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postal receipts until 1944. And today, 97 cents out of every dollar is spent for salaries and transportation, and that approaches $2 billion.

Senator DWORSHAK. But you do not think it is inconsistent to make this radical change, in view of the fine record that you are so proud of in your Department ?

Postmaster General DONALDSON. Well, I agree with the chairman and agree with you on this fact, that I don't know any system where you would get more competent postmasters than you have now.

You get incompetent people into your service from time to time no matter what kind of a system you have.

And, of course, they are weeded out as fast as that fact is established.

I was speaking more particularly with reference to the criticism that is often heaped upon the postal service, of politics in it; and most of that criticism is based upon the fact that the postmasters have to be confirmed.

Senator DWORSHAK. Is it not largely stemming from the fact that political influence dictates the original nomination or selection, and That if you remove confirmation then you eliminate the only check or safeguard you have on some ill-advised political action?

Postmaster General DONALDSON. Well, there is truth to that, Senator Dworshak.

The elimination of the paper work both in the Senate and in the White House would be worth while, of course. And the incentive to destroy or dissipate this criticism that is heaped upon the postal service might be helpful, too.

Senator DWORSHAK. That is all, Mr. Chairman.
The CHAIRMAN. Thank you very much.
Will it be convenient for those of you who are scheduled to testify
to return this afternoon?

Then we will recess until 2:15.
Thank you very much, General Donaldson.

Postmaster General DONALDSON. Mr. Chairman, you are through with me?

The CHAIRMAN. Yes; as far as we know.
Postmaster General DONALDSON. Thank you, sir.

(Whereupon, at 12:10 p. m., a recess was taken until 2:15 p. m. this same day.)

AFTERNOON SESSION,

STATEMENT OF HON. JOHN S. GRAHAM, ASSISTANT SECRETARY OF

THE TREASURY; ACCOMPANIED BY HON. DAVID STRUBINGER, ASSISTANT COMMISSIONER, BUREAU OF CUSTOMS; AND W. R. JOHNSON, ASSISTANT TO THE COMMISSIONER, BUREAU OF CUSTOMS

REORGANIZATION PLAN No. 3 OF 1952, To REORGANIZE THE BUREAU OF

CUSTOMS, DEPARTMENT OF THE TREASURY The CHAIRMAN. The committee will come to order and we will resume hearings on plans 2, 3, and 4.

The first witness is Mr. John S. Graham, Assistant Secretary of the Treasury, and Mr. David Strubinger, Assistant Commissioner, Bureau of Customs.

Gentlemen, you desire to testify regarding plan No. 3? Mr. GRAHAM. That is correct, Mr. Chairman. The CHAIRMAN. You wish to testify together; is that correct? Mr. GRAHAM. I will endeavor to carry the testimony, Mr. Chairman, but some of your questions will be quite technical and in that event I would like to call on Mr. Strubinger.

The CHAIRMAN. That will be fine. Let the record show that Mr. Strubinger is present.

Do you have a prepared statement, Mr. Graham?

Mr. GRAHAM. I do, Mr. Chairman, and with your permission I would like to read it to you.

The CHAIRMAN. Please proceed. Mr. GRAHAM. Thank you.

Mr. Chairman and members of the committee, I welcome this opportunity to appear before your committee on Reorganization Plan No. 3 of 1952, submitted to the Congress by the President on April 10.

As stated by the President in his message of transmittal: This reorganization plan will permit a needed modernization of the organization and procedure of the Bureau of Customs. It will permit a more effective administration of the custom laws

The need for the modernization and more effective administration envisaged by the President is urgent in view of current conditions in the Customs Service.

The workload of the Bureau of Customs has increased tremendously over the years. For example, it has nearly doubled since the year 1940. Passengers arriving by air in 1951 were approximately 1.2 million as contrasted with 80,000 in 1940. The number of persons crossing our land borders in 1951 was nearly 90 million, compared with 50 million in 1940. The number of formal entries of merchandise in 1951 was about 900,000 compared with 500,000 in 1940.. Collections of revenues in 1951 were $809 million, in contrast to $383 million in 1940. Yet the number of full-time employees, who are paid solely from appropriated funds, decreased from 8,238 in 1940 to 7,853 in 1951.

We believe that the standard of service rendered by Customs to the public today is generally of a high order, although there are specific types and areas of workload which can be corrected only by increased appropriations to permit the hiring of some additional personnel.

A large part of the credit for this record is traceable to the vigorous efforts of the headquarters and field personnel to improve management efficiency in accordance with the Secretary's objectives. This management program has made full use of authority granted by Congress for the payment of incentive awards to its employees as a means of soliciting ideas for improving the service. The suggestions which have been adopted resulted in savings approximating $100,000. Likewise, the Treasury recommended to the Eightieth Congress that Customs be granted an appropriation to permit the employment of a private firm of management engineers to evaluate the Customs Service. This was done, and McKinsey & Co. were retained. Action on the recommendations of the report which could be accomplished by administrative action has been virtually completed. Here again, substantial savings were accomplished. Those recommendations of the report which required legislative enactment formed the basis of the Customs Simplification Act, H. R. 5505, which was passed by the

House in the fall of 1951 and on which hearings have been recently completed by the Senate Finance Committee. Further additional savings should result from the passage of such legislation.

All in all, the Customs Service, in recent years, has had an enviable record for continually improving its efficiency of operations and service to the public. However, the point has been reached where statutory changes are required if substantial progress is to be made in the fields of personnel administration and in accounting procedures. The President's plan would permit such accomplishments by (1) changing the present method of selection and apopintment of certain Customs officers, and (2) abolishing detailed statutory prescriptions of certain functions, particularly in the accounting field. These corrective actions will permit better management in Customs and are in accord with the principles envisioned by the Congress when it enacted the Reorganization Act of 1949.

The plan would abolish a total of 52 field positions in which the incumbents are appointed by the President, by and with the advice and consent of the Senate. Forty-four such positions are collectors of customs; six are comptrollers of customs; one is a surveyor of customs; and the other position is an appraiser of merchandise.

Various steps have been taken from time to time, and over a period of years, to decrease the number of political offices in the Customs Service. As early as 1912, President Taft, in a message to Congress transmitting reports of the Commission on Economy and Efficiency, recommended that all such offices be transferred to the classified service. Although Congress did not abolish these offices, legislation was passed in the act of August 24, 1912 (37 Stat. 434), under which President Taft reorganized the Customs Service so as to eliminate 115 political offices of collector of customs and a substantial number of other customs offices subject to political appointment.

In 1918, the United States Tariff Commission, in a report to Congress entitled "Report Upon the Revision of the Customs Administrative Laws” recommended that all remaining political offices in the Customs Service be abolished and their duties transferred to careerservice employees. While a substantial part of this report was incorporated in the Tariff Act of 1922, no action was taken to abolish political positions.

In 1932, Congress abolished the offices of appraiser of merchandise, except the appraiser of merchandise at New York. At the same time, there were abolished the offices of surveyor of customs, except the office of surveyor of customs at New York. Twenty-one Presidential positions were eliminated by these actions. Today New York is the only port having either an appraiser or a surveyor appointed by the President.

Subsequently, in 1937, the report of the President's Committee on Administrative Management stated that, the continued appointment by the President of field officials, such * * * collectors of customs is not only antiquated but prejudicial to good administration. Apparently no action was taken by either the Congress or the President on this recommendation at that time.

In 1939, Congress again gave consideration to the abolition of Presidential offices in the Customs Service. The House inserted a provision in the Treasury-Post Office appropriation bill for the fiscal year 1940 to eliminate funds for the salaries and positions of all comptrollers of customs and the surveyor at New York. However, the Senate restored the funds for these positions and the House subsequently agreed to the restoration.

The CHAIRMAN. May I interrupt to ask if the Senate restored those funds upon the insistence of the Treasury?

Mr. GRAHAM. I was not there at that time, but it is my understanding that the Treasury did not urge the restoration. '

The CHAIRMAN. I think somebody did. The funds were restored. Mr. GRAHAM. Therefore, no reduction in the number of political offices in the Customs Service resulted.

In considering the Customs appropriation for 1944, it was again proposed in Congress that the Presidential offices of comptroller of customs be abolished, but in the final enactment of June 30, 1943 (57 State. 256), only one such office was abolished, that of the comptroller of customs at San Francisco, which was then vacant.

As stated previously, the Congress authorized the Bureau of Customs to contract for the services of a private firm of management engineers to study the Bureau of Customs. The report concluded that it was important to have all employees of the field offices thoroughly trained and experienced in the work and laws of customs. It recommended that this could be best accomplished by having career employees at all supervisory levels.

In 1949, the report of the Commission on Organization of the Executive Branch of the Government, with reference to the Treasury Department, recommended that all officials in the Treasury below the rank of Assistant Secretary, should be appointed from the career service.

This brief outline highlights the efforts, and the thinking, of the past 40 years on the subject of appointment of certain customs field officers.

The President's Reorganization Plan No. 3 provides that incumbents of the offices may serve out their present terms of office. Vacant offices would be abolished on the effective date of the plan. Those incumbents whose terms have expired before the effective date, commonly referred to as hold-overs, and the appraiser, whose office has no prescribed term, would be permitted to continue in office until replaced by a civil-service appointee, but in no event later than January 1, 1953. The other offices would be abolished at such time as they become vacant or the term of office of the incumbent expires. If there are no vacancies created by resignation, or otherwise, before the terms of the incumbents expire, out of the total of 52 such offices in Customs, not over 35 would exist by the end of 1952; not over 19 would remain on December 31, 1953; not over 10 on December 31, 1954; and only 1 on December 31, 1955, which would be abolished not later than February 29, 1956.

The CHAIRMAN. You are not implying or trying to convey the impression that we are going to reduce the number of Federal employees or offices by that number? There can be two appointed to take their place to do the same work. Mr. GRAHAM. I am afraid I miss your point.

The CHAIRMAN. You are emphasizing here that we are gradually getting rid of some offices.

Mr. GRAHAM. That is correct.

The CHAIRMAN. But not necessarily getting rid of that number of employees, just these offices that exist. The office itself will be eliminated, but employees to do the same work will have to be supplied.

Mr. GRAHAM. Sir, we propose, and I will touch on that later in my testimony, that in certain cases there will be no replacement, man for man, because we think some of the jobs can be consolidated into one person.

The CHAIRMAN. Would there be other instances of one job in one of these offices where the duties will be performed by two people instead of one?

Mr. GRAHAM. I think that is likely sir, at some of the large ports where you have a collector and you have an assistant collector. I think probably you will have the same number, but in some of the smaller ports where you abolish the collector, we think perhaps those duties could be combined into one man.

The CHAIRMAN. In other words, in some of these offices that are being abolished you can take the duties that both are now performing in the two separate offices, with different functions, and combine them and place them under one man? Mr. GRAHAM. That is correct, sir.

As stated previously, the primary objective of the plan is to improve efficiency. The proposed change in the method of appointment of such officials will enable the Bureau, at the smaller 'ports, to combine the present duties of the collector and the assistant collector into one position. By placing the functions of both offices under one incumbent, there will be savings in money and manpower. At the larger ports there will also be a combining of functions. However, depending upon the workload at each port, some of the positions of assistant collector will be retained and in others we may be able to shift those present duties to other senior members of the collector's office. We intend, wherever possible, to combine the existing duties into one position.

We believe that the proposed change in method of appointment will increase efficiency also by providing for clearer lines of accountability and responsibility direct from the Secretary and the Commissioner of Customs.

The CHAIRMAN. What is the confusion in the lines of responsibility now? You say it will provide clearer lines. What is the confusion that exists now in those lines of authority ?

Mr. GRAHAM. Sir, I think that where you have a person appointed by the President, as he states in his message, and yet the Secretary is responsible for him, that by having him responsible solely to the Secretary or the Commissioner of Customs, it makes a clearer line of accountability. It is more a chain of command if you would use that word in a military sense.

The CHAIRMAN. I just ask that for the record. We all know what really is meant by it, but I have never quite agreed that, with respect to any one the President appoints and whom he can remove at the snap of his finger when he wants to, it is necessarily improving the lines of authority and responsibility by saying it has to go through someone else. I do not see that it strengthens it, but I know the general philosophy that is entertained by others who support this idea.

Mr. GRAHAM. Increased efficiency of operations will also result from that portion of the plan which would remove certain restrictive statu

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