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Any further efforts at the reorganization of the Treasury Department as a whole should involve much more than simply the transfer of certain nonfiscal units and agencies to other departments or establishments of the Government and the consolidation or regrouping of the remaining units and agencies in the Treasury. It should be a genuine reorganization along functional lines and without regard for the retention of existing offices and units except as they may conform to the new structure. In the suggested reorganization which follows, it is proposed that each new operating service will be a complete realignment and integration of the functions assigned to it, and not just a corralling of old offices and agencies. Statutory authority will be necessary for such reorganization in order to sweep away obsolete offices and refashion old and outmoded procedures.

PROPOSED REORGANIZATION OF THE TREASURY

DEPARTMENT

Three important steps appear to be necessary in order to modernize the present Treasury Department. These are:

1. Transfer of certain nonfiscal units and activities now in the Treasury to other points in the governmental structure.

2. Transfer of some fiscal functions to the Treasury which are now placed elsewhere.

3. Complete reorganization of the Treasury Department along functional lines.

Transfer of nonfiscal elements from the treasury

Certain nonfiscal offices, units, and activities of the Treasury Department should be transferred to other departments and establishments of the Government, since they contribute little or nothing to the strictly fiscal operations of the department. The Task Force on the Federal Supply Project has recommended for good and sufficient reasons that the Bureau of Federal Supply should be removed from the Treasury Department and placed elsewhere in the administrative structure. The United States Coast Guard is only remotely related to the primary fiscal functions of the Treasury. It properly belongs in one of the operating departments. The Task Force on Transportation facilities has recommended that it should be located in a proposed Department of Transportation. The marine activities recently assigned to the Bureau of Customs should go along with the Coast Guard.

The Bureau of Narcotics is mainly a regulatory unit, and as such properly belongs in an organization like the Department of Justice. It is largely concerned with the prevention of the illegal use of narcotics, and only incidentally with tax collecting. It cooperates with the State Department in the discharge of international obligations with respect to traffic in narcotic drugs, and it aids the various States in suppressing abuse in the use of such drugs.

The United States Secret Service is functionally more closely related to the Federal Bureau of Investigation in the Department of Justice than to the Treasury Department. It is engaged in protecting the President and his family and the President-elect. It supervises the permanent White House police force, which is assigned to the Executive Mansion and grounds. It also has charge of the uniformed guard force of all Treasury buildings. These functions have little or nothing to do with fiscal operations and may be properly lodged with an agency like the FBI in the Department of Justice. Other functions of the Secret Service relate to the suppression of counterfeiting, forging, or alteration of United States currency and securities; the investigation of forgery or fraudulent negotiation of Government checks, and the counterfeiting or altering of Government transportation requests. These functions may properly remain with the Treasury Department, since they are highly specialized enforcement activities requiring specially trained personnel. They should, however, be located in a suitable unit in the new Fiscal Service, or assigned to an Assistant Secretary. Consideration should be given to including in this unit the intelligence services of internal revenue and customs.

The Bureau of Engraving and Printing designs, engraves, and prints paper currency, bonds, and revenue stamps for the Treasury, and in addition it does extensive work for other departments and establishments, particularly in the production of postage stamps for the Post Office. In short, it is a large manufacturing plant for the Government, although it does the major part of its work for the Treasury in turning out paper money and Government securities. It has been suggested that as a manufacturing plant the Bureau of Engraving and Printing does not belong in the Treasury, but it would seem that since so much of its work is done for the Treasury Department under strict Treasury supervision and control that it might properly remain in that department under the new Fiscal Service. The same arguments apply to the Bureau of the Mint, although it is more exclusively occupied with the work of the Treasury. The operations of both of these bureaus should tie in closely with Treasury policies in the fiscal and monetary fields.

The Comptroller of the Currency, who is engaged principally in examining the national banks of the country, more properly belongs under the Federal Reserve Board than in the Treasury Department. Historically, this office is identified with the National Banking System, which was created during the Civil War period. It was originally placed in the Treasury Department and has remained there ever since. It was, however, a more important office from the Treasury standpoint before the Federal Reserve System was established in 1913, since it then had certain duties with respect to the currency and supervised the banks which served principally as Government depositories. The Nation Banking System now includes only about a third of the banks of the country, though a very important third from the standpoint of deposits. These banks have become accustomed over the years to deal directly with the Treasury through the Comptroller of the Currency, and are understood to prefer that arrangement.

Since they pay the cost of the Comptroller's office, there would be little or no economy in moving the office elsewhere. If the office of the Comptroller of the Currency is continued in the Treasury Department, it is recommended that it should be put under the Assistant Secretary in charge of Banking and International Finance.

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Transfer of Fiscal Functions to the Treasury

To make it possible to set up a central accounting system in the Treasury Department, it is necessary to transfer from the Comptroller General the power to prescribe administrative accounts and the authority to settle claims. These functions, as explained in the accounting report of this task force, really belong to the Executive. They are essential to the systematic management of the fiscal processes of the Government by the Executive; they are not needed for effective auditing, investigation, and reporting to Congress on the part of the Comptroller General. Without these functions, the Comptroller General would be in a much stronger position as an independent auditor, since he would not then be involved in executive and administrative determinations and decisions. He and his staff could then become a powerful aid to Congress in ferreting out extravagance and misuse of funds by the Executive and the administrative departments.

In order to integrate the budgetary process with the financial management of the Government, it is essential to return the functions of the Budget Bureau dealing with the preparation and execution of the budget to the Treasury Department. The separation of budgeting from financial management has resulted in the Budget Bureau being unable to follow through on budgetary execution, resulting in the failure for all practical purposes of the apportionment system which Congress has relied upon in the past to control the rate of expenditure from appropriations and to prevent deficiencies.

Treasury Reorganization Along Functional Lines

The complete reorganization of the Treasury Department, when stripped down to essential fiscal functions, involves two aspects: (1) the departmental or overhead management and (2) the operating services of the Treasury.

Departmental Management.—The overhead management of the Treasury Department consists of policy matters, general staff services, and departmental housekeeping functions. Policy matters are now handled mainly by the Secretary, the Under Secretary, and the assistant secretaries. The assistant secretaries (of which there are three, two appointive and one permanent) are usually assigned in a supervisory capacity to groups of the operating services. The Fiscal Assistant Secretary, however, is permanently assigned to the Fiscal Service, which includes accounts, disbursements, finances, and public debt operations.

The general staff services of the Treasury include the General Counsel's office, the Office of Tax Legislative Counsel (loosely attached to the General Counsel), the Division of Tax Research, and the Office of International Finance. The General Counsel is head of the Legal Division which services all units of the Treasury on legal questions. In several instances parts of the legal staff are assigned to Treasury units, such as Internal Revenue, Customs, Narcotics, and Public Debt. The General Counsel usually sits in on the determination of top policy matters for the department.

The Office of Tax Legislative Counsel reports through the General Counsel to the Secretary of the Treasury. It is a question whether this office should be left as a separate unit or integrated with the general legal staff. If it is continued separately, it should be under the Assistant Secretary in charge of the Revenue Service. At present the staff of the Tax Legislative Counsel is engaged principally in planning the Treasury's legislative program with respect to internal revenue, and in representing the Treasury on such matters before the appropriate committees of Congress.

The Division of Tax Research serves in a technical capacity to the Secretary of the Treasury and the congressional committees dealing with matters of taxation. It assembles the facts and prepares the analyses (other than legal) needed in the formulation of tax policy. Although there has been some criticism of its work, the division is generally considered to be a useful entity of the Treasury Department, and should be continued under the Assistant Secretary in charge of the Revenue Service.

The Office of International Finance was established on July 15, 1947, and took over the functions of monetary research and foreign funds control. It assists the Secretary of the Treasury in the formulation and execution of programs relative to international monetary and fiscal problems. These problems have rapidly expanded since the war and the Secretary has become more and more involved in them through his connection with the International Bank and the Monetary Fund. A staff agency such as this office affords is considered a necessary adjunct to the work of the Secretary at the present time. It should, however, be under the supervision of the Assistant Secretary in charge of Banking and International Finance.

At present the housekeeping services of the Treasury Department are under the direction of the Administrative Assistant to the Secretary, and embrace administrative services, personnel, and budgeting, each under a directing officer. The Office of Administrative Services was set up on October 1, 1947, taking over the work formerly performed by the Chief Clerk, and in addition assuming responsibility for

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