The CHAIRMAN. The Federal Housing Agency perhaps might be so influenced, but not the National Housing Agency. Do you mean the Federal Housing Administration is dominated by private interests?

Mr. SMITH. Your point, as I understand it, is that if you put public housing and private housing and the whole housing program together, in which the Government has an interest, that the sheer results of that might be that the program might be overweighted on the side of public housing. I answer that by saying that I do not see how that has a bearing on it, because the administration gets a whack at that issue, and the Congress gets a whack at it in terms of appropriations and legislation.

The CHAIRMAN. Is it not regular procedure for the Budget to be submitted through the National Housing Administrator to you, to be submitted to the President and transferred to Congress, so if the Administrator of the National Housing Authority is unfriendly to the Federal Housing Administration his budget,, when submitted to you, will be cut down quite a bit? They know just about how much money they can get out of Congress.

Mr. SMITH. Would this not be a question with any top administrator?

The CHAIRMAN. That is true, and that is one of the things that I fear in this particular plan. I fear that it gives the Administrator of the National Housing Administration, of necessity, if he was a good Administrator and would build a lot of houses, that he of necessity believe in Government ownership of homes.

Mr. SMITH. I think it would be difficult to produce evidence, Mr. Chairman, that would show that kind of favoritism. I think that there are a good many safeguards there. The point I would regard as being much more important is that, in the alternative, you would have a separate agency interested in housing, unrelated to other housing programs of Government. It is my observation as Director of the Budget that in such a situation agencies inevitably suffer and that their chances of getting their programs adequately considered in relation to all the other programs of the Government are much better if they are brought much closer to the center of administration. In any case, the National Housing Administrator, reporting to the President, could easily bring the important issues that are involved here right to the center of the administration of the Government. To me that is important.

The CHAIRMAN. Would this situation be similar: Suppose that the Reconstruction Finance Corporation were operating some public power unit. A privately owned power unit came in to borrow money from the Reconstruction Finance Corporation. Would they not want to tend to increase the holdings of public power and cut down the loans to a private power interest?

Mr. SMITH. That is entirely possible.

The CHAIRMAN. Is it not natural?

Mr. SMITH. Depending upon the people who are dealing with the issue, that would apply; but that is assuming that there is no central policy of the Government with respect to these matters. It seems to me that where essential policy is developed you easily put your

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finger upon the people who are violating that policy. That is the important thing from the standpoint of Federal administration.

It seems to me we must bear in mind here, Mr. Chairman, that we are facing some new issues in Federal administration, and it is easy to overlook those. We have a departmental set-up, we have a good many independent agencies of government that I think are pretty much out on a limb, or tend to be, and that more and more it will be necessary to bring about a closer-knit program in unity in Federal administration and to cut off all of this proliferation of agenciesand that, in part, is what these plans propose to do.

The CHAIRMAN. I evidently have not-made myself clear. I think it is the policy of the Congress and the administration to curb monopolies. Yet, on the other hand, we turn around with the taxpayer's money and borrowed money and have an operating agency on one hand building homes and renting those homes and on the other hand we have a lending agency. I just think it would be natural that the operating agency would curtail the functions of the lending

agency.

We will not discuss that further, that is my personal opinion.

Mr. SMITH. There is one point I would like to make there. After all, the public-housing agency is also a lending agency in the sense that the money is loaned to local housing authorities. You just have a different kind of program. I would like to say, Mr. Chairman, that as Director of the Budget I am thoroughly conscious of the difficulties we went through for many months with the housing agencies scattered all over this town. As the result of the Executive order on which this order is now based, we have had a very considerable experience there that in the main, as near as I can see, indicates a fairly happy relationship between all these agencies in contrast to the very unsatisfactory and unhappy situation we did have in housing.

The CHAIRMAN. I think you did a good job in consolidating all the operating agencies, I think that was a good job. However, when you put under the operating agencies an agency insuring homes for private dwellers, I do not believe that is proper procedure. That is merely my personal opinion. It may not be the opinion of the committee. I think that is a bad mistake.

Mr. SMITH. I think we could readily differ on that point, Mr. Chairman. The point I was trying to make is that I think in the main we have had a very considerable gain in this experience here, and that there is no evidence to my knowledge which would indicate any reason for changing that set-up substantially.

Mr. WHITTINGTON. Mr. Smith, I think you have made a very helpful statement. I would like to ask you one or two questions. I recall your views with regard to reorganization in general, and I am in accord with it. I think I am correct in my recollection when I say that the reorganization bill as introduced provided for continuing in part, some of the powers under the War Powers Act and that the bill as passed made no reference at all to that. I think I am correct

in that statement, am I not?

Mr. SMITH. Yes; I think that is right.

Mr. WHITTINGTON. I think it is fair to state that the bill as passed, under which the proposed plans as submitted, eliminated those provisions with respect to the War Powers Act, primarily because under

section 5 you were unwilling to continue any agency the functions of any agency longer than at present authorized by law. I think that is a fair statement. Should that be not your construction personally, I would be glad to have your view with respect to that. I have in mind section 5, subsection 3, subsection 4, and subsection 7.

Beyond the period authorized by law for its existence, or beyond the time it would be terminated if the reorganization had not been made.

That is to say, the War Powers Act. No. 7, increasing the term of office, and so on.

Now first, with respect to the law and I think you have been very fair in stating that these provisions have with respect to part V are pretty technical and they are legal. I made the statement a few minutes ago and I am going to stand on it that regardless of whether it was the Attorney General or your chief counsel, I think there has been a jumbling job done. I say that for this reason: First, there is an apparent effort under part V to continue an agency that exists only under Executive Order under the War Powers Act, and we are inclined to recognize that in the reorganization bill. I ask you there, if you know, even though you continue the name any function that will be continued under the plan beyond the expiration of the act.

Mr. SMITH. It is my understanding, and I desire to have a representative of the Attorney General testify on that point, that there is no function here which could possibly be continued under this act which function would expire under some act of Congress. In other words, we cannot continue any function here that has an expiration date already, and none are continued.

Mr. WHITTINGTON. Therefore, it is a fair statement to say that about the only thing under part V that would be continued would be the name "National Housing Administrator," and the President himself, regardless of the Executive Order or War Powers Act, may have used that name in making the combination or coordination? Mr. SMITH. That is right; yes.

Mr. WHITTINGTON. The only things that would be continued would be the powers and functions under the substitute laws that by the Executive order under the War Powers Act were placed under the National Housing Agency?

Mr. SMITH. Yes sir.

Mr. WHITTINGTON. Now this is for your lawyer, primarily, and you have introduced them and I will ask them to answer when they come on: Under section 506, can you provide for the continuance of functions that you do not transfer if those functions are abolished? Now that is a legal question, Mr. Smith.

Mr. SMITH. I would like to have a representative of the Attorney General's office who is in back of you answer that at this time.

Mr. WHITTINGTON. I will be glad for him to follow you, at the conclusion of your testimony.

Section 508 is a more important matter and it looks to me like this agency is going to be left up in the air, because there is a provision for interim appointment or functions that have been abolished. I would like your lawyers to answer those questions when they come along, Mr. Smith, and I do not want that to interfere with your plan or your statement. I think those are more important, because I tell you, the way this thing strikes me, that the lawyers who wrote

part V were pretty hard put to it to give us an argument of a bill that had been passed by the Senate that had never been considered nor reported by the House. That has lent a good deal of substance to the view that there was an effort on the part of this National Housing Agency to perpetuate not only its name, but its powers in the hope of legislation that might be passed. Now I do not want to be unfair, but I am just giving you that and you must overcome it and must have some good answers to my judgment.

Mr. SMITH. May I just say this on that point: I think I can say positively that there is no relationship between the two things. There is no relationship between the statement in the President's message which mentioned, I think, the Wagner-Ellender-Taft bill which has caused so much comment here, and anything that the lawyers considered in connection with the legal problems that confronted them with these plans. This message, after all, is the President's message and it is a recognition of the progress that had been made in one of the Houses of Congress along this line. That, of course, gives this message no standing in the other House.

Mr. WHITTINGTON. I am not going to agree with you about the word "progress." ." It is provocative, there.

The CHAIRMAN. That same statement could be used about the FEPC and the anti-poll-tax bill. The House passed those.

Mr. SMITH. I think there was a bow in the President's message to some progress that had been made in this general direction and could have been left out without having any effect upon any of the questions that you raised, although I can realize that you have that problem of relationship.

Mr. WHITTINGTON. If there is one subject that needed to be coordinated and correlated and combined and wherever possible abolished, it was certainly the matter of housing. If it was not scattered all over the lot, so to speak, I know of no agency that was. Now, in this, whatever the name is, and keeping in mind your answer, what I want to know is regardless of the jumbling, regardless of what I call mistaken language, what I would like to know is, what injustice is done to these agencies established by law in the Federal Housing Administration, of these other agencies that would prevent them from functioning according to the laws that Congress has passed. Either you, or those that follow, when they come along, whether they be advocates or opponents of this plan, if they will answer the question, it will be helpful to me as a Member of Congress, because what I am interested in is results, and what I am interested in is the efficiency and the economy that will result from combining and abolishing a lot of these housing activities that are useless.

Mr. SMITH. I would like to answer that categorically and say there is nothing that prevents these policies from being carried out by the constituent agencies.

Mr. WHITTINGTON. That is, as Congress has stipulated in the acts passed?

Mr. SMITH. That is right.

Mr. WHITTINGTON. Is it your view, that so far as public housing is concerned, and having used the name of that agency to designate the Administrator, that the future policy must be laid down by Congress before additional funds can be either requested or recommended or appropriated?

Mr. SMITH. Yes; and it is now laid down by Congress. The CHAIRMAN. Is it not true, Mr. Smith, that at the present time no one can veto the acts of the Federal Housing Administrator, yet if you transfer it under the National Housing Agency, that the Administrator of the National Housing Administration could veto any action by the successor to the Federal Housing Administrator?

Mr. WHITTINGTON. I think that is a good question.

Mr. CHURCH. Mr. Chairman, I would suggest that the witness answer that as to both the efficiency and economy.

to

The CHAIRMAN. We will leave out the efficiency.

Mr. SMITH. I think that is a legal question the chairman is putting me, and I would like to have it raised with the lawyers. My answer to it, from the knowledge I have of it, is that he would not have the power to veto something if the Congress would give independent power, you see, to one of the other agencies. Obviously, the National Housing Administrator sits at the top and develops a program for the total housing agency, whether it is public or private housing in which the Government is interested and which the Government is doing, something in the private housing field and the public housing field. There is a careful consideration in matching up the total programs. There is where the Administrator develops a program for presentation to the President of a group of constituent agencies.

The CHAIRMAN. Mr. Smith, if you will look on page 11, paragraph (d), section 505, you will find this language:

the functions to be administered by the constituent units under this section shall be deemed to be vested in the respective Commissioners, and in the administration thereof the Commissioners shall be subject to the authority of the Administrator.

Mr. SMITH. Is that what you mean by “veto”?

The CHAIRMAN. Yes; it is.

Mr. SMITH. Well, you are right, then.

The CHAIRMAN. In other words, anything that the Federal Housing Administrator does can be vetoed by the National Housing Administrator?

Mr. SMITH. He is the top boss; yes, sir.

The CHAIRMAN. That is absolutely contrary to the intent of Congress in making a separate Federal Housing Administrator. Would it not be contrary to the intent of the law?

Mr. SMITH. No; it would not be. Of course, there is a chance to pass on that issue, but I am not sure that it is contrary to the intent of Congress.

The CHAIRMAN. You said there was no change in the duties and functions of the Housing Commissioner?

Mr. SMITH. No; I did not mean to say that, if I did. I tried to make this point-that under the previous arrangement, the National Housing Administrator had chiefly coordinating functions. He now has more than that. His position is strengthened. It is perhaps a sort of middle position between being a coordinator, on the one hand, and having all of the functions of these agencies, on the other hand, as is often the case with respect to a Cabinet member, where all the functions of the Department are vested in him. The Administrator's position is definitely strengthened.

The CHAIRMAN. He is the czar?

Mr. SMITH. I do not know what a czar is.