ABOLITION OF OFFICES OF ASSISTANT POSTMASTERS GENERAL

SEC. 4. (a) Section 389 of the Revised Statutes, relating to the appointment of Assistant Postmasters General (U. S. C., title 5, sec. 363) is repealed.

(b) All powers, functions, duties, authority, and discretion conferred or imposed by or pursuant to law upon Assistant Postmasters General, or any of them, are hereby transferred to the Postmaster General.

ABOLITION OF CERTAIN SUBORDINATE STATUTORY OFFICES IN POST OFFICE DEPARTMENT, AND SO FORTH

SEC. 5. (a) The (1) office of Solicitor for the Post Office Department, (2) office of Purchasing Agent for the Post Office Department and the functions of such office, and (3) the office of Comptroller, Bureau of Accounts, are abolished. (b) The Bureau of Accounts in the Post Office Department is abolished and its functions, together with the functions of the Comptroller, Bureau of Accounts, are transferred to the Postmaster General.

ADVISORY BOARD

SEC. 6. (a) There is hereby created in the Post Office Department an Advisory Board to the Postmaster General (hereinafter called the "Advisory Board") which shall consist of the Postmaster General ex officio, who shall be Chairman, the Director of Posts ex officio, who shall be Vice Chairman, and seven members who shall be appointed by the President. The members appointed by the President shall be citizens of the United States, and shall be appointed with reference to their proven ability, experience, reputation and standing, without regard to political affiliation, except that not more than four of the members appointed by the President shall be members of the same political party.

(b) It shall be the function of the Advisory Board to advise and consult with the Postmaster General with respect to policies and proposed policies affecting the postal service and with respect to ways and means of improving the postal service and affording satisfactory and efficient service to the users thereof. The Advisory Board shall meet with the Postmaster General not less than once in each calendar month. It shall also meet at other times on the call of the Chairman or Vice Chairman.

(c) The members of the Advisory Board appointed by the President shall not be regarded as officers or employees of the United States, but they shall be allowed and paid for attendance at meetings of the Advisory Board a reasonable per diem prescribed by the President, and shall also be allowed and paid their necessary travel and subsistence expenses (or a per diem in lieu thereof) while away from their official residence or place of business to attend meetings of the Advisory Board.

APPOINTMENT OF POSTMASTERS

SEC. 7. (a) So much of section 1 of the Act of June 25, 1938, as amended (U. S. C., title 39, sec. 31a), as precedes the proviso therein is amended to read as follows:

"SECTION 1. Postmasters shall hereafter be appointed in the classified service without term by the Postmaster General."

(b) Section 2 of such Act of June 25, 1938, as amended (U. S. C., title 39, sec. 31b), is amended (1) by striking out "at first-, second-, and third-class post offices" and (2) by striking out everything following the first sentence.

(c) Section 6 of the Act of July 12, 1876, as amended (U. S. C., title 39, sec. 31), relating to the appointments of postmaster of the fourth class, and the Act of May 20, 1944 (U. S. C., title 39, sec. 31c), relating to postmasters at offices of the fourth class that are advanced to the third class, are repealed.

PERFORMANCE BUDGET

SEC. 8. (a) Notwithstanding any other provision of law, the budget estimates (including supplemental and deficiency estimates) of the Post Office Department shall be prepared, presented, and justified, where practicable, and authorized programs shall be administered, in such form and manner as the Postmaster General, subject to the authority and direction of the President, may determine, so as to estimate, account for, and report, the cost of performance of readily identifiable functional programs and activities, with segregation of operating and capital programs. So far as practicable, such estimates and authorized

programs shall be set forth in readily comparable form and shall follow a uniform pattern.

(b) In order to expedite the conversion from present budget and accounting methods to the cost-of-performance basis contemplated in this section, the Postmaster General, with the approval of the President, is authorized and directed, until the end of the second full fiscal year following the date of the enactment of this Act, to make such transfers and adjustments within the Post Office Department between appropriations available for obligation by such Department in such manner as he deems necessary to cause the obligation and administration of funds and the reports of expenditures to reflect the cost of performance of readily identifiable functional programs and activities of the Department. Reports of transfers and adjustments made pursuant to the authority of this subsection shall be made currently to the President and the Congress.

(c) On and after the end of the second full fiscal year following the date of the enactment of this Act, the Postmaster General, with the approval of the President, is authorized and directed to make transfers and adjustments between appropriations available for obligation by the Department, in order to provide maximum economy and efficiency in the operation of programs for which appropriations may be made from time to time, but no appropriation shall be increased or decreased thereby by more than five per centum. Reports of transfers and adjustments made pursuant to the authority of this section shall be made currently to the President and the Congress.

FINANCIAL OPERATIONS; ACCOUNTS AND AUDITS

SEC. 9. (a) Notwithstanding any other provisions of law, (1) receipts of the postal service shall constitute a revolving fund for the Department, and (2) such receipts shall, under the direction and control of the Postmaster General, be available for expenditure by the Post Office Department for any object (other than an object of expenditure of a capital nature) which the Postmaster General deems necessary in the operation of the postal service.

(b) Notwithstanding any other provision of law, the accounts of the Post Office Department and of the officers and employees thereof and the vouchers and supporting documents in connection therewith, shall be kept at such place or places in the Post Office Department as the Postmaster General shall direct, and shall not be required to be transmitted to the General Accounting Office in Washington, District of Columbia, or, except upon the direction of the Postmaster General, be required to be transmitted to him in Washington, District of Columbia, for administrative examination; and the Comptroller General of the United States shall conduct his examination and audit of the administrative accounts of the Department and the officers and employees thereof at the place or places in the Department where such accounts, and the vouchers and supporting documents in connection therewith, are kept.

(c) In order to prevent overdrafts and deficiencies in any fiscal year for which appropriations are made, on and after the beginning of the next fiscal year following the date of the enactment of this Act, appropriations made to the Post Office Department, and reimbursements thereto, shall be available for obligation and expenditure only after allocations, or modifications thereof, approved by the Postmaster General. Nothing in this subsection shall affect the right of the Post Office Department to incur deficiencies under any existing law.

(d) When under authority of law a function or an activity is transferred or assigned from one agency within the Post Office Department to another agency in such Department, the balance of appropriations which are determined by the Postmaster General to be available and necessary to finance or discharge the function or activity so transferred or assigned, may, with the approval of the President, be transferred to, and be available for use by, the agency to which said function or activity is transferred or assigned for any purpose for which said funds were originally available. Balances so transferred shall be credited to any applicable existing appropriation account or accounts, or to any new appropriation account or accounts, which are hereby authorized to be established on the books of the Department of the Treasury, of the agency to which such function or activity is transferred, and shall be merged with funds in the applicable existing or newly established appropriation account or accounts and thereafter accounted for as one fund. Balances transferred to existing accounts shall be subject only to such limitations as are specifically applicable to such accounts and those transferred to new accounts shall be subject only to such

limitations as are applicable to the appropriations from which they are transferred.

(e) The number of employees which in the opinion of the Postmaster General is required for any such transferred functions or activities may, with the approval of the Director of the Budget, be deducted from any personnel maximum or limitation of the agency from which such function or activity is transferred, and added to any such personnel maximum or limitation of the agency to which such function or activity is transferred.

FEES FOR SPECIAL SERVICES

SEC. 10. (a) The Postmaster General is authorized by regulation to prescribe from time to time the fees that shall be charged by the postal service for the following services:

(1) The fees that shall be charged for the registry of mail matter, and the fees that shall be charged for securing a signed receipt upon the delivery of registered mail matter and returning such receipt to the sender.

(2) The fees that shall be charged for the insurance of mail matter, or other indemnification of shippers thereof for articles injured or lost.

(3) The fees that shall be charged for collect-on-delivery service.

(4) The fees that shall be charged for special-delivery service and that shall be charged for special-handling service.

(5) The prices that shall be charged for post cards sold by the postal service. (6) The fees that shall be charged for the issuance of money orders and that shall be charged for the issuance of postal notes.

(b) The regulations of the Postmaster General under subsection (a) shall fix the fees and charges for each of the services covered thereby at such levels as in the opinion of the Postmaster General will make such service selfsupporting.

(c) Regulations issued by the Postmaster General under subsection (a) shall. to the extent prescribed therein, supersede existing laws, regulations, and orders governing the fees for the services covered thereby.

EFFECTIVE DATE

SEC. 11. This Act and the amendments made by this Act shall take effect July 1, 1949.

Senator JOHNSTON. We are very happy, indeed, this morning to have with us Ex-President Hoover, who will explain to us the reorganization of the post office at this time. We are certainly glad to have you with us.

You may proceed in any manner you see fit.

STATEMENT OF HON. HERBERT HOOVER

Mr. HOOVER. I prepared a short statement that does not go far, but it might open the discussion.

As you all know, the Commission on Organization made some rather radical recommendations on the Post Office Department, and they were the result of very exhaustive investigation extending over nearly 2 years. After an enormous amount of discussion and consideration, we finally came up with a unanimous report of all 12 members of the Commission, and, as you know, the Commission was entirely bipartisan.

The general lines proposed were fairly simple. First, the setting up of a Director of Posts, or a Deputy Postmaster General, under the Postmaster General, together with an advisory board of citizens under the chairmanship of the Postmaster General.

The abolition of all Senate confirmations except the Postmaster General and the Director of Posts, and the substitution of Civil

Service open examinations on merit for all employees, thus taking the post office service out of politics.

And that the post office, being a vast business organization, receiving and disbursing vast funds, should be given the flexibility in budgeting, accounting, and audit which Congress has already conferred on Government corporations, but we did not see any necessity nor any need to make it into a corporation. Congress could confer those same authorities without making a corporation out of it.

In the matter of rates, we made no recommendations as to first-, second-, third-, and fourth-class mail rates, except as to postcards, which we thought the public ought to pay for at cost, since they are mostly used for advertising anyhow.

We did recommend that the Postmaster General should be required to fix the rates on all of the subsidiary services in such a fashion as to cover their expenses. That is on postal notes, money orders, special delivery, c. o. d., and a dozen services that the post office performs for very special groups, which we did not think should be a burden on the taxpayer as a whole.

I might add that my personal view was that the fourth-class mail, parcel post, should be included in these categories that should be made to pay their expenses, because the parcel post is largely used for, and the taxpayers are subsidizing, special forms of merchandizing.

The Commission considered the second- and third-class rates which are those that are under most public discussion. They contain fundamental elements that involve education and information. Some subsidy from the taxpayers, if it cannot be made up on the other services, is justifiable.

We came, however, into another area of subsidies. That is the use of the mails to subsidize marine and air services. How much they amount to is practically unknown. They are very considerable sums. But we thought, under the form of accounting and budgeting we were setting up, they could be separately accounted for and the Congress ought to authorize definite expenditure by the Post Office. Thus these hidden subsidies would be brought out into the open.

The question is always raised as to what savings would be effected. I am not in a position to give you any personal estimate in the matter. It was estimated by our task force and the accountants that we have on the work. There were two task forces which worked on Post Office problems. The estimate is that if these various reforms were carried out, there would be savings somewhere between $200,000,000 and $300,000,000 a year. The deficit at present is $500,000,000.

If I can answer any question in amplification I would be delighted. Senator JOHNSTON. Is there any question anyone would like to ask? Senator FREAR. Mr. Chairman, I assume you are going to ask a question about the savings. If you intend to, I will not.

Senator JOHNSTON. You go right ahead.

Senator FREAR. Naturally, I think, Mr. President, anyone who is connected with this matter is interested in the savings, especially in view of the large deficit that the Post Office Department is now operating under. We are wondering if you would care to go into any greater detail on the savings, although you did say it was the task force who had perhaps rendered this decision and that it was not your personal one.

But, since the interest is so heavy in the savings, would you like to comment any further as to approximately the way the savings could be made?

Mr. HOOVER. The savings on the subsidiary services-rather, not savings, but if they were made to pay their way-I think they would be estimated at somewhere between $60,000,000 to $80,000,000 a year. Those are increased revenues if all the subsidiary services were put on a self-supporting basis. That does not include the fourth-class mailparcel post, the loss on which is probably another $30,000,000.

If this reorganization plan were put into effect, it would enable a great number of administrative reforms in the Post Office. The task force, examining the effect of those reforms, estimated that savings of somewhere about $140,000,000 would result. Very little of these savings can be done unless these fundamental reforms are put in action. So, if you add those two sums together, of somewhere between $60,000,000 and $80,000,000 on increased revenues and $140,000,000 in sa ings, you get into some field between $200,000,000 and $300,000,000.

Senator FREAR. Primarily on administration? Did I understand that? That the savings would be primarily on a change in the type of administration or on the mechanics of handling the mails? Mr. HOOVER. Both.

Senator FREAR. Both?

Mr. HOOVER. One of the difficulties of the Post Office at the present moment is the accounting. That part of the Post Office organization seems to be about as Ben Franklin left it.

Senator HENDRICKSON. I did not hear the last remark.

Mr. HOOVER. I said the organization seems to be just about as Ben Franklin originally left it.

Senator THYE. Including some of the equipment?

Mr. HOOVER. Yes; quite true.

Every one of the 40,000 post offices today has to send all of its vouchers for expenditures and receipts to the General Accounting Office. They are all added up to see that they are made out in proper form and that the addition is correct. The merits of a particular expenditure, aside from its legality and form, is not part of the duties of the General Accounting Office. The Postmaster General, if he wants to find out what has been spent by the Post Office, must go to the General Accounting Office, which is, of course, a function of the Congress and not the executive arm.

The multitude of small items in those accounts requires an enormous amount of clerical detail in the General Accounting Office. That office is usually about 8 months behind in being able to tell the Postmaster General what he has spent. Then the Postmaster General is required to go before the Budget Bureau in the months of November or October, and, being 8 months behind in knowing what his expenses have been, he has to make a guess for 8 months ahead. Therefore, the whole budgeting process is kind of a nonsense performance.

We felt that if the same practices that are used in ordinary corporate business, private business, were introduced into accounting and budgeting and auditing of the Post Office, it would in no way diminish the authority of the Congress, and a large amount of savings could be made in many directions.

The Congress in 1945 passed an act, if you remember, setting up such accounting and budgeting and auditing methods for Government