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Mr. CANFIELD. Mr. Chairman, I second every word that you have just uttered in compliment to our retiring member, Mr. James, who has served this committee so faithfully and effectively for 7 years.

Recently I heard Ben James say that he had retired three times and each time voluntarily. When he said that, he meant that some years ago he was called into the service of his home town and had a position of leadership in that community for some 8 years. He retired after being elected to the State legislature where he served another 8 years and after retirement from the State legislature he was elected to the Congress and now he is retiring from the Congress after a 9-year period of service, 7 of them on this committee.

As you say, Mr. Chairman, he was a very valuable member of this subcommittee and he brought to the committee a vast background of experience in business. He was an authority on printing, banking, and in the business world generally.

He was, you might say, our Ben Franklin. In fact, his name is Ben Franklin James and he is still the chairman of the board of the Franklin Printing Company of Philadelphia, which was founded by Poor Richard himself. He is one of the most conscientious men that I have known and I regret no end that he now feels that he must leave us, mainly because of reasons of health. He has a most charming and devoted wife and I wish Mr. and Mrs. James many years of happiness in retirement. I do want to express the hope also that he will be coming back to see us now and then, and when he does, to give us the benefit of his advice.

Mr. STEED. Mr. Chairman, I would like to join in what you gentlemen have said about Mr. James and I would like to say that I have had the good fortune to encounter him this morning and had a nice visit with him. He was in a very cheerful mood and while he regrets that he cannot carry on his committee work, he is taking good care of his health and was in better spirits today than I have seen him for a long time.

Mr. Gary. That is fine. We are very glad to hear that.

SUPPLEMENTAL BUDGET ESTIMATES FOR 1959

The committee this morning meets to consider supplemental estimates contained in House Document No. 394 amounting to $9,454,000 for the Treasury Department for fiscal year 1959;$1,600,000 for the Post Office for 1959, and $3 million for the Post Office for 1958.

We will insert Treasury and Post Office paragraphs from pages 23, 24, and 25 of the document referred to in the record at this point. (The pages referred to follow:)

"TREASURY DEPARTMENT
“BUREAU OF THE PUBLIC DEBT

"ADMINISTERING THE PUBLIC DEBT “For an additional amount for 'Administering the public debt', $1,500,000.”

Additional funds were granted in fiscal year 1958 to cover (1) increased charges by the Federal Reserve banks acting as fiscal agents of the Treasury Department; (2) additional fees to commercial banks for redeeming more savings bonds than anticipated; and (3) additional costs attributable to the printing of securities to carry out the increased public debt financing required during the fiscal year. This proposed supplemental appropriation is to meet these increases in the fiscal vear 1959.

“BUREAU OF CUSTOMS

"SALARIES AND EXPENSES *For an additional amount for 'Salaries and expenses', $150,000.”

This proposed supplemental appropriation is needed to cover the additional cost during fiscal year 1959 of wage-board pay increases granted June 1, 1958.

"UNITED STATES SECRET SERVICE

"SALARIES AND EXPENSES, WHITE HOUSE POLICE "For an additional amount for 'Salaries and expenses, White House Police', $54,000.”

The use of offices in the Executive Office Building by members of the White House staff requires the extension of protection by the White House Police force to those offices. This estimate is to provide the additional funds necessary to permit recruitment of, and purchase of uniforms for, 11 additional officers to man the 3 posts of duty which will be established to provide 24-hour protection for approximately 24,000 square feet of space.

"Coast GUARD

"OPERATING EXPENSES “For an additional amount for 'Operating expenses,' $6,900,000: Provided. That appropriations to the Coast Guard for Operating expenses,' shall hereafter argilable for payment of claims as authorized by Public Law 85-255, approved September 2, 1957.

"RETIRED PAY "For an additional amount for 'Retired pay', $700,000."

The two foregoing proposed supplemental appropriations are needed to provide for the cost of military pay increases as authorized by Public Law 85-422, approved May 20, 1958, which is effective June 1, 1958.

The additional proviso for “Operating expenses” is to enable the payment of claims authorized by Public Law 85-255, approved September 2, 1957.

“ACQUISITION, CONSTRUCTION, AND IMPROVEMENTS "For an additional amount for 'Acquisition, construction, and improvements,' $150,000, to remain available until expended."

Provision was made in the 1958 appropriation act for the construction of a Coast Guard facility, Manhattan Island, N. Y., so that Pier 9 could be returned to the city of New York for commercial use. On May 2. 1958, while this facility was under construction, a New York City ferryboat collided with one of the piers, resulting in approximately $150,000 damage. Funds are needed for repairs in order to allow completion of the project.

"General PROVISION

"Notwithstanding the limitations of any other Act, the maximum amount allowable for the purchase of any passenger, motor vehicle may be exceeded, during the current Bucal vear, and when authorized by the Secretary of the Treasuru. by the net extra cost of any special features of equipment which, while affecting the operation of the Vehicle as a passenger-carrying vehicle, are required to

, are required to render it suitable and safe for the adequate performar

e performance of criminal law enforcement or police-type activities, by the United States Secret Service, the Bureau of Nar

reau of Narcotics, the Bureau of Customs, the Internal Revenue Service, and the Coast Guard »

This proposed provision 15 deeded to authorize the purchase of special features or equipment required for automobiles used in las

used in law enforcement or police-type activities.

"POST OFFICE DEPARTMENT

“(Out of postal fund) "ADMINISTRATION, REGIONAL OPERATION, AND RESEARCH "For an additional amount for 'Administration, regional operation, an research', $1,600,000."

This proposed supplemental appropriation is to provide (1) $1,096,000 fa regional operation as the savings anticipated as a result of the recent reorganiza tion will not be effective immediately, (2) $260,000 for additional positions i Bureau of Operations headquarters incident to the transfer of personnel action of fourth-class postmasters and rural carriers to headquarters and increases in workload, and (3) $244,000 for additional positions in the Inspection Service du to expanded activities involving depredations and mail fraud.

"TRANSPORTATION “For an additional amount, fiscal year 1958, for "Transportation', $3,000,000.'

This proposed supplemental appropriation is to provide for the payment of increased rail costs resulting from the Interstate Commerce Commission approval of an adjustment in rates for western and southern railroads. The total additional cost amounts to $14,000,000; however, the difference between the cost and this request has been absorbed within appropriations available to the Department.

BUREAU OF THE PUBLIC DEBT

ADMINISTERING THE PUBLIC DEBT Mr. Gary. First, we will take up the request of the Bureau of the Public Debt. The appropriation for this Bureau for 1958 was $46,946,000 and the appropriation for 1959, $44,500,000. The supplemental estimate is $1,500,000 and the proposed total for 1959 would be $46 million.

We will insert pages 8 through 13 of the justifications at this point in the record.

(The pages referred to follow:)
SCHEDULE OF SUPPLEMENTAL APPROPRIATION AND REVISED EstimATES

Administering the public debt, Treasury Department, May 14, 1958 1. Present appropriation or estimate....

$44, 500, 000 2. Total amount available.--

44, 500, 000

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11, 676, 000 11, 730, 000 11, 344, 000 11, 250, 000

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3. Obligations:

1st quarter.
2d quarter..
3d quarter..
4th quarter

Total obligations.---
5. Less total amount available------
6. Estimated supplemental required...----
7. Estimated supplemental included in latest budget------
8. Date needed:

For obligation, Sept. 30, 1958.

For expenditure, Oct. 15, 1958. 9. Estimated expenditures from supplemental:

In budget
In this fiscal year (1959).
10. Actual obligations last 3 months:

February 1958.--
March 1958.----
April 1958.-.-.

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GENERAL STATEMENT This Bureau of the Treasury Department is responsible for administering the public debt. It administers the laws and regulations pertaining to public debt financing within the framework of the fiscal policies determined by the Secretary of the Treasury. The Bureau's primary concern is with the issuance, servicing, and retirement of Government securities. It also has a general responsibility in the conduct or direction of transactions in public debt issues of the insular governments and of those Government-owned corporations for which the Treasury acts as agent.

The appropriation granted to the Bureau provides, in addition to the administrative costs of the Bureau, operating funds for the United States Savings Bonds Division, a separate organizational entity directly responsible to the Secretary for promoting the sale of United States savings bonds. The appropriation also includes funds for reimbursing the Federal Reserve banks, on an actual cost basis, for services performed in their capacity as fiscal agents of the Treasury; funds for payment of fees at stipulated rates to banks and other financial institutions for redeeming savings bonds; and funds for payment to the Post Office Department for services performed as issuing agent for savings stamps and for issuing savings bonds to the public in certain localities where other public facilities are not available.

Departmental headquarters of the Bureau are in Washington where, in addition to general executive direction and bureauwide administration, transactions relating to all securities other than savings bonds are conducted or directed; offices concerned exclusively with transactions relating to savings bonds are located in Chicago, Ill., Parkersburg, W. Va., New York, N. Y., and Cincinnati, Ohio. In the interest of economy of operation, the New York office is being consolidated with the Cincinnati office at the beginning of the fiscal year and the future workload will be diverted to the Cincinnati office.

PURPOSE AND NEED FOR SUPPLEMENTAL FUNDS The purpose of this supplemental is to permit the Bureau to reprogram its work for fiscal 1959 and to develop, at the beginning of the fiscal year, a financial plan and a work program that is more realistic in terms of currently known operating conditions and fund requirements.

At the present time, the Congress has appropriated, Public Law 85–354, March 28, 1958, the amount of $44,500,000 for fiscal 1959. This amount is only $100,000 less than the amount requested by the Bureau when it appeared before the Congress last January. However, the basic work volume and estimates of operating costs that were used in that budget estimate had been developed over a year ago and are no longer valid. Certain cost factors not known or not foreseeable at that time now confront the Bureau which, in the aggregate, total to an additional $1,500,000 over the amount appropriated. Whereas it was thought that we needed only $44,600,000 to fully process all the then estimated work volime, it now appears abundantly clear that it will cost $46 million to process all work based on current volume estimates.

Should it be necessary to develop a financial plan and a request for annual apportionment to the Director of the Bureau of the Budget, as required by law, based on the $44,500,000 currently appropriated, it would be necessary to begin the year with a work program based on backlogging work, reducing service, and separating trained and efficient personnel. This could only have costly results to the Government in the long run and could not be considered prudent management of funds or effective administration.

The additional funds herein requested would permit the development of a sound financial plan for the year envisioning the complete processing of all current work during the year and certain backlogged operations that regrettably have had to be carried over from fiscal 1958.

INCREASED costs Most of these additional costs which directly bear on the need for additional funds at this time relate to increases in estimates of the workload which were discussed with this committee in April when the supplemental request for 1958 funds was presented. Among these are: increased redemption of savings bonds on which stipulated fees are paid to qualified paying agents; increased costs in the Federal Reserve banks acting in their capacity of fiscal agents of the Treasury; increased costs of processing other Treasury securities resulting from substantially heavier public debt financing which is anticipated in 1959,

On the whole, the regular costs of the Bureau's operations have been reduced by reason of improved procedures and organizational changes. This is reflected in the estimated reduction in the number of employees on the roll in the original 1959 budget. Continuing efforts will be made during the year to reduce operating costs. However, at this time, it is sincerely believed that the full $46 million will be needed to completely process all currently estimated work volume.

Analysis of present revised estimate as compared with 1959 original submission

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SPECIFIC ITEMS OF INCREASE (1) Federal Reserve Bank service costs.-In the original 1959 budget estimate, an amount of $10,500,000 was requested for reimbursement to the Federal Reserve banks on an actual out-of-pocket expense basis for services performed as fiscal agents of the Treasury in processing of savings bonds and other Treasury securities in Government financing. The figure of $10,500,000 was a projection of what had been an estimated cost for such service during fiscal 1958. These costs, however, were sharply increased during fiscal year 1958 which necessitated a request to the Congress for supplemental funds for this item in the amount of $900,000.

As was indicated in our appearance before you during April, the closest possible estimate indicates a requirement of $11,400,000. Information furnished by the banks during the month of January indicates that this increase in requirements is occasioned by salary increases approved for Federal Reserve bank employees and a number of other increases in costs including: the costs of handling a greater volume of savings bonds and other Treasury securities than was provided for in original program estimates; costs projected for the special handling of purchases of E and H bonds after January 1 by other than individual purchasers; and increased costs for maintaining dual records of paid paper bonds and the card bonds, which are necessary under separate procedures employed for each type of security.

We are now simply projecting the 1958 cost into 1959 and are expecting the banks to absorb the additional volume and other possible increases in salaries or other costs through improved procedures or other possible savings developed jointly between the Treasury Department and the banks.

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