Treasury could pay them in spite of the Auditor General's objection?

Mr. GULICK. No; the administrative officers can proceed to incur the expenditures in spite of the objections under the plan which we present.

In this draft of the bill Mr. Harris calls my attention to the fact that section 307 reads as follows:

The General Auditing Office shall make a postaudit of all public accounts, which audit shall be conducted as nearly as practicable in the vicinity of disbursing offices of the United States located in the District of Columbia and elsewhere. The representatives of the General Auditing Office in the District of Columbia and elsewhere shall furnish daily to the accountable officers concerned, the Secretary of the Treasury and the Auditor General, notice of any exceptions taken to items in the accountable officers' accounts, which accounts such officers are required by section 314-A to furnish to the General Auditing Office, together with statements of the reasons therefor.

In other words, there in section 307 of the bill it says that this shall be done in the field as the transactions are being made, that the exceptions shall be taken and shall be reported to the Treasury, so that the audit by the auditor, independent auditor, is there before the Treasury, before the settlement takes place.

Representative GIFFORD. But what authority has he? He simply sends it back and they go ahead and pay it.

Mr. GULICK. That is correct, but if they do settle it on that basis, then the Comptroller General presents his statement to the Congress and the Congress can call them before them, and that material will be available in connection with the following year's Budget.

Senator BYRD. After the money has been spent?

Mr. GULICK. After the money has been spent in certain cases, if the Treasury so decides. Undoubtedly in a case of that sort it will get the opinion of the law officer before it will settle the account. The Attorney General is called in.

Senator BYRD. When is the Attorney General called in? How is he called in?

Mr. GULICK. He may be called in by the head of the department. Senator BYRD. Could the Treasury Department call him for their own account that they audit themselves?

Mr. GULICK. The head of any department has the right to call

him in.

Senator BYRD. Would it be likely that the Secretary of the Treasury would call the Attorney General in for some controversy within his own department?

Mr. GULICK. He might, as a protection for himself.

Senator BYRD. The Attorney General is only called in when there is a conflict between the Secretary of the Treasury and someone to whom the payment is due. The Secretary of the Treasury would not call in the Attorney General to overrule his own decision, very likely.

Representative GIFFORD. All they can do is this: They simply send back exceptions; they look into it, they pass on it, then the bills are finally paid, and then you say they report to this committee of Congress what they consider a wrongdoing, then the committee can send for that official and he is privileged to defend himself. What comfort is there in that?

Mr. GULICK. The general control of the Congress through the Budget over the department, the general influence is the effective method of holding them responsible with reference to the larger items of expenditures.

Representative GIFFORD. How do we know who is to be sent for? Mr. GULICK. Because the Auditor General, standing outside of the picture and watching the thing from day to day, knows where the men are.

Representative GIFFORD. He reports that there has been a certain expenditure wrongfully made which is contrary to the expenditure which, in his opinion, should have been made?

Mr. GULICK. Yes.

Representative GIFFORD. Can he identify the actual person for whom Congress can send?

Mr. GULICK. Yes; he can identify the responsible person from whom to get the full factual material. He makes a special investigation of the case.

pay?

Representative GIFFORD. Then he might send in a man of small Mr. GULICK. No. Wherever a case of this sort arose the responsibility would have to be assumed up the line, probably the head of the Bureau, or the Secretary of the Department. The responsibility could not be taken by the man down the line in a case of any significance.

Representative GIFFORD. Now, in a situation of that kind, it would probably be carried right up to the top of the department, to the department head, would it not?

Mr. GULICK. It probably would.

Representative GIFFORD. If it came to the Treasurer himself, you do not expect the committee would discipline him very inuch, do you?

Mr. GULICK. Well, you can cut off the salaries of the heads of departments. You can cut their appropriations unless they promise to do certain things. We do that now. I do not see where there is any difference.

Senator BYRD. When has it ever happened that the salary of the head of the department has been cut? When he has not agreed to appointments?

Mr. GULICK. The chief executive officer?

Senator BYRD. Yes.

Mr. GULICK. I will leave it to you, sir.

Senator BYRD. I am asking you.

Mr. GULICK. I would rather withdraw the statement.

Representative GIFFORD. The Senate Appropriations Committee did it in one case the other day.

Mr. GULICK. Yes, sir.

Senator BYRNES. Mr. Gulick, as it now operates, a question arises in the field, it is sent to the Comptroller General and he can settle it finally, can he not? When he settles it you say he files it in his files. Is there any audit?

Mr. GULICK. No.

Senator BYRNES. Nothing is known about it by the administration?

Mr. GULICK. No.

Senator BYRNES. Under your proposal, the information must be furnished to the Secretary of the Treasury, the Auditor General giving notice of the exceptions, and if after that the Secretary of the Treasury settles when his action is not approved by the Auditor General, your theory is that the Auditor General would report to the congressional committee. Is there any other difference? Mr. GULICK. Is there any other difference?

Senator BYRNES. Yes; is there any difference?

Mr. GULICK. No; I think not. I think that is a fair statement of the situation.

Representative TABER. Is not the Comptroller General now required to report illegal expenditures to the Congress?

Mr. GULICK. Yes.

Senator BYRNES. But if he believes it to be legal that ends it. Representative TABER. What is that?

Senator BYRNES. I was asking Mr. Gulick if the Comptroller General now believes the settlement to be legal he files it and there is no audit of that action at all.

Senator BYRD. You mean there is no audit of the fact that the inan who was supposed to get a certain sum of money got less than that amount?

Mr. GULICK. As to the decisions and settlements that are made by the Comptroller General at the present time, he makes the decision and makes the settlement and on that basis the payment is made. Senator BYRD. Then there is no check to see that the payment is made correctly?

Mr. GULICK. He would make it himself right in his own office. Senator BYRD. Why should not he make it?

Mr. GULICK. Because the man who makes the settlement cannot be trusted to make the audit and report on his own action.

Representative TABER. You think the man that makes the expenditure can be trusted better to make the settlement than the man who makes the audit?

Mr. GULICK. Yes; the settlement, but not the audit. That is, if there is an audit then he can be trusted. If there is no audit he cannot be trusted.

Senator BYRD. If the Comptroller General decides that a certain appropriation is legal and gives a decision to that effect, then he cannot be trusted to see that that expenditure is made correctly?

Mr. GULICK. Well, the question or the statement of whether he thinks it is legal or not begs the practical situation which has developed in the administration that we have. I assume, Senator, that you have been over the cases that have been gathered by Colonel Wren. It shows scores of cases in which the Comptroller General's office has stepped out into the field of administration has held up activities, has increased the cost of expenditures, and has, in some cases, said, "No, this is not legal." I remember one case-it happens not to be in your State but in New York State-that the request of $50,000 for an allotment under one of the P. W. A. grants was illegal, was held to be illegal, and it was then changed to $20,000

after the suggestion of the Comptroller's Office, and was held to be legal. $50,000 was illegal, and $20,000 was legal.

Representative TABER. That is administration, rather than statute, is it not?

Mr. GULICK. Yes.

Representative TABER. That is a matter that the administration could correct, or could try to correct. I am, frankly, disturbed all the way through in your statement and the Brookings statements, because there seems to be absolutely no differentiation in these statements between what you regard as defects of administration and defects of the legal set-up. We are only concerned in this committee, as I understand it, with defects in the legal set-up. I may misunderstand it, but that is my idea.

Mr. GULICK. I think you have your finger on one of the very important phases of this question. It was my feeling, when the difficulties began to arise over the operation of the General Accounting Act, and the cases came back from the courts, almost all the cases reversing the action of the Comptroller General's Office, that the law could be corrected merely by a change in administration. Then it became clear to me that this office, because of its detached and independent nature and the natural tendency of any bureaucracy to expand its functions and to push over could never be set right by a change in administration alone.

Where there is an independent and irresponsible office the nature of the powers have to be very closely specified. If powers are granted to that office which make it possible to extend the functions into fields of administration, you are sure to get that extension because of the independent, irresponsible character of the 15-year term, practical irremovability and the rest of it.

So the mistake that was made here-as Dr. W. F. Willoughby says in his 1936 revision of his "Government of Modern States"-the mistake that was made here was in transferring the settlement powers and the general accounting powers to the General Accounting Office. This ruined the independence of the Office and equipped it with an avenue to power which, with broad interpretation, inevitably lead over into the field of administration.

I went back over the debates to see what Congress had in mind in the adoption of that act. You will remember that the Budget and Accounting Act was drawn in a period of great interest on the part of all in the development of the Budget system, and the general fiscal controls. We had had a big expansion of expenditures. As a matter of fact, the major outlines of the bill came from the House under the chairmanship of Representative Good. In going through that material I was struck by two facts: First, that all the attention was centered on the Budget section. That is what we were all talking about. Second, the amount of attention that was devoted to fiscal control was very small indeed. No one seemed to understand exactly where we were headed and what we were doing. There were a few people who seemed to understand where we were headed. Congressman Byrns was one of those who understood where we were headed and what we had in mind.

At one stage somebody asked what we were trying to do, and asked specifically on this point. He said, "I would like to ask what function the Comptroller General will have that would interfere

or forward any difficulty between him and the President?" You see, it is the very point that has been raised in these recent years. "In other words, what are the specific functions of the Comptroller General?"

Representative Clark arose and said, "To tell the gentleman the truth, nobody knows."

This was in the debate on the adoption of the act in Congress, but there were those who were sponsoring the measure, who were presenting it and defending it, who had some ideas on it.

Representative Good, who had the matter in charge

Representative TABER (interposing). Is that in this document? Mr. GULLICK. No; it is not. I just have a few notes here from the Congressional Record.

Representative Good, who was chairman of the House committee,

said:

True, the investigation is a post mortem examination, yet in practice that examination always served as a check and restraining influence in the making of the budget for the succeeding year.

Now, that is what he said when this question was raised. Then Congressman Byrns, who was present, and was the leader of the minority group in pressing for this program-and you remember this was carried through as a nonpartisan move, with the backing of both groups in the House and Senate

Representative GIFFORD (interposing). You say he was pressing for the Comptroller General's Office?

Mr. GULICK. Yes; this was the statement that was made, which indicates, I think, what the members of the committee at that time had in mind.

Representative GIFFORD. Now, Mr. Gulick, right there, I wish we could look forward instead of backward, but I would like to give you this instance: Where would the authority conflict between the President and the Comptroller General? I wish you would look into it. There is an authority now that is conflicting. I think I mentioned it before, about the Federal Surplus Credit Corporation. The Comptroller General might have been embarrassed and I think he is embarrassed now, from the correspondence I am getting. The President suggested or requested that they send some people on a tour to Europe, which cost a lot of money. The Comptroller General evidently did not stop it. I wish you would look into it to see if he should not have stopped it. He may be stopping some of it, but a lot of it got by. Now, there is a case where it might have been very serious, and it is now very embarrassing, I am sure, to the Comptroller General's Office.

Mr. GULICK. That is, your feeling is that there was an act which was not authorized by the appropriation?

Representative GIFFORD. Yes; I would like to have you show me that the President could have used that money for that purpose. Mr. GULICK. I do not know the facts at all.

Representative GIFFORD. If there had been an Auditor General, of course, there would not be any trouble, he would have put it in. As to the Comptroller General we Congressmen have a right to demand that he live up to his duty.

Mr. GULICK. The Auditor General would be just as much an agent of Congress, under the plan which we suggest, as the Comptroller