act was the power given to the head of a department doubting the correctness of any balance certified to him by such officers to return it for reexamination with any evidence in his possession bearing upon the subject.

It is suggested in the letter of the Secretary that his Department is embarrassed in asking for appropriations by reason of their want of knowledge of the amounts needed for the payment of claims upon it, if the amount is to be fixed by officers of another department. It is impossible for the committee to see much force in the suggestion. If the estimates are made in advance, of the settlement of the claims to this extent, they must be wholly uncertain, by whomsoever they are to be settled, unless the estimate is to furnish arbitrary rule for settlement, which would be unjust. If the estimates are made after settlement there is no uncertainty in either mode of settlement. But if it be true that under this mode of settlement the department has made underestimates, so that they are not in possession of funds for the payment of claims allowed, the hardship would seem to be upon the claimants, whose payments must be delayed until the department is in funds.

It is suggested by the Secretary in his letter that in case of disagreement between the accounting officers in the Treasury and the War Department as to the allowance of a claim, the claimant might be sent to the Court of Claims for the balance or the whole of his claim, as the case might be.

Section 7 of an act passed June 25, 1868, seems to provide all that the Secretary desires in this behalf by authorizing the head of any executive department, when any claim is made upon his Department and the amount in controversy exceeds $3,000, and in other cases where the questions involved are important, to send such claimant to the Court of Claims.

In the judgment of the committee the present system of public accounting (which has worked so satisfactorily with few interruptions for more than half a century) ought not to be disturbed, and that the act of March 30, 1868, which was designed to prevent such interruptions in the future, was just and wise, and that no necessity exists for its repeal or modification.

On July 17, 1862, Congress passed an act to provide for the more prompt settlement of the accounts of disbursing officers. (See ch. 199, 12 Stat. 593, 594.) It provided that from that date any officer or agent of the United States who should receive public money which he was not authorized to retain as salary, pay, or emolument, should render his accounts monthly instead of quarterly as therefore, and that such accounts, with the vouchers necessary to the correct and prompt settlement thereof, should be rendered direct to the proper accounting officer of the Treasury, and be mailed or otherwise forwarded to its proper address within 10 days after the expiration of each successive month.

It also provided that in case of the nonreceipt at the Treasury of any accounts within a reasonable and proper time thereafter the officer whose accounts were in default should be required to furnish satisfactory evidence of having complied with the provisions of the act, and that for any default on his part the delinquent officer should be deemed a defaulter and be subject to all the penalties prescribed by the sixteenth section of the act of August 6, 1846, "to provide for the better organization of the Treasury, and for the collection, safe-keeping, transfer, and disbursement of the public revenue", which are the penalties now prescribed by section 5491 of the Revised Statutes, namely, a fine equal to the amount of money embezzled and imprisonment for not less than 6 months or more than 10 years. The act of July 17, 1862, also provided that the Secretary of the Treasury might, if in his opinion the circumstances of the case justified and required it, extend the time prescribed in the act for the rendition of accounts, and that nothing contained in the act should be construed to restrain the heads of any of the departments from requiring such other returns or reports from the officer or agent, subject to the control of such heads of departments, as the public interest might require. On March 2, 1867, Congress passed a resolution to facilitate the settlement of accounts of disbursing officers. (See Resolution No. 48, 14 Stat. 571.) It repealed so much of the act of July 17, 1862, as provided that "such accounts with the vouchers necessary to the correct and prompt settlement thereof should be rendered direct to the proper accounting officers of the Treasury", and provided that all such accounts and vouchers should thereafter be sent to the bureau to which they pertain, and, after examination there, passed to the proper accounting officer of the Treasury for settlement.

On July 15, 1870, Congress provided in section 15 of the Navy Appropriation Act, that the joint resolution of March 2, 1867, should not be construed to apply to disbursing officers of the Navy, but that such officers should render their accounts as the same were rendered before the passage of said resolution.

Upon the revision of the statutes the provisions of law then in force from the above-mentioned statutes were embodied in section 3622 of the Revised Statutes, where they may now be found.

It thus appears that from July 17, 1862, to March 2, 1867, a period of nearly 5 years, covering the greater portion of the War of the Rebellion, there was no statute requiring administrative action by the War and Navy Departments upon the accounts of military or naval officers, although, owing to the vast operations of the armies in the field and the great number of inexperienced disbursing officers on duty in the military and naval service of the Government, there would naturally seem to have been greater need during those 5 years for such direction than during any other period in our history. It also appears from an examination of the above-mentioned statutes that on July 15, 1870, nearly 24 years ago, Congress directed in express terms that the joint resolution of March 2, 1867, which, after an interval of 5 years, made administrative action by the Navy Department upon the accounts of disbursing officers of the Navy again possible, should not apply to disbursing officers of the Navy, but that such officers should render their accounts direct to the proper accounting officer of the Treasury; that is, to the Fourth Auditor, thus entirely dispensing with administrative action so far as naval accounts are concerned.

And it does not appear that the pending bill "to improve the methods of accounting in the Department of the Treasury, and for other purposes", or any other bill anywhere provided for any administrative action upon the accounts of the disbursing officers of the Navy, notwithstanding the fact that the Joint Commission of Congress to Inquire Into the Status of Laws Organizing the Executive Departments and their three experts lay great stress upon administrative action upon accounts by the executive department in which the accounts accrue. And it does not appear that there is any statutory provision declaring in what the examination or administrative action of any executive department shall consist. It may be much or it may be little. The statute simply provides that the accounts of disbursing officers shall be sent to the bureau to which they pertain, and, after examination there, passed to the proper accounting officer of the Treasury. There is no statutory provision declaring that the examination of accounts in the bureau to which they pertain shall be of the same character as that by the accounting officers of the Treasury. There is nothing mandatory as to the character of the examination to be found in any statute whatever. The statutes leave the character of the examination to the discretion of the head of the bureau or department to which the accounts pertain. The examination may or it may not include a verification of the mathematical calculations involved in the accounts, and it may or it may not include an examination of the statutory provisions and executive and judicial decisions governing the accounts.

STATEMENT OF DANIEL T. SELKO, BROOKINGS INSTITUTION

Senator BYRD. Will you state your position with the Brookings Institution, Mr. Selko?

Mr. SELKO. Mr. Chairman, and Senator Byrd, I am a member of the staff of the Institute for Government Research of the Brookings Institution. My connection with this report has been read into the record previously, in the record of the joint committee hearings, and, if it is agreeable with you, I shall pass over that and I am prepared to answer any questions which you wish to ask.

The CHAIRMAN. I think Senator Byrd desired to ask you some questions.

Senator BYRD. Well, I understood you had some additional testimony, in addition to that which you have already given, just briefly. Mr. SELKO. Yes, sir. In listening to the testimony presented before this committee, both at this series of hearings, that is today, and previously, it has occurred to me that there is one fundamental issue to be* considered and decided upon before passing any legislation affecting the control of expenditures of the Federal Government.

That issue seems to me to be whether the exercise of proprietary control belongs properly to the executive or the legislative branch of

the Government. By "proprietary control" I mean control of the cash, property, and appropriated funds of the Government.

This same issue was raised as the result of differing conclusions and recommendations presented, respectively, by the President's Committee on Administrative Management and the Brookings Institution, in their reports on Government organization, and as the result of the public controversy arising out of these two reports we undertook, at the Brookings Institution, to prepare a succinct statement summarizing the differences in the reports and stating our position with respect to the fundamental issues raised by the two reports.

Since, as I have already indicated, it has occurred to me that the chief issue, the one of primary importance to this committee, is whether proprietary control is properly exercised by the legislative or the executive branch I should like to read what the Brookings Institution has prepared on that subject.

Beginning on page 51 of this pamphlet entitled "The Administration of Federal Finances", we have stated the issue to which I have just referred in the form of the following question:

"Does the exercise of proprietary control through the settlement of disbursing officers' accounts belong properly to the executive or to the legislative branch?"

Following that question we have summarized the arguments presented in the reports of the Brownlow Committee and the reports of the Brookings Institution. I think we may omit the comparison of those arguments, since we have already been through them, and proceed directly to the conclusions of the Brookings Institution on this subject.

In the opinion of the Brookings Institution, if Congress delegates power to make final settlement of accounts to the executive branch, whether to an officer in the Treasury Department or to an officer in the Bureau of the Budget, Congress has no recourse, even though it has definite knowledge of erroneous payments, Congress cannot sue or discharge the individual responsible, or recover the loss from his bondsman, because the authority to settle the accounts has been delegated.

Therefore, the settlement of accounts, in the opinion of the Brookings Institution, is a function which should not be delegated to the Executive if Congress desires to retain control over the cash and appropriated funds of the Government, which is another way of saying that it is a function belonging properly to the legislative branch of the Government.

The vital issue to be considered, it appears to us, is whether, if Congress should relinquish control of disbursements by delegating authority to disallow payments to executive officers with authority to incur obligations against appropriations, Congress would then retain any effective control over the expenditure of appropriated moneys by the executive branch.

Consideration of this issue follows on page 53 of this pamphlet, where we have stated the question as follows:

"Can Congress hold the executive branch accountable through a post-audit by a Congressional agency without power to disallow payments?"

The contention of the President's Committee is particularly appropriate to this point, I believe, Senator Byrnes, and, if I may, I shall just read what we have said on that.

The CHAIRMAN. Go ahead, sir.

Mr. SELKO. The President's Committee contends that once Congress has made an appropriation, the responsibility for the expenditure of money devolves upon the Executive; and that to hold the Executive accountable, Congress needs, and should have, no further information than that afforded by subsequent "independent audit made by an independent auditor who will report promptly to the Congress his criticisms and exceptions of the actions of the Executive." It is the contention of the committee that on the evidence furnished by this independent auditor, Congress may call upon executive officers to explain their actions and if their actions are deemed illegal or irregular, Congress can take steps necessary to preclude such action in the future.

When questioned in hearings before the Joint Committee on Government Organization as to the efficacy of such a postaudit for purposes of congressional control, Mr. Luther Gulick, speaking for the President's Committee, testified that under the committee's plan Congress would be adequately protected. According to Mr. Gulick: "There would be a current postaudit, or what we call a 'hot' audit, carried on under the direction of the Auditor General. He would have his men scattered around wherever there are settlement officers of the Government watching the thing as it is being carried forward, then if he discovered any irregularity in connection with the very first payment that was made, that would be reported."

It is apparent that the plan proposed by the President's Committee would require the setting up of a second extensive auditing system which would in large measure duplicate the auditing force required by the Treasury Department in its proposed audit of accounts for settlement. It is estimated by the Brookings Institution that if the system which Mr. Gulick suggests were to be established, it would involve additional expenditures of several million dollars annually.

Under this plan the so-called postaudit would be made so currently that the independent auditor would be able to report to Congress with respect to illegal expenditures before an appropriation was entirely expended, or at least before the accounts were finally settled. It is difficult, however, to see what value this would be if Congress had already delegated to the Comptroller in the Treasury Department-the new Bureau of the Budget, as it is suggested by this billthe power to make the final settlement of accounts. The postaudit of expenditures by an agent of Congress would give Congress no power to protect the Government from loss occasioned by illegal or irregular payment. If erroneous disbursements were reported, Congress could take no action against the individual responsible, either through suit to recover the amount of loss or by discharge of the individual. By delegating authority to make the final settlement of claims and accounts to the executive department, Congress would be helpless to enforce compliance with appropriation acts. Once an account had been settled by the Comptroller in the Treasury Department Congress could take no action against an administrative or financial officer, or their sureties, because the authority to settle accounts had been delegated.

Thus, if Congress desires to hold the executive branch of the Government strictly accountable for the use of appropriated funds, disbursing officers' accounts must be settled by an agency directly responsible to Congress. Under the system proposed by the Presi

dent's Committee the only thing Congress could do in the event of illegality or irregularity would be to exhort against the continuance of such practices or to tighten the laws so as to make it more difficult for funds to be misapplied in the future.

The CHAIRMAN. I do not like to interrupt you, but, just for my own information, you mean to say that if there is a final settlement of a claim today and you discover fraud in the claim you can bring suit, can you not, against the person to recover the money?

Mr. SELKO. Yes.

The CHAIRMAN. Is there anything in this bill that would prevent the Attorney General from bringing suit in like manner, if fraud were discovered, in the settlement of the claim?

Mr. SELKO. If fraud were discovered in the process of settlement of that claim? That is, before the claim was settled?

The CHAIRMAN. Yes.

Mr. SELKO. It would not be proper, however, I should think, to bring suit against the officer for an improper settlement of the claim if the authority to settle the claim had been delegated to him.

The CHAIRMAN. Just because that power was vested to make a final settlement now in the General Accounting Office?

Mr. SELKO. Yes.

The CHAIRMAN. If you make it with any other official and fraud is detected you do not think we should bring suit against the person who is the beneficiary of the fraud?

Mr. SELKO. It depends on when the fraud is attempted-on whether the fraud is attempted prior to the settlement of the claim.

The CHAIRMAN. After the settlement of a claim if you find that there is fraud do you think there should be no action?

Mr. SELKO. No; I do not think so; for Congress would be in a very embarrassing position to force action in such circumstances.

The CHAIRMAN. Why would it embarrass anybody to prosecute a fellow who was guilty of fraud?

Mr. SELKO. In a case of pure guilt of fraud I should amend that statement.

The CHAIRMAN. That is what I am asking.

Mr. SELKO. But in the case, Senator, of the settlement of an account, if Congress has delegated the authority to settle an account to an officer of the executive branch of the Government, and that officer, acting in what he considers his wisdom, settles that account and releases the claim of the Government to the amount of money involved, Congress is in no position to take action to correct the decision exercised by that executive, in our opinion.

The CHAIRMAN. I did not want to interrupt you, Doctor. Go ahead, sir.

Senator BYRD. Of course, I think, Mr. Selko, you ought to make it clear it is not only the question of fraud, it is a question of seeing that the limitations imposed by Congress are observed.

Mr. SELKO. That is the point I was trying to make just now, Senator. In the settlement of an account many matters are involved besides fraud. It must be determined by the Comptroller, for example, that the proper appropriation has been charged, that there is a balance standing to that appropriation available for the purpose, that the purpose of the expenditure is a legal purpose, that the money has been obligated by the proper authority and has been properly disbursed, in accordance with all the regulations set down by law.