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"The first can be determined most properly by those in command of the armed forces. The second can best be determined, particularly as to the relative present importance, by the Office of Production Management.
The Bureau Impounds Funds for Two Oklahoma Projects The Bureau of the Budget was now to discover the political consequences of curtailing public works projecis designed for the constituents of individual Congressmen. A sample of these consequences is the flurry caused by impounding funds for two Oklahoma flood projects: the Tulsa levees and Jarklam Ferry Dam.
On March 25, 1941, the Secretary of War had submitted a report to Congress from the Chief of Engineers recommending completion of a flood control leree on the Arkansas River at Tulsa and West Tulsa, Oklahoma which had been started some years before. The Secretary admitted that the Budget Bureau regarded the proposal as out of line with Presidential policy. Congress never. theless called for the completion of the levee project, along with others, in a flood control authorization act of August 18, 1941 (Public Law 228 of the 77th Congress).
In submitting supplemental requests for fiscal 1912, the President asked do funds for the Tulsa project. But in the Third Supplemental National Defense Appropriation Act, 1942, passed December 17, 1941, $300,000 (which had been added in the Senate) was appropriated for the Tulsa levees. In the following year, $213,000 more was added, upon Senate initiative, in the War Department Civil Functions Bill for 1943, making a total of $513,000 of unrequested funds for the Tulsa project.
A $15.4 million power and flood control reservoir at Markham Ferry on the Grand Neosho River in Oklahoma was also authorized by Public Law 228. The Federal Power Commission had included the project in its defense program as a source of additional electric power, but the Office of Production Managerrent (OPII, predecessor of the War Production Boardi) believed (a) that the surrounding area could not absorb the additional energy, and (b) that there was no defense need for the reservoir. Yo funds were requested by the President, but at Senate behest, $1.5 million was made available in the Third Supplemental, 1942.
On December 18, 1941, the day after Congress provided funds for the two disapproved projects at Tulsa and Markham Ferry, the attention of the Assistant Budget Director for Estimates was called to the two projects. A budget examiner explained to him that the request for funds for the projects had originated with Senator Elmer Thomas (Dem., Okla.), and not with any Federal agency. Thomas had introduced into the hearings a number of letters from maufacturers in the area of Sand Springs and West Tulsa citing defense work and warning of the thood danger to their operations. Among the companies were Sheffield Steel, National Tank, and Wheatley Brothers Pump and Valve. The budget examiner recommended asking OPM about the defense necessity of the Tulsa levee project before allowing the Corps of Engineers to proceed. He recommended also that the Markham Ferry and Tulsa funds be placed in reserve.
Budget Director Smith notified the Secretary of War on February 5, 1949, that $1.8 million for the Markham Ferry and Tulsa projects had been placed in reserve until evidence was received from OPM indicating that the projects bad some defense value. Smith's impwunding letter seemed only to spur the War Department, for on February 9, it requested $213,000 for the Tulsa project for fiscal 1913.
Not long afterwards a news item appeared in the Tulsa Tribune reporting the resentment of local officials over the stoppage of the levee project. Senator Thomas next informed the Tulsa Tribune (which printed the story on page one) that release of the funds depended upon the recommendation of the district engineer of the Corps of Engineers in the Tulsa area. (Actually, the decision on the defense value of any project had to come from the War Production Board or from the higher echelons of the War Deartment.) From the 16th through the 20th. Tulsa papers reported that the Chamber of Commerce was taking action to prove the defense worth of the levee project.
On February 18, the same day that budget examiners were recommending retention of the impounded funds, the president of tire Tulsa Chamber of Cominerce, N. R. Graham, sent a letter to the Budget Director:
"We wish to respectfully protest this decision. This decision overrules the judgment of Congress. Our people feel that we are having far too much gorern
ment by decree rather than by law; and we have had many expressions of dissatisfaction over the action of your Bureau in this particular instance." Graham went on to emphasize the importance of the levee and reservoir projects for preventing a recurrence of the crippling flood experienced in November, 1941, and for providing additional power. Copies of his letter were sent to the Oklahoma delegation in Congress.
Undaunted, the Budget Bureau notified the War Department on February 24: no release of funds for Tulsa or Markham Ferry. Harold Smith replied to Graham on March 6, also sending copies to the Oklahoma Congressional delegation. He emphasized that when he approved the legislation authorizing Markham Ferry and other projects, the President had stated that funds would neither be requested for, nor allocated to, projects not important to national defense. Smith then explained the problem of materials shortages:
"The manufacture of hydroturbines (which would be needed were Markham Ferry to be undertaken) is in direct competition with the manufacture of guns and forgings. It is impossible for us to undertake at this time the construction of all those multiple-purpose flood control and hydroelectric power development projects which are desirable and economically justified."
On March 10, Director Smith informed Senator Josh Lee (Dem., Oklahoma, up for re-election that year) that the brief of the City of Tulsa in behalf of the levee project had been received and was under study, adding: “In this study, in addition to considering the views of local interests, the relative importance of any project as determined by the federal agencies directly charged with prosecution of the war effort must be obtained.”
About this time, the WPB, which had also received the Tulsa brief, indicated concern over the political ramifications of the Tulsa decision. It sent a legal aide to ask the budget Bureau: since the levee project called primarily for earth-moving and would not require scarce materials, could funds be released simply on certification from WPB that it had no objection to the project?
No, WPB was told, the President's policy called for a positive statement that a given project was essential to the war effort. Furthermore, the materials question did not exhaust the burdens that the Tulsa project would place on the war economy, since it would require funds, machinery, and skilled personnel which should not be diverted from more essential war activities.
On February 20, when Congress was being petitioned for additional funds for certain flood control projects, Director Smith explained in a letter to Congress that the required sum to be appropriated might be reduced by $7.1 million by drawing upon existing appropriations held in reserve from the projects for which they had originally been intended. Included in the $7.1 million were the reserves for Markham Ferry. Congress acquiesced by appropriating amounts in line with the recommended transfer of reserves, thus "plowing under” the Markham Ferry project among others.
On the House floor on April 2, Congressman Jerry Voorhis of California protested the impounding of $37 million of Agriculture Department funds for the school lunch program since the start of fiscal 1942. Under questioning from surprised colleagues, Voorhis said he understood that the Budget Bureau claimed legal authority to impound funds under the Anti-Deficiency Act and Executive Order 6166. Voorhis disagreed that these justified the impounding of funds and pointed out two possible dangers : the Bureau might impound funds for the Legislative Branch, threatening representative government; or it might increase other appropriations by transferring funds placed in reserve. “When that time comes, the power of the purse of Congress will be gone," he warned.
On April 9, Donald Nelson, chairman of WPB, informed the Budget Bureau that a study of the Tulsa project "fails to establish that the project may properly be described as essential to the national defense." "However," Nelson went on, in view of the small amount of materials and equipment involved, WPB "has no objection to the release for this purpose of $300,000 from the appropriation for ‘Flood Control, General' of the Act of December 17, 1941.”
After this finding by WPB, it was recommended within the Bureau that the $300,000 already appropriated for Tulsa should be kept in reserve and that $213,000 about to be appropriated should be put there.
A feeling of uneasiness seemed to come over the Bureau officials as the impounding process bit deeper. In a memorandum dated April 16, 1942, to Martin, Assistant Director for Estimates, Dr. R. D. Vining, a group head in that division, expressed doubt about the Bureau's legal authority to impound funds. Beyond that, be worried about the political wisdom of holding up projects for which Congress had appropriated funds. Vining felt that there was room for debate
about the necessity of the Tulsa project, but even if it were clearly an unrise venture, responsibility for it would not rest with the Bureau. On the other hand, for the Bureau to impound the Tulsa funds was a sure way to court criticism that it had set itself above the law.
Soul-searching was going on at all levels within the Estimates Division. While Vining was writing to his chief, Curran was writing Vining (Curran's group head). Called upon by Vining to find a legal basis for impounding funds, Curran turned first to some suggestive, if not permissive, language in certain Congress sional reports and statutes. Specifically noted was the sentence in the Flood (ootrol Act of 1941 (the sentence which the President had wanted strengthenedi. “The following works of improvement ... shall be prosecuted as speedils as may be consistent with budgetary requirements." Curran noted also that the House Appropriations Committee had recently spoken of appropriations as “authority to enter into contracts and incur bills," (his emphasis) rather than as mandales to do so.
Curren then turned to a second source of authority for the Bureau's action. the war power of the President. Recognizing that the Bureau's right to stop specific projects during peacetime might be questionable, he contended that the President's war power permitted “the President to prosecute (the) war in all its ramifications by all the machinery available to him.” 2 The President Agrees
Meanwhile the Civil Functions Appropriations Bill for 1943 had gone orer to the Senate Appropriations ('ommittee, where Senator Thomas introduced more evidence from industrial plants along the Arkansas River of the need for flood protection. A short while later Curran called Assistant Director Martins attention to the fact that the bill was through conference, containing funds for a whole group of projects (including Tulsa ) which had never received Presidential approval. With his memo, the budget examiner forwarded a draft of a letter ordering the impounding of certain funds which he hoped the President would sign and send to the Secretary of War at the same time he signed the Bill.
Martin, however, had many doubts, including those which his assistant chief, Vining, had planted in his mind a week earlier. He ordered that the drift letter be submitted to the National Resources Planning Board, the second time in ten months that the issue had been shifted in its direction. With a few changes called for by the NRPB, the letter was cleared by the Budget Bureau and sent on to the President.
Casting an eye in the direction of Capitol Hill, the President's political advisers could discern both favorable and unfavorable portents. Four Months earlier, Judge Tarver, chairman of the House Appropriations Subcommittee on Agriculture, had criticized the Budget Bureau for impounding $3.4 million for the Soil Conservation Service in 1941. On the other hand, the House Appropriations Committee as a whole had subsequently hinted that it would go along with the President in holding up non-essential public works. In a House report of March 6, 1942, the Committee stated that the President alone had the power to determine priorities among construction projects. This was important, coming from the committee which originated all appropriation measures and which focused upon government-wide problems in contrast to the narrower scope of the substantive program committee.
So the President went ahead. On April 28, he signed the Civil Functions Appropriations Act and immediately blocked the projects of which he did not approve by signing the impounding letter to the Secretary of War which the Bureau had drafted. Noting that Congress had made certain appropriations for public works in excess of his budget requests, the President asked the War Department to establish, in cooperation with the Budget Director, "administrative reserves in the amount which can be set aside at this time by the deferment of construction projects not essential to the war effort and hy the suspension of the survey program." He said he would have no objection to a subsequent release of funds for any projects which are shown to be of importance for national defense.
1 As Vining put it years later. “There was unanimous opinion in the Bureau that no statutory authority existed for impounding funds under continuing' appropriations for specific projects as distinguished from annual appropriations for maintenance and operation of government agencies where apportionment was required under the Anti-Deficiency Act of 1906."
9 A year later Chief Justice Stone was to say for the Supreme Court. "The war power of the national government is the power to wage war successfully.'” (Hirabayashi r. U.S. 320 US 81, 93).
The President's letter settled the internal problem within the Bureau of the Budget. On April 30, Assistant Director Martin issued a directive to the staff of the Estimates Division, referring to the letter as a "declaration of policy on the part of the President." The Bureau proceeded immediately to implement the policy, after discussions with the Corps of Engineers, by impounding $17.8 million of the new appropriations for civil works, including $213,000 for Tulsa. The Corps was informed that no funds could be earmarked for Tulsa or Markham Ferry, among other projects. The Fight for the Tulsa Project
The Bureau had now to defend its new impounding policy against the rising protests of Congressmen and their hurt constituents. Early in June, Budget Examiner Curran inspected the Sand Springs area near Tulsa. He found that the industries there, like most industries in the country at that time, did have some war contracts. But so far as he could tell, the real pressure for the levee project stemmed from the inhabitants of inexpensive cottages in the lowlands near the river. Estimating that the levee would cost twice the $513,000 held in reserve, Curran reiterated his conviction that the Tulsa project was not essential to the war effort and therefore should not be started.
The boosters of the levee project received unwelcome support when torrential rains caused the Arkansas River to flow over its banks on June 24, inundating Sand Springs. The damage gave new impetus to the demand for completion of the flood control levees. The Tulsa Daily World of June 26 pointed to the Budget Director as the culprit responsible for freezing the funds. The newspaper said that the Oklahoma delegation in Congress "will again be bombarded with 'demands for action' in the hope that the budget director can be persuaded to release the frozen funds so vitally needed here."
The flood seemed to nourish every type of grass root activity. The pastor of a Tulsa Baptist Church, along with many others, wrote Senator Lee urging release of the funds. The Senator talked to the Budget Bureau. But on the 13th, acting director Coy, politely rebuffed him :-no funds unless and until the war necessity of the Tulsa project was certified by the proper authorities.
Senator Elmer Thomas wrote the Bureau the next day protesting that he had been given the “run-around." He enclosed a letter of July 26 from General W. B. Persons of the Office of the Chief of Staff and photographs of the flood waters at West Tulsa. Oddly enough, the Persons letter said that "There are no important products produced in the protected area with which the War Department has direct concern,” The question of necessity for the war effort, the General continued, “is one for determination of the War Production Board or other Federal Agency directly concerned with the use of the products of this area."
At this point another member of the Senate Appropriations Committee, Richard Russell (Dem., Ga.), wrote a letter to the President, criticizing the Budget Bureau's attempt to curtail--not to halt completely--the food distribution programs of the Agricultural Marketing Administration.
Chief Examiner James Scott, who had fought for reserves in what he regarded as in tlated appropriations for various agriculture programs, felt that Russell's letter deserved a strong reply. His draft was ultimately signed by the President and sent to Senator Russell on August 18, 1942. It said in part:
“It should, of course, be clearly understood that what you refer to as "the practice of the Bureau of the Budget of impounding funds duly appropriated by the ('ongress" is in fact action by the Chief Executive, and has two purposes. The first purpose is compliance with the Anti-Deficiency Act, which requires that appropriated funds be so apportioned over the fiscal year as to insure against deficieney spending. This step, of itself, has for many years resulted, and will continue to result, in important savings of appropriated funds. Secondly, the apportionment procedure is used as a positive means of reducing expenditures and saving money wherever and whenever such savings appear possible.
"While our statutory system of fund apportionment is not a substitute for item or blanket veto power, and should not be used to set aside or nullify the expressed will of Congress, I cannot believe that you or Congress as a whole would take exception to either of these purposes which are common to sound business management everywhere. In other words, the mere fact that ('ongress, by the appropriation process, had made available specified sums for the various programs and functions of the Government is not a mandate that such funds must be fully expended. Such a premise would take from the Chief Executive every incentive for good management and the practice of common-sense economy. This is par
ticularly true in times of rapid change in general economic conditions and with respect to programs and activities in which exact standards or levels of operation are not and cannot well be prescribed by statute."
The President's letter put a timely prop under the Bureau at a time when Congressional criticism was beginning to rise.
In October, with election day a month off, Senator Josh Lee wired Donald Nelson at WPB that a steel mill near Tulsa had been flooded during the summer because a flood control project had been held up by the Budget Bureau. Four days later the president of the Sheffield Steel Corporation, R. I. Gray, informed WPB that summer flood water coming through an uncompleted levee on the Arkansas had caused a shutdown of one of his plants handling war contracts at West Tulsa.
Then came a direct assault. On October 13, Senator McKellar (Dem., Tenn.) served notice in the Senat of his intention to introduce several amendments to H.R. 7672, the Supplemental National Defense Appropriation Bill. One of the amendments would have required the Budget Bureau to release $513,000 of impounded funds for the Tulsa-West Tulsa project.
Reaction within the Budget Bureau indicated that McKellar's threat was not taken lightly. Once again the Estimates heads asked for a review of the whole Tulsa impounding. On October 15, Assistant Director Coy informed Lawton and Martin that he had talked with Senator Barkley (Dem., Ky.), the majority leader, on how to deal with the McKellar amendment. Barkley was pessimistic about the chance of defeating it once it was introduced. Budget Director Smith suggested that, if the amendment passed the Senate, one of the House conferees should be approached by the Bureau. Smith's plan again showed the Bureau's reliance on the House Appropriations Committee.
While preparing to meet the McKellar amendment, the Bureau received word from Donald Nelson on October 16, that the Tulsa project was not regarded by WPB as essential to the war effort. The first paragraph of Nelson's letter sounded as if he had never heard of the Tulsa issue before and was totally unaware of WPB's refusal to certify the project on April 9, 192:
"Senator Josh Lee in a telegram dated October 8th has brought to my attention the fact that the money to finish a certain levee on the Oklahoma (sic) Rirer for protection of the town and steel mill is frozen because your Bureau has not been advised that protection of the steel plant and rolling mill of the Sheffield Steel Corporation at Sand Springs is necessary for war purposes. . . . The War Production Board therefore certifies to you that proper protection from floods is necessary to assure the continued operation of this particular plant."
"I am taking the liberty," Nelson said in his final paragraph, "of sending copies of this letter to Senators Lee and Thomas of Oklahoma, and to Congressman Wesley E. Disney of the First District of that same State."
While a reply was being prepared, the Bureau informed the Secretary of War that since WPB had now certified the necessity of the Tulsa project, the Bureau would release the $153.000 from reserve on receipt of the proper form from the War Department. Three days later, the amendments mentioned he McKellar on October 13 were passed, except for the amendment on the Tulsa project which was not even called up.
Coy replied to Nelson's letter on October 19, informing WPB that the funds for Tulsa would be released. Coy asked, “In order that our record may be complete, what circumstances have arisen to change the character of this project so that it now has become important to national defense?" He concluded tartly: "Your thoughtfulness in sending copies of your letters to Senators Lee and Thomas of Oklahoma and Congressman Wesley E. Disney of that State is appreciated."
Nelson replied evenly on October 29, that during the investigation in the spring of 1942 :
"There was no evidence that the possiblity of floods in the Arkansas River seriously endangered the operation of war plants in the vicinity. We have only recently been advised that in July of this year apparently because of a new break in the levee, the Sheffield Steel plant at Sand Springs was flooded and shut down for about a week. This occurrence convincingly demonstrated that there is, in fact, flood danger to war plants in the area and prompted my request for release of the funds."
Not long afterwards, the Corps' request for release of the $513,000 for the Tulso project was granted. Thus, in 1912, the Bureau kept the Markham Ferry project from going through but lost on the Tulsa project.