which proposes abolishment of the present Social Security Board. I have advised these people of the hearings.

Representatives of various Federal employees' groups have also advised me that they are opposed to plan No. 2. I refer to postal employees and also Federal employees in other branches of Government service. I have also received protests from the International Longshoremen's Asso: iation of New York City against the abolishment of the United States Employees' Compensation Commission. The post office employees and other labor groups have likewise indicated opposition. They want the United States Employees' Compensation Commission continued and are very well satisfied with the way it is conducted.

In connection with plan No. 3, I have had contacts with John Hawk, secretary-treasurer of Seafarers International Union of North America in New York City. Mr. Hawk advises me his group is joined with other American merchant seamen in opposition to plan No. 3. They are opposed to having the Marine Inspection and Navigation Service remain permanently under the Coast Guard. They want this Service, which is necessary under the Coast Guard, to be returned to the Department of Commerce, where it belongs.

I have also had protests from the Propeller Club of the port of New Orleans and also from the Master Mates and Pilots Local No. 15 and also from the Marine Engineers Beneficial Association No. 12 of New Orleans in opposition to plan No. 3.

These are only a few of the groups that have contacted my office and I have referred them to the chairman of the committee so they could arrange for an opportunity to be heard.

Mr. PITTENGER. I would like to leave with the committee, Mr. Chairman, these questions, to be considered in the disposition of the matters before the committee:

Who, in the Bureau of the Budget was in charge of the preparation of these plans and who were the principal aides in such work. I think the committee should have that, because I understand the Bureau of the Budget has assumed responsibility.

Mr. BENDER. Is the gentlemen prepared to furnish us with his answer to that question?

Mr. PITTENGER. Do you mean me?

Mr. BENDER. Yes.

Mr. PITTENGER. I do not know. question.

That is why I am asking the

Mr. WHITTINGTON. You are just putting these questions for the benefit of the committee; you do not care for it personally?

Mr. PITTENGER. Yes, sir, I do want it. I am attempting to get it, Mr. Whittington.

Question No. 2: What special qualifications do those individuals, unknown, unnamed, unhonored, and unsung, possess for this work? Question No. 3: What investigation was made by the Bureau of the Budget as to the effect of the proposed changes and the views of parties interested and affected by these changes?

Question No. 4: Did the Bureau of the Budget discuss the reorganization plan with the Chief of the Children's Bureau, the members of the United States Employees' Compensation Commission, and with

members of the Social Security Board? If so, give us the names of those parties. If you do not give them to us, I think the committee should know why, before it swallows this fish without having it cooked.

Question No. 5: Did the Bureau of the Budget discuss the changes with interested parties outside of the Government prior to presenting these plans?

That completes my statement.

Mr. BENDER. Do you mean outside of the United States?

Mr. PITTENGER. No; I mean outside of Government employment. Mr. BENDER. The gentlemen has introduced three bills or resolutions asking that plans 1, 2, and 3 not be considered favorably, and the gentleman must have studied these plans, and the gentleman is conversant with this provision of the act we passed last December providing for a 25-percent reduction. Can the gentleman tell the committee which of these items would accomplish that 25-percent reduction in cost of government?

Mr. PITTENGER. I have not been able to get any evidence that anyone of these three plans saves the taxpayers a single dollar. The only evidence I have gotten, and that was discovered and not secured by design, was the evidence to the effect that under plan 2, certain people had been over before the Subcommittee on Appropriations, and every one was increasing by tens of millions of dollars the Budget estimates under Reorganization Plan No. 2.

Now, I suggest that you do not take my word for it, but get definite information from the Subcommittee on Appropriations.

Mr. WHITTINGTON. To which subcommittee do you refer? There are 20 of them over there.

Mr. PITTENGER. It is the one that handles social security.

Mr. BENDER. I think the gentleman is a Republican; is he not? Mr. PITTENGER. I will say that I have supported reorganization plans under Mr. Roosevelt and Mr. Hoover and as I recall the first one was under Hoover. I said last year I would vote for one, hoping that Mr. Truman would have people under him that used good judgment and did what Congress wanted, and so I said I would support Mr. Truman's plan last year, and I voted for the law. Until I found out that it had a lot of these objections, I was perfectly willing to go along. My approach is nonpolitical.

Mr. BENDER. The gentleman will recall, however, that in 1932 Mr. Roosevelt ran for President on the plan of cutting the cost of government 25 percent. I believe that under the circumstances the gentleman is just a little suspicious is he not?

Mr. PITTENGER. I have a right to be.

I thank you, Mr. Chairman, and I may have some more people inquire by reason of the fact that I am the author of these resolutions and if I can produce more light for the committee and not confuse it any, I shall request the indulgence of the committee a little later. The CHAIRMAN. We thank you, Mr. Pittenger, you have been very helpful.

The next is Hon. Harold D. Smith, the Director of the Bureau of the Budget and we will here insert a report from the Bureau of the Budget in the record.

(The report is as follows:)

Hon. CARTER MANASCO,

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET, Washington 25, D. C., May 31, 1946.

Chairman, Committee on Expenditures in the Executive Departments,

House of Representatives, Washington 25, D. C.

MY DEAR MR. MANASCO: I have your letters of May 25 and 27, requesting my views on House Concurrent Resolutions 151, 154, and 155, which propose that the Congress reject Reorganization Plans Nos. 1, 2, and 3 of 1946, transmitted by the President to the Congress on May 16, 1946.

My views are that the three reorganization plans transmitted on that date embody important improvements in the organization of the Government and should become effective. I hope, therefore, that the House concurrent resolutions which would prevent these plans from becoming effective will be disapproved.

The President's messages transmitting the three plans to the Congress contained a thorough justification of each of the reorganization actions proposed. Accordingly, I will limit my comments to a summary of the effect of the plans as a whole, with particular reference to the manner in which they carry out the mandate contained in the Reorganization Act of 1945, plus some additional explanation of specific proposals.

The plans represent a highly expeditious way of accomplishing much-needed improvements in the structure and administration of the executive branch. Under normal procedure, the 28 provisions contained in the plans would not be enacted except by that many separate statutes. The principles of legislative-executive teamwork contained in the Reorganization Act make it possible for all of the proposals to be considered in a single group of documents and for a decision to be taken upon them within a period of 60 days. In my judgment, these three plans demonstrate the wisdom of the Reorganization Act.

All of the objectives set forth in section 2 (a) of the Reorganization Act are served by one or more of the provisions in the plans. Most of the provisions, in fact, support more than one of the act's purposes.

One objective of the act is to facilitate orderly transition from war to peace. This objective is furthered, for example, by two items which deal specifically with the liquidation of war agencies. One places residual functions of the Office of Contract Settlement, which has substantially completed its mission, in the Office of War Mobilization and Reconversion. The other provides for continued supervision by the State Department of three corporations formerly attached to the Office of Inter-American Affairs which have program commitments running into the fiscal year ending June 30, 1949.

Perhaps even more important to an orderly transition from war to peace are the provisions of the plans which will prevent the breaking up of organizational arrangements effected in wartime that have proved sound for peacetime also. Of the 28 actions, nine are of this character. Among these are the provisions which make permanent the National Housing Agency, some of the wartime organizational improvements in the Department of Agriculture, and the consolidation of the functions of the former Bureau of Marine Inspection and Navigation of the Department of Commerce into the Coast Guard and the Bureau of Customs. The act also directs the President to determine changes necessary to group, coordinate, and consolidate agencies and functions according to major purposes. A major action aimed at this objective is the whole of reorganization plan No. 2, which provides for grouping and consolidating in the Federal Security Agency of functions relating to the broad Governmental purposes of fostering the health, education, and welfare of individual citizens. Part V of plan No. 1, brings together in the National Housing Agency those governmental agencies having the promotion of housing as their primary purpose. Again, the two agencies of the Department of the Interior having the general purpose of administering public lands under jurisdiction of the Department are consolidated into a Bureau of Land Management. In fact, all of the transfers of functions contained in the plans meet the criterion laid down by the Congress of bringing together agencies or units having a common purpose.

Reduction of the number of agencies of the Government, either by consolidation or abolition, is an additional goal of the act which the plans seek to accomplish. Perhaps the most important step of this character is the elimination of the Social Security Board and the consolidation of its functions with other functions now under the single head of the Federal Security Agency. Two other bodies within

the Federal Security Agency also are eliminated, as well as three independent agencies the Office of Contract Settlement, the United States Employees' Compensation Commission, and the Canal Zone Biological Area.

Each proposed action which consolidates functions or which groups them according to major purpose will also reduce expenditures, promote economy, increase efficiency of operations, and eliminate overlapping and duplication of effort. By simplifying the structure of the Government, the plans provide for a greater measure of coordination and leadership by the President and his Department and agency heads. A simplified Government is inevitably more responsive to the policies laid down by the Congress and to the needs of the individual citizen. Individuals and organizations who must deal with Government agencies will more readily obtain service if the agencies are fewer in number and are unified in organization according to their major purposes.

The following sections explain further the provisions contained in each of the plans, wherever data supplemental to that contained in the President's messages appear to be of particular interest to you in your consideration of the plans.

REORGANIZATION PLAN NO. 1 OF 1946

As stated in the President's transmittal message, the majority of the items included in reorganization plan No. 1 confirm organization changes effected under title I of the First War Powers Act of 1941. The only exceptions are provisions concerning the Office of Contract Settlement and the Office of the United States High Commissioner to the Philippine Islands.

Office of Contract Settlement

The plan abolishes the Office of Contract Settlement, established by the Contract Settlement Act of 1944. The Office of Contract Settlement has performed the purposes for which it was established, and the remaining tasks of this office can appropriately be shifted to the Director of the Office of War Mobilization and Reconversion. Acceptance of this proposal by the Congress will have the advantages of eliminating one agency and affording a specific economy which, although not large in absolute amount, is a substantial percentage of the administrative cost of the office involved.

Department of State

The items in Reorganization Plan No. 1 applying to the Department of State are those relating, respectively, to the Office of Inter-American Affairs and the Office of the United States High Commissioner to the Philippine Islands. In both cases the necessity arises from the fact that functions are being abolished, in the one case by Executive order and in the other by legislation. Incident to the abolition of these functions there are certain duties of a liquidation and wind-up character.

Thus, in one case, the plan designates the Secretary of State to perform the functions formerly vested in the Director of the Office of Inter-American Affairs with respect to the direction of certain governmental corporations with program commitments for which Congress has already made funds available extending into fiscal year 1949.

In the other case the plan abolishes the Office of the United States High Commissioner to the Philippine Islands and directs the Secretary of State to wind up its affairs. This step is consonant with the granting of independence to the Philippine Islands on July 4 of this year, after which date relations with the Philippines becomes a State Department responsibility. If such action were not accomplished under the Reorganization Act, administrative situations might arise in which the Government could be justly criticized for having failed to take adequate precautions.

National Housing Agency

Consolidation into a permanent housing agency, under a National Housing Administrator, of the main activities of the Government relating to housing is a move that has long been advocated both within and outside of the Congress. The Senate Subcommittee on Housing and Urban Redevelopment, which made an exhaustive study of the housing problem in all its ramifications, stated in its report that "it is essential that all the housing activities of the Government be subjected to a common policy and, to assure the consistent execution of policy, that the agencies operate under some form of unification." The Committee also pointed out that "the excellent performance of the temporary National Housing Agency during the trying conditions of wartime has been demonstrative of the

value of unification and coordination. A similar close working relationship between the several forms of governmental activity seems no less desirable as a means of maintaining an efficient and adaptable use of our resources in a period of restoring and expanding a peacetime economy.”

A permanent National Housing Agency will provide a stable basis for an integrated approach to all aspects of housing. It will assure consistency in the substance and timing of housing programs. Unification will make possible economies in terms of joint use of administrative, research, and statistical services. And not without importance is the fact that it will afford a single, manageable channel for contact with the Congress and for reporting to the public.

It would indeed be unfortunate to go back to the situation which existed prior the consolidation of housing function to 1942 under the temporary authority of the First War Powers Act. Housing functions were then scattered throughout the Government. Unless action is taken, housing activities will ultimately revert to their prewar status. The results of such reversion in terms of confusion and disorganization would be incalculable.

The plan does not make permanent a war agency. The present National Housing Agency is a wartime consolidation rather than a new war agency. It represents a grouping of Federal housing functions which has fully demonstrated its value under stress of war, and which is currently proving its worth in meeting the problems of peace.

Other provisions of Plan No. 1

Three other items represent confirmations of actions taken under the First War Powers Act-namely, the transfer of National Prohibition Act functions to the Department of the Treasury, the transfer of credit union functions to the Federal Deposit Insurance Corporation, and the transfer of agricultural research functions to the Secretary of Agriculture. These provisions merely continue in existence organizational relationships of activities authorized by statute which have been found desirable over a period of from 3 to 4 years operating experience. It would defeat the purposes of the Reorganization Act to allow these functions to revert to their former organizational location upon the expiration of the First War Powers Act of 1941.

REORGANIZATION PLAN NO. 2 OF 1946

The general purpose of Reorganization Plan No. 2 was made clear, I believe, in the President's message transmitting the Plan. In brief, the objective was to develop the Federal Security Agency into the central agency of the Government for dealing with problems of social welfare in the broad sense of the term and to strengthen the internal organization of the Agency for more effective service.

The plan establishing the Agency (plan I of 1939) left several serious gaps in the functions of the Agency and did not fully bring about a well-knit organization. Plan No. 2 of 1946 endeavors to close as many of the major gaps as possible and to enable the Federal Security Administrator to integrate his Agency more thoroughly and to provide greater leadership in dealing with social problems.

In my judgment, the Plan provides a major improvement in the administrative structure of the Government. The social programs in the fields of child care and development, education, health, welfare, and social insurance constitute a family of closely related services needing unified direction and leadership. These programs have been scattered about the Executive branch much too long. It is not so much a matter of eliminating watseful duplication-though there has been some overlapping-as of obtaining better teamwork and a more effective attack upon complex social problems which often cut across the fields of child care, education, health, and social security. In considering the reorganization plan, therefore, I urge that you give appropriate weight to its over-all objective. In the following sections, I will comment on particular provisions of plan No. 2.

United States Employees' Compensation Commission

Let me, first, explain briefly the nature of the Commission's functions and what the plan provides, and then indicate the reasons for the action taken. The United States Employees' Compensation Commission administers two types of workmen's compensation programs-one for employees of the Federal Government and the District of Columbia, and the other for longshoremen and