There are two reasons for this change: First, employees with a competitive status who have been promoted or transferred to exempt positions should not be required to be again examined, and, second, it is believed that the incumbents of positions who do not have a classified status should be required to enter the open competition on the same terms with all other persons and that they should be retained only as the result of being reached in the order of their grades on the eligible register under the method of certification prescribed by the civil service rules. They would be given full credit in the examinations for their experience. It should not be enough merely that they pass the examinations but they should be retained only when reached in the order of their grades in the examination. Trusting that these suggestions may meet with your concurrence. By direction of the commission.

Very respectfully,

JOHN T. DOYLE, Secretary.

Mr. CRAMTON. That concluded the amendments in the Volstead Act. Section 4 proposes the addition of certain new sections providing for the creation of a bureau of prohibition and defining its jurisdiction.

Having come to all these conclusions as to the form of the bill, I then consulted others who were much more experienced than I in the practical details of administration.

It is only fair to say, however, that I resolutely kept away from Commissioner Haynes and the prohibition enforcement unit, because I did not want them to be held responsible for my actions.

I was proceeding on my own motion and I did not want to cause any false embarrassments in the department.

I did, however, conclude--and I am very glad that I did that inasmuch as this proposed an important change in the Treasury Department, that I should consult the head of that department, Secretary Mellon. I had not met the Secretary before, but I secured an appointment and presented the subject to him.

I think it is only due to the Secretary to say that he has throughout approached the question in a broad-minded and most satisfactory

way.

In my first interview with him, which was, as I recall, now shortly before Thanksgiving, he expressed his concurrence with the principle of my bill.

I expressly said at that time I did not have the bill fully drawn and he was not, of course, speaking of details. But the principle met his indorsement in our first interview.

I think it is not improper in connection with what I have referred to as the attitude of members of the chamber of commerce, to tell you that the Secretary in that interview-I can not quote him verbatim and will not attempt to, but I have the idea-said that he realized the necessity of giving some relief to the Commissioner of Internal Revenue by the removal of this extraneous burden.

He said:

Three or four times a day I am in consultation with the commissioner over tax matters. Usually they involve very large sums of money. In fact, it seems to me that the Commissioner of Internal Revenue has to decide questions just about important sometimes as does the Supreme Court of the United States.

He said that he felt the force of the suggestion that I had made, that the Commissioner of Internal Revenue had enough to do without having this burden upon him.

I may say further that he said when he came into office, he had been given to understand that this was going to be taken out of the

department in 60 or 90 days, and he anticipated that; that if his personal wishes were served, it would be and he mentioned some reasons with reference to that, which probably will occur to your minds as well.

But he said that based upon his experience in the department, he was bound to say that his judgment was that the Treasury Department was the proper place to keep the administration.

Mr. MONTAGUE. Who said that?

Mr. CRAMTON. Secretary Mellon; and for reasons that I may as. well emphasize now, since I have not done it before. Because that department has these kindred bureaus, which, to get the best enforcement, must closely cooperate.

If this bill is passed as proposed,, you will have in the one department four bureaus that should closely cooperate in this work. There would be the bureau of prohibition; there would be the Commissioner of Internal Revenue; there would be the Coast Guard, which we have just now proposed to enlarge to give it the opportunity to put an end to smuggling by sea; there would be the customs division, I think it is called, or the customs bureau, which of late, has been taking an increased part in the prevention of the smuggling of liquors by land.

I assume, while the bill does not provide it--and the law seldom does define the duties of Assistant Secretaries--that the Secretary of the Treasury, who has full power of supervision over the work of each of these four bureaus, would naturally group these four bureaus under one Assistant Secretary, who would be the coordinator to secure the closest possible cooperation.

Not all of those suggestions that I have just given came from the Secretary; certainly not in that one interview, but they accurately represent this point of view and my own point of view as to the desirable features of the case.

Following that interview with the Secretary, I had an interview with Commissioner Blair, who was in fact present during the latter part of my interview with the Secretary.

Later I had interviews with Judge Britt, when it became definite that he was cooperating with the head of the department, Judge Moss at that time being engaged in negotiations in Canada and not being in the city.

When I had a complete draft of the bill I presented it to the Secretary, and he caused to be made an examination of its details. Finally, I introduced a bill which had at that time the approval of the department in detail.

That bill was the first bill I introduced, which was H. R. 4102. That bill, after its introduction, was referred to the Treasury Department for report and in response there came back to this committee certain suggestions of desirable amendments as to the details of the bill. No change in the principle in the bill was made, but merely as to the working out of the details.

Those being checked over, I told the department that I could accept them entirely and that I preferred to have a bill come before this committee approved as a whole.

So I reintroduced H. R. 4102, and it became H. R. 6645. That embodied the changes suggested by the Treasury Department.

That bill went to the department and received under date of February 20, the complete approval of the Secretary of the Treasury, in which he says in part, as follows: The letter has already been put in the record, but I think it is brief enough for me to read most of it.

I understand this bill, the proposition to create a bureau of prohibition in the Treasury Department under the general supervision of the Secretary and his assistants, as our other bureaus giving to the Commissioner of Prohibition, which office it creates, the entire administration of all prohibition laws, present and prospective, reserving only the collection and covering into the Treasury of all taxes fixed thereon, as determined by the Commissioner of Prohibition to the Commissioner of Internal Revenue, and with this understanding of the bill, I give it my approval. Should there be any necessary changes, either verbal or written of assistance to effectuate these ends, your committee will no doubt make them before the passage of the bill. This being done, I hope the bill may speedily become a law.

The bill provides then for centering in a new bureau in that department, subject to complete supervision by the Secretary of the Treasury, all the activities with reference to the enforcement of the law concerning alcohol and intoxicating liquors.

The Department of Justice would retain the duty of prosecuting, but the duty of detection and supervision and administration would be in this bureau.

Let me say this: It is to be definitely understood that we are not increasing the number of positions in the Government. We are not adding here several hundred new employees. We are simply taking out of the existing Internal Revenue Bureau the Prohibition Unit, with its officials and its employees, and constituting them a separate bureau coordinate with these other three that already exist.

Mr. HERSEY. Which three do you refer to?

Mr. CRAMTON. Internal Revenue, Coast Guard, and customs service. This seemed the logical thing, to set up this bureau coordinate with other bureaus and activities in the same department.

I think almost without exception or practically without exception the Assistant Secretaries are the agents of the Secretaries created to relieve the Secretaries as the Secretaries may desire, and Congress never imposes specific duties upon them, but I assume one Assistant Secretary will assist the Secretary in supervision of these four bureaus. I want to emphasize that we are not creating any more jobs. are reorganizing, that is all. I talked with Judge Volstead

We

Mr. DYER (interposing). You are raising the salaries of some of the officials?

Mr. CRAMTON. Yes. Of course, that is not an essential feature of the plan. But I do feel this, that the task is one of the biggest jobs in the country, and that the salary that is proposed is none too large for its responsibilities. But I say that is a matter in the hands

of the committee.

If I may proceed, I have just a word or two and then I will be through.

First, as to the terms of this bill, its scope. It seeks to center in this one bureau, the administration of the law with reference to alcohol, both its prohibited and its permitted use; which is desirable, for reasons I have already urged.

That part of the administration which we propose to leave in the Commissioner of Internal Revenue is the purely financial. There is a tax upon lawful sales of alcohol which the Commissioner of Internal Revenue, under this bill, will continue to handle.

I will say that as to details of the bill and administration, Judge Moss, Assistant Secretary of the Treasury, and Judge Britt, who I think is Solicitor of the prohibition unit, are here. I have consulted a number of times with Judge Britt as to the technical features of the bill. They know a great deal more about the technical part of it than I do; and those details, I know the committee will want to discuss with these gentlemen from the department. I will not take the time to go into them at length.

I think that that covers what I especially wanted to say to the committee.

Mr. PERLMAN. Don't you think, Mr. Cramton, there would be less duplication of work, more cooperation and protection and enforcement of the law, if this bureau went to the Department of Justice?

Do not some of the Department of Justice men do some work in connection with the detection of violations of the Volstead law?

Mr. CRAMTON. I suppose they do, but no proposition that I have seen advanced contemplates taking to the Department of Justice anything except administration of the law as to the prohibited use of liquors.

Here is a concern making alcohol, which, under the law, may be used lawfully for certain purposes. Permits are granted for its use for proper purposes.

There are two great enemies to-day to a proper enforcement of the Federal act. One is the smuggling of liquors from abroad, which we are trying to stop through our proposed enlargement of the Coast Guard, and the other is the diversion of liquor manufactured ostensibly for lawful purposes but going into an illicit traffic.

Do not understand that I am charging that that is customary or usual or that the majority or any large per cent of concerns engaged in this lawful traffic step over into the unlawful, but there is a percentage and that whole traffic has to be policed by the Government to protect the country from that percentage that would step over.

I do not believe we ought to have the Internal Revenue Department administering the law as to the lawful use and lawful manufacture and then have the Department of Justice with another force coming in to see that these people under permits are not violating the law. I think the authority that issues the permits should be the authority to check up on them and to stop them if they are violating the permits.

Mr. DYER. Why don't you leave the industrial alcohol enforcement, as it is now, under the Internal Revenue Commissioner, make it direct and specific, and put all this other business under a commissioner such as your bill indicates? Why couple up the illigitimate, illegal traffic with that which the law permits?

Mr. CRAMTON. Because in commerce the illegitimate, wherever it does exist, has to be fastened on to the legitimate.

Mr. DYER. They are two separate subjects. Industrial alcohol was so treated in the enforcement act.

Mr. CRAMTON. But the violation of the law and the difficulty of enforcement, in large part--not in a major part, perhaps, but in a very appreciable part-grows out of a diversion, even of industrial alcohol, from its legitimate purposes.

96962-24-SER 28- -2

Mr. DYER. That is very small, Mr. Cramton. The great trouble of the country, as I take it, is in the illegal importation, such as we are endeavoring to stop by recommendations of the President concerning the Coast Guard. That is where the great trouble is. I think the prohibition unit would have enough to do, if they were trying to enforce the law on that subject, without spending all their time on the other, and let the Internal Revenue Commissioner handle that. I think he could handle it and he can enforce the law.

Mr. FOSTER. If you will allow me, there occurs to my mind the proceeding we had here a year or two ago in which it was brought out, in southeastern Ohio, I think, there were found some 30 medicines that were probably used as a beverage. I think that is a little more prominent is some sections of the country.

Mr. CRAMTON. What I have said to the gentleman from New York would be very much my answer to the gentleman from Missouri.

But these gentlemen who are present are much better versed than I am as to these technical matters and I would be glad if you would discuss that with them, Mr. Dyer.

Mr. PERLMAN. What struck me was this. It was the intention to create the Treasury Department to take care of our finances and the Department of Justice to enforce the law. The enforcement of the Volstead Act is a matter of the enforcement of the law and not a matter of finances at all. That is what struck me and perhaps it might be advisable to have it under the Department of Justice.

Mr. CRAMTON. This just occurs to me. I started to refer to Judge Volstead and my discussion with him concerning this in November, when he chanced to be in Washington. I just talked with him a moment and I learned then that the reason that this thing was not done in the original Volstead Act, the thing which I am now proposing, was very largely for the reasons suggested, that there was a fear on the part of Judge Volstead that he would have more difficulty in getting the bill through, if it created a new bureau.

But that is a matter of form rather than of substance because we have the people and only the titles will be a little different.

I want to thank the committee for the very patient hearing they have given me and I want to emphasize this again, that I do not want this to involve a question of whether Prohibition Commissioner Haynes is the best man for the job, or whether Commissioner of Internal Revenue Blair is the best man, or whether Secretary Mellon is an ideal man to put in this position.

I have expressed my satisfaction of my contact with Secretary Mellon. But it is not a question of personalities. It is a question of getting this law in the best shape we can for the best possible enforcement. I do not think that that needs to involve the direct issue of whether the present commissioner is the best man. As Major LaGuardia emphasized on the floor of the House yesterday, he was ready to stand for the best enforcement, while he would ask some modifications of the act.

Mr. HERSEY. You have cited Secretary Mellon as approving your bill. Have you anything from the Judicial Department, the Department of Justice, approving this?

Mr. CRAMTON. No; I have not consulted that department. I think there have been some comments from time to time. There