the Department. Section 3 provides for the appointment of an Administrative Assistant Secretary. Section 4 permits the Secretary to transfer records, property, personnel, and funds as required to carry out the previous sections.

Before discussing the fundamental provisions, it may be helpful to comment on two other provisions of the plan, namely, sections 1 (b) and 3. The matter of exemptions from the transfer provision under section 1 (b) particularly deserves some clarification. As I understand it, the functions of hearing examiners are exempted from transfer in recognition of the need for independence of any primarily judicial work handled by hearing examiners. The functions of the Civil Aeronautics Board are exempted presumably in recognition of the principle that a board is a more effective instrument for fulfilling primarily regulatory responsibilities. The functions of the Inland Waterways Corporation are understood to be exempted in recognition of its corporate form of organization. To me it is significant that no exemptions are made in the case of the functions of Bureau heads.

The Administrative Assistant Secretary as provided in section 3 of the plan would be under the classified service and would be appointed by the Secretary subject to Presidential approval. The creation of this post reflects the unanimous recommendation of the Commission on Organization of the Executive Branch that such an Assistant Secretary be appointed "for administrative duties of a housekeeping and management nature and to give continuity in top management." Although the duties of this official will undoubtedly be primarily of an administrative nature relating to the supervision of such functions as budgeting, accounting, property, and supplying personnel, these functions are not specified as such in the plan. This is properly left to the discretion of the Secretary of Commerce in order to permit him flexibility in selecting and assigning functions to his principal staff assistants. The provision of this position also stems from recommendation No. 16 in the report of the Commission on Organization on General Management of the Executive Branch which states as follows: "Department heads must have adequate staff assistants if they are to achieve efficiency and economy in departmental operations."

It is important to remember that plan No. 5 is part of a much broader program for improving the quality of administration in all executive departments. As mentioined before, corresponding plans were submitted by the President for five other Departments. I am informed that corresponding objectives in a basic sense have been achieved already through earlier reorganization plans or special legislation in the case of the Department of State, the National Defense Establishment, and the Post Office Department. The fundamental principle underlying this broad pattern for improving the Government's administration is that delegations of authority should be unmistakably clear and organizational flexibility should be provided to meet changing conditions.

During my tenure as Secretary of Commerce, I have had many occasions to consider the nature of my legal responsibilities in connection with the various activities conducted by the Department. It has struck me rather forcefully that I am held responsible to Congress, to the President, and to the people for faithful execution of several functions for which the direct statutory authority is scattered among different Bureau officials of the Department. In the light of these practical operating circumstances, I was pleased that the Commission on Organization of the Executive Branch saw fit to give attention to the matter of Department organization. In the light of my personal experience as Secretary, I was subsequently pleased with the insight and soundness of the observations and rec ommendations of the Commission on Organization.

At the risk of repeating what may be familiar to you gentlemen, I would like to refer to several observations and recommendations of the Commission. As you know, these observations and recommendations are the result of a thorough and objective review of executive branch operations. They coincide with my personal views which have been developed during my tenure as Secretary.

In the Commission's report on General Management of the Executive Branch, the following comments are directly pertinent to plan No. 5 and to the corresponding plans for other departments:

"The President, and under him his chief lieutenants, the department heads, must be held responsible and accountable to the people and the Congress for the conduct of the executive branch.

"Responsibility and accountability are impossible without authority-the power to direct. The exercise of authority is impossible without a clear line of command from the top to the bottom, and a return line of responsibility and accountability from the bottom to the top" (p. 1).

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"Any systematic effort to improve the organization and administration of the Government, therefore, must: (2) Establish a clear line of control from the President to these department and agency heads and from them to their subordinates with correlative responsibility from these officials to the President, cutting through the barriers which have in many cases made bureaus and agencies partially independent of the Chief Executive" (p. 7).

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"(c) The line of authority from departmental heads through subordinates is often abridged by independent authorities granted to bureau or division heads, sometimes through congressional act of stipulations in appropriations. Department heads, in many instances, do not have authority commensurate with their responsibilities. Such bureau autonomy undermines the authority of both the President and the department head. There is, therefore, a lack of departmental integration in performing the department's major mission” (p. 32).

"Recommendation No. 18: Each department head should receive from the Congress administrative authority to organize his department and to place him in control of its administration" (p. 37).

Additional observations and recommendations are set forth by the Commission in its report on the Department of Commerce. Without going into detail, this report proposed an organization for the Department of Commerce which would embrace all of the present constituent agencies, plus a few additional ones. Incidentally, the Patent Office was specifically included within the Department. As a result of its study, the Commission did not recommend that any bureau of the Department, short of the Civil Aeronautics Board, should receive special treatment in terms of relative autonomy in relation to the Secretary. The Commission restated the position taken in the report, just quoted, as follows:

"We have urged in our first report that the foundation of good departmental administration is that the Secretary shall have authority from the Congress to organize and control his organization and that separate authority to subordinates be eliminated" (p. 5).

There is little that I can add to the words of this distinguished Commission except to say that my experience both in business and as Secretary of Commerce leads me to give my full support to the Commission's findings and recommendations on this subject. Reorganization Plan No. 5 is entirely consistent with these recommendations. Based upon my experience, it is difficult for me to believe that any business concern would give to subordinate officials authorities independent of the responsible head of the firm. Likewise, I do not believe that any business concern would be inclined to freeze organizational arrangements so as to make it impossible to adjust to changing conditions and new circumstances. There is no doubt in my mind that plan No. 5 is sound in theory and in practice. Only the most compelling evidence should be permitted to dilute or obstruct this plan. In my judgment, such evidence has not yet been presented.

In giving consideration to Reorganization Plan No. 5 it is desirable to have some understanding of the nature and magnitude of the various activities and agencies within the Department of Commerce. It is essential to keep in mind that the plan applies to the entire Department. The Department was established as such by the act of March 4, 1913, which reorganized the Department of Commerce and Labor, which had been created 10 years earlier. The statutory functions of the Department are to foster, promote, and develop, the foreign and domestic commerce, mining, manufacturing, shipping, and fishing industries, and the transportation facilities of the United States. The Department had a total employment of somewhat over 46,000 as of January 1 of this year. In financial support of the Department, the Congress appropriated $672,000,000 in cash and approved an additional $537,000,000 in contract authority.

For purposes of suggesting immediately the size, scope, and range of the Department's functions, I might mention that the Department embraces the following major constituents: Office of the Secretary, which includes the Office of Technical Services, the Civil Aeronautics Administration, the Weather Bureau, the Bureau of the Census, the Bureau of Public Roads, the National Bureau of Standards, the Coast and Geodetic Survey, the Patent Office, the Bureau of Foreign and Domestic Commerce, and the Inland Waterways Corporation. I have brought together certain factual information concerning these 10 agencies. Rather than taking the time of the entire committee in reading this information, I would like to submit for the record at this point a statement which I hope will provide a bird's-eye view of the Department.

With respect to the functions of the various constituent agencies of the Department, it is of immediate pertinence to Reorganization Plan No. 5 to indicate the powers of these agencies and the scope of the supervisory authority of the Secretary of Commerce.

The functions of the National Bureau of Standards are vested in the Bureau, which is "under the jurisdiction and supervision of" the Department. Most of the functions of the Bureau of Foreign and Domestic Commerce are vested in the Bureau, which is "under the jurisdiction and supervision" of the Department. The functions of the Bureau of the Census are vested in the Director of the Census. The Bureau operates "under the jurisdiction of" the Department and many of its functions require the approval of the Secretary.

The functions of the Weather Bureau are now vested in the Chief of the Weather Bureau, and are "administered under the direction and supervision of the Secretary of Commerce." Similarly, the functions of the Coast and Geodetic Survey are vested in the Director of the Coast and Geodetic Survey, and are administered "under the direction of the Secretary of Commerce." Virtually all of the functions of the Civil Aeronautics Administration are vested in the Administrator of Civil Aeronautics, and are "administered under the direction and supervision of the Secretary of Commerce."

Unlike the other bureaus, the functions of the Bureau of Public Roads are authorized by law to be "performed by the Secretary or, subject to his direction and control, by such officers, employees, and agencies of the Department of Commerce as the Secretary shall designate."

Accordingly, with the exception of the Bureau of Public Roads, most of the functions of the Department's constituent subordinate agencies are vested in the heads of those agencies or in the agencies themselves, and the administration of the functions is subject to the "jurisdiction" or "supervision" or "direction" or "control" of the Secretary or of the Department. The mere fact that these bureaus are in the Department gives the Secretary additional power. Under the Budget and Accounting Act of 1921, he is responsible for the budget of the entire Department, which gives him a very substantial measure of control over the bureaus. In addition, Revised Statutes, section 161, title 5, United States Code, section 22, gives the head of a department authority to prescribe regulations, not inconsistent with law, for the government of his department.

In general, therefore, the Secretary has broad powers to regulate the bureaus in the Department. However, the language by which this control is granted varies, and the exact effect of each provision is not clear. The purpose of Reorganization Plan No. 5 of 1950 is to make it clear that all functions of all officers of the Department of Commerce and all functions of all agencies and employees of the Department are vested in the Secretary of Commerce, subject to his making from time to time such provisions as he shall deem appropriate authorizing the performance by any other officer, or by any agency or employee, of the Department of any of these functions.

The question arises as to the potential advantages and disadvantages accruing from that part of plan No. 5 which permits the Secretary to improve or otherwise modify the organization structure and assignments to key officials. Section 2 of plan No. 5 states that the Secretary may from time to time make such provisions as he shall deem appropriate, authorizing the performance by any other officers, or by any agency or employee, of the Department of Commerce of any function of the Secretary. Under this permissive provision the Secretary of Commerce would have the opportunity to review the organization and administration of the entire Department and to make changes as he may deem necessary and desirable in the interest of greater economy and efficiency. The act itself does not make changes nor require changes in the present organizational arrangements of the Department.

At the same time that I endorse Reorganization Plan No. 5, I am fully cognizant that fears may be engendered by such a plan. If the language is considered very literally, without recognition of the ever-present restraining factors in the operation of a large Federal agency, it might appear to some persons that any future Secretary would be entirely free to shift delegations of authorities among bureaus and officials without restraint. As history will support. there are a number of factors which act as checks and balances against arbitrary organizational changes. Primary among these is the fact that a large share of existing procedures and policies are set forth in laws. Congressional committees, including especially appropriations committees, are in a position to assert strong influence against unwise organizational modifications, if necessary

by formal investigations. The President, or the Director of the Bureau of the Budget acting for him, is in a position to be informed rather intimately concerning current and prospective developments in the various agencies, and might well dissuade a cabinet official from short-sighted or otherwise unsound organizational changes. In the light of the cumulative impact of these actual and potential pressures it is not realistic to anticipate dangerous actions in terms of arbitrary organizational shifts.

On page 7 of the Task Force Report on Departmental Management prepared for the Commission on Organization is the following pertinent paragraph:

"The granting of organizational authority would probably lead to few immediate changes. No department head is likely to make extensive organizational changes without careful consideration. Confronted on the one hand as he is with the essentiality of Government activities, and restricted as he is today by general legislation and by the level of public morality from seeking narrow personal and partisan advantage in his position, the department head can be expected to exercise even the broadest discretion carefully and conservatively. Indeed, the charge more generally is made against Secretaries of State, Secretaries of Agriculture, and Postmasters General, among others, that they have been too lax in the exercise of their discretion rather than that they have abused it."

The question might be asked what organizational changes are contemplated at the present time under the proposed plan? As a matter of actual fact, the Department of Commerce has few problems of jurisdictional overlapping or program conflicts since the responsibilities of several bureaus seldom if ever impinge one on the other. For example, there is very little problem of relationships between agencies so far apart in their responsibilities as the CAA, the Bureau of the Census, and the Patent Office. Within the Department the various constituents need coordination primarily in terms of broad program objectives rather than organizational delineation.

For that reason, though I am clearly interested in the provisions of Reorganization Plan No. 5 as being in the interests of sound departmental management, I do not as a practical matter contemplate any major or significant changes. Neither do we contemplate or foresee any large changes in the administration of present legal responsibilities. There are a few areas of bureau discretion where we shall undoubtedly require departmental approval of certain major policy actions as a matter of administrative orderliness. For example, we may wish to require that the National Airport plan be approved by the Secretary before it is formally transmitted to Congress as required by law. Basically, however, it is expected that the individual bureaus will continue to operate substantially as they are

now.

The only immediate transfer which we are presently considering, if this plan becomes law, is that relating to the Division of Commercial Standards of the National Bureau of Standards. For some time there has been pending a proposal for the transfer of this Division to the Office of Domestic Commerce. The Director of the National Bureau of Standards himself has pressed for this. The transfer would involve only about 30 employees. While no final decision has been made, there does seem to be some basis for placing this operation in a promotional rather than retaining it in a scientific agency. Reorganization Plan No. 5 would permit the Secretary to make this kind of organizational adjustment.

Consideration is also being given to the possible desirability of using the authorities in this plan to effect certain administrative consolidations, particularly in the field. We may, for example, want to consolidate all pay-roll preparation for all bureaus of the Department in a few centers in the country. We might wish to use the authority also for consolidation of such functions as procurement and warehousing. The obvious objective of such measures would be increased economy and better administrative services. In addition, as information may be developed indicating the need for expediting the flow of work in certain bureaus or otherwise assuring more proper conduct of the activities in the bureaus, the Secretary and his staff can afford to function with more direct constructive effect if legal authority for the functions has been vested in the Secretary.

These examples just stated may serve to illustrate why I feel strongly that there are positive practical benefits to be gained from effectuating Reorganization Plan No. 5. Over and above these concrete possibilities of improvement, I feel that the approval of organization plans such as No. 5 will provide firm evidence that the entire Government takes seriously and believes wholeheartedly in the need for clear-cut legal responsibilities on the part of Cabinet officials. From this I anticipate certain intangible but nevertheless very real advantages in

terms of greater internal cohesion within the departments. It would indeed be unfortunate for the Department of Commerce and for the Government as a whole if unrealistic fears in connection with a very limited segment of activities were to obstruct the benefits that are to be realized from the adoption of plan No. 5 and similar plans for other departments.

Objections to plan No. 5 center around the effects of the plan upon the Patent Office. Accordingly, I plan to discuss in greater detail the impact of the plan on this Bureau.

The Patent Office has the basic responsibility of examining applications for patents and issuing patents upon approval of such applications. Similar work is performed regarding the registration of trade-marks.

The Patent Office was a part of the State Department from 1793 to 1849, of the Department of the Interior from 1849 to 1925, and of the Department of Commerce from 1925 to the present time. As indicated earlier the functions of the Patent Office are vested in the Commissioner under the direction of the Secretary. Also, it should be noted that under present law (35 U. S. C. 6) the rules and regulations of the Office are subject to approval by the Secretary.

In the interest of concreteness I might describe briefly the basic patent procedure and give some idea of volume.

An application for a patent is referred to 1 of the 70 Patent Office divisions, which studies the application and searches all prior United States and foreign patents. The division may approve the application if it finds the invention patentable, and a patent is then issued.

If the final decision of the division is adverse, the applicant may appeal to the Board of Appeals of the Patent Office and have an oral hearing. The members of the Board are nominated by the President and confirmed by the Senate. They must be persons of "competent legal knowledge and scientific ability."

From an adverse decision of the Board of Appeals, an appeal may be taken to the United States Court of Customs and Patent Appeals, which may review the case on the basis of the record; or a civil action may be brought against the Commissioner in the United States District Court for the District of Columbia. The district court may consider the case de novo.

The procedure for trade-marks follows in a general way that relating to patent application, except that the internal appeal is to the Commissioner of Patents in person.

During the fiscal year 1949, the Patent Office finally disposed of 76,298 patent applications, and actually issued 34,815 patents. The number of patent interferences terminated was 498. The number of appeals disposed of by the Board of Appeals was 3,388. The Patent Office has approximately 2,000 employees. The Patent Office in former years has been to a large extent financially selfsustaining. However, during the last completed fiscal year, 1949, expenses exceeded income by $4,900,000. Thus the income of the Office in 1949 was only slightly more than half the expenses.

The functions of the Patent Office have many of the characteristics of judicial actions in that they affect the private rights of inventors and the public and confer exclusive rights through the issuance of patents. These functions must be carried out in a skilled and professional fashion. This has been the case throughout the entire history of the Patent Office. The Patent Commissioner and I are agreed that they should be carried out in this fashion in the future. However, the Patent Office is not unique in the high professional standards with which its work is carried out. Other bureaus in the Department have important duties involving the rights and privileges of the public and affecting their safety and lives. Other bureaus of the Department also carry on their activities with very high professional standards.

The Administrative Procedure Act recognized the fact that many, if not all, of the so-called administrative agencies, whether departments or regulatory commissions, exercised functions having legislative and judicial aspects. The act did not attempt to strike down this combination of functions, or to prohibit an administrative agency from exercising semilegislative or semijudicial functions. Instead, the act separated out the two functions, the legislative or rulemaking function, and the judicial or adjudicating function, and established certain principles and rules to insure that these functions would be carried out fairly and impartially by the administrative agencies.

The Administrative Procedure Act, in order to safeguard the exercise of legislative and judicial functions, prescribed procedures for hearings by independent hearing examiners in cases where hearings were required by statute