person acknowledging the same.

The provisions of this section shall not apply to payments for rent of post office quarters made by postmasters to duly authorized agents of the lessors."—(R. S. section 3477; May 27, 1908, c. 206, 35 Stat. 411.)

Furthermore, the act of June 20, 1874, 18 Stat. 109, provides that no such civil officer of the Government shall receive any compensation or perquisites, directly or indirectly, from the Treasury or property of the United States beyond his salary or compensation allowed by law. Needless to say the instant activity does provide perquisites not allowed by law, and this at great expense to the United States in carrying out the arrangements stipulated, such as advances, purchases at net costs, and deductions from pay rolls, the expenditures on account of which are made in contravention of section 3678, Revised Statutes, which provides that—

"All sums appropriated for the various branches of expenditure in the public service shall be applied solely to the objects for which they are respectively made, and for no others."

It has been the long-established rule in the Federal service that the functions of the agencies of the United States are restricted to those activities authorized by general or special enactments of the Congress, and where an activity involves the expenditure of moneys of the United States, the appropriation laws must make the moneys available therefor in no uncertain terms if such activity is to be accepted as lawful. Accordingly, it must be concluded in the instant matter that the disbursements and other costs were made and incurred without authority of law.

Sincerely yours,

R. H. ELLIOTT,

Acting Comptroller General of the United States.

The CHAIRMAN. Mr. Yates, do you care to supplement the statement contained in the letter?

Mr. YATES. I might add just one thought, if I may, Mr. Chairman, which is that the Comptroller General's Office has generally viewed broad discretions granted by Congress to administrative agencies as being discretions to be exercised within the field of and the purpose for which the agency was created.

While, in this case, referring to Senator McCarran's problem, possibly in the actual wording of that broad authority, the Home Owners' Loan Corporation does have authority to spend the money for any purpose it may wish, yet we must view that authority as granted by the Congress in the spirit that it would be exercised for the purpose only of carrying out the purposes set forth in the act creating the Home Owners' Loan Corporation.

Mr. TULLOSS. May I add, if you will permit me, that the Tennessee Valley Authority and other activities, some other corporations, are now carrying their funds in the Treasury in the manner contemplated by the proposed section 5 of this bill, and I feel that the law last year, in appropriating this money to these agencies, these activities, really contemplated that the funds would be warranted into the Treasury and drawn out on warrants in accordance with the procedure applicable to these agencies.

ABSENCE OF ACTING COMPTROLLER GENERAL

The CHAIRMAN. Why did not the Acting Comptroller General appear here instead of sending you gentlemen here?

Mr. TULLOSS. The Acting Comptroller General, or, rather, the division responsible for this work did set up a fund title on the books to receive these moneys, but they refused to deposit themSenator BYRNES. No; you misunderstood the chairman.

The CHAIRMAN. I asked you why the Comptroller General is not here instead of delegating you gentlemen to appear.

Mr. TULLOSS. He asked me to report to you in response to your request.

The CHAIRMAN. Because of your familiarity with the question? Mr. TULLOSS. I have been closer to this than anyone in the Office except the men who actually were engaged upon it. The only man left in our Office who had to do with this is at home ill, and he could not have come or I would have brought him along.

The CHAIRMAN. Does any member desire to ask any further questions?

SECTION 5 PROVIDES A MEANS OF ENFORCING THE LAW

Mr. YATES. I might make one further brief statement, Mr. Chairman, that has to do with the broad authority curtailing the H. O. L. C.; that is, the authority to determine the manner in which expenditures shall be incurred, allowed, and paid. The point I wish to suggest is that neither there nor anywhere else in the legislation affecting the H. O. L. C. is there authority granted to determine how the money shall be accounted for or audited. This authority has to do with the objects of expenditures, not the methods of accounting or auditing.

Senator ADAMS. Then, it would follow from that that the accounts ought to go through the Comptroller General's Office, under the general statute, in your view?

Mr. YATES. We so feel, yes, Senator, that the money is already acquired to be set up in an appropriation account in the Treasury, and the account submitted to the Comptroller General for audit in the usual manner.

Senator MCADOO. You do not think, then, that any special provisoions should be inserted in this act to make certain that that will be done in the future because the law already provides for it?

Mr. YATES. It will be necessary to have some means of enforcing the present law, Senator, and I think that would be accomplished by the section in the pending bill.

Senator MCADOO. You think it is accomplished by section 5 of the pending bill?

Mr. YATES. I think the means of enforcement is contained in that section.

Senator McADOO. I have not seen that section.

The CHAIRMAN. That is covered by the House bill. We are obliged to you, gentlemen.

Mr. Carmody.

RURAL ELECTRIFICATION ADMINISTRATION

STATEMENTS OF JOHN M. CARMODY, ADMINISTRATOR, AND PERRY R. TAYLOR, BUSINESS MANAGER

RESTORATION OF AMOUNT PROVIDED IN BUDGET ESTIMATE

Senator BYRNES. What is it you are asking of this Committee? Mr. CARMODY. We are asking that the committee restore the reduction that the House made in the Budget estimate for 1939.

Senator BYRNES. The Budget estimated $1,650,000, and the House gave you $1,587,000, a reduction of $63,000?

Mr. CARMODY. I think those are the figures. Mr. Taylor has the exact figures.

Senator BYRNES. You are now asking that you be given the estimate furnished by the Budget?

Mr. CARMODY. Yes, sir.

Senator BYRNES. Very well, proceed.

Mr. CARMODY. This map shows the present status of the rural electrification projects in the United States, with colors around the printed material. The light yellow shows that money has been allowed; the orange shows projects now under construction. The red shows projects that have been energized, and it shows the distribution of these projects from southern California to St. John, and from southern Florida up to Pennsylvania, cross country. This represents the progress that has been made in this work.

This chart [indicating], which is a little difficult to see, represents the graphical progress that has been made with respect to requests for funds, for allotment of funds, for loan contracts, for construction, and for money out of the Treasury to pay for it.

This blue line [indicating] shows where the program was when our present Budget was set up in October of last year, and it shows the expansion of the program from that period to this period.

Senator ADAMS. Your upper line runs up to a figure of $145,000,000. That is the amount that has been applied for?

Mr. CARMODY. Yes; that is the amount that has been applied for. Senator ADAMS. And your allotments amount to some $80,000,000, roughly?

Mr. CARMODY. Yes, sir; that is right, Senator Adams.

Senator MCCARRAN. Those are the allotments that have been allowed?

Mr. CARMODY. Yes, sir; and that represents money that has actually been allotted for construction, and then the construction program follows along that line [indicating].

Senator ADAMS. The bottom line represents the amounts actually expended out of the amount allotted?

Mr. CARMODY. As of December 31, $35,000,000 had been paid out, and as of the beginning of this month it will be over $40,000,000, because the program is growing very rapidly. It was at this point on the chart, on the blue line, that our present Budget was set. Senator ADAMS. That is on the blue line?

Mr. CARMODY. Yes; and this is what is happening. That is why so many of our people have to work overtime, to carry on the program, because there was no preparation for this or thought that this could be achieved, and having achieved it of course means we must have the necessary personnel to carry it on further.

Now, the committee took money out of two funds, one engineering supervision and audits of borrowers' accounts. You can see what is happening to the demand for field engineers when the program expands at this rate, and in this fashion over the whole of the United States. Similarly, you can see what happens to field and travel accounts. They are on that project usually for 3 to 4 or 5 days, except in the case of final audit when they may be there 10 or 11 days. So, they are required to travel. We have no field offices and no regional offices.

The men travel and get back home when they can. They travel in a definite area.

Senator MCCARRAN. How many regions have you?

Mr. CARMODY. For field auditors, we have no regions at all definitely defined.

Senator MCCARRAN. Yes.

Mr. CARMODY. For engineers, we have six regions.

Senator MCCARRAN. The areas comprise what States?

Mr. CARMODY. Well, for engineering, one region goes from eastern Wyoming and actually runs to the coast. Two field engineers in that area run jobs on the Canadian border down to the Mexican line.

Senator MCCARRAN. You have two field engineers for that area? Mr. CARMODY. Yes, sir; we have two field engineers that travel that area.

Senator MCCARRAN. How many auditors?

Mr. CARMODY. Four.

Senator MCCARRAN. For the entire territory?

Mr. CARMODY. Yes, sir.

Senator MCCARRAN. How many auditors have you altogether? Mr. TAYLOR. At the present time we have 27.

Senator MCCARRAN. Over the entire United States?

Mr. TAYLOR. Yes, sir. We have asked for 44 for the next fiscal year. Senator MCCARRAN. And how many engineers have you?

Mr. TAYLOR. At the present time we have 16, and we are asking for 18 for the next fiscal year.

Senator MCCARRAN. That is for the entire United States?

Mr. TAYLOR. That is right.

NUMBER OF PROJECTS COVERED

Senator MCCARRAN. The auditors and the engineers together would cover how many projects?

Mr. CARMODY. The total number of projects now is 400.

Senator MCCARRAN. Scattered over the entire United States. Mr. CARMODY. Yes, sir; from the Atlantic to the Pacific, and from the Canadian line down to Mexico.

Senator MCCARRAN. The total number of projects contemplated under your present set-up would be about how many?

Mr. CARMODY. Two hundred more, at least.

Senator MCADOO. In which States are these projects chiefly concentrated?

Mr. CARMODY. The projects are chiefly in the more heavily populated areas, such as Ohio, Indiana, Illinois, Iowa, Wisconsin, Minnesota, and the eastern part of Nebraska, and in the northeastern part of Texas, and in Georgia. That is the concentration.

Senator McADOO. Why are California, Arizona, Colorado, and Nevada neglected?

Mr. CARMODY. In the first place, California is better served by present lines. The power companies have done a better job in California than they have in many other places, many other States.

Senator MCCARRAN. You do not go into those States, as I understand it, where there are any private concerns in existence; is that right?

Mr. CARMODY. No, sir; we build no lines to serve people where they are already served by a private company.

Senator MCCARRAN. Regardless of the cost for that service; you do not take that into consideration?

Mr. CARMODY. No; we do not take that into consideration. We get many requests because they want cheaper service, because of the high rates.

Senator ADAMS. That is, you are trying to serve communities who are without electricity?

Mr. CARMODY. Yes; wholly.

Senator MCCARRAN. Into which a number of the private concerns have determined not to go.

INCREASE GRANTED FOR 1939

Senator BYRNES. This bill, according to the House report, includes $1,587,000 which is an increase of $137,000 over the current year. Mr. CARMODY. Yes.

Senator BYRNES. That is a reduction of $63,000 under the estimate. Mr. CARMODY. Yes.

Senator BYRNES. The House gave you everything you asked for personnel.

Mr. CARMODY. Yes.

Senator BYRNES. The only thing that they did not give you was the $20,000 proposed increase for engineers.

Mr. CARMODY. Yes, sir.

Senator BYRNES. And $43,000 increase for load buildings. Those two items were disallowed

Mr. CARMODY. That must be a misprint.

Senator BYRNES. Those are the two items for which you are asking this committee to give you funds which the House did not give you. First, as to engineers, why was the amount given to you by the House insufficient?

Mr. CARMODY. It is not sufficient because it does not allow enough travel fund for these men. They must travel or they are of no use to the service.

Senator BYRNES. How much have you got this year for engineers and traveling?

Mr. TAYLOR. It was $54,000 for travel of engineers this year.
Senator BYRNES. $54,000?

Mr. TAYLOR. Yes, sir; that is right.

Senator BYRNES. And you asked for how much?

Mr. TAYLOR. We asked for $55,000 plus.

Senator BYRNES. Plus what?

Mr. TAYLOR. We asked for $55,440.

Senator HALE. That is a difference of $1,440.

Senator MCCARRAN. Yes; $1,440.

Senator BYRNES. According to this report you are asking for an increase of $44,523. What about that?

Mr. TAYLOR. That is correct; the large percent of it is personnel. Senator MCCARRAN. Then they did not give you all of the personnel you asked for.

Mr. TAYLOR. That is correct.

Senator BYRNES. I thought you said it was for travel.

Mr. TAYLOR. Part of it is for travel.

Senator HALE. How much of it is for travel?