ury and the Comptroller of the Currency, and it was thought then that that did not make for greater efficiency. I take it on the whole you are definitely of the belief that this would not make for greater efficiency at a time when it is most important that we maintain the high authority and prestige of the Office.

Senator ROBERTSON. I cannot see how it would add anything to efficiency or anything in the way of economy. Outside of his salary and the few immediate assistants he has in the Treasury Department, all of the expense of his Office is paid by the banks. I know you are familiar with bank examinations. It is not so cheap. It may cost you six or seven thousand dollars an examination.

Senator O'CONOR. Thank you.

The CHAIRMAN. Senator Benton?

Senator BENTON. I would like to associate myself, Mr. Chairman, with the adjective "persuasive" that Senator O'Conor used, and Í have no questions.

Senator SCHOEPPEL. Senator Robertson, I received quite a large volume of mail not only from my State but all over the country on this matter. I wonder if you share the view that some of the State banks in my State have expressed that they are afraid, if this plan goes through, that it could be utilized and used to establish a great fluctuation of credit, namely, much more on the loose side, that it would take away from the State banks as well as the national banks pretty much the independence that they enjoy now in the cataloging and servicing and making of loans. They want to retain that. Is that fear expressed to you?

Senator ROBERTSON. I think it is fair to say that any Government that faces the necessity of a $5,000,000,000 deficit financing program is not going to use what control it has over credit to make credit tighter. In other words, I think the fears that have been expressed to you are potentialities. I do not mean to say that that is the purpose of the President's plan. I do say, however, that those fears are not without foundation as a possibility. For that reason, I do not think that we should let something go into effect that will become a law, in which there is this, even though it may be remote, implicit situation that it could be used in a way that we, interested in the soundness of our banks, would not favor.

Senator SCHOEPPEL. That is all, Mr. Chairman.

Senator ROBERTSON. I want to say I think both the National and the State banks are fully justified in asking us, and they do ask us, to disapprove this proposal.

The CHAIRMAN. Thank you very much, Senator Robertson.
Senator ROBERTSON. Thank you, gentlemen.

The CHAIRMAN. Senator Capehart, will you proceed now?

STATEMENT OF HON. HOMER E. CAPEHART, UNITED STATES SENATOR FROM THE STATE OF INDIANA

Senator CAPEHART. Mr. Chairman, I want to associate myself with Senator Robertson and agree with the statement that he made.

I am not a banker, but I have received many, many letters from bankers in my State and other States opposed to this legislation. I find in none of them what I might term any degree of selfishness or high pressure. I cannot detect any selfishness. I have analyzed

their opposition, I have analyzed the proposal, and I cannot see where they are trying to get an undue advantage. I think they are rightfully alarmed that the proposal might not be in the best interests, or at least it might work out not to be in the best interests of the banking system of America.

The Office of Comptroller of the Currency was founded or established 85 years ago, and the first Comptroller was a Mr. McCulloch from Fort Wayne, Ind. There will be no money saved. There will be no economy. There might well be no change in the operation if the Comptroller is transferred to the Secretary of the Treasury.

Again, there might well be a change at some future time.

Inasmuch as no money will be saved, no economy made; inasmuch as the bankers are almost solidly against the reorganization plan; inasmuch as I do not believe anyone can point out a single instance where the bankers are selfish about the matter, and I find no signs of any selfishness, I find no signs of any special interest here, trying to get an undue advantage over some other group-I endorse the refusal of the Senate to approve the Reorganization Plan No. 1.

I would like, Mr. Chairman, to place in the record a statement setting forth some reasons why it should not be done, if I may.

The CHAIRMAN. That may be printed in the record.

Senator CAPEHART. I would like also to place in the record a statement by the New York Times placed in the Congressional Record by the Honorable Burnet R. Maybank a few days ago; and also an article in the United States Investor of April 8, 1950, entitled "National Banks Need Independence," which I believe sets forth the situation quite clearly. It is worth reading, and I shall not take the time of the committee to read it.

The CHAIRMAN. They may be inserted in the record. (The matter referred to follows:)

REORGANIZATION PLAN No. 1 of 1950

REASONS FOR OPPOSING THE REORGANIZATION PLAN

1. For 86 years the Office of the Comptroller has enjoyed, and still does, a semiindependent status.

Other branches, bureaus, or divisions of the Treasury Department do not possess this standing. The plan therefore primarily would affect the Comptroller. The Comptroller is appointed by the President with consent and advice of the Senate. He administers the functions of the Office under the general direction of the Secretary of the Treasury. He is accountable to Congress through annual reports and through reports on salaries of all bank examiners. He makes recommendations to Congress concerning legislation affecting national banks. He enjoys a position of prestige on the same plane as the heads of other supervisory authorities, such as the FDIC and the Board of Governors of the Federal Reserve System.

The plan would result in the Secretary of the Treasury absorbing all functions of the Office and severing the Comptroller's present direct relationship with Congress.

2. The Comptroller's office does not constitute, in any way, a burden upon our Federal budget.

One of the principal objectives of the Reorganization Act of 1949 is to reduce expenditures and promote economy, to the fullest extent consistent with the efficient operation of the Government. With this sound principle we are all in accord.

At this time the Comptroller's office is entirely self-sustaining, dependent in no way upon appropriations made by Congress or funds supplied by the Treasury Department. The expenses of the Office are defrayed exclusively by the assessments on national banks for examinations made by it. Therefore no reduction of Government expenditures would result from the proposed reorganization plan.

3. Under the plan the Secretary of the Treasury could effect transfers of the funds of the Comptroller's office, as well as records, property and personnel.

The sums paid to the Comptroller by national banks therefore would be subject to this provision. The Secretary of the Treasury would have control of these funds and any unused portion thereof could be appropriated and used by him to carry out other functions of the Department.

4. It would be a step toward the breaking down of our existing dual banking relationship.

This plan might be only the forerunner of still an additional reorganization plan which would transfer either to the Board of Governors or the FDIC the examining, statistical, and other functions, excepting perhaps the chartering of national banks.

5. It would place the Comptroller in an inferior position with relation to the heads of other supervisory bodies, such as the FDIC and the Board of Governors of the Federal Reserve System.

6. The Secretary of the Treasury could reassign duties which might seriously interfere with the efficient operation of the Comptroller's functions.

The Secretary of the Treasury, under the plan, would have complete direction and control over the duties now performed by the Comptroller's office. The Secretary could authorize any other officer, agency or employee of the Department to handle any of the functions now performed by the Comptroller's office. This could lead to serious difficulties in the enforcement of the National Bank Act, as the proper administration of national banking laws requires quick decisions by experienced supervisory authorities, whose decisions are final.

The national banks, at this time, have confidence and are satisfied with the splendid past performance of the Comptroller's office and certainly do not desire any change which might in any way jeopardize the same.

7. The plan possibly would involve the replacement of the Comptroller by the Secretary of the Treasury on the Board of Directors of the FDIC, unless the Secretary delegates that function specifically to the Comptroller or to some other official.

8. An Administrative Secretary would be appointed who would perform such duties as prescribed by the Secretary, particularly in supervising and directing the policies and the programs of the Department.

This would inject outside interference in the determination and administration of policies and regulations now carried out by the Comptroller and his assistants. 9. The Office of the Comptroller enjoys the confidence of the national banks of the country.

There are approximately 5,000 national banks in this country, representing over 56 percent of all the commercial banking resources of the United States. These banks look to the Comptroller of the Currency as their sponsor in Washington, a Federal official free to speak and act on their behalf and without censor or influence from a superior. While the banks of the country have the highest respect and confidence in our present Secretary of the Treasury, the Honorable John W. Snyder, there is apprehension that some future holder of this office might use his powers and authority in a way not conducive to sound banking or for the general public welfare. It is a matter of law, rather than a matter of personalities. Over the long years of its existence the Office of the Comptroller has built up a splendid record. It is our belief that nothing should be done which would in any way disturb the present satisfactory operations of national banks and the public confidence in them.

[From the New York Times of April 4, 1950]

OPPOSE ABOLITION OF COMPTROLLER-BANKS OF NATION ARE RALLYING AGAINST REORGANIZATION PLAN THAT SPELLS VIRTUAL DOOM-INDEPENDENCE SEEN STAKE-STATE SUPERVISORS JOIN ABA, OTHER ASSOCIATIONS IN FIGHTHEARINGS DUE THIS WEEK

(By George A. Mooney)

Banks throughout the country are rallying in opposition to President Truman's Reorganization Plan No. 1 which would virtually abolish the Office of the Comptroller of the Currency, it was learned yesterday. Although the proposal primarily affects national banks, the National Association of Supervisors of State Banks, it is understood, has joined with the American Bankers Association, State banking associations and other interested groups in an effort to arouse resistance.

The drive will reach its peak intensity on Tuesday and Wednesday this week when hearings are scheduled to be held before the Senate Committee on Expenditures in the Executive Department. Last week the Senate Banking Committee voted to oppose the shift. Also it was reported that Senators H. Willis Robertson, of Virginia, and Homer Capehart, of Indiana, have both introduced resolutions requesting that the proposal be defeated and the resolutions will be presented at the hearings.

Although this action might have been expected to allay concern, bankers are not relaxing the fight, at least not in this area. Despite the resolutions by the Senators, Arthur T. Roth, president of the Franklin National Bank, of Franklin Square, Long Island, mailed out a 7-page statement to all national banks in an attempt to arouse grass roots opposition to the plan. Urging the banks to make their views known to Congress promptly, Mr. Roth pointed out that unless a legal majority of 49 Senators approves the resolution, the plan will automatically become effective May 11.

During the week also, the New York State Bankers Association issued a broadside to its member banks throughout the State, asking immediate action.

"The American Bankers Association in Washington is exerting every influence at its command to save the independence of the Comptroller's office," the State association wrote. "The ABA adds that it is of grave concern to all bankingthis move in Washington is a direct challenge to an independent banking system."

URGED BY HOOVER GROUP

Reorganization Plan No. 1, ostensibly an adaptation of a recommendation of the Hoover Commission, was one of 21 Government reorganization plans which President Truman sent to Congress on March 13. Submitted under the Reorganization Act of 1949, the plan would (a) vest in the Secretary of the Treasury all functions of all other department officers, employees, and offices; (b) authorize the Secretary of the Treasury to delegate functions to any officer, employee, or office of the Department; (c) establish an administrative Assistant Secretary in the Department.

As presently established, the Comptroller's office has a semi-independent status. Although under the general supervision of the Secretary of the Treasury, the Comptroller now reports directly to Congress and the office makes its own recommendations to that body. The Comptroller also enjoys a position of prestige on the same level as the heads of other supervisory authorities, such as the Federal Deposit Insurance Corporation and to Board of Governors of the Federal Reserve System.

There are approximately 5,000 national banks in this country, representing more than 56 percent of all the commercial banking resources of the Nation, and the Comptroller serves as the sponsor of these banks in Washington. Thus, the banks are most anxious that the Comptroller's office be maintained intact. They are not concerned that Secretary of the Treasury John W. Snyder might absorb the Office if given the power, but they are afraid that some future holder of the office might do so.

VIEWS OF SECRETARY

The Secretary, incidentally, when questioned on his views last week was quoted as saying that he did not need any legislation to help him run the Treasury. He added that he "had no further comment at this time."

Perhaps the major concern of the bankers, however, is the fear that the reorganization plan would be a further step toward breaking down the dual banking system, and another move nearer to nationalization. The plan, it is held, might be only the forerunner of an additional reorganization plan which would transfer either to the Board of Governors, or the FDIC, the examining, statistical, and other functions of the Comptroller.

But while presumably intended to permit economies of operation in Government, the plan would not eliminate any of the demands on the public purse, the bankers point out. Actually, the Comptroller's office is entirely self-sustaining and dependent in no way upon appropriations made by Congress or funds supplied by the Treasury Department. Expenses of the office are defrayed exclusively by the assessment on national banks for examinations made by it. The plan, moreover, would permit the Secretary of the Treasury to transfer the funds of the office as well as its records, property, and personnel, to carry out other functions of the Treasury Department.

The foregoing are only a sampling of the variety of reasons in opposition to the plan advanced by the bankers. They hasten to explain that they are in full

accord with all plans which would reduce Federal expenditures and promote economy, provided they are consistent with efficient operation of the Government. The bankers add, however, that there are many activities, especially those developed in recent years, in which economies can be readily effected. But the Comptroller's office, they assert, has performed an effective function in its semiindependent status for 86 years.

MEMORANDUM: REORGANIZATION PLAN No. 1 AS APPLIED TO OFFICE OF THE COMPTROLLER of the CURRENCY

The principal powers and functions which would be transferred to the Secretary of the Treasury under the plan would be:

Chartering of national banks.

Approval of branch offices.

Approval of consolidations between national banks or State and national banks. Approval of conversions of State banks into national banks.

Approval of recapitalizations and reorganizations.

Examination and supervision of national banks.

Power to examine nonbanking affiliates of national banks.

Promulgation of rules and regulations relating to investment securities of national banks. (State member banks are also subject to these regulations.) Interpretation, application, and administration of laws relating to lending and investment powers of national banks.

"

Power to initiate proceedings to remove officers and directors of national banks for violation of law or continuance of unsafe and unsound banking practices. Power to initiate court proceedings to forfeit charter of national bank for violation of law.

Power to publish bank's reports of examination in newspaper if bank refuses to conduct sound banking.

Power to levy assessments against shareholders of national banks to restore impairment of capital.

Power to assess fees against national banks for the purpose of covering costs of examinations and to determine the amount thereof.

Control over funds of the Comptroller's office obtained through assessments against national banks for expenses of examination; this would be transferred to the Secretary to be used as he deems appropriate.

Power to determine insolvency of national banks and to appoint a receiver therefor.

Power to appoint a conservator of a national bank.

Duty of Comptroller to serve as a director of the Federal Deposit Insurance Corporation.

Many of these powers and functions can, in their exercise, be far reaching in their effect on our economy and must be exercised with sound judgment and caution, free from political pressures.

When Congress, 87 years ago, created the national banking system and the Office of the Comptroller of the Currency, it recognized that such Office, clothed with quasi-judicial functions, must be independent. Fresh in the mind of all was the country's experience with the United States Bank, politically dominated, bestowing its favors on some and ruin on others.

Congress, therefore, in order to make the Office of the Comptroller of the Currency a nonpolitical office and to remove it as far as practicable from the influences incident to the quadrennial changes in party or political administration of the Federal Government, fixed the term of the Comptroller at 5 years, and he was required to report annually direct to Congress, instead of to the Secretary of the Treasury, as other Department-bureau officers are required to do.

The purpose of this latter requirement was to enable the Comptroller to present to Congress for consideration his independent views and recommendations in regard to the conditions and necessities of the banking interests and currency needs of the country, free from censorship by his official superior, the Secretary of the Treasury.

Thus, Congress made the Comptroller of the Currency somewhat akin to an arm of Congress, just as it did in latter years with the Office of the Comptroller General of the United States.

It is, of course, true that the Comptroller is under the general supervision of the Secretary of the Treasury, but a glance at the Comptroller's powers or functions will clearly demonstrate the responsibility placed in him and him alone. Moreover, his Ŏffice is financed exclusively by fees and charges paid by national banks