings on the Senate side where we will be hearing from the Chairman of the National Endowment for the Humanities, Ronald S. Berman, and representatives from the voluntary State humanities councils.

On Friday, we shall return to the House side and hear from George Stevens, director of the American Film Institute, the chairman of the board of AFI, Charlton Heston, and Eleanor Perry, a member of the board. We will also hear from Amyas Ames, chairman of Lincoln Center; Robert Brustein, dean of the Yale School of Drama; and Douglas Davis, visual artist and art critic of Newsweek magazine. I would like to welcome our witnesses to the hearing today, but before we proceed, I would yield to my Senate colleague, Senator Pell for any comments that he might wish to make.

Senator PELL. Thank you, Mr. Chairman.

I am very pleased to join Chairman John Brademas of the Subcommittee on Select Education in these joint hearings to consider reauthorization legislation for the National Foundation on the Arts and the Humanities.

As Chairman of the Senate Special Subcommittee on the Arts and Humanities since its inception more than 11 years ago, as the earlier Chairman of the Senate Special Subcommittee on the Arts, and as the Senate sponsor of initial legislation to support both the arts and

the humanities, I am happy to join in welcoming today those witnesses representing the National Endowment for the Arts and its programs.

I am also pleased to observe that the Endowment has reached its 10th anniversary under the chairmanship of Nancy Hanks. Following initiatives taken by Roger L. Stevens, first chairman of the Endowment, she has exerted excellent leadership in the highly commendable development of this program. Her statement testifies to the expansion of the Endowment's efforts during its historic and precedent-setting 10 years, and I am pleased that she has gone into great detail to describe a time of truly constructive and meaningful growth.

So, I say, "Happy Anniversary" to Chairman Hanks.

At previous reauthorization hearings in 1973, I remarked to her, "You've come a long way. . ." I repeat that observation today—but for reasons of deference to her position, I won't quite complete the whole of that popular slogan.

In these hearings, we will focus on details and on larger principles and concepts.

I am impressed by a statement made by Mr. Louis Harris at the House hearings on this legislation in late September. Mr. Harris, one of our Nation's outstanding poll takers, spoke as Chairman of the Associated Councils on the Arts, and he emphasized that the American people in the years ahead will be searching for "a quality of experience to fit the quality of life." And, in this search, he points out, "the arts are central.”

So, in these hearings, we are considering priorities, national in scope.

And we are considering the arts as resources of deep meaning to our daily lives—and to our economy.

A recent study supported by the Rhode Island State Council on the Arts points to the dramatic growth of the arts in my home State during the past decade. This growth is now reflected by a total of 216 organizations, by annual attendance figures of more than 1.5 million people, by operating budgets totaling more than $19 million annually, and by the annual employment of more than 2,000 individuals.

The arts are one bright spot in Rhode Island's sadly depressed economy.

And the State arts programs, supported by the Endowment, have greatly strengthened our national understanding and appreciation of the values and meaning of the arts.

State witnesses today will address that important subject—and will provide some basis for comparison when we consider, tomorrow, the programs of the National Endowment for the Humanities.

I must add, in conclusion, that I am concerned with the development of the humanities in comparison and in contrast with the arts.

I am troubled by what appears to be a lack of balanced progress between the two Endowments. Perhaps the time has come to consider that the need for parity in funding between these Endowments has come to an end.

Perhaps the two Endowments, once considered twins in our cultural progress, should be allowed to go separate ways.

I look forward to exploring these and other concepts as these hearings develop.

Representative BRADEMAS. Thank you, Senator Pell.

Before beginning, the Chair would like to take a moment to say a word of tribute to the late Steven Wexler who served Senator Pell in the Senate Subcommittee on the Arts and Humanities with such distinction and served indeed his colleagues on the House side, as well. I think it appropriate that notice should be taken as we begin these hearings.

We are pleased to see Livingston Biddle who has served in the same capacity over a number of years and has served also an important. role for Miss Hanks at the Arts Endowment is serving Senator Pell and his subcommittee again.

Senator PELL. Thank you very much, Chairman Brademas, for your statement.

Needless to say, I appreciate your taking the initiative in making mention of Steve. My heart is as heavy and full of grief now as it was a month ago when he was so cruelly killed by an allegedly drunken driver on a Saturday afternoon a few miles from here.

Representative BRADEMAS. Miss Hanks, I want to join in the tribute to you and Mr. Straight which Senator Pell has paid because I think, without any question, one of the reasons that the National Endowment for the Arts has enjoyed the support that it has both from Presidents and in Congress has been the effective way in which you have administered these programs.

On this 10th anniversary, we want to wish you "Happy birthday,” and say we are very pleased to have you back.

STATEMENT OF MISS NANCY HANKS, CHAIRMAN, NATIONAL ENDOWMENT FOR THE ARTS, ACCOMPANIED BY MICHAEL STRAIGHT, DEPUTY CHAIRMAN, AND BRIAN O'DOHERTY, DIRECTOR, VISUAL ARTS PROGRAM

Miss HANKS. Thank you very much.

I guess you would have to say that I am one of the few ladies and Michael one of the few men who are happy to have another birthday, to grow older and to grow bigger in size. I hope that we can continue to do so despite the problems we might have with fashion design. It is a wonderful occasion to be here.

I thank you both very much for your tributes to the Endowment at the time of its 10th anniversary.

With your permission, I would like to submit for the record the written testimony that has been presented to the committees and make a few very brief remarks so that we might spend the limited time we have available in responding to your questions.

As members of the committee will note, the testimony is some 80 pages long. The OMB called over, Mr. Brademas, and asked, "Are you trying to win an intergovernmental record in terms of length of testimony?"

And I said, "Yes; indeed. Our budget is so small we must at least be worried."

However, the real reason for writing at such length was to describe the progress which has been made over the last 10 years and to talk a bit about the future. We wish to do that not only in recognition of the 10th anniversary of the Endowment but to pay tribute to these com

mittees and their staffs because without your assistance, without the leadership that you have given, this agency not only would not exist, it would not have had the experience it has had over the past 10 years.

Michael Straight and I would both like to express our appreciation for the help and advice we have received from all members of the committees over the past. We certainly welcome the new members who have joined the committee since we last testified.

We want particularly, on behalf of ourselves and on behalf of the National Council on the Arts, to express our appreciation to the members of the staffs of the committees and we particularly wish to express our personal and professional sorrow on the loss of Steve Wexler as a member of the Senate staff. Although Steve is no longer with us, I can assure you that the agency will continue to profit over the years from his cautions, his advice, and his encouragement to us. This is very important because Steve was a man who understood and translated very well the views of the committee not only in terms of encouragement of the arts but the cautions about Government support and how it should be handled and how the advisory systems should work.

The testimony is long, too, because we wished to offer to the committee members a few comments that we felt might be helpful to you as you look to the future.

Very briefly, let me talk about the situation as we see it today.

The arts are flourishing in the country. We have as great institutions and as great artists as any in the world. There are far more of them today than there were 10 years ago.

In the arts, we have what might be known as a growth industry. The cultural base is far broader today than it was 10 years ago in great measure because of the legislation of these committees. Attendance and participation in the arts is increasing all over the country.

There is growing realization on the part of many people that the arts are not only a wonderful enhancement for the community but they are very good business, indeed. While they require an investment to keep them growing, to keep them alive, to keep them vital, and while there is no direct dollar return to the particular institution, there is a very substantial dollar return to the community. This, among other reasons, I believe, is why both the mayors and the Governors in their national conferences have recently passed resolutions in terms of support for the arts. In addition, action has been taken to back up those resolutions, which leads me to stress, Mr. Chairman, that one of the most remarkable achievements in the past 10 years is that unprecedented partnerships have been forged between all sources of support.

Of course, the situation could be better; it can always improve. But, we are in this country, in the process of developing a method of encouraging the arts that is totally unique and far better than any other in the world. In great measure, it is, thanks to the brilliance of the basic legislation.

Let me turn very quickly to the future-I could mention 100; I will mention four points that the Council would like me to suggest for consideration by the committee as it, too, looks to the future.

First, there must be more cooperative effort to develop and maintain our cultural institutions so that they can better serve their communities. These are resources to be called upon and should be thought of as resources. They should not be thought of as sinking ships to be bailed