lative consideration and appropriate amendments of title III of the Servicemen's Readjustment Act.

This law presently contemplates that, as a part of the preferential treatment accorded veterans in meeting their problems of acquiring, repairing, altering, or improving housing and the financing of business and farm ventures, the administrative cost, to the extent necessary, will be borne by the Government and not by the veteran. To collect a fee, as recommended, would largely negate the basic concept of this benefit program which was provided as a special form of readjustment assistance and preferential treatment to veterans who served in World War II or during the Korean service period. This underlying philosophy is also applicable to the other special readjustment programs for war veterans which have been enacted by the Congress in furtherance of the long-established principle that special consideration should be given to war veterans in the form of various types of benefits extended at the cost of the Governemnt.

There is the additional consideration that the adoption of this recommendation for application to future guaranteed, insured, or direct loans would result in discrimination against those eligible veterans who have not yet taken advantage of their loan or loan guaranty entitlement. Over 4 million loan applications had been received, cumulatively, by January 1, 1955, and had been processed at public cost as a special benefit to the veterans involved. It would seem to be rather late to adopt a radically different approach in this temporary readjustment program, to the detriment of those whose basic eligibility is the same and whose situation differs only by the fact that, whether by choice or necessity, they did not or could not utilize their entitlement in the earlier stages of the program.

From a practical standpoint, the recommendation must also be evaluated in terms other than the $25 per loan cost factor established in the 10-year history of operations. Though this amount per loan, estimated as covering administrative costs, is reasonable, the payment of this sum or any other amount as a fee to cover administrative expenses would place the GI loan squarely in the category of a service to be purchased. This aspect alone would bring about substantial changes in the administration of the program, including procedures for the collection and accounting for fees imposed, and thus would result in additional administrative costs necessitating a somewhat larger charge than the $25 estimated unit cost under present conditions.

With respect to the direct loan program, it should be mentioned that its operations to date reflect an apparent profit in terms of amounts returned to the Treasury which will more than offset the administrative costs of this part of the Veterans' Administration loan activities. Under the circumstances, the Veterans' Administration is unable to concur in recommendation No. 44.

RECOMMENDATION NO. 45

"That the recommendation made by the 1947-49 Commission on Organization of the Executive Branch be adopted:

"We recommend that all Government business enterprises be required to surrender to the Treasury all United States securities held, up to the amount of the capital furnished them by the Government,

and that they receive in return non-interest-bearing credit in the Treasury. They should not be allowed to invest their idle funds in any other securities except as authorized by the Congress. This recommendation does not include trust accounts.'"

Comments of Veterans' Administration

This recommendation appears to have no application to the Veterans' Administration for the reason that United States securities held by this agency are held in trust for certain funds, notably the insurance funds and the General Post Fund. The last sentence of the recommendation specifically exempts trust accounts from its terms.

RECOMMENDATION NO. 46

"That all nonmutualized agencies engaged in lending, guaranteeing, and insurance be required to report each year to the Congress and the Treasury in a form determined by the General Accounting Office the total amount by which earned income failed in the previous year

to cover:

"(a) operating expenses;

"(b) interest on advances by the Government at a rate equal to that on the public debt of comparable maturity;

"(c) losses on loans or investments;

"(d) reserves against losses; and

"(e) if the agency is not paying a return on the Government's investment, interest received on holdings of United States securities up to the amount of the Government's investment."

Comments of Veterans' Administration

This recommendation would appear to be directed primarily to agency activities with respect to the making, guaranty, or insurance of loans in connection with which there is a return to the Government in the form of interest or administrative charges and in connection with which there may be investments in United States securities. To a considerable extent, it is believed that the recommendation may not be intended to apply to operations such as those conducted by the Veterans' Administration. In any event, definitive comments cannot be made in the absence of a concrete legislative or other proposal outlining the requirements in greater detail and the exact types of activities intended to be affected.

Hon. OLIN E. TEAGUE,

Chairman, Committee on Veterans' Affairs,

JUNE 30, 1955.

House of Representatives, Washington, D. C.

DEAR MR. TEAGUE: In accordance with your request, transmitted by Mr. Oliver E. Meadows, staff director, I am enclosing the comments of the Veterans' Administration on the recommendations in the report on personnel and civil service of the Commission on Organization of the Executive Branch of the Government which affect or are of interest to this agency.

Advice has been received from the Bureau of the Budget that there is no objection to the submission of this report to your committee for its consideration. However, the Bureau also advises that the relation

ship of the views expressed in this report to the program of the President has not been determined, and the report should not be construed as a commitment regarding legislation which has been or may be proposed to carry out the recommendations of the Commission on Organization.

Sincerely yours,

JOHN S. PATTERSON, Deputy Administrator

(For and in the absence of H. V. Higley, Administrator).

REPORT ON PERSONNEL AND CIVIL SERVICE

RECOMMENDATION NO. 1

"(a) Career administrators, as rapidly as possible, should be relieved by noncareer executives of responsibility for advocacy or defense of policies and programs and should be kept out of direct participation in political controversies. This recommendation is in no way intended to restrict Congress in obtaining information from any employee of the Government.

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(b) Additional competent noncareer executives should be worked into management organization at the departmental level to help carry the workload, assist the secretaries and assistant secretaries in improving their control over and grasp of departmental business, and take over the political tasks formerly handled by many career administrators. Political appointees should not be placed in the line of command below career administrators. Obviously, such appointments undermine the line of command and make the position of career administrator untenable."

Comments of Veterans' Administration

The general principle inherent in this recommendation of removing career administrators from direct exposure to, and participation in, political controversies is sound. The recommendation is also in keeping with the concept that agency heads should have the privilege of making their own appointments to top-level policymaking positions. As matters presently stand, it is believed that the recommendation would not have any substantial application to the Veterans' Administration. To a considerable extent the machinery already exists, in the form of schedule C, to increase in Government agencies the number of positions for noncareer executives.

Basically, it is also a sound proposition that political appointees should not be placed in the line of command below career administrators.

One important factor should be acknowledged as a qualification to this recommendation, as well as recommendations 2 and 3. That is the fact that it is necessarily true that subordinate executives and employees must at times participate with their superiors, or even alone, in such outside activities as congressional hearings and interagency conferences to the extent of providing information and explanations which may bear on policies and programs. This is a proper function of the technician and, as a practical matter, cannot be entirely eliminated in the conduct of any large agency such as the Veterans' Administration.

The Commission partially recognizes this problem in the last sentence of subdivision (a) of recommendation No. 1 to the effect that it is in no way intended to restrict Congress in obtaining information from any employees of the Government. It is believed that the Commission tends to overemphasize the objective of withdrawing career personnel from this area, notably with respect to the explanatory functions of career representatives before committees of the Congress (see p. 18 of the report, H. Doc. 89, 84th Cong.). Accordingly, the Veterans' Administration is impelled to emphasize these reservations to the implications of recommendation No. 1.

RECOMMENDATION NO. 2

"We recommend that the President designate the positions which should be in the noncareer category and that he use the following criteria to determine positions which should be in this category:

"(a) All positions filled by Presidential appointment, with or without confirmation by the Senate;

"(b) All positions having vested in them statutory authority or Executive delegations of authority requiring the incumbents to make final decisions in the establishment of governing policies, programs, objectives, and in the enunciation of principles which will control the action of subordinates in the implementation of the foregoing;

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"(c) All positions, the duties of which require the incumbents to act publicly in advocating new policies and in justifying or defending the governing policies or the basic principles or philosophy which control their department or agency policies. Such duties would include direct participation with, or representation of noncareer executives in public debate, evaluative discussions, and justifications of departmental policies, programs, or activities;

"(d) Most positions of a personal and confidential nature, such as personal aids, confidential secretaries, and personal chauffeurs. Noncareer executives may, of course, continue to employ career people in such positions.'

Comments of Veterans' Administration

The Veterans' Administration endorses the principle that there should be a clear line of demarcation between agency positions which are essentially of a noncareer character and those which fit properly into the career service. It appears to be the view of the Commission that schedule C has not fully achieved this desired objective and that the President should specify the positions which should be segregated into the noncareer category in accordance with the criteria enumerated in recommendation No. 2.

This recommendation is intended to serve the twofold purpose of assuring to the heads of agencies the privilege of placing personnel of their own choice in top-level policymaking positions and at the same time of protecting the great group of career positions against insecurity of tenure and political infiltration. However, the criteria specified in the recommendation might, if applied literally, produce undesirable results tending to defeat the overall purpose. This is particularly true of item (c) which would seem to call for a classification of all positions as "noncareer" if the duties include either the public advocacy of new policies or justification of governing policies and the

underlying principles of such policies. The possible scope of this criterion is emphasized by specific reference to duties involving direct participation with, or representation of noncareer executives in public debate, evaluative discussions, and justifications of departmental policies, programs, or activities.

In many instances, such as appropriation hearings and other congressional committee hearings, as well as interagency conferences and other outside contacts, those in subordinate positions who are engaged in activities incident to the preparation of information and source material bearing upon agency policies, which are not approved and crystallized except at the top level, are necessarily called upon in company with top officials, or possibly in their absence, to participate in discussion, explanations, and informative presentations relative to such policies. It would be unrealistic and unfair to characterize employees of this class, who perform a technical or institutional type of service, as policymakers not entitled to the protection and continuity of tenure which is necessary to the stability of the career service.

The Commission recognizes that its stated criteria must be applied with some "flexibility" and should be regarded as "a guide for making a practical division of responsibility and labor between the two groups." As indicated, the objective is sound, but it is feared that the specific criteria, more particularly item (c), could be easily misunderstood and misapplied to the detriment of the career service, and with resulting confusion of functions properly attached to some subordinate positions with those prerogatives which reside only at the topmost level of administrative responsibility.

RECOMMENDATION NO. 3

"We recommend that the civil-service rules establishing the schedules of positions exempted from the competitive civil service be modified to provide for four schedules as follows:

"(a) Schedule A should include all positions except those under schedules C and D below, which, from time to time, the Civil Service Commission determines it is not practicable to fill by examinations, either competitive or noncompetitive.

"(b) Schedule B should include all positions except those under schedules C and D below, which the Civil Service Commission determines it is not practicable to fill by competitive examinations. Appointments to these positions shall be subject to such noncompetitive examinations as may be prescribed by the Commission.

"(c) Schedule C should include all positions which the President, on nomination by department or agency heads, exempts from the competitive civil service on an indefinite basis because the incumbents perform duties of a personal and confidential nature such as junior personal aids, confidential secretaries or personal chauffeurs to noncareer executives. (See criterion (d) in recommendation No. 2 above.)

(d) Schedule D should include all positions which the President on nomination of department or agency heads, exempts from the competitive civil service because their incumbents perform the functions listed in criteria (b) and (c) in recommendation No. 2 above."

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