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harbor workers throughout the country and for private employees of the Federal trict of Columbia. Operations under the public employees' programs are entirely centralized in the headquarters office of the Commission. Claims are examined and determined by a central staff of examiners, except that some of the more difficult cases are handled directly by the members of the Commission themselves. The programs for longshoremen and harbor workers and for private employees in the District of Columbia are decentralized. The determination of claims under these programs is vested by law in deputy commissioners in charge of the ten field offices of the Commission. While the Commission is responsible for supervising the work of the deputies, appeals from their decisions are to the Federal district courts rather than to the Commission.

The plan abolishes the Commission as a body and transfers its functions to the Federal Security Administrator, but requires the creation of a three-member board to hear and finally decide appeals on claims of Government employees. The jurisdiction of the appeals board is limited to claims of public employees because, by statute, appeals in other cases go directly to the courts. The provision for the appeals board, whose decisions are not subject to modification by any administrative officer, assures public employees an opportunity for a fair and impartial hearing and decision by an independent body. The arrangement is similar in general to that used for handling appeals in the Veterans' Administration, the Bureau of Old-Age and Survivors Insurance, the Bureau of Immigration and Naturalization Service and various other agencies.

The transfer of the programs of the Employees' Compensation Commission will relieve the President of the burden of direct supervision of the agency and bring it under closer administrative control. The work of the Commission involves no policy problems of a type that should require the attention of the President. With all the other demands upon his time no President can, or should be expected to, exercise direct supervision over an agency as small and routine as the Commission. The task can better be performed for the President by placing the Commission's programs in an appropriate major agency of the Executive branch.

The programs of the Commission belong in the Federal Security Agency be cause they are a type of social insurance, and the Federal Security Agency is the central agency of the Government for social insurance administration. The activities of the Commission are similar in general character to those involved in other social insurance programs under the jurisdiction of the Agency. They consist mainly of the examination and determination of claims. The Federal Security Agency, which administers old-age and survivors insurance and unemployment compensation, is the center of technical knowledge on such procedures.

For these reasons, it is clear to me that the functions of the Employees' Compensation Commission should be assigned to a major agency, and that the Federal Security Agency is the appropriate one. Children's Bureau

The transfer of the Children's Bureau is essential if the Federal Security Agency is to be equipped to deal comprehensively and effectively with social problems, or, as the President has said, with the conservation and development of the human resources of the nation. While the Federal Government now undertakes programs to enhance the well-being of individuals at all ages-literally "from the cradle to the grave"--no unified approach is possible so long as responsibility for children's programs is in the Labor Department and for other social programs is in the Federal Security Agency.

Only one of the five permanent programs of the Children's Bureau can accurately be called a labor program. This one, the child-labor program, is left by section 1(b) of plan 2 of 1946 in the Labor Department. It consists mainly of the enforcement of the child labor part of the Fair Labor Standards Act. This work is largely performed by the inspection staff of the Wage and Hour Division, and can be carried on much more economically in conjunction with that Division.

The other four permanent programs of the Bureau all fall in the fields of health, welfare, and the study of child-life problems. All are closely related to programs of the Federal Security Agency. For example, the Children's Bureau annually apportions $1,500,000 to states for child welfare services, while the Bureau of Public Assistance in the Federal Security Agency administers grants of over $50,000,000 a year for aid to dependent children. The money from both programs is administered through State welfare departments, frequently by the same units of these departments, for work which at the local

level often is performed by the same persons. In the field of health, the Children's Bureau administers grant-in-aid programs, principally through State health departments, for maternal and child health services and for the treatment of crippled children. The public Health Service of the Federal Security Agency administers other grants-in-aid for State health department activities. The states have found it unnecessarily complicated to deal separately with the Department of Labor and the Federal Security Agency on related programs.

To gear in the Children's Bureau's health and welfare activities with the health and welfare programs of the Federal Security Agency, the plan transfers the functions of the Bureau to the Federal Security Administrator. The plan specifically retains the Children's Bureau. Moreover, it requires that the Bureau undertake studies and provide advisory service on such matters as infant mortality, orphanage, juvenile delinquency, accidents and diseases of children and legislation affecting children. Organizational arrangements for the other programs are left to the Federal Security Administrator.

The transfer of the Children's Bureau will benefit both the Children's Bureau programs and the other programs of the Federal Security Agency in the fields of education, health, and welfare. The latter will gain by greater participation of the Children's Bureau, with its fund of knowledge of child-life problems, in the planning and execution of the work of the Agency. At the same time, the children's programs will benefit by fuller cooperation from the agencies having general Federal responsibility for the promotion of education, health, and welfare services. The new setting will widen the influence of the Children's Bureau and broaden its field of service. Vital statistics

The reasons for transferring vital statistics from the Census Bureau to the Federal Security Agency may be briefly stated. These statistics are compiled from State and local data obtained from State vital statistics units, which in 47 of the 48 States are administered by the State health departments. These units are partially supported from grants administered by the Public Health Service. The latter, therefore, is in a better position than any other Federal agency to raise the level of State vital statistics activity. If the quality of the State work can be improved, it may be possible to eliminate a large amount of detailed Federal tabulation of a type already being done by the State units. This would yield substantial savings.

Transfer to the Federal Security Agency will also permit a combination of vital statistics and morbidity statistics activities, which are now carried on by the Public Health Service. In addition, the Federal Security Agency is the principal Federal user of vital statistics and vital records and has the greatest interest of any Federal agency in their reliability. Social Security Board

The plan abolishes the Social Security Board and transfers its functions to the Administrator to facilitate a better integration of the Federal Security Agency and to strengthen its administration. The Social Security Board has rendered an outstanding service in establishing the social security program and shaping its basic policies.

But for the future, the premium will be on simple, expeditious, and effective administration rather than on the kind of policy deliberations which a board is commonly set up to provide. Administration through a board of three members with overlapping 6-year terms also has tended to create the undesirable circumstance of a semiautonomous agency within an agency. Single-headed administration and integration of the programs of the board with other programs of the Federal Security Agency are, therefore, a more appropriate organizational arrangement.

The plan provides for not over two new assistant administrators of the Federal Security Agency to head social securities activities and assist the Administrator in the direction of the Agency. Other Features of Plan No. 2

The other changes made by plan 2 all relate to matters of internal administration. The ends they accomplish were all originally proposed by the Federal Security Administrator. The purpose of each of these provisions is briefly explained in the President's message transmitting the plan.

REORGANIZATION PLAN NO. 3 OF 1946

Reorganization Plan No. 3 is made up principally of two kinds of items: First, changes in the internal organization of departments proposed by the heads of those departments; second, adjustments which recognize and confirm actions already taken either by the Congress or by the President under his war powers.

In the first category are changes in the Departments of the Navy, the Interior, Agriculture, and Commerce; in the second, the most important provisions are those relating to the Bureau of Marine Inspection and Navigation. Department of the Navy

In the Navy Department, the Hydrographic Office and the Naval Observatory are transferred from a Bureau where they do not logically belong to the Office of the Chief of Naval Operations. This transfer was undertaken at the beginning of the war and should be made permanent. The consolidation of the Paymaster's Department and the Quartermaster's Department of the Marine Corps is a progressive step which should lead to more expeditious administration and to some savings in administrative expenses. Department of the Interior

The Secretary of the Interior proposed the consolidation of the General Land Office and the Grazing Service into a single Bureau of Land Management. This appears to me to be a clear case of two agencies with a common major purpose that should be consolidated under the objectives stated in the Reorganization Act. This consolidation will lead undoubtedly to elimination of some duplication, greater consistency of policies, and a more efficient use of available funds.

The transfer of jurisdiction over minerals on Department of Agriculture lands from that Department to the Department of the Interior was recommended by the Secretary of Agriculture as well as by the Secretary of the Interior. Centralizing responsibility in one department for mineral leasing on Federally owned lands held by both departments permits the development of one set of policies and one administrative organization instead of two. Department of Agriculture

The provisions relating to the Department of Agriculture will permit the Secretary of Agriculture to continue the consolidation of functions which is now represented in the Production and Marketing Administration with authority to make further adjustments in organization as may be necessary. The present consolidation grew out of the studies of a special advisory committee headed by Milton Eisenhower, president of Kansas State College. I believe it has met with general approval among Members of Congress and agricultural groups. Department of Commerce

The transfer of minor functions within the Department of Commerce similarly carry out the recommendations of a committee of businessmen. They are, to the extent of my knowledge, noncontroversial. Bureau of Marine Inspection and Navigation functions

Most significant of the existing changes to be confirmed is that relating to the former Bureau of Marine Inspection and Navigation of the Department of Commerce.

The functions of this Bureau were amalgamated in 1942 with those of the Coast Guard and the Bureau of Customs of the Department of the Treasury. Prior to the consolidation, the primary interest of both the Coast Guard and the Bureau of Marine Inspection and Navigation was to insure safety of life and property at sea. As an example of related activities, the Coast Guard conducted a maritime personnel training program for the Bureau of Marine Inspection and Navigation, while the latter examined the trainees for licensing or certification as officers or seamen, The Bureau of Customs already performed, on behalf of the Bureau of Marine Inspection and Navigation, practically all of the functions which subsequently were transferred to Customs. Both the Coast Guard and the Bureau of Marine Inspection and Navigation maintained large and widely distributed field offices. Both maintained patrol fleets, although the Coast Guard fleet was of sufficient size to conduct all maritime patrol functions.

In view of all of the above considerations, Executive Order No. 9083 of February 27, 1942, was issued, transferring the major part of the Bureau of Marine

Inspection and Navigation to the Coast Guard and the remainder to the Bureau of Customs.

The Coast Guard has successfully carried on these functions during the past 4 years, and the quality and general morale of the maritime personnel has improved. The Coast Guard has demonstrated its technical qualifications to do the job. The personnel and functions of the two organizations are now integrated to such a degree that a separation would be difficult to effect. Remaining provisions of plan No. 3

The remaining provisions of the plan probably require little comment.

The transfer to the War and Navy Departments of responsibility for some categories of patients hitherto cared for by St. Elizabeths Hospital seeks to achieve a proper apportionment of responsibility among the various agencies concerned with care and treatment of mental patients. This also continues arrangements which had to be made at the beginning of the war when the capacity of St. Elizabeths was exceeded.

The strike-ballots function of the National Labor Relations Board has already, in effect, been abolished by the Congress by means of withholding any appropriation for the purpose.

Similarly, the placement functions of the Selective Service System, which duplicate those of the United States Employment Service, have never been given funds to permit an active program.

Transfer of the functions of the board of directors of the Canal Zone Biological Area to the Smithsonian Institution eliminates an independent agency which has functions hardly distinct enough or significant enough to warrant independent status with Cabinet members bearing personal responsibility.

The transfers of functions at the Franklin D. Roosevelt Library at Hyde Park clear up an instance of divided responsibility which, while not involving many individuals or much expenditure, has created difficulty for those who are directly concerned. Sincerely yours,

HAROLD H. SMITH, Director. The CHAIRMAN. Mr. Smith, do you have a prepared statement ?

STATEMENT OF HON. HAROLD D. SMITH, DIRECTOR, BUREAU OF

THE BUDGET

Mr. SMITH. Mr. Chairman, I do not have a prepared statement and I would be dealing with the rather obvious if I expanded upon the act itself under which these plans are presented, or upon the plans themselves without regard to the questions that you may have in mind.

The previous witness, it seems to me, argued very ably for reorganization on the one hand, and equally ably for doing nothing about it on the other. I am for doing something about it.

The only point that he makes, that concerned me greatly, was the reference to St. Elizabeths. If I thought for a moment that the abolition of the Board of Visitors at St. Elizabeths would in any way cause deterioration in the administration out there, I would be concerned, because the Director of the Budget has a tentative lease on a padded cell out there.

I think that I would like to just for a moment refer to certain points which I presented in some previous testimony. The thought occurs to me that this act provides for one of the best vehicles that has been devised for dealing with administrative problems. It should be borne in mind here that under these proposals, no new functions can be created and no new functions are created. We believe that these 3 plans, Nos. 1, 2, and 3, which deal with some 28 different proposals, are thoroughly consistent with the Reorganization Act itself.

What we get down to, it seems to me, stripped of every other consideration, is that here the President takes the initiative in presenting to the Congress his ideas for better administration of the Government, and those do not necessarily change or abolish or certainly do not add to the functions of the Government.

The Chief Executive, in his responsibilities for the faithful execu-. tion of the law and administration of Government generally, ought to have the opportunity, provided under this act, for presenting his own notions as to how the Government can be better administered.

It seems to me we may very well lose track of the important aspects of practical administration. It is important that the executive structure of the Federal Government have certain characteristics:

First, the organization of the executive branch should be such as to facilitate the development and execution of consistent Federal programs. This requires the proper grouping of related activities and functions in organizational units which have suitable internal arrangements and staff facilities.

There may be many arguments on that point, but in the last analysis it seems to me that it is important that the Administration present to the Congress its notions of how that can best be brought about. The Congress is then left with the decision as to whether or not the specific proposal, which has to do wholly with administration, should be approved.

Second, the organization should be such as to be capable of being managed effectively. To this end, the number of separate executive agencies responsible directly to the President and the Congress should be reduced by placing some agencies within departments or combining related agencies into a smaller number of new agencies, or both. Further, means of adequate supervision and coordination of the operations of agencies and activities which are now scattered should be supplied at the level below the President and the Congress and above the present level of such agencies.

Third, the organization should be such that Federal operations will have a proper and consistent impact upon each individual affected by the various Federal activities.

Fourth, the organization should be capable of changing, and such changes should be made when they are timely. Stated otherwise, neither Federal programs nor the emphasis of Federal programs is static. The organization should be adapted rapidly to accommodate changes in programs or in program emphasis.

I think that is a very important point and obviously during the war there had to be a great responsiveness in administration which led to Executive orders, and often to criticism of Executive orders; but timing was important. I think organization, like all human arrangements, need rather constant examination and adjustment.

Fifth, the organization should be such as to promote economy and minimize lost motion and inefficiency. This does not mean that executive reorganization is the sole key to the reduction of expenditures but on the contrary the possibility of relatively large reductions and expenditures lie almost entirely in the elimination or temporary reduction of large-scale programs or in the elimination of many of the smaller programs. Nor should my point be understood to mean that any given executive reorganization should be rejected if it does not produce a direct reduction in expenditures; on the contrary it would

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