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The present plan is for the Navy to provide certain personnel at Fort Worth and to send all of its mentally ill patients there. The per capita cost at Fort Worth is somewhat higher and there is no assurance that any better care will be given to the patient. Just what arrangement will be made for the care of Navy prisoners who become mentally ill is not clear. The changes proposed in the character of the population of St. Elizabeths Hospital would render it essentially a District institution and would deprive it of many of its characteristic features which have reacted to the benefit of the patients, of the community and of American psychiatry in general. The American Psychiatric Association is disturbed at the implications of the plan and has authorized representatives to appear in opposition. These representatives are Dr. John C. Whitehorn, professor of psychiatry at Johns Hopkins and Dr. Ross M. Chapman, superintendent of Sheppard and Enoch Pratt Hospital in Towson, Md., and former president of the American Psychiatric Association.

The CHAIRMAN. The committee will stand adjourned until 10 o'clock tomorrow.

(Whereupon, at 12:30 p.m., the committee adjourned until Friday, June 7, 1946, at 10 a.m.)

REORGANIZATION PLAN

FRIDAY, JUNE 7, 1946

House of REPRESENTATIVES,
COMMITTEE ON ExPENDITURES
IN THE ExECUTIVE DEPARTMENTS,
Washington, D. C.

The committee reconvened pursuant to adjournment at 10 a. m., the Honorable Carter Manasco, chairman, presiding.

The CHAIRMAN. The committee will come to order.

We have before us this morning, Mr. Thomas S. Holden, representing the Commerce and Industry Association of New York, who is appearing in opposition to Reorganization Plan No. 1. r. Holden, you may proceed.

STATEMENT OF THOMAS HOLDEN, OF THE COMMERCE AND INDUS. - TRY ASSOCIATION OF NEW YORK

Mr. Holden. My name is Thomas S. Holden, president of the F. W. Dodge Corp., and I represent the Commerce and Industry Association of New York, which has a total membership of approximately 4,000, representing all segments of business, industry, and finance in the New York metropolitan area. I am a member of the board of directors of that organization and have served for the past 8 years as chairman of its special committee on urban rehabilitation, which committee has made original studies of housing problems and housing legislation, which originated legislation which has been enacted in the State of New York, also. The statement I will present has been approved by unanimous vote # the board of directors of the association at a meeting held on une 3. The President of the United States reported to Congress on Thursday, May 16, under Reorganization Plan No. 1 of 1946 the reorganization of the National Housing Agency as a permanent agency of government. Under the existing reorganization law this action of the President will have statutory force uniess Congress votes positive disapproval before July 16. The National Housing Agency was created in February 1942 as an emergency war agency under which was consolidated the Federal Home Loan Bank Administration, the Federal Housing Administration, and the Federal Public Housing Authority. - My statement to you today is directed to that portion of Reorganization Plan No. 1 of 1946 which would transform the National Housing Agency from a temporary wartime unit to a permanent agency. 88368–46—12 173

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Practically all the reasons advanced for the immediate establishment of the National Housing Agency as a permanent agency by means of this reorganization plan are based on conditions which are, even by the proponents of the measure, considered to be temporary in nature.

The President, in submitting the plan to Congress, stated in the accompanying message:

I do not need to stress again at this time the urgent necessity of taking all possible measures to alleviate the present critical housing shortage If the Government is to mobilize to fullest effectiveness our resources for dealing with the housing emergency, an indispensable step

is the establishment of a housing agency on a permanent basis.

There is a seeming inconsistency in arguing for permanent consolidation of these agencies on the basis of a purely temporary emergency situation. The powers granted to the Housing Administrator by Executive order and by the Veterans' Emergency Housing Act are ample, and considered by many people more than ample, to deal with the present temporary housing emergency. When the House of Representatives first passed the Veterans' Emergency Housing Act of 1946 it set June 30, 1947, as the termination date, later extended to December 31, 1947, by the conference committee, thus recognizing the temporary character of the situation.

In further justification of this permanent reorganization, the President's message states:

It (National Housing Agency) is not infrequently looked upon as an organization which, now that peace has come, may be abolished in the relatively near future. This has made for uncertainties which have inevitably placed the National Housing Agency at a disadvantage. In order that it may proceed on its program with the fullest confidence that it has a position equivalent to that of any other permanent Government agency, its organization should be confirmed at the earliest possible date.

To say the least, this is a highly rationalized argument. No specific example of the alleged "disadvantage” has been advanced. The fact of the matter is that all the components of the National Housing Agency which are essential to the execution of the emergency housing program are permanent units. These are the Federal Home Loan Bank Administration, the Federal Housing Administration, and the Federal Public Housing Authority. All these organizations have worked in a fine spirit of cooperation and if the housing program is not moving at the rapid rate for which early hopes were entertained, the principal reason is the shortage of building materials. That has been taken care of, in part at least, by the Veterans' Emergency Housing Act to which I have previously referred.

Title I of the pending Wagner-Ellender-Taft bill; officially designated as the General Housing Act of 1946, would effect this permanent consolidation by regular legislative process; it has passed the Senate and is now pending in the House of Representatives. Since many objections to title I have been voiced and since there is some doubt as to speedy enactment of the Wagner-Ellender-Taft bill by the House in its present form, this action of the President in seeking to effect such consolidation under the Reorganization Act has the appearance of an attempt to rush a highly debatable matter through Congress without adequate consideration by that body.

Objections to the proposed permanent consolidation in whatever manner it might be effected are twofold: - Under the proposed merger, a single administrator would, have authority over the home-financing functions of the Federal Home Loan Bank Administration, the mortgage-insuring functions of the Federal Housing Administration, and the loan and grant functions of the Federal Public Housing Authority. The commissioners of these several constituent agencies would be reduced to the status of deputy administrators. The politically appointed top Administrator would thus exercise a power over housing finance as great as, or even greater than the power of the Federal Reserve Board over the commercial banking system. Critics of the title I proposal urge strongly that in any such consolidation the policy-making function should reside in a governing board; it has been suggested that such board should include the heads of the several constituent agencies of the National Housing Agency and representatives of the Veterans' Administration and the Department of Agriculture—both of which agencies have important home-financing functions—or other set-ups that have been suggested, but agreeing on the idea that a policy-making board is very desirable. A second objection is to the consolidation of the Federal Public Housing Authority, which functions in the field of subsidized public housing, with the other two agencies which have to do with facilitating private housing finance. Many people consider it preferable that the Federal Home Loan Bank Administration and the Federal Housing Administration be restored to their former status as constituent parts of the Federal Loan Agency, and that the Federal . Housing Authority be made a part of the Federal Security gency. Summarizing the position of the Commerce and Industry Association of New York, I would state that: 1. We believe that a concurrent resolution should be adopted by both Houses of Congress, disapproving of Reorganization Plan No. 1 of 1946 as it relates to the establishment of the National Housing Agency as a permanent body because— irst, there is no justification for creation of a permanent body to treat with a temporary condition; and next, the various component units of the National Housing Agency, when permanently reassigned, should not be incorporated in the same agency because the Federal Housing Administration and the Federal Home Loan Bank Administration are engaged in activities entirely unrelated to those of the Federal Public Housing Authority. Third, no one administrator should have the tremendous permanent powers which this reorganization plan would confer. Finally, if Congress vetoes by joint resolution this consolidation feature of Reorganization Plan No. 1, the consolidation proposal can be considered by the House of Representatives as title I of the o General Housing Act of 1946 (the Wagner-Ellender-Taft ill). This bill has been referred to the House Committee on Banking and Currency, which committee could take ample time to consider the objections to the proposed consolidation in connection with the long-range measures proposed in the other 10 titles of that bill.

On behalf of the Commerce and Industry Association of New York, I wish to thank Chairman Manasco and the members of this committee for the courteous consideration accorded me. The CHAIRMAN., Mr. Holden, you have made studies, I presume, as to the legality of the reorganization plan submitted by the President? Mr. HoLDEN. I am not a lawyer, sir. As a lay reader of it, I would not question the legality; I question the wisdom of it. I would say that to a layman's understanding the intent of the Reorganizaion Act was to enable the President to put agencies together for purposes of economy and efficiency. It seems to me that this consolidation would go beyond that and create a concentration of financial power which was probably not the intent of Congress in the Reorganization Act. That is a lay opinion on a legal matter and it may not have any validity. The CHAIRMAN. In section 2 of title I of the Reorganization Act, subparagraph 4, the President is directed to examine the organization of all agencies of the Government, and shall determine what changes therein are necessary to accomplish, among other things, the grouping, coordinating, and consolidation of agencies and functions of the Government as nearly as may be, according to major purposes. Would you say that this plan would not accomplish that result? Mr. Hoi.DEN. My belief is that it goes somewhat beyond that, that in creating a consolidation of organizations which deal with finance— two of them dealing with private-home financing and one dealing with Government finance, there is the added question of how much concentration of Government financial power you are creating. It seems to me when you have a large aggregation of financial power we feel it will be administered wisely if it is under the direction of a wellconstituted board rather than an individual. I would say that I believe that the head of the Home Loan Bank System should be a member of such a board. I feel certainly that the head of the Federal Housing Administration should be on such a board and other qualified persons. Our commercial banking system is organized under the Federal Reserve System, and in the top body there is a board. It is not some sort of a consolidation that might be desirable, but I think when it is made of organizations functioning so importantly in the general field of finance, dealing with people's savings and the financing of people's homes, and so on, I think you want the best possible administration of the policy functions. Administering the internal machinery, that is a matter for an executive, and a single administrator possibly coordinating administrative activities, but I think coordination of policy needs more than one individual point of view. The CHAIRMAN. As I understand, your objection is more toward the policy than the legality. Mr. HoLDEN. I say I am not competent to pass on the legality of it, sir. I object to the procedure for this reason, that I think the question of consolidation in the Wagner-Ellender-Taft bill tied in with other proposed changes in the existing housing laws, and some new proposals .. o which, in my opinion, are good and some of which I think are OaCl. I think if this were considered perhaps more deliberately than this reorganization plan contemplates that we would arrive at a better

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