of the Government. The revision by the Comptroller of settlements made by the six auditors shall be discontinued, except as to settlement made before July 1, 1921.

SEC. 305. Section 236 of the Revised Statutes is amended to read as follows: "SEC. 236. All claims and demands whatever by the Government of the United States or against it, and all accounts whatever in which the Government of the United States is concerned, either as debtor or creditor, shall be settled and adjusted in the General Accounting Office."

These sections are found in substantially the same form in the bills debated in the House in 1919, 1920, and 1921 and in the Senate in 1921. The Good bill (H. R. 9783, 66th Cong., 1st (special) sess.) was introduced October 7, 1919. It provided for an independent "accounting department" headed by a Comptroller General who should hold office during good behavior and could be removed only by concurrent resolution of Congress. Section 10 of this bill was substantially the same as the first paragraph of section 304 of the Budget and Accounting Act, the only exception being that the "duties of the Division of Bookkeeping and Warrants of the Office of the Secretary of the Treasury relating to keeping the personal ledger accounts of the disbursing and collecting officers", were not conferred on the Comptroller General. Section 236, Revised Statutes, was amended as in the Budget and Accounting Act. The bill was passed by the House October 21, 1919, but the Senate substituted the MeCormick bill under its title on April 30, 1920. The compromise contained precisely the same provisions as sections 304 (first paragraph) and 305 of the Budget and Accounting Act. Although the bill was passed in the compromise form by both Houses, it was vetoed by the President on June 4, 1920.

A bill introduced by Representative Good in the final days of the second (first regular) session of the Sixty-sixth Congress (H. R. 14441) sought to circumvent the objections of the President by providing that the Comptroller General should be appointed and removed by the Supreme Court. Sections 304 (first paragraph) and 305 of the bill were the same as sections 204 and 305 of the General Accounting Act. It was not voted upon before Congress adjourned.

In the Sixty-seventh Congress bills were introduced by both Representative Good (H. R. 30, Apr. 25, 1921) and Senator McCormick (S. 1084, Apr. 25, 1921). While the bills differed on certain points, the corresponding sections of both were identical with sections 304 (first paragraph) and 305 of the Budget and Accounting Act, as were such sections in the conference bill adopted by both Houses and signed by the President June 10, 1921.

To summarize:

1. The provisions of the original Good bill were substantially the same as sections 304 and 305 of the Budget and Accounting Act, the only difference being that certain duties of the Division of Bookkeeping and Warrants were not transferred to the Comptroller General as in the Budget and Accounting Act.

2. The original McCormick bill differed on these points in some respects, but was not up for debate in the discussions referred to.

3. The compromise bill, vetoed by the President, contained the identical provisions which now constitute the first paragraph of sections 304 and 305 of the Budget and Accounting Act.

4. The Good and McCormick bills introduced into the Sixty-Seventh Congress, first session both contain those same provisions.

Mr. GULICK. As I indicated the other day, we desired to present one more matter before the committee, and I will endeavor to do that just as promptly and simply as I can, and that is the theoretical foundation of principles underlying the program as submitted by the President's committee, and to indicate therefrom the precise point at which the suggestions made by the Brookings Institution and the President's committee differ.

Now, as we look at the problem of fiscal administration, how to manage the finances of the Government, we identify four very clear and separate steps in that process.

The first of these is the preparation of the Budget, which is made by the Budget Bureau acting as an agent for the Executive, and

if I had a big blackboard here I would put that down "No. 1: Preparation of the Budget."

Then no. 2 is the consideration and revision of the Budget, the adoption of the Budget, as it is sometimes said, and that is a legislative function which is performed by the legislative body, first with the aid of the committees and then the action of the legislature itself. I might say that step no. 2, the adoption of the Budget, the action of the legislative body is in the form of appropriations and in the form of revenue tax and other laws which are adopted by the legislative body, because the legislative body acts by the adoption of laws. That is step no. 2 in fiscal administration.

Then the third step in the management of the finances of the Government is the execution of the Budget. That is the enforcement of the appropriation measures, the enforcement of the revenue measures, the enforcement of the tax measures and all other measures that have to do with the finances of the Government. That is step no. 3, and is known as the execution of the Budget.

Now, step no. 4 is the examination of the execution; that is, the inspection of the work that has been done by the Executive, under the authorizations which have been made by the legislative body in the form of its appropriations and other measures. Those are the four essential steps of fiscal administration.

Now, I would like to clear up an implication which has been before the committee. It has been implied that this analysis of the steps of fiscal administration represents something brand new that has just been worked out in order to sustain the program which has been presented by the President's committee. When Charles Wallace Collins came to testify before the committees of the Senate and House in 1919 and 1920 he testified that the fiscal functions of Government are these four. As a matter of fact, I looked back through the little volume which he printed on the National Budget System and American Finance in 1917 in which he lists these four essential steps in fiscal administration.

Representative VINSON. You can go back further than that, can you not? Can you go back to the Constitution?

Mr. GULICK. Well, I think it is implied in the Constitution, but there is a debate over that, over the question as to the time when the Budget Act was first established. It is recognized, however, that there are these four steps. I think there can be no debate as to that.

As a matter of fact, I had occasion to dig out of the dust a book that I wrote in 1920 on the Evolution of the Budget in Massachusetts, and on page 224 of that volume I say that "The stages through which a budget must pass are the following: (1) Preparation of the plan; (2) authorization of the plan; (3) execution of the plan; and (4) audit of the execution of the plan.'

This is an old-established philosophy of the nature of the process of fiscal administration in government.

Now, at what point in this analysis is there a difference of opinion. between the program which we have recommended and the program which is now in operation and which, in its essential elements, has been urged for further development along the same lines by the

Brookings Institution? It comes precisely to this question: At what point should the division be made between the third step, namely, execution of the Budget, and the fourth step, audit of the Budget? Under "execution of the Budget" we take the position that the interpretation of the laws and their enforcement in the day-to-day work of government is an executive function, that it cannot be divided from the other functions of the Executive with reference to the organization of departments, the selection of personnel, the decision as to what is to be done. In all of them the Executive is responsible for the interpretation and enforcement of law. The interpretation and enforcement of finance laws is no different from the interpretation and enforcement of other laws, and under the Constitution that is an Executive function.

Alexander Hamilton, when writing about this matter, said that the interpretation and enforcement of finance laws is a function of the Executive. This was right from the very beginning. That was the position of the Government down to 1921, and when this change was made in 1921, as I showed from the debates in the legislative body, it was not intended to establish the control over current operations.

Now, in this matter there are two questions involved. First, can you take fiscal control out from under the Executive and put it in an independent office and still leave the Executive with responsibility to carry on efficiently and manage his job? We say you cannot take these essential powers of control away without vitiating the responsibility, interfering with the efficiency of the Executive in the doing of his job, that that is part of his job and has to be done there.

Now, the second question that arises is if you take these control functions away from the Executive and place them in the hands of the audit authority, which has the fourth step in this outline of four steps that I presented, then we maintain that you have not only injured the responsibility and effectiveness of the Executive but you have, by adding these control functions to the audit activities of the fourth step, ruined the effectiveness of the fourth step, because a man who is making the audit cannot make an independent audit unless there are two conditions: First, he must be independent of the direction and supervision of the Executive. That is understood. He has got to be independent of the Executive.

Second, he must be independent of the transactions on which he is reporting, and independent of the records that he is examining. If he has participated in the making of the decisions he is no longer an independent agent to pass on those decisions. If he has maintained the financial records he is no longer an independent examiner of the accuracy of those records.

Therefore, it is our position that, as a matter of practical administration, you must separate audit, which is the post-mortem examination, if you use that term "post mortem." I think, as you know, we do not call it "post mortem" because we think it should be going on at the same time. We call it a postaudit because it is made by an independent group which has no authority to issue orders to the people who are making the expenditures, but only to report on the legality and the accuracy of the work which they have done. Now, I want to give some specific illustrations. Congressman Taber, Senator Byrd, and others have repeatedly asked for specific

illustrations. It may be that some specific illustrations will serve to explain concretely matters which, in the statements that we have presented thus far, have been presented in broad terms.

I think the statement that was filed with the committee, prepared by Colonel Wren, gives the committee an opportunity to see the nature of the material that has been filed. Some members of the committee, I think, have examined them to see what they contain. With the aid of the colonel's memorandum I was able to note one or two of the illustrations that seemed to be rather indicative. The first one I want to cite is from the Department of the Interior. The Senate joint resolution, approved on March 28, 1918, reads as follows:

That the assistant to the Secretary of the Interior be, and hereby is, authorized to sign such papers and documents as the Secretary may direct.

Despite this clear and unequivocal language of the statute, the Comptroller General has held that the Secretary of the Interior could not delegate to the assistant to the Secretary the authority to sign orders entitling employees to reimbursement of travel and other expenses involved in a transfer from one official duty station to another. That is 15 Comptroller General 171 (1935). This holding in substance states that the power to delegate authority to sign papers and documents, which is specifically covered by resolution of Congress, cannot be done by the Secretary. As the result, the cabinet head is sitting there signing all kinds of approval orders, and so on, approval vouchers, because the Comptroller will not permit him to delegate that duty.

Representative TABER. Have you the language of that resolution? Mr. GULICK. Yes. The language of the resolution is "that the assistant to the Secretary of the Interior be, and hereby is, authorized to sign such official papers and documents as the Secretary may direct."

Representative TABER. You see right there that your criticism falls, because right there it provides that the assistant to the Secretary of the Interior is authorized to sign such papers as the Secretary may direct. It does not give the Assistant Secretary, nor authorizes the Secretary to give his assistant the power to sign papers which are required to be signed by the Secretary of the Interior specifically. Mr. GULICK. I can see that it can be argued either way. Representative TABER. Why, yes.

Mr. GULICK. Presenting it the way that the Comptroller General has maintained unquestionably produces a tremendous amount of unnecessary labor.

Representative TABER. No; it is simply a matter of the failure of Congress to properly prepare its resolution on that proposition. It is not a matter of criticism of the Comptroller.

The CHAIRMAN. Just a moment there. I do not see the correctness of that conclusion by any means. The language of the Senate Joint Resolution No. 18, which has been quoted, is general language, but it is very comprehensive and to my mind, as a legal proposition, it gives the Secretary the authority to direct his assistant to sign any official papers and documents, which would embrace just such documents as you have referred to. Why would it not embrace that?

Representative TABER. The statute requires the Secretary to sign certain papers.

The CHAIRMAN. Yes.

Representative TABER. This resolution does not give the assistant to the Secretary of the Interior, even if the Secretary directs it, the power to sign his name to documents. It simply gives him power to sign such papers as the Secretary may direct. To my mind, that is very loosely drawn and does not cover the thing that very evidently was in the minds of some of the Senators.

The CHAIRMAN. But the language of the resolution, Congressman Taber, is general. However, I do not know of anything that is to be accomplished by us arguing it out at this juncture. In my opinion, it is just as comprehensive as it can be. He can sign anything that the Secretary directs him to sign. That is the object of it. What would he sign, under that joint resolution, that the Secretary directs him to sign, and what would he not sign? He can sign anything.

Representative COCHRAN. I am in full agreement with the Senator, unless there is something else in that resolution that Mr. Gulick has not read.

Mr. GULICK. There may be. I am just reading the statement. The CHAIRMAN. I have read the resolution.

Representative COCHRAN. Can you give us the citation for the

record?

Mr. GULICK. You have these papers in your files with all the citations.

Representative COCHRAN. Can you state briefly for the record why he took that position? You give us here the citation of the decision of the Comptroller General, but we do not know what that decision is.

Mr. GULICK. I do not have the document in front of me.

Representative COCHRAN. That is very interesting, and I think it should be in the record.

The CHAIRMAN. Yes. I suggest at this point that the entire resolution be inserted in the record. You have got to identify the resolution sufficiently to enable the stenographer to secure it and incorporate it into the record, and later we may have occasion to renew the argument.

Representative COCHRAN. May I further suggest, Mr. Chairman, that Colonel Wren be instructed to get a copy of the Comptroller's decision and have it printed for each member of our committee? Representative VINSON. Why not put it in the record. It will not be long.

The CHAIRMAN. I think that is better, to incorporate it into the record.

Representative COCHRAN. You do not know how long it is. That is the trouble. It might be a very lengthy decision.

Senator BYRNES. I am advised as to what the situation is. The Comptroller acted not upon the construction the Congressman placed upon the language but upon subsequent legislation which said that such travel vouchers could be paid only by the approval of the Secretary, and that caused the doubt in the mind of the Comptroller, and that is what his opinion was based upon.