To be fully effective, the volunteer and paid sales representatives must operate with a continuous array of publicity and advertising. Bond promotion must come out of the loudspeaker; it must speak from the full page ads of our newspapers; and it must strike the magazine reader constantly. National promotion hits the potential buyer at every turn, and this is supplemented by local promotion through institutions which the prospective buyer has learned to respect. As the Treasury promotional force works against this backdrop, it can exploit bond buying potential which has been escaping.

The $3,750,000 provided in the House bill and recommended by the House Committee on Appropriations will not be sufficient to provide an adequate program in the fiscal year 1949. It will not be enough to enable us to develop the large corps of volunteer workers on which we must rely for the success of our sales program. We will not be able to pull into the program the tremendous volume of personal services, time, and energy contributed in the national interest by our Nation's leaders that we will require. In the past, our volunteers have come from management and labor, banks, agricultural organizations, schools, radio, press, and other public media, clubs, organizations, and national, State, and local leaders. We can sell our program only through these people. To obtain their efforts requires a tremendous amount of personal contact work. This can be done only by paid representatives of the Treasury Department.

The appropriation request of $4,658,100 provides for the absolute minimum of personnel and materials with which the donors of these uncompensated services can be obtained and held together in an effective program. A cut of $908,100 would make it impossible to do the job adequately and I earnestly request the committee to restore the amount cut by the House Committee on Appropriations from the appropriation request.

BUREAU OF INTERNAL REVENUE

The Bureau of Internal Revenue requested an appropriation for the fiscal year 1949 of $188,004,500, which was approximately the same amount as was allowed the Bureau to operate during the fiscal year 1948. The House committee reduced the appropriation request by $1,264,000. This cut will follow a cut of approximately $20,000,000 in the amount requested by the Bureau for 1948. As we told your committee last year, many of the Bureau's activities are not being carried on now with the intensity and effectiveness that proper tax administration requires.

The cut in Internal Revenue's funds was for activities of the Washington office. No cut was made in the funds for the field offices where most of the collection, investigative, and related work of tax administration is done.

For personal services in the District of Columbia the House Committee on Appropriations raced the amount requested from $16,530,000 to $16,000,000. This represents a re tion of $530,000.

Based on aver salaries of the Washington office, the reduction of $530,000 requires the loss or 156 positions. We cannot reduce the number of positions in the Washington office without serious consequences to the over-all management and control work performed in that office in respect to the whole task of tax administration both in Washington and throughout the country.

The important control work performed in Washington involves, among other matters (1) the administrative check maintained by each major operating unit over the work of its respective field organizations; (2) technical review of the application and interpretation of the Internal Revenue Code in respect to cases settled by the field organizations; and, (3) certain types of assessment and overassessment work which the Commissioner is required by law to perform.

No reduction should be made in the management work in the Washington office since its need during 1949 will be greater than at any previous time. Among the reasons for this are the following:

(a) Numerous basic changes in operating plans for purposes of improving efficiency are now being developed and will be pushed further during 1949. An example of such a plan already under way is the shifting from manual to machine methods. The first large experiment with punch-card equipment in respect to the computation of taxes and refunds by the collectors on Forms W-2 is now well under way in the Cleveland district. When the operating procedures have been worked out completely, the machine method will be introduced in all districts to reduce costs.

(b) Efficiency will be improved through the development of basic administrative changes in the Internal Revenue Code which is in process. An example of one of these possible changes which is now in the development stage is the substitution of stamp-metering devices for the more cumbersome revenue-stamp system.

(c) Further improvements in the administration of the Bureau are being carefully examined in connection with the work of a committee established by the Commissioner of Internal Revenue to deal with these matters. Moreover, it is anticipated that the scope of these activities will be greatly increased in connection with the consideration of any recommendations made by the Joint Committee on Internal Revenue Taxation pursuant to the Treasury Department Appropriation Act of 1948.

(d) The transition from a wartime tax system to a peacetime system involves a great many problems. These require a trained staff if they are to be dealt with. For example, it will be many years before the tremendous problems created by the wartime tax cases, particularly excess-profits tax relief under section 722 of the code, will be settled.

These and other cases have resulted in a backlog of legal work of an interpretative nature greater than at any previous period. This is also true in respect to cases examined during the past 3 or 4 years by the investigative forces. Due to these investigations there has accumulated before the Appeals Division a tremendous number of cases for trial before the Tax Court involving the most complex problems with which the Bureau and the taxpayer have ever been faced. Moreover, the full effect of the tax drive to discover wartime tax evaders is now reaching the Bureau's Penal Division and it will be incumbent upon that Division to push those cases forward as promptly as possible in order that full benefits may be derived from the criminal prosecution of them. It is, therefore, essential to the efficient operation of the Bureau that the $530,000 for personal services be restored.

The House committee reduced the estimate for expenditures for purposes other than personal services from $18,734,000 to $18,000,000, or a reduction of $734,000, of which $130,000 was for the Bureau's printing and binding, and $100,000 was for stationery.

The printing and binding cut came about by the insertion of the sum of $2,400,000 in the text of the bill as a limitation on the amount which can be expended for this purpose in 1949.

The Bureau had requested $2,530,000. The printing expenses incurred each year by the Bureau are controlled by the needs of the millions of taxpayers in meeting their tax liability to the Federal Government. This task requires the printing of hundreds of millions of tax forms and instructions each year. These needs must be met promptly in order to comply with statutory requirement limitations for the filing of returns of the various classes of taxes. During the fiscal year 1949 more tax blanks will have to be printed than this year.

In accordance with statutory requirements, all printing and binding for the executive departments must be performed by the Government Printing Office or by contracts let by that Office. Printing costs have been constantly increasing, due to rises in prices for paper stock and upward adjustments of wage schedules. The restoration of the amount cut by the House committee would be conducive of more efficient administration at the Bureau.

The amount included in the appropriation estimate for the purchase of stationery supplies for 1949 was $1,500,000. This amount has been reduced by $100,000, as evidenced by the insertion of $1,400,000 as a limiting clause in the text of the appropriation.

Of the $1,500,000 which was included in the estimate, approximately $805,000, or 54 percent, is intended to cover the cost of envelopes and paper stock items exclusively. Prices for these items have risen very sharply in the past few years. The cost of envelopes increased 25 percent over 1947 prices ($4.25 per thousand, as compared with $3 40), and the

percent over 1947 pris, Far

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maper stock items has increased by 50 derable stationery stock was prevailing prices. This

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gerations of the Bureau. This is true

The estimated rental cost for space for the current and coming fiscal years, as included in the estimate, is $5,620,865, and covers approximately 2,898,000 square feet of commercial space, at an average annual cost of approximately $1.94 per

square foot. As you know, there are no rent controls over prices charged for commercial space. In 1948 the price of commercial space was 16 percent higher than in 1947, and an additional rise is in prospect for 1949.

Of approximately 715 leases for the current year, only 235 have renewal privileges, at similar rates, extending beyond June 30, 1948. The remaining leases, numbering 480, will have to be renegotiated, involving in all probability an additional expense.

Similarly, the cost of all other continuing services comprising other items of expense have sharply increased since the estimates were prepared. The cost of such continuing services as telephone and telegraph have gone up recently, and increased costs are also involved in the expenditures for hauling and drayage, repairs to and storage and care of official cars, etc. Any reduction in these items, therefore, would have a serious effect on the operation of the Bureau. Under the circumstances cited above, it is essential that the $734,000 for objects of expenditure other than personal services be restored.

BUREAU OF ENGRAVING AND PRINTING

The next appropriation item which I should like to discuss in some detail is the appropriation for the Bureau of Engraving and Printing. This Bureau requested an appropriation of $12,830,000 and the House committee cut the request by $830,000 and allowed an amount of $12,000,000 for the fiscal year 1949. This reduction is made up of two items-$705,000 for the printing of approximately 10,000,000 sheets of United States currency and $125,000 for the purchase of equipment.

I must urge on the committee the necessity of restoring these two items. The situation with respect to currency is that currency redemptions have been much greater than new production; accordingly, our reserve stock in the Office of the Treasurer has been depleted rapidly. The reduction during recent months has taken the reserve stock down nearly to the point where we can't fill order for new currency, and it is imperative now that we step up the production at the Bureau of Engraving and Printing.

We have, as you know, sent up for the consideration of the Congress a supplemental appropriation for the Bureau to carry us through the balance of this fiscal year. The estimates for 1949 are based on the assumption that the Congress will grant a deficiency of $1,650,000 to print 20,000,000 additional sheets of currency during the last 3 months of the fiscal year 1948. If the supplemental appropriation is passed, deliveries by the Bureau by June 30, 1948, will be 105,000,000 sheets of currency this year instead of 85,000,000 sheets for which the original appropriation provided. However, if the Bureau is not provided with sufficient funds in 1949, the reserve of completed currency will again drop to a low level.

We have been very economical in the issue of new currency. In 1943, in order to economize, we cut the standard of fitness for currency and increased the life of the dollar bills from 9 to 11 months, on the average. This policy has allowed a lot of substandard currency to stay in circulation and now more than a proportional amount is being turned in.

We are careful about the condition of the currency we destroy and a short time ago the Federal Reserve banks were requested to try to keep every possible piece of currency in circulation and to submit bills for redemption only when they are absolutely unsatisfactory for further monetary transactions. The sup plemental appropriation request will not let us raise the standard of fitness of the currency, but it would rebuild our reserve stock.

The Director of the Bureau of Engraving and Printing will discuss these matters with you at greater length when he appears before your committee, and he will show you some samples of how bad the currency gets before it is taken in for destruction. The Bureau is doing as good a job as possible in turning out currency economically. Increases in demand for currency can be met only by increasing the force working on the job. Therefore, I urgently request your committee to give this Bureau the money they have asked for, so that we can meet our obligation to supply currency as it is required, to maintain a decent standard of fitness of the currency in circulation and to maintain adequate reserve stocks of completed currency.

I also urge that the committee restore the $125,000 for the purchase of equipment for the Bureau of Engraving and Printing. In an organization as large as the Bureau with the large amount of equipment that is used to produce currency and securities, the experience has been that replacements are needed

each year to keep the Bureau working at peak efficiency. Equipment is ordered only when necessary and the small amount involved will be of great assistance to the maintenance of satisfactory operations during the fiscal year 1949.

BUREAU OF FEDERAL SUPPLY

The next bureau is the Bureau of Federal Supply whose appropriation request was cut $10,070,000 by the House committee. Ten million dollars of this item involves the elimination of a request for additional capital for the general supply fund.

The money invested in the general supply fund more than pays for itself. The present capital is too small to do the job required. An increase in the capital would permit the Bureau to operate its Nation-wide supply system on an efficient and economical basis.

It should be noted that this amount differs from the usual appropriation estimate in that it involves an advance of capital only. This is a pertinent point for your consideration. The Bureau's estimate contemplates only an advance of funds which will be restored after expenditure as quickly as the accounting processes of the Federal Government allow. We should like to emphasize that the additional capital will be utilized only for the purpose of maintaining adequate inventories; for the speedy liquidation of accounts payable; and for the financing of purchases of those materials and supplies, the centralized procurement of which will be economically advantageous to the Government. The increase in capital does not contemplate any expanded organization of the Bureau other than such changes as are necessitated by substantial upturns in business. The Bureau's operation under the general supply fund closely resembles that of a commercial concern. As is well known, profitably operated jobbing businesses predicate their success on two main factors, (1) buying large quantities thereby obtaining competition and lowest prices, and (2) maintaining a large volume of sales to keep the cost per dollar of warehousing and selling at the lowest possible figure. To accomplish these two objectives sufficient working capital is absolutely necessary.

The remaining items that were cut by the House committee involve $35,000 of salaries and expenses and $20,000 for printing and binding. These are small cuts, yet they will be quite burdensome to the Bureau and it would be of great assistance to us in the carrying out of an efficient and adequate purchasing operation if they were restored.

We are not raising with your committee at this time the restoration of the $15,000 cut from the estimate for expenses for renegotiation rebates.

In conclusion the restoration of the $13,088,500 for the five Treasury bureaus discussed in this letter is most essential. The officials of the Department hope that you will allow them to appear before your committee for the purpose of furnishing such additional information bearing on the reduction and the requested restorations as you deem necessary. They have already-in compliance with the request of the clerk of your committee-prepared certain prescribed forms containing additional information relative to these items and these are transmitted herewith as attachments to this letter. The Treasury Department regards each of the items as vital and it is most important that they be restored. Sincerely,

JOHN W. SNYDER, Secretary of Treasury.

STATEMENTS OF A. L. M. WIGGINS, UNDER SECRETARY OF THE TREASURY; ACCOMPANIED BY W. W. PARSONS, ADMINISTRATIVE ASSISTANT TO THE SECRETARY; W. L. JOHNSON, BUDGET OFFICER; LOUIS SHERE, DIRECTOR OF TAX RESEARCH; AND VERNON L. CLARK, NATIONAL DIRECTOR, PUBLIC DEBT

Senator CORDON. May I suggest, Mr. Wiggins, that I am most pleased with the showing that has been made by the Treasury Department in connection with its administrative efforts under the direction of the Secretary and yourself.

Mr. WIGGINS. Thank you, sir.

Senator CORDON. I congratulate you on doing an outstanding job and increasing the efficiency of the Department, and in the consequential reduction in the cost of administering that Department.

COMPARISON OF 1949 ESTIMATES WITH 1948 AND 1947

I want to call attention to the statement in the Secretary's letter in the third paragraph, which I quote:

The budget estimates for 1949 for regular annual appropriations of the various bureaus included in title 1 of the House report amounted to $306,981,700. This figure was $7,000,000 less than the amount appropriated for the same bureaus for the fiscal year 1948. The 1948 figure, in turn, was about 281⁄2 million dollars less than the amount appropriated for the same bureaus in 1947. The estimates set forth in the budget, therefore, already involve a $35,000,000 reduction in the cost of operating these burdens during the 2-year preiod from 1947 to 1949. Moreover, it should be pointed out that in addition these bureaus will absorb approximately $11,000,000 representing amounts required for within-grade promotions during this 2-year period.

That is an outstanding job, Mr. Under Secretary.

Mr. WIGGINS. Thank you, sir.

Senator CORDON. Now, I assume, Mr. Wiggins, that you desire to make some comments generally on the status of your request and the action of the House. If so, please go ahead.

GENERAL STATEMENT

Mr. WIGGINS. In view of the Secretary's letter which covers in some detail the request before this committee for consideration of certain items in the budget, I have not prepared a written statement for the committee, but I would like to take advantage of the opportunity which you have graciously given me to comment on a few items that I think will be of interest to your committee.

REDUCTION IN CONTROLLABLE ITEMS

As you have just pointed out in quoting from the Secretary's letter of March 17, the request under title 1, which is the controllable part of the expenses of the Treasury, totals $7,000,000 less than the amount appropriated for the last year. Now, if we would also eliminate from that an item of $10,000,000 that represents not an expense but a capital outlay for the Bureau of Federal Supply, the expense item would show a reduction of $17,000,000 from last year.

I think that in view of the very fine remarks you made about the Treasury, it might be appropriate to put that in the record at this point.

Senator CORDON. We are glad to have it in there. A good job well done deserves commendation.

Mr. WIGGINS. Now, of the 26 items cut from the Treasury budget estimates under title I by the House Committee on Appropriations, we invite your attention to seven items on which we ask further consideration. The seven items are included in five headings which I will briefly discuss.