Senator MCKELLAR. In the name of the Alien Property Custodian?" Mr. MCNAMARA. It is subject to check by the Custodian. Then for our administrative expense fund we draw down from these general funds the amount necessary to carry on the operations of the office, and this is kept in a separate account, known as the administrative expense fund.

Senator MCKELLAR. Before the passage of the Russell amendment, as I understand it, you just made a report of your finances and obtained your expenses out of it without coming to the Congress.

Mr. MCNAMARA. That is correct, under supervision of the Bureau: of the Budget.

Senator MCKELLAR. How is that?

Mr. MCNAMARA. The Bureau of the Budget supervised our expenditures and determined what the ceiling would be and how much would be available.

Senator MCKELLAR. In other words, the Bureau of the Budget took the place of the Congress?

Mr. MCNAMARA. I can't quite agree with that characterization, but they kept a check on us.

Senator MCKELLAR. Not under the law.

Mr. MCNAMARA. Under Executive order.

Mr. CUTLER. May I add to that that Congress, as to the old Office of Alien Property Custodian, starting in 1923, specifically provided that this method of financing should be used, and reaffirmed that in 1928 and again in 1934. The, functions of that officer were transferred to the Department of Justice, and when the present war broke out a new Alien Property Custodian was appointed by Executive order, to whom were given many of the functions of the old. However, there is, therefore, not only Executive order authority for this method of financing for the present war, but there are the statutory provisions of the past war. It is arguable that these are applicable to the present office and that therefore no further authorization is needed, but we have felt that we wanted to present the matter to Congress.

Senator MCKELLAR. As I understood Senator Hayden, we passed an amendment requiring you to do it, did we not? You never asked for it until after the Russell amendment was passed, did you?

Mr. CUTLER. We had already prepared legislation to clear up some of the administrative functions of the office in this and other respects-certain administrative powers that we felt we should have the advice of Congress on. That was under preparation and had been introduced before the Russell amendment was suggested or enacted. That, finally, and presently is H. R. 5031, and section 35of that deals with the problem of the expenses of the Office of Alien: Property Custodian.

Senator MCKELLAR. At this point, Mr. Reporter, insert section 35, showing just what it is-the Russell amendment.

Senator BROOKS. I don't believe section 35 is the Russell amendment.

Mr. MCNAMARA. Section 35 is a section of the act proposed by the Alien Property Custodian, and the Department of Justice

Senator McKELLAR. I didn't understand that. I want the law that was passed. It will be inserted by the stenographer at this point.

(The section referred to is as follows:)

TEXT OF RUSSELL AMENDMENT

SEC. 213. After January 1, 1945, no part of any appropriation or fund made available by this or any other Act shall be allotted or made available to, or used to pay the expenses of, any agency or instrumentality including those established by Executive order after such agency or instrumentality has been in existence for more than one year, if the Congress has not appropriated any money specifically for such agency or instrumentality or specifically authorized the expenditure of funds by it. For the purposes of this section, any agency or instrumentality including those established by Executive order shall be deemed to have been in existence during the existence of any other agency or instrumentality, established by a prior Executive order, if the principal functions of both of such agencies or instrumentalities are substantially the same or similar. When any agency or instrumentality is or has been prevented from using appropriations by reason of this section, no part of any appropriation or fund made available by this or any other Act shall be used to pay the expenses of the performance by any other agency or instrumentality of functions which are substantially the same as or similar to the principal functions of the agency or instrumentality so prevented from using appropriations, unless the Congress has specifically authorized the expenditure of funds for performing such functions.

Senator HAYDEN. You are not objecting to the imposition of a ceiling?

Mr. MCNAMARA. No; we are not.

Senator HAYDEN. Then what is hte difference between the way the House passed on it, and what you want to do? I don't quite understand.

Mr. CUTLER. The House, in its report, stated that they were concurring in the Budget as submitted by the Bureau of the Budget, on page 11 of their report

Senator HAYDEN. I have read that.

Mr. CUTLER. In fact, however, that budget was for administrative expenses. As written in the bill, however, it would be for all expenses, both those administrative and those more directly related to the operations of the specific properties.

Senator HAYDEN. You merely want a change in language. You don't ask for a change in the amount of money; you merely want us to put in the bill what the House thinks it did?

Mr. CUTLER. That is correct.

Senator HAYDEN. And which you think they did not put in?
Mr. CUTLER. That is correct.

AMOUNT NECESSARY FOR OTHER THAN ADMINISTRATIVE EXPENSES

Senator MCKELLAR. How much money would you use out of this fund for other than administrative expenses?

Mr. CUTLER. This fund would be for the general administrative expenses of the office-overhead.

Senator MCKELLAR. I know that $4,000,000 would be, but you have got $31,000,000, you say. How much of that money do you expect to use in your general administration outside of your general office? Mr. CUTLER. Outside of the $4,000,000?

Senator MCKELLAR. Outside the $4,000,000.

Mr. CUTLER. None, sir.

Senator MCKELLAR. If that is the case, why do you want to

cange it?

TYPE OF EXPENSES CLASSIFIED AS NONADMINISTRATIVE

Mr. CUTLER. Because the sums additional which we would have to spend have nothing to do with the operation of the office. Senator McKELLAR. What are those funds?

Mr. CUTLER. They are the expenses for repairs, for instance, on a particular property. They are summarized on page 4 of our letter, Mr. Chairman.

Senator MCKELLAR. All right.

AMENDMENTS SUGGESTED

Senator GURNEY. Mr. Chairman, may I suggest that if the witness would turn to the bill and tell us what specific changes he wants in the House language, it might aid us.

Senator MCKELLAR. Yes; I think that would be a good idea.

Mr. MCNAMARA. I will read the section as it now reads

Senator HAYDEN. We have that before us. What do you want to add to it?

Senator GURNEY. It would be much better if you could look at the bill and say that on line so and so, page so and so, you want to insert such and such.

* *

Mr. MCNAMARA. We want to change it so that (in line 23, on p. 3) after the following words "* * hereby authorized to pay out of any funds or other property or interest vested in him or transferred to him," will be added: "all necessary expenses incurred by the Office of Alien Property Custodian."

Mr. CUTLER. May I interrupt? I might suggest there is a deletion there. That would.simplify the explanation, to put it in the terms of a deletion.

Senator HAYDEN. What do you want to strike out?

*

Mr. MCNAMARA. Strike out the words "not to exceed $4,000,000." Mr. CUTLER. “* * for the entire fiscal year 1945, for"-strike out through the word "for" on page 4, line 1.

Senator HAYDEN. Where do you put it back in again?

Mr. CUTLER. Then we propose to strike out the proviso starting on line 5, page 4, and running through line 9. In lieu of all that proviso we propose new language, as follows:

Provided, That not to exceed $4,000,000 shall be available for the entire fiscal year 1945 for the general administrative expenses of the Office of Alien Property Custodian, including the objects as specified in section 201 of the National War Agencies Appropriation Act, 1945, printing and binding, rent in the District of Columbia, and all other necessary general administrative expenses.

In other words, we would suggest moving the words "not to exceed $4,000,000 for the entire fiscal year, 1945 for" into the

REASON FOR RECOMMENDED DELETION OF PROVISION REQUIRING ANNUAL APPROPRIATIONS

Senator MCKELLAR. Well, you remove another very important phrase. After the proviso on page 4 of the bill, that—

after June 30, 1945, the Office of Alien Property Custodian shall not incur any obligation for the administrative expenses of said office except pursuant to an annual appropriation by the Congress specifically therefore.

You remove that, and that is something the Congress does not want removed.

Mr. CUTLER. Let me comment on that, Mr. Chairman. That phrase was inserted in the President's proposal, and, in fact, was suggested by us in connection with the original proposal presented by the President, which did not contain a ceiling. There was precedent in the last war for that, but a ceiling has been imposed and we are entirely in accord with it. However

Senator MCKELLAR. But you want to strike it out.

Mr. CUTLER. No, sir; we want to put a ceiling in in connection with administrative expenses, as we understand to have been the intention of the House, as expressed in their report. As to the proviso to which you have just referred, in the absence of a ceiling at present, this would be a declaration by Congress that next June there would be a ceiling-after next June we should not incur any administrative expenses without coming to Congress. That was for the future. Now, Congress has seen fit, with our full concurrence, to impose the ceiling now. Therefore, this has already been accomplished, and it seems to us surplusage to state it again. However, if the Congress feels it should be retained, we have no quarrel with it whatever. We only point out that it is possibly inartistic, since its purpose has already been accomplished now by the insertion of the ceiling.

Senator MCKELLAR. So far as I am concerned-I want to be perfectly frank about it-I think you should report to Congress and you should come to Congress for your appropriation, and that there should be a ceiling put on your appropriation, just like any other administrative branch of the Government.

Mr. CUTLER. With that we are entirely in accord.

Senator MCKELLAR. And if I have anything to do with it, that is going into this bill. If that is not in this bill now, we are going to make that so plain that none of you can misunderstand that you must come to Congress for your appropriation, and I think that your language just confuses it, so that you can do just as you have been doing for a number of years. I am not for the moment charging that there is anything wrong with it, but we are going to see that there is nothing wrong with it, by requiring you to come in and putting a limitation on your expenditures down there, just as we do with every other department of the Government.

Mr. MCNAMARA. We agree with you on that, Mr. Chairman.
Senator MCKELLAR. I am glad you do.

Mr. MCNAMARA. We would rather come to the Congress every year than follow the historic precedent of the Trading With the Enemy Act, which gives us blanket authority to pay expenses and deduct them.

Senator MCKELLAR. What this does is to strike out the proviso on page 4 of the bill that, after June 30, 1945, the Office of Alien Property Custodian shall not incur any obligations for the administrative expenses of such Office, except pursuant to an annual appropriation by Congress specifically therefor. That is precisely what you want to do. I don't know what the other members of the committee are going to say about it, but that is precisely what we are going to keep in this bill and require you to do. It will not be stricken out of here if I can help it.

Mr. CUTLER. That is exactly what the present imposition of the ceiling accomplished, and that is the only reason we suggest it, be

cause we expect to do that. We do it from this moment, instead of from June 30.

Senator MCKELLAR. I am quite sure of that, but we are going to have it done by law. That is what we are required to do. That is our business. That is why we are here. The Alien Property Custodian was not established as an organization superior to the Congress of the United States, so that you could run it as you thought best without coming to the Congress, both for your appropriation and to bring us your reports of what you are doing. You are established under the Congress. Congress is the only power that has the right to establish organizations of this kind. I say right now that I think your language confuses the matter, and that the House language makes it very specific, and I hope you gentlemen will agree to it, because we want to agree with you. We don't want to be at odds.

EFFECT OF PROPOSED AMENDMENTS

Senator HAYDEN. All I see to your proposition is, the way it stands now, you leave the proviso the House has in, and you want to move the "$4 million" down from the place where it appears in the text and put it in the proviso.

Mr. CUTLER. That is right.

Senator HAYDEN. What difference does it make if it is in one place or the other?

Mr. CUTLER. Because, as it reads, sir, the $4,000,000 applies to all necessary expenses. If a given property had to have a roof put on it, we would have to charge that against the $4,000,000. That is not intended, and that is not the situation with F. H. A. and R. F. C., where they have precisely the same problem.

TYPES OF NONADMINISTRATIVE EXPENSES

Senator HAYDEN. I see here, toward the end of the letter, you say: We have not burdened the proposed legislation by detailed specification of what constitutes administrative as distinguished from nonadministrative expenses. The Agency has, however, consistently drawn a distinction between the two, under the supervision of the Bureau of the Budget and pursuant to Executive Order No. 9325. It is believed the present practice in this respect may properly be continued. For the information of the committee, it may be stated that the following are typical examples of nonadministrative or "direct" expenses, which are paid directly out of cash identified with a specific alien account:

1. Real and personal property taxes and other taxes related to a particular property.

2. Storage, moving, rental, maintenance, conservation, repair and operating charges directly related to a particular property.

3. Costs of sale relating to a particular property, including appraisal costs, advertising, auditing charges and other sales expenses.

REQUEST FOR SUBMISSION OF ESTIMATE FOR NONADMINISTRATIVE EXPENSES

Senator MCKELLAR. You pointed out that you have these additional expenses. What we want you to do is to point them out, get a Budget estimate for them, come down here and get the right to