Representative VINSON. With that background, Mr. Meriam, I would just like to know how the institute got sidetracked from the plan submitted to the States, that the control audit must be under the control of the executive?

Mr. MERIAM. I think the way we got sidetracked on that was that in State after State into which we went the method of financial administration as a whole was in a very rudimentary form. In most of those States they had never developed the executive budget type of control.

Representative VINSON. That was your function, to help and develop proper administration, was it not?

Mr. MERIAM. Yes, sir; and that is what we did. In developing that system we did not necessarily have any clear-cut principles. We never went into a State with an advanced plan worked out of what we wanted in that State.

Representative VINSON. But to each State you recommended that the comptroller should be responsible to the executive?

Mr. MERIAM. Yes, sir.

Representative VINSON. And you did that in underscore?

Mr. MERIAM. Very possibly so. Of course, I must say that I am not one who believes a great deal in principles of public administration just as flat principles. My own experience has been that the situation in different places is so entirely different that the question very largely is: How can you work it out?

Now, if you go down to North Carolina, for example, on one floor of the capitol you have the treasurer and the auditor and the director of the budget. They are just three fellows with four or five employees in the auditor's office, perhaps a little more than that because they have to do some accounting work there, and in the treasurer's office three or four employees, and the director of the budget, who works by himself with one stenographer.

As for me personally, I do not get tremendously excited if the precise principles that are used in a little set-up where you can walk from one office to the other and have all the accounts in 5 minutes, if those same principles are not applied here in the Federal Government.

I went down to North Carolina with the salary and wage commission. We went over the records of every employee in the State, including the State educational institutions, and there were between 5,000 and 6,000 employees all told.

Senator BYRNES. Mr. Meriam, did you make the investigation in North Carolina?

Mr. 'MERIAM. No, sir; I did not make the investigation in North Carolina. My work in North Carolina was prior to our survey.

Senator BYRNES. In North Carolina the Brookings Institution made its recommendation to Governor McLean.

Mr. MERIAM. Governor McLean was elected Governor and he got through a budget act and a salary and wage commission act. Senator BYRNES. You did not make the investigation?

Mr. MERIAM. No; I was on another job, an entirely different job. Senator BYRNES. Here is what the Brookings Institution recommended in North Carolina:

The duties of the comptroller are strictly of an administrative character and the comptroller should be one of the important officers of the adminis

trative branch. The duty of the auditor, on the other hand, has to do with the verification of the fidelity with which financial transactions had been performed by administrative officers, and if he is to perform this duty in a fearless and proper manner it is imperative he should be independent of both the executive and administrative branches.

Now, that was made in 1930.

Mr. MERIAM. Yes, sir.

Senator BYRNES. The Alabama report is in 1932. The Mississippi report was made in 1932. The Iowa report comes later, in 1933, and the Oklahoma report as late as 1935.

Mr. MERIAM. Yes, sir.

Senator BYRNES. Now, I understand that since that time—and it is perfectly all right for you to make the statement, I want to have your views-since that time, in considering it, you have changed your views?

Mr. MERIAM. Yes, sir.

Senator BYRNES. As to this matter?

Mr. MERIAM. Yes, sir.

Senator BYRD. Mr. Chairman, may I interrupt just one moment there? For the purpose of the record I think Colonel Wren should obtain these facts about these States, as to who elects the auditor of public accounts in these respective States, and to what extent the comptroller is the spending agency, so that we can draw then a direct contract between the plan recommended by the President's committee here and the plan in operation in these respective States. Will you ask Colonel Wren, please, to get that information for the record?

Senator BYRNES. Colonel Wren, will you get the information that Senator Byrd requests?

Mr. WREN. I will be glad to.

Senator BYRNES. We were talking about the plan that you suggest here, Mr. Meriam.

Mr. MERIAM. The Federal Government plan.

Senator BYRNES. The Federal Goernment plan that you suggested here, that is what we are discussing now. I want to ask if, instead of having them elected, if it was not your recommendation in 1935 that the comptroller should be appointed by the Governor, without term and directly responsible to him, if that was not your recommendation in each State-not that he be elected, but that he be responsible to the Governor, appointed by him and removable by him, and if not, in what State did you make a different recommendation?

Mr. MERIAM. I am not in a position to answer with respect to all those States, because I was on other assignments most of the time. I worked very few of them myself personally, but we would say now, as a matter of principle, that the officer who exercises budgetary control and the executive management should unquestionably be appointed by the executive officer, and that he is the right-hand man of the executive officer for the purpose of exercising managerial control.

Senator BARKLEY. You mean before appropriations are made, in preparing the budget?

Mr. MERIAM. That is all true, Senator. Your budget officer is not only concerned with the formulation of the budgetary program, that

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is the estimates and recommendation, but after the appropriation has been adopted the Governor's budgetary officer is concerned with the allocation of those appropriations to objects and the time scheduling of payments, and in a great many of the States he follows, to a very considerable extent, the efficiency of the administration.

Senator BARKLEY. You have not advocated, though, that the same person to the budgetary officer, in the preparation of the budgets for legislation, and that that identical person should then be the comptroller to determine on those appropriations after they are made, do you?

Mr. MERIAM. In some instances it works out about that way, some of those smaller States, as I recall it.

in

Mr. SELKO. Yes; they did make the recommendations in some of the States that budgetary control and accounting control be combined in the same officer. We now take the position that budgetary control should be exercised by an officer responsible to the executive. Senator BARKLEY. And that he should have nothing to do with the control of the expenditures after they have been appropriated for by Congress, that still another man should have control of that? Mr. SELKO. The budgetary officer responsible to the Executive would have the authority, as, for instance, the Director of the Budget in the Federal Government has under the Antideficiency Act, to control the rate of expenditure, the rate at which administrative officers allocate their appropriations, in order to avoid deficiencies occurring in appropriations in a given fiscal year.

Senator BARKLEY. My understanding of all these recommendations which you have made to the States, and the statement accompanying them, is that control is an executive and administrative matter. You have now changed your view, that it is not an executive and administrative matter?

Mr. MERIAM. There are two types of control, and that is where the confusion has come in, the confusion in our own thinking on the matter of principle. There is the type of control that the Governor or the President uses as general manager for the government. Senator BARKLEY. That is not necessarily financial?

Mr. MERIAM. Yes, sir; it is very largely financial.

Senator BARKLEY. It is partly financial.

Mr. MERIAM. He uses the financial records very largely.

Representative VINSON. That is the power that is inherent in the Executive.

Mr. SELKO. The point we wish to make is that in changing our position we wish to give this auditor who makes the audit of the expenditures for the final settlement of accounts the power to suspend or disallow payment in order that his audit may be effective.

Senator BARKLEY. You claim that that function is not administrative or executive but that it is legislative, and that the legislative branch, which has made the appropriation, hedged about with all sorts of limitations and restrictions, should keep a man there, like a cat at a rat hole, to watch every dollar as it goes through?

Mr. SELKO. I would not apply that simile to him.

Representative VINSON. Do I understand you to say that the function of the person who makes the preaudit, or the control audit, is a legislative function? Day before yesterday Mr. Meriam was very postive that his function was quasi-judicial.

Mr. MERIAM. Well, sir, I think we have lots of officers in the Federal Government, and lots of officers in the State governments who perform some functions which are administrative, some functions which are legislative, and some functions which are quasi-judicial. Representative VINSON. Certainly; that is true.

Mr. MERIAM. Now, you cannot get, in my judgment, very far by attempting to take a particular officer and insist upon it that we shall put him in one of those three categories. You have to take his duties and analyze those duties.

Representative VINSON. That is what you were doing day before yesterday.

Mr. SELKO. Excuse me, sir, but that is not what we were doing today.

Representative VINSON. Senator Barkley asked you if the functions of this agent were legislative, and you said yes.

Mr. SELKO. Excuse me, sir, but I probably did not understand the question.

Representative VINSON. You stated today that it was legislative and day before yesterday Mr. Meriam was very emphatic in putting it in the category of quasi-judicial.

Mr. SELKO. There may have been some confusion about my answer, in interpreting the question about whether or not this officer was an agent of the Congress or the legislature. My answer was not an analysis of the character of his functions. I have no doubt that the legislature, or the Congress can itself engage an agent for certain executive acts which are incidental to its legislative function. I did not understand the question to be drawing me into any discussion as to the character of the functions of this agency of Congress.

Representative VINSON. The question was plain enough.

Senator BARKLEY. The question simply was: Whereas heretofore you held the duty to be executive and administrative now you have withdrawn that definition of it and you say it is not.

Representative MEAD. The representatives of Brookings Institution insist that they are consistent in all of their recommendations with regard to the Federal type of government. They want the committee to keep in mind that these inconsistencies that have been brought out in debate are answered by reason of the fundamental difference in the State and Federal types of government. In other words, in State set-ups they make certain recommendations which are inconsistent with their recommendations as to the Federal set-up, and it is due to the fact that they find a State type of government entirely different to the Federal type of government.

Representative VINSON. Yes; but they have changed their minds now as to the recommendation that they would make to the State governments.

Senator BYRNES. No; Mr. Mead; I think Mr. Meriam would prefer to have his statement stand, because I do not think he agrees entirely with your statement. Let him state it.

Mr. MERIAM. The fact is that if we were doing the State governments now we would look much more closely into that division between managerial control and the control for the legality and regularity of expenditures, and we would go the maximum possible

distance under the law in securing an independent audit prior to final settlement.

Now, how far you could go under the law, in any State, is a State matter. If you have an elected official, elected by the people, independent of the Governor, that gives you an independent control. If your State government permits the election of a comptroller, or a department of the comptroller through the legislature, we now recommend that.

Representative BEAM. Mr. Meriam, stripping it of all question as to whether the office is legislative or quasi-judicial, I think we are all in accord with the proposition that an auditor should be an independent officer; is that true?

Mr. MERIAM. Yes, sir.

Representative BEAM. Then how do you dove tail the question of Senator Byrd a few moments ago, that under your propsed set-up almost one-third of the expenditures of the Federal Government would be self-audited by the Department of the Treasury?

Mr. MERIAM. We do not recommend at all, and we would be very much opposed to placing this auditing function in the Treasury Department.

To go back to the States again, the Federal Government's Department of the Treasury is entirely unlike the ordinary State treasurer's office. In North Carolina, for example, they have a big department of revenue. Now, take the Treasury Department as we have it today, the Treasury Department is a great, big organization in the revenue branch. They have the Internal Revenue, Customs, Coast Guard, they have got this great, big Revenue Department there, so that they are one of the very largest of the civilian departments. Of course, you take the Public Health Service out of there, but they have all the revenue part of the Government, they have the Bureau of Engraving and Printing, they have the Mint, they have the Secret Service, and they are one of the great, big operating departments of the Government.

Now, our contention is that you should not put this function of audit in a large operating spending department, because if you do that you have got those people auditing and finally settling their own

accounts.

Now, we believe that audits prior to final settlement should be just as independent as you can make them.

Now, we had a debate on Monday with respect to the constitutionality of legislative control. There is no use going back into that. We would say: Make your auditing office just as independent as you can possibly make it of the spending departments, keep it entirely an auditing office. Do not let a big spending department have control of the auditing agency.

Representative GIFFORD. Mr. Chairman, I want to put something in there very much.

Senator BYRNES. Mr. Gifford.

Representative GIFFORD. I would like to put something in at this point, very briefly. Mr. Gulick testified that he helped Massachusetts in its reorganization plan, and he spoke of the auditor general's duties.

I want to say to you that in Massachusetts we elect our auditor general by the people, we elect the attorney general by the people,