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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 un.fied 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.

JUNE 4, 1946. Congressman Thomas D'ALESANDRO,

House of Representatives, Washington, D. C. 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 Em-' ployees' 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 Président'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,

AUGUST IDZIK, International Vice President.

JEFF DAVIS, Atlantic Coast Division Vice President.

[graphic]

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

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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.

It is expressly provided in section 1 of title I of the First War Powers Act, "that the authority by this title granted shall be exercised only in matters relating to the conduct of the present war.” Accordingly, the power conferred upon the President by that act, "to make such a redistribution of the functions among executive agencies as he may deem necessary” could only be exercised for the purpose of promoting the successful prosecution of the war.

Under title IV of the First War Powers Act, it was provided as follows:

“Titles I and II of this act shall remain in force during the continuance of the present war and for 6 months after the termination of the war, or until such earlier time as the Congress by concurrent resolution or the President may designate.

It is further provided in section V as follows:

"Upon the termination of this title, all executive or administration agencies, governmental groups, departments, commissions, bureaus, offices, or officers, shall exercise the same functions, duties, and powers as heretofore or hereafter by law may be provided, any authorizations of the President under this title to the contrary nothwithstanding."

It thus clearly appears that the National Housing Agency is purely a war agency, and goes out of existence 6 months after the termination of the war. under the express terms under the act under which it was created and it is also perfectly clear that the functions of the agencies consolidated into the National Housing Agency return to their prewar status.

When the Acting Solicitor General of the Department of Justice was asked how this National Housing Agency could be set up under the reorganization plan, he gave the entirely unsound and specious justification by saying that while its functions ceased its "shell” remained. Under the authority of what act, or what provisions of the First War Powers Act does any shell remain?

We therefore submit that when the existence of the National Housing Agency terminated under the provisions of the War Powers Act it completely went out of existence, and it cannot be re-created without an act of Congress. The functions undertaken to be conferred on the National Housing Agency by this Executive order are powers that only can be conferred by Congress.

We now come to the consideration of the reorganization plan itself.

I have carefully studied the Reorganization Act of 1945, the so-called plan No. 1, and particularly part V thereof, the reports of the committees of the House and Senate in reporting the bill, and all the debates which took place in both the House and Senate when the bill was being considered.

It is shown by these reports and debates that Congress in passing the Reorganization Act had in mind three broad objectives:

(1) to produce economy in the operation of governmental agencies; (2) to promote efficiency in their operation; and (3) to prevent duplication and overlapping by the consolidation of agencies.

It is perfectly clear from these debates and reports that Congress did not intend to authorize the creation of new agencies or functions, and it is also perfectly clear that in passing this act Congress was dealing solely with the regrouping of permanent agencies. These conclusions result from a study of these debates and reports, and are borne out by the provisions of the act itself. These objectives are stated in section 2 (a) of the act, which is as follows:

"SEC. 2. (a) The President shall examine and from time to time reexamine the organization of all agencies of the Government and shall determine what changes therein are necessary to accomplish the following purposes :

(1) to facilitate orderly transition from war to peace;

"(2) to reduce expenditures and promote economy, to the fullest extent consistent with the efficient operation of the Government;

“(3) to increase the efficiency of the operations of the Government to the fullest extent practicable within the revenues ;

“(4) to group, coordinate, and consolidate agencies and functions of the Government, as nearly as may be, according to major purposes ;

“(5) to reduce the number of agencies by consolidating those having similar functions under a single head, and to abolish such agencies or functions thereof as may not be necessary for the efficient conduct of the Government; and

“(6) to eliminate overlapping and duplication of effort.”

On the question of economy, I would like to call attention to some interesting figures which I have obtained from the Budget estimates of the National Housing Agency for the fiscal years 1946 and 1947.

The National Housing Agency estimated the expenditures of the Office of the Administrator for the fiscal year 1946 to be $3,750,903; while, for the fiscal year 1947, it is estimated they will be $8,085,000-an increase of $4,434,097, or more than 100 percent. And this, I understand, does not include the cost of administering the so-called Veterans' Administration program.

The same estimates show that the number of employees of the office of the Administrator of National Housing Agency for the year 1946 were estimated at 626, while for the year 1947 the number is estimated at 1,397.

Does this indicate economy? As a matter of fact, every cent of it could be saved without any loss whatever in the efficiency of the operation of the constituent units. As a matter of fact, both the Home Loan Bank Board and the Federal Housing Administration have contributed from their net earnings (and both operate at a profit) substantial funds to the administrative expenses of the National Housing Agency. These contributions are estimated in the same Budget estimates as follows:

For 1946, the Federal Housing Administration contributed $119,988 while it will be called upon to contribute $180,000 in 1947. In 1946, the Home Loan Bank Board contributed $99,992 to the administrative expenses of the National Housing Agency, while in the 1917 estimates it will be called upon to contribute $67,500.

It is pertinent to ask wherein is there shown here any economy.

As to the question of promoting efficiency and preventing duplication, my experience as Commissioner of the Federal Housing Administration was that the efficiency of the Federal Housing Administration was clearly impared and dupli. cation greatly increased by the operattions of the National Housing Agency.

As a matter of fact, there was no duplication of function between the Federal Housing Administration, the Home Loan Bank Board, and the National Public Housing Authority, because their functions were althogether different and they operated programs which had no administration connection.

I should particularly like to call the attention of the committee to several provisions of the Reorganization Act of 1945, which, in my opinion, definitely and expressly prevent setting up such a reorganization plan as is attempted to be set up under part V of this plan No. 1.

Subsection 3 of section 5 (a) of the Reorganiaztion Act directs that no organization plan shall provide for and no reorganization under the act shall have the effect of

“(3) continuing any agency beyond the period authorized by law for its existence or beyond the time when it would have terminated if the reorganization had not been made."

Is there any doubt in the world that this plan undertakes to continue the existence of the National Housing Agency as a permanent agency of the Gov. ernment, although that Agency came into existence as a purely temporary war agency. It might be contended that the reorganization plan does not undertake to make the National Housing Agency permanent, but undertakes to set up a new organization to take its place. Such a specious argument as this hardly deserves refutation. A permanent agency can only be created by act of Congress.

Again we find that subsection (4) of section 5 (a) prevents

“(4) continuing any function beyond the period authorized by law for its exercise, or beyond the time when it would have terminated if the reorganization had not been made, or beyond the time when the agency in which it was vested before the reorganization would have terminated if the reorganization had not been made."

Can there be any question but that this plan continues functions of• the National Housing Agency beyond the period authorized for their exercise? We have shown that under the First War Powers Act, the existence of the functions of the National Housing Agency terminated 6 months after the end of the war and that the agencies that had been consolidated to form it at that time would assume their prewar status and functions. The attempt to convert the National Housing Agency into a permanent agency is therefore in violation both of the First War Powers Act and the Reorganization Act of 1945.

We submit further that this reorganization plan violates subsection (6) of section 5 (a). This subsection provides that no reorganization shall provide for or have the effect of—

"(6) imposing, in connection with the exercise of any quasi-judicial or quasilegislative function possessed by an independent agency, any greater limitation upon the exercise of independent judgment and discretion, to the full extent

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