the Government service, and bringing in of large numbers of people to undertake new enterprises, and it is inevitable, under those circumstances, that there should be difficulty, and perhaps more friction. Senator BYRD. How much has been expended under this present system?

Mr. MERIAM. Do you have the total expenditures under the present system? Do you have the figure in your mind?

Mr. SELKO. No, sir; but I can get that statement and insert it in the record, if you wish, Senator Byrd. I am sorry that I do not have that in mind.

Senator BYRD. Mr. Meriam, you are familiar with the President's committee's proposal, are you not?

Mr. MERIAM. Yes, sir.

Senator BYRD. To what extent do you think that will increase costs as it now exists?

Mr. MERIAM. Well, Mr. Selko has some estimates along that line. They are very difficult estimates to make, but we have some approximate estimates.

Mr. SELKO. Senator Byrd, as Mr. Meriam has suggested, it is very difficult to make an estimate of the additional expense involved, since we cannot be absolutely certain as to how the President's committee's proposals would be effectuated, but suppose we assume that the audit for final settlement and the necessary control accounting which is now done in the General Accounting Office were to be transferred to the Treasury Department, it seems to us that it would be necessary to duplicate the establishment which now exists for that purpose, or, we will say, just leave the establishment which exists for that purpose.

Now, if it were then required to perform a postaudit, which was a thorough postaudit designed to advise Congress of every irregularity or illegality in expenditure, to make a complete and comprehensive report on all expenditures made it seems to us very likely that a staff comparable to the size of the existing General Accounting Office would be necessary to perform such a functon.

Senator BYRD. Well, if that is correct, what would be the additional cost each year?

Mr. SELKO. The additional cost on that basis, assuming no other larger organization were involved in placing postauditors in the field, or anything of that kind, we would estimate that the present cost of the General Accounting Office might be duplicated, which is about $8,000,000 in round numbers.

Senator BARKLEY. We have spent a lot of time here talking about bookkeeping, postauditing, preauditing, checking and doublechecking, all of which is important but which is only one phase of this question that this committee has undertaken to consider, and I think we have spent a disproportionate time to consider it. Has the Brookings Institution been asked to make any investigation or has it made any report with respect to the big question of reorganization, of consolidation of departments, bureaus, agencies, and the other things?

Mr. MERIAM. Yes, sir. We have divided the activities of the Government into several fields, broad fields of activity, and we have prepared reports on each of those broad fields. They are being submitted now. I think Dr. Powell said yesterday that he thought

the remaining ones would be ready to come to the Senate committee at about a one a day now.

This system of cooperative research that we use at the Brookings Institution holds us up every now and then, because we have to get the group in complete agreement. Now, in my judgment most of those disagreements have been washed out and the reports will be coming to the Senate committee. I think, Senator Byrd, probably we can clean this thing up. There is one report on public works that we haven't been entirely satisfied ourselves with, because of the very complicated nature of water and water control, and we are trying to strengthen the report along that line, but I think that work is very nearly done.

Senator BYRD. I would like to state for the benefit of the Senator from Kentucky that Mr. Meriam and the Brookings Institution are appearing here at the suggestion of the chairman with respect to this particular matter. The chairman recalls that he asked them to appear in regard to this accounting proposition.

Senator BARKLEY. I am not questioning that at all. That matter has been gone into. The other phase of this investigation has not been touched upon.

The question of whether your system or the President's committee's recommendations will be a little more or less expensive by a few million dollars is largely a question of opinion and estimate. There isn't going to be enough saved by either plan to enable the United States to declare an extra dividend unless Congress quits appropriating so much money. I am not saying whether I am for or against that, but the saving of money is going to be the result of appropriations, not the result of any bookkeeping or bonding, or any of these technical matters that go on within the department. Mr. MERIAM. I wish it would not cost us such a tremendous amount of money to handle these accounting matters, these details of bookkeeping. That is one of the things that always distressed me when I was in the service, how much money we had to spend to keep those detailed things straight. I am sorry, Senator, that it involves such large numbers, but it is a very expensive matter.

Senator BARKLEY. Leaving out the question of whether one system or another might save a few million dollars, does the Brookings Institution regard this matter, the whole subject that we are considering, the subject of reorganization, consolidation, the grouping of these different bureaus, 130 odd, that are independent of anybody, does the Brookings Institution regard that as the more important phase of our duties here, or do they regard the question of bookkeeping, the saving of a few million dollars, or the increase of a few million dollars in the cost of auditing as more important?

Mr. MERIAM. Well, sir, we are of the opinion that insofar as the Federal Government pays for the cost of administration-of course, as we all know the costs of administration constitute a relatively small part of the expenditures of the Federal Government-if you are going to make savings in administration you are not going to find one great big place where you can show savings through administration. The gross savings are the sum totals of relatively small savings at different points. This matter of, say, three or four million dollars here and few hundred thousand there, or something else somewhere else, taking them all together, they will amount to an appre

ciable sum-do you remember the figure as to the total percentage of the Federal expenditures that go for administration?

Mr. SELKO. Here is the chart.

Mr. MERIAM. You can get that percentage stated there. Here is the chart [indicating].

Senator BARKLEY. Can you give it to me in figures?

Mr. MERIAM. You are more familiar with the figures than I am, Mr. Selko.

Mr. SELKO. What we estimate to be the administrative expenses of the Government are somewhat less than $1,000,000,000 out of more than $7,000,000,000 which we are spending now, excepting the veterans' bonus.

Senator BARKLEY. Assuming here and there by lopping off something, by cutting out something, by denying the expenditures which Congress has appropriated if it is not done in the right way, assuming the maximum amount you can guess at would be saved, do you regard that as being more important or less important than the consolidation and simplification of all the agencies of the Government in order to get more efficient service for the people?

Mr. MERIAM. Oh, no, sir. The two things generally to together. In certain instances you can actually save some money; in certain other instances you do not save any money but you give very much more rapid and very much more accurate service.

Senator BARKLEY. Where there are instances where the two theories conflict, and if, as a whole aggregation the two theories conflict, which do you prefer?

Mr. MERIAM. I do not think I quite follow you, Senator.

Senator BARKLEY. Well, if you could reorganize the Government so as to make it much more efficient without saving any money: would you prefer that or would you prefer to save a little money and not make it more efficient?

Mr. MERIAM. Well, in making this study under the terms of the resolution we have assumed that no question of policy is submitted to the Brookings Institution for consideration. If the Government at the present time is rendering a service to the public, we have made no recommendations to change that service. That was clearly understood when our contract was drawn and the principle has been followed throughout. It is definitely understood that we were not retained to make any recommendations with respect to the economic, social, governmental policy as prescribed by the Congress.

Senator BARKLEY. I haven't asked you to express any opinion on it. I am talking about the mechanism of government, the agencies through which these policies are carried out.

Mr. MERIAM. I am going to give you a concrete illustration. We put automobile tags on cars; that is one of our revenue devices. Now, if we can go in and install a system whereby those tags can be put on the back of an automobile for 13 cents instead of for 75 cents, or a dollar, the amount the State has been spending, you would get not only economy, but, as a matter of fact, superior service to the public, because where it is done on the basis of costs of 13 cents it means it is done very rapidly and very efficiently. Now, there are cases like that.

I remember when I was working for the Congressional Joint Commission on Reclassification of Salaries in days when we had the

five auditors and the Comptroller of the Treasury, we found remarkable differences between the offices of the five auditors. In the office of the auditor for the Navy all the figure-accuracy details were done by clerks using a comptometer, or adding machine, or other computing machines, and they had enough clerks to do that so that each voucher was checked as correct for figure accuracy before it went to the high-grade auditor who was competent to pass on the legality, regularity, and procedure. Now, in another office, side by side, they had nothing but high-grade auditors. Those fellows would sit down and work out for themselves all those figure-accuracy computations. They were relatively high-paid people. There was a very great discrepancy in the costs of those five auditing offices doing precisely the same thing.

I talked with Judge Warwick about that. He was then Comptroller of the Treasury. He told me that in his opinion the cheapest office, the one that was doing the work the cheapest, was also doing the work the best.

Now, unfortunately, these are all matters of detail, but if you study this Government of the United States in its far-flung services, and get down where the money is spent in the various bureaus, you find that often the real questions are details of procedure.

Senator BARKLEY. Of course, it is desirable to save money by eliminating duplication and getting better material for a lesser amount, if possible, but in the matter of automobile tags, if you find one department deciding on what the color should be for the background and another what color should be for the letters and figures, and still another one determining the question of size, and still another one the material, and still another one determining who shall make them, don't you think the consolidation of all of those into one agency would not only be more efficient but would be less expensive?

Mr. MERIAM. Not necessarily; because you have the color of the tags and certain other things determined by the Automobile License Bureau, then you have the tags manufactured in the penitentiary by an entirely different agency. It is very much cheaper.

Senator BARKLEY. That is of course an exceptional case. I am trying to get at a general rule.

Mr. MERIAM. Well, sir, I wish that I could give you a general rule, but all my life, since I have been working, has been connected with these things. Unfortunately we have to study the details in the operating department to understand what the situation is. You may discover two things that are very much alike and yet you discover that for some particular reason it is very advantageous to have the work done in different agencies.

There is a familiar story that goes around about the bears, as to how many different Government agencies we have that are concerned with bears. Some people have maintained that all the bears ought to be in one department. Now, we have the United States Forestry Service that has some bears. It is cheapest to have those bears taken care of by the Forestry Service. If you have some bears in Alaska it is cheaper to have those bears taken care of by the Government of Alaska. If there are some bears on Indian reservations it is cheaper to have those bears taken care of by the Indian

reservations; and the parks, the same thing. The bears out in the Zoo here occasionally get sick; the Zoo officials send down to the Bureau of Animal Industry and get the veterinarians from the Bureau of Animal Industry to come out and take care of the bears. If anybody wants to talk about putting all those bears into one department I do not think it makes for economy or efficiency, or good service.

The CHAIRMAN. Mr. Meriam, if I understand you correctly, your organization does not claim that the present system is a failure but you do claim that there are defects in the system that may be corrected?

Mr. MERIAM. Yes, sir.

The CHAIRMAN. Now, that is a general statement, of course, and that does not differ from the position taken by the President's committee, does it?

Mr. MERIAM. As far as the statement of fact is concerned, the major difference is that they say it is a "total failure."

The CHAIRMAN. As far as the general statement is concerned, there is no difference of opinion on the proposition that the system needs improvement?

Mr. MERIAM. That the system needs improvement; yes, sir.

The CHAIRMAN. Yes. The general criticisms made by the President's committee, found at page 46 of document no. 8, are, first, that the General Accounting Office has failed to provide an adequate independent accounting system, and, second, that it has failed to supply Congress with the comprehensive information concerning the financial administration of the Government which an auditor should supply. Those are the two general criticisms, as I understand it, that the President's committee have made of the accounting system as it now exists.

Are you prepared to state, connectedly and briefly, what, in your opinion, are the important defects in the present financial and accounting system that may be corrected?

Mr. MERIAM. Mr. Selko will answer that, Senator.

Mr. SELKO. If I may, Senator, I will just read from the summary of conclusions in our report.

The CHAIRMAN. You may answer it from any source you want to, if you are prepared to give it in a succinct, brief statement, as to the defect in the present system that needs correction.

Mr. SELKO. Yes, sir. Our study has revealed three defects which we consider fundamental in the existing system. First, that the budgetary system fails to provide the President with satisfactory implements for centralized budgetary and administrative management. We feel that there could be improvement, in other words, in the budgetary system.

Second, that the existing provisions for the final audit and settlement of accounts fail both to assure complete control by Congress of the collection, custody, and disbursement of public moneys, and to require the preparation of current statements of the financial condition and operations of the Government as a whole.

Third, we feel that the existing financial procedure results in unnecessary delay in the liquidation of obligations and the final settlement of accounts.