Mr. HOOVER. No; I could give you no estimation of the amount. I have the faith that this Bureau placed in the Department of Labor and associated with men who are familiar with the problems of labor, will get more economical handling than it will be as a sort of an orphan in the Social Security, where there are other and much more dominant activities.

Senator IVES. Then I should like to ask another question in that connection. Would it not be necessary for the Department of Labor either to establish additional regional offices or to greatly expand its existing regional offices to administer the employment and compensation services?

Mr. HOOVER. I do not think so.

Senator IVES. Then my third one is a natural follow-up. Would such action not duplicate the existing Federal Security Agency regional offices which administer the two services at present? I think we may run into some questions there.

Mr. HOOVER. I think you will find that all of those offices are divided into two separate divisions, and it amounts to about the same thing one way or the other.

A much more constructive thing would be to bring a lot of Federal agencies into a given town under one hat, instead of having these two either separate or together. In one city there are 185 Government agencies, I think, in 85 different offices. It is much more important to solve the whole question of branch offices of the Government than to bother about questions as to whether these two are under the same roof.

Senator IVES. Thank you.

Senator HUMPHREY. Mr. Hoover, I shall continue in the same line of thought that Senator Ives has posed to you.

First of all, just this general observation. It has been generally accepted that the operation of the United States Employment Service and the operation of the Unemployment Compensation Service are closely related programs which should be administered by the same department of government at the Federal level, just as they are in the majority of the States. You have pointed out already with forceful argument, that the Employment Service is clearly a major function of the Department of Labor under the statutory purposes of the Department of Labor. On the other hand, it has been argued with effect too, that the Unemployment Compensation Service is a grant-in-aid program, closely related to some 15 other grant programs, such as the oldage insurance, public assistance, education, all operated under the Federal Security Agency.

Here is the question: Is it your opinion that the advantages to be gained by the transferring of the Employment Service, because of its functional relationship, to the Department of Labor would outweigh the disadvantages which might result from the transfer of the unemployment compensation grants program to the Department of Labor? Mr. HOOVER. My recollection is that the Commission in its studies of that problem recommended that the Unemployment Compensation Service also be moved into the Department of Labor alongside of the Employment Services. I do not believe that the grants-in-aid feature of agencies creates special affinity on which to set up organization plans. I do not see any more reason why we should any more

confine the agency under discussion to the Federal Security Agency because it is a grant-in-aid than that we should put the highways in the Security Agency because they also are grants-in-aid. In other words, the theory that all the grants-in-aid programs ought to be brought together seems to me to be a feeble basis for administrative organization of the Government.

Senator HUMPHREY. The final question. In your recommendations this morning, and your analysis of the President's reorganization plans thus far, you pointed out that two bureaus or two functions had been transferred, the Bureau of Employment Security, and the functions of the Veterans' Placement Service. There were four more that you brought to our attention, and I just wanted to clear this up in my own thinking, since Senator Ives and myself have the responsibility for Reorganization Plan No. 2.

Are these other four, or could these other four be transferred without any further congressional action? Is that within the purview of the general Reorganization Act as passed?

Mr. HOOVER. I think three of them could. There is a question as to the fourth that I mentioned. That is, clarification of the responsibility in enforcement of labor standards in connection with Government contracts. That would require a little legal investigation as to whether or not it is within the President's powers under the Reorganization Act of 1949.

Senator HUMPHREY. The Selective Service Sys.om could be readily transferred.

Mr. HOOVER. Yes.

Senator HUMPHREY. I recall that also has a very heavy administrative overhead in terms of the number of people that are being recruited. Mr. HOOVER. It has.

Senator HUMPHREY. Something like almost a thousand dollars a person when they got through with it.

Mr. HOOVER. One difficulty is that although it involves civilians, and civilian interests, it is under military officers. It seemed to our Commission that it would be a better set-up to put it into a civilian department than to leave it out of control as an independent agency under military officers.

Senator HUMPHREY. I was thinking in terms of what you said about the high administrative overhead of the Labor Department. The Selective Service, if my memory serves me correctly, has had a terrific overhead in terms of the number of people who have been recruited. There might be a good saving, in that instance.

Mr. HOOVER. I think that is true.

Senator HUMPHREY. Thank you.

Senator MUNDT. Mr. Hoover, the particular reorganization plan with which I have been working is No. 3, dealing with the reorganization of the Post Office Department. One of the recommendations of the President of the Commission, was that the Postmaster General should not be an official of a political party. I was wondering how we could proceed to carry out that recommendation. What would the method be?

Mr. HOOVER. I just don't know how that could be done. I suppose it could be fixed by law. The Commission's recommendations with regard to the Post Office were rather radical, but rather simple. They first proposed an overhead set-up very much as is provided in the

President's plan. He uses a different nomenclature, but it comes to the same thing. And then the Commission recommended that Senatorial confirmation of all officials except the Postmaster General and the Director of Posts should be abolished. That the Civil Service System should be adjusted to that Department to make it a system of open examinations on merit, with proper regard to local selection of employees. That there be an entire revolution in the whole business methods of the Post Office. That there be a requirement that the Postmaster General should fix rates on subsidiary mail services (not the class services) so they would be self-supporting. And finally, that the Postmaster General should report the actual amount of subsidies for air and overseas mail, and that Congress should authorize the amounts in order to bring out into the open the drains on the postal service.

Those were four additional items in the Post Office reorganization beyond that which may be accomplished under this Presidential authority. The important part of Post Office reorganization must be accomplished by special legislation.

Senator MUNDT. I was thinking primarily about the problem of personnel. It seems to me that if we eliminate the Senatorial confirmation of postmasters, placing it entirely in the hands of the Postmaster General, we either then have a very good postal service or a very bad postal service, depending entirely upon the type of Postmaster General who is selected, and his willingness or ability to avoid political appointments. Would that not be correct?

Mr. HOOVER. The concept of the civil service is the employment of persons by open competitive examination and their selection by merit. If that were carried out faithfully, and the law is clear on that subject, it could be a good service and it could not be made political by the Postmaster General.

Senator MUNDT. It is your thought, then, that the Postmaster General would select the postmaster candidates who qualified under civil service examination and be bound to make the selections on that basis?

Mr. HOOVER. I assume that you would have an examination for postmaster in a given area, and the person who received the highest marks would get the appointment. There should be some provision in the legislation that would localize these appointments because the people ought to belong to their communities. But it should not exclude promotions.

Senator MUNDT. I mean in theory that is what is done now, of course. They hold an examination. The postmaster is selected from among the three highest ranking members. If it happens that the candidate of the party in power does not qualify, they appoint an acting postmaster and hold a second examination, and if he does not qualify they hold a third examination.

I want to find out how we can get the thing working effectively to get able and talented postmesters devoid of politics. I agree thoroughly with the objectives that you seek.

Mr. HOOVER. Senator, I was the author of that idea of three civilservice selections. The idea was that we would have examinations conducted by the civil service, and that the top three men would be eligible. The only enforcement was that the President could refuse to send up any other name to the Senate than among the three. It

turned out, I think, in practice, that the political party in power always had one among the three, or selected someone else. Ît did have the effect of improving the quality of many postmasters, but certainly never eliminated the political phase.

Senator MUNDT. In connection with-presuming this reorganization plan is carried out-in connection with the present postmasters who now serve, they would be subject to the same classifications and examinations then on reappointment, would they, as a new candidate, or would they be given some preference, a preferential status?

Mr. HOOVER. I presume that if you are setting up a complete civil service of the Post Office, they would need to stand examination for reappointment.

Senator MUNDT. Do you feel that our postal interests would be better served if there were more generally a promotion within the postal service from a local situation, a man having served perhaps as assistant postmaster or a window clerk, moving up to the postmastership, rather than have him brought in from the outside, as has been done in the past?

Mr. HOOVER. We have here a great service institution where there is no profit incentive. The only incentive among employees is promotion. The political appointment of a certain stratum of important employees creates a dam against promotion of subordinate people who have qualified. Our thought was that by such means we could build up that sense of loyalty to the service and reward of promotion to those qualified, which would add to the efficiency of the service very greatly.

It is difficult to translate such proposals into dollars.

Senator MUNDT. But your objective, then, is, as I understand it, definitely to encourage the promotion of postmasters from within the ranks of the postal servants, who have been there for a period of years?

Mr. HOOVER. I should think that the result would be to promote persons to the postmasterships. It would, of course, be necessary under the legislation to provide for promotion of persons who qualified originally and showed capacity and seniority.

Senator MUNDT. I agree with you.

Mr. HOOVER. But I would let an office boy in Podunk rise to postmaster in Chicago if he was an outstanding genius. I would not create a frozen dam that prevents his movement upward.

Senator MUNDT. Thank you very much.

Senator SMITH. According to my mail, we feel that the public is very much interested in the Hoover recommendations, and in the results they hope to get. Whether it is for the sake of economy or efficiency is not wholly known, but it is encouraging, I think, Mr. Hoover, and I believe you agree with me, that the public is taking enough interest in this to have their wishes known here among us who are handling these reports.

As a member of the subcommittee assigned to Reorganization Plan No. 6, I should like to ask you several questions, if I may.

Under section 1 of the reorganization plan, the United States Maritime Commission, the Chairman will be the chief executive and administrative officer. Is this in accord with the Hoover Commission recommendations for other commisions of the Government?

Mr. HOOVER. We recommended that there be a chief executive of the business administration in very much the same terms as the Chairman is constituted in the President's plan. Our recommendation was that the business side should be moved into the Department of Commerce, and not left in the Maritime Commission.

Senator SMITH. Section 2 gives broad administrative authority to the Chairman with respect to hiring and firing, and so forth, reorganization or distribution of business among personnel, and organization units, and the control of funds for administrative purposes.

It seems to me that this will make the Chairman virtually a dictator with respect to the internal operations of the Commission. So far as the administration of the Commission is concerned, do you believe these functions should be vested in the Chairman?

Mr. HOOVER. We certainly recommended that all employees be placed under civil service merit requirements. I do not approve of the business of shipping being in the Commission at all. The Maritime Commission is a regulatory body. We have the astonishing situation today of a regulatory body regulating itself in connection with rates. What is more, a regulatory agency has been, by common consent, considered to be outside of the executive arm of the Government. Thus the President has no authority over the administration. The business or commercial operations of the Maritime Commission are certainly an executive function, and ought to be moved into the executive departments under the President of the United States.

Those are the reasons that moved us to recommend that these functions should be placed in the Department of Commerce. The President has chosen to make the first step of establishing some singleheaded authority to carry on its business activities, and that is a step to the good. My comment extends to the recommendation of our Commission that the service be put under a single executive and transferred to the Department of Commerce.

Senator SMITH. And until we go all the way, we cannot hope for the efficiency and economy that we want from the Maritime Commission.

Mr. HOOVER. That is true. The problem involves the setting up of a transportation division in the Department of Commerce, where all transportation functions could be affiliated. I might tell you that a ship captain coming into New York City has to pass through 14 Government bureaus before he can get in, and he has to pass through 14 bureaus before he gets out. We were attempting to set up all the marine functions, so far as possible, in one place so as to minimize this enormous burden that it places on the industry.

That all involves the business operations of the Maritime Commission. The President has taken the first and simplest step of trying to get some business efficiency in that Commission. That is step No. 1. As I have said, we would go further and put that business organization in the Department of Commerce.

Senator SMITH. It could be streamlined somewhat. The ship entries and departures could be streamlined somewhat, then, if it went under Commerce, under the regular part.

Mr. HOOVER. That part of maritime administration would then be associated with the other maritime activities of the Government, of which there are a great many. We propose that they all be brought together from the different departments.