Delay in the adjudication of these compensation claims would tend to delay final adjustment of cost-plus-fixed-fee contracts, since such liability is a proper item of cost. Thus, orderly transition from war to peace would tend to be delayed rather than facilitated. Plan No. 2 would not promote economy either. The plan provides for the creation of an Appeal Board of three persons to make final decisions on claims by Government employees. Since this is an Appeal Board, presumably claims will originally be heard by hearing officers. Moreover, other administrative functions will, presumably, have to be performed by the Federal Security Administrator or some other person to whom such duties would be delegated. Thus, with respect to Government employees' claims, the duties of a three-man commission, which now hears all claims and makes final decisions, would be split up among five or more persons. Such a division of function does not seem to be consistent with economy. The plan is not sufficiently definite with respect to claims under the other acts within the Commission's jurisdiction to permit its accurate appraisal as an economy move. Administrative costs under these acts, however, are largely determined by the number of claims presented and these would not be affected by the proposed change. It is unlikely, moreover, that an agency inexperienced in the field of workmen's compensation could administer the laws more economically than a Commission whose functions have for many years been exclusively devoted to this field.

The message which tells how the plan is to be implemented, and describes the object of the plan, states that

By abolishing the Commission, the plan eliminates a small agency and lightens the burden on the President.

The message further states that the Federal Security Administrator is in the best position to guide and further the program of the Commission (as the Commission is abolished reference to "the Commission" is not clear), because such Administrator is

the head of the Federal agency with the greatest experience in insurance administration.

The reason for abolishing the Commission because it is a "small agency" apparently is insufficient reason of itself under section 2(a) of the act because the reduction of agencies rests upon the consolidation of those having similar functions. No other agency in the Government performs similar functions to that of the Commission and its functions do not overlay those of any other agency, and as above pointed out, no assumption of reduced expenditures appears. The reference to lightening the burden on the President as the reason for abolishing the Commission is not an assigned statutory reason and what those burdens are does not appear.

Plan No. 2 is a step in placing workmen's compensation within the Federal Security system. This plan would for the first time bring workmen's compensation within the scope of the Federal Security Agency. It would place within that Agency authority over self-insured employers and insurance companies since such Agency would have the power to determine what employers are to be permitted to self-insure and what insurance companies would be permitted to write such workmen's compensation insurance. This agency up to the pres

ent has not exercised such supervision and is not fitted either through experience or organization to exercise it.

Plan No. 2 contravenes the provisions of the Reorganization Act of 1945. This plan contravenes subsection 6a of section 5 of the Reorganization Act of 1945. This subsection prohibits, in reorganization plans, any "greater limitation upon the exercise of independent judgment and discretion, to the full extent authorized by law," in carrying out quasi-judicial functions than that which existed with respect to the exercise of such functions by the agency in which it was vested prior to the reorganization.

The United States Employees' Compensation Commission is required by law to be a three-member governing bipartisan body. The transfer of its functions to a single administrator, head of the Federal Security Agency, constitutes a greater limitation on the exercise of independent judgment than is authorized under present law, since it would not represent bipartisan judgment.

With respect to claims by Government employees, the present Com mission passes on the merits of individual original claims. Under the plan the independent judgment and discretion of the three members will be abolished and the judgment of a single hearing officer be substituted therefor and this judgment would be further subject to the views of the three-man appeal board which is not specified to be bipartisan and provision for which is not made in the law.

The plan does not specify who shall pass on claims under the Longshoremen's Act over which the Commission now has direct supervision, such as lump-sum settlements. However, the elimination of bipartisan judgment with respect thereto would seem, in itself, to constitute a greater limitation upon the exercise of independent judgment than is now provided by law.

It is respectfully submitted that for the foregoing reasons Reorganization Plan No. 2 of 1946 should be disapproved.

Mr. WHITTINGTON. The committee stands adjourned subject to the call of the chairman.

(Whereupon, at 11:50 a. m., the committee adjourned, to reconvene at the call of the Chair.)

(The following was submitted for the record:)

STATEMENT OF WILLIAM GREEN, OF THE AMERICAN FEDERATION OF LABOR, IN SUPPORT OF A PERMANENT UNIFIED NATIONAL HOUSING AGENCY PRESENTED TO THE HOUSE COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS JUNE 13, 1946

The American Federation of Labor strongly and wholeheartedly supports the proposal to establish a permanent National Housing Agency responsible for the coordination and general supervision of the main activities of the Government relating to housing. Congress must not retreat to the confusion and diffusion of Government housing activities which existed prior to the establishment of the temporary National Housing Agency in February 1942. Before consolidation, prompted at that time by the emergency of war, a multiplicity of Federal agencies concerned in housing engaged in rivalry, competition, and open strife. Housing administration was in a state of chaos. Wartime reorganization, placing the various Federal bureaus dealing with housing under a single National Housing Agency, brought harmony in place of confusion, economy in place of waste, and efficiency in place of disorderly government. To destroy the unity of administration and to return the administrative conflict bred of multiplicity will indefinitely postpone the solution of our present housing emergency and make impossible the postwar housing goal of a decent home for every American family. Wartime housing experience taught us the vital need for the coordination of

housing activities of the Government. For 2 years during the defense period we tried to get along without a single National Housing Agency. We found it impossible. Insufficient, poorly planned, and badly located housing slowed down essential war production. Proper housing for families of war workers and servicemen became essential in the wartime national emergency. We would not have solved this problem without the efficiencies and economies made possible by the creation of a unified National Housing Agency.

Today the housing emergency facing the Nation touches every person in the country, on the farms, in the towns, and in the cities alike. As early as 1944 the American Federation of Labor, realizing that housing would be a primary peacetime problem, formulated a postwar housing program to meet our national housing needs. We felt then and we feel now that the primary initiative in housing must come from local communities and the major responsibility for home building from private enterprise. But Federal aid, guidance, and coordination of housing activities are essential. Labor played a vital part in carrying out the wartime housing program with utmost possible speed. Working closely with the agencies responsible for housing, we learned from experience that a divided housing administration in the Federal Government breeds interagency jealousies and costly competition, is inefficient and wasteful of public funds. The WagnerEllender-Taft general housing bill, S. 1592, embodies the major provisions of our postwar housing program. S. 1592 would provide sound coordination of the major housing activities of the Federal Government by a permanent National Housing Agency while relying predominantly on local action and private enterprise.

President Truman has soundly stated the need for a permanent National Housing Agency and his reasons for including this proposal in Reorganization Plan No. 1. But this is not an action originated by the Chief Executive. The proposal for a permanent National Housing Agency originated in Congress and has had the repeated endorsement of congressional committees both in the House and in the Senate.

A permanent National Housing Agency is the indispensable foundation for the permanent national housing program embodied in the general housing bill, S. 1592. Special subcommittees of the House and Senate Committees on Postwar Economic Policy and Planning held exhaustive hearings on housing over a period of almost 2 years. The framework of S. 1592 and the proposal for a unified permanent National Housing Agency embodied in S. 1592 is the outgrowth of these hearings. The Senate Subcommittee strongly recommended the creation of a permanent National Housing Agency. The House subcommittee concurred in that recommendation.

After extensive hearings on this very question, the Senate Banking and Currency Committee gave its strong and specific approval to title I of S. 1592, which is embodied in every detail in the reorganization plan. The Senate as a whole approved the proposal by an overwhelming vote. The view of the Senate committee is indeed conclusive:

"The various housing activities of the Government should not be competitive; they should be reconciled through a well-thought-out, well-administered, and unified housing policy laid down by the Congress. If various types of undertakings are needed, it is only because they are supplementary to one another in the effort to meet the whole housing needs of all the people. And if they are supplementary to one another, they should be fitted together under a unified direction.

"The argument that this unified direction would result in favoring one aspect of the housing problem as against its other aspects overlooks and depreciates the function of the Congress itself. It is the function of the Congress to define the size and scope of the various housing programs undertaken by the Government. No matter what may be the leanings of a particular Administrator (and there has been no evidence and practically no claim that either of the two National Housing Administrators thus far has shown bias), no National Housing Administrator can administer a larger public-housing program, or a larger program of insuring privately financed mortgages, or a larger program of rural housing, than the Congress itself authorizes. The main difference between one housing agency and many housing agencies is that, in the case of the former, the Congress has much better opportunity and facilities for knowing fully and promptly what is being done, and therefore it is much better enabled to execute its own prime function of determining basic policy and vigilantly scrutinizing the nature of its administration" (S. Rept. No. 1131, 79th Cong. 2d sess.).

On behalf of the American Federation of Labor, I call on your committee to support the President's reorganization plan creating a permanent National Hous

ing Agency. Such a permanent agency is an essential tool for solving effectively and efficiently America's staggering housing problem. It is an indispensable instrument for speedy execution of the housing policy written by the Congress itself.

Congressman THOMAS D'ALESANDRO,

House of Representatives, Washington, D. C.

JUNE 4, 1946.

MY DEAR CONGRESSMAN: Your attention is called to my telegram to you dated May 29, in which telegram I called to your attention the matter of the proposed Reorganization Plan No. 2, submitted to the Congress by the President in accordance with the provisions of the United States Reorganization Act of 1945. My telegram set forth that the proposed reorganization will do away with the United States Employees' Compensation Commission as such and place its functions in the Social Security Board.

You will, no doubt, remember that the Longshoremen and Harborworker's Act became law in 1927, and since that time it has been administered by honest, sincere and efficient directors and commissioners, who, through all these years, have handed down decisions based strictly on law and justice, not permitting politics of any sort to enter into their opinions. We representatives of the International Longshoremen's Association have not won all of our cases that were tried before the commissioners, but we are perfectly satisfied that the decisions rendered by the commissioners were honestly their opinions, and, on the whole, we are completely satisfied. The present set-up of the United States Employees' Compensation Commission is a bulwark of strength, assuring our members a fair and impartial trial and judgment on their claims, and we do not want to see anything happen which would change the present set-up in any manner, shape, or form.

Not only have we been interested in the Longshoremen and Harborworker's Act of 1927 since the date of its enactment, but for many years prior thereto in an effort to get for our workers some form of compensation in the event of injury. Since 1927, we have assisted in ironing the kinks out of the original law and have been instrumental in the passage of the several amendments to the original act. Again today our interest in the administration of this act is forcibly brought to your attention with the idea that you exert every possible influence that you may have in an effort to retain "as is" one of the most respected and respectable branches of government.

We urge upon you most strongly that you bear in mind that affirmative action is required by both Houses of Congress prior to July 14, 1946, to eliminate the provisions relative to the proposed change in the set-up of the United States Employees' Compensation Commission from the reorganization proposal. Should you and our other representatives fail to bring about this action, the proposed change in the status of the United States Employees' Compensation Commission will automatically become law.

In view of the seriousness with which we and our 15,000 members view the President's proposal, we would thank you for a reply to this letter, giving us the benefit of your ideas as to just how the President's proposed reorganization with respect to the United States Employees' Compensation Commission can be defeated.

Very truly yours,

STATEMENT OF ABNER H. FERGUSON IN OPPOSITION TO REORGANIZATION PLAN No. 1 BEFORE THE HOUSE COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS, THURSDAY, JUNE 13, 1946

Mr. Chairman and gentlemen of the committee, my name is Abner H. Ferguson. I am Washington counsel for the United States Savings and Loan League, an organization consisting of approximately 3,600 savings and loan associations, building and loan associations, and cooperative banks.

These organizations are deeply interested in Reorganization Plan No. 1, and particularly part V thereof, which undertakes to make permanent the National 88368-46- -22

Housing Agency, which was set up as a purely temporary war agency under an Executive order of the President made pursuant to the First War Powers Act. The sole operations of these institutions are concerned with lending private mortgage funds for the financing of privately built and individually owned homes. These associations have resources of approximately $6,000,000,000 which is invested, except for Government bonds, entirely in home mortgages, and they hold approximately one-third of all the home mortgages in the United States. They do not feel that the proposed plan is to their best interests, or that it is a legal exercise of the President's powers under the Reorganization Act of 1945. I should like to discuss briefly the legal aspects of the so-called part V of plan No. 1, which undertakes to make permanent the National Housing Agency. I shall not discuss the question of the legality of the Reorganization Act itself, because I do not think that is a question with which this committee is concerned, but I am confident that I shall be able to satisfy the committee that part 5 of plan No. 1 violates the provisions of the Reorganization Act of 1945, and is not in accordance with the intent of Congress in the enactment of that act.

In order that the committee might more clearly understand the legal questions involved, I think it might be useful to state the background and history of the Federal Home Loan Bank Board and the Federal Housing Administration.

In July 1932, Congress passed what was known as the Home Loan Bank Act. This act set up a Board consisting of five members to be approved by the President and confirmed by the Senate, and was known as the Federal Home Loan Bank Board. This act set up a Nation-wide system of reserve banks for savings and loan associations known as the Federal Home Loan Bank System. By this system Congress provided for these savings and building and loan associations and cooperative banks a reserve system similar to that provided for commercial banks under the Federal Reserve System. This Board was composed of outstanding, efficient, and highly representative men, including two former Members of the House of Representatives, who have served on the Board with credit and distinction.

This Board, after its original organization, pursued the even tenor of its way and performed its supervisory and regulatory functions to the complete satisfaction of everybody until February 21, 1942, when, by Executive order, issued pursuant to the First War Powers Act, this Board, which had been created by Congress, was abolished and all its functions were transferred to a single person. Its name was changed from the Federal Home Loan Bank Board to Federal Home Loan Bank Administration, and the new head was designated as Home Loan Bank Commissioner. This new set-up was made one of the operating units of a new agency which was created under the same Executive order and named therein as the National Housing Agency. This new agency was entirely a creature of the Executive order without any approval of Congress.

There is incorporated into this new agency two other independent agencies formerly set up by Congress, to wit: the Federal Housing Administration established in 1934 under the provisions of the National Housing Act, and the United States Housing Authority established under the United States Housing Act of 1937, and whose name was changed to Federal Public Housing Authority.

The Home Loan Bank Board and the Federal Housing Administration are purely and simply credit agencies set up to facilitate the financing of home ownership through the use of private capital, while the functions of the United States Housing Authority are interested solely in public or Government housing. The functions of the Federal Housing Administration were solely the insurance of loans made in connection with residential properties by private lending institutions.

While it was perfectly apparent that this consolidation of agencies was unsound and unworkable-if not illegal-yet no point was made of it at the time because of the fact that the country was at war and these institutions did not feel that anything should be done which might possibly interfere with its successful conclusion. However, it soon become apparent that the new set-up was to be entirely dominated by a public-housing attitude. All the key employees were well-known public-housing advocates and despite much lip service to private enterprise, it soon developed an attitude strongly pro-public-housing.

As I stated a few moments ago, the National Housing Agency was created by an Executive order of the President under the provisions of title I of the First War Powers Act, and accordingly its existence terminated with the war, and it could not have been created for any other purpose than for use in connection with the prosecution of the war.