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Mr. WHITTINGTON. If it please the chairman, we will take up the plans in their order and I imagine plan No. 1 would be first.

Mr. PITTENGER. If you would bear with me for a moment, Mr. Whittington, I would like at this point, so we have a complete record the committee's permission to have you insert a copy of the law, which is not a long piece of legislation, Public Law 263, December 20, 1945, known as the Reorganization Act, and following that copy of the law, I think it would be well to insert, in the interests of economy, printing, and other things, the Reorganization Plans No. 1, No. 2, and No. 3. Following the law I would recommend that that be included in the record. Those are the messages of the President, and if they could be inserted at this point then the record would be clear and in my opinion in shape for the testimony that follows.

Mr. WHITTINGTON. I suppose that would be available, but when it comes to inserting the Reorganization Act, Mr. Chairman, you only want to refer to the provisions under question in that act.

The CHAIRMAN. Are there any objections to the request? I hear none. The documents referred to will be included in the record at this point.

(The documents are as follows:)

[H. Doc. No. 594, 79th Cong., 2d sess.)


To the Congress of the United States:

I transmit herewith Reorganization Plan No. 1 of 1946, prepared in accordance with the provisions of the Reorganization Act of 1945.

In my message to the Congress of May 24, 1945, requesting passage of a reorganization act, I stated that an important purpose of the act would be to permit making permanent certain of the reorganization actions taken by Executive order under the authority of title I of the First War Powers Act, 1941 (55 Stat. 838). The effect of this reorganization plan would be, in the main, to continue in force some of the reorganization actions now in effect by virtue of Executive orders. The reorganization actions continued in force by this plan all constitute improvements in the organization of permanent functions of the Government or functions which may be expected to be active after the expiration of title I of the First War Powers Act, 1941. Those improvements should, therefore, be made permanent under the procedure established in the Reorganization Act of 1945.

I have found, after investigation, that each reorganization contained in the plan is necessary to accomplish one or more of the purposes set forth in section 2 (a) of the Reorganization Act of 1945. Each part of the reorganization plan is explained in further detail below.

DEPARTMENT OF STATE The first part of the plan provides for the transfer of certain functions to the Department of State, and imposes certain liquidation duties on that Department.


Executive Order No. 8840 of July 30, 1941, established the Office of the Coordinator of Inter-American Affairs. Throughout the war period this Office (later redesignated the Office of Inter-American Affairs) played a major role

in the development of better relations among the American Republics. In accordance with the general realinement of the functions and organization of wartime agencies in the international field, this Office was abolished and certain remaining functions were transferred to the Secretary of State by Executive Order No. 9610 of April 10, 1946. The plan confirms this transfer, providing specifically for the direction by the Secretary of State of the activities of certain corporations formerly headed by the Director of the Office of Inter-American Affairs.

The necessity for confirming Executive Order No. 9610 arises from the fact that certain of the corporations have program commitments, for which funds have been made available, extending into fiscal year 1949. The reorganization' plan will assure that the activities of the several corporations listed in the plan will be under the direction of the Secretary and Department of State so long as they are in existence.


Under the terms of the Tydings-McDuffie Act, the Philippine Islands will become independent on July 4, 1946. This event makes necessary a change in the conduct of the political relationships between this Government and that of the Republic of the Philippines.

The reorganization plan accordingly abolishes the office of United States High Commissioner to the Philippine Islands (established by Tydings-McDuffie Acts, ch. 11, 47 Stat. 761, and ch. 11, 48 Stat. 456) and provides for the orderly liquidation of its affairs by the Department of State. It is contemplated that after July 4, 1946, the conduct of relations with the Republic of the Philippines will be carried on in the same manner as relations with other countries.


(National Prohibition Act functions) The act of May 27, 1930 (46 Stat. 427), imposed upon the Attorney General general duties respecting administration and enforcement of the National Prohibition Act. By Executive Order No. 6639 of March 10, 1934, all of the powers and duties of the Attorney General respecting that act, except the power and authority to determine and to compromise liability for taxes and penalties, were transferred to the Commissioner of Internal Revenue. The excepted functions, however, were transferred subsequently to the Commissioner of Internal Revenue by Executive Order No. 9302 of February 9, 1943, issued under the authority of title I of the First War Powers Act, 1941.

Since the functions of determining taxes and penalties under various statutes and of compromise of liability therefore prior to reference to the Attorney General for suit are well-established functions of the Commissioner of Internal Revenue, this minor function under the National Prohibition Act is more appropriately placed in the Bureau of Internal Revenue than in the Department of Justice.


(Agricultural Research Administration) By Executive Order No. 9069 of February 23, 1942, six research bureaus, the Office of Experiment Stations, and the Agricultural (formerly Beltsville) Research Center were consolidated into an Agricultural Research Administration to be administered by an officer designated by the Secretary of Agriculture. The constituent bureaus and agencies of the Administration have, in practice, retained their separate identity. This consolidation and certain transfers of functions between the constituent bureaus and agencies have all been recognized and provided for in the subsequent appropriation acts passed by the Congress.

By the plan the functions of the eight research bureaus and agencies which are presently consolidated into the Agricultural Research Administration are transferred to the Secretary of Agriculture, to be exercised under his direction and control by the Agricultural Research Administration or by such other officers or agencies of the Department of Agriculture as he may provide.

The benefits which have been derived from centralized review, coordination, and control of research projects and functions by the Agricultural Research Administrator have amply demonstrated the lasting value of this consolidation. By transferring the functions of the constituent bureaus and agencies to the

Secretary of Agriculture it will be possible to continue this consolidation and to make such further adjustments in the organization of agricultural research activities as future conditions may require. This assignment of functions to the Secretary is in accord with the sound and long-established practice of the Congress of vesting substantive functions in the Secretary of Agriculture rather than in subordinate officers or agencies of the Department.


(Contract Settlement functions) The Office of Contract Settlement was established by the Contract Settlement Act of 1944. By the War Mobilization and Reconversion Act of 1944, the Office of Contract Settlement was placed within the Office of War Mobilization and Reconversion and the Director of the latter Office was given general supervision over its activities.

The reorganization plan transfers all of the functions of the Director of Contract Settlement and all other functions of the Office of Contract Settlement under the Contract Settlement Act of 1944 to the Director of War Mobilization and Reconversion and to the Office of War Mobilization and Reconversion. The plan further abolishes the office of Director of Contract Settlement and the Office of Contract Settlement. The effect of this proposal will be to eliminate entirely one agency, whose mission has been substantially accomplished, without appreciably increasing the burden of the Director of War Mobilization and Reconversion.

The functions of the Office of Contract Settlement are, in general, to (1) establish and supervise uniform and fair contract settlement policies and procedures for the Army, the Navy, and other contracting agencies, and (2) establish and operate an Appeal Board to hear and determine appeals by war contractors relating to contract termination matters. Major policies and procedures have been established by the issuance of 20 regulations of general application. No new regulations have been issued during the last 8 months and none are contemplated. The Appeal Board will of necessity continue in operation for some time; but it exercises its authority sperately and autonomously, and it can therefore function as well under the Office of War Mobilization and Reconversion as under the Office of Contract Settlement.

As of March 31, 1946, about 24,000 war contracts were still unsettled, involving claims filed and expected to be filed of approximately 2.7 billion dollars. The settlement of these cases, however, is an operating function which rests with the contracting agencies. Moreover, at the current rate of settlements this represents a backlog of only 4 or 5 months' work by such agencies. Policies and procedures for settlements have been sufficiently tested to make it unlikely that new problems of substance will arise in connection with these remaining settlements which will require any action by the Office of Contract Settlement. In the event that any should arise, however, the Director of War Mobilization and Reconversion will be in a position to deal with them.


The plan consolidates permanently in one National Housing Agency under the direction of a National Housing Administrator the main activities of the Government relating to housing.

I do not need to stress again at this time the urgent necessity of taking all possible measures to alleviate the present critical housing shortage. The job of providing adequate housing for our returning veterans will tax to the utmost the resourcefulness and vigor of all parts of the Government that are concerned in any way with housing. And in the months and years ahead, the goal of a decent home for every American will demand the fullest use of all of the Government's resources in the housing field.

If the Government is to mobilize to fullest effectiveness its resources for dealing with the housing emergency, an indispensable stepand one which we cannot afford further to delay—is the establishment of a housing agency on a permanent basis. The fact that we have had a unified housing agency, even though temporary, has enabled us to move more efficiently toward a solution of postwar problems, in cooperation with private enterprise and local communities, than would have been possible without unification of the Government's housing activities; but the present National Housing Agency has been handicapped in its operations by its lack of a permanent status. Having been created during the war emergency, it is not infrequently looked upon as an organization which, now that peace has come, may be abolished in the relatively near future. This has made for uncertainties which have inevitably placed the National Housing Agency at a disadvantage. In order that it may proceed on its program with the fullest confidence that it has a position equivalent to that of any other permanent Government agency, its organization should be confirmed at the earliest possible date.

I fully recognize that S. 1592, the Wagner-Ellender-Taft bill, approved by the Senate on April 12 of this year, provides for the permanent organization of the housing activities of the Government along the lines set forth in this plan. However, since the House must act before S. 1592 can become law, and because of the heavy legislative schedule now facing the House, it is difficult to foretell when such action can be expected. On the other hand, action by the President, taken under the authority of the Reorganization Act, assures decision on the matter in 60 days. Moreover, the fact that S. 1592 is pending in the Congress does not relieve the President of his responsibilities under the Reorganization Act, passed by the same Congress. On the contrary, the action already taken by the Senate constitutes in effect an expression of approval of the objectives of the plan and therefore strengthens my confidence in the wisdom of the step I am taking.

It also seems desirable to confirm under this reorganization plan as many as possible of the organization changes that were effected under the First War Powers Act, 1941, and that it seems desirable to make permanent. Otherwise, confusion might arise, since specific congressional action on these subjects at a definite date cannot be accurately forecast.

Moreover, I place great weight upon the long congressional investigations which preceded the adoption of S. 1592 by the Senate. After comprehensive studies, hearings, and inquiries beginning in the middle of 1944, the Subcommittee on Housing and Urban Redevelopment of the Special Committee on Postwar Economic Policy and Planning of the Senate issued a unanimous report on August 1, 1945. Founded upon this report, S. 1592 was introduced and, after 2 months of comprehensive hearings, was reported favorably to the Senate. It was then approved by the Senate without substantial opposition. pioneer work done by the sponsors of the Wagner-Ellender-Taft bill, andw also by other members of the Senate Committee on Banking and Currency, the Senate Committee on Education and Labor, and the Subcommittee on Housing and Urban Redevelopment, plus approval by the Senate, has been highly constructive and has helped importantly to point the way for this plan.

Since S. 1592 continues many substantial programs which are essential for the success of the veterans' emergency-housing program, as well as for accomplishing the long-time objective of a decent home for every family, I feel bound to stress that the treatment by this plan of the organizational features of that measure does not diminish the necessity for passing those parts of the bill not covered by the plan. The organizational features are for the purpose of making the National Housing Agency as efficient and effective an organization as possible; but without the other provisions of S. 1592 this Agency, regardless of how efficient and effective it may be, will not be able to meet he requirements of the present housing emergency. While it is not customary to advocate legislation in a message of this character, I do so in this instance to make it clear that those provisions of the pending legislation not incorporated in substance in this plan are made no less necessary as a result of submission of this plan.

Wartime experience has fully demonstrated the necessity for unifying the Government's housing functions. When the defense-housing program began in 1940, housing functions were scattered a mong a number of different agencies. In February 1942 the President consolidated these dispersed housing functions into a single National Housing Agency-an action which met with almost universal approval. While this Agency was created under the First War Powers Act, 1941, and was therefore necessarily temporary in character, it brought together not only special war-housing activities but also the main permanent housing organizations of the Government.

That the housing consolidation of 1942 served a useful and necessary purpose is uncontested. Without such a consolidation we could not have coped effectively with the difficult and often extraordinary wartime housing problems. It was demonstrated time and again that one housing agency could operate more efficiently and economically than many. In actual program execution there have been enormous savings of material, manpower, and money-savings to localities as well as the Federal Government—that resulted from unity and could not have been achieved with disunity. The lessons of the war must not be ignored in dealing with the very much different but no less difficult peacetime problems of housing.

The plan provides that the functions consolidated in the National Housing Agency are to be administered under a National Housing Administrator to be appointed by the President, by and with the advice and consent of the Senate. The National Housing Administrator is authorized to appoint a Deputy Housing Administrator, who shall be in the classified service.

The plan establishes three constituent units corresponding to those now existing in the National Housing Agency, to be known as the Federal Housing Administration, the Federal Public Housing Authority, and the Federal Home Loan Bank Administration. Each unit will be under a Commissioner to be appointed by the President, by and with the advice and consent of the Senate. The functions grouped under each new constituent unit parallel the functions of the predecessor unit in the existing National Housing Agency.

Dissolution of the United States Housing Corporation (existing pursuant to the acts of May 16, 1918, 40 Stat. 550, ch. 74, as amended, and June 4, 1918, 40 Stat. 595) is directed by the provisions of the plan, and the Federal Home Loan Bank Commissioner is required to wind up the affairs of the Corporation. The office of Federal Housing Administrator, the Federal Home Loan Bank Board and the offices of the members thereof, the Board of Trustees of the Federal Savings, and Loan Insurance Corporation and the offices of the members thereof, the Board of Directors of the Home Owners' Loan Corporation and the offices of the members thereof, and the office of Administrator of the United States Housing Authority are also abolished by this plan.

The reorganization of housing functions will, of course, in nowise impair any outstanding obligations or contracts made in connection with any of such functions, nor the pledge of the faith of the United States to the payment of the principal of and interest on debentures now or hereafter issued under the National Housing Act, as amended, nor any annual contributions now or hereafter contracted or pursuant to the United States Housing Act of 1937, as amended, nor any of the insurance funds created under the said National Housing Act, as amended.

I have found and declare that by reason of the reorganizations made by the plan the responsibilities and duties of the National Housing Administrator, the Deputy National Housing Administrator, the Federal Housing Commissioner, the Federal Home Loan Bank Commissioner, and the Federal Public Housing Commissioner are of such nature as to require the inclusion in the plan of provisions for their appointment and compensation.

Under the limitations contained in section 4 (2) of the Reorganization Act of 1945, the compensation of the National Housing Administrator cannot be set in the plan at a rate of more than $10.000 a year. The National Housing Administrator now receives a salary of $12,000 a year. I do not consider the $10,000 provided in the plan as adequate compensation, and recommend that the Congress act to increase it, if possible not later than the end of the 60-day period during which the Congress has this plan under consideration. This might well be done in the appropriation bill for the National Housing Agency for the coming fiscal year.

Achievement of the objectives we are seeking-homes immediately for our veterans and a suitable dwelling ultimately for every American family-will require, as I have noted, additional legislation by the Congress. But a sound and stable housing organization, as provided for in this plan, is imperative for present operations as well as for the efficient execution of new policies and programs laid down by the Congress. I have said before that the people of the United States can be the best-housed people in the world. I repeat that assertion, and I welcome the cooperation of the Congress in attaining that goal.


(Credit union functions)

The plan makes permanent the transfer of the administration of Federal functions with respect to credit unions to the Federal Deposit Insurance Corporation. These functions, originally placed in the Farm Credit Administration, were transferred to the Federal Deposit Insurance Corporation by Executive Order No. 9148 of April 27, 1942. Most credit unions are established in urban areas, and consequently are not related to agricultural activities. The supervi.

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