Later on it tells the Comptroller General to make recommendations to the Congress looking to greater economy or efficiency in public funds. That is the general language under which investigations are carried on; this work is based upon information from any credible source, including even the "private informer" type of letter from tax-paying citizens who quite often write us, or whose letters to their Senators or Representatives are referred to us.

The next paragraph of the statute reads:

He shall make

that is, the Comptroller General—

such investigations and reports as shall be ordered by either House of Congress or by any committee of either House having jurisdiction over revenue, appropriations, or expenditures. The Comptroller General shall also, at the request of any such committee, direct assistants from his office to furnish the committee such aid and information as it may request.

To implement that program the statute gives us the right of access to any books or records of any department or establishment. So far as the law is concerned this is absolutely without limitation except for certain unvouchered expenses of the State Department and a few other special funds, and except as it may be limited for constitutional reasons in matters pertaining to military or atomic energy secrets or in foreign affairs. The law also authorizes our people to administer oaths to affidavits taken in connection with our investigations, but it does not give us the right of access to private records of most Government contractors or other private firms or individuals. We can examine contractors' books in the case of the normal cost-plus contract and in the few cases entered into or amended under the War Powers Act. While we may not demand the right of entry to examine bank deposits, State and local government records, insurance company books, private employment records, and the like, as a practical matter we can and do go very far in that direction in proper cases where we are able to elicit the cooperation of their custodians who ordinarily are as anxious as we are to bring out matters which will result in saving the taxpayer's dollar.

The CHAIRMAN. Mr. Ellis, do you encounter much difficulty or resistance when you need such information from private sources?

Mr. ELLIS. Now and then, it is true, especially in the case of bank deposits. The banker, of course, has his duty as trustee on behalf of the depositor, and some bankers are very careful, shall we say, to be sure that they reveal nothing.

In most cases, however, and my assistants can check me on this, my impression is that in most cases when the banker is apprised of the nature and the purpose of the investigation and realizes it is distinctly in the public interest, we are permitted access to the records to find out essential information, sometimes on our undertaking to protect the source, which is sometimes necessary.

Our organization is a small staff group, attached to the office of the Comptroller General, and is not, of course, a part of our larger operating divisions which are responsible for the regular audit of the accounts of the several departments and the transactions of the Government corporations.

The CHAIRMAN. You say you have a small staff. Would you indicate the size of it?

Mr. ELLIS. Two hundred and thirty-seven people altogether. The CHAIRMAN. I should not have asked; I see that in the statement. Go ahead.

Mr. ELLIS. It is possible, depending on the subject matter, that some studies for the Congress would be made by those divisions but, of course, I do not undertake to cover their work at this time. Our own staff consists of 237 people, 74 of them here in Washington and the rest located in 19 principal field offices and 4 subordinate stations throughout the United States and Hawaii. The number of people at each post varies from 2 to 16. All of them are investigators, except a small administrative staff, more than half of them have been trained in accounting, a number have been trained in the law, and nearly all of them have a number of years of experience in examining Government fiscal operations throughout the land.

My own experience in this particular field is rather brief as I have been assigned to this work now about a year. But for the others I exaggerate not one whit when I claim for them that they know more about the fiscal workings of our Government at the operating or grassroots level throughout the country than, I believe, does any other one group of people-this for the reason that they devote their time and their lives in the continuous process of either inspecting, investigating, or surveying operations at the ultimate direct field level where the work actually goes on, and they cover or they can cover all departments of the Government.

As a matter of practice, there are some departments that we are in all the time and others that we very rarely visit, since experience has dictated where the services of our men are most needed. Just as military and veteran activities dominate the national budget, so do they predominate in ours.

The scattering of our people into so many offices is done as a very practical economy; travel expenses are a big part of our budget and we save a great deal by having the work done locally where the men are not far removed from their homes. More than that, there develops gradually a valuable specialization in the work of the field establishments located in each group's area, as well as a most essential personal relationship of confidence between our field people and the fiscal officers in the departments they examine.

Third, the studies requested by the Congress:

As quoted above the law tells us to furnish investigations, reports, assistants, aid and information as requested by either House or by a committee dealing with revenue, appropriations, or expenditures. Rather than deal in vague generalities, I will illustrate by the mention of four such cases now in operation or recently completed:

(a) The railway mail freight cost situation was thoroughly explored a year ago for one of the committees, where we disclosed that the law as carried out results under the round-trip clause in tremendous payments to the railroads for carrying empty freight cars and other unused space. As a result that arrangement has now been discontinued, at least in part.

The CHAIRMAN. May I inquire as to that? On a car carrying mail going out, I understand the Government pays for the same service coming back, even though the car is empty.

Mr. ELLIS. Yes; whether it is a railway mail car which cannot be used for anything else or if it is a freight car or cattle car or milk

car, all of which have been used many, many times, in fact in some areas and in some seasons, there are more of those than railway-mail

cars.

The CHAIRMAN. Now, on any car besides a mail car, which cannot be used for any other purpose, if that car goes to a western city, for example, is that car available for any other purpose, for hauling freight back, or must it come back empty and the Government pay for that?

Mr. ELLIS. Under the arrangement that, I believe, is now corrected, that car was available if the railroad chose to use it. But if it chose not to use it, it returned the car empty and collected 50 and a small fraction cents a mile for carrying the empty car.

The background of that is interesting. I thought, of course, that we had as many letters going one way as we did the other. But the odd thing is that the heavy mail, especially parcel post, predomi nantly moves east to west and north to south, causing a great many empty returns.

The CHAIRMAN. That might be advertising that goes out from industrial centers.

Mr. ELLIS. I suppose so, but the amount of it was surprising. We checked, for example, here in August 2 years ago and found about 100 empty freight cars a day going back from here to New York, and on each one of them the Government was paying 50 cents a mile. The CHAIRMAN. Was that from Washington?

Mr. ELLIS. Yes; including those not merely starting here, but coming through from the South. We think that that largely has been corrected in the case of freight cars. In the case of railway-mail cars, it is clear that they are not utilizable for any other purpose. The CHAIRMAN. All right; proceed.

Mr. ELLIS. (b) Relating to the Indian tribes: There is now pending a Senate resolution to have us make a Nation-wide survey of Indian tribes and their trust and other funds comprising their capital. This will bring up to date a similar study made some years ago.

(c) War surplus property operations were studied last year by one of the House committees which wanted to know what had happened to the millions or perhaps even billions of dollars' worth of property donated to State and local educational institutions. At their request we thoroughly investigated one so-called school which managed to acquire land and equipment for training veterans, but overlooked getting either staff or students, and converted itself into a second-hand sales agency. For the same committee we are now completing a survey of the use of the property by the State schools which got great quantities of property for educational purposes but later converted much of it to cash.

The CHAIRMAN. Was that developed to an appreciable extent? Mr. ELLIS. A tremendous extent; yes, sir. That latter item is just now being completed and I do not have the figures assembled, but I was frankly shocked.

The CHAIRMAN. You found considerable abuses in the acquisition of surplus property by schools, by educational institutions?

Mr. ELLIS. Mr. Chairman, I do not like to come out now with the conclusion, by saying considerable abuses. We have received today only 15 of the 20 field reports.

The CHAIRMAN. That report will be available?
Mr. ELLIS. Yes, of course.

The CHAIRMAN. All right. I was just asking for that information, I will not press it.

Go ahead.

Mr. ELLIS. (d) Last winter our people noted the entry into this country of large numbers of valuable trucks which had been left abroad as Army surplus, but which until recently were being returned to enter the commerce of this country, with some parts actually being sold back to the Army from which they came. The House committee directed further investigation, and upon completion, heard the Secretary of the Army and other officials, and elicited from them a new and, we believe, a rather complete freeze order withholding usable materials for current military use.

Fourth, our other work: Of course, the law does not tell us to wait for a congressional request before we go to work. Our regular activity is divided into three branches.

(a) Investigation: We detect and establish irregularities, fraud, misuse, or waste in connection with receipt, disbursement, and application of public funds. This may be a matter referred to us by a Member of the Congress, by another division of GAO, by another department, or by someone in another department or by private citizens. We are definitely expected not to duplicate or compete with the investigation responsibilities of the departments; rather we supplement them by filling in where they cannot or will not act.

The subjects covered are seemingly unlimited. Thus they include the use of appropriations for purposes not provided by law, wasteful and extravagant procedures and expenditures, spending activities not authorized by law, failure to follow the methods laid down for handling the spending of public funds, inadequate examination by the departments of their offices in the field, and many other matters.

For example, we are now investigating a Veterans' Administration center at Fort Snelling, Minn. Complaints were made to a Member of Congress by present and former employees of the VA at Fort Snelling, charging wrong personnel practices, involving appointment and promotion of unqualified personnel, favoritism in promotions and assignments, providing special advantages to chosen employees, rehiring at increased compensation of personnel suspended or dismissed for improper handling of public funds. The complaints further charge misapplication of public funds and improper adjudication of veterans' disability claims. I emphasize it is under way at the suggestion of one or two Members of Congress, at least.

The second branch of our regular work is called "inspection," which comprises a periodic examination, on a test check basis, of matters of every conceivable nature covering all the work of one particular installation, such as an Army post or a veterans hospital. We check not merely the use of money being spent, but also the income; not merely the income collected, but that supposed to be collected; and not only the collection of the income, but whether it is turned into the Treasury to be subject to the appropriation power of the Congress, or whether it is used without authority. Reports go to the department, as well as other divisions of GAO, and pertinent material is sent to the Congress when the intervention of the legislative branch seems to be called for. Thus, 2 years ago we reported to the Congress the

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widespread practice of withholding from the Treasury for local use substantial sums of income received by the field agencies. This was a synthesis of 6,000 reports assembled during the 8 years previously and included among very many other questions, the thousands and thousands of dollars being diverted from the Treasury in the way of rentals and concessionaires' commissions, such as those paid especially on Army posts by the operators of restaurants, soda fountains, grocery stores, drug stores, beauty parlors, garages, golf courses, theaters, and so forth.

I might interrupt myself to say that I located in our files a copy of the fine summary of that report which was prepared by this com mittee's staff 2 years ago which we consider very good. Because it is such a good summary, with the leave of the committee I would be delighted to place it in the record because I believe it would have considerable use to the committee, it being a very brief summary of a very broad subject and I think it would be very helpful.

The CHAIRMAN. We will be very glad to have it printed at the conclusion of your remarks.

Mr. ELLIS. I could add one example of that sort of thing. The other day we ran across one instance at a nearby Army post of a tremendous commercial garage in operation on Government-owned land and in a Government-owned building, with a great deal of Government-furnished utilities and expenses, and no part of the income or profit of any kind going to the Government. Yet, it is a tremendous commercial garage and it is the only one available to serve a community of a large number of people.

The CHAIRMAN. It is operated by private people?

Mr. ELLIS. I understand it is a private concessionaire in effect.
The CHAIRMAN. And the Government gets no compensation?

Mr. ELLIS. Nothing to the United States Treasury. He makes a payment, of course, to the post exchange. He does not make a payment to the United States Treasury.

The CHAIRMAN. That money does not go into the Treasury.
Mr. ELLIS. That is right.

The CHAIRMAN. It is operated by the commander of the post? Mr. ELLIS. That is right, that is, under his permission. Now, one garage at one Army post is not going to wipe out the deficit in the Treasury. But I do not exaggerate when I say it seems to me there are a dozen or more military or other similar installations in every State or nearly every State. It seems to me that every post has, we find, half a dozen to two dozen such enterprises where the return or at least some of the return as a rental rightfully belongs to the Gov

ernment.

The CHAIRMAN. Let me go into these post-exchange funds. For what purpose are those funds if they do not go into the Treasury?

Mr. MATCHETT. Those funds go into a central post-exchange fund which is used for welfare purposes. For instance, at some Army establishments the local posts are able to get enough to be able to meet all of their expenditures, where some others are not so fortunate and the larger ones have to keep them going.

The CHAIRMAN. Then, are the funds used for entertainment, probably, or what?

Mr. MATCHETT. Entertainment and welfare, generally of enlisted personnel-sports equipment.