Mr. GRAHAM. That is the theory upon which we were suggesting that this be done.

The CHAIRMAN. The staff director here suggests that there are now more than 800 of these positions instead of 475 or whatever it was in the beginning. So we are practically doubling those positions; and will obviously do so by the time we get through with these different reorganizations. I am hoping, but I do not know, that in these consolidations other savings will result that will justify this additional expense in these higher-classified offices.

Mr. GRAHAM. We think that will be true in our case, Mr. Chairman. Senator SCHOEPPEL. Who would have the final say as to where and when these positions are to be filled? Is it strictly the civil service on a recommendation from the Department?

Mr. STRUBINGER. Could you repeat your question, please, sir?

Senator SCHOEPPEL. Who will determine the actual need of this position to be filled? Now, if this plan goes through, the structure is here for the formation of 20 additional positions. I am concerned about never filling them unless you actually need them. I know that must be your intention, but who will determine whether they are to be filled? Who has the final say? Is it strictly the civil service? Mr. STRUBINGER. Here is the way this would work. We would select certain jobs throughout the Customs Service which we think should be included in these 20 jobs. In other words, they would be present jobs, not new jobs, not additional positions. They are present jobs which at the present time we think are undergraded simply because we have the ceiling of grade 15 to put these top jobs into. Senator SCHOEPPEL. This statement says 20 additional positions in these grades. To me that means 20 new positions.

Mr. STRUBINGER. It is 20 new positions in the super grades. In other words, above grade 15. We have authority now to create as many positions up to grade 15 as we can justify.

The CHAIRMAN. In other words, you are simply taking grades below 15 and raising them?

Mr. STRUBINGER. We are taking grade 15 and below and raising them.

The CHAIRMAN. And raising them up to higher classifications, together with positions that may result from consolidations of positions that now exist?

Mr. STRUBINGER. That is correct. So at the end we will not have any more positions than we have today. As a matter of fact, we will have fewer, because we intend to consolidate some of these collector and assistant collector positions into one position.

Senator SCHOEPPEL. I wanted that clarified for my own thinking because not to many days ago over on the Senate floor the Senator from Kansas was confronted by this kind of proposition. He noted on the executive calendar there were many, many, many generals to be added and some other high-ranking military officials. The question was asked, "Do you need them?" The chairman of one of the subcommittees said, "Frankly, no, but the framework is here to fill them and it is strictly within the law to have them placed there." I was wondering if that sort of condition might ensue under this. Mr. STRUBINGER. No, sir.

The CHAIRMAN. Just because we have the creative proposition here by this Reorganization Act if it passes, I am sure you will agree that

it should only be filled if the need and necessity exists and after proper screening and after proper determination by your Department and the civil service to really gear to an efficiency ratio of some kind. Mr. STRUBINGER. Yes, sir.

Senator SCHOEPPEL. I agree with the chairman. I am afraid in all these reorganization plans we are not saving money but for a long while will be adding to the expenditures, and despite this, the great, elaborate claims that have been made that we will save $2 or $3 billion a year on this thing.

The CHAIRMAN. All right, Mr. Graham.

Mr. GRAHAM. We come now to a question about the estimate of savings. The adjustments in customs operations which would result from the principal changes noted above and as provided in the plan, are estimated to produce, within a few years, annual savings of approximately $300,000, based upon present enforcement levels, business volume, and salary scales. It is difficult to forecast accurately the savings in each fiscal year. However, we believe that significant savings can be accomplished by fiscal year 1954 and that the estimate total annual savings of $300,000 can be reached by fiscal year 1957. We also believe that approximately one-half of the savings will be effected through the change in method of appointment of 44 collectors, 6 comptrollers, the surveyor of customs at New York and the appraiser of merchandise at New York. We believe that the remaining portion of the savings will be made through the changes in accounting procedures.

The President's message emphasizes that abolition by Reorganization Plan No. 3 of 1952 of the offices of collector of cutoms, comptroller of customs, surveyor of customs and the appraiser of merchandise will in no way prejudice any right or potential right of any person paying duties or imposts. The abolition of offices will not abolish any rights, privileges, powers, duties, immunities, liabilities, obligations, or other attributes of those offices except as they relate to matters of appointment, tenure, and compensation inconsistent with the plan. All of these attributes of office will attach, as may be appropriate, to personnel of the Treasury to whom the Secretary delegates the functions formerly vested in the abolished offices.

The changes which would be authorized by the President's Reorganization Plan No. 3 wil limprove not only the internal lines of administration and authority with respect to field offices, but also the internal audit and control programs of the Bureau. This will enable customs to increase its efficiency and will result in better service to the importing and traveling public.

That, Mr. Chairman, concludes the formal statement.

The CHAIRMAN. I might say that I am not too familiar with the way customs operates. My State is not a border State and we do not have these problems. I am therefore not as familiar with the operation of this agency as I am with some others. Of course we do have offices in my State.

Senator Schoeppel, do you have any questions?

Senator SCHOEPPEL. Mr. Chairman, I am sorry I was late. I had to be on the floor on other matters. I shall read the remaining part of the statement.

The CHAIRMAN. Senator Dworshak?

Senator DwORSHAK. Just a few, Mr. Chairman.

Mr. Graham, I note you hold out the promise that by 1957 the total annual savings resulting from this reorganization plan will be about $300,000 annually.

Mr. GRAHAM. That is correct.

Senator DwORSHAK. Why is it going to take 5 years to reach that goal?

Mr. GRAHAM. Well, when we are dealing with the first part of it, a $150,000 saving, you have a gradual shift of these offices which would account for it, Senator. The reason with respect to the second part of the savings is that whenever you start on a change and you still have to be in business and be in operation every day, the system that Customs has heretofore very successfully used is to put in a pilot-plant installation, as we call it, and work the bugs out and then extend it.

Senator DWORSHAK. I would like to call your attention to a statement made by a member of the committee staff referring to the 1948 McKinsey report. It was pointed out that this report involved total expenditures of about $200,000, half for survey and report and half toward its implementation. In contrast, the Treasury Department states the report is causing a much larger permanent savings of over $1 million a year on a recurring basis.

Mr. GRAHAM. That is correct, sir.

Senator DWORSHAK. Why would it take under this reorganization plan 5 years to save only $300,000, whereas as a result of the McKinsey report, the studies made of the Customs Service in 1948, they achieved a savings of $1 million? It seems to me it is wholly unnecessary to come in here and ask for a lengthy extensive reorganization plan, ostensibly to get greater efficiency but in reality to save a very few dollars. Can you explain that?

Mr. GRAHAM. Customs has done, I think, a very creditable job in saving money already. We have here, and we will be glad to put in the record or to show to you, if you care, a table showing how these savings have already been accomplished in the other fields."

Senator DWORSHAK. You did not have any reorganization plan to accomplish that.

Mr. GRAHAM. We could make some of those changes administratively, sir. In the meantime there has been some legislation passed which has enabled us to make some savings. We have a table right here, if you would like to see it.

The second thing is that it is my recollection that the McKinsey & Co. report said as a minimum it would take 5 years to make these gradual changeovers.

Senator DWORSHAK. Has it taken that long?

Mr. GRAHAM. 1948 to 1952, that is about 5 years, sir. I would like to repeat that it is still not complete, because we hope that the Customs simplification bill will be passed and that will give us some savings. The thing I would like to stress, Mr. Senator, is that when we got the McKinsey & Co. report, we did not just receive it and file it. We went to work on it. The people in customs worked diligently on it. They treated it as a live and as a continuing document. The improvement program of Customs is not just something that you take in a block and leave. It is a continuing thing that keeps going.

Senator DwORSHAK. How many in the Customs Service currently are not under the civil-service regulations?

Mr. GRAHAM. Fifty-two.

Senator DwORSHAK. How many will not be under the civil service under this plan?

Mr. GRAHAM. They would all be under this plan, sir.

Senator DWORSHAK. You put in this additional amount so they would all be under civil service?

Mr. JOHNSON. We have certain temporary day laborers who can be employed for certain limited periods who are not required to be under civil service. So a categorical statement of every employee under civil service would not be quite true.

The CHAIRMAN. You mean every permanent employee.

Mr. JOHNSON. But every permanent employee would be under civil

service.

Senator DwORSHAK. Do you think this will eliminate all partisan politics in the selection of top-level personnel in the Customs Service? Mr. GRAHAM. Would you mind repeating that question?

Senator DWORSHAK. Do you think if this plan is adopted it will eliminate all partisan politics or patronage in the selection of toplevel personnel in the Bureau of Customs?

Mr. GRAHAM. Yes, sir; I do.

Senator DwORSHAK. In what way will that be done?

Mr. GRAHAM. Because without these 52 you will not have need for either of the political parties to have any interest in it.

Senator DwORSHAK. Who will make the appointments?

Mr. GRAHAM. The Secretary of the Treasury.

Senator DwORSHAK. He is outside of politics?

Mr. GRAHAM. No, sir; but this is in accordance with civil service. Senator DwORSHAK. Of course, we understand that civil service is supposed to be nonpolitical.

The CHAIRMAN. There is one thing you can get rid of and that is congressional interference.'

Mr. GRAHAM. I would rather say "interest," sir, rather than interference. I could say that the Senate does not interfere with us, sir. They are always very interested, but no interference.

The CHAIRMAN. Sometimes it does not take too much interest to interfere.

Any other questions, Senator Dworshak?

Senator DwORSHAK. No.

The CHAIRMAN. I have a letter here that has come to my attention, sent over by Senator McKellar, from the Memphis Chamber of Commerce. It seems that they are apprehensive that some of their offices there are going to be closed and they would have to go to New Orleans or some other port to transact their business. I do not know much about it. I will read the first paragraph of the letter so as to ascertain whether they have any basis for their fears.

The letter is addressed to Senator McKellar, dated April 22. I will place the full letter in the record.

It says that "We understand," quoting from the first paragraph of the letter, "that plan No. 3 under the Reorganization Act of 1949 concerns reorganization of the Bureau of Customs in the Department of the Treasury, and threatens abolition of certain customs

offices at interior points. Among these are Memphis and its two other offices at Nashville and Chattanooga (cusotms district No. 43)." They are very concerned about it. I do not know whether there is contemplated, if this plan goes into effect, the abolition of those offices. Can you advise about it, because Senator McKellar wanted this letter put in the record. I thought you might make some comment on it while you were here.

Mr. GRAHAM. Mr. Chairman, I think they are unduly alarmed. There is no present plan to close any of those offices. The first we had heard of it was this letter.

The CHAIRMAN. Has a copy of this letter reached you?

Mr. GRAHAM. No, sir. It is true that if the plan were to go into effect, the office of the collector of customs, which is at Memphis, would be abolished.

The CHAIRMAN. The office of collector?

Mr. GRAHAM. The office, but not the functions.

The CHAIRMAN. But not the functions of the office that are transacted there. I will place the letter in the record following this interrogation about it. But it just occurred to me that maybe their apprehension was unfounded and that change was not necessarily envisioned in this plan.

Mr. GRAHAM. Furthermore, the Secretary already has authority to abolish offices in the sense of closing up Nashville or Elkin, N. C., as ports of entry, for example, if they did not have any business there, but you have to continue to serve the importing and traveling public wherever it is justified.

To repeat, I have heard nothing at all about any plans to close up Memphis or to close up Nashville. That all depends on your workload.

The CHAIRMAN. That would be true whether you had this plan or not?

Mr. GRAHAM. That is correct, sir.

The CHAIRMAN. The plan is not directed at abolishing offices in the sense of a place where the business is transacted.

Senator SCHOEPPEL. Mr. Chairman, I would like to ask a question. Reference has been made to this letter to closing some of these places. I do not know whether it is in the record or not. Frankly, I do not know anything about customs, so if I seem to get off bounds, you can charge it to that fact. If you talk about wheat, cattle, and corn, I will go along with you.

How do you open a customs office? By that I mean, suppose you are going to enlarge one, do you have a yardstick of certain volume of business that has to go through, and where you can consolidate them to get that volume? Is that the way you generally approach it?

Mr. GRAHAM. I think I will ask Mr. Strubinger to answer that particular one for you, if you do not mind.

Mr. STRUBINGER. Probably as good a way to answer you would be to answer in reverse. Where we have ports of entry today and the volume of business goes up, we usually add more personnel if they are needed. If the volume of business goes down to a point where we are serving very few or the service is not justified, we close it.

Now, where the request is made, and we do get lots of requests, to open ports of entry, we justify it on the needs of the community. In