SENATE ACTION ON HOOVER COMMISSION REPORTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86B00269R000100130003-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 99
• Document Creation Date: December 12, 2016
• Document Release Date: April 1, 2002
• Sequence Number: 3
• Publication Date: October 15, 1952
• Content Type: REPORT

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[COMMITTEE PRINT]
82D CONGRESS
2d Session J
SENATE ACTION ON HOOVER
COMMISSION REPORTS
REPORT
OF THE
COMMITTEE ON
GOVERNMENT OPERATIONS
Printed for the use of the Committee on Government Operations
UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1952
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 Ir
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COMMITTEE ON GOVERNMENT OPERATIONS
JOHN L. McCLELLAN, Arkansas, Chairman
CLYDE R. HOEY, North Carolina
HERBERT R. O'CONOR, Maryland
HUBERT H. HUMPHREY, Minnesota
MIKE MONRONEY, Oklahoma
THOMAS R. UNDERWOOD, Kentucky
BLAIR MOODY, Michigan
JOSEPH R. McCARTHY, Wisconsin
KARL E. MUNDT, South Dakota
MARGARET CHASE SMITH, Maine
ANDREW F. SCHOEPPEL, Kansas
HENRY C. DWORSHAK, Idaho
RICHARD M. NIXON, California
WALTER L. REYNOLDS, Chief Clerk and Staff Director
GLENN K. SHRIVER,
HERMAN C. LOEFFLER,
ELI E. NOBLEMAN,
Professional Stair Members
SUBCOMMITTEE ON REORGANIZATION
HERBERT R. O'CONOR, Chairman
MIKE MONRONEY MARGARET CHASE .SMITH
THOMAS R. UNDERWOOD ANDREW F. SCHOEPPEL
BLAIR MOODY HENRY C. DWORSHAK
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CONTENTS
Introduction--------- Page
- ----
Summation and conclusions ------ 1
Report ---- 8
o.
1. General Management of the Executive Branch
2. Personnel Management ----- 16
3. Office of General Services (Supply Activities) --------- 20
22
4. The Post Office-------------------- -------------
5. Foreign Affairs-------------- ------------------------------------ 27
---------------------------------- 30
Department of Agriculture_
7. Budgeting and Accounting-- - 34 39
8. National Security Organization ------------------------------------
9. Veterans' Affairs ...... 43
10. Department of Comme -
------ 47
rce _____ ___
11. Treasury Department_______________ ----------------------------- 50
--------------------
- - - --54
12. Regulatory Commissions--_
13. Department of Labor_____________________ - - 61
14. Department of the Interior___________ - --' 64
66
----------
15. Social Security, Education, and Indian Affairs--------------------- ------------------------
16. Medical Activities-----__ 69
17. Federal Business Enterprises_________________________ 72
18. Part i-Overseas Administration-------------------------------- 76
Part 2-Federal-State Relations- -- 78
Part 3-Federal Research80
Concluding report_____________ 82
Appendix A-Report from the Director of the Bureau of the Budget as to 83
savings resulting from implementation of Hoover Commission reports,
and estimates of such savings by officials of the Citizens Committee for
the Hoover Report and others, arranged chronologically-------------- 87
Appendix B-Senate action on reorganization plans, Eighty-first and
Eighty-second Congresses95
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[COMMITTEE PRINT]
Calendar No.
82D CONGRESS SENATE
2d Session
SENATE ACTION ON HOOVER COMMISSION REPORTS
Mr. MCCLELLAN, from the Committee on Government Operations,
submitted the following
REPORT
The Committee on Government Operations,' to whom the reports
of the Commission on Organization of the Executive Branch of the
Government were referred, instructed its staff to prepare for the infor-
m.ation of the Senate a summary of actions taken by the Eighty-first
and Eighty-second Congresses on the recommendations of the so-called
Hoover Commission. The staff was also directed to submit a brief
analysis of the problems involved in those areas where legislative action
deviated from specific recom.m.endations. This summation is set forth
under the appropriate titles of the separate Hoover Commission reports.
It supplements more than 20 special reports dealing with various
aspects of the reorganization program released by the committee. The
three basic progress reports in this group are as follows:
1. Progress on Hoover Commission Recommendations-Senato
Report 1158, Eighty-first Congress, first session, dated
October 12, 1949.
2. Action on Hoover Commission Reports-Senate Report 2581,
Eighty-first Congress, second session, dated October 12,
1950. (Out of print.)
3. Reorganization of the Federal Government-Senate Docu-
ment 91, Eighty-second Congress, dated January 21, 1952.
In this analysis the staff has attempted to set forth specific facts re-
lating to each report and to appraise those recommendations which
have not been implemented, with an. explanation of the reasons for
lack of action on. the part of the Congress or by officials of the executive
branch. Although some of these comments may appear to be critical
of certain of the Hoover Commission proposals, the report has as its
primary purpose the presentation of a factual outline of the many con-
Name chaneed from Committee on Expenditures in the Executive Departments on March 3, 1952.
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flitting aspects of some of these recommendations and the tremendous
problems involved in carrying out the proposed reorganizations. In-
structions to the staff were to the effect that wherever recommenda-
tions of the Hoover Commission were not strictly reorganization
proposals but involved basic changes in substantive legislative policy,
they should be so classified.
Even the most ardent supporters of the Hoover reports must realize
that when the Commission was created by the Congress it was given
only the authority to recommend to the Congress legislative actions
which would achieve the objectives the Commission thought were
desirable, in the interest of economy, efficiency, and better manage-
ment. Since the Hoover Commission, in effect, supplemented the
work of the standing committees of the Congress, its reports, when
submitted with recommendations, were subject to the same close
scrutiny and analysis as are legislative proposals emanating from any
of its jurisdictional committees. At most, its reports were intended
to serve only as a guide or blueprint, and were never considered at
any time to constitute a mandate to the Congress.
The Congress has the constitutional duty of approving, rejecting or
amending legislation reported to it by its committees. In many cases
it completely revises, or even rejects, basic programs advanced by
jurisdictional committees when a majority of either the House or the
Senate so determines. The Congress is likewise required to exercise
its full responsibility, as representatives of the people, with respect to
any suggested legislation emanating from the Hoover Commission or
any other such study group. The responsibilities of the Congress in
this respect are in no way different from those applying to bills or
resolutions reported to it by its own committees.
Many communications have been addressed to individual Members
of Congress and to the various committees handling legislation dealing
with the recommendations of the Hoover Commission, insisting that
"the Hoover Commission reports be enacted into law." This com-
mittee has assumed that those who have expressed an interest in the
effectuation of these recommendations had, as their primary objective,
the improvement of the administration of the executive branch of the
Government and the achievement of economies in its operation.
This, in fact, was the purpose for which the Hoover Commission was
established. Some of these demands for immediate enactment of the
Hoover Commission reports have apparently come from people who
have been led to believe that the Commission's proposals were
sacrosanct, but who have little conception of the necessary technical
legislative processes which must be followed before the recommenda-
tions can be fully appraised and acted upon. It is obvious that they
do not have a full understanding of the importance of including
necessary safeguards to protect the public interest.
Some of the problems involved are set forth in this report in order
to present to such advocates of governmental efficiency a true and
impartial picture of the tremendous amount of work involved before
final action could be taken on many of these proposals. This report
cannot possibly include all the various aspects that must be considered
by the committees of the Congress and the Congress itself as to the
effect which approval of these recommendations would have on
existing programs. However, all potential conflicts which might arise
must be fully examined. in relation, not only to the operation of present
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statutory controls, but also as to their possible adverse effect on
Federal policies affecting various segments of our population or areas
of our country. Only then may action be taken to enact the recom-
mendations into law.
Practically every major recommendation of the Commission has met
with some opposition. The committees of the Congress have a con-
tinuing obligation to see that all of these views are brought forth in
committee and fully evaluated before any final action is recommended
to the Congress. This normally includes extensive hearings and a
number of executive sessions before an important reorganization bill
can be reported. Experience has- demonstrated that it is not prac-
ticable to act on the reports without going through normal legislative
procedures, and affording the proponents as well as the opponents a
full hearing on the vital issues involved. To do otherwise would mean
that the Congress has abandoned its legislative responsibilities.
These differences as to desirable reorganizations were in evidence
even during the discussions of the Hoover Commission. In many
instances dissenting views were filed regarding specific recommenda-
tions, and, in some cases, the final report by the Commission on con-
troversial subjects was supported by only a bare majority. In its
report on the Interior Department there were three widely divergent
points of view set forth by 6 of the 12 Commissioners. Throe advo-
cated the creation of a Department of Natural Resources, and three
submitted dissenting views on other phases of the report. Moreover,
in this and other reports, a majority of the Commission rejected some
of the recommendations of its task forces of specialists in the assigned
fields. In Interior the task forces recommended the establishment
of a Department of Works, which the Commission rejected, and then
all of its members submitted diametrically opposite views to the Con-
gress as specific recommendations.
This record alone served to alert the Congress to the necessity of
fully and carefully evaluating all of these recommendations. A sec-
ond factor, paramount even to this consideration, is that final decisions
requiring changes in basic Federal programs should have the advantage
of the long experience and thorough knowledge developed through the
years by members of committees under whose jurisdiction the
original programs originated, and by whom proposals must be approved
before being submitted to the Congress for action.
It should be borne in mind that the Hoover Commission and its
task forces devoted less than 2 years to a study and appraisal of all
Federal activities, involving some 65 separate Federal agencies, each
of which is responsible for one or more major programs. They
could not, therefore, have at their disposal the background information
acquired by Members of Congress in the development of Federal
policies on which these respective programs were based. The basic
program legislation relative to Federal functions had been initiated,
implemented, perfected, and extended through studies of actual operat-
ing conditions by members of these committees of the Congress. It
would be utterly impossible for a temporary study group to have had
the full benefit of this historical development of all programs involved,
or to comprehend as fully their relation to other Federal activities.
Therefore, where the Commission's recommendations would have re-
vised basic statutes approved by Congress, it was incumbent upon the
appropriate committees to evaluate thoroughly the effect that pro-
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posed changes in the structure or functions of such agencies would
have on the operation of other authorized programs, and the impact
they might have on over-all Federal policies. In some cases, what
might have appeared to be a desirable and economical step involved
other considerations which, on examination and practical analysis by
legislators and administrators who had specialized in these fields, re-
vealed that the anticipated benefits were entirely illusory, and that
implementation of such a program would effect no economics or im-
provement in its administration. In fact, it was demonstrated in
some cases that the proposal might seriously weaken or undermine
other programs established by the Congress for the benefit of the
American people.
Proponents of the Hoover Commission reports in the Senate realized
that there were certain, basic problems involved in the recommenda-
tions of the Commission which must, be carefully considered. This is
evidenced by the fact that practically every sponsor and cosponsor of
the legislation introduced in the Senate during the Eighty-second
Congress, designed to carry into effect those recommendations that
had not been approved by the Eighty-first Congress, reserved final
decisions. In most cases the sponsors stated that their purpose in
proposing the bills was primarily to :insure adequate consideration by
the Congress. They made general reservations regarding their right
to amend drastically, or even to later oppose, some of the proposals
they were then sponsoring, should the appropriate committees find
that they were not in the public interest. There were 35 individual
Senators who participated in sponsoring the 21 Hoover Commission
bills and resolutions introduced in the Eighty-second Congress. These
bills contained legislative proposals covering all the Commission's
recommendations not previously approved, whether they had been
rejected by the Congress or not. Most of these bills had numerous
cosponsors, with some Senators joining in sponsoring a number of
the bills. In practically every instance the same reservation as to
final action was made covering all the bills introduced-that, if found
inconsistent with sound legislative policy or good government, the
Members would exercise their right to vote their convictions when
all the facts were available.
Another aspect of the Hoover Commission reports, which has caused
considerable confusion in the public mind because of its wide dissemina-
tion, involves the extravagant claims of tremendous monetary savings
which would result from the full implementation of these reports.
These estimates have varied from an ultraconservative figure of a few
million to as much as ten billions of dollars in annual savings. This
committee has been unable to find any sound basis for the unsub-
stantiated estimates of savings claimed by some of the proponents.
Even if all the Hoover Commission's recommendations had been
found to be of practical application, these estimates are not based on
facts, and are grossly unfair to the Congress. The American people
have every right to expect the proponents of these reforms to be
completely fair and reliable in their estimates. At the same time
they have an equal right to expect thoir representatives in Congress
to act with sound judgment regardless of the pressure brought to bear
upon. them by those who do not have full information as to their impact
on the national welfare.
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In order to insure that this important issue would be presented
objectively, this committee requested the Bureau of the Budget to
submit an estimate as to the potential savings that might be expected
to result from the various aspects of the reorganization program
recommended by the Hoover Commission. Specifically requested
was an estimate of savings resulting from the activation of reorganiza-
tion plans submitted to the Congress under the provisions of the
Reorganization Act of 1949, which was reported from this committee
on the recommendation of the President of the United States and of
the Chairman of the Hoover Commission, and approved by the
Congress as a basic method of expediting action on various of the
Hoover Commission recommendations. The committee also speci-
fically requested a detailed estimate of savings that would follow the
enactment of all the recommendations of the Hoover Commission.
In his response to this request, the Director of the Bureau of the
Budget stated that he had "no choice but to advise you, with regard
to the fourth item in your request that it is impossible to furnish the
committee with `a detailed estimate relative to the estimated savings
that would follow the enactment of the remaining recommendations
of the Hoover Commission.' " The Director did, however, include in
his letter indicated savings which he described as illustrative as to the
type of administrative accomplishments made in recent years, some
of which might be attributed to reorganizations proposed by the
Hoover Commission. The majority of them were stated to have been
accomplished under the President's management program. Those
items specifically identified as to which savings could be directly
attributed totaled approximately $33,473,000.2
The Citizens Committee for the Hoover Report then issued a release
reasserting its oft-repeated, but always varying, claim to the effect
that "$4 billion per year in eventual economics will accrue to American
taxpayers as a direct result of the work of the bipartisan Hoover Com-
mission." This estimate was based on the premise that a total of
70 percent of the Hoover Commission's recommendations had been
approved and enacted into law. The Citizens Committee then stated
that, although eventual annual economies would aggregate $4 billion,
"preliminary surveys showed that identifiable economics of $1,244,-
600,000 are now being realized," attributing $800 million of such
savings to the economies effected in the National Military Establish-
ment. The Citizens Committee failed to specify the basis for such
estimates, and submitted no facts to substantiate its claims that
savings of $800 million in the military and more than $400 million
in other reorganizations were related to specific Hoover Commission
recommendations. Nor did the Citizens Committee offer any support
for its claim that eventual annual savings would aggregate $4 billion.
Many of the reforms proposed by the Hoover Commission have
been pending before the Congress in various forms for a number of
years. The Hoover Commission studies served to focus public atten-
tion upon the many deficiencies in. the operations of the Federal pro-
grams which the Congress had been unable to correct because of the
lack of any general or united support. The tremendous growth of
government, and the need for improvements throughout its entire
structure, was emphasized, and necessary reorganizations have taken
2 A copy of this report from the Director of the Bureau of the Budget, with a chronology of estimates of
noover Commission savings, is included in Appendix A of this report.
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place which would not have been possible otherwise. Finally, the
specific remedies proposed for the improvement of government
compelled the Congress to meet the challenge. In the 3 years since
the submission of the reports, a legislative program for reorganization
of the Federal Government has been approved which has helped to
bring about very worth-while progress. Had it not been for these
reports many desirable reorganizations, effected during the past 3
years, would still be a group of indefinite and disconnected proposals
before the committees, and constituting unfinished business on the
legislative calendars of the Congress.
The Hoover Commission reports indicate the value of independent
bipartisan commissions in developing facts and submitting recom-
mendations to the Congress for appropriate action, based on studies
of national problems by qualified and public-spirited citizens of the
Nation. In fact, the Hoover Commission itself recognized the value
of such independent studies and recommended that similar fact-
finding commissions be created in the fields of overseas activities and
intergovernmental relations, which in their view were of such wide
magnitude and importance as to warrant studies by special commis-
sions. In this way public attention is focused on the deficiencies of
existing programs and the Congress provided with the essential facts
on which to initiate legislation to effect desirable improvements in
these fields.
Although this report sets out many instances where differences of
opinion have developed as to the effect of proposed reorganizations on
basic programs, it also points up many areas where other differences
have been resolved. The fact that Congress has, up to the present
time, failed to take action on a particular proposal does not neces-
sarily mean that these recommendations will not be given continuing
consideration in the future. The Congress has constantly studied
the numerous reports dealing with Federal reorganizations which have
been submitted by various study groups over the past 40 years, taking
action, from time to time, where supplemental studies established the
soundness of recommendations for certain reorganizations. None of
these reports were as comprehensive and extensive as those submitted
by the Hoover Commission, however, and there can be little doubt
that the Hoover reports will provide a solid foundation for other re-
organization measures which will be continually studied and resub-
mitted at various intervals. Whenever they present proper and
feasible solutions to existing problems, appropriate action will be taken
to implement the remaining recommendations in line with basic
legislative policies as then determined. This does not mean that the
Congress will accept literally all recommendations of the Hoover
Commission. It does indicate, however, that studies will be con-
tinued in an effort to solve the problems developed by the Commis-
sion in a manner the Congress considers to be in the best interest of
all the people.
This report, prepared by the staff, is herewith submitted for the
information of the Senate. It illustrates clearly the tremendous
interest manifested by the Congress and the vast amount of time and
study devoted to the consideration of the Hoover Commission's
recommendations. The report covers action on nearly 100 separate
bills and resolutions filed in the House and Senate out of more than
400 such legislative proposals introduced during the Eighty-first and
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Eighty-second Congresses, many of which were identical or differed
slightly from others. The report also covers action on 41 reorgani-
zation plans submitted to the Congress by the President, under
authority granted to him by the Reorganization Act of 1949, 30 of
which were permitted to go into offect. Of the 11 remaining reorgani-
zation plans, 2 were duplicate plans originally rejected, though later
approved with modifications to meet Senate objections, and 8 were
disapproved by the Senate and 1 by the House. All of the nine
disapproved plans involved serious questions of policy which directly
affected the jurisdiction of the legislative branch, and were not
considered to be proposals for structural reorganizations or adminis-
trative reforms based specifically on Hoover Commission recommenda-
tions.'
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SUMMATION
In summing up the legislative and administrative actions which
have been taken to implement the recommendations of the Hoover
Commission, it was found necessary to make arbitrary determinations
relative to many of them that are very broad and indefinite or too
general in their application. In somev instances, legislative actions
proposed to effect reorganizations recommended by the Commission
incorporated one or more of its proposals, some of which were dupli-
cated in more than one of the reports. In other instances pointed up
in the analyses of the reports that follow, the adoption of certain
specific proposals might have resulted in a serious adverse impact on
legislative programs formulated to serve the public interest. Such a
result would have far outweighed any advantages that might have
accrued from the reorganizations proposed, and their approval by
the Congress would have defeated other primary objectives of the
Commission.
Since it was incumbent on the Congress to give adequate consider-
ation to policy determinations and to the effect which legislative
actions might have on existing programs formulated in the public
interest, each of the legislative proposals advanced by the Com-
mission has been thoroughly analyzed from that approach, and, in
many instances, rejected under normal legislative procedures. For
the purpose of this report, these types of recommendations, which
have been given careful Senate consideration, have been classified
as having been fully acted upon, although they failed of approval.
The simplest solution, in evaluating reorganization accomplishments
as a result of the Hoover Commission reports, would have been to
exclude entirely from all calculations any recommendations which
invaded the policy field. This formula, however, would have heavily
penalized the record achieved both by the legislative and executive
branches of the Government as a result of the studies made by the
Hoover Commission.
A number of the analyses contain comments which may be con-
strued to question the authority of the Hoover Commission to enter
into matters of policy primarily within the jurisdiction of the legis-
lative branch rather than the executive branch. The Commission
recognized the difficulty of separating policy from reorganization in
many of its reports, and stated. in its concluding report that it had "not
been concerned with matters of substantive policy" as a -matter of
principle. This summation is based on the premise that the recom-
mendations of the Hoover Commission were presented merely as
suggestions to the Congress relative to desirable actions, looking toward
improvement in the structure and organization of the executive
branch and the administration of Federal programs. The Congress,
as has been emphasized in the Chairman's introductory comments,
has the continuing obligation of fully analyzing these recommendations.
It must, however, exercise its constititional authority of determining
substantive policy and, after a full analysis of the recommendations,
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SENATE ACTION ON HOOVER COMMISSION REPORTS 9
of the Government, but we cannot agree to or silently acquiesce in plans and
proposals that concentrate in,one agency unprecedented powers that could well
be used to promote unsound policies and greater inefficiency than we can hope to
correct by any reorganization now being attempted.
Moreover, minority protests were undoubtedly paralleled by an
unknown number of instances wherein the minority disagreed with
the majority on proposed policy changes but, despite well-founded
doubts, refrained from submitting further dissenting views. This
was due primarily to a desire to avoid weakening the effect on the
public of the Hoover Commission recommendations generally, be-
cause of too many differences and protests, as borne out by the reserva-
tions of Commissioners McClellan and Manasco to a proposal in the
report on budgeting and accounting. After pointing out specific ob-
jections to the majority report, these Commissioners stated:
We have been reluctant to present minority views, preferring to be in the posi-
tion of supporting and facilitating action on the Commission's recommendations.
But when the Commission goes afield of its jurisdiction and makes recommenda-
tions and attempts changes in an agency of the Congress, we are compelled to
of legislating in a manner which it considers to be in the public inter-
est. It is, therefore, clear that the final decision as to whether recom-
mendations of the Hoover Commission are to be accepted or rejected
as legislative policy rests upon the Congress. Once direct or indirect
action has been taken, the proposals are disposed of in one form or
another, although they may be reconsidered in the future by the
Congress. For the purposes of this report, action has been taken, and
some disposition has been made of those recommendations.
Comments of members of the Hoover Commission on reports which
dealt primarily with legislative policy serve to bear out this premise.
An illustration is found in the dissenting views of Vice Chairman. Dean
Acheson relative to the proposal to integrate the Indians. He stated
that-
The Commission goes beyond these recommendations for reorganization and
improved efficiency and outlines objectives and purposes. * * * These
recommendations seem to me beyond our jurisdiction. If they are said to fall
within it because they abolish functions of the executive branch, it is equally true
that they change substantive legislative policy established by the legislative
branch. We have neither the right nor the duty to enter this field. On occasion,
common sense may tell us not to draw too fine a line.
Vice Chairman Acheson and Commissioner Forrestal further
dissented in regard to recommendations in the report on Federal-
State relations, as follows:
This report seems to us to exceed the jurisdiction of a Commission created to
make recommendations regarding the organization of the executive branch.
Both the report and the recommendations contained in it have little to do with the
organization or even the functions of the executive machinery of the Federal
Government. They are concerned chiefly with taxation, grants-in-aid, and
other matters primarily in the realm of legislative policy. As a consequence,
we are unable to join in this report or to express any view as to the merits of the
conclusions of the majority of the Commission.
In a strong dissent filed by Commissioners McClellan and Manasco,
with reference to the proposed transfer of the civil functions of the
Corps of Engineers to the Department of the Interior, a somewhat
similar view was expressed, which need not be confined to this partic-
ular recommendation but which may be applied to many other
similar recommendations, as follows:
We are strongly in favor of effective recorganization in the executive branch
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U SENATE ACTION ON HOOVER COMMISSION REPORTS
dissent. The majority contends that there is no inherent conflict, but the adop-
tion of its recommendations would require legislation transferring the function of
prescribing administrative appropriation and fund accounting systems from the
General Accounting Office to the Treasury Department. We do not believe the
Congress will consent to the stripping of its agency of effective authority over ac-
counting systems. A similar proposal was a major factor in bringing about the
defeat of the entire reorganization program in 1937. This renewed effort to have
the Congress shirk its constitutional duty and relinquish its authority over public
expenditures to the executive branch of the Government by transferring general
accounting functions from its own agency to an office in the executive branch may
again adversely affect the entire reorganization program.
In the summaries which follow, the staff has classified as positive
action legislative consideration of Hoover Commission proposals, even
though the specific recommendations of the Commission may not
have been approved. These determinations were based on the prem-
ise that Congress has carried out its responsibilities and exercised its
judgment regarding basic policy determinations, and has acted in
what it considers to be the best public interest.
Report No. 1-General management of the executive branch.-Legisla-
tion dealing with many of the recommendations in this report was con-
sidered by the Congress, from the standpoint of activating all recom-
mendations dealing with improvement of administrative procedures,
on the general premise set forth in this report, and under specific dupli-
cating recommendations contained in reports applying to specific
agencies. Appraisal of all actions taken indicates that this report has
been fully implemented to the extent that the Congress determined it
was in accord with the public interest.. In arriving at this conclusion,
it is necessary to disregard conflicting recommendations, such as the
specific organization proposed for the Executive Office of the President
contrary to the general recommendation, also included in the report on
general management, that heads of agencies should have authority to
organize and control agency activities. Many of the recommenda-
tions were repeated in other reports, some of which have been applied
to all but a few agencies. Where these specific recommendations have
not been activated, comments are made on the deviations in the re-
ports on the respective agency. To avoid duplication, they have been
considered to have been carried into effect as far as this report is con-
cerned.
Report No. 2-Personnel management.-The recommendations in
this report have been considered by various committees of Congress
in all their aspects, and, where consistent with legislative policy or
considered not to be disruptive of other phases of established policies
governing the rules and regulations of the classified civil service, have
been acted upon in various degrees. While many of the specific rec-
ommendations of the Hoover Commission have not been implemented,
as proposed, the substantive committees of the Congress have given
them appropriate consideration and, in some instances, initiated steps
designed to develop further facts before final action can be taken to
conform to the objectives set forth. The intent and purport of this
report, therefore, has been either fully activated or is in process of
study for future consideration and action by the Congress.
Report No. 3-Office of General Services.-This report has been
fully activated by legislative action, except for the proposal to trans-
fer to the Administrator of General Services administrative control
over certain independent agencies in the District of Columbia. The
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SENATE ACTION ON HOOVER COMMISSION REPORTS 11
legislative committees determined that these agencies should have an
independent status at the time they were created, and the Congress
has confirmed this view. Furthermore, it was found that the func-
tions of these agencies are unrelated to the operations of the General
,Services Administration, and the proposed transfers would not accom-
plish any of the general objectives set forth by the Commission.
Report No. 4-Post Office Department.-Three recommendations in
this report have not been fully implemented as they relate to (1) air-
mail transportation subsidies, (2) appointment of postmasters by the
Postmaster General, and (3) the decentralization of postal services to
15 regional and district offices. The first of these was approved by
the Senate, but the house took no action on the Senate bill. The
.second was rejected by the Senate as not being in the public interest,
and the third was found to be impractical of administration. A fur-
ther slight deviation, considered here as full activation since the spe-
cific proposal was not consistent with other recommendations, was the
authorization for the appointment of a Deputy Postmaster General
responsible directly to the Postmaster General, instead of creating an
independent office of Director of Posts. Under the formula upon
which this evaluation is based, complete action has been taken on
all the recommendations of the Commission in this report.
Report No. 5-Foreign Affairs.-Complete and extensive actions
have been initiated and consummated by the Congress and the
Department of State in carrying out the recommendations contained
in this report, providing primarily for the reorganization of the Depart-
ment of State. In line with the hoover Commission's findings, the
Congress, after carefully evaluating its findings and recommendations,
took action on the premise established by the Commission in this
report-that the recommendations were intended to serve only as
guideposts for the future. The only recommendation in this report
which has not been fully carried into effect relates to the amalgama-
tion of departmental and Foreign Service personnel. This recommen-
dation has been given extended study and is now in process of full
implementation.
Report No. 6-Department of Agriculture.-The Senate Committee
on Government Operations has given extended consideration to the
recommendations in this report, and has proposed legislation to imple-
ment them. A number of administrative actions have been taken by
the Secretary of Agriculture to carry out internal reorganizations of
the Department, within his statutory authority, but no direct and final
legislative action has been taken to effectuate those recommendations
which are beyond the authority of the Secretary. Considerable
progress has been made, however, in the drafting of appropriate legis-
lation for consideration by the next Congress as set forth in the detailed
analysis of this report. It is therefore difficult to evaluate the action
of the Congress upon this report, and the staff has arbitrarily arrived
at an estimate that only 25 percent of the recommendations have
received full legislative consideration. In view of the tremendous
amount of study that has gone into proposed legislation for reorganiza-
tions within the Department, this percentage does not accurately re-
fleet either the amount of work done or the extent of the progress
made toward implementation of the report.
Report No. 7-Budgeting and Accounting.-This report has been
fully activated by the Congress, with the exception of two recommen-
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12 SENATE ACTION ON HOOVER COMMISSION REPORTS
dations-the creation of an. Accountant General in the Department of
the Treasury, and providing for a complete survey of the appropriation
structure. The first of these recommendations was repeated verbatim
in Report No. 11 on the Department of the Treasury. As has been
set forth in complete detail in the analysis of this report, this proposal
is perhaps the most direct invasion of legislative prerogatives of any
that is contained in the Hoover Commission reports. The recommen-
dation nevertheless has been fully reviewed on the basis presented by
the Commission, and rejected as being contrary to legislative policies
established in the public interest. The second relates entirely to the
improvement of the fiscal structure of the legislative branch. Since
these proposals are not reorganizations in the sense envisioned by the
Congress when the Hoover Commission was established, the report
may be considered to be completely implemented.
Report No. 8-National Security Organization.-Except for slight
variations necessary to conform to legislative policy determinations
and to meet administrative problems outlined by the Secretary of
Defense, all the recommendations of the Commission in this report
have been fully activated. The proposals for improvement in and
better integration of procurement, cataloging, and warehousing pro-
grams, although fully acted upon by the Congress, requires further
administrative implementation.
Report No. 9-Veterans' Aj'airs.---Except for certain administrative
changes made by the Administrator, under authority already vested in
him, action on this report was deferred pending submission and analy-
sis of a management survey of the Veterans' Administration authorized
by the President. This survey will supersede the Hoover Commis-
sion's report, which, will have been given consideration by the manage-
ment firm in connection with its study of the Veterans' Administration,
and will be ready for consideration and action in the next Congress.
The scope of the activities of the Veterans' Administration is so broad
and so clearly tied in with other recommendations contained in the
reports on medical activities and on the Department of the Interior,
that the Congress postponed any attempt to enact legislation in this
field until it was supplied with essential information developed by the
more extensive management survey.
Report No. I O-Departmen t of Commerce,.-Some of the recommenda-
tions in this report involve highly controversial issues and are in con-
flict with existing legislative policy through the proposal of entirely
different basic programs. The recommendations affecting the internal
management and administration of the Department have been ap-
proved, as have certain transfers. The proposed transfers and changes
in inter-departmental operations still require further study and action
on the part of appropriate jurisdictional committees. These recom-
mendations would, if approved as proposed, have changed basic legisla-
tive policies dealing with extensive operations of the Department
which have been given repeated consideration by the appropriate
committees of the Congress, Although many of them still await
final decisions on the part of the jurisdictional committees, considera-
tion has been given to them, and action taken, whether favorable or
unfavorable.
Report No. 11--Department of the Treasury.-The Congress has ap-
proved legislation which would bring about major changes and.
strengthen the administrative programs in the Department of the
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SENATE ACTION ON HOOVER COMMISSION REPORTS
Treasury in line with the recommendations of the Hoover Commission.
This action constitutes ] 00 percent action under the prescribed
formula. All of the five transfers proposed by the Commission to
and from the Department have been rejected as being not in the
public interest. These transfers would have changed the basic
functions of the Coast Guard, the Bureau of Narcotics, the Recon-
struction Finance Corporation, the Export-Import Bank, and the
Federal Deposit Insurance Corporation in a manner contrary to policy
determinations of the Congress. Also, the duplicating proposal to
establish an Accountant General in the Department of the Treasury,
and the recommendation relative to the appointment of collectors of
customs by the Secretary were also rejected by the Congress on policy
grounds. The basic problems set forth in this report were recognized
by the Hoover Commission, which stated that it was not setting
"a hard and fast rule of organization" for the Department.
Report No. 12-Regulatory Commissions.-All of the recommenda-
tions in this report have received close and detailed study by the Con-
gress. Some of the recommendations rejected by the Senate in the
Eighty-first Congress were reconsidered in general legislative pro-
posals introduced in the Eighty-second Congress for the purpose of
effectuating recommendations which had previously been rejected.
Therefore, each of the recommendations contained in this report has
been, given careful consideration under two separate approaches, and
the Senate has completed action on all of them. The reorganization
plans rejected were in conflict with recent policy determinations made
by the Congress. Their disapproval, after careful consideration,
must be considered as legislative action. The only remaining actions,
whichaffected more than one agency, involved approximately 10 per-
cent of the recommendations, and were contained in a bill passed by
the Senate. However, since the Senate bill was not approved by the
House, these proposals must be considered to have failed of favorable
consideration by the Congress. On this basis, the remaining 90
percent of the recommendations in this report, having received
detailed consideration, may be considered to have been acted upon.
Report No. 13-Department of Labor.-All the recommendations in
this report have been carried into effect, insofar as they are not in
conflict with programs which had been established in the public in-
terest, and which were consistent with circumstances that have
developed since the submission of the Hoover report. The recom-
mendations relating to general management, and many of the pro-
posed transfers recommended with it view to strengthening the De-
partment, have been fully effectuated. The proposed transfer of the
functions of the Selective Service System to the Department, although
having considerable merit when that agency performed merely
routine, record-keeping functions, and of the Federal Maritime Board
relating to the determination of minimum wages on privately-owned
vessels, were found to be inadvisable under present conditions.
Report No. 14-Department of the Interior.-This highly contro-
versial report, on which the Commission divided, has been considered
by committees of the Congress. Proposed implementing legislation
was held to affect adversely programs vital to the national security,
and decisions were reached to the effect that approval would be
against the best interests of the Nation. Therefore, although the
Congress approved recommendations designed to improve internal
24689-52-2
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administration of the Department, repeated in the report on general
management, and certain of the recommended transfers were accom-
plished either by reorganization plan or by direct legislative action,
other major recommendations in this report have been completely
rejected by the Congress. These sections of the report have been
under study by the Congress over, an extended period of years, and
will require further analysis and appraisal before final determinations
can be made. In view of the fact that those recommendations on
which no final action has been taken involve vital legislative policy
problems and determinations, it is the view of the staff that the report
on the Department of the Interior has been carried out to the extent
acceptable to the Congress.
Report No. 15-Social Security, Education, and Indian Affairs.--
The recommendations in this report were considered by the Congress
under several separate proposals dealing with various aspects of the
many problems involved. Some of the recommendations overlap
into other areas covered by the Hoover Commission in its reports on
medical activities and the Department of the Interior. Proposals set
forth in this report have been repeatedly rejected by the Congress.
These were submitted prior to the creation of the Hoover Commission,
at which time action was withheld until other determinations in the
areas of health, security, and related problems could be resolved..
The recommendations in this report did not overcome the previous
objections of the Congress, and a full reevaluation of the proposals
has carried out the full purport and intent of this report.
Report No. 16-Medical Activities.-The recommendations in this
report involve legislative policy of a highly controversial nature. The
entire sub'ect matter was considered by the Congress and, although
no direct legislative action was taken on the major sections of the
report and important aspects were rejected, further consideration is
assured. A substitute measure for the implementation of the pro-
posals and objectives es of the Commission has been tentatively approved
in committee, and will provide the basis for further study with a view
to adopting appropriate safeguards to assure that medical programs
will continue to be administered in the public interest by the various
agencies. Although these proposals have received extended study by
the Congress, positive legislative action has not resulted.
Report No. 17-Federal Business Enterprises.-Full implementation
of the broad coverage of this report would have required the Congress
to revise practically all Federal policies and programs in the banking,
insurance, housing, and other areas dealing with vast industries and.
resources. Many of the recommendations were repeated in other
reports of the Commission and, although a number of actions have
been taken which conform directly or indirectly to some of the prem-
ises set forth, their full activation by legislative processes is very diffi-
cult and, in many instances, impractical without revising many of
the basic legislative policies established by the Congress. To fully
evaluate all actions taken in conformity with the recommendations
in this report would require a detailed appraisal of all legislation
affecting the various agencies whose programs were involved. There-
fore, the only assumption as regards implementation would appear to
be that the purpose of this report, of stimulating legislative action as
opportunities permit looking toward the elimination of deficiencies
that have developed in the operations of these programs, has been
accomplished.
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Report No. 18, Part 1'-Overseas Administration.-The recommenda-
tion of the Commission in this report, to create a Commission on
Overseas Administration, was approved by the Senate in both the
Eighty-first and Eighty-second Congresses. The House of Represent-
atives failed to act in the Eighty-first Congress, and the implementing
legislation was recalled from the House on the motion of one Senator
and restored to the Senate Calendar under "Motions to Reconsider"
in the Eighty-second Congress. It will be necessary to reevaluate
this recommendation in the new Congress, in the light of present con-
ditions, and to resubmit the proposal to create a commission, or, in
lieu thereof, to pass legislation integrating all overseas activities as
may be determined by the normal legislative processes.
Report No. 18, Part 2-Federal-State Relations.-The recommenda-
tions in this report were in the nature of suggestions to the Congress
relative to solutions to major problems involved in Federal-State
relations, including the creation of a continuing Commission on
Federal-State Relations designed to accomplish the objectives set
forth. The Committee on Government Operations reported bills in
both the Eighty-first and Eighty-second Congresses to create such a
commission on a temporary, bipartisan basis, subject to further
determination of the Congress as to its continuation. The bill, re-
ported favorably in the Eighty-first Congress, failed of passage due
to the objection of a single Senator. A similar bill passed the Eighty-
second Congress, but was recalled on the motion of a Senator and
placed on the Senate Calendar under "Motions to Reconsider." This,
like the proposal outlined under part 1 of this report, will require
initiation of new legislation in the Eighty-third Congress.
Report No. 18, Part 3-Federal Research.-The two recommenda-
tions in this report have been fully implemented by the creation of a
National Science Foundation, and the establishment in the Depart-
ment of Commerce of a clearing house for the collection, dissemination,
and exchange of technological, scientific, and engineering information
useful to business and industry, and the transmission of information
of military value to the Department of Defense.
Concluding report.-This report sums up basic proposals of the
Hoover Commission reports. It contains certain recommendations
for transfers which, because of provisions in the basic statutes or
because the a encies. affected were. later abolished, made action
unnecessary. It repeats recommendations which are contained in its
basic reports, for numerous congressional studies and surveys of
national problems in various areas of Federal operations, which have
been covered in detail in comments on other reports.
CONCLUSIONS
This summary indicates that, except for approximately 10 percent
of the recommendations contained in the report on regulatory com-
missions, 25 percent of the report on the Department of Agriculture,
20 percent on veterans' affairs, and no appreciable implementing
action on the reports on medical activities, overseas administration,
and Federal-State relations, all the Hoover Commission's recommenda-
tions, when found not to directly oppose established legislative policies,
have received the full consideration of the Congress, with some
resultant legislative action whether favorable or unfavorable. In
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each of the reports cited, however, committees of the Congress have
held hearings, executive sessions and, in some instances, drawn up
revised bills. In others the Senate has taken positive action. A fair
appraisal of legislative progress must, therefore, give some weight to
the elimination of the need for further extensive hearings, and in the
preparation of implementing bills to bring about immediate committee
action in the new Congress. When consideration is given to these facts,
an evaluation of legislative accomplishment is considerably increased.
The Hoover Commission made a total of 281 specific recommenda-
tions in all of its reports. Excluding duplications, and omitting in-
terim actions of the committees of Congress as set forth in the preced-
ing paragraph, it is estimated that .90 percent of all of the recom-
mendations have been fully considered and have received direct
action by the Congress or its committees, and legislative determina-
tions applied thereto. The remaining 10 percent, or 28 recommenda-
tions, which will require further action by the Congress, if adequate
consideration is to be given to them, are as follows: 16 recommenda-
tions affecting the Department of Agriculture, 4 relating to the
Veterans' Administration, 5 in the report on medical activities, and
single recommendations in each of the reports on budgeting and
accounting, overseas activities, and Federal-State relations. The
Senate has already taken positive action on the latter three (S. 913,
S. 1166, and S. 1146, 82d Cong.), but reconsideration will be necessary
in the new Congress since the House did not act. All of these 28
recommendations, although they do not come within the scope of dil ect:
action set forth in the premise outlined in this summation, have been
considered and, in some instances, tentatively approved by committees
of Congress, except as to veterans' affairs which has been deferred
pending an analysis of the management survey now in progress.
REPORT NO. 1-GENERAL MANAGEMENT OF THE EXECUTIVE BRANCH
This report consists of 27 recommendations dealing with the "es-
sentials of effective organization of the executive branch" of the
Government. Among these, 11 applied directly to the powers of the
President, and were intended to strengthen the Executive Office of
the President.
One of the latter recommendations specifically stated that "The
President should have authority to determine the organization of the
Executive Office." Despite that recommendation, the Commission
made 10 other recommendations which were contradictory to this
premise. These conflicting recommendations involved the establish-
ment within the Executive Office of an Office of Personnel, a Staff
Secretary in the White House Office, expansion of the Bureau of the
Budget, and the replacement of the Council of Economic Advisers by
an Office of Economic Advisor. The remainder dealt with internal
policies and regulations governing the activities and operations of the
Executive Office. The recommendations in this group were also at
variance with the general conclu ;ion of all the Hoover Commission
reports-that the heads of Federal agencies should be vested with full
control over the organization and operations of their agencies. Action
by the Congress on these specific proposals would have, therefore,
failed to grant to the Prsident this same general authority and juris-
diction over the affairs of the Executive Office as was recommended
for other agencies.
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Four recommendations in this report were carried out by legislative
action in the Eighty-first Congress. These provided for (1) transfer
of the National Security Council and the National Security Resources
Board to the Executive Office (Reorganization Plan No. 4 of 1949) ;
(2) expansion of the responsibility of the Public Buildings Adminis-
tration in providing space for Federal agencies (Public Laws 152 and
754, and amendments thereto, and Reorganization Plan No. 18 of
1950) ; (3) consolidation and decentralization of accounting, budgeting,
and personnel services (Public Laws 216, 359, 429, 656, 712, and 784) ;
and (4) clarification of the line of authority of the President and
permitting him to delegate certain functions (Public Law 673).
The remaining 12 recommendations dealt with general reorganiza-
tion proposals which were acted upon by the Congress. They conform
to duplicate recommendations with respect to specific departments or
agencies in the reports dealing with those agencies. Among these
were recommendations (1) that agencies should be grouped into major-
purpose departments (bureaus grouped as nearly as possible by major
purposes), a7d (2) that the heads of all departments should be pro-
vided with adequate staff assistance, and vested with full responsi-
bility under the President for administrative supervision and control
over internal procedures as well as to effect reorganizations within the
various age icies. Practically every agency of the Government was
affected by these general recommendations, and numerous actions
have been taken, both administrative and legislative, to carry them
into-effect by various methods. Some have been fully effectuated,
while others were rejected partially or wholly by the Congress under
reorganization plans submitted by the President, or by disapproval of
bills introduced for the purpose of carrying into effect these programs
as they related to specific departments and agencies. In most
instances, rejection by the Congress was based primarily on the fact
that implementation of certain of these recomnien lations would have
been contrary to established legislative policy. The major agencies
coming within this latter category were the Department of Agri-
culture, the Federal Security Agency, the Federal Communications
Commission, the Interstate Commerce Commission, and the National
Labor Relations Board.
Legislation was approved by the Congress carrying into effect
general management recommendations as they applied to the Depart-
ments of Defense and State, and to the General Services Administra-
tion. These acts also incorporated recommendations which were
duplicated in the reports applying specifically to these agencies. In
addition, the President submitted, and the Congress approved,
reorganization plans incorporating recommendations covered in this
report, affecting the Post Office Department (No. 3 of 1949), the Civil
Service Commission (No. 5 of 1949), the United States Maritime
Commission. (No. 6 of 1949), the Department of Justice (No. 2 of
1950), the Department of the Interior (No. 3 of 1950), Department of
Commerce (No. 5 of 1950), the Department of Labor (No. 6 of 1950),
the Department of the Treasury (No. 26 of 1950), the Federal Trade
Commission (No. 8 of 1950), the Federal Power Commission (No. 9
of 1950), the Securities and Exchange Commission (No. 10 of 1950),
the Civil Aeronautics Board (No. 13 of 1950), the Reconstruction
Finance Corporation (No. 1 of 1951), and the Bureau of Internal
Revenue (No. 1 of 1952). Except as to the Department of Justice,
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on which no separate report was filed, actions taken on these plans
applied to specific recommendations repeated in the reports on the
respective Departments, and in the report on regulatory commissions.
Reorganization Plan No. 4 of 1950, and a bill, S. 1149, introduced
in the Eighty-second Congress, would have carried out all of the recom-
mendations of the Hoover Commission in its report on the Department
of Agriculture. If approved by the Congress, they would have vested
all of the functions of the Department in the Secretary. Both pro-
posals were contrary, however, to determinations by the Congress over
a period of many years. Since the creation of the Department, the
Congress has established certain statutory agencies within it, with
authority to carry on specific programs more or less independent of
other programs which, in the opinion of the legislative body, might
have conflicted with the intent of the Congress or the proper adminis-
tration of these functions. The committee, therefore, instructed its
staff to draft appropriate legislation to implement those recommenda-
of the Hoover Commission which would tend to promote better
tions
program coordination and bring about increased economy and effi-
ciency within the Department of Agriculture without in any way
destroying the functional stucture established by statute. After
full consideration of the revised committee bill it was the opinion of
the committee that the proposed legislation indirectly involved major
problems of policy of such magnitude that it would be inadvisable to
recommend final action to the Congress until the jurisdictional com-
mittees of the House and Senate had had full opportunity to evaluate
the effects of the proposed bill on the national agricultural program.
The bill was, therefore, submitted to these committees for considera-
tion with a request for advice as to appropriate changes designed to
make it conform to legislative policy.'
In considering reorganization of the Federal Security Agency, and
the vesting of functions of that Agency in the Administrator, as
recommended by the Hoover Commission, a number of proposals were
taken up in the Congress. This committee gave consideration to two
separate reorganization plans (No. 1. of 1949 and No. 27 of 1950), which
would have raised the status of the Federal Security Agency to a
Cabinet department and vested all of its functions in the Secretary.'
Consideration was also given to a bill (S. 1140, 82d Cong.) providing
for the consolidation of Federal medical activities into a Department
of Health. All the proposals developing these recommendations were
rejected, either by this or other committees, or by the Senate, because
the effect of these measures would have been contrary to established
legislative policy, and because their approval might result in greater
emphasis being placed on substantive policy than on organization
and administration. The committee also found that the enactment
of the proposals relating to medical activities would have completely
disrupted existing legislative programs designed primarily to promote
medical research under public-health programs, as well as those
providing for military and veterans' hospitalization. These serv-
ices were gradually established over a, period of many years by the
Congress, after the organizational structure recommended by the'
Hoover Commission, as it related to the hospitalization of veterans,
had been tried with unsatisfactory results. Based on this experience,
' See Rept. No. 6, Department of Agriculture, for full details.
5 See Rcpt. No. 15 on social security, education, and Indian affairs.
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the committee concluded that, while undoubtedly certain economics
could eventually be effected through the enactment of this legislation,
its over-all effect would prove detrimental to the public interest. The
committee was not inclined to recommend legislation which might
disrupt progress made (a) in the development of Federal medical
research programs; (b) in providing adequate medical and hospitaliza-
tion facilities and services to the veterans; or (c) seriously interfere
with the defense program by impairing the basic principles under-
lying specialized military medical programs devised to meet exacting
conditions and emergency requirements.6
Similarly, those reorganization plans and related bills which dealt
with certain of the regulatory agencies-ICC, FCC, and NLRB-
were rejected by the Congress because their provisions would have
nullified the legislative determinations of the Congress in establishing
these quasi-judicial agencies on an independent basis. They were
established by and made responsible to the legislative branch rather
than to the executive. Had the plans affecting the ICC (Plan No. 7
of 1950, S. Rept. No. 1567, 81st Cong.) and the FCC (Plan No. 11 of
1950, S. Rept. No. 1564, 81st Cong.) been permitted to take effect,
the Chairman, who is appointed by the President with the consent of
the Senate, would have been vested with all the administrative func-
tions under the jurisdiction of such agencies. Through his control
over the administration, records, and personnel of the agencies, the
Chairman would be able to put into effect programs to control regu-
latory functions in alinement with executive or political policies, con-
trary to the intent of the Congress and possibly detrimental to the
public interest.
In the case of the National Labor Relations Board, the President
submitted a reorganization plan (Plan No. 12 of 1950) which, accord-
ing to its proponents, would have conformed to the Hoover Commis-
sion's recommendations for improved management of that agency.
This plan, in the opinion of both this committee and the Senate, was
contrary to policy determination previously made by the Congress
under which important functions of the NLRB were vested in its
General Counsel for well-considered and specific reasons. Actually,
instead of reorganizing the NLRB in the sense intended by the Hoover
Commission, the plan would have effected a change in that agency's
entire method of operation. Furthermore, it might have afforded the
President political control over its operations by means of the indirect
control exercised by him through the appointment of the Chairman
(S. Rept. No. 1516, 81st Cong.).
The Senate therefore rejected reorganization plans affecting these
agencies on the basis that they were neither reorganizations, nor within
the scope of the authority granted to the Hoover Commission. It was
the view of the committee, that, if changes in the methods of operation
of these regulatory commissions were desirable, they should be accom-
plished under the normal legislative procedures and not be put into
effect through a temporary medium (the Reorganization Act of 1949)
in the name of governmental reorganization.'
Another general recommendation of the Hoover Commission in this
report suggested the establishment of a standard nomenclature. This
program was not new, having been initiated by this committee prior
6 Sea Rapt. No. 16 on medical activities, for further details.
7 Sao Rept. No. 12 on regulatory commissions.
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20 SENATE ACTION ON HOOVER COMMISSION REPORTS
to the establishment of the Hoover Commission (S. Rept. No. 243,
80th Cong.). Since then, the committee has continued to exert every
effort to improve the uniformity of organizational terminology for all
agencies of the Government. It was, therefore, considered that this
recommendation was fully activated and largely implemented, to all
practical purposes, even before it was included in the Hoover report.'
The Hoover Commission also recommended the reduction of 65
departments and nonregulatory agencies by two-thirds, through con-
solidation, the issuance of general regulations providing for the pooling
of certain administrative services, for strengthening and standardizing
field reports, and the improvement of field inspection and relations
with State and local officials. All of these recommendations have been
carefully considered, as set forth in the appraisal of actions taken on
each of the Hoover Commission reports. Some have been imple-
mented fully; others only partially where appropriate. It appears
clear, however, that implementation of these general proposals must
be considered as a continuing process, always open to reappraisal and
reexamination, with a view to effecting further improvements as
conditions require.
In order to insure that a complete review of the actions taken on
recommendations contained in this report on general management
would be undertaken by the Congress, and further actions necessary
to accomplish their implementation. would be fully appraised and con-
sidered, a bill was drafted by the Citizens Committee for the Hoover
Report and introduced in the Eighty-second Congress (S. 1134).
After a complete appraisal of actions already taken, this committee
concluded that the substance of the report had been fully implemented,
insofar as it was in accord with legislative policy. This decision
reflected the assumption that the conflicting recommendations in the
report relative to the internal organization of the Executive Office of
the President should be left to the determination of the President, of
the United States.' This general conclusion does not mean that each
Commission recommendation has been fully implemented as to specific
text, since some of them would require separate actions relating to
each executive agency. On the other hand, all recommendations have
been fully evaluated and analyzed and, where objectives of the Hoover
Commission could be clearly attained without doing violence to legis-
lative policy, appropriate actions have been taken. It should be
noted that 13 of the 27 recommendations in this report are duplicated
in the various reports of the Commission as set forth in the separate
analyses of each which follow.
REPORT No. 2-PERSONNEL MANAGEMENT
All bills relating to the implementation of the 29 recommendations
contained in this report, or dealing with various aspects of the program
set forth therein, were referred to the Committee on Post Office and
Civil ervice. This committee has gi'7en careful end detailed con-
sideration to each of the recommendations and direct or indirect
action has been taken in practically every area.
This report involves numerous controversial issues which have been
the subject of debate in Congress over a period of many years. Should
9 See reports and charts on organization of Federal executive departments and agencies, released annually
by this committee as of January 1, 1947, through January 1, 1952.
U See S. Dec. No. 91, 82d Cong., pp. 3-4.
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ON ON HOOVER COMMISSION REPORTS
the recommendations be adopted, they would establish rigid personnel
policies applicable to every Federal agency without regard to its
specialized requirements and methods of recruitment, promotions, re-
instatements, transfers, etc. The Congress was fully aware of the
many problems involved in these areas of Federal activity long before
the Hoover Commission recommendations were submitted. The very
nature of the many different problems required special consideration
of every aspect of any program to be implemented by the Congress.
Virtually every recommendation made by the Commission relative
to personnel management dealt. directly with established legislative
policy. Numerous hearings have been held on various phases of the
proposals contained in the report, and the resulting action, in some
instances, was in direct accord with the Hoover Commission's recom-
mendations. In others, slight variations were made, based on facts
developed at the hearings, and as a result of intimate knowledge of the
operations of the programs on the part of the members of the com-
mittee, who have dealt with these matters for many years. Where
the application of some recommendations was not found to be practical,
in view of the peculiar problems involved in connection with Federal
operations under the civil-service system, partial implementation
was approved. In the latter cases, this does not mean that the Con-
gress has irrevocably rejected the recommendations, but merely that
it has deferred final action pending further study and a complete
evaluation of their effect and impact on the perplexing problems
involved at various levels of activity.
In carrying out their responsibilities, the agencies affected and the
jurisdictional committees made detailed analyses of each Hoover
Commission recommendation. In many instances legislative or ad-
ministrative action has resulted in new procedures which can be tied
into some specific recommendation of the Commission, even though it
varies from the exact language of that recommendation. It is esti-
mated that, from a standpoint of realization of the improvement
of the Federal career service and economies resulting therefrom which
were the primary objectives of the Hoover Commission recom.m.en.da-
tion.s, actions have been taken to date which may finally result in
full accomplishment. Those that have not been. fully activated involve
substantive policies which have been given full consideration, but
which will require further study and policy determinations on the part
of the legislative branch before final action is taken.
Some of the more important actions based on recommendations of
the Hoover Commission, have brought about (1) complete reorganiza-
tion of the operations of the Civil Service Commission vesting admin-
istrative functions in the Chairman while reserving to the full Com-
mission control over deliberative, regulatory, and appellate functions
(Reorganization Plan No. 5 of 1949); (2) increased compensation of
the President and Vice President (Public Law No. 2, 81st Cong).;
(3) increased salaries of high officials in the Federal Government
(Executive Pay Raise Net, Public Law 359, 81st Cong., and Public
Law 201, 82d Cong.); (4) complete revision of the Civil Service Classi-
fication and Pay Net (Public Law 429, Classification Act of 1949);
(5) additional professional and scientific positions at increased rates
of pay (Public Law 167 and Public Law 472, 81st Cong.); (6) a uni-
form system of salary increases for the postal service (Public Law 500,
81st Cong., and Public Law 204, 82d Cong.); (7) rules and regulations
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`2 SENATE ACTION ON HOOVER COMMISSION REPORT
for suspension and discharge of Federal personnel (Public Law 733,
81st Cong.); and (8) establishment by the agencies of performance
rating plans for the evaluation of work performed, including a system
for rating such evaluations (Public Law 873, 81st Cong.). In addi-
tion, a number of amendments incorporating certain aspects of
Hoover Commission recommendations in this report have been
included in bills passed by the Congress during both the Eighty-first
and Eighty-second Congresses. This type of legislative action can
be carried on continuously as general legislation is considered in the
future.
A number of bills were introduced in the Senate which sought to
tighten up civil-service rules and regulations, so as to provide for a
so-called blue ribbon civil service. These proposals would have
required the appointment of all Federal officials under the policy
level, such as collectors of internal revenue, postmasters, and collectors
of customs, from eligible lists compiled under civil-service rules and
regulations, by the heads of the respective agencies rather than by
the President with Senate confirmation. The submission of reorgani-
zation plans covering certain aspects of these proposals caused the
jurisdictional committees to withhold action on these general bills.
It should also be rioted that numerous administrative actions have
been taken, where legislative authority already exists, carrying into
effect either the letter or the intent of many Hoover Commission
recommendations. These include improved recruitment and exami-
nation of agency employees, through the decentralization of these
functions to agency committees and boards of special examiners; re-
visions of job classification, recruitment, and examination; a completely
revised promotion program; and the development of operating
standards for agency personnel offices, rules affecting veterans' pref-
erence, reduction-in-force, etc.
The Hoover Commission's work an personnel management has
been most helpful in pin-pointing many of the problems which have
confronted the Congress in its efforts to improve the career service
and to bring about more economy and efficiency in personnel opera-
tions in all agencies of the Federal Government. Although certain
of its recommendations have not been fully adopted, most of the
fundamental objectives sought to be accomplished by the Commission
have been attained. The problems relating to personnel management
must, of their very nature, constitute a continuing project before the
appropriate committees of the Congress in carrying out their legisla-
tive responsibilities. The Senate and House Committees on Post
Office and Civil Service are currently conducting extensive investiga-
tions ?
and studies into possible improvement of the civil service so as
ultimately to work out solutions to many remaining personnel prob-
lems confronting the Government. As implementing legislation
develops, the Commission's recommendations will be reappraised and
previous actions reviewed, with a view toward perfecting existing
laws and improving the rules and. regulations of the career service.
REPORT No. 3-OFFICE OF GENERAL SERVICES-SUPPLY ACTIVITIES
The Hoover Commission report on General Services submitted 23
specific recommendations for the centralization and improvement of
procurement and supply and the records and buildings management
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activities of the Government. With but two exceptions, all of these
recommendations have been placed in effect by appropriate action of
the Congress.
The Commission specifically urged the establishment of an Office
of General Services as an independent agency responsible to the
President for the procurement and supply of personal property and
nonpersonal services. To be included within the new agency were
certain related functions, such as contracting, inspection, storage,
issue, specifications, property identification and classification, and
utilization of property throughout the Government. Actually this
proposal had previously been given extended consideration in the
Congress prior to the creation of the Hoover Commission. In 1943,
the House passed, and the Senate Committee on Expenditures in the
Executive Departments favorably reported a bill (H. It. 2795) de-
signed to accomplish this reform. Final action on the bill was delayed,
however, because of the urgent need for legislation covering the dis-
posal of war surplus during and following World War II. Mean-
while, the Congress did adopt the Surplus Property Act of 1944, as an
emergency measure designed to govern the disposal of surplus prop-
erty for a period of 3 years after the date of cessation of hostilities.
On March 5, 1948, the President submitted a formal request to the
Congress, together with a draft of a bill, to establish a central office
for control of the procurement, supply, and general services functions
carried on throughout the Government. This message was referred
to this committee, and beginning on March 31, 1948, hearings were
held for a period of 4 days, during which time numerous witnesses
testified and urged the enactment of the proposed administration bill.
,On May 26, 1948, a committee bill (S. 2754) was reported favorably
to the Senate (S. Rept. 1413, 80th Cong.), which was designed to bring
together in one agency centralized responsibility for property and
buildings management, Government procurement and utilization of
goods and services. The bill also included provisions governing the
disposal of surpluses, and for the creation of a uniform cataloging and
inventory control program. This proposed legislation would have
consolidated the functions of the Public Buildings Administration,
the War Assets Administration, and the Bureau of Federal Supply,
Department of the Treasury, under the then existing Federal Works
Agency. All such functions would have been vested in the head of
FWA with authority to redelegate to other agencies when such func-
tions could thereby be more efficiently and economically administered.
The provisions of this committee bill were very similar to the Hoover
Commission's recommendations. The report of the Commission went
further, however, and recommended the abolition of the Federal Works
Agency and the creation of an Office of General Services, which would
establish a records management program and perform certain other
functions not included in the original bill.
After the filing of the Hoover Commission reports, a new administra-
tion bill (S. 990), and a bill incorporating all the Commission's recom-
mendations (S. 991), were introduced in the Senate by Senator
McClellan. This committee, acting on the basis of its previous studies,
the recommendations of the Hoover Commission, and the administra-
tion proposals, drafted two completely revised committee bills (S. 1809
and S. 2020). These measures culminated in the approval by the
Congress of the Federal Property and Administrative Services Act of
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24 SENATE ACTION ON HOOVER
1949 (Public Law 1.52, 81st Cong.) creating the General Services
Administration. The preparation and perfection of the language of
this act and a supplemental Records Management Act (Public Law
754, 81st Cong.), required months of detailed study and consideration
in executive session.
Even after the basic laws became fully effective, it was necessary
that continuing studies be made in. order to repeal or amend existing
statutes which were in conflict with the basic authority vested in the
General Services Administration. A survey of such acts was made
by the GSA, under a directive from the Congress, resulting in the
repeal or amendment of 234 specific. provisions of law (Public Laws
209 and 247, 82d Cong.), which were found to be in conflict with
the provisions of the Federal Property and Administrative Services or
the Records Management Acts. To conclude the tremendous task
involved in. the perfecting legislation, it should be pointed out that
the agencies affected, the staff. of this committee, and the committee
itself, had to consider each of these 234 am.endm.ents individually and
to fully appraise the effect their repeal or amendment would have
upon. existing laws, in order to insure that such repealers did not
affect basic legislative policies established by the Congress.
In considering this legislation, it developed that the committee
would have to resolve the purposes and intent of two conflicting
Hoover Commission recommendations. The first of these proposed
the creation of an "Office of General Services," which did not conform
to the recommendation in its report on General Management relative
to the standardization of nomenclature. The second recommended
that certain independent agencies established by the Congress in the
District of Columbia should be placed under the jurisdiction of the
new agency.
The committee rejected the specific recommendation of the Hoover
Commission to create an "Office of General Services," inasmuch as
the nomenclature program originally conceived by this committee
and adopted by the Commission, required that an "office" should be
merely a subordinate administrative component of a department or
independent agency, and that an independent component such as
proposed, or one performing major services under the control of
another agency, should be designated as an administration," "com-
m.ission," "corporation," etc. It, therefore, would have been. entirely
inconsistent with the program of nomenclature designations to have
carried out this specific recommendation of the Hoover Commission.
The committee and the Congress approved, instead, the creation of
the General Services Administration..
As to the second legislative deviation from the Hoover Com.mis-
sion.'s recommendations, the committee could find no justification. for
requiring the officials of the government of the District of Columbia,
or of the Smithsonian Institution to consult the Administrator of
General Services regarding their activities, as recommended by the
Commission. Nor could any advantages or savings be obtained from
requiring the National Capital Park and Planning Commission, the
National Capital Housing Authority, and the Commission of Fine Arts,
to report to the Administrator of General Services, as recommended,
instead of continuing their present direct reports to the President of
the United States. The purpose of this recommendation was to re-
duce the number of Government officials who are required to report
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SENATE ACTION ON HOOVER COMMISSION REPORTS 25
to the President of the United States, by directing them to report in-
stead through the General Services Administrator. The committee
held, however, that, since the Congress had established these agencies
to perform specific, independent functions which had no relation what-
ever to the housekeeping or service functions vested in the General
Services Administrator, and since the proposed r ction would neither
effect any economy nor promote greater efficiency, approval should not
be recommended to the Senate.
This decision was based in part on a record which showed that these
agencies had successfully carried out their functions under the basic
statutes with little or no requirements for administrative control by
the Chief Executive, and the fact that there were no appreciable
functions performed by the President in relation to the activities of
these agencies which could or should be delegated. The primary
Presidential function involved was the appointment of policy-making
officials, subject to confirmation by the Senate, which should not be
changed even if such functions could be redelegated.
During the Eighty-second Congress, a new bill (S. 1136), designed
to carry out all Commission recommendations which had not been
included in previous measures, was drafted by the Citizens Committee
for the Hoover Reports, introduced in the Senate, and referred to this
committee. As introduced, S. 1136 would have placed in the Admin-
istrator of General Services, responsibility for coordination of certain
miscellaneous activities of the government of the District of Columbia,
the Smithsonian Institute, the National Capital Park and Planning
Commission, and the Commission of Fine Arts. The Subcommittee
on Reorganization directed the staff to redraft the bill in an effort to
overcome. objections raised to certain of its provisions. The bill was
revised so as to permit the President, at his discretion, to delegate any
functions that may be vested in him in relation to the operations of
these agencies to the head of any department or agency who might
be qualified to act for him. As amended, the bill would have per-
mitted the President to designate the Administrator of General
Services, or any other official who might be better qualified, to per-
form any administrative functions pertaining to the designated
agencies which might be vested in him. It was reaffirmed, after the
commnittee's consideration of the amended bill, that there was no
relationship between the operations of the GSA and those of the
government of the District of Columbia, and the other agencies
established as independent entities which had been so operated for
many years. Furthermore, an act was approved on August 8, 1950,
which gave the President general authority to delegate functions not
specifically vested in him by the Constitution to such other Federal
officials as he might designate (Public Law No. 673, 81st Cong.).
This aet made it doubtful that further action was necessary to carry
out the purpose. and intent of S. 1136.
Nevertheless, in order that the matter might be further explored by
other committees of Congress, which had expressed opposition to the
approach which this committee had attempted, recommendations
were made to the Senate that the bill be rereferred to the Senate
Committee on the, District of Columbia, fdr further consideration,
particularly as to the effoc.t of the proposal on the government of the
District of Columbia. This committee's recommendation was agreed
to in the Senate on, July 11, 1951. The Committee on the District of
Columbia, however, has taken no action on the bill.
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26 SENATE ACTION ON HOOVER COMMISSION REPORTS
Reorganization Plan No. 5 of 1952, which became effective on July 1,
1952, provided for a complete reorganization of the government of the
District of Columbia (S. Rept. No. 1735, 82d Cong.). It abolished
the existing departments, commissions, and offices and transferred
their functions to the Board of Commissioners as a whole, authorized
the Board to delegate functions, with certain exceptions, and to estab-
lish a new departmental structure to perform the regrouped functions.
While the Hoover Commission made no recommendations concerning
the internal organization of the government of the District of Colum-
bia, this action was somewhat related to recommendations made in
this report, and in its report on general management.
Among the continuing benefits accruing from the Commission's
studies and recommendations, which merit special mention, are two
legislative developments designed to implement further the program to
provide general services to the Federal agencies. This committee
initiated, in cooperation with GSA, two steps designed to tighten up the administration of the Federal Property and Administrative Serv-
ices and the Records Management Acts. The first of these dealt with
amendments to the basic act in relation to the further development
and more effective administration of the procurement and supply
programs. On the insistence of this committee, the General Services
Administration and the Department of Defense made a study of the
procurement of common-use items of supply, with the result that, as a
first step in expanding the program, it was recommended that large
quantities' of office supplies and other common-use items might be
procured through the GSA for the civilian agencies and for the De-
partment of Defense at less cost to the Government.. To effectuate
this program, however, it became necessary to increase the capital of
the general supply fund of the GSA. Accordingly, the committee
raised the authorized ceiling on this fund from $75,000,000 to $150,-
000,000 to enable the GSA to acquire, by purchase and transfer, gen-
eral common-use items of supply for both the military and civilian
agencies. When this legislation was considered (S. 3063 and H. R.
5350), the committee also included provisions (a) to permit greater
flexibility in the determination of the amount of reimbursement in
connection with the transfer of excess property among Federal agen-
cies; (b) to extend the authority to negotiate sales of surplus property;
and (e) to establish a buildings management fund to provide adequate
and necessary buildings management services to other Government
agencies on a reimbursable basis. This bill was approved by the
Congress as Public Law 522, Eighty-second Congress.
The second proposal initiated by this committee as a result of its
consideration of the Hoover Commission recommendations, was a
bill to amend the Federal Property and Administrative Services Act
to authorize the Administrator of General Services to enter into
lease-purchase agreements. Such agreements would provide for the
lease to the United States of real property and structures for terms
of not less than 8 years but not in excess of 25 years, and for acquisition
of such properties and structures by the United States at or before
the expiration of the lease terms. Committee studies of the buildings-
management program showed that certain agencies of the Govern-
ment have paid several times over the actual value of property under
rental contracts over periods of up to 40 years. The purpose of
this bill (S. 2137) was to permit the Administrator of General Services
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SENATE ACTION ON HOOVER COMMISSION REPORTS Q- 4
to enter into lease-purchase agreements for the acquisition of per-
manent space requirements of Federal departments and agencies
of the Government. These agreements would require the application
of funds appropriated by the Congress for rent payments to individual
agencies toward the liquidation of such lease contracts under the
existing 15-percent per annum rent limitation. Title would vest in
the Government after the expiration of the designated lease period,
with the rentals paid covering the total purchase price as well as the
lessor-vendors disbursements for interest, taxes, etc., during the term
of the lease. Legislation of this type would save the Government
millions of dollars annually through the procurement of space for
permanent Federal agencies in communities throughout the United
States wherever it is clearly established that continuing Federal
activities would insure full utilization of such properties, without
requiring the Government to enter into a huge public-buildings
program to meet its increasing needs. The proposed act would
have permitted local banks, insurance companies, or private investors
to enter into contracts with the Government for the construction of
necessary local Federal buildings under a firm contract guaranteeing
repayment of the entire cost of the buildings with interest and taxes
under an equitable appraisal and lease arrangement. This bill was
reported favorably by the committee (S. Rept. 784, 82d Cong.), and
a companion bill (H. R. 4323) was approved by the House of Repre-
sentatives and referred to the Senate for final action. Both of these
bills were objected to by a single Senator on the call of the calendar on
several occasions, and failed to receive final approval by the Senate.
The recommendations contained in the Hoover Commission report
on General Services have been fully evaluated and implemented, by
enactment of legislation, or by adoption of reorganization plans,
insofar as they are in the public interest and consistent with legislative
policy.
REPORT No. 4-POST OFFICE DEPARTMENT
Six of the nine recommendations in this. report, omitting deviations
which did not alter the basic premise of original Hoover Commission
proposals, have been enacted into law or carried out through appro-
priate administrative actions. This has resulted largely from the
approval of Reorganization Plan No. 3 of 1949, the enactment of
the Post Office Department Financial Control Act of 1950 (Public
Law 712, 81st Cong.), and of special legislation simplifying the postal
laws and regulations, and the adjustment of postal rates with a view
to making certain services self-sustaining.
Although the Senate passed a Hoover Commission bill providing
for separation of funds paid by the Federal Government in the form
of air-mail transportation subsidies from the regular air mail pay, it
failed of final passage in the House. Two other recommendations
which were not implemented related to the proposals that confirma-
tion of postmasters by the Senate be abolished, and that the postal
service be decentralized into 15 regions under regional and district
officials. As is set forth below, these proposals involved basic legisla-
tive policies and conflicts with existing programs, and were in no sense
simple reorganizations.
On April 20, 1952, the President submitted to the. Congress Re-
organization Plan No. 2 of 1952, providing for the appointment of
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postmasters by the Postmaster General rather than by the President,
eliminating the requirement of Senate confirmation. A resolution
of disapproval, filed in the Senate (S. Res. 317) in accordance with the
piocisions of the Reorganization Act of 1949, was approved by a vote
of 56 to 29, resulting in the rejection of the plan. This action by the
Senate was based partly on the fact that hearings had failed to indicate
that any economy could be anticipated from approval of the plan, and
partly because it involved changing a basic legislative policy while mak-
ing little or no change in the existing status of postmasters, since they
had already been under civil service since 1917 by Executive order
and, since 1938, by statute. The plan was further found not to be in
the public interest, since it would have centralized absolute authority
and control over the appointment of all postmasters in the Postmaster
General, eliminating the existing check; exercised by the Congress upon
the character, ability, and suitability of applicants for the position of
postmaster. Although this reorganization plan would have followed
the recommendations of the Hoover Commission, the Congress, in
exercising its legislative, responsibility, failed to agree with the findings
and recommendations of the Commission in this respect. This action
was supported by all labor groups representing classified employees
within the postal service. These groups agreed that it would n.ot
eliminate politics and political patronage from the appointment of
postmasters, as claimed by the President. In this connection, they
advised this committee that "the American people have absolutely
no direct control over administrators, and very little indirect control.
The elected representatives of the Government are responsive to the
desires of the public, and must defend their policies to the people."
In rejecting this recommendation of the Hoover Commission, the
committee and the Senate concluded that this was not a reorgan-
ization, but involved a basic legislative policy change requiring
affirmative action by the appropriate committees of the Congress
which should not be accomplished by a reorganization plan. This
recommendation had been based on the premise that a Postmaster
General should have complete control over the appointment of
postmasters in exactly the same manner as all other department heads
control appointments in their departments. This committee, in
answer to this contention, stated in its report on Reorganization
Plan No. 2 of 1952 (S. Rept. 1747, 82d Cong.) that-
the office of postmaster is entirely unlike any other Federal office, since it extends
into every village, hamlet, town, and city in the United States and can and has
formed the nucleus of a powerful political machine under the complete control
of the Postmaster General, unless checked by a requirement for Senate confirma-
tion. In fact, it was this very development which led, in 1836, to the enactment
of the first statute making postmasters Presidential appointees and requiring
Senate confirmation. Prior to that time, all postmasters were appointed by the
Postmaster General. The graft, corruption, and huge personal patronage
machine which resulted from the centralization of absolute authority in the
Postmaster General led to a series of Senate investigations which culminated in
the act of July 2, 1836.
Thus, it will be seen that this recommendation of the Commission
would merely bring about a reversion to a system which was previously
in effect, and which was found to be unsatisfactory.
The second recommendation rejected by the Congress was a proposal
for the decentralization of the postal service into 15 regions. This
proposal was not incorporated in Reorganization Plan No. 3 of 1949,
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SENATE ACTION ON HOOVER COMMISSION REPORTS 29
to implement all the other recommendations of the Hoover Commis-
sion in this report, and which became law on August 20, 1949. Nor
was it included in any other bill approved by the Congress relating
to the Post Office Department. The basis for the rejection of this
recommendation was the position taken by the Postmaster General
to the effect that "the proposal of the Commission suggests an im-
practical organization for the management of the post ggal service, as
well as an expensive one. If the proposal were practicable, it is
conservatively estimated that the yearly cost of operation would
exceed $5,000,000, exclusive of additional cost due to the decentraliza-
tion of accounting procedures." The appropriate committees of
Congress agreed in general with the views of the Postmaster General,
and since no economies or improvements in administration would have
resulted, the Congress exercised its legislative prerogatives and
rejected this proposal.
This congressional action, while in conflict with the above cited
recommendations, was in general accord with recommendations in the
Commission's report on general management, that heads of depart-
ments should be given full responsibility for the conduct of their
departments, with adequate "administrative authority to organize
his department and to place him in control of its administration."
This latter proposal was further reiterated in another recommendation
that each department head be given authority "to determine the
organization within his department." It follows that, had the
decentralization action recommended by the Commission been adopted
by the Congress, it would have forced the Postmaster General to
accept an administrative policy and structure to which lie was
opposed, and which lie contended would not effect economies or
improve management.
Two deviations occurred in connection with other recommendations,
that (1) a Director of Posts should be appointed by the President and
confirmed by the Senate as operating head of the Post Office Depart-
ment and (2) that the Postmaster General should not be an official of
a political party. The first of these recommendations was omitted
from Reorganization Plan No. 3 of 1949, but a Deputy Postmaster
General was created to perform such general management functions
as might be delegated to him by the Postmaster General. This also
accorded with the recommendations in the Commission's report on
general management. It would have been impracticable to vest
authority in a Director of Posts without going contrary to the recom-
mendations that the Postmaster General should have complete ad-
ministrative control over his Department and that all functions be
vested in him. The recommendation that the Postmaster General
not be a political party official was carried out by the present Admin-
istration prior to the submission of the Commission's report, and its
further implementation would be entirely at the discretion of any
future President. Another departure from Hoover Commission recom-
mendations relates to the proposal that the business management,
budgeting, accounting, and audit functions of the Post Office Depart-
ment be made subject to the Government Corporation Control Act
of 1945. This recommendation was rejected in favor of legislation
drafted to conform to the Budgeting and Accounting Procedures Act
of 1950, which resulted in the approval of the Post Office Financial
Control Act of 1950 (Public Law No. 712) as a companion and coordi-
24689-52-3
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30 SENATE ACTION ON HOOVER COMMISSION REPORTS
nating measure. As set forth under Report No. 7, Budgeting and
Accounting, the joint accounting project initiated prior to the creation
of the Hoover Commission was enacted into law as being preferable
to the specific recommendations of the Hoover Commission. This
decision of the Congress was based on years of concentrated study
as well as on the specific recommendations of the agencies of the
Government most closely identified with Federal accounting problems
and fiscal controls, including the Postmaster General.
To all intents and purposes, the full import of the Hoover Commis-
sion's recommendations affecting the general management and internal
operations of the Post Office Department has been fully carried into
effect by appropriate action. This was accomplished primarily
through the approval of Reorganization Plan No. 3 of 1949, which
vested all functions of the Department in the Postmaster General;
created a Deputy Postmaster General to be appointed by the President
by and. with the advice and consent of the Senate (in lieu of a Director
of Posts); created an advisory board on methods and policies; and
abolished the Bureau of Accounts in the Department. The accounting
functions were transferred from the General Accounting Office to the
Department by Public Law 71.2. This plan also carried out somewhat
similar recommendations in the Commnission's report on general man
agem.ent in many respects. Public Law 712 implemented the recom-
mendations of the Commission relative to improvement of budget,
accounting and audit functions of the Department, except that it did
not carry out the specific recommendation that its functions should be
subject to the Government Corporation Control Act of 1945. The
rejection of Plan No. 2 of 1952, removing Senate confirmation of post-
masters was, as outlined above, due to the determination by the Senate
that it was not in accord with sound legislative policy.
The operations of the postal service have been under close obser-
vation and study by committees of the Congress for many years,
during which time numerous efforts have been made to improve its
management and to bring about more economy in its operations.
During that time various studies of the Department's operations
have been conducted under the direction of both the legislative and
executive branches, including the Hoover Commission's reports, the
Heller Management Survey, the General Accounting Office, the point
accounting project, the 1937 Brownlow Report, and other sources.
The activities of the Post Office Department are of such importance
that they warrant continuing study by the administration and the
Congress to further improve the postal services which are still defi-
cient in some respects. As these studies are carried on, the Hoover
Commission's recommendations will be constantly reviewed and
reappraised in light of developments or as new proposals are made
for the improvement of services, effecting further economy or produc-
ing-more efficiency in theoperations of the Department.
RrnonT No. 5--FCREI(..N AFFAIRS
The first 8 of the 22 recommendations in this report were actually
statements of principles or substantive policy, rather than. recom-
mendations concerning organization and structure, and required no
action by either the Congress or the Department of State, being
intended to serve only as guideposts for the future. Typical of
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SENATE ACTION ON HOOVER COMMISSION REPORTS 31
such proposals were the suggestions by the Commission that the
Congress should vest any new powers over foreign affairs in the
President or in an established agency, rather than in any new bodies,.
unless the, advantages in creating a new body were overwhelming;
that the principal functions of the State Department should be to
define objectives in foreign affairs, and to formulate policies in con-
junction with other interested agencies; that, as a rule, the State
Department should not be given responsibility for the operation of
programs, whether overseas or at home; and that the State Depart-
ment should continue to discharge its traditional responsibilities of
representation, reporting, and negotiation.
Ruling out the initial 8 statements of principle, only 14 recommen-
dations remained to be implemented. Of these, 12 related to the in-
ternal organization of the Department of State, and 2 related to other
departments and agencies having responsibilities in the field of
foreign affairs. Even with respect to these, the Commission observed
that "organization cannot be immutable and the recommendations
herein cannot be regarded as having indefinite validity."
After careful study of these recommendations, the Congress
approved legislation designed to strengthen and improve the organi-
zation and administration of the Department of State, primarily by
giving to the Secretary of State sufficient authority to carry out
administratively the. major reforms proposed (Public haw 73, 81st
Cong.). It transferred to him all statutory authority for the conduct
of foreign. affairs which had been scattered among subordinates and
gave him an adequate top staff of 10 instead of 6 Assistant Secretaries
to carry out these responsibilities.
The provisions of this new statute differed from Hoover Commis-
sion recommendations in the following respects: (1) The office of coun-
selor, which the Commission recommended be abolished, was continued
because the Department felt this position was necessary for efficient
operations; (2) instead of creating two Deputy Under Secretaries, as
proposed by the. Commission, the Secretary was authorized to desig-
nate two Assistant Secretaries as Deputy Under Secretaries; and (3)
the proposal for the abolition of the position of Director General of
the Foreign. Service and the amalgamation of the Foreign Service with
the departmental personnel in Washington, above certain levels, was
only partially carried out. The position of Director General of the
Foreign Service was retained, but in a staff capacity, and all of the
statutory powers of that office. were transferred to the Secretary of
State with authority to redelegate.
Following the enactment of Public haw 73, which was based upon
a detailed plan of reorganization submitted by the Department of
State to the Foreign Relations Committee of the Senate and the
Foreign Affairs Committee of the [louse, the Secretary of State
instituted action designed to implement fully the objectives sought
to be accomplished by the Hoover Commission, with such modifica-
tions as were deemed appropriate, by the Secretary and the congres-
sional committees concerned.
The first major change, effectuated in May 1949, was the dissolu-
tion of the separate Office of the Foreign Service and the pairing of
its administrative activities with the parallel departmental activities?
so as to establish a better functional pattern. As a result, depart-,
mental offices were given responsibilities for the administration of
Foreign Service as well as regular departmental matters.
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32 SENATE ACTION ON HOOVER COMMISSION REPORTS
The second phase, which was put into effect in October 1949, was
the realinement of the organization pattern for the conduct of sub-
stantive operations. This was accomplished by the dissolution of the
former regional geographic offices and their replacement by bureaus,
each of which was given responsibility for all operating actions affect-
ing countries under its jurisdiction.. To insure efficient functioning,
most technical personnel concerned with public affairs and economic
and administrative matters were transferred to the newly created
bureaus. In addition, all economic policy matters were consolidated
under a single Assistant Secretary for Economic Affairs.
The net effect of these and other changes was the establishment of
six operating branches, with line responsibilities delegated by the
Secretary of State. Five of the branches were headed by Assistant
Secretaries of State, each with responsibility for decisions within
clearly defined limits. An Executive Secretariat, was established to
insure that policy decisions are maintained and disseminated currently
and that appropriate action is taken to carry them out. In addition,
these Assistant Secretaries serve as focal points of contact between
the Department and the missions, in both substantive and adminis-
trative matters. Among other changes made was that the chief of
each foreign mission is designated as the responsible official for the
area to which he is assigned; the intelligence unit has been strength-
ened; intra-agency arrangements have been made for coordination
between action staff segments and between various units within each
segment, .in the Office of the Under Secretary; and special arrange-
ments have been made to assist interdepartmental coordinating
agencies.
Only two of the recommendations of the Hoover Commission in
the field of foreign affairs have not been implemented fully: (1) That
the Foreign Service be amalgamated with departmental personnel in
Washington, above certain levels, into a single Foreign Affairs Service;
and (2) that the State Department should not be given responsibility
for the operation of specific programs.
The recommendation regarding the amalgamation of departmental
and Foreign Service personnel systems is well on its way to full
implementation. At the outset, many perplexing problems were
presented, largely due to the fact that had this recommendation been
carried out immediately, all persons serving in departmental positions
in Washington who are concerned with the conduct of foreign relations
would have been required to serve anywhere in the world. Immediate
application of the plan would, therefore, have caused many resigna-
tions which would have seriously depleted the departmental service
and hampered effective operation of the Department. Because of
its many worth-while aspects, however, the Secretary of State set up
a research committee in the Department in 1949 to make a preliminary
study of ' the recommendation and its accompanying problems. In
January 1.950, the Secretary established an Advisory Committee on
Personnel to advise him whether fundamental changes were required.
In March 1951, the Department made public a plan for improve-
ment in personnel administration, following a detailed explanation
of it to the Senate Foreign Relations Committee and the House
Foreign Affairs Committee. The plan provided for a considerable
overhauling of personnel methods and procedures and for the gradual
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SEN E A
merger of the departmental and Foreign Service, staffs over a period of
years so as not to disrupt the orderly operations of either service.
The major portions of these reforms could be accomplished by admin-
istrative action, but some legislation was essential, and a bill (H. R.
5723, 82d Cong.) was submitted to the Congress in October 1951.
It failed of passage, but will be resubmitted to the Eighty-third
Congress.
In the meanwhile, the Department revised administrative pro-
cedures so that as junior officers are recruited to fill the basic needs
of dual service positions, it is made clear that they will be required
to serve anywhere in the world, depending upon the needs of the
service.
The remaining recom.m.endation-that as a rule the State Depart-
ment should not operate programs-is really a statement of principle.
It applies primarily to an international information program and a
t technical-cooperation program, which are now operated by the Do-
partment. This proposal conflicts with the suggestion contained in
the same report: That the Congress should vest any new powers over
foreign affairs in the President or in an established agency, rather than
in any new bodies. Since both of those programs are integral parts of
the foreign policy of the United States, it is difficult to understand
where Congress could have assigned them, if not to the State Depart-
ment. The Hoover Commission recognized this difficulty by stating
in its report that "operational responsibility, for the present at least,
must remain in the State Department in default of any other satis-
factory location in the executive branch."
With respect to the information program, the commission further
qualified its recommendation by stating that there was an urgent need
"for freeing the Assistant Secretary, Public Affairs, from devoting his
personal attention to details of an operational nature." It then sug-
gested that "this end can be equally attained, however, by reorganiza-
tion within the public affairs area. One possibility is the creation of a
new post under the Assistant Secretary of a `general manager' to whom
would be assigned full operational authority and responsibility for the
Voice of America and such other portions of the foreign information
program as are primarily operational in character."
This suggestion has been adopted by the establishment, within the
Department on an operating level, of a United States International
Information Administration, headed by an Administrator, whose
responsibility runs directly to the top level, and who is entirely di-
vorced from the Assistant Secretary, Public Affairs. The major
objection to operating programs has been removed as regards the
Technical Cooperation Administration, by establishing it on an oper-
ational level under an Administrator who reports directly to the top
level.
The foregoing review of administrative and legislative action indi-
cates that to all intents and purposes the recommendations of the
Hoover Commission in the foreign-affairs field have been implemented
fully to the extent that they are feasible and practicable. The only
exception is the full amalgamation of the departmental personnel of
the State Department with the Foreign Service, which cannot be
completely accomplished, to the extent that it is advisable, until new
legislation is enacted.
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e SENATE ACTION ON HOOVER COMMISSION REPORTS
REPORT N0.' 6-DEPARTMENT OF AGRICULTURE
This report contained a total of 16 recommendations for the organi-
zation of the Department of Agriculture. A number of legislative
proposals have been filed in the Congress which would group these
recommendations into a single action. The approval of this proposed
legislation, as presented, woul4 have had the effect of vesting all. func-
tions of the Department in the Secretary and granting to him author-
ity to reorganize his Department in accordance with the recommenda-
tions of the Commission.
The first of these proposals was a bill submitted to this committee
by the Hoover Commission, which was drafted by its attorneys with
a view to carrying out recommendations contained in. this report.
This draft was filed in the Senate by Senator McCarthy (S. 2055),
and referred to the Senate Committee on Agriculture and Forestry
where no action was taken during tiLe Eighty-first Congress.
The President subsequently submitted Reorganization Plan No. 4
of 1950, providing for the reorganization of the Department, includ-
ing the transfer of all the functions vested in other officers, employees,
and agencies of the Department to the Secretary, except the functions
conferred on hearing examiners, corporations, boards of directors and
officers of such corporations, and the Advisory Board of the Com-
modity Credit Corporation. The plan also authorized the Secretary
to redelegate such of his responsibilities as lie might determine to any
officer, employee, or agency within the Department, and established
an Administrative Assistant Secretary and two additional Assistant
Secretaries. This plan, together with a resolution of disapproval
(S. Res. 263), was considered by this committee, the majority of
whom concluded that the plan contained an unwarranted delegation
of authority to the Secretary on a permanent and' continuing basis
without restriction or restraint as to how and when it would be ex-
ercised. The plan was opposed by eight members of the Hoover
Commission Task Force on Agriculture, on whose report the Com-
mission's recommendations were based. The chairman of the task
force, Dean H. P. Rusk, concluded in his testimony before the com-
mittee, that-
the record of a previous attempt during the years to secure a more effective, eco-
nomical organization of this and other departments of the executive branch of the
Government shows that the absence of specific directives places the Secretary in
a very weak position with regard to vested interests in and outside of the Depart-
ment. We, as former members of the agriculture task force, believe that Reor-
ganization Plan No. 4 should be rejected, and that specific directives should be
provided by the Congress to efrectuate the basic principles and recommendations
of the Commission. I am advised that legislation is now being prepared to ac-
complish this objective. * * *
The committee recommended, and. the Senate approved, the rejec-
tion of the plan by adoption of Senate Resolution No. 263. The basis
for this action was set forth in detail in the committee's report (S.
Rept. 1566, 81st Cong.), as follows:
Reorganization Plan No. 4 authorizes the Secretary to consolidate or abolish
long-established components in conformity with any over-all national farm
program that may be adopted by this or any incoming national administration.
It authorizes the Secretary of Agriculture to take actions which would in effect
destroy the will of the Congress as expressed in basic legislation setting up the
various functions of the Department of Agriculture, and bring the policies of the
Department under direct political control of the President.
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The majority of the committee feels that Reorganization Plan No. 4 deals
primarily with "matters of substantive policy" which have been established by
the Congress after many years of study. It is the opinion of a majority of the
committee that to grant the Secretary the powers contained in this plan would
mean that the Congress is abjectly surrendering its legislative authority to the
Secretary of Agriculture without any indication as to how it will be used and with-
out veto powers over any reorganization effected thereunder.
The plan contains no compulsion or mandate to the Secretary that he shall
reorganize the Department, nor is there any provision in the plan which would
place any limitation on his authority to disrupt one service with which he is not
in full accord in favor of another which he night favor. It places in the Secretary
a blank check to use or not in any manner he may desire now and hereafter
without advance indications to the Congress as to what action he will take to
effect reorganizations either in accord with or opposed to Hoover Commission
recommendations.
As was done in regard to other recommendations of the Hoover
Commission, a bill (S. 1149) was resubmitted to the Eighty-second
Congress, designed to implement all the recommendations relating to
the Department of Agriculture, and referred to this committee. Ex-
tensive hearings were hold during August and September of 1951 in
an effort to resolve the differences between the various groups and to
draft it committee bill which would overcome as many of these ob-
jections as possible and to conform both to the legislative directives
of the Congress and the organization objectives of the Hoover Com-
mission. These hearings developed vigorous opposition to practically
every one of the Hoover Commission's recommendations in this report.
The opposition centered on the proposal which would have vested all,
functions and reorganization authority in the Secretary, previously
rejected under Reorganization Plan No. 4 of 1950. The committee,
therefore, endeavored to redraft the bill in such a manner as to over-
come the objections raised at the hearings by Federal officials, repre-
sentatives of farm organizations, and others.
The staff, at the direction of the committee, prepared several drafts
of a proposed committee bill, the last of which received tentative
committee approval as to reorganization phases, but the committee
was still of the opinion that the proposed reorganizations would effect
such vital changes in legislative policies established by Congress that
action should be deferred until many of these policy problems had
been fully explored and determinations made as to whether the safe-
guards provided in the bill were adequate.
The final draft of this revised bill differed from the original bill,
S. 1149, which constituted an interpretation of the Citizens Committee
for the Hoover Report as to actions required to fully implement the
Hoover Commission's recommendations, as follows:
1. It eliminated the provisions which would have vested all func-
tions and reorganization authority in the Secretary.
2. Provided a revised organizational structure to meet objections
raised at the hearings, while conforming as nearly as possible to the
Hoover Commission's recommendations.
The major changes in this section of the original bill would con-
solidate the Soil Conservation Service and the Production and Market-
ing Administration into an. Agricultural Conservation Production
Service, and create a Forest and Range Service. This would have
eliminated the recommendations of the Commission which proposed
the establishment of an Agricultural Consultation Service, an Agri-
cultural Resources Conservation Service, and a Commodity Marketing
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SENATE ACTION ON HOOVER COMMISSION REPORTS
and Adjustment Service, which the Secretary held would bring about
a rigid, unrealistic structure impractical of administration. In his
testimony, the Secretary also contended that the establishment of a
Regulatory Service, as proposed by the Hoover Commission, would
be uneconomical since much of the existing regulatory authority is
delegated to the operating field services. The committee, therefore,
proposed to vest all regulatory functions in the Secretary instead
of creating a Regulatory Service, in order that he might redelegate
this authority as he may determine.
In lieu of the provision as outlined in No. 1 above, the committee
would have vested authority in the Secretary to make transfers and
to bring about better coordination of functions within the statutory
structure prescribed in No. 2, when, in his opinion, such action
would improve administration, reduce expenditures, and promote
economy and efficiency, and when such reorganization changes had
the approval of the jurisdictional committees of the Congress.
3. Eliminated the proposal to transfer vocational education func-
tions from the Federal Security Agency to the Department of Agri-
culture. The evidence submitted at the hearings indicated that there
was little or no support for such a transfer, and that it was not in the
public. interest to subjugate this purely educational function to the
control of the Secretary of Agriculture.
4. Eliminated all sections dealing with the creation of State, county,
and local advisory ccmrnittees as being substantive legislation of such
vital importance that the administration of the whole agricultural
V rogram would be seriously and probably adversely affected if the
Ioover Commission's recommendations in this area were adopted.
It was the view of this.committee that these recommendations in-
volved substantive legislative policy. The effect of adoption of these
sections of the original bill would have been to completely disrupt
all policy determinations of the Ccngress. By reducing State, county,
and local committees to an advisory status, and vesting their functions
in the Secretary or his agent, the farm program would be brought
under direct Federal control and any effective farmer control over
the administration of programs affecting his interest and welfare
would be removed.
5. Provided safeguards relating to the proposed transfer of the
Bureau of Land Management from the Department of the Interior to
the Department of Agriculture to insure that functions neces~a,ry to
the operation of the Department of the Interior are retained within
that Department. This section also provided that existing laws
and regulations approved by the Congress as policy determinations
relating to the management and operation of forestry and grazing
resources would continue in force for a period of 2 years. The bill
required the Secretary of Agriculture to submit to the appropriate
jurisdictional committees of the Congress a program for integrating
these services before the expiration of the 2-year period.
In a preliminary draft of a report on S. 1149, which was never filed
with the Senate, the committee tentatively approved the following
language as explanatory to its proposed action:
In reaching a decision as to procedure, the committee was faced with a specific
proposal as to determining the character of reorganization to be proposed. Two
separate approaches were available. Under S. 11.49, as introduced, a basic
structure would be established in line with the approach recommended by the
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SENATE ACTION ON HOOVER COMMISSION REPORTS
Hoover Commission, but another provision of the bill would then vest in the
Secretary of Agriculture complete authority to reorganize that structure, and
reassign functions within the Department. It was the opinion of the committee
that these sections were inconsistent and that one of the basic sections of the bill
would completely abrogate the reorganizations proposed under another.
The alternate approach was to endeavor to conform as nearly as possible to
the Hoover Commission's recommendations relative to the establishment of a
basic structure for the Department, while insuring the continuation of established
agricultural policies and of statutory functions authorized by the Congress. To
conform to the Hoover Commission recommendation that administrative controls
should be vested in the head of the agency, provision has been made in the amend-
ment which would permit the Secretary. to make transfers within the structure
prescribed where necessary to improve administration or effect economies of
operation.
In further explanation of its objectives, the committee tentatively
approved a summary regarding the revisions made in the general
features of the original bill, as follows:
1. The Senate has previously rejected Reorganization Plan No. 4 of 1950,
which would have vested all functions of the Department in the Secretary of
Agriculture. The provision in S. 1149, which would have reactivated this plan,
has been eliminated by the committee amendment.
2. The organizational structures prescribed in the original bill were found to-be
impractical of operation and administration.. The committee has, therefore,
completely revised the organizational structure.
3. The Hoover Commission recommended the establishment of State, county,
and local committees which would have only advisory functions with respect to
the administration of agricultural programs in the field. The committee took
the view that this would constitute a complete departure. from the acceptea prin-
ciples of administration of the farm. program and, therefore, should be considered
by substantive committees of the Congress, and not acted upon as a reorganization
measure.
4. The provision in S. 1149 which proposed the transfer of vocational-education
functions dealing with agriculture from the Federal Security Agency to the
Department of Agriculture was omitted in the committee amendment. This was
not a direct recommendation of the Hoover Commission, and the committee held
that the functions involved were primarily of an educational nature and should
remain in the agency dealing with education.
5. The amendment retains sections (a) creating two additional Assistant Secre-
taries and an Administrative Assistant Secretary; (b) requiring that customs
receipts now allocated directly to the Department (sec. 32 funds) be paid into
the Treasury and that direct annual appropriations he made by Congress for
specified purposes; (c) that new Federal agricultural-research stations should
generally be established only where existing Federal and State facilities cannot be
developed to fill the need; and (d) provides for a study of the Federal regulatory
functions exercised with respect to food and drugs.
6. The amendment expands the subsection of S. 1149 providing for the transfer
of the Bureau of Land Management, retaining under the control of the Secretary
of the Interior (in addition to functions with respect to mining and mineral
resources) "the conduct of cadastral surveys on the public lands; the adminis-
tration (other than the classification functions relating thereto) of homestead and
other land-disposal and withdrawal laws; and the custody of the public-lands
records," which functions the Secretary of the Interior contended were essential
to the operations of that Department in the conduct of its mineral-resources
activities.
The amendment prescribes that the lands transferred from the Bureau of Land
Management to the Department of Agriculture shall not be converted to the
same status as those lands presently administered by the Forest Service, but that
they shall continue to be administered under existing laws and'regulations until
a program for such integration is submitted and approved by the Committees on
Agriculture.
The amendment attempts to overcome other objections to the proposed transfer
of the Bureau of Land Management by requiring that existing laws (including the
provisions of the Taylor Grazing Act) now applicable to the operations of func-
tions transferred to the Department of Agriculture under this section shall eon-
tinue in effect until the Congress has had an opportunity to study the matter and
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38 SENATE ACTION ON HOOVER COMMISSION REPORTS
enact legislation to implement a uniform policy with respect to grazing and
forestry. The Secretary of Agriculture is required to submit to the jurisdictional
committees of Congress within 2 years a program for integrating the management
of forestry and grazing under the newly created Forest and Range Service, with
recommendations for appropriate legislation necessary to implement such a pro-
gram. It is also specifically provided that the present methods and bases of
determining grazing fees shall continue for 60 days following the expiration of the
2-year period unless Congress shall have acted prior to the expiration of that
period.
After thoroughly reviewing its previous action in trying to work
out a compromise bill dealing with the reorganization of the Depart-
ment of Agriculture, the committee agreed to defer action, pending
submission of the revised bill to members of the Senate and House
Committees on Agriculture, in order to afford those committees an
opportunity to study substantive matters involved which came within
their jurisdiction.
The chairman, in submitting copies of the revised bill to members of
these committees, pointed out that if the bill, as drafted, were ap-
and reported to the Senate by this committee, which had
proved
primary jurisdiction over reorganizational aspects of the bill, it would
involve certain important policy determinations which this committee
desired be made known to members of the appropriate jurisdictional
committees in order that they might be fully informed and afforded
an opportunity to suggest any further desirable amendments designed
to make the bill conform to the permanent policy programs approved
by the Congress. One of the prime objectives of this committee, in
adopting this procedure, was to insure that the interests of the farmers
were adequately protected in accordance with the purpose and intent
of legislative programs authorized by the Congress.
Officials of the Department were most cooperative with the staff
of this committee in developing a workable draft of legislation con-
tained in the amendments to S. 1149, outlined above, before submission
to the jurisdictional committees of the Congress. Since, in the pres-
sure of other legislative business, the committee received no official
notice of any action taken by either the House Committee on Agricul-
ture or the Senate Committee on Agriculture and Forestry, it did not
take any further action on the bill.
In view of the lack of action on the above-outlined legislative
proposal, the recommendations of the Hoover Commission in its report
on the Department of Agriculture have not been implemented. The
staff has estimated that approximately 75 percent of the report will
require reconsideration and action by the new Congress, if the recom-
mendations are to be enacted into law.
Although no direct legislative action has been completed to imple-
ment the recommendations of the Hoover Commission in its report
on Agriculture, the Secretary of Agriculture initiated "a comprehensive
departmental management survey to determine further savings," as
recommended by the Commission. In his appearance before this
committee in regard to S. 1149, on September 11, 1951, he set forth
in detail administrative progress made since the Hoover Commission
reports were submitted. These included departmental memorandums
from the Office of the Secretary of Agriculture: No. 1278, on Coordi-
nation of the Department's Agriculture Resources Conservation
Services; Memorandum No. 1279, on Coordination of Agriculture
Research Services; and Memorandum No. 1280, on Reorientation of
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Department Agencies for Agricultural Mobilization Purposes. The
Secretary contended the activities of the Department were being effi-
ciently administered in accordance with program legislation approved
by the Congress.
REPORT No. 7-BUDGETING AND ACCOUNTING
This report, consisting of 14 recommendations, emphasizes two
serious weaknesses in Federal fiscal operations: that the budget does
not accurately report costs of Federal activities, and that outmoded
accounting methods do not indicate accomplishments for funds
expended. The Federal budget is characterized as "an inadequate
document, poorly organized and improperly designed." The Com-
mission recommends (1) the establishment of a performance budget,
emphasizing work to be done rather than objects purchased; (2) an
immediate survey of the appropriation structure to correct diversity
of appropriations; (3) separation of current expenditures from capital
outlays; and (4) authorization that the President may spend less than
full appropriations if congressional purposes are still carried out. The
report then contains specific recommendations as to integration and
improvement of present accounting procedures and methods in the
Office of the Budget and the reorganization of the budgeting, account-
ing, and auditing structure throughout the Federal Government.
All of the 14 specific recommendations made by the Hoover Com-
mission in this report have been given extended consideration by the
Congress, and most of them were incorporated in the Budget and
Accounting Procedures Act of 1950. The Senate was directly opposed,
however, to the proposed creation of an Accountant General in the
Department of the Treasury, on which there had been a division
among the members of the Hoover Commission. In the opinion of
this committee, which handled the bill, this proposal was in its essence
a matter for congressional policy determination.
The Budget and Accounting Procedures Act of 1950 (Public Law
784, 81st Cong.) consists of three titles. Title I enables the President
to present the Government's financial program in simple, meaningful
terms based on the origin of the funds, their purpose, and costs
involved. It also deals with accounting and auditing, and in par-
ticular authorizes the Comptroller General to establish the general
principles, standards, and related requirements to govern the depart-
ments and agencies in establishing and maintaining the accounts for
which they are responsible. Title II requires prior approval by depart-
ment heads before submission of any legislation authorizing subsequent
appropriations, and also provides for the adjustments of appropria-
tions made necessary by reorganizations. Finally, title III repeals in
whole or in part 106 statutory provisions which were obsolete or in
conflict with this statute.
The record shows that the recommendations contained in the
Hoover Commission report were in general accord with the joint
accounting project initiated during the Eightieth Congress. At that
time a program was undertaken by the General Accounting Office,
the Treasury Department, and the Bureau of the Budget with a view
to completely revising and modernizing the fiscal structure of the
executive branch of the Government. At least 2 years prior to the
submission of the report of the Hoover Commission, the foundation
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for the program had been established and its activities constantly
urged upon the participating agencies by this committee. Some
aspects of the program were actually in operation on a preliminary
trial basis in several agencies before the Commission's report was
submitted to the Congress.
The Budget and Accounting Procedures Act not only incorporated
the basic recommendations of the Hoover Commission but carried out
the program anticipated by the Congress prior to the creation of the
Commission itself. In rejecting the provision relating to the creation
of an Accountant General in the Department of the Treasury, this
committee stated in its report (S. Rept. 2031, 81st Cong.) that this
action conforms to "policies established and adhered to over a period
of many years by the Congress. The continuation of the functions
of the General Accounting Off-ice as an agency of Congress is essential
to the maintenance of adequate appropriation and expenditure control
by the Congress over the Federal Government, and the committee
is convinced the omission of the recommendation for the creation of
an Accountant General will in no way interfere with the accomplish-
ment of every other recommendation of the Commission on Organiza-
tion of the Executive Branch of the-Government in its report on
budgeting and accounting. * * * In . the opinion of this com-
mittee, not only is the question of appointing an Accountant General
to supersede the representative of Congress-the Comptroller General
of the United States-a substantive-policy matter, but the committee
further believes that this proposal also concerns primarily the legis-
lative branch of the Government rather than the executive branch,
over which the Hoover Commission had. no jurisdiction in conducting
its survey for reorganizations in the Federal Government."
In its efforts to perfect the accounting system of the executive
branch, this committee was impressed with the statement made by
the Commission in its report that "Congress, the press, and the public
are, therefore, often confused about the total amount of appropri-
ations in any major appropriation bill." In recognizing this defi-
ciency in the legislative structure, and the urgent need for action in
order to bring the legislative fiscal structure into focus with the
tremendously increased Federal operations, the Commission suggested
to the Congress that "a complete survey of-the appropriation structure
should be undertaken without delay." Following the enactment of
the Budget and Accounting Procedures Act of 1950, the chairman of
the Senate Committee on Government Operations instructed the staff
to proceed immediately with studies which would perfect the fiscal
procedures of the Congress in accord with the evident meaning and
purport of this recommendation of the Commission., directed at the
legislative branch.
A bill designed to meet this and related fiscal policies was introduced
by the chairman of this committee in the Eighty-first Congress,
S. 2898, providing for the creation of a Joint Committee on the
Budget, to serve the Appropriations Committees of the Congress in a
manner similar to the functions carried out by the Bureau of the
Budget for the President of the United States. Further studies
were found to be necessary, however, in order to resolve conflicting
views on the part of certain Members of Congress, and to insure that
the proposed program would continue to come within present juris-
dictional controls of existing committees, particularly the Appropri-
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SENATE ACTION ON HOOVER COMMISSION REPORTS 41
ations Committees. Action on S. 2898 was therefore delayed, but
extensive hearings were held on a revised bill, S. 913, in the Eighty-
second Congress. S. 913 was reported favorably to the Senate on
July 25, 1951. The committee report (S. Rept. 576, 82d Cong.) set
forth the purposes of the proposed legislation, as follows:
S. 913 represents months of careful study on the part of the committee to evolve
some method by which the congressional fiscal structure can he improved in
order that the legislative branch may assume its rightful position in reaching vital
decisions affecting the future of the Nation. Confronted with imposing and
increasing threats to the national economy because of ever-mounting spending.
pressures both from internal sources and from abroad, it is essential that the
Congress delay no longer in meeting this issue head-on, and solving the probl.eim
before it is too late. This committee believes that S. 913 offers at least an approac
to the solution of these problems in that the legislative branch would be definitelf
provided with the equipment to permit it to examine carefully every item of
expenditure so that appropriations may be limited to only as much, and no more
than, is actually necessary to provide the minimum funds essential to successful
operation of the Government. * * *
The proposed joint committee would be assigned several major duties, perform-
ing a similar service for the legislative branch as the present Bureau of the Budget
now performs for the President and paralleling, as to expenditures, the functions
performed by the Joint Committee on Internal Revenue Taxation in the revenue
field. It would be required to inform itself on all aspects of the annual budget
of th' agencies of the Government, to examine expenditure reports, and to
investigate the details of Federal operations in order that theAppropriations
Committees might be provided with detailed information concerning each item in
the budget and the justifications therefor. It would also be required to fully
utilize information emanating from the Joint Committee on Internal Revenue
Taxation and all other sources as to estimated revenues and changing economic
conditions, in order that a well-considered fiscal program may be devised to hold
expenditures to the minimum in relation to anticipated Federal revenues and
consistent with essential requirements of Government operations and the national
security.
In addition, the joint committee would be authorized to report on and recom-
mend appropriate legislative changes to standing jurisdictional committees so
that they may eliminate wasteful practices and correct deviations from programs
authorized by the Congress, and to recommend cut-backs in such programs when,
in. the public interest. To aid the Committees on Appropriations in determining
the action necessary to conform to this program, the joint committee would be
required to submit, at the beginning of each regular session of Congress, and
periodically as deemed necessary, schedules of total estimated. costs of all programs
and projects authorized by the Congress, together with estimated costs of such
programs and projects during the current, succeeding, and subsequent fiscal
years where the program extends for more than 2 years.
The bill would authorize the employment of adequate staff personnel on a basis
of technical and professional fitness and attempts to effect the building up of a
permanent qualified staff to insure that efficient service will be rendered to the
Congress on a continuing basis.
Section 2 provides that all committees reporting legislation authorizing appro-
priations must include in their reports estimates as to the initial cost of the project
or programs and its continuing cost over the succeeding 5 years.
Section 3 of the bill authorizes the joint committee to recommend joint hearings
by the Appropriations Committees and subcommittees thereof, in the interest of
expediting action on appropriation measures. This would insure conservation of
the time and energy of the members of these committees and administrative
officials of the Government, without in any way interfering with the independent
of separate committee deliberations and decisions.
S. 913 passed the Senate, with. amendments, on April 8, 1952, by
vote of 55 to 8. The House Committee on Rules, to which the meas-
ure was referred after passage by the Senate, held 6 days' hearings and
reported a companion measure (H. R. 7888) favorably for House
10 Also see hearings on Organization and Operation of Congress, Senate Committee on Government Oper-
ations, June 6-27, 1951.
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42 SENATE ACTION ON HOOVER COMMISSION REPORTS
action. Under House procedures, it was necessary to approve a
rule permitting consideration of the bill, but that was rejected on a
record roll-call vote of 173 to 1.55 (see Congressional Record, July 3,
1952, p. 9352),
In connection with this action of the House in rejecting a rule to
even consider the merits of the bill, the House Committee on Appro-
priations succeeded in amending the supplemental appropriation bill
so as to provide each of the two Committees on Appropriations with
A total of $250,000 annually for additional staff. The action taken
was not necessary and did not in any way change existing law. The
Legislative Reorganization Act of 1946 authorizes both the Appro-
priations Committees to employ whatever personnel is required,
Without limitations as to number or cost, which authorization has not
,been utilized. This committee has indicated its intention to continue
its efforts to improve the fiscal structure of the legislative branch in
line with the modernization of the fiscal structure of the executive
branch. The Congress will not, until some such action is taken, be
able to properly exercise its control over the purse strings as authorized
under the Constitution. This can be done without in any way under-
mining the authority of the Appropriations Committees or changing
the accepted practice of permitting the House of Representatives to
initiate appropriation measures.
It has been emphasized by some of tl: e proponents of S. 913 that,
by providing the Congress with adequate fiscal machinery with
which to control Federal expenditures, to cut unnecessary programs,
and to eliminate duplication, waste, and extravagance, would bring
about savings to the taxpayers far in excess of all economies that could
possibly result from the full activation of all the other Hoover Com-
mission recommendations.
Closely related to the general subject matter of Hoover Commission
report on budgeting and accounting were a number of measures intro-
duced in the Eighty-first and Eighty-second Congresses proposing
various legislative fiscal reforms, which are set forth briefly as a part
of the composite legislative fiscal program. The legislative budget
provisions in the Legislative Reorganization Act of 1946 created a
joint committee to recommend the over-all total to which appro-
priations should be cut annually, in view of revenue prospects. For
various reasons this provision has failed. and, hence, various alterna-
tives have been proposed for change in addition to the McClellan
bill, S. 913, including Senate Concurrent Resolutions Nos. 18 and
38 of 1949, and No. 27 of 1941. The three resolutions called for
an annual omnibus appropriation bill, passage of which would bring
about a part of the earlier broad legislative objective of the legislative
budget which interrelated total appropriations and revenues. All of
the resolutions were reported favorably by the Senate Committee on
Rules and Administration, but made little further progress. Mean-
while, efforts have been made by the House Appropriations Commit-
tee, and then abandoned after a single year's experimentation, to
place an omnibus appropriation bill in action without statutory change.
To meet objections of the executive agencies that the above type
of omnibus appropriation bill greatly increases the danger of bad
legislative riders, three members of the Senate Committee on Rules
and Administration introduced S. 2161 on June 29, 1949, authorizing
the President to impound certain appropriated moneys, which was
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SENATE ACTION ON HOOVER COMMISSION REPORTS
referred to the Committee on Government Operations. This pro-
posal resembles an item veto in that the President may strike out
parts or all of items of appropriations which he deems are "not in the
public interest," in general accord with the recommendation of the
Hoover Commission, that the President be authorized to spend less
than full appropriations if legislative purposes are carried out. In
an attempt to meet the constitutionality question involved in this
provision, the bill then authorized Congress to reappropriate by simple
majority any dollar items stricken by the President. If so reappro
priated by the Congress, the President may not again intervene in
those cases. S. 2161 ina;de no further progress.
In 1949, Senator McClellan introduced Senate Joint Resolution 108,
requiring an over-all cut of not less than 5 percent, nor more than 10
percent, to bring the Federal budget more nearly in balance. The
resolution was favorably reported by the Senate Committee on Govern-
ment Operations (S. Rept. 498, dated June 13, 1949). In order to
make further legislative progress, it became necessary to attempt
attaching the resolution as an amendment to an appropriation bill;
this required a technical vote to suspend the rules and the final vote of
48 to 28 fell three votes short of obtaining the necessary two-thirds
majority. Probably this background played a considerable role in
the large over-all reduction which the Congress required be made in
1950 appropriations.
Meanwhile, Senator McClellan introduced another proposal,
Senate Joint Resolution 131, on September 30, 1949, requiring the
President annually to submit along with his regular budget an alter-
nate and balanced budget for the fiscal year 1951. It was felt that
Congress would thereby be much more adequately equipped to mak
,specific and informed determinations as to what over-all deficit, if any,
developing circumstances may justify. The Senate voted the sub
stance of this resolution as an amendment to the Executive Pay
Raise Act of 1949, but it was stricken in conference (H. Rcpt. t411). J
When the Senate Committee on Government Operations favorably
reported S. 913, the Joint Budget Committee bill, the committee rlso
favorably reported an accompanying amendment of S. 913 cr.lling for
annual submission by the President of an alternate balanced budget.
The two proposals were kept separate by the committee so as not to
mingle the differing arguments relative to them. The Senate passed
and sent along S. 913 for House consideration, without adding to it the
amendment calling for an alternate balanced budget requirement.
Except for the two deviations outlined above, which are primarily
legislative policy matters and not reorganization proposals, this
report has been 100 percent approved and activated.
REPORT No. 8-NATIONAL SECURITY ORGANIZATION
This report contains six basic recommendations, designed to bring
about unification. and strengthening civilian control over the National
Military Establishment. The recommendations cover organization,
policy, budgeting, accounting, personnel (civilian and military), and
integration of national defense. The report states that there is a
serious lack of close working relations within the National Military
Establishment, and as a result of this condition, disharmony, lack of
uniform planning, waste, and extravagance are prevalent throughout
the organization.
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SENATE ACTION ON HOOVER COMMISSION REPORTS
The Commission ?pecifically recommended that complete fiscal
authority be vested in the Secretary of Defense, that the entire mili-
tary budget system be overhauled, the adoption of a performance
budget, and that the Department maintain complete, accurate, and
current inventories. The Commission further recommended that
complete authority over the Department be vested in the Secretary,
in order that he can maintain control over its operations, in accord-
ance with the general recommendations contained in the report on
general management. Other Hoover Commission recommendations
covered a variety of subjects ranging from changes in administration
of civil-service employees, including decentralization of recruitment,
and the establishment df uniform personnel policies; effecting more
effective working relations between the Joint Chiefs of Staff, National
Security Council, CIA, and the Munitions Board; and the transfer of
control over hospital and other medical services to a unified medical
administration, as recommended in it= report on medical activities.
The concluding recommendation of the Commission dealt directly
with questions of policy relating to such, problems as civilian mobiliza-
tion, use of advisory boards, formulation of stockpiling policies, and
psychological and economic -warfare.
Following the submission of the Hoover Commission reports, the
National Military Establishment drafted its own bill (S. 1843) to
implement the 24 specific recommendations in this report. In addition
to the administration bill, a number of other bills were introduced by
Members of Congress to carry out specific objectives. One of these,
H. R. 2216, amended the National Security Act of 1947 by providing
for the establishment of an Office of Under Secretary of Defense
I (Public Law No. 36, 81st Cong.). The Eighty-first Congress also
authorized the Central Intelligence Agency to reorganize and improve
its internal structure in accordance with the Commission's recom-
mendations (Public Law No. 110). Enactment of another bill (H. R.
8198) provided for reorganizing the Department of the Army in
accordance with the organization structure established under tem-
porary authority granted during World War II. This act (Public
Law No. 581, 81st Cong.) established on a permanent basis clear lines
of authority from the Secretary to the various services and staff
officers, and repealed many statutory provisions which heretofore
prescribed organizational details and duties and powers of officers
subordinate to the Secretary.
These actions were further coordinated to carry out the purport and
objectives of all of the Commission's recommendations on the National
Security Organization as proposed in the bill (S. 1843) drafted by
representatives of the Hoover Commission and the National Military
Establishment, which, after extensive hearings, was enacted into law
(Public Law No. 216, 81st Cong.). This act converted the National
Military Establishment into a Department of Defense. It provided
for basic changes in the composition of the National Security Council,
converted the Departments of Army, Navy, and Air Force into
military departments without Cabinet status, and yested in the
Secretary of Defense complete authority and control over the admin-
istration of the new department. The act also authorized the estab-
lishment of three Assistant Secretaries of Defense, created the position
of Chairman of the Joint Chiefs of Staff, established the Munitions
Board as an integrated part of the Department under the jurisdiction
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of the Secretary, and made the Research and Development Board
advisory to the Secretary as to the status of scientific research relating
to the national security.
The act further provided for the establishment of a Comptroller for
the Department of Defense and a Comptroller for each of the three
military departments and authorized the establishment of a
performance-type budget calling for the coordination of the Depart-
ment's accounting, auditing, statistical, and fiscal policies, procedures,
and methods over all appropriations and funds allocated to it. This
section of the act was in line with related actions taken by the Congress
in approving the Budget and Accounting Procedures Act of 1950 and
the Post Office Department Financial Control Act of 1950.
The Federal Property and Administrative Services Act, approved
June 30, 1949, provided that the Administrator of General Services
establish and maintain such uniform Federal supply catalog systems
as may be appropriate to identify and classify personal property
under the control of Federal agencies. This act also provided that
the Secretary of Defense and the Administrator of General Services
shall coordinate the catalog activities of the two agencies so as to avoid
unnecessary duplication. Under this authority coordinating com-
mittees were established and areas of understanding were agreed to
by the Secretary of Defense and the Administrator of General Services.
Subsequently the Department of Defense attempted to withdraw
from this arrangement. A resolution drafted and approved by the
Department of Defense, proposing to separate its cataloging program
from all other departments and agencies of the Government, was
rejected by the Congress. After the jurisdictional committees of
Congress had consulted with representatives of the GSA, House Con-
current Resolution 97 was introduced and adopted, to place the
Congress on record as again approving the previously authorized
developments of a single supply catalog system, and calling upon the
affected agencies to expedite action on the program.
In the Eighty-second Congress the entire program was reappraised,
and a bill (H. R. 7405) was introduced in the House which provided
for the further consolidation and coordination of the cataloging and
standardization program. Under the authority of this act, known as
the Defense Cataloging and Standardization Act (Public Law 436,
82d Cong.) a Defense Supply Management Agency was established
within the Department and authorized to develop "a single catalog
system and related supply standardization program."
During the latter part of the calendar year 1950, the staff of this
committee made a study of the procurement and supply system of the
Department of Defense, with a view of ascertaining where duplicating
and overlapping services are carried on in the Military Establishment.
Because of the tremendous size of the Department's supply program
and the extent of its operations throughout the world, the staff con-
centrated on a single segment of the program which could be readily
identified and compared with similar civilian activities of the Gov-
ernment. This study revealed that the Departments of the Army
and the Navy maintained independent medical-supply systems for
their respective services competing against each other for medical
personnel, for the procurement, warehousing, and issue of medical
supplies and equipment which are procured from the same sources.
As a result of duplications of this type, millions of dollars have been
24889-52-4
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spent for construction and maintenance of warehouses, supply depots,
and distribution centers, which the committee recommended should
be eliminated by consolidated procurement and distribution of such
items of supply. In the spring of 1951, the Intergovernmental Rela-
tions Subcommittee of the House Committee on Expenditures in the
Executive Departments followed up on this committee's study, and
initiated a survey of the management of Federal supply with special
emphasis on military-supply management. Extensive hearings and
field studies were conducted by the subcommittee and several reports
were issued, pointing out deficiencies in the management and opera-.
tion of the supply and distribution systems.
The information contained in these reports, together with other
data and observations of committee members, was made available to
the Appropriations Committees of Congress. Based on this informa-
tion, the Senate Appropriations Committee amended the bill providing
appropriations for the Department of Defense, fiscal year 1953, to
prohibit any officer of the Department from obligating any funds
until the Secretary of Defense issued necessary regulations eliminating
duplication of procurement, production, warehousing, and distribution
of supplies or equipment or related supply-management functions.
This amendment, which became effective on September 5, 1952, will
undoubtedly improve the efficiency of the Department and make
possible great savings in manpower, material, transportation costs,
and appropriations, while increasing the effectiveness of logistics sup-
port. In addition, this program will bring about better utilization of
trained. medical personnel who have been engaged in this type of work
rather than in medical care and services.
The Congress also approved Reorganization Plan No. 4 of 1949,
transferring the National Security Council and the National Security
Resources Board from the Department of Defense to the Executive
Office of the President, and Reorganization Plan No. 25 of 1950, which
transferred the functions of the National Security Resources Board to
the Chairman and made the Board advisory to the Chairman. The
latter plan clarified the responsibilities of the NSRB in the mobiliza-
tion area and permitted the expedition of mobilization of civilian
defense programs. The effect of plan No. 4 of 1949 was to bring about
closer relations between the National Security Council, the Central
Intelligence Agency, the Research and Development Board, the
Munitions Board, and the National Security Resources Board. The
work of the Central Intelligence Agency was improved under the
authority of the basic acts, which resulted in the creation of an
Interdepartmental Intelligence Committee and an Interdepartmental
Committee on Internal Security under the National Security. Council.
Except for minor variations as were found necessary by the appro-
priate jurisdictional committees to meet the administrative problems
outlined by the Secretary of Defense and other officials under whose
authority these programs would be carried out, all of the recom-
mendations within the Commission's report on the National Security,
Organization have been fully implemented. The result has been to
improve the structure of the Department of Defense and correlated
agencies. Full utilization of the authority provided will also bring
about better coordination of Federal procurement and of cataloging
systems.
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SENATE ACTION ON HOOVER COMMISSION REPORTS 47
As an indication of the continued benefits that will accrue from the
Hoover Commission's reports. through actions initiated by the Con-
gress to supplement activation of certain of its recommendations,
Public Law 581 of the Eighty-first Congress, which provided for the
reorganization of the Department of the Army, is cited. The pro-
visions of this act related directly to developments following the
approval of Public Law 216 of the Eighty-first Congress, creating the
Department of Defense. Public Law 581 authorized a complete
reorganization of the Department of the Army, to accord with actions
taken in direct implementation of the Hoover Commission's recom-
mendations, under the basic reorganization program previously
approved. This type of action is indicative of the legislative process
in following up on these programs as additional facts are developed
and information becomes available relative to further desirable changes
in the structure of the executive branch, and is a good example of
legislative action that may be expected in the future on many of the
reports submitted by the Commission.
REPORT No. 9-VETERANS' AFFAIRS
The Commission made six general recommendations in this report
to correct "serious organizational defects" which result, among other
things, in "conflicting lines of authority to field offices with divided
responsibility for programs," an "excess of internal organizational
units, many of which are based on a process rather than a program"
and, in the final analysis, a general impairment of service to veterans.
Six of the twelve specific recommendations contained in this report,
relating to changes and improvements in internal management, were
in general accord with other recommendations in the reports on general
management and general services.
A bill (S. 2019) was introduced in the Eighty-first Congress to
carry out another recommendation, which proposed the consolidation
of insurance functions into a Veterans' Life Insurance Corporation.
The bill was referred to the Senate Committee on Finance, which
took no action. A similar bill was reintroduced in the Eighty-second
Congress (S. 1138), together with another bill (S. 1151) carrying out
the other recommendations of the Commission in its report on vet-
erans' affairs. The first of these measures was again referred to the
Committee on Finance, while the latter bill was submitted to this
committee. The Subcommittee on Reorganization undertook a study
of its provisions, and to make recommendations for action to the full
committee.
On receipt of the Hoover Commission's Report on Veterans' Affairs,
the chairman of this committee wrote the Veterans' Administrator
requesting his views and comments on the recommendations which
affected veterans' programs. In response to this request, dated
May 23, 1949, General Gray replied fully on June 24, 1949, expressing
apposition to some aspect of every one of the Commission's recom-
mendations, contending that studies had constantly been made and
would continue with respect to organization of the Veterans' Adminis-
tration, and stated that" as it becomes evident that changes in organi-
zation will promote efficiency in service to veterans or economy without
sacrifice of service, the necessary action will be taken." The Adminis-
trator also contended that "the present practices on issuance of
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48 SENATE ACTION ON HOOVER COMMISSION REPORTS
directives are believed to be proper," but vigorously opposed the
incorporation of the veterans' insurance program, stating that-
a careful consideration of all the factors involved leads me to the conclusion that
the creation of a corporation to handle insurance operations would not add any
impetus to better service to the policyholders or economy in operation.
The Administrator expressed somewhat similar views regarding other
basic recommendations of the Commission relative to readjustment of
the compensation and pension services, loan guaranty programs, and
the transfer of veterans' medical activities to. a proposed United
Medical Administration. The latter is dealt with in' the report on
medical services.
In view of the many problems involved, the widespread interest
in the operations of the Veterans' Administration and the opposition
views of the Administrator and representatives of veterans' organiza-
tions, the President apparently determined that the Hoover Com-
mission report was too broad in its general aspects to warrant action
without more adequate and extensive study. He therefore authorized
the Veterans' Administrator to enter into a contract for a complete
management survey of the central activities of the Veterans' Admin-
istration and of certain selected typical field services, with a view to
developing more details and basic facts governing the present opera-
tions of the Veterans' Administration before attempting to reorganize
the agency. It was proposed that such a broad survey would not
only provide a better basis for the guidance of the Congress in enacting
legislation along the lines recommended by the Hoover Commission,
but would also indicate administrative actions which would conform
to the purpose and intent of the Commission's recommendations.
The Subcommittee on Reorganization thereupon determined that
it would be unproductive to attempt to hold hearings on the pending
bill (S. 1151) until the reports of the management firm were available.
Accordingly, the subcommittee suggested postponement of action until
the new Congress convened, to which the full committee agreed.
The House Committee on Veterans' Affairs, in the meantime, started
hearings on companion bills to S. 1138 and S. 1151, as well as other
reorganization proposals pending before that committee. As the
hearings proceeded, however, it developed, as this committee, had
previously found, that it would be premature to act on the Hoover
Commission recommendations until the broader and more compre-
hensive management reports were made available to the Congress.
In addition to these hearings, a subcommittee of the House Com-
mittee on Expenditures in the Executive Departments (now the
Committee on Government Operations) held extended hearings in
May 1950 on the national service life insurance program, with a view
to exploring the possibility of promoting more efficiency in operation
and effecting economies in its administration wherever possible.
During the process of these hearings, consideration was given to the
Hoover Commission recommendations, as well as to many other
suggestions relative to the improvement of the Veterans' insurance
services.
Although this entire area has been under constant study by the
committees of the Congress during the 3 years following the submission
of the Hoover Commission's recommendations, it has been the view
of the jurisdictional committees that it would be only logical to with-
hold legislative action until an opportunity had been afforded to fully
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SENATE ACTION ON HO V
evaluate the results of the management survey. It may be concluded,
therefore, that while it has been necessary to withhold legislative action
on this extensive program, it is only a temporary postponement of
such action. If the recommendations contained, in the management
-survey do not permit the Administrator to take administrative action
necessary to correct existing abuses and modernize the structure of
the Veterans' Administration, legislative direction must be provided
for this purpose.
Only certain phases of the six basic recommendations of the Hoover
Commission in this report have been carried into effect. A partial
implementation of a number of proposals dealing with interna'
controls were effectuated through administrative action. This in-
eludes changing the title of Executive Assistant Administrator to
Deputy Administrator, and the appointment of nine Assistant Ad-
ministrators, with directives being released through the central office
as promulgated by the Administrator. Finally, existing laws relating
to the certification of educational institutions, although still left to
the States, have been strengthened, thus giving effect to the primary
objective of this proposal.
Further action on proposed administrative and legislative changes,
constituting an estimated 80 percent of the report, will be reconsidered
by the Congress in light of the more detailed and elaborate recom-
mendations proposed in the management survey. This survey of the
over-all organization and interrelationships of the Veterans' Adminis-
tration was contracted for on December 28, 1950, at a cost of $605,000.
This approximates one-third of the total expenditures made by the
Hoover Commission for its activities, including its task forces of more
than 300 specialists who made studies of the operations of the entire
Federal Government. In view of the indicated broad coverage of
this specialized survey into the activities of the Veterans' Administra-
tion, it is not unlikely that there may be many recommendations
submitted to the Administrator and to the Congress which world be
at variance with the conclusions reached by the Hoover Commission.
The recommendations were available to the management firm, how-
ever, and were necessarily taken into account before conclusions were
reached. Therefore, any future administrative or legislative actions
will be based on a more detailed and comprehensive study than was
possible by the Hoover Commission.
The chairman of this committee requested the Veterans' Adminis-
tration to furnish copies of the management survey, completed early
in June of 1952, to the committee for staff analysis during the recess
period. On the adjournment of the Congress, the staff initiated
detailed studies into the operations of the Veterans' Administration,
with special emphasis on hospital construction, the utilization fo
hospital facilities and medical personnel, and. on the possibilities of
improving the administration of the veterans' insurance program.
Although the management report has been withheld from the staff
up to the time this report was issued, efforts will continue to be made
to obtain the report so that a complete analysis of the recommenda-.
Lions may be made available to the committee on the convening
of the Eighty-third Congress. At that time drafts of appropriate leg-
islation necessary to fully implement the objectives contained in the
report of the Hoover Commission and the management survey will be
prepared by the staff for committee consideration and action. Hear-
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ings have already been tentatively set by the chairman of the com-
mittee, starting in January 1953, and full committee consideration
of all aspects of this report and the report on the management survey
is assured.
REPORT No. 1O--DEPARTMENT OF COMMERCE
The Commission, in its report on the Department of Commerce,
recommended (1) improvements in departmental administration in
accordance with the Commission's recommendations in the report on
general management of the executive 'branch; (2) a grouping together
in the Department of Commerce of all major transportation activities
of the Government now located in various executive agencies, com-
missions, and boards, except for independent regulatory functions; (3)
transfer of the commercial fisheries activities of the Department of
the Interior to a proposed Bureau of Commercial Fisheries in the
Department of Commerce; (4) establishment of an interdepartmental
committee between the Departments of Commerce, Agriculture,
Interior, and State to determine respective commodity-research areas;
and (5) limitation of the foreign commerce reporting activities of the
Department to highly specialized technical cases, as recommended in
the Commission's report on foreign affairs.
In addition to these 5 basic recommendations, the Commission
included 14 specific recommendations relative to the internal organiza-
tion of the Department, providing for the consolidation and coordina-
tion of existing functions and those proposed to be transferred to the
department. In this group were a number of recommended trans-
fers relating primarily to the proposed centralization of transportation
activities within the Department of Commerce.
In implementation of some of these recommendations, plan No. 7
of 1949 transferred the functions of the Public Roads Administration
from the General Services Administration to the Department of Com-
merce (S. Dept. No. 927, 81st Cong.). Prior to the effective date
of this plan, August 17, 1949, the Public Roads Administration was a
constituent agency of the General Services Administration, where it
was placed pursuant to section 103 of the Federal Property and
Administrative Services Act of 1949, and designated as the Bureau
of Public Roads.
Reorganization Plan No. 5 of 1950 (S. Rept. No. 1561, 81st Cong.)
provided for the reorganization of the :Department of Commerce, as
recommended in this report and in the report on general management.
The plan transferred to the Secretary all departmental functions,
except those of hearing examiners, the Civil Aeronautics Board, the
Inland Waterways Corporation, and the Advisory Board of the Inland
Waterways Corporation. It also authorized the Secretary to delegate
functions to such subordinates as he deems necessary, and to appoint
an Administrative Assistant Secretary. Some opposition developed
to the plan because of its failure to exempt the transfer of certain
judicial or quasi-judicial functions of the ]Patent Office to the Secretary.
A resolution of disapproval (S. Res. 259) was introduced, but was
rejected in the Senate and the plan became effective on May 25, 1950.
Reorganization Plan No. 6 of 1949, effective August 20, 1949 (S.
Rept. No. 840, 81st Cong.), had strengthened the administration of
the United States Maritime Commission by vesting in the Chairman
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SENATE ACTION ON HOOVER
responsibility for administrative control, and for the appointment and
supervision of personnel. Reorganization Plan No. 21 of 1950,
effective May 19, 1950 (S. Rept. No. 1674, 81st Cong.), provided
for the abolition of the United States Maritime Commission and
transferred its functions to the Department of Commerce, established
a Federal Maritime Board, a Maritime Administration, and an office
of Under Secretary of Commerce for Transportation. The functions
of the Maritime Administration, except for certain regulatory and
subsidy functions which were vested in the Federal Maritime Board,
were transferred to the Secretary, with authority to redelegate such
responsibility as he may determine to the new Administrator or other
official. Plan No. 21 of 1950 was a further step toward a complete
revision of the maritime program and the integration of its functions
into the Department of Commerce, as recommended by the Hoover
Commission.
Reorganization Plan No. 24 of 1950 proposed the transfer of the
RFC to the Department of Commerce, where the corporation would
be subject to the supervision, coordination, and policy guidance of the
Secretary. This plan was in accord with the dissenting views of three
of the Commissioners, but was contrary to the recommendations of the
majority of the Hoover Commission, who proposed that the RFC
be placed in the Department of the Treasury. A resolution of dis-
approval was filed in the Senate (S. Res. 290), and the plan was re-
jected by the Senate (S. Rept. No. 1868, 81st Cong.).
Plan No. 1 of 1951, providing for an internal reorganization of the
Reconstruction Finance Corporation, was then submitted by the
President, approved by the Congress, and became effective on April
30, 1952 (S. Rept. No. 213, 82d Cong.). This plan fixed adminis-
trative responsibility in a single Admimstrato as recommended by
the Hoover Commission, and created a Loan Policy Board and a
statutory Board of Review, but continued it as an independent
agency.
There were a number of other recommendations contained in this
report which were considered in connection with the above-outlined
transfers, many of which were carried into effect wholly or partially,
either as recommended or as to intent, such as the grouping of all non-
regulatory transportation activities within the Department of Com-
merce, studying marine functions of the Bureau of Customs with
eventual transfer to the Department of Comme.?cc if justified, and
establishing a coordinating structure in the Department relating to the
functions of the Weather Bureau.
Other recommendations in this group were not approved by the
Congress for various reasons. Among these were a proposal to estab-
lish a Bureau of Civil Aviation to administer the CAA and to issue
and enforce air-safety rules with CAB review; transfer of the National
Advisory Committee for Aeronautics to the proposed Bureau of Civil
Aviation; transfer of motor-carrier safety functions from ICC to
Commerce; transfer of car service and safety and railroad-consolida-
tions functions from ICC to Commerce; to assign establishment of
transportation-route programs for air, land, and water to the Secretary
of Commerce; to transfer all commercial fishery activities of the De-
partment of the Interior to a Bureau of Commercial Fisheries in the
Department of Commerce; and to establish an interdepartmental
committee to determine commodity-research areas. The reasons for
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rejection of these proposals were based primarily upon the premise
that they involved basic legislative policy determinations of long-
standing controversy among the departments, the industries affected,
and the Congress.
Still other recommendations were not approved because they did
not conform to what the appropriate committees of Congress consid-
ered to be good administrative practice. In the latter group was the
proposal to transfer the Office of Defense Transportation from the
Executive Office of the President to the Department of Commerce.
To have carried out this recommendation would have established the
ODT as a permanent component of the Department, which. consti-
tuted, in effect, repeal of the basic law which provided that it should
be liquidated as soon as it performed the functions for which it was
created. Accordingly, the Office of Defense Transportation was ter-
minated by Executive order effective July 1, 1949.
The most far-reaching recommendation in this report involved basic
policy problems which have been pending; before the Congress for a number of years. It proposed that all major "nonregulatory" trans-
portation activities of the Government be grouped in the Department
of Commerce. When this committee reported the bill to create the
General Services Administration, it included a provision to the effect
that the General Services Administrator would be vested with cen-
tralized controls over transportation and traffic management, includ-
ing determination of rates and classification of property and other
transportation problems common to all agencies. These were con-
sidered to be service functions now performed by many Federal agen-
cies which should be centralized in accord with the over-all program
set forth in the report on general services. Strenuous opposition de-
veloped to action on this phase of this program, until it could be fully
evaluated and permanent legislation drafted by the substantive com-
mittees of the Congress. The committee therefore accepted amend-
ments restricting to some extent the authority granted to the General
Services Administrator, awaiting the outcome of pending legislative
studies by other committees. This matter has been considered by
various committees of Congress on numerous occasions, and the rec-
ommendation of the Hoover Commission, that this entire policy-
determining function should be given to the Secretary of Commerce,
has been rejected.
The general basis for rejection of this proposal is set forth in the
minority dissenting views of Commissioner Clarence J. Brown, who
stated that-
in the field of transportation, the regulatory function is predominant and the
executive, promotional, and administrative activities relating thereto must ad-
here to the broad regulatory structure,
The essence of this argument is that the, establishment of central con-
trols, such as a proposed Bureau of Civil Aviation in the Department
of Commerce, would supersede many of the regulatory functions of the
existing independent boards and commissions on the basis that they
were nonregulatory transportation activities. The minority dissent
of Commissioner Brown was supported by the Civil Aeronautics
Board in its comments on the recommendations of the Hoover Com-
mission. The CAB maintained that this recommendation, which is
duplicated in the Commission's report on regulatory commissions,
cannot be justified on the grounds of grouping in the Department of
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SENATE ACTION ON HOOVE
Commerce "nonregulatory transport activities" since such function
is distinctly "regulatory" in character, and the consolidation of the
functions of promulgation and administration, if effected at all,
should be in the Board rather than in the Department. The Board
maintained that the approval of such a program would make admin-
istration more cumbersome than the existing division of responsi-
bilities.
Another recommendation of the Hoover Commission which met
with almost united opposition, even from the Secretary of Commerce
who supported most of the recommendations in this report, was the
proposed transfer of the National Advisory Committee for Aeronau-
tics to the Department of Commerce. The Secretary of Commerce
stated that, inasmuch as all the research now conducted by the
NACA is for military purposes and its future work will have little
civilian air transport application, there seems to be no valid reason to
transfer this organization to the Department. This proposal was also
strenuously opposed by the NACA, which set forth eight basic reasons
for its opposition, concluding that-
the independent status of the NACA has been a primary factor ii its successful
operation through three decades, including two world wars, and made possible
American supremacy in the air in World War 11. Great harm to the national
security could easily result from change in status. The prrsent indeperdent
status should be continued unless there can be a clear showing a change would
result in improvement.
The Congress set up the NACA so that it could act as an indep end-
ent agency, and included among its members top representatives of
other governmental agencies having problems relating to scientific re-
search in the field of aviation. In approving the basic legislation gov-
erning the activities of the NACA, the jurisdictional committees
determined that it was not desirable or feasible to bring its activities
under the supervision of the National Military Establishment, the
Department of Commerce, or any other agency. It was held at that
time that to do so would change its character, impair its efficiency,
lessen its usefulness, reduce cooperation between governmental
agencies concerned, and retard the progress of aeronautics. For these
and other reasons the Congress disagreed with this recommendation,
and no action has been taken on this proposal of the Hoover Com-
mission.
In addition to the actions taken under the reorganization plans
submitted to the Congress in 1949, 1950, and 1951, a Hoover Com-
mission bill, S. 2056, was introduced in the Eighty-first Congress,
which would have given the Secretary of Commerce all the authority
necessary to reorganize the Department of Commerce as recommended
by the Commission. The bill would have also transferred to the
Department the function of executing the transportation policies of
the United States to the extent that such policies entailed the exercise
of executive functions. S. 2056 was referred to the Senate Committee
on Interstate and Foreign Commerce, where no action was taken. A
similar bill was prepared by the Citizens Committee for the Hoover
Report and introduced in the Eighty-second Congress (S. 1141) and
referred to the Committee on Interstate and Foreign Commerce.
This bill attempted to incorporate all of the recommendations of
the Hoover Commission for legislative action, but, since that com-
mittee took the view that many of these proposals were of such
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Eft COMMISSION REPORTS
a controversial nature and so directly opposed to established policies
in these various industrial fields, as set forth briefly above, it was not
in the public interest to enact them into law. The jurisdictional
committees of the Congress will, however, continue to review the
recommendations of the Hoover Commission in connection with thei
consideration of general legislation in these areas, with a view to
incorporating those proposals which are later found to be acceptable
and in the public interest, after some of the present conflicts have
been resolved.
In summation, basic recommendations included in this report have
been fully effectuated with relation to improvements in departmental
management, and as to certain aspects of the general program calling
for the grouping of nonregulatory transportation activities in the de-
partment. The proposals relating to the various transfers, with the
exception of. the effected transfers of the United States Maritime Com-
mission and the Public Roads Administration to the Department of
Commerce, involve important, regulatory functions and legislative
policies with which the Congress has long been concerned. Continu-
ing study of actual operating conditions to determine permanent
programs will depend upon developments which may make it good
legislative policy to alter the present operating aspects of the programs
involved.
REPORT No. il-DEPARTMENT OF THE TREASiJRY
The Hoover Commission stated that the adoption of the 1.0 recom-
mendations in this report would make the Department of the Treasury
'the real fiscal center of the Government" by clarifying responsibilities
in the fields of (a) assessment and collection of revenues; (b) custody
and disbursement of funds; (e) accounts; (d) financial reports; (e) debt
and currency; (f) credit; (g) credit-institutions; and (h) inspection of
liquidating agencies. The report proposed that three nonfiscal func-
tions (the Bureau of Federal Supply, the Coast Guard, and the Bureau
of Narcotics) be transferred out of the Treasury, and that the super-
vision of three lending and guaranty agencies (Reconstruction Finance
Corporation, the Export-Import Bank of Washington, and the Federal
Deposit Insurance Corporation) be transferred into the Department of
the Treasury.
Some of these proposals duplicate recommendations in other Hoover
Commission reports. The recommendation proposing the transfer of
the Bureau of Federal Supply to the Office of General Services was
repeated in the Commission's report on General Services. Likewise,
the recommendation in the report on Budgeting and Accounting,
calling for the creation of an Accountant General in the Department
of the Treasury, is also duplicated. in this report. Action on both of
these recommendations has been discussed in the reports on general
services and budgeting and accounting. I
The Congress has also given extended consideration to the Com-
mission's recommendation that the RFC, the FDIC, and the Export-
Import Bank be transferred to the Department of the Treasury. The
President submitted Reorganization Plan No. 24 of 1950, providing
for the transfer of the RFC to the Department of Commerce, with
functions of the Corporation placed under the supervision of the
Secretary. Neither of these proposals relating to the RFC were
acceptable to the Congress.
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Following the rejection of Reorganization Plan No. 24 of 1950 by
the Senate in the Eighty-first Congress, the President submitted a
now reorganization plan in the Eighty-second Congress (Reorganiza-
tion Plan No. 1 of 1951) which continued the independent status of
the Reconstruction Finance Corporation, establishing a single Admin-
istrator, abolishing the Board of Directors, and setting forth a pro-
cedure for the granting of loans. This plan, which became effective
on April 30, 1951, was not in accord with the Commission's specific
recommendations, but conformed to the general tenor of the Commis-
sion's reports that the Government's financial enterprises or corpora-
tions should have centralized administrative control rather than con-
trol by a multiheaded board.
There were dissenting opinions filed on the part of five members of
the Hoover Commission to proposed agency transfers to the Depart-
ment of the Treasury. These dissents were based on the view that it
was inappropriate to place the Export-Import Bank of Washington
under the supervision of the Treasury Department. Three of the
Commissioners suggested that it would be more desirable to place the
bank in the Department of Commerce. Another Commissioner main-
tained that the underlying problems involved and the question as to
which of the departments should be charged with the supervision of
the Export-Import Bank and the Reconstruction Finance Corpora-
tion had not been sufficiently explored by the Commission to justify
any specific recommendation.
The Board of Directors of the Export-Import Bank of Washington
took a similar view and, in response to a request from this committee,
stated that-
It is a considered opinion of the Directors of the Export-Import Bank that to
place the bank under the supervision of the head of any executive department
would contribute nothing to the efficient conduct of the Government, but would
on the contrary, through destroying a very effective plan of operation set up in
the Export-Import Bank Act of 1945 and the Bretton Woods Agreement Act,
incur the risk of creating confusion and.of interfering with the efficient perform-
ance of the bank's functions.
With this view the jurisdictional committees of the Congress agreed,
and therefore took no action on the Hoover Commission's recommen-
dations relative to the Export-Import Bank.
Five Commissioners dissented in some respects relative to the
proposed transfer of the Federal Deposit Insurance Corporation to the
Treasury. Two of them contended that the Corporation should be
left in its independent status unless the Congress determines that all
Federal banking agencies, including the Federal Reserve System,
should be coordinated in Treasury. Three of the dissenting Com-
missioners concluded that if the Corporation were put in the Treasuryy',
the only compelling reason for such transfer would be that its bank-
examining functions should be more closely integrated with those of the
Comptroller of the Currency. They pointed out that this same reason
is equally valid as to the bank-examining functions of the Federal
Reserve System which require as much and just as little integration as
those of the FDIC.
The proposed transfer of the functions of the FDIC, which had been
theretofore established by the Congress to meet a specific need in a
bank emergency is an excellent example of how many of the Hoover
Commission's recommendations, if adopted, would change basic poli-
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ties and established legislative progri ms. The FDIC was established
as a unifying link between the State banking and the National banking
systems, consistent with the concept of Federal deposit insurance as
determined by the Congress. The Congress held that there were
fundamental reasons why the FDIC should remain as an independent
agency free from the control or interference of any other agency or
department, and that to the extent to which such independence of the
Corporation might be impaired, the dual banking system would be
endangered.
This recommendation of the Hoover Commission was vigorously
opposed by the FDIC, which commented in a letter to the chairman
of this committee as follows:
The law creating the Federal Deposit Insurance Corporation was not hastily
considered and passed by the Congress under stress of the emergency existing in
1933. Numerous proposals for Federal deposit insurance had been carefully
studied by the Banking and Currency Committees of both the Senate and House
for more than_a year before adoption of the first deposit-insurance law. During
this period and in the time between the date of enactment of the first law and the
date of enactment of the permanent law in 1935, much debate took place on some
of the very same proposals that are now before your committee in the Commission
and task-force reports.
Serious consideration was devoted to the question of whether Federal deposit
insurance was to be a Government guaranty of deposits or a mutual trust estab-
lished and sponsored by the Government and maintained by the banks. The
present system, a mutual-trust arrangement, was adopted in preference to a direct
governmental guaranty. Thus, control of the Corporation by any of the execu-
tive departments, including the Treasury, was automatically excluded as being
inconsistent with the mutual character of the Federal deposit-insurance system,
and a bipartisan Board of Directors was given authority for the management of
the Corporation as a means of assuring independent and impartial administration.
All of the Hoover Commission's recommendations in its report on
the Treasury Department were incorporated originally in a bill
introduced in the Eighty-first Congress by Senator McCarthy (S.
2058). Before any legislative action could be taken on this bill,
however, the President submitted a reorganization plan (No. 1 of
1950), providing for the reorganization of the Department of the
Treasury which incorporated the general management phases of this
report.
The original statutes creating the various major operating units
within the Department of the Treasury vested certain independent
functions in the heads of these agencies, which include the Office of
the Comptroller of the Currency, and the, Bureaus of Internal Revenue,
of Customs, of Narcotics, of the Mint, of Engraving and Printing,
the United States Coast Guard, and the Fiscal and Secret Services.
Plan No. 1 of 1950 proposed the centralization in the Secretary of all
functions of the Department, except those of hearing examiners, but
excluded the Coast Guard in time of war, at which time the Coast
Guard becomes a part of the Navy. The plan also authorizes the
Secretary of the Treasury to delegate functions, to appoint an Adminis-
trative Assistant Secretary, and to make, necessary transfers of records
and funds as required to carry out the plan. A .resolution of disap-
proval was filed against this plan (No. 1. of 1950) on the premise that
the proposed centralization of Treasury functions in the Secretary
would adversely affect statutory authority vested in the Comptroller
of the Currency in connection with the supervision and control of
national banks. The plan was rejected in the Senate by a vote of 65 to
13 on May 11, 1950.
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SENATE ACTION ON HOOVER COMMISSION REPORTS 57
Immediately thereafter a now plan was submitted by the President
(plan No. 26 of 1950). The new plan was identical to the rejected
proposal, except that it specifically exempted the functions of the
Office of the Comptroller of the Currency. Since the transfer of the
Comptroller's functions had been the primary reason for Senate
disapproval of the original plan, this modified plan, having met the
objections of the Congress, was permitted to become effective on
July 31, 1950.
Reorganization Plan No. 26 of 1950, as approved by the Congress,
carried out the basic principles of the Hoover Commission's recom-
mendations in its report on the Treasury Department, including the
establishment of a career position of Administrative Assistant Secre-
tary and authority of the Secretary of the Treasury to transfer func-
tions within the Department. No provisions were included for the
proposed transfer of certain agencies in or out of the Department of
the Treasury. Nor was there any provision for the establishment of
the recommended National Monetary and Credit Council, to be com-
pposed of Government officials to coordinate monetary policies of the
Federal Government agencies. The Senate considered, but failed to
act on, Senate Joint Resolution 9 and S.'1559, which were introduced
as separate proposals to establish a National Monetary Commission.
The proposal made by the Hoover Commission for the transfer of
the Bureau of Narcotics to the Department of Justice was opposed
by the Secretary of the Treasury, who suggested that the Commission
in making this recommendation had overemphasized the police work
of the Bureau. He pointed out that the Harrison Narcotics Act under
which the Bureau operates has been held constitutional solely on the
ground that it is a revenue measure, that every case under this act
involves this revenue, and that it must have a close day-to-day
relation with the Bureau of Internal Revenue in connection with the
registration of persons dealing in narcotic drugs and other related tax
problems. The Secretary also contended that the Bureau of Narcotics
was required to work continuously with the Bureau of Customs in
the suppression of illegal narcotic traffic. A further and compelling
reason against the proposed transfer of this Bureau to the Depart-
ment of Justice was set forth in a report to this committee by the
Department of the Treasury as follows:
* * * The United States Government is obligated under the international
convention for limiting the manufacture and regulating the distribution of
narcotic drugs (signed in 1931) to maintain a special organization to supervise the
trade and suppress illicit traffic. Thus the Bureau of Narcotics could not be
merged with any existing bureau or division in the Department of Justice. In
1933, when this question arose following a study by the Bureau of the Budget,
President Roosevelt settled it by stating that "There is no intention of abolishing
or merging the Bureau of Narcotics. We must respect our treaties." At that
time it had been recommended that the Bureau of Narcotics be transferred to
the Department of Justice.
Another recommendation in this Hoover Commission report pro-
posed that the Congress should continue its study of the whole ques-
tion of fidelity insurance for accountable officers of the Government in
order to arrive at a simpler and less expensive system. This proposal
was duplicated in the Commission's report on budgeting and account-
ing. Studies of the problems involved in fidelity insurance have been
in progress in the Congress for more than 15 years. In 1935 two bills
were introduced (H. R. 6680 and S. 2233, 74th Cong.), providing for a
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58 SENATE ACTION ON HOOVER CONIlVIISSION 'REPORTS.
blanket bond for all Government officers and employees required to be
bonded, on which the premium would be paid by the Government. On
May 18, 1935, the Acting Secretary of the Treasury submitted an
adverse report on H. R. 6680 to the chairman of the House Com-
mittee on Expenditures in the. Executive Departments, stating that
a blanket bond for all employees would not be in the interest of effi-
ciency and trustworthy administration of the laws, and the handling
of public funds. On March 17, 1947, Senator Downey introduced
a bill (S. 911, 80th Cong.) which provided that the Secretary of
the Treasury pay the premium on bonds, required of postal employees
from appropriations made available to the Post Office Depart-
ment. Because of its limited effect on. a single department of the
executive branch of the Government, it was referred to the Senate
Post Office and Civil Service Committee. The Senate Committee on
Expenditures in the Executive Departments (now the Committee on
Government Operations), acting on the premise that the bill involved
certain aspects of management improvement, and because of its pos-
sible effect on Government operations, directed its staff to prepare a
revised bill providing for the payment f premium en bonds required
of employees in all departments and agencies of the Government.
Considerable time and study was devoted to perfecting this measure,
but the revised bill was not completed until near the end of the session
and was therefore not introduced in the Eightieth Congress.
In the light of the fidelity-bond recommendations in the Hoover
reports, new legislation was introduced in the Eighty-first Congress
and referred to this committee. The various proposals ranged from
bills which would have (a) created a $500,000 Federal trust fund to
provide fidelity bonds for employees without cost to them, and author-
ized additional appropriations as needed to maintain the fund; (b)
required that such a fund be maintained at employee expense; (c) lim-
ited the scope of such a plan to post-office employees alone; and (d)
limited average total payments by bonded employees into the fund
to the average total net amounts paid for defalcations and other losses.
The House passed a bill in the Eighty-first Congress (H. R. 8706),
which, along with a number of similar Senate bills, was the subject of
extensive hearings before a special subcommittee of this committee.
After completion of the, hearings, and study and analysis of the
subcommittee's recommendations, the full committee voted to
postpone action indefinitely for two primary reasons: (1) An esti-
mated annual cost of over one million dollars for the proposed new
program was considered to violate the announced policy of Congress
of making all Possible reductions in nondefense expenditures during
present emergency; (2) removal of the present requirement that
Federal employees pay the small premiums on their own fidelity
bonds might seriously weaken existing personal deterrents against
def aleations.
As has been indicated, the proposed transfers to and from the
Department received consideration during the Eighty-first Congress,
but further action was deferred by the Congress in view of conflict
with legislative policy. A new bill was introduced in the Eighty
second Congress (S. 1150) to provide for full implementation of all
those recommendations of the Hoover Commission which had not
already been approved through legislative action by the Congress, or
through adoption of reorganization plans. The bill was referred to
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OOVER 59,
this committee and considered at length by the Subcommittee on
Reorganization, which, like the subcommittee in the previous Con-
gress, recommended against any further action on S. 1150, on the
basis that the provisions of the bill involved controversial issues of
great magnitude, vitally affecting legislative policies. The subcom-
mitteo took the view that there was little prospect of favorable action
by the Congress until these conflicting points of view could be resolved.
During the consideration of S. 1150, the President submitted two
reorganization plans affecting the Department of the Treasury-
Reorganization Plan No. I of 1952, providing for reorganizations in
the Bureau of Internal Revenue, and Reorganization Plan No. 3 of
1952, providing for reorganizations in the Bureau of Customs. The
Hoover Commission, in its report on the Treasury Department, stated
that-
One of the first handicaps to effective reorganization of the Department is the
political appointment of collectors of internal revenue and of customs, and certain
othar officials. `These appointments are regarded by some as sinecures. In any
event, they form a bar to orderly development of an experienced staff.
The Commission thereupon recommended the creation Hof a Con-
solidated Revenue Service under the direct supervision of an Assistant
Secretary, who would be responsible for management, administrative
services, and field offices of these agencies, without being subjected to
revenue policy determinations and control by other Treasury officials
at the Assistant Secretary level. The Commission further recom-
mended that all officials of the Department below that of the new
Assistant Secretary should preferably be appointed from the career
service without Senate confirmation.
Reorganization Plan No. 1 of 1952 (lid not deal with the Hoover
Commission's recommendation for a consolidated Bureau of Internal
Revenue and Customs Service. The plan dealt only with the Bureau
of Internal Revenue, the offices of Assistant Commissioner, Deputy
Commissioner, collector, deputy collector, and the presidentially
appointed Assistant General Counsel for the Bureau of Internal
Revenue. It established in lieu thereof three Assistant Commis-
sioners, not to exceed 25 district commissioners of internal revenue,
and not to exceed 70 other offices at any one time with such title or
titles as the Secretary of the Treasury shall determine. The plan also
replaced the presidentially appointed Assistant General Counsel for
the Bureau of Internal Revenue with an Assistant General Counsel
appointed under civil-service procedure.
A major feature of plan No. 1 of 1952 called for repeal of the re-
quirement for Senate confirmation of the collectors and other revenue
officials and provided that they be appointed by the Secretary under
civil-service rules and regulations. While the committee's majority
report (S. Rept. No. 1259, 82d Cong.) supported reorganization of
the Bureau of Internal Revenue, it stressed that the proposed re-
organizations would have a serious import and possible adverse effect
on the entire revenue policy and structure of the Government. The
committee therefore recommended. rejection of the plan because it felt
the issues involved were of such magnitude as to far outweigh any
possible advantages that might accrue from its adoption. The com-
mittee's views were based on the evidence presented at the hearings,
that there would be little improvement in the administration of the
Bureau, and that no claims had been made that any economies would
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60 SENATE ACTION ON HOOVER
be effected as a result of the reorganizations incorporated in the plan.
On the other hand, a minority report submitted by certain members
of the committee took a-strong position in favor of the plan, with
particular reference to the establishment of a career service from top
to bottom. The resolution of disapproval (S. Res. 285) was reported
favorably to the Senate by a majority of this committee, but failed
to obtain a constitutional majority of the membership of the Senate,
required for rejection. Plan No. 1 of 1952 therefore became effective
on March 15, 1952.
Following the approval of this plan, the President submitted Reor-
ganization Plan No. 3 of 1952, providing for reorganizations in the
Bureau of Customs This plan was designed to shift the existing
method of appointment of customs officials by the President, subject
to Senate confirmation, to the Secretary of the Treasury under civil-
service rules and regulations. In addition, it provided for the aboli-
tion of certain offices and functions, and established such other offices
as might be determined by the Secretary of the Treasury. A resolu-
tion of disapproval (S. Res. 331) was introduced in the Senate and
referred to this committee for consideration. A majority of the coin-
mittee approved the resolution of disapproval (S. Rept. No. 1748)
primarily on the basis that (a) plan No. 3 would not remove political
aspects of the appointments to the Customs Service by simply placing
them under civil service; (b) the plan contained substantive legislative
proposals not intended to be vested in the President by the Reorgani-
zation Act of 1949; (c) by abolishing certain functions contained in the
plan, statutory rights of ;judicial review would be endangered; (d)
adoption of the Pan would reduce the chances of achieving a Consoli-
dated Revenue Service, as strongly recommended. by the Hoover Com-
mission; and (e) the plan would create supergrade civil-service posts
in excess of fixed limitations previously established by the Congress.
The resolution of disapproval was agreed to in the Senate on June 18,
1952, and the plan therefore became inoperative.
The Congress approved a special. act (Public Law 636, 81st Cong.),
recommended by this committee, which applied to the activities of the
Bureau of Engraving and Printing in the Department of the Treasury
in the conduct of the fiscal operations of that unit. This act required
the Bureau to use a business-type budget procedure and to set up a
revolving fund for financing its operations in line with the fiscal
program set forth in the Budget and Accounting Procedures Act of
1950. These changes were not specifically recommended by the
Hoover Commission, but conform generally to the purposes set
forth in its reports on the Treasury Department and budgeting and
accounting.
In summation of action taken on this Hoover Commission report, it
is estimated that approximately 70 percent of the Commission's
recommendations as applied to the operations of the Department of
the Treasury have been fully implemented, with another 20 percent
partially in operation. Those that have not been approved include
recommendations relating to transfers to and from the Department as
set forth hereinbefore, and to internal reorganizations of the Depart-
ment. Actions taken have not adhered entirely to the specific lan-
guage of the Hoover Commission's proposals. As a matter of fact,
the Commission, recognizing the difficulties that would be encountered
in translating its recommendations into legislative form, stated that
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"no hard and fast rule of organization" was being presented. It
might, therefore, be concluded that substantially all of the recom-
mendations in this report have been carried out as to purport and
intent, except those specifically requiring the transfer of the Coast
Guard to the Department of Commerce, the Bureau of Narcotics to
the Department of Justice, and certain independent fiscal agencies
(i. e., RFC, FDIC, and Export-Import Bank) into the Department
of the Treasury, all of which involve important -legislative policy
determinations.
REPORT NO. 12-REGULATORY COMMISSIONS
The broad objective of the 12 recommendations in the report on
regulatory commissions was to enable the 9 independent regulatory
agencies of the Government to discharge more effectively their pri-
mary functions of regulating various aspects of the Nation's economy.
This was to be accomplished by (1) streamlining and improving
administrative procedures, by transferring to the respective chairmen
of the agencies concerned all administrative responsibility with
authority to delegate; (2) strengthening of internal structures by
providing for uniformity and assurance of tenure when not provided
by existing law, and by increasing salaries of board members; (3) trans-
ferring certain purely executive functions to appropriate agencies
within the executive branch; (4) extension of the principle of bipartisan
representation to those commissions where not required; and (5) study
by the Bureau of the Budget designed to suggest ways and means for
reducing the cost of disposing of business before these agencies.
To relieve the regulatory agencies from responsibility for purely
executive functions, the Commission submitted specific recommenda-
tions for the transfer of the power-planning functions of the Federal
Power Commission to the Department of Interior; and (a) the func-
tions of the Maritime Commission relating to construction, operation,
charter, and sale of ships, (b) of the Interstate Commerce Commis-
sion relating to safety, car service and equipment inspection, and
(c) the promulgation of aircraft-safety regulations of the Civil
Aeronautics Board, to the Department of Commerce. These proposed
transfers were duplicated in the reports on the Departments of
Interior and Commerce.
Four bills (S. 2073, S. 2059, S. 2330, and S. 2340), designed to
implement various recommendations contained in this report, were
introduced in the Senate during the Eighty-first Congress. They
were based upon drafts prepared by attorneys for the Hoover Com-
mission and represented slightly different approaches to the same
objective. S. 2073 and S. 2059, omnibus bills, introduced by Senators
McClellan and McCarthy, incorporating virtually all of the Commis-
sion's proposals, were referred to this committee. S. 2330 dealt with
six regulatory agencies under the policy jurisdiction of the Committee
on Interstate and Foreign Commerce and wag referred to that com-
mittee for appropriate action. S. 2340 dealt with three regulatory
agencies under the jurisdiction of the Committee on Banking and
Currency and was referred to that committee. The last two bills,
duplicating certain sections of the omnibus bills, were introduced
by the chairmen of the respective committees in order to insure
proper consideration of policy determinations by these jurisdictional
committees.
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No action was taken on any of these four bills, primarily due to the
fact that the President submitted eight reorganization plans affecting
regulatory agencies, (No. 6 of 1949, and Nos. 7, 8, 9, 10, 11, 12, and
13 of 1950), all of which proposed to vest administrative responsibility
for day-to-day operations of the Maritime Administration, the ICC,
FTC, FPC, SEC, FCC, NLRB, and CAB in each of the respective
commission chairmen, in accordance with recommendations in this
report and the report on general management. All of these plans,
except No. 12, provided for (1) the transfer of administrative functions
from the commissions to the chairmen; (2) authority of redelegation
of administrative functions by the chairman to commission officials,
employees, and staff units; and (3) Presidential appointment of com-
mission chairmen, except for the Maritime Commission, FCC,
NLRB, and CAB, where such authority is already provided by statute.
Plan No. 12 provided specifically for the transfer of independent
functions of the NLRB General Counsel to the Board and abolished
the General Counsel's office.
The issue in connection with approval of each of these plans was
whether the vesting of administrative powers in the chairman would
impair the independence of the regulatory agencies as quasi-judicial
arms of the legislative branch. Opponents of the plans, which in-
cluded practically all of the regulatory commissions affected (except
for certain specific recommendations), maintained that placing re-
sponsibility in the chairman for appointment of personnel, distribution
of commission business, and expenditure of commission funds would
result in that officer's domination of the operations of the respective
commissions, thus exerting an undesirable influence upon their regula-
tory functions. By vesting the administrative functions in the chair-
man, it was held that the President could, through his power of
appointment, control decisions of the commissions in the discharge of
their regulatory duties. Opponents of plan No. 12 contended that
the transfer of the independent functions of the NLRB General
Counsel to the Board would largely destroy the effectiveness of the
Taft-Hartley Act, which vested labor-management prosecutory func-
tions directly in the General Counsel rather than in the Board. It was
also felt that such action would violate the constitutional separation
of the investigatory or prosecutory functions from judicial deter-
minations.
A favorable report was submitted to the Senate by this committee
on plan No. 6 of 1949, approving the reorganization of the United
States Maritime Commission, in conformity with the Hoover Com-
mission's recommendations, and the plan became effective August 20,
1949. Resolutions of disapproval were filed in the Senate with respect
to plans Nos. 7, 8, 9, 11, and 12. The Senate adopted resolutions of
disapproval as they related to the ICC No. 7), FCC (No. 11), and
NLRB (No. 12), which were approved by the Senate, and the plans
did not become effective. Resolutions of disapproval of plans affect-
ing the FTC (No. 8) and FPC (No. 9) were defeated in the Senate and
these plans became effective on May 24, 1950. No resolutions of
disapproval were filed on plans No. 10 (SEC) and No. 13 (CAB),
which also became effective on May 24, 1950.
A number of bills were filed in the Senate relating to the various
aspects of the Hoover reports on regulatory commissions, some of
which were incorporated in the above-outlined reorganization plans.
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These measures contained special provisions, such as increases in the
salaries of members of the V CC and NLRB. They failed of passage
due to the fact that most of these separate proposals were incorporated
in Public Law 359, approved October 15, 1949, increasing salaries in
the executive branch, as recommended under the Hoover Commission
report on personnel management.
In the Eighty-second Congress, a new bill (S. 1139) was introduced
for the purpose of effectuating those recommendations of the Hoover
Commission applying to regulatory commissions which still required
legislative action or for which reorganization plans had been submitted
and disapproved. An analysis of this bill, which was referred to this
committee, revealed that some of its provisions were identical with
proposals submitted by the President during the previous session, in
the form of reorganization plans rejected by the Senate by a substantial
vote. After careful consideration, the committee concluded that it
would serve no useful purpose to resubmit these sections of the bill to
the Senate, particularly in view of their recent rejection. Other sec-
tions of the bill, which were designed to promote uniformity in the
regulatory agencies with respect to tenure of office of commissioners
and board members of the regulatory agencies, appeared to merit fur-
ther consideration. However, they were objectionable in the form in
which they were submitted in that they tended to infringe upon both
presidential and senatorial prerogatives and authority. In an effort
to overcome these objections, extensive staff studies were initiated,
resulting in amendments to the original measure which would ac-
complish the projected reforms without doing violence to these
prerogatives.
The committee, in conformity with these objections, amended the
bill to provide (1) that the President may remove for cause only
(inefficiency, neglect of duty, or malfeasance in office) commissioners
of the Federal Power Commission, the Federal Communications Com-
mission, and the Securities and Exchange Commission; and (2) that
the commissioners and board members of the Federal Power Com-
mission, Securities and Exchange Commission, Federal Communica-
tions Commission, Civil Aeronautics Board, and the National Labor
Relations Board whose terms had expired shall continue in office until
the appointment and qualification of a successor, but in no event for
a period of more than 60 days after the expiration of such term of
office. The language of this bill was perfected by the Subcommittee
on Reorganization, reported in amended form to the full committee
on April 1, 1952, and approved and reported to the Senate on April 3,
1952 (S. Rcpt. No. 1401). The bill passed the Senate on April 9, 1952,
without dissenting vote, and was referred to the House Committee
on Expenditures in the Executive Departments, where no further
action was taken.
With the approval of S. 1139, the Senate completed consideration
and action on each and every recommendation made by the Hoover
Commission in this report. To the extent that such recommenda-
tions were consistent with established legislative policies and in con-
formity with the separation of regulatory, functions from adminis-
trative controls of policy-determining departments or agencies, they
received favorable action. These regulatory commissions were estab-
lished primarily by the Congress to act on an independent basis in
the public interest, and free from direct control by the President over
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either their activities or their decisions. The basic statutes provided
that they be primarily responsible to the Congress of the United
States as the elected representatives of the people in order that they
might be responsive to the general public interest and in a position to
carry on their activities without improper influences from other gov-
ernmental agencies. This committee, and the Senate, determined
therefore that favorable action on these proposals would seriously im-
pair the operations of these commissions and would tend to undermine
their independence of action.
REPORT No. 13-DEPARTN[ENT OF LABOR
In this report the eight recommendations of the Hoover Commission
proposed broad reorganization of the Department of Labor in an
effort to carry out the objectives set forth by the Commission to restore
the Department to a major element of the executive branch.
In the years immediately preceding the establishment of the Hoover
Commission, it had been stripped of many functions, and
the Hoover Commission proposed that the following major
functions should be transferred back to the Department: (a) Bureau
of Employees Compensation and Employees Compensation
Appeals Board from the Federal Security Agency; (b) Bureau
of Employment Security, including the United States Employ-
ment Service, Veterans' Employment Service, and Unemploy-
ment Compensation from the Federal Security Agency; (c) Selective
Service System, including appeal boards, operating as an independent
agency; (d) the determination of minimum wages for seamen from the
Maritime Commission; and (e) research surveys to determine prevail-
ing wages now conducted by various agencies.
The Commission also made specific recommendations for the im-
provement of departmental management, duplicated under general
recommendations contained in its report on general management.
It further proposed that, a study be made of industrial hygiene
functions for a logical division of labor and health functions to appro-
priate agencies.
The President submitted Reorganization Plan No. 2 of 1949, pro-
viding for the transfer of the Bureau of Employment Security from
the Federal Security Agency to the Department of Labor, which
became effective on August 20, 1949.
On. March 13, 1950, the President submitted Reorganization Plan
No. 6, providing for the reorganization of the Department of Labor,
which had as its major purpose the vesting of greater administrative
responsibility for operation of the Department in the Secretary, as
recommended in this report and in the Commission's report on general
management. The plan was reported favorably by this committee
(S. Rept. No. 1684) and became effective on May 24, 1950.
Reorganization Plan No..14 of 1950, providing for the centralization
in the Secretary of Labor of authority to prescribe uniform labor
standards for all Government departments concerned, in general
conformity with the Hoover Commission's recommendations relative
to rebuilding of the Department of Labor through the centralization
therein of functions relating to labor, was reported favorably by this
committee (S. Rept. No. 1546), and became effective on May 24,
1950.
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Reorganization Plan No. 19 of 1950, providing for the transfer of
the Bureau of Employees Compensation, and the Employees Com-
pensation Appeals Board, from the Federal Security Agency to the
Department of Labor was also reported favorably by this committee
(S. Rept. No. 1549) and became effective on May 24, 1950.
The remaining recommendations in this report were incorporated
in a bill, S. 1142, introduced in the Senate in the Eighty-second
Congress, as drafted by the Citizens Committee for the Hoover
Report, and referred to this committee for consideration. The Sub-
committee on Reorganization held hearings in February 1952, follow-
ing which a report was submitted and approved by the full committee.
As recommended by the subcommittee, further action was indefinitely
postponed, since the recommendations of the Hoover Commission in-
corporated in this bill were considered neither necessary nor desirable.
The committee based its conclusions on the fact that some of the
provisions of this bill had far-reaching policy implications which would
make important substantive changes in long-established congressional
policy, and that to approve the bill would be contrary to many of the
Hoover Commission's major recommendations.
Specifically, the bill contained provisions which would (1) transfer
the Selective Service System to the Department of Labor; (2) transfer
all functions of the Federal Maritime Board (already transferred to
the Department of Commerce under Reorganization Plan No. 21 of
1950) relating to the determination of minimum wages on privately
operated vessels to the Secretary of Labor; and (3) direct the Secretary
of Labor and the Federal Security Administrator to make a detailed
-study of industrial hygiene functions of the Government so as to work
-out a logical division of functions among the agencies in the Depart-
ment of Labor and the Public Health Service.
The committee, after fully evaluating testimony from all the affected
agencies, including the Secretary of Labor, recommended against the
enactment of S. 1142. The proposed transfer of the Selective Service
:System to the Department of Labor was opposed by all witnesses
appearing before the committee. These views were based upon the
fact that conditions had changed considerably since the Hoover Com-
mission made its original recommendations, and that the work of the
Selective Service System no longer entailed a record-keeping operation,
but was now a very important operating agency carrying out essential
functions directly affecting manpower problems relating to the na-
tional security of the United States. The proponents of the bill agreed
that it would be inadvisable to effect this transfer at this time, because
?of a change in circumstances during the 2; years elapsed since the
Hoover Commission made its recommendations, and that it would be
preferable to have the Selective Service System continue to operate
-on an independent basis, at least until the national emergency has
passed.
The committee also recommended against the proposed transfer
-from the Maritime Administration of the Department of Commerce
to the Department of Labor the functions relative to the determina-
tion of minimum wages for merchant seamen on privately owned,
subsidized vessels. All witnesses agreed, including the Secretary of
Labor, that no useful purpose would be served by such action since the
,determination of minimum wages on such vessels is an integral part
,of the Maritime Administration's functions of determining operating
2 4 6 8 9-52---6
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66 SENATE ACTION ON HOOVER COMMISSION REPORTS
subsidies, and that these wages do not appear to have any appreciable
effect upon wage scales generally. Finally, the committee was able
to insure the consummation of an agreement between representatives
of the Federal Security Agency and the Department of Labor to con-
duct a joint industrial hygiene survey, as recommended by the Hoover
Commission, without the necessity of legislative action.
In summation, an analysis of the above actions clearly illustrates
that the recommendations of the Hoover Commission in its report on
the Department of Labor have been fully effectuated or carefully
analyzed by the committees of the Congress and appropriate action
taken thereon when consistent with the broad objectives of the Com-
mission and in accord with legislative policy.
REPORT No. 14-DEPARTMENT OF TFTE INTERIOR
In this report, probably the most highly controversial of all the
reports submitted by the Commission, 15 specific recommendations
propose that the major subsoil, water development, and public works
activities of the Government be centered in the Department of the
Interior. Some of the Commissioners disagreed with the majority and
filed dissenting views on various aspects of the report.
The Commission rejected the recommendations of its task forces on
natural resources for the establishment of a Department of Natural
Resources, and the recommendations of its task forces on public works
for the establishment of a Department of Works. Three of the
Commissioners agreed in substance with the first of these recommenda-
tions and proposed the establishment of a Department of Natural
Resources, replacing the Department of the Interior, but disagreed
with the Commission in its recommendation that public works should
be consolidated with natural resources. They also opposed the
majority recommendations that the Bureau of Land Management
should be transferred to the Department of Agriculture; and that
the commercial fisheries should be transferred to the Department of
Commerce. Probably the most controversial feature of the entire
report was the recommendation suggesting the transfer of all flood-
control and river and harbor improvement functions of the United
States Corps of Engineers from the Department of the Army to the
Department of the Interior. Two of the Commissioners filed strong
dissenting views to this recommendation.
Except for the general management proposals, relating to the
internal operations of the Department as covered under general recom-
mendations in other reports, practically every recommendation con-
tained in this report has met with strong opposition from the agencies
affected, and in the Congress. The Hoover Commission's first recom-
mendation was the creation of it Board of Impartial Analysis for
Engineering and Architectural Projects, which would be authorized to
determine the validity, economic justification, and timing of all public
works projects. Chairman Hoover preferred two boards for each of
the different type projects, and Commissioner Forrestal opposed the
establishment of independent boards. A bill was introduced in. the
Eighty-first Congress by Senator McCarthy (S. 2057) to carry out this
and other recommendations in this report, as drafted by the attorneys
for the Hoover Commission. No action was taken during the Eighty-
first Congress, and a new bill was therefore introduced in the Eighty-
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SENATE ACTION ON HOOVER COMMISSION REPORTS 67
second Congress (S. 1144) which incorporated only this specific
recommendation. This bill was referred to the Senate Committee on
Public Works where no action was taken.
The Commission repeated its general recommendations in its report
on general management, relative to the reorganization of the Depart-
ment along functional and major purpose lines, following which it
submitted the specific recommendation for the transfer of (a) Bureau
of Indian Affairs to a new Department of Social Security and Indian
Affairs (duplicated in Rept. No. 15 on social security, education, and
Indian affairs); (b) the transfer of land management (except minerals)
to the Department of Agriculture (also repeated in its report on the
Department of Agriculture); and (e) transfer of commercial fisheries
from Fish and Wildlife Service to the Department of Commerce
(repeated in its report on the Department of Commerce). One or
more Commissioners objected to each of these recom.m.endation.s.
The Commission also recommended the grouping of agencies
"related to the development of natural resources _and construction
according to their major purposes" be transferred to Interior. Pro-
posed transfers included (a) flood control and rivers and harbors
improvements from the Department of the Army; (b) public building
construction from the Federal Works Agency; (c) community services
from the Federal Works Agency; and (d) certain major construction
assigned on behalf of other agencies of the Government, except where
carried on by grants-in-aid programs. The Commission submitted
specific proposals for the internal organization of the Department,
including the major purpose grouping of agencies proposed to be
assigned to the Department. To better coordinate these functions,
it was recommended that the following policies be adopted: (a)
Clarification and codification of the laws pertaining to the Bureau of
Reclamation; (b) creation of a Drainage Area Advisory Commission
for each major drainage area; (c) all construction under any inter-
national aggreements be carried on by the Water Development Use
Service; (d) that no irrigation, reclamation projects be undertaken
without a report to the proposed Board of Impartial Analysis by the
Department of Agriculture; (e) that the RFC should secure reports
from the proposed Mineral Resources Service in connection with its
financing programs; and (f) that the tin smelter at Texas City, Tex.,
be operated by the Bureau of Mines instead of by the RFC.
The bill (S. 2057) previously referred to, proposing the establish-
ment of a Board of Impartial Analysis for engineering and architectural
projects, also contained separate divisions for the activation of each
of the other recommendations of the Hoover Commission in this
report. The bill was referred to the Senate Committee on Interior
and Insular Affairs in the Eighty-first Congress, where no action was
taken. In the meantime, the Committee on Public Works initiated
action (S. 2116) to authorize $100 million for distribution by the
General Services Administrator to the States for architectural, engi-
neering, and economic surveys for the construction of Federal public
works, which was approved as Public Law No. 352, Eight-first
Congress.
Reorganization Plan No. 3 of 1950 was submitted to the Congress
by the President on March 13, 1950, for the purpose of effectuating
the general management recommendations of this report. This plan
vested in the Secretary of the Interior. responsibility for all operating
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divisions of the Department, except the functions of hearing examiners,
the Virgin Islands Corporation, its Board of Directors and officers.
The plan carried out other specific recommendations contained in
the report on general management, by authorizing the Secretary of
Interior to delegate functions, appointment of an Administrative
Assistant Secretary and an additional Assistant Secretary. The plan
was reported favorably by this committee (S. Rept. No. 1545) and
became effective May 24, 1950.
Reorganization Plan No. 1.5 of 1950, which also became effective on
May 24, 1950, transferred functions relating to public works in Alaska
and in the Virgin Islands from the General Services Administration to
the Department of the Interior. This plan was designed to consolidate
functions originally vested in the GSA with other programs in the
Department of the Interior relating to the long-range interests of Alaska
and Virgin Islands in order that Federal policies and programs for
promoting the general welfare of these possessions may be properly
coordinated.
A number of bills were introduced during the Eighty-first Congress
which had as their purpose the activation of certain phases of the
recommendations made by the Commission in this report. These
bills proposed to approve certain of the transfers recommended and
had as their objective the development of related programs as pro-
posed by the Commission and its task forces. No action was taken
on these bills and a new proposal incorporating all of the recommenda-
tions of the Hoover Commission, drafted by the Citizens' Committee
for the Hoover Report, was introduced in the Eighty-second Congress
(S. 1143) and referred to this committee for consideration. The
various proposals made by the Commission were given careful study
by the Subcommittee on Reorganization, but in view of strong opposi-
tion based on the fact that they were contrary to established legisla-
tive policy and not in the public interest, no action was taken on such
proposals.
The committee gave consideration. to the many problems involved
in connection with the reorganization programs advocated by the
Hoover Commission in this report on other occasions. Opposition
to the proposed transfer of the civil functions of the Corps of Engi-
neers, was brought out in great detail in connection with the com-
mittee's consideration of a provision. to exempt such a transfer from
the provisions of the Reorganization Act of 1949," on the basis that it
would completely disrupt the training program for the Corps of
Engineers. Further hearings on the organization and operation of
Congress held by this committee in June of 1950, again focused
congressional attention on this proposal. Following these hearings
the committee took under consideration a proposed consolidation of
the Senate Committees on. Interior and Insular Affairs and Public
Works, with a view to resolving the basic jurisdictional problems
involved at the legislative level rather than through a consolidation
of administrative functions dealing with the specialized activities of
the United States Corps of Engineers and the Bureau of Reclamation.
Although no action was taken in this connection during the Eighty-
first Congress, the committee has instructed the staff to make further
studies into the possibility of proposing to the Senate amendments to
the Legislative Reorganization Act providing for the consolidation of
-l Hearings on s. 826, a bill providing for reorganization of Government agencies, February 1949.
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SENATE ACTION ON HOOVER COMMISSION REPORTS 69
these two committees. This approach was with the view toward
eliminating at the legislative source defects in the existing adminis-
trative programs as they relate to rivers and harbors, construction
and flood-control functions, performed by the Corps of Engineers,
and reclamation functions vested in the Bureau of Reclamation.
Preliminary studies indicated that the conflicting aspects of these
programs might better be resolved at the legislative level, with specific
provisions included in authorizing legislation for the performance of
designated functions i?i these areas by either of these or other agencies
having to do with water development and use programs. Should
such legislative authorizations provide that specific functions be per-
formed by designated agencies, the question of administration would
be resolved. Each of the present administrative groups would con-
tinue as at present, but under a definite program designating which
agency was to perform required surveys, construction, operating, or
management functions in these fields as may be required to eliminate
duplications and proper integration of the activities of such agencies.
This approach to these issues involves a number of serious problems,
such as committee seniority and numerical assignment, workloads,
and jurisdiction aspects. Federal water conservation, usage, flood
control, and reclamation policies are becoming of increasing import-
ance to the national welfare, and require proper coordination at the
legislative level.
In summary, it might be stated that those features of this report
which were not the subject of opposition on the part of members and
task forces of the Hoover Commission, the agencies involved, and
which did not convict with established legislative policies, have been
considered and carried into effect, primarily by the adoption of Re-
organization Plan No. 3 of 1950. The remaining section of this report
will require continuing studies on the part of Congress as general pro-
grams are advanced with the view toward the enactment of general
legislation of a policy-determining nature.
REPORT No. 15-SOCIAL SECURITY, EDUCATION, AND INDIAN AFFAIRS
This report, which included 17 specific recommendations, has as
its first and most important objective the creation of a new Depart-
ment of Social Security, Education, and Indian Affairs to administer
the major functions of Federal social security and educational services.
In addition to these two groupings, the functions of the Bureau of
Indian Affairs and Federal-State relations would be transferred into
the new department and administered under the Secretary.
The problems involved in connection with the creation of a new
department for administering education, health, and social-security
programs have been studied and considered by the Congress on a
number of occasions during recent years. Direct action was taken
in connection with bills introduced in the Eightieth Congress by
Senators Taft and Fulbright (S. 140) to create a Department of
Health, Education, and Security, and a companion measure by
Senator Aiken (S. 712) to constitute the Federal Security Agency as
a Department of Health, Education, and Security. After extensive
hearings by this committee in 1947, S. 140 was reported to the Senate,
but failed of enactment. At that time Senator Taft also introduced
another bill (S. 545) to segregate health activities in a now and inde-
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pendent health agency, to accord with any action Congress might
take to separate health activities from social security and education
functions, as was proposed at that time.
The only new approach contained in the Hoover Commission report,
which had not been fully explored and developed through testimony
presented at previous hearings, was the proposal that the Bureau of
Indian Affairs be transferred from the Department of the Interior to
the proposed new department.
In view of the scope of the problems involved, the Hoover Com-
mission suggested that extensive studies be made of several problems
for the purpose of (a) transferring its grant functions from the Child-
ren's Bureau to a staff agency under the Secretary; (b) making a
complete review of the old-age and survivors insurance program; (c)
conducting a study of the possible merger of the several Federal con-
tributory retirement systems (except that the Railroad Retirement
Board retains its present status) ; (d) securing participation of all in-
terested Federal, State, and local agencies in programs to raise the
living and cultural standards of the Indians; and (e) gradually replac?-
'ing and ultimately discontinuing administrative supervision of Indian
business enterprises. These latter two proposals were included in a
separate report on Indian Affairs. Nine specific recommendations
were made in this report, with the primary objective of assimilation
of Indians into the rest of the population. Vice Chairman Acheson
of the Hoover Commission dissented vigorously from the recommenda-
tions to assimilate the Indian and to turn him, his culture, and his
means of livelihood over to State control. He felt that these recom-
mendations go beyond the jurisdiction of the Commission in that they
change substantive legislative policy. Commissioners Rowe and
Forrestal concurred.
Following the submission of the Commission's report, a bill (S. 2060)
was introduced by Senator McCarthy, as drafted by attorneys for.
the Hoover Commission, which proposed to establish a Department of
Welfare as an executive department to conform to the recommenda-
tions of the Commission. On June 20, 1949, the President, under au-
thority granted under the Reorganization Act of 1949 (Public Law No.
109, 81st Cong.) submitted Reorganization Plan No.. 1 of 1949, to
create a Department of Welfare. Its provisions were practically
identical to some of the provisions of S. 2060, but it did not include
transfer of Indian affairs, or provide for the basic studies proposed by
the Commission. Opposition developed immediately to the reorgani-
zation plan as had occurred in connection with similar legislative pro-
posals in the past. Objections to the plan were based on the premise
that it ignored the Hoover Commission recommendations for the
creation of a United Medical Administration, and was a complete
deviation from other aspects of the report. The committee therefore
recommended that-
It is imperative that the Congress determine upon the entire program of re-
organization for health, education, and welfare before any such permanent aline-
ment as proposed under plan No. I is approved.
The Senate rejected the plan by adoption of a resolution of disapproval
(S. Res. 147, S. Rept. No. 851, 81st Gong.), as required under the pro-
visions of the Reorganization Act. The committee later considered
a new bill in the nature of a substitute for S. 2060, also introduced by
Senator McCarthy, which conformed generally with S. 140 reported
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favorably in the Eightieth Congress, but took no further action in
view of the failure of the Senate to approve the original bill.
After the rejection of plan No. 1 of 1949, the President submitted
Reorganization Plan No. 27 of 1950,. which proposed to constitute the
Federal Security Agency a Department of ,Health, Education, and
Security, as originally proposed under the Aiken bill (S. 712, 80th
Cong.). The plan would have retained the present semi-independent
status of the United States Public Health Service and the Office of
Education. No provision was included in this plan for the establish-
ment of a United Medical Administration, to consolidate the Public
Health Service with other Federal medical activities, as recommended
by the Hoover Commission. This committee recommended ' that a
resolution of disapproval of this plan (S. Res. 302, S. Rept. No. 1943,
81st Cong.) be adopted by the Senate. Before action was taken in
the Senate the House of Representatives approved a resolution of
disapproval (H. Res. 647, 81st Cong.) by a vote of 249 to 71, thereby
rejecting the plan without further Senate action. The primary
reason for the disapproval of this plan was the fear that health activi-
ties in the proposed new department would be largely dominated by
welfare officials, since adequate safeguards were not included.
The Commission included a recommendation in this report that
Federal aid to education programs should be administered by the
agencies whose functions the particular programs promote. The
Citizens Committee bill, S. 1149, Eighty-second Congress, as outlined
in the report on the Department of Agriculture, contained a provision
to transfer agricultural vocational education functions to the Depart-
ment of Agriculture. This proposal was vigorously opposed by repre-
sentatives of educational groups, on the basis that to transfer these
functions from the Office of Education would splinter the vocational
education activities and completely disrupt the administration of
State and local programs. This proposal was characterized as edu-
cationally unsound, since the whole trend in education is toward
integration, not dispersal. In view of the lack of support for this
provision in the Citizens Committee bill, the entire subsection was
disapproved by the committee, and further efforts to decentralize
these functions to operating agencies were abandoned.
There were a number of other legislative actions which are relevant
to this report, such as the approval of Public Law 180, Eighty-first
Congress, consolidating the Alaskan and Canal Zone Retirement
Acts and the Federal Civil Service Retirement Act; Public Law 734,
Eighty-first Congress, expanding the coverage of public assistance
programs under the Social Security Act Amendments of 1949, in
conformity with recommendations of the Hoover Commission; and
Reorganization Plan No. 16 of 1950, effective May 24, 1950 (S. Rept.
No. 1548, 81st Cong.) which transferred Federal financial assistance
to local public school districts, and water pollution control from the
General Services Administration to the Federal Security Agency.
In addition to these positive actions by the Congress, there were
numerous bills introduced during both the Eighty-first and Eighty-
second Congresses which would have carried into effect certain aspects
of Hoover Commission recommendations in this report, some provid-
ing for the establishment of a new department, and others relating
to welfare programs and Indian Affairs. Outside of the legislative
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actions noted above, and some other minor amendments to general
legislation, no direct action has been taken to enact legislation recom-
mended in this report. As has been noted, many of these proposals
did not originate with the Hoover Commission, except for certain
specified features, and had been under consideration by the Congress.
for a number of years prior to the creation of the Commission.
This report emphasizes the lack of over-all supervision and co-
ordination of Federal medical activities which are presently being
carried on by five major agencies of the Federal Government. Vary-
ing and uncoordinated policies among such agencies have resulted in
unused hospital facilities, inadequate staffing in some areas and over-
staffing in others, great fluctuation in construction priorities and costs
per hospital bed, variation as to beneficiaries and bed services, and
other major deficiencies. Critically necessary objectives are stated to
be better medical care, better training, improved medical research and
medical preparedness for national defense requirements, and to elimi-
nate the present Federal policy of draining doctors, nurses, and medical
and technical personnel from private practice.
The Commission's major recommendation in this report strongly
supports a consolidation of all large-scale Federal activities providing
medical care, medical research and public health including preventive
medicine, into a new United Medical Administration. This proposal
would provide medical care for those patients certified for treatment
by the Veterans' Administration, for a major portion of hospital care
required by the military forces, and would integrate all such services
under one general program of administration, construction and hospi-
tal utilization. In addition to the proposed UMA, the Commission
recommended the establishment of an advisory board consisting of
representatives of the Department of the Army, Navy, Air Force, the
Public Health Service, and the Veterans' Administration. To be
transferred to the UMA under this program were the functions, facili-
ties, and personnel of (a) general and station hospitals of the armed
forces not located at outlying posts; (b) Veterans' Administration
hospital functions including out-patient field services; (c) four non-
military hospitals in the Canal Zone; and (d) hospitals, functions,
facilities, and personnel of the Public Health Service.
The report stressed the importance of congressional action (a) to
specifically define classes of beneficiaries and details as to the type of
medical services that should be provided; and (b) to bring to an end
inconsistencies existing between the Federal hospital construction
programs, and Federal aid to non-Federal hospitals. The report
stressed that it was essential that (a) the Secretary of Defense should
control medical policy in the armed services and give constant atten-
tion to measures for national defense, (b) that medical and technical
personnel should be provided on a career basis through the estab-
lishment of additional medical schools and facilities for training pur-
poses, and (c) that the UMA should strongly emphasize research and
preventive medicine.
Following the submission of this report, and at the request of the
chairman of this committee, attorneys for the Hoover Commission
prepared a bill providing for its implementation. This bill, known as
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SENATE ACTION ON HOOVER COMMISSION REPORTS 73
the United Medical Administration Act (S. 2008, 81st Cong.) was
introduced and referred to the Committee on Labor and Public
Welfare. It incorporated all of the recommendations of the Hoover
Commission in its report on medical activities, including a provision
for establishment of a United Medical Administration. The bill also
provided for a professional career service to be known as United
Medical and Health Service, prescribing qualifications for appoint-
ment therein, and for appointment of disciplinary boards.
As set forth in Report No. 15 on social security, education, and
Indian affairs, Reorganization Plan No. 1 of 1949, to establish a
Department of Welfare submitted by the President to the Congress
on June 20, 1949 was rejected by the Senate. Reorganization Plan
No. 1 failed to make any disposition of health functions now vested in
the Federal Security Agency, and omitted the Commission's recom-
mendations relating to the consolidation of all major Federal medical
facilities.
Vigorous opposition was expressed to the passage of S. 2008. In a
letter to the chairman of this committee, the Federal Security Admin-
istrator stated that he was unalterably opposed to the recommenda-
tion to transfer the Public Health Service to an independent United
Medical Administration, stating that-
any plan to consolidate hospital functions at this time would be premature * *
I likewise feel that proper safeguards for the elimination of waste and duplication
can be established by methods other than those proposed by the Commission,
even if it should be eventually decided that two medical services were needed,
one military and the other civilian.
The Administrator of Veterans' Affairs also strenuously opposed
this bill, contending that the consolidation of large-scale activities in
the Federal Government in the fields of medical care, and medical
research and public health, and the transfer of Federal hospitals to
a new UMA would "limit the use by veterans of the Nation's hospital
plant established for them by making these facilities available to addi-
tional groups, principally armed services personnel and their depend-
ents, and merchant seamen. It would also impede the efficient han-
dling of claims for compensation, pensions, insurance and other
benefits where a physical examination is necessary. It is in conflict
with the traditional policy of the Government to accord to veterans,
t as a class, special consideration through one agency responsible for
administering the various benefit programs."
In view of this opposition on the part of the agencies directly
affected, including military and all medical groups, the Committee
on Labor and Public Welfare took no action on this bill during the
Eighty-first Congress, pending determination as to what legislative
disposition should be made of all interrelated problems dealing with
Federal medical programs.
A new bill, S. 1140, was filed in the Eighty-second Congress at the
request of the Citizens Committee for the Hoover Report. Although
this bill was supposedly designed to carry out the Hoover Commission's
recommendations in its report on medical activities, it ignored the
specific proposal of the Commission to create a United Medical
Administration, and instead proposed a new Department of Health.
Otherwise, the bill closely followed the previous bill drafted by the
Hoover Commission, S. 2008, on which action had been postponed in
the Eighty-first Congress. It was referred to the Committee on
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74 SENATE ACTION ON HOOVER COMMISSION REPORTS
Government Operations, which held extensive hearings on the bill
during February, March, and April 1952. The hearings clearly sup-
ported the views expressed in the Hoover Commission's report rela-
tive to the existence of many instances of inefficiency and duplication
and costly extravagance in the operation of the Federal hospital and
medical systems.
Opposition to the bill came from practically every source, with the
exception of the National. Doctor's Committee for Improved Medical
Services established by the Citizens Committee for the Hoover Report
to develop the Hoover Commission's recommendations in this area.
The Senate Committee on Government Operations reached a unanim-
ous decision based on evidence submitted at the hearings, that the
enactment of S. 1140 might seriously impair medical programs estab-
lished by the Congress to fully utilize knowledge and experience ex-
tending over many years. This impairment was particularly true as
to the provisions of the bill relating to medical research., preventive
medicine, public-health programs conducted by the Public Health
Service, the training of specialized medical and hospital personnel, and
field operations of medical services in the military. Similarly the
medical, hospital, and domiciliary programs of the Veterans' Adminis-
tration might suffer. It was the view of the committee that these pro-
grams were of such magnitude and involved such diverse objectives
that any possible benefits of the so-called streamlined administration
provided for in S. 1140 would be far outweighed by permanent dis-
advantages that would result from any arbitrary or hasty action such
as the Congress was being urged to take. This view was supported
by the united opposition to certain specific proposals included in
S. 1140 by Federal agencies, medical groups such as the American
Medical Association, veterans' organizations, and the military estab-
lishments, all of whom would be affected by the various provisions of
the bill.
After a thorough analysis of the testimony submitted at the hearings
on S. 1140, the committee determined that the more logical, though
partial, approach to the problem would be to establish an independent,
coordinating agency vested with adequate authority to bring about
better integration of all Federal .medical activities and programs. It
was the view of the committee that such an agency should have suffi-
cient authority to insure the highest possible utilization of existing
hospital, convalescent, and domiciliary services and facilities, the
centralized supervision of the construction and acquisition of addi-
tional facilities, and bring about the elimination of overlapping and
duplicating services without disrupting specialized programs.
This approach to the problem had been already proposed by various
groups interested in improving Federal medical activities. The
Armerican Legion, for instance, drafted and had introduced in the
Senate a bill, S. 925, which would set up a Federal Board of Hospi-
talization, composed of officials or representatives of Federal agencies
operating major medical. programs. This type of board has been
tested in the past on several occasions, but no real authority had been
vested in such boards. The basic problem had developed the fact
that representatives of one agency, by making concessions to another
for a desired program could in. turn secure approval of programs it
seeks, even though the programs may or may not be in the general
public interest. This committee, therefore, instructed its staff to
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SENATE ACTION ON HOOVER COMMISSION REPORTS 75
draft a completely new bill designed to create such a board or agency
with sufficient authority to carry out as many of the objectives of the
Hoover Commission in its report on medical activities as possible,
without disrupting existing programs authorized by the Congress.
The bill as drafted by the staff was based largely on the provisions
of the American Legion bill (S. 925), and was introduced in the Senate
as a committee bill on June 11, 1952 (S. 3314, to establish a Federal
Board of Hospitalization). This bill deviated from the American
Legion bill in that it recognized that, if proper controls of facilities
and personnel are to be exercised, such a board must be able to evalu-
ate impartially existing policies and procedures, and must be in a
position to exercise independent action in the public interest. The
bill, therefore, proposed a board consisting of an approximately equal
number of public members who are to be "persons learned in the medi-
cal arts and of outstanding professional qualifications and attain-
ments," to be appointed by the President and confirmed by the Senate,
one of whom would be chairman, in addition to the Federal members
of the Board, who would represent the operating agencies.
Following introduction of this new bill, S. 3314, the Citizens Com-
mittee for the Hoover Report and the American Medical Association
recommended that it was essential that public and Federal members
of the proposed Board have equal representation with Federal agen-
cies; that instead of six representatives from Federal agencies engaged
in some type of medical activity and four from public members, there
should be only eight members, four from private life and four from
the major Federal medical operating units (the Secretary of De-
fense, the Administrator of Veterans' Affairs, the Surgeon General of
the Public Health Service, and the Secretary of the Interior, omitting
the Director of the Bureau of the Budget, and the General Services
Administrator). The American Legion indicated that it would oppose
any public membership on the Board, and that, if public members
were included such members should be distributed specifically to in-
clude (a) a doctor of medicine; (b) a construction engineer familiar with
hospital construction; (c) a hospital administrator; and (d) a person
trained in veterans' affairs. The Veterans of Foreign Wars took the
view that no public members should be included on the Board and
that it should be a strictly federally controlled operation along the
{ lines of such previous Boards, with no real authority vested in the
Board, and that it be staffed only'for minor administrative functions.
Since vitally interested groups were unable to agree on the language
of the committee bill, it became clear that no action was likely during,
the closing days of the Eighty-second Congress. The committee
therefore withheld further action on S. 3314, thus creating an oppor-
tunity for consideration of perfecting amendments necessary to insure
effective administration of the Federal medical programs, without
impairing statutory medical activities.
After adjournment of the Eighty-second Congress the committee
directed the staff to make a complete and careful analysis of the hos-
pital programs of the Veterans' Administration, based on the manage-
ment survey authorized by the President, as outlined in Report No. 9
on Veterans' Affairs. The staff was further directed to prepare a
new bill for consideration by the committee on the convening of the
Eighty-third Congress with a view to initiating appropriate legisla-
tive action at that time to carry out the Hoover Commission's recom-
mendations in its report on medical activities.
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76 SENATE ACTION ON HOOVER COMMISSION REPORTS
REPORT No. 17-FEDERAL BUSINESS ENTERPRISES
This report deals primarily with organization, policy, reporting, and
other aspects of "about 100 important business enterprises," operated
wholly or partly by the Federal Government, engaged directly or
indirectly in lending money; guaranteeing loans and deposits; writing
life insurance; producing, distributing, and selling electric power and.
fertilizers; operating railroads and ships; purchasing and selling farm
products; and smelting and selling metals.
Of the 23 recommendations in this report, 15 of them deal with
general operations of Government corporations and with housing enter-
prises, 4 with farm-credit enterprises, with the remaining 4 proposing
specific actions which would (a) liquidate the Inland Waterways
Corporation and (b) the Puerto Rico Reconstruction Administration;
(c) incorporate the Washington National Airport and (d) the Alaska
Railroad.
Each and every one of the recommendations contained in this report
deal specifically with legislative policy. They are so broad and in-
volved that the attorneys for the Hoover Commission did not submit
a draft bill to put the recommendations into specific legislative pro-
posals, as requested by the chairman of this committee, and no specific
drafts were compiled by the Citizens Committee for the Hoover Report
for implementation of the report.
A number of recommendations in this report were repeated in other
reports submitted by the Hoover Commission. As an illustration,
the recommendation for vesting the supervision of the Federal Deposit
Insurance Corporation in the Secretary of the Treasury was repeated
in the report on the Department of the Treasury. The Chairman
of the FDIC stated in reply to this suggestion, that-
Without intending any criticism whatsoever of the work of the Commission or
the task forces, it is submitted that the recommendations pertaining to this
Corporation suggest lack of understanding of the basic reasons for creation of the
Corporation as an independent agency and. its relationship to the Federal Reserve
System, the Comptroller of the Currency, and the 48 State bank supervisors.
This is due in part, we believe, to the piecemeal method by which the task forces
studied the functions of the Corporation.
As a further indication of the extent to which activation of recom-
mendations in this report would have on the prerogatives of Congress,
the following is quoted from a letter submitted to the committee by
Mr. Raymond M. Foley, Administrator of the Housing and Home
Finance Agency, who stated that, in connection with the proposal. for
the creation of a system of national mortgage discount banks to pro-
vide real estate mortgage discount facilities for all private lending
agencies, he had no objection to a study of this problem being made
by the Congress. He added, however;, that he believed there is "a
confusion in the Commission's report between the type of financial
activity involved and the public purpose which it is desired to ac-
complish," concluding that
It is my considered opinion that the principles on which this question was
rejected in the early 1930's are still sound and that there would be draw-backs
to the adoption of a national system of discount banks, of the type apparently
contemplated by the Commission, at the present time. At the same time there
is no doubt that a general review of the Federal Government's activities in the
broad field of fiscal management and supervision might be profitable in terms of
recommendations for a better integration of all current reserve facilities. We
would welcome a congressional study on such a comprehensive basis. -
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SENATE ACTION ON HOOVER COMMISSION REPORTS 77
The recommendations of the Hoover Commission in this report,
along with those submitted at the hearings by qualified experts in
connection with consideration of basic legislation, have been given
careful consideration. When future proposals affecting the operations
of the numerous agencies involved are considered, there is little doubt
that they will continue to review the Hoover reports, as is the accepted
congressional procedure when basic legislation of this type is proposed.
Among the numerous legislative actions taken in these broad fields,
during the Eighty-first and Eighty-second Congresses, the following
may be cited as having some bearing on relationship to the purport
and intent of the Hoover Commission recommendations in its report
on Federal business enterprises : The Housing Act of 1950, titled II,
relating to the disposition of veterans' housing projects (Public Law
No. 475, 81st Cong.); improvement in the organization, management,
and operation of the Panama Canal (Public Law No. 841, 81st Cong.);
Reorganization Plan No. 22 of 1950, transferring the Federal National
Mortgage Association from the Reconstruction Finance Corporation
to the Housing and Home Finance Agency (S. Rept. 1936, 81st Cong.) ;
and Reorganization Plan No. 1 of 1951, providing for the reorganiza-
tion of the Reconstruction Finance Corporation (S. Rept. 213, 82d
Cong.). In conformity with recommendations relating to the liquida-
tion of the Puerto Rico Reconstruction Administration, the Interior
Department initiated plans calling for its liquidation. The recom-
mendation relating to the separation of capital and operating ex-
penditures in connection with the operation of Government business
enterprises has been fully provided for in the joint accounting pro-
gram of the General Accounting Office, the Department of the Treas-
ury, and the Bureau of the Budget, as set forth under Report No. 7
on~ budgeting and accounting.
In addition to direct legislative and administrative actions along
the lines cited above, various committees of Congress have conducted
extensive studies and surveys into the operations of many of the
Federal business enterprises to which reference was made in the
Hoover Commission reports. Notably, the Senate Committees on
Banking and Currency and Interstate and Foreign Commerce con-
sidered the enactment of proposals relating to banking, Federal loans,
housing, corporation controls, transportation, public power and inter-
state commerce. The broad purpose underlying the recommendations
of the Hoover Commission in its report on Federal business enter-
prises is the fundamental improvement of business methods of Gov-
ernment activities.
Legislation is the keynote for either initiating or improving these
operations. One of the fundamental bases of control of these activ-
ities is through proper auditing procedures which this report itself
recognizes. In line with this, the Congress has approved the Budget
and Accounting Procedures Act of 1950, as recommended by this
committee, which vests authority in the Comptroller General of the
United States as a representative of the legislative branch in matters
of accounting and auditing, under which the Congress can be kept
fully apprised of any irregularities or deviations from basic legislative
authorizations, as prescribed under the provisions of the Corporation
Control Act of 1945, as amended. Pursuant to this authority the
General Accounting Office audits the books and financial records of
wholly owned and mixed-ownership Government corporations. These
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78 SENATE ACTION ON HOOVER COMMISSION REPORTS
audit reports are submitted to the Congress at the end of each fiscal
year, and referred to this committee for examination. These audit
reports are also available to the substantive committees which deal
with problems related to the activities of these agencies, and are
.annually reviewed for the purpose of amending or expanding existing
statutes to conform to changing economic or national conditions.
Consequently, to fully appraise legislative actions taken by the Con-
gress or administrative actions in implementation of recommenda-
tions contained in this report, it is necessary to fully analyze all
legislation, reorganization plans, and administrative actions through-
out this report as well as many which are not included.
Actions taken on certain aspects of this report are also incorporated
in comments on other reports of the Hoover Commission, such as No.
7 on budgeting and accounting, and No. 10 on the Department
of Commerce.
REPORT No. 18, PART I-OVERSEAS ADMINISTRATION
This report is concerned with the manner in which the United
States administers overseas areas, including occupied areas, insular
possessions and trust territories, organized (self-governing) territories,
and other overseas activities, including economic cooperation, mutual
defense programs and special missions. The Commission also gave
consideration to the disposition of certain other small independent
agencies such as the American Battle Monuments Commission,
Philippine Alien Property Administration, and the Philippine War
Damage Commission, the latter two of which have been liquidated
since the Commission's report was submitted to Congress.
The Commission made only one concrete recommendation in this
-report: that the Congress direct that a comprehensive study be made
of the entire problem of overseas operation and administration. As
possible alternatives, it was suggested that (1) a special Secretary be
appointed, directly responsible to the Secretary of Defense, who
would take over then-existing Army and Navy responsibilities for
the Panama Canal, tha island possessions and trust territories, and
the administration of the occupied areas; or (2) an Administration. of
Overseas Affairs be created, headed by an Administrator, who would
have the responsibility for the administration of all overseas activities,
including occupied areas, but excluding the diplomatic and consular
-services. This alternative had as its prime objective the unification
of overseas policy controls under one responsible head. The creation
.of such an agency would, in the view of the Commission, enable the
development of a corps of career men for foreign administration,
reduce the total number of agencies in the Government, and eliminate
overlapping and duplicating overseas activities.
Two bills (S. 2072 and S. 2061), were introduced in the Senate in
the Eighty-first Congress by Senators McClellan and McCarthy,
respectively, to conform to a draft submitted to this committee by
attorneys for the Hoover Commission providing for the creation of a
Commission on Overseas Administration. These bills accorded with
the specific recommendation of the Commission, and provided au-
thority to the proposed new Commission to conduct a complete study
and survey of the administration of all, overseas activities of the
Government and to make recommendations to the Congress with
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respect thereto. The Commission was to be composed of 12 mem-
bers--4 Members of the Senate, to be appointed by the President of
the Senate; 4 persons from the executive branch, appointed by the
President of the United States; and 4 Members of the House of
Representatives, appointed by the Speaker. This Commission would
have been required to submit its report to Congress within a specified
time, and was empowered only to recommend appropriate action to
correct deficiencies in existing programs and to suggest means for
coordinating and integrating overseas activities. Any report sub-
mitted under its authority would therefore have been subject to com-
plete congressional review and approval before legislative action would
be taken on any of its recommendations, on the same basis as the
Hoover reports.
S. 2072 was reported unanimously by this committee (S. Rept. 889,
81st Cong.) and passed the Senate on August 27, 1949, in preference
to the alternative approach of establishing an Administration of
Overseas Affairs. After passage by the Senate, the bill was referred to
the House Committee on Expenditures in the Executive Depart-
ments where no further action was taken during the Eighty-first
Congress.
A similar bill (S. 1166) was introduced in the Eighty-second
Congress and again reported favorably by this committee on July 11,
1951 (S. Rept. 543). Under its provisions, however, bipartisanship
was provided for by requiring that within each class of four members,
two were to be from each of the two major political parties. The
Commission was given subpena powers and was required to report to
Congress and terminate its activities within 1 year after its first
meeting. The bill passed the Senate on July 23, 1951, under
unanimous consent, and was referred to the House Committee on
Expenditures in the Executive Departments the following day. A
motion to reconsider the Senate action was entered by Senator Ellender
of Louisiana, and the bill was called back from the House of Repre-
sentatives and placed on the Senate Calendar under "Motions. to
reconsider." The effect of this procedure, under the Senate rules,
was to nullify the previous Senate action, and to kill the bill.
As indicated above, the Hoover Commission suggested that should
the Congress approve the alternative proposal to establish an Admin-
istration of Overseas Affairs, the agency should be. set up under an
Administrator whose position would be similar to that of the Economic
Cooperation Administrator and who would bear the same relationship
to the Secretary of State in matters involving foreign policy. Although
the Congress has not acted directly on this recommendation, it ap-
proved the Mutual Security Act of 1951 (Public Law 165, 82d Cong.),
which abolished the Economic Cooperation Administration and estab-
lished a Mutual Security Agency, to be administered by a Director of
Mutual Security. The Congress set forth in the act establishing this
new agency, that its purpose would be to-
maintain the security and to promote the foreign policy of the United States by
authorizing military, economic, and technical assistance to friendly countries to
strengthen the mutual security and individual and collective defenses of the free
world, to dev-lop their resources in the interest of their security and independence
and the national interest of the United States and to facilitate the effective
participation of those countries in the United Nations system for collective
security. The purposes of the Mutual Defense Assistance Act of 1949, as amended,
the Economic Cooperation Act of 1948, as amended, and the Act for International
Development shall hereafter be deemed to include this purpose.
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Following the adjournment of the Eighty-second Congress in July,
the staff of this committee was directed to make further studies into
the operations of overseas agencies. The purpose of this staff review
of the Hoover Commission's recommendations, submitted to the Con-
gress in 1949, is to develop pertinent facts and information relative
to the present operating status of overseas agencies, and report to the
committee with respect to deficiencies, duplicating activities, or extrav-
agances that may be found to presently exist. This will permit the
committee to reconsider the recommendations contained in this report,
in the light of current policies and practices, when the Eighty-third
Congress convenes, with a view to recommending appropriate action
to the Congress consistent with new or revised programs and present
operating conditions.
REPORT NO. 18, PART 2-FEDERAL-STATE RELATIONS
The five recommendations contained in this report point up the
need for establishing an understanding between the Federal Govern-
ment and State and local governments to determine the best means
of meeting public needs in the various governmental areas of activity,
and to evolve some solution as to which level of government will levy
and. collect the various kind of taxes. The Commission put special
emphasis on the need for the formulation and determination of policies
to enable local governing bodies to carry on such functions which they
are in a position to administer, with Federal supported grants-in-aid
being budgeted and administered locally. To best accomplish these
objectives the Commission proposed that a Federal-State relations
agency be created to study, inform, and assist in devising national
programs governing all activities involving Federal-State relations.
The subject matter of this report has been the basis of continuing
studies on the part of the various committees of the Congress, the
Federal Government, and State and local governments for a number
of .years. The deficiencies in existing systems and programs have
been. fully recognized by the Congress, and various actions have been
taken which had as their objective the carrying out of the specific
recommendations contained in this report. Unfortunately, such ac-
tions as have been initiated have not resulted in any broad-scale
solutions to the many problems involved.
The specific recommendations made by the Commission in this
report suggested that action should be taken by the Congress to solve
five major problems which were analyzed generally as follows: (1)
That the functions and activities of the Federal Government be
appraised to determine which can be most advantageously operated
by each level of government, and which require joint policy making,.
financing and administration; (2) that the tax systems-National,
State, and local-be revised, and that in this revision every effort be
made to leave to localities and States adequate resources from which.
to raise revenue to meet duties and responsibilities of local and State
governments; (3) that all Federal grants-in-aid to State governments.
be budgeted and administered on the Federal and State levels, as are
other Federal and State funds; (4) that the grants-in-aid plans and
programs be clarified and systematized; and (5) that a continuing
agency on Federal-State relations be created to accomplish these
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recommendations, with primary responsibility for study, information,
and guidance in the field of Federal-State relations.12
Following the submission of this report to Congress, agency com-
ments were requested by the chairman. The resultant responses
indicated that there was general agreement with the purpose of
recommendation No. 5, calling for study of the conflicts between
existing Federal, State, and local programs with a view to accom-
plishing more economically and effectively the coordination of these
activities. There was, however, some opposition to the creation of
a new agency for this purpose.
A number of bills in this whole area wore introduced in the Congress
by various Senators, most of them providing for the creation of com-
missions similar to that recommended by the Hoover Commission.
The bills differed in many respects as to the proposed membership of
the Commission and as to their emphasis on Federal-State fiscal
relations. None of them provided for a continuing agency as recom-
mended by the Hoover Commission, except the bill drafted by attor-
neys for the Commission (S. 1946, 81st Cong.). S. 1946 was reported
favorably on June 13, 1949 (S. Rept. 488, 81st Cong.), after extensive
joint hearings had been held on all related bills by the Senate and
House Committees on Expenditures in the Executive Departments
(now the Committees on Government Operations).
This bill was called up several times on the Senate Calendar and
passed over on objection of individual Senators. Objections to the
bill were largely due to the contention that the proposed Commission
should be temporary rather than permanent in character in order to
permit Congress to receive and review its report and determine from
time to time on the desirability of its continuance. Suggested changes
were also proposed as to the composition of the Commission. This
committee therefore reconsidered the proposed legislation, and ordered
reported a now committee bill, S. 3147, containing appropriate amend-
ments to meet these objections (S. Rept. 1856, 81st Cong.). Despite
these efforts, repeated objections were also made when the revised
measure was called up in the Senate, and no further action was taken
in the Eighty-first Congress. ?
A new bill containing the general provisions of S. 3147 was intro-
duced in the Eighty-second Congress (S. 1146). This new bill pro-
posed the creation of a temporary bipartisan National Commission
on Intergovernmental Relations to terminate March 31, 1953, with
directives to study and to submit a comprehensive report on the
allocation of functions between Federal, State, and local governments,
and on their fiscal relations, including tax immunities, revenue sources,
grants-in-aid, and tax sharing. The bill required the Commission to
submit with its final report suggested legislative and administrative
proposals necessary to carry out its recommendations at each level of
government. On the basis of the comprehensive report required from
the Commission, the Congress could then determine whether or not it
should be continued permanently or for another stated period. The
bill was reported unanimously to the Senate, with minor amendments
(S. Rept. 544, 82d Cong.), and passed the Senate on July 23, 1951.. As
in the case of the proposal to create a Commission on Overseas Ad-
11 A subcommittee to study intergovernmental relations of the Senate Committee on Expenditures in
the Executive Departments prepared a report during the 80th Congress in cooperation with the Gover-
nors' Conference and other committees of the Congress on the Coordination of Federal and State
Taxes (S. Rept. 1054, 80th Cong.) which dealt with many of the problems outlined in this report.
24689-52--7
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ministration, discussed elsewhere in this report, Senator Ellender, of
Louisiana, requested that the bill be recalled from the House of
Representatives. On July 25, the House Committee on Expenditures
in the Executive Departments, to which it had already been referred,
was discharged from consideration of S. 1146, and it was returned
to the Senate and placed on the Senate Calendar under "Motions for
Reconsideration," where no further action was taken.
The Hoover Commission recommended that plans and programs
for grants-in-aid be clarified and systematized. The Bureau of the
Budget reports that it has been conducting, at the request of the
Governors' Conference, a study with a view toward the formulation
of standards and guides with respect to the objectives and uses of the
grants-in-aid device. In line with one of the objectives of this study,
the Bureau drafted a bill for the consideration of the Congress,
providing for improved policies and procedures with respect to pay-
ments to State and local overnrnents of annual sums in lieu of taxes !
on real property and tangible personal property owned and located in
the States but which has been taken off the local tax rolls. This pro-
posed legislation, S. 2268, was introduced by Senator Humphrey and
referred to this committee for consideration and action. At the re-
quest of the chairman, the various Federal agencies affected by the
proposed program have suggested amendments to meet specific
problems relating to the activities of these agencies as to which there
is disagreement. These amendments were so complicated and in-
volved that the committee determined that time did not permit of
revision of a bill during the closing days of the Eighty-second Congress,
and, therefore, no action was taken before adjournment. The com-
mittee believes that, prior to legislative action on S. 2268, it would be
desirable to have this phase of the Federal-State relations thoroughly
studied and reported on by the proposed National Commission on
Intergovernmental Relations, along with other related Federal-State
programs, so that specific recommendations on this aspect of the
over-all problem might be included in the Commission's report to the
Congress.
Although Congress has not taken final action to create a Commission
on Intergovernmental Relations, the Federal Security Agency reports
that, pending such action, it has made extensive studies of the prob-
lems pointed up in the Hoover Commission Report on Federal-State
Relations and has established an Office of Federal-State Relations
within that agency which is responsible for the development and co-
ordination of policies, methods, and procedures concerning all Federal-
State relations.
REPORT No , 18, PART 3--FEDERAL RESEARCH
This report contained two specific recommendations: (1) That
authority be granted to the President to coordinate research and
strengthen interdepartmental committees for this purpose, and (2)
that, a Federal Science Foundation be established.
The first of these recommendations was implemented as to intent
and purport through the enactment of Public Law 776, Eighty-first
Congress, establishing in the Department of Commerce a clearing-
house for the collection, dissemination, and exchange of technological,
scientific, and engineering information useful to business and industry,
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and for the transmission of information of military value to the De-
partment of Defense. The purpose and intent of this act was initiated
originally through a bill (S. 1248) introduced by Senator Fulbright in
the Seventy-ninth Congress, on which extensive hearings were held
before the Senate Committee on Commerce. A somewhat revised bill
was reintroduced in the Eightieth Congress (S. 493) and referred to
this committee. This bill, which proposed the establishment of an
Office of Technical Services in the Department of Commerce, was
reported favorably (S. Rept. 395, 80th Cong.), but failed of approval
in the Senate. Another action of the Congress relating to this recom-
mendation was the approval of Public Law 672, Eighty-first Congress,
expanding research facilities in the NACA in order to equip and
operate research stations to promote national-defense programs. This
was in conformity with the Hoover Commission's recommendation
that the President be empowered to coordinate research and to
strengthen interdepartmental committee organization for that purpose.
The second of the recommendations in this report was fully activated
by the passage of the National Science Foundation Act of 1949 (Public
Law 507, 81st Cong.) establishing the National Science Foundation
as an independent agency. The purpose of the foundation was set
forth in the act, which provided for the development and encourage-
ment of a national policy for research and for scientific education.
This act consummated a legislative program initiated by the Senate
in the Seventy-ninth Congress prior to the establishment of the
Hoover Commission (S. 1850, S. Rept. 1136, 79th Cong.). Both
the Senate Committees on Commerce and Military Affairs held
extensive hearings and conducted comprehensive studies of this entire
problem, the results of which were in close accord with the recom-
mendations incorporated in the Hoover Commission's report.
As will be seen from the above, this report merely contained con-
firmation of previous Senate actions initiated to conform to the
general purposes set forth in the report. Public Laws 507 and 776,
as finally approved by the Congress, deviated from its original concept
of the program, and in certain respects from the recommendations of
the Hoover Commission, but the over-all objectives of both approaches
to the problem were fully evaluated, and final determinations as to
appropriate action necessary to meet the needs as outlined were
incorporated in the acts above cited.
CONCLUDING REPORT
In its concluding report, the hoover Commission "attempts to sum
up the common thinking of the Commission on the basic organization
problems of the executive branch as they relate to efficiency, economy,
and improved administrative mana~oment." The report makes no
attempt to digest the recommendations made in the 18 substantive
reports to the Congress as horeinbefore outlined, but reviews each of
these reports in broad terms as to the approach, the magnitude of the
problem, the major reorganizations proposed, and areas of government
management which, in the opinion of the Commission, require further
study.
In this report the Commission states: "As a matter of principle, the
Commission has not been concerned with matters of substantive
policy." It then acknowledged, however, that "in practice it has
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often been extremely difficult to separate policy from administration?
although a conscientious effort has been made to do so."
The Commission, apparently realizing that certain agencies bad
been completely overlooked by the task forces in their studies, included
four recommendations in its concluding report, as follows:
(1) That the Displaced Persons Commission and the War Claims
Commission report directly to the Secretary of State.
(2) That the Indian Claims Commission be attached to the pro-
posed Indian Affairs Service to be established in the new Department
of Social Security and Education as an appeal board with independent
powers of review on Indian claims.
(3) That all interagency committees be assigned permanently to
regular departments- and agencies of the executive branch for better-
reporting, housekeeping, and coordination.
(4) That the Motor Carrier Claims Commission be abolished and
its functions absorbed by the Court of Claims.
It has been repeatedly reiterated throughout the analysis of the
various Hoover Commission reports that there is clear evidence the
Hoover Commission itself had at least some doubt as to how these con-
solidations could best be made. The recommendations in this report
are indicative of its indecisions, and apparently most of the above-
cited recommended actions were included as catch-ails. On analysis,
it becomes evident that the Commission gave no consideration to the
facts governing the creation of the Displaced Persons Commission
and the War Claims Commission as independent agencies. At the
time these Commissions were established, the Congress gave careful
consideration to the advisability of setting them up within existing
agencies, and decided against such action for various reasons. The
basic statutes governing their operations specifically required that
they were to perform certain temporary functions, and that they were
to exist for only limited periods. Their functions bear no direct re-
lation to the operations of the Department of State.
The Displaced Persons Commission was established by Public Law
No. 774, Eightieth Congress, approved June 25, 1948. In accordance
with the purpose and intent of the act, the Displaced Persons Com-
mission completed its work program on June 30, 1952, and on August
9 the President issued Executive Order No. 10382,. transferring the
functions and activities of the Commission to the Department of
State for liquidation.
The War Claims Commission was created as an independent agency
by the act approved March 3, 1948, for the purpose of receiving,
adjusting, and providing for the payment of certain claims arising
out of World War II and to make inquiry into war claims arising
out of World War II and not compensated under the act. This.
Commission consists of three members appointed by the President
with the advice and consent of the Senate. The term of office of'
the Commissioners expires at the termination of the affairs of the
Commission, which by statute provides that in no event shall be later
than March 31, 1955.
The recommendation that the Indian Claims Commission be at-
tached to a proposed Indian Affairs Service to be established in a pro-
posed Department of Social Security and Education is a similar case
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SENATE ACTION ON HOOVER COMMISS'ION' REPORTS
'in point. The Indian Claims Commission was created by the act of
August 13, 1946, to hear and determine claims against the United
'States on behalf of any Indian tribe, band, or other identifiable group
'of American Indians residing within the territorial limits of the United
'States or Alaska. The Commission consists of three members, all of
whom are appointed by the President, by and with the advice and
consent of the Senate. The statute provides that the Commission
shall have only a temporary status receiving claims for a period of 5
years after the date of approval of the act, and shall expire within
5 years after the end of the initial period prescribed for filing claims.
Another recommendation of this typo contained in the concluding
Teport was "that the Motor Carrier Claims Commission be abolished.
and its functions absorbed by the Court of Claims." The Motor
Carrier Claims Commission was created by the act approved July 2,
1948, to hear'an.d determine existing claims against the United States.
of certain motor carriers. The Commission consists of three members
appointed by the President, by and with the advice and consent of
the Senate. The act as amended provides that the Commission
shall terminate on June 30, 1953, after carrying out the limited func-
tions for which it was specifically created, and any such functions not
performed by the Commission as prescribed by the Congress would
:automatically go before the Court of Claims, as provided by general
law.
The Commission pointed out that certain limitations at times made
it impossible for it.to inspect all of the activities of the Government,
.and stated that some of the small agencies were either not considered
.at all or were considered only from the standpoint of how they might
be related to the executive structure as a whole. To fill in these
discrepancies, the Commission recommended certain specific studies
to supplement its reports. The most important of these included
the creation of a Commission on Overseas Administration and a
Commission To Study Intergovernmental Relations. It also sug-
.gested that the Congress conduct surveys of the relations of (a) labor
mediation and conciliation and the functions of the National Labor
Relations Board; (b) a system of national mortgage-discount banks
to provide real-estate mortgage-discount facilities for all private lend-
ing agencies in the real-property field; (c) old-age and survivors-
insurance programs; (d) Federal contributory retirement systems to
,determine whether they should be merged; (e) establishing a Govern-
ment system of contributory fidelity insurance; (f) the appropriation
structure to correct diversity of appropriations; (g) necessary desirable
changes in the United States banking and monetary system; (h)
industrial-hygiene functions to work out a logical division between
health and labor agencies; and (i) the needs of the medical schools.
'The Commission also recommended that the Secretary of Agriculture
institute a comprehensive management. survey of the Department of
Agriculture.
Comments relative to actions heretofore taken by the Congress in
these areas are contained in the respective reports. In some instances,
such as the studies relating to unification of the retirement systems
.and industrial-hygiene function, action has already been completed.
The survey of the appropriation structure to correct the diversity of
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86 SENATE ACTION ON HOOVER COMMISSION REPORTS
appropriations has been acted on by the Senate, but failed of approval
in the House, as set forth in detail in the report on budgeting and
accounting. The Senate Committee on. Government Operations has
approved bills providing for the creation of Commissions on Overseas
Administration and Intergovernmental Relations, neither of which was
finally passed by the Senate or the House. The Secretary of Agri-
culture has drawn up organization memorandums in implementation
of the studies made of the Department's operations, recommended
by the Commission, as outlined in the report on the Department of
Agriculture. In addition, the President authorized a private manage-
ment survey of the Veterans' Administration to make further careful
studies of the problems outlined in the Hoover Commission report on 4
veterans' affairs, and the Attorney General has entered into a contract
for a management survey of the Department of Justice.
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APPENDIXES
REPORT FROM THE DIRECTOR OF THE BUREAU OF THE BUDGET AS TO SAVINGS
RESULTING FROM IMPLEMENTATION OF HOOVER COMMISSION REPORTS, AND
OF ESTIMATES OF SUCH SAVINGS BY OFFICIALS OF THE CITIZENS COMMITTEE.
FOR THE HOOVER REPORT AND OTHERS ARRANGED CHRONOLOGICALLY
EXECUTIVE OFFICE OF THE PRESIDENT,
BUREAU OF THE BUDGET,
Washington, D. C., June 16, 1952.
Chairman, Committee on Government Operations, United States Senate,
Washington, D. C.
MY DEAR MR. CHAIRMAN: This is in reply to your letter of January 17, 1952, in
which you request that the committee be provided with the following specific data
regarding savings effected or obtainable through the implementation of recom-
mendations of the Hoover Commission:
"1. An estimate of savings in expenditures by the Federal Government under
reorganization plans which have become effective since the approval of the
Reorganization Act of 1949.
"2. Which of these reorganization plans have been fully activated by adminis-
trative action and those on which final administrative action still remains to be
taken.
"3. Estimated savings accomplished under other reorganization legislation
approved by the Congress based on Hoover Commission recommendations.
`4. A detailed estimate relative to the estimated savings that would follow the
enactment of the remaining recommendations of the Hoover Commission."
Last July I received a somewhat similar request from the Senator from Dela-
ware, the Honorable John J. Williams. In my reply to him I included a statement
which I had presented to the Senate Finance Committee in answer to questions
raised in hearings held on June 29, 1951. This statement explained in some detail
why it is not usually possible either in prospect or in retrospect to estimate
precisely the savings realized through reorganizations.
At the outset it should be kept in mind, as you have noted in your remarks before
the Senate, that the Commission on Organization of the Executive Branch of the
Government deliberately refrained from estimating economies in terms of reduced
expenditures. A few of the "Task Force" reports did contain dollar estimates of
savings, but those were usually not supported in detail. Most of the claims of
large savings for particular reorganizations have appeared in the speeches and
writings of certain former members of the Commission and in the materials and
statements of organizations advocating the adoption of the various recommenda-
tions or reports. Many of these estimates lack supporting evidence.
Because the Reorganization Act of 1949 requires that the President specify the
reduction of expenditures which will be brought about by the taking effect of a re-
organization plan, messages transmitting plans to Congress contain estimates of
what the President believes can be achieved in the way of savings. Although the
President has often forecast long-range economies, he has in but one case predicted
the precise dollar savings expected to follow the approval of a plan. The excep
tion was Plan No. 3 of 1952, for which the President estimated that, within a few
years, annual savings of about $300,000 would be realized from reforms in the
customs service made pursuant to that plan. There is little reason to expect that
what could not be done for most all of the 41 reorganization plans submitted to
date could be done for any substantial proportion of the plans which he may sub-
mit in the future. I have, therefore, no choice but to advise you, with regard to
the fourth item in your request, that it is impossible to furnish the committee with
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88 SENATE ACTION ON HOOVER COMMISSION REPORTS
"a detailed estimate relative to the estimated savings that would follow the en-
actment of the remaining recommendations of the Hoover Commission."
The second item on which you request information concerns the extent to which
approved reorganization plans have been activated. Final administrative action
has been taken upon most of the plans. There are a few plans, such as Nos. 8, 9,
10, and 13 of 1950-which established strong chairman positions for various regu-
latory commissions-that will require administrative actions for an indefinite
period of time. In addition, there are, of course, instances where agency heads
have not had occasion or found it necessary to use certain authorities extended. to
them by reorganization plans. The Secretary of Labor, for example, has not
found it necessary to fill the position of Administrative Assistant Secretary pro-
vided under Reorganization Plan No. 6 of 1950.
The first and third types of information requested in your letter deal with specific
data relating to the reduction in expenditures which has been accomplished
through the reorganization plans and statutes which have been approved either
pursuant to the Reorganization Act of 1949 or for the purpose of effectuating
recommendations of the Commission on Organization of the Executive Branch
of the Government.
A number of reorganization plans and acts of Congress have led to sufficiently
evident and tangible economies to permit their use as illustrations. I am setting
forth a few of these examples in the following paragraphs.
Reorganization Plan No. 22 of 1950 transferred the Federal National Mortgage
Association from the Reconstruction Finance Corporation to the Housing and
Home Finance Agency. This transfer had the immediate positive result of
assuring close coordination between the secondary market operations of the
Association and national housing policies. In addition, an active program of
consolidation of field offices and related streamlining reduced the annual adminis-
trative expenses of the Association by about a million dollars during the fiscal
year 1951, at a time when the portfolio of Government-held mortgages was in-
creasing.
Public Law 152, approved July 1, 1949, and Reorganization Plans Nos. 18 and
20 of 1950 created the General Services Administration and pulled together in
this one agency numerous central service functions previously scattered through-
out the executive branch. Although it will require many years to realize the full
benefits of such a complex and large-scale reorganization, specific examples of
savings already achieved can be cited. These savings are discussed in greater
detail in the annual report of the General Services Administration for fiscal year
1951. During the 1951 fiscal year supplies were furnished to Federal agencies at
a total cost nearly $26,000,000 less than the probable cost had the same supplies
been purchased by the using agencies individually. During the same fiscal year
over 520,000 square feet of space and 8,000 filing cabinets were released through
the transfer of inactive records to the new Federal records centers; the annual
savings for these records management operations are estimated at $1,400,000.
Tightening up on space utilization by the Federal agencies resulted in savings of
annual rentals in excess of $3,700,000. The traffic management program led to
various agreements with carriers which saved the Government $2,240,000 during
fiscal year 1951. Changes in the methods of publication of slip laws and other
documents led to savings estimated at $133,000 over the same period.
Detailed estimates of the savings realized through activation of the Hoover
Commission recommendations are extremely difficult to prepare for a number of
reasons, the most important of which are the following:
(1) Many of the recommendations of the Hoover Commission were aimed at
improving the effectiveness of executive supervision of Federal agencies: The
purpose of many recommendations of the Hoover Commission was to provide an
opportunity for efficient, responsible administration by providing clear lines of
authority and responsibility from the President, through the heads of the depart-
ments and agencies, down to the most subordinate units of the executive branch.
It was the view of the Commission and the theme of many of the messages trans-
mitting reorganization plans that once the head of an agency is given the authority
and staff required to coordinate the bureaus and programs for which he is respon-
sible his capacity to eliminate poor management within his organization is
increased. Reorganizations of this type provide an opportunity for more econom-
ical administration. What is actually accomplished will depend upon how aggres-
sively the responsible officials take advantage of the opportunity. Even for
known improvements, it is often difficult to determine whether or not they took
place because of reorganization action or simply as a part of the normal process of
executive supervision.
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ION ON HOOVER COMMISSION REPORTS 89
(2) A substantial number of the recommendations of the Hoover Commission
were designed to facilitate the coordination of Federal programs by bringing
together those related to a common major purpose in a single department or
agency: Very frequently little duplication existed prior to organization action,
and therefore no immediate savings in terms of reduced program costs resulted.
Yet the improved grouping of related activities increases the likelihood that the
various programs of the Government will be carried out in a consistent and
coordinated manner. For example, the Hoover Commission recommended that
the major nonregulatory transportation activities of the Federal Government be
grouped in the Department of Commerce. Reorganization plans have since
transferred the functions of the Maritime Commission and the Bureau of Public
Roads to the Department of Commerce and have created the post of Under
Secretary of Commerce for Transportation. The major benefit to be derived
from these reorganizations is not immediate savings but rather the more effective
development of a national transportation system designed to meet the needs of
commerce
industry
agricultu
th
,
,
re,
e general public, and the national defense.
(3) The changing nature of Federal programs and agencies makes difficult the
identification of specific savings resulting from reorganization actions: Since the
activities of the Federal Government are designed to meet the needs of the
people, changes in economic conditions, international developments, significant
population growth, and other factors frequently compel adjustments in Federal
programs. It is thus possible to consolidate functions to produce more economical
administration; yet, because the programs involved may increase in tempo,
the next year's appropriations may be larger than those required to carry out the
activity under less efficient arrangements. For example, one of the major
reorganizations from which savings have been anticipated is the replacement of
the National Military Establishment by a more effectively unified Department
of Defense. Since that reorganization took effect there have been important
reforms relating to sea transportation, air transportation, procurement activities,
and personnel utilization. However, whatever savings may have resulted from
these actions have been obscured by an increase in expenditures for the military
program from $11,900,000,000 in the 1950 fiscal year to an estimated $39,000,-
000,000 for 1952.
(4) The measuring of the effectiveness of reorganization plans and legislation in
terms of reduced expenditures is complicated by the fact that the chief effect
of some reorganizations is improved service to the public: The cost of a program
involved in a reorganization may remain constant and there may be little or no
reduction in administrative expenses, but the improvements in the quality of the
service rendered may still fully justify reorganization. The transfer of functions
r
from the
elating to the maintenance and operation of schools affected by Federal activities G sav d litt leeneral Services Administration to the the cost of administration (and nydsa ingsLwhich might ha vebre-
sulted have been completely obscured by subsequent enlargement in the scope
of the program). Yet this transfer added to the convenience with which State
and local school officials can deal with the Federal Government by concentrating
Federal responsibility in a single agency. The improved lines of supervision
established by various plans may also result in better service to the public with-
out leading to tangible savings.
(5) A number of the recommendations of the Hoover Commission proposed
additional studies or investigations, in areas such as Federal-State-local relations
and overseas administration: Obviously no savings could result immediately
from the authorization of such studies, for they.must be completed and findings
must be implemented before it becomes possible to estimate the benefits.
Because of the factors mentioned above it is impossible to estimate the savings
accomplished from many of the reorganization plans and statutes which have
been approved. In other instances it would be feasible to come no with reason-
ably firm estimates if the agencies involved were to undertake exter sive studies
of the effects of the reorganizations. Such studies would in some instances call
for the expenditure of so many man-hours as to offset the benefits attributable
to reorganizations.
Many of the identifiable savings in the administration of Federal programs
achieved during the last 2 years stem from the President's efforts to promote
improved management in all the departments and agencies. Executive Order
10072, issued July 29, 1949, requires that each agency head systematically review
the effectiveness of his agency's programs and the economy of its operations.
Annual reports of management improvement activity are submitted to the
Bureau of the Budget. Many economics have been reported. Some of these
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 Approved For Release 2002/051/091 ~>~0269R000100130003-3
90 SENATE ACTION ON HOOVER Old O F.
may have been facilitated by the various reorganization plans strengthening the
authority of the heads of certain agencies and the chairmen of several regulatory
commissions. The improvements realized to date, examples of which are cited
in the following paragraphs, are more often the result of efforts over a long period.
The Treasury Department has reported numerous examples of management
improvement actions leading to tangible savings including the following:
(a) During 1950 the Fiscal Service, working through the Fiscal Services Man-
agemeut Committee, effected management savings totaling mere than $6,000,000,
including some economies resulting from improvements initiated during the
period 1947 to 1949.
(b) The Bureau of Public Debt reduced the number of regional offices from
five to three with a resulting annual savings of $250.000 in 1950.
(c) A depository receipt procedure was developed by the Bureau of Internal
Revenue in cooperation with the Fiscal Services to cover employment taxes- as
well as income taxes. During the first half of 1950. when the rew procedure was
first nut in operation, savings from the elimination of compensation to com-
mercial banks amounted to $500,000.
('1) The modernization of the intaglio presses in the Bureau of Engraving and
Printing in 1950 led to savings estimated at over $1,000,000 a year.
(e) The Bureau of Engraving and Printing also reported that improvements in
the printing of currency installed. during fiscal year 1951 would lead to the aboli-
tion of 300 positions and an annual savings of $963,000.
The Housing and Home Finance Agency reported numerous improvements
during the 1951 fiscal year, many of which resulted in individually small but
cumulatively significant savings. Changes in FHA title I claims payment and
recovery procedures produced annual personnel and materials savings estimated
at $61,000. Improvements in the procedures used in the termination of insured
mortgages brought about an estimated annual saving of $60,000. HIIFA
records disposal activities saved another $50,000 during the year.
Many actions to improve the organization and efficiency of the military services
have been taken by the Department of Defense. , Numerous consolidations have
been made and a number of joint activities for the three services have been estab-
lished since enactment of the National Security Act. Examples of consolidations
and joint operations now in effect include the Military Air Transport Service, the
Military Sea Transport Service, the Military Traffic Service, the Armed Forces
Technical Information Agency, the National War College, the Industrial College
of the Armed' Forces, the Armed Forces Special Weapons Project, the Armed.
Forces Institute of Pathology, the Aeronautical Standards Group, the Armed
Services Medical Regulating Office, the Electronics Production Resources Agency,
the Physical Security Equipment Agency, the Armed Services Petroleum Pur-
chasing Agency, the Armed Services Medical Procurement Agency, and other
single purchasing and service arrangements. These actions have enabled con-
siderable progress in providing common procedures and in reducing duplications
of effort, and they have enabled such specific dollar economies as those resulting
from the consolidation of printing facilities, the curtailment of certain printing,
and the installation of working capital funds in printing plants, which in the fiscal
year 1950 saved over $2,000,000.
Also illustrative of actions being taken by the Department of Defense is the
development of a plan, for operation by the military departments, providing for
preferential bulk insurance rates on a uniform basis for workman's compensation
and public liability on defense contracts; this plan is similar to one developed
during World.War II which enabled a sating of $193,000,000 from standard
insurance rates. A saving in funds and personnel is to be realized from the
consolidation of the examination and classification activities of the 192 main
recruiting stations of the services into a total of 71 Armed Forces examining
stations. Large savings are also being made from the establishment by the Army
Ordnance Corps of the largest rebuild program in history, which has rebuilt for
about $161,000,000 equipment which today would cost $600,000,000; typical
quantities rebuilt are over 10,000 combat vehicles, over 22,000 artillery pieces,,
and over a million and a half small arms.
The Veterans' Administration, by arranging for a consolidation of insurance and
death claims offices in Philadelphia, at an initial one-time cost of about $1,800,000,
will henceforth realize annual savings estimated at $2,700,000. Similar insurance
office consolidations at Fort Snelling and Denver will permit a reduction in annual
operating costs of about $2,500,000; the Fort Snelling and Denver moves will,
however, necessitate a one-time cost of about $2,400,000.
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 Approved For Releease 20022/0x5/09 : CIA-RDP86B00269R000100130003-
EN SENATE TIN ON HOOVER COMMISSION REPORTS 9
The introduction of a new money order punch card to replace that previously
used in post office auditing procedures has resulted in a saving of over 300,000,000
forms and other gains. Although this now money order system has not been in
operation long enough to permit an accurate estimate of ultimate savings, it has
already led to the elimination of 700 positions. The annual savings from the
personnel reductions alone will exceed $2,500,000.
In December 1947 the Bureau of the Budget, the Treasury Department, and
the General Accounting Office undertook a joint program to improve accounting
in the Federal Government. A large number of significant accomplishments has
been reported under this program, some of which were facilitated by the Budget
and Accounting Procedures Act of 1950. Illustrations of improvements which
have produced specific recurrent savings include: (a) The elimination in the
General Accounting Office of certain operations which were common to the
General Accounting Office and the Treasury Department, with a resultant saving
of nearly $1,000,000; (b) the revision of accounting procedures for public debt
coupon interest and related operating procedures in the Treasury Department,
with a saving of at least $150,000; and (c) the adoption in the Department of
Defense of a simplified method of scheduling disbursements and collections on
electrical accounting machines and the revision of related procedures, which are
expected to result in the elimination of more than 100 clerical positions in regional
accounting offices of the Department of the Navy, with comparable savings
possible in the field disbursing activities of the Departments of the Army and the.
Air Force.
While the above examples of savings from reorganization legislation and plans
and from management improvement activities of the departments and agencies
fall short of your request for the reasons which T have already indicated, it is my
hope that the examples cited above will make clear that Government reorganiza-
tion efforts frequently result in reduced costs of operations, including identifiable
dollar savings in some cases. While this is the best we can do by way of identifying
tangible savings without investing considerably more staff time and money, we
are confident that, as a result of both the Hoover Commission studios and the
President's management improvement program, there are many additional
savings not listed herein. '
Even if examples of reduced expenditures were totally lacking, it would not,
however, mean that the reorganization legislation passed by Congress and the
plans submitted by the President have failed to serve useful purposes. Much of
what has been. done in the last 2 years has been in the direction of improving the
lines of responsibility and accountability within the executive branch. Improve-
ments of this typo and many of the regroupings of functions which have taken
place will add to the capacity of the Government of the United States to carry
out its immense responsibilities at home and overseas. The provision of executive,
machinery organized to do well whatever it is called upon to do is the most
important objective of the reorganization program. The dollars saved in par-
ticular instances are among the beneficial results of improved organization, but,
they are by no means the sole criterion by which the accomplishments since the
passage of the Reorganization Act of 1949 and the publication of the reports of
the Commission on Organization should be judged.
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 92 ApprovedTFEor Relea oe 21002 /05/09~A IRD P8 6B002 69R000100130003-3
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Approved For Release 2002/05/09 : CIA-RDP86B00269R000100130003-3
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