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the office for which they were appointed and confirmed, or their duties and responsibilities could be assigned, at the discretion of the Secretary of the Treasury, to others that Congress did not intend should have such duties and responsibilities.
In our democracy, which every member of this committee as well as every Member of the Congress wants to maintain, it is necessary for the Senate of the United States to preserve its right to examine the fitness of appointees to various positions in our Government. Under Reorganization Plan No. 1, the duties and responsibilities of the following officials holding high office could be shifted from one individual to another:
Treasurer of the United States.
Assistant Treasurer of the United States.
Comptroller of the Currency.
Commissioner of Internal Revenue.
Assistant Commissioners of Internal Revenue.
Special Deputy Commissioner of Internal Revenue.
Assistant General Counsel for the Bureau of Internal Revenue.
Commissioner of Narcotics.
Register of the Treasury.
Assistant Register of the Treasury.
I mention this fact not because I am directly opposed to that, although I have some questions in my mind. I think the Congress should preserve its right to examine the fitness of the Commissioner of Internal Revenue, for instance, and there are others in this list. I do not mention the Under Secretary of the Treasury or the Assistant Secretaries of the Treasury or the General Counsel, because I think the Secretary should have the right in those cases to make shifts in his Department but when it comes to some of these others, for instance, the Commissioner of Internal Revenue (and I think Senator Benton mentioned that a few minutes ago), I do think that we want to see the Congress, particularly the Senate, have the right to examine the fitness of that appointee. In the past there have been some unfortunate appointments which were not confirmed.
Our national banking system is strong and it should be kept so. The country needs it, and the Treasury needs it because we are faced with deficit financing. Under Reorganization Plan No. 1, the Secretary of the Treasury could have complete control over bank examinations. This responsibility now rests mainly with the office of the Comptroller of the Currency. The national banks of the country own approximately $38,000,000,000 of Government securities. It would not seem to me to be wise to clothe the Secretary of the Treasury with both the power over the examination policies of the national banks of the country and the power to manage the public debt held by the banks. It hardly seems sound or conducive to democratic government for the official responsible for debt management, in which capacity he stands in the position of debtor, to have the power to supervise and examine the banks which are, in effect, his creditors. Undoubtedly the members of this committee, and other members of the United States Senate, have received from many national bankers in their own States expressions regarding Reorganization Plan No. 1, that are similar to those I have stated. I earnestly urge this
committee to report out favorably Senate Resolution No. 246, and thereby disapprove Government Reorganization Plan No. 1.
Mr. Chairman, and gentlemen of this committee, I appreciate the courtesy accorded me in having this opportunity to appear before you and record my views in regard to Reorganization Plan No. 1. The CHAIRMAN. Thank you very much, Mr. Fleming.
Are there any questions?
Senator BENTON. Mr. Fleming, I have a special interest in the solvency of your bank and its conduct, being a depositor of yours. The CHAIRMAN. That is why I do not wish to cross-examine him. I am going to let him have his way.
Mr. FLEMING. I have been cross-examined before.
Senator BENTON. I was very much interested in your appearance here this morning. I have one question because I have learned to admire you over a long period of years. You are a permanent resident and observer here in the town, watching us transients come and go, and you have a chance to observe some of these problems involved in trying to get a more efficient administration.
Mr. FLEMING. That is correct.
Senator BENTON. Do you not agree, on your part about the Congress reserving its right in this and the other area, that this is of course standard appeal and one of great importance? On the other hand, it is one of the greatest causes of inefficiency and maladministration in the executive branch of our Government.
Mr. FLEMING. I think, Senator, that is a matter that has to be rather selective according to the importance of the office.
Senator BENTON. That was the next point I was going to make. Do you agree that it is one of the great reasons for maladministration? Perhaps I should give you my two or three questions in sequence. I do not want to trap you here.
Mr. FLEMING. I would like to have it amplified a little bit, Senator, so I can more intelligently answer.
Senator BENTON. If that is true, you then come to the second step where you are not necessarily choosing between good and evil, black and white, but you are choosing between the lesser evil. As Machiavelli once said, "It is the problem of the statesman not to choose between good and evil, but to choose between the lesser of the two evils."
We want our efficient administration. Are you aware of the fact that the Congress has no power to amend or change in some one respect one of these reorganization plans?
Mr. FLEMING. I understand that very thoroughly, Senator, and of course I realize the reasons for that. It is an endeavor to get the plan through.
Senator BENTON. You think the reasons for it are valid reasons? Mr. FLEMING. I think the reasons are valid, but in submitting those plans, where there were regulatory bodies or quasi-judicial functions performed, I think it would have been better if the plan had not been so sweeping. I think we all want to see economy in government and we all want to see more efficiency in government if we can get it.
On the other hand, maybe I am old fashioned, maybe because I am getting old, but in certain cases, as where there are quasijudicial or
regulatory functions and things of that sort, I do want to see the Senate reserve its right, if it can, to examine the fitness of appointees. I have confidence in the democratic system, and when all the hearings are over from the standpoint of the fitness of a man for office, I do not think many mistakes are made.
Senator BENTON. It is a problem of examining the likelihood of the Secretary of the Treasury having great incentive to corrupt perhaps that is not quite the right word-having incentive to take away from a confirmed officer, for whom he is responsible, the duties for which that officer was appointed.
Coming back to my questions to Mr. Peterson, if the risk is very great of the Secretary of the Treasury having political incentive to cause him to socialize the banks, cut up the financial system, prostitute the bank inspectors, et cetera, then we should turn down Reorganization Plan No. 1. I would agree with you. But should we turn it down on the assumption that the incentive is so great that we should abandon the very great advantages for efficiency and good administration that are involved in making the Secretary of the Treasury responsible not only for the Comptroller of the Currency, but these other nine bureaus, because the Congress does not have the choice of stating "we shall agree with the bankers on the Comptroller of the Currency, but go ahead with the other eight.' You appreciate we do not have that choice.
Mr. FLEMING. I appreciate the dilemma, but I would like to point out that when you are dealing with the credits of the Nation, that is the lifeblood of business enterprise. I have lived through a period of time when there were some pretty dark days when it was very seriously considered that we should have a 100-percent reserve theory. In other words, all demand deposits. The only way you could loan any money would be by getting permission of a regulatory body. It would have been a step down the socialistic road if that had through. I do not say it will happen, but I do say if you eliminate the office of the Comptroller of the Currency or emasculate the office, let us say that, in the future we do not know who the Secretary of the Treasury might be, and he might conceive the idea that we should go to some theory of that sort. He might advocate it very strongly. Whereas, if you leave the Comptroller in his independent status, he stands as a guardian for the national banking system created by the Congress.
Senator BENTON. I see there is a difference between me and some of the witnesses on the likelihood of the risk. If the Secretary of the Treasury takes that position, I would assume the President of the United States would take that position. If the President of the United States takes that position, I would assume there is some chance that the President of the United States might have some influence over the Congress. If we have an administration and a Congress that take that position, I assume that no Office of the Comptroller at that time as constituted can withstand such a risk.
Mr. FLEMING. He still has the right to make his report to Congress. Senator BENTON. That is what we are balancing against the chance to take these nine great and sprawling organizations and bureaus and achieve the great economies and greater efficiency that would be involved in Reorganization Plan No. 1.
Mr. FLEMING. For instance, going back to some of these people who are to be affected, I could not see that any danger could occur from transferring some of the duties of the Treasurer of the United States, or something of the sort, because that is not a supervisory job. That is only one of those I mentioned that could be transferred. But where you have over the years the comptroller who traditionally has stood up to protect and keep the national banking system sound, to protect it from the encroachment of State laws, to preserve the creature that Congress created, and who supervises 56 percent of the commercial bank resources, I see no advantage in eliminating that Office when you save no money and you do not make it more efficient. Maybe my thinking is fallacious, but it seems to be common sense to me, Senator.
Senator BENTON. I congratulate you on your statement, Mr. Fleming. I hope you remain solvent and take care of my money.
Mr. FLEMING. We are going to do the best we can. We are going to be solvent as long as the Treasury of the United States is solvent. Thank you very much, Senator.
I might say one other thing, Mr. Chairman and Senator Benton, that I am a great admirer of Frank Pace, and I think his appointment as Secretary of the Army is a fine appointment. I was sorry to see him leave the Budget Bureau, which is so important. I talked to Frank Pace about this very question and endeavored to get him to withdraw this plan and to put it up again without the Comptroller. Senator BENTON. To take the other eight?
Mr. FLEMING. To take the other eight. He said he could not do it. I must say that Frank was not cognizant of what we bankers feel when he sent it up. He knew nothing of that situation. That is always a danger where somebody has not spent a lifetime-and I wonder sometimes why we do in the banking business.
Senator BENTON. The difficulty, of course, now is that it comes up to the Congress as a package. The question is whether the risk that worries you is of sufficient validity to warrant the sacrifice of the tremendously great advantages that are involved. Is that a fair statement of the question?
Mr. FLEMING. You are drawing the issue.
Senator BENTON. From the standpoint of Congress.
Mr. FLEMING. I think you are drawing the issue very clearly.
Mr. FLEMING. I think the danger should not be understated in some subsequent year, not now. With John Snyder as Secretary of the Treasury nothing is going to happen on that, but he is not going to be there always. As I said in my statement, when you deal with legislation, you have to deal with what could happen and who is going to be Secretary of the Treasury in the years to come.
Senator BENTON. I am sorry, Mr. Chairman, that I must leave. I think I must add my tribute. I could not be the only man at these hearings who did not pay tribute to John Snyder. I must for the record add my tribute to John Snyder.
Mr. FLEMING. He is all right.
The CHAIRMAN. Thank you very much, Mr. Fleming.
STATEMENT OF WILLIAM B. GLADNEY, PRESIDENT, NATIONAL BANK DIVISION, AMERICAN BANKERS ASSOCIATION; PRESIDENT, FIDELITY NATIONAL BANK, BATON ROUGE, LA.
Mr. GLADNEY. Mr. Chairman, with just one remark I would like the privilege of filing this report.
The CHAIRMAN. Do you have a prepared statement?
Mr. GLADNEY. Yes.
The CHAIRMAN. You may file your statement and summarize it if you care to.
Mr. GLADNEY. My name is William B. Gladney. I am president of the Fidelity National Bank of Baton Rouge, La., and president of the national-bank division of the American Bankers Association.
In filing this, I would just like to say that the national-bank division of the association is thoroughly satisfied with the fair and equitable and efficient manner in which the Comptroller is running his office, and we don't wish any such change as is proposed in Reorganization Plan No. 1 of 1950.
I thank you very much.
The CHAIRMAN. Your statement will be filed and it will be printed in the record. Thank you, Mr. Gladney.
Mr. GLADNEY. Thank you.
(The statement referred to follows:)
STATEMENT OF WILLIAM B. Gladney, PRESIDENT OF THE NATIONAL Bank DIVISION OF THE AMERICAN BANKERS ASSOCIATION
My name is William B. Gladney. I am president of the Fidelity National Bank, Baton Rouge, La. I am also the president of the National Bank Division of the American Bankers Association and am here to register its disapproval of Reorganization Plan No. 1 of 1950.
With your permission I first would like to voice the national-bank division's sincere appreciation for the high degree of efficiency that the Comptroller of the Currency and his very capable staff have maintained in the conduct of his office. The fair and equitable interpretation of the national banking laws, the prompt and unbiased decisions on policies and procedures, the constructive and comprehensive examinations and the general over-all helpful services rendered by this Bureau have given the national banks confidence in the Comptroller, and also have given the public confidence in the soundness of the national banking system. The excellent service of this Bureau, continuous since its creation, has today reached a high level. We desire no change such as provided for in this reorganization plan.
The Comptroller of the Currency is the very center of our national banking system. His decisions must be fair and unbiased, based squarely upon actual facts, and not influenced by pressure, political or otherwise. There must be no indecision or delay on his part in the handling of the many problems coming to his attention. The transfer of the functions of the Comptroller to the Secretary of the Treasury, as contemplated in this reorganization plan, disturbs national banks and makes them apprehensive of what to expect in the future. Such questions as these come to their minds:
1. With all the other grave problems confronting and perplexing him, especially those relating to the national debt, how will the Secretary be able to give his personal attention to the individual problems of the 5,000 national banks needing immediate decisions?
2. Will the Secretary delegate the transferred functions of the Comptroller and, if so, to whom?
3. Will the Secretary divide the functions between several members of his staff and thus lose the consistency and harmony of policies made possible under the present independent status of the Comptroller?
4. Will the consideration of fiscal and monetary policies, rather than the principles of sound banking, control in the supervision and examination of national banks?