Mr. BROWNLOW. I am concerned with the general intention. I think the lawyer who helped us draft it would be much better able to answer than we are as to the question of whether or not such power would be granted. I should think if you took corporations that are under several States and put them in one they could not be precisely the same. I can get that answer for you in greater detail later, Mr. Taber.

Representative TABER. Now, this hot audit that you suggest on items that the Auditor General might make would be absolutely ineffective except as a notice to the head of the department, would it. not?

Mr. GULICK. The notice would be made to the head of the department. It would be made to the Treasury which is the finance control division of the Government, and I think that the suggestion that Senator Byrd makes that also the Attorney General should be notified if there is any problem of collection or equity or anything of that sort, should be inserted. It is not intended to withhold the payment of cash; it is intended to report on the legality of the payment. Representative TABER. Nor is it intended to operate as a precedent by which the department must be bound?

Mr. GULICK. Not "must be bound." It will be a present precedent by which they would be greatly influenced, but not as a precedent by which they must be bound until the law has been changed. Then it would be something they must be bound by.

Representative TABER. That would mean you might just as well not have the Auditor General?

Mr. GULICK. Not at all. Otherwise how are you going to

Representative TABER. What is the use of having it if it is not going to be good for anything? I would like to hear you discuss that. You might better abolish it.

Mr. GULICK. The important element of an independent audit is that there be an independent report to Congress and to the people of the United States on the legality of the expenditures that have been made. It is a question of a measure of the responsibility or the accountability of spending officers, and if you do not have that independent audit, then in the first place you do not know whether the financial report that is turned over to you is accurate or not. You have got to have an independent official who has followed the transactions and the posting of the accounts, who is able to certify, when he gives the financial report to you of receipts and disbursements, "I certify to the best of my knowledge and belief that this is an accurate picture of financial transactions of the Government."

That is what you have in banks, that is what you have in business concerns, that is what you have in hospitals, private hospitals, as a proof that the financial report is accurate that has been made by the administrative officials.

Now, in this case, you would also have, as you have in a private concern, the auditor reporting where these expenditures have not met the requirements, have not met the authorizations made by the board of directors of the corporation. They will check up against them. In this case they will check up against the appropriations acts and other acts passed by the Congress governing the handling of public money.

Representative GIFFORD. Mr. Taber, just one word: You spoke about hospitals; do you think there is some value in autopsies? Representative TABER. Provided you learn something. From this you learn nothing.

Representative GIFFORD. He says in his report that it provides for the future.

Representative TABER. It would require, would it not, an affirmative action by Congress in every case to produce any results? Mr. GULICK. No; you would change the generalRepresentative TABER. Just the atmosphere?

Mr. GULICK. No; you would change the law, make the law specific. Representative TABER. You are relying on a change of atmosphere rather than power to enforce results. Now, isn't that about the picture?

Mr. GULICK. I am saying that if you put the power in the hands of the auditor, he ceases to be an auditor because he participates in the making of the decision. I am saying, second, that if you put the making of the decision in the hands of the auditor for all of the departments of the Government, you are substituting the experienced knowledge of men concentrated in different departments who have a responsibility for getting the job done; you are scrapping that judgment and you are putting in the place of it a man on the outside who is not responsible for getting the job done. You have got to trust somebody's judgment. You are saying, "These fellows are dishonest and this fellow is honest." I don't know why we just do that.

I say you cannot do anything if you separate the power to make the decision on the procedure as it goes forward. This legality thing has got to be introduced and it has to come in as a subsequent examination on the report of the accountability of the officer.

Representative TABER. And you never would have any protection until after you could go through a session of Congress a year or so off on anything, and you would have to have a scandal to get that through.

Now, I have another question that does not relate to the Auditor General. Was it the intention of the Board to recommend that all members of such boards as the Interstate Commerce Commission, the Federal Trade Commission, the Federal Power Commission, and that sort of unit, be appointed by the Cabinet member who would have jurisdiction over them without term and without confirmation by the Senate?

Mr. GULICK. No.

Representative TABER. That is the effect, is it not, of section 211 of the proposed bill?

Mr. GULICK. Yes; I think in that respect Colonel Wren's comments are certainly in point, and the bill does not meet exactly the suggestion.

Mr. BROWNLOW. That we have in the report. This draft of this bill, which, as I explained yesterday, was prepared to carry out the report so we could see it, is descriptive in some ways. In fact, there are two or three drafts, and one that was later than the one that was handed to you here yesterday. We have discussed that before and had a draft of it, but we did not have a copy here yesterday. There are certain other things that Colonel Wren has brought up and many

other things undoubtedly will come up in consideration by the committee that require a perfection in the draft even to carry out our recommendations in the report.

Representative TABER. I am going to suggest this for the consideration of the committee: It is exceedingly difficult with just that situation for an ordinary Member of Congress to tell just what he is shooting at, and I do not know but what it might be a good thing, if these gentlemen would do so, for them to have prepared a draft which would conform to their ideas, because, if the report says one thing and the bill that they have brought to our attention says another thing, it is rather hard for us to tell just what they are shooting at.

Mr. BROWNLOW. Some of those things have already been considered, and some of them were brought to our attention by Colonel Wren's memorandum. We would be very glad to do that, or we would be very glad to have in the draftsman who helped us with this bill an experienced man.

The CHAIRMAN. It may develop during the further hearings of the President's committee that there are other features of the bill that do not conform to the intent of the committee, and I think that a little later it would be well for the President's committee to revise its draft so as to take cognizance of the suggestions that have been made and of the errors that are in the tentative draft so that the committee may have a draft that will reflect the conclusions of the President's committee. I think your suggestion is well worth consideration so far as I am concerned.

Representative ROBINSON. Mr. Chairman, I cannot follow that suggestion. It seems to me that if we get the ideas of the members of this committee and understand wherein they differ from this bill we ought to be able to draft it.

The CHAIRMAN. Well, whatever bill is reported, of course, we will have the advantage of their suggestions in concrete form.

Representative ROBINSON. I am not suggesting, nor is Mr. Taber, that the committee at this juncture adopt any particular bill, but the idea is and I think it a good one-to have a draft that will reflect the true intent of the report. It has been disclosed that in some particulars the draft we have does not do that.

Mr. BROWNLOW. In some places, as Colonel Wren has pointed out, the draft bill is not clear, and some amendments might be made merely for the purpose of clarifying it.

The CHAIRMAN. Yes; a draft that would embody your intentions accurately would be helpful in the further studies of the committee, but one that is not in conformity to the purpose of the President's committee in important particulars would not be very advantageous. Senator O'MAHONEY. Certainly the President's committee ought to indicate, as the hearings progress, those features of the bill as presented with which they no longer agree.

The CHAIRMAN. If there is no objection, the committee will stand adjourned until 10 o'clock tomorrow morning, when the hearings will be resumed at this place.

REORGANIZATION OF THE EXECUTIVE DEPARTMENTS

THURSDAY, FEBRUARY 18, 1937

JOINT COMMITTEE ON GOVERNMENT ORGANIZATION,

Washington, D. C.

The joint committee met, Senator Robinson presiding.

The CHAIRMAN. The committee will please come to order. Is it the desire to continue the examination of Mr. Gulick, or shall we hear from Mr. Merriam this morning?

Senator BYRD. Senator, I would like to ask Mr. Gulick a few questions.

The CHAIRMAN. Certainly. Proceed.

Senator BYRD. I want to refer to the testimony that Mr. Gulick gave yesterday, on page 139 of the record. I want to repeat what he then said. [Reading:]

Yesterday Senator Byrd referred to the fact that the Treasury Department now is a large spending department, and to that extent the Treasury tends to get spending-minded. He is right about that. That is one of the reasons why we suggest that there should be moved out of the Treasury particularly such services as the Health Service, which represents a spending service that does not belong there and which tends to influence the psychology of that Department. The Department must be built up as a brake on spending

And so forth.

Now, I want to ask Mr. Gulick to tell the committee exactly what activities it is intended to remove from the Treasury Department. The present activities in the Treasury Department are the Bureau of Customs. Would that remain?

STATEMENT OF LUTHER GULICK-Resumed

Mr. GULICK. That would remain.

Senator BYRD. The Bureau of Engraving and Printing?

Mr. GULICK. That would remain, unless possibly there were a reorganization of the whole printing arrangement so that printing and engraving might be tied in with the Government Printing Office in some way.

Senator BYRD. The Bureau of Internal Revenue?

Mr. GULICK. That would remain.

Senator BYRD. The Bureau of Narcotics?

Mr. GULICK. That would probably remain, because the enforcement feature there is said to be primarily connected with the revenue, but I think there is some doubt as to the propriety of keeping it there.

Senator BYRD. The Bureau of the Mint?

Mr. GULICK. That would probably remain.

Senator BYRD. The Public Health Service would be removed?

Mr. GULICK. That would go out.

Senator BYRD. The Federal Alcohol Administration?

Mr. GULICK. As you know, that has been taken out as it stands

now.

Senator HARRISON. That is set up as an independent organization, is it not?

Mr. GULICK. That is set up as an independent organization.

Senator BYRD. The office of the Commission of Accounts and Deposits?

Mr. GULICK. That would, of course, remain.

Senator BYRD. The office of the Commission of Public Debt?
Mr. GULICK. That would remain.

Senator BYRD. The office of the Comptroller of the Currency?
Mr. GULICK. That would remain.

Senator BYRD. The Office of the Treasurer, of course, would remain?

Mr. GULICK. Would remain.

Senator BYRD. The Procurement Division?

Mr. GULICK. That might be split; that is, if the Department of Public Works is created the part of it dealing with construction of buildings, and so forth, might very well be carried to the Department of Public Works, after investigation. As you know, in the procurement work the work is actually split at the present time. There is a division that works on office supplies, and so forth, and another division on construction.

Senator BYRD. The Secret Service Division?

Mr. GULICK. The Secret Service Division would probably remain, though there is a question of whether it would be possible, after investigation, to bring the secret-service groups more closely together. Senator HARRISON. Well, they do not have jurisdiction of all the Secret Service, do they?

Mr. GULICK. No, sir.

Senator HARRISON. They have it just for that particular Depart

ment.

Mr. GULICK. Also the White House group. It is really for their department, that is true.

Senator BYRD. The United States Coast Guard division?

Mr. GULICK. It is not certain where that ought to be. It could stay there or it might be found, with the reorganization of the naval services, and so forth, that it would be better to bring them together.

Now, on all of these question may I say this: While I have gone down the list, to be as helpful as I could in answer to the Senator's questions, we have not made a detailed kind of study of overlapping and duplication of these agencies of the Government, whether they are in the Treasury or elsewhere, in order to determine where the proper final location should be.

Senator BYRD. You specifically stated, though, that this particular Department, because of the fact it has the audit control, that spending should be eliminated from this. I assume, therefore, that you have investigated certainly this particular Department.

Mr. GULICK. It does not require detailed investigation of the activities, or the determination of their proper assignment, to reach the conclusion which is well known on the basis of American business and fiscal practice, that finance departments should, as far as possible, be limited to the inherent functions of fiscal control, and everything else should be taken out, insofar as it can be done.