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The same thing applies to business in the matter of accounting. If you have a man set up there and say, "Yes; go ahead and spend this money," and then he is consulted on something else and he says, "Yes; go ahead and spend the money," or he says. "No; do not de that," he has assumed the responsibility for administration.

Representative COCHRAN. Let me ask you this: Is it not better for Congress to write a law not to suit a Government agency that wants to spend it as it sees fit, but to spend money as Congress desires it to be spent?

Mr. GULICK. On the broad questions of conditions that are to be laid down, yes; but once those conditions have been determined, once the Congress has acted on an appropriation, which it has every constitutional right to withhold under our system, once they have acted then comes the job of administration. You have got to decide to do this or not to do that, you have got to buy Government equipment, you have got to rent quarters, but then the process is adminis

tration.

Representative COCHRAN. You would not deny the Congress the right to limit appropriations?

Mr. GULICK. No.

Representative COCHRAN. When the Comptroller General limits the expenditure of a certain sum of money that Congress intended for a given purpose, why should not the Congress be criticized if you are going to criticize anyone? Congress laid down the law, not the Comptroller General.

Mr. GULICK. That kind of limitation the Congress cannot exercise constitutionally. There is a very interesting case in the New York State courts where the legislature endeavored to establish exactly that kind of control over the spending of money, and the Court of Appeals, by unanimous decision, held that was a violation of the American constitutional structure of the separation of powers. The legislature makes the appropriation, establishes the conditions for the carrying out of that thing, but this business of deciding from day to day what you are going to do, how you are going to do it, that is administration, and that is within the scope of the power which the Constitution covers when it says "The Executive power."

Representative COCHRAN. Do you feel that if we put a limitation upon an appropriation bill that this money should not be expended for the specific purpose, that the Congress is going beyond its powers?

Mr. GULICK. No.

Representative COCHRAN. Then, if the Comptroller General sees that that limitation is carried out he should not be criticized, but probably Congress should be criticized for putting the limitation on if criticism is justified.

Mr. GULICK. The making of day-to-day decisions in advance of the expenditure of money carries a man directly into administration. The increasing practice under the act which we now have has been for the Comptroller General's office to encourage all of the departments to come on over and get decisions on all of their points in advance. Now, a few departments, as you know, have refused. They said, "We cannot do that and carry on; we cannot carry on with the job when we have such delay. We have to postpone action.

We just cannot do our work if we have to consult the auditor on every decision that is made and get this type of approval."

The CHAIRMAN. Just a moment. The imposition of a limitation is a legislative act?

Mr. GULICK. That is correct.

The CHAIRMAN. Congress, within the necessary limits of the Constitution, can impose any limitation it sees fit with respect to the expenditure of funds, but after it has imposed the limitation the expenditure is an executive function and not a legislative function. Mr. GULICK. And if there is an effort to confuse that, then the responsibility of the executive is lost; you cannot hold anybody responsible.

The CHAIRMAN. And the responsibility of the Congress is lost, too. Senator BYRNES. Has the plan that you suggest been administered in any of the States of the Union?

Mr. GULICK. Yes.

Senator BYRNES. What States?

Mr. GULICK. Massachusetts, Maine, and Virginia.

Senator BYRNES. The legislative branch of the government having this control over the auditing of the expendtures by the administration, within the limitations set forth in the law?

Mr. GULICK. That is right.

Mr. BROWNLOW. Illinois, also.

Senator O'MAHONEY. Now, let me ask you to give a specific example of the difficulty that you want to avoid.

Mr. GULICK. All right. Some months ago-I cannot give you the exact date the Post Office Department needed quarters. The Treasury Department proceeded to get the quarters. Negotiations were carried on for the leasing of a private building for use by the Post Office. The original demand on the part of the owner was in excess of the 15 percent of the valuation of the property, as laid down by congressional rule with reference to the rental of properties, so the Treasury Department negotiated, got the amount down to a reasonable amount, which they considered was within the 15 percent of the capital value of the property. The contract was sent over to the Comptroller's office. The Comptroller said, "No; we do not agree with you as to what the full value of this property is; therefore you may not sign the lease." The basis of that was that they took the assessed value as it appeared on the assessor's books in this particular community, and I think you gentlemen all know there are few assessed values in the United States that show the value of the property, but that was held up for months while the Post Office Department was in need of quarters. Finally, 3 months after the period of the negotiations on the lease, the Comptroller's office said, "Yes; you can go ahead and sign it." Now, there was the case of the administrative officer, who knew the necessity for the space, making the investigation, exercising the judgment within the rules laid down by the Congress, namely, you must not pay more than 15 percent; he gathered the material, brought it in, but his decision was not enough; they had to have another decision from another man, and this other man studied the thing, he had no particular interest in the necessities of the Post Office Department, he did not have men in the field gathering this material, but, just on the basis of the slight information that he had, his decision had to be made.

Representative GIFFORD. Then if the Post Office Department procured a lease and afterward they themselves felt the lessors ought to be released because the Government did not pay enough for it, perhaps because of the growth of the community and that sort of thing, if the Comptroller General is out of the picture they could cancel that lease at will, could not they, under your plan?

Mr. GULICK. Yes.

Representative GIFFORD. The Comptroller General has held that the Government held an equity and forced them to live up to the provisions of the lease in all cases we know of. In the proposed legislation, in all cases where the Post Office Department may see fit, they may relieve lessors in the matter of contracts.

Mr. GULICK. Now, that release can be granted by the Comptroller; is that correct?

Representative GIFFORD. No; the Comptroller himself says, "The law is plain. The Government owns an equity."

Mr. GULICK. I was thinking of the case in Vermont in which the Comptroller granted $22,000 increase over a bid which had been made.

Representative GIFFORD. Yes; in the Post Office that is correct; I grant they get around it by building an addition in the Post Office Building and then increase the rent to such amount Comptroller will allow.

as the

Mr. GULICK. Your question raises this point, which I would like to deal with: What would happen if the Post Office went ahead and signed that contract for an improper amount under this scheme which we suggest? Well, the Auditor General would be making a continuous audit. That is what we call in nontechnical terms a hot audit, as these transactions take place. He makes the audit on the spot. If he found that that individual lease was unsatisfactory, immediately that statement is made the Auditor General says, "I am going to report to Congress, to the congressional committees, that this lease is illegal."

Under my understanding of the law the spending officer will be notified, in this case the officer that made the contract, and they will go ahead, they will start occupancy, they will start using the property. Then the action will proceed from that point. I grant you there is a slight amount of money which they will not be able to get back again which might have been saved if the decision had been made in advance, but I am here also to say that there is a tremendous amount of loss now by the delays and the different negotiations that go on, by the division of responsibility that is introduced under the scheme we have now.

Representative GIFFORD. You answered my question that favoritism and cancelations could be indulged in, and that was the reason for the Comptroller's office being set up. Was that favoritism being indulged in before 1921?

Mr. GULICK. All governments do that, you know.

Representative GIFFORD. I am asking you whether it can be done under your plan.

Mr. GULICK. Of course, all of the expenditures of the United States up to 1921 were made under the scheme we suggest, minus the most important element, namely, an honestly independent outside post audit, such as you have in every business concern.

Representative TABER. How can you have an independent audit and have the auditor under one of the departments?

Mr. GULICK. I am glad you made that point. The auditor would be just as independent as the comptroller is now.

Representative TABER. I thought he was set up as an officer of the Treasury, or under the Secretary of the Treasury.

Senator BYRNES. He is an officer of Congress.

Mr. GULICK. He is an officer of Congress for 15 years, not subject to removal by the executive.

Representative TABOR. That is the way the Comptroller General is. Mr. GULICK. That is exactly what you would have to have in order to get an effective audit.

Senator O'MAHONEY. Your point, Mr. Gulick is this, is it not, that there are innumerable cases in which the question is perhaps a close one, as to whether or not the law permits the particular expenditure, or permits it in a particular way, in the particular way in which the administrative agency is undertaking to make it, and that under the present system the Comptroller General is exercising a power to duplicate the discretionary authority which actually lies in the administrative agency, and that you want to stop that sort of thing, but that you do not want to stop the intelligent examination. and report to Congress of the exact manner in which the expenditures have been made.

Mr. GULICK. Just so.

Senator BYRNES. May I ask this question along the same line? I recall last year Congress passed, in one of the appropriation bills, a provision for the payment of cotton ginners, for services performed in connection with the Bankhead Act. Under that act the Agricultural Department had to hold up the payments for about 7 or 8 months, discussing with the Comptroller the question as to what character of proof should be submitted in order to secure payment, and he would pass upon it, whether it involved the collector of internal revenue or the officials of the Department of Agriculture. Is it your idea that that is a function of the Agricultural Department, which Department in that instance, was directed by the Congress to make the payments?

Mr. GULICK. By the responsible administrator.
Senator BYRNES. Of the Department?

Mr. GULICK. Yes.

Senator BYRNES. And that the auditor then must audit and see that the money is not improperly spent, and if it is improperly spent it is reported to the Congress?

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Mr. GULICK. It is reported to this joint committee. Of course, that set-up of the scheme the Department will consult the Attorney General, consult their own law officer, in order to make certain that they will not have the humiliation of being later upset on the thing. I think you know the tendency of all spending officers to play just as safe as they can. What they are doing now, because of this desire to play safe, is to shove the burden over on the Comptroller.

Senator BYRD. Suppose one of the Cabinet officers would illegally expend $1,000,000 or more, and after that had been spent, suppose then that this Auditor General would report to Congress that this expenditure had been made illegally; what recourse would there be to recover the money?

Mr. GULICK. Well, the probability is, first, that there would be no large proportion of the million dollars expended before the current audit of the Auditor General would catch the first things that go through.

Representative GIFFORD. May I answer the Senator's question by reading the report:

An independent audit made by the independent auditor; to make reports of the illegality or impropriety, so that Congress would take the necessary corrective steps and safeguard the future.

It is already done as you suggest.

Senator BYRD. If the money had been spent, assuming there is no fraud connected with it, suppose on the question of advertising for bids, which the Comptroller General has had a great deal of trouble with, in that case that money had been spent. Would any Cabinet officer be responsible for that $1,000,000.

Mr. GULICK. If it is spent illegally, then you could proceed. Senator BYRD. Do you propose to bond the officers so they would be responsible for these expenditures?

Mr. GULICK. The spending officers are bonded now.

Senator BYRD. The bonds are very small.

Mr. GULICK. Yes; the bonds are very small, but haven't they proved adequate?

Senator BYRD. They have proved adequate, but you have had an independent audit, a free audit, which you do not have under this plan.

Mr. GULICK. We started in 1921. We went through all the great expenditures of the World War without an independent auditor and we did not have any trouble of that sort. You see, when you have men whose career depends upon the accuracy and honesty of their management, they are not going to gamble with things of that sort. Representative COCHRAN. If you were a disbursing clerk and in doubt would not you want a legal determination before you spent the money? Where is the disbursing clerk going to go for this determination?

Mr. GULICK. He goes first to the departmental law officer. If the law officer is in doubt, it is carried to the law department of the United States, the Attorney General. It also goes to the Treasury.

Representative COCHRAN. In the final analysis you propose to accept the Attorney General's opinion as final, rather than the Comptroller General's opinion.

Mr. GULICK. As to the right to go ahead with the job; yes. This is administration, to go ahead with the job.

The CHAIRMAN. Why cannot the Attorney General determine questions of law? What is the object of having a Department of Justice? How did the Attorney General's office originate, excepting on the theory that he was the head of the law division of the Government? Why should a clerical man, a man who is an accountant, who necessarily must devote a great proportion of his life to that service, assume to determine questions of law to the exclusion of the agency which the Government has created to answer law questions? I think that is a perfectly sound proposition.

Senator BYRD. The question involved, it seems to me, is the question of an independent audit. The Attorney General is appointed by the

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