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Mr. WHITTINGTON, Well, after all, the administration of any plan, like the administration of any law, depends upon the administrator, and if the administrator is seeking power and authority that is not conferred upon him, even though he does supervise and control, Congress has the final say? - Mr. SMITH. That is right; and before Congress gets to pass on it, there are lots of other checks upon the administrator of which some administrators least complain. Mr. CHURCH. Mr. Smith, how much money would be saved the taxpayers if the Federal Home Loan Bank system were placed under the National Housing Administration? Mr. SMITH, I do not know that. Mr. CHURCH. Might I ask you, under plan 3, how much money would be saved the taxpayers if the functions of the Bureau of Marine Inspection and Navigation were placed under the Coast Guard? r. SMITH, I would not think that that would materially change, of course, existing arrangements, because during the war the functions of the Bureau of Marine Inspection and Navigation were under the Coast Guard all the time. Mr. CHURCH. Do you know whether the marine industry, either management or labor, preferred having the functions of the Bureau of Marine Inspection and Navigation under the Coast Guard? Mr. SMITH. Well, I think I have sufficient information on that subject, but it does not happen to be my business as Director of the Budget to consult people outside about these matters. I have some limitations which I must observe. Mr. CHURCH. That is, you do not want to give an answer to that Question? Mr. SMITH. Well, I cannot very well answer it. I have heard that #. unions might be opposed to that plan; how vigorously, I do not OW. Mr. CHURCH. Why is that? Mr. SMITH. I do not know. Mr. CHURCH. You do not believe there would be any money saved? Mr. SMITH, I am not sure; here is an arrangement that is just being continued. There is no substantial change in it at all. It is not now being moved from the Department of Commerce to the Coast Guard. It was moved early in the war from Commerce to the Coast Guard, and it is proposed under the plan to leave it in the Coast Guard. It has been in the Coast Guard since February 1942. Mr. CHURCH. You would want to make that permanent, while now it is a temporary arrangement? Mr. SMITH. Yes, sir; that is what the plan provides. Mr. CHURCH. Have you any facts or figures indicating what the transfer would accomplish in the way of savings? Mr. SMITH. No, sir; I do not have any. You see, a fair number of these 28 proposals come from the departments themselves, for the unification of certain of the bureaus within those departments, and it would be very difficult to determine at this time what might come about in terms of efficiency. Mr. CHURCH. How about those functions that are requested to be transferred from one department to another, that is wholly outside of the Department?

Mr. SMITH. The assumption is that they are related functions and belong more appropriately to some other department, and in their administration that you will get, because of that relationship, some increased efficiency.

Mr. CHURCH. "Who is responsible for inspiring these plans?

Mr. SMITH. Well, I do not know that I would commit myself to the proposition that these are inspired plans. Actually, there is no great mystery about these matters. We have had, in the Bureau of the Budget and in the Government, since 1939, when the Reorganization Act was first passed, various studies of organization of Government going on; and, as I say, I should say, without checking specifically about half of these proposals come from the departments themselves.

Mr. CHURCH. Without any regard at all to the money to be saved as the result of these consolidations?

Mr. SMITH. I am sure that the head of the department felt he could increase the efficiency of the operation if he joined related activities within his department. I am sure that is true.

Mr. CHURCH. The question we must ask ourselves and answer to our constituents is: How much will be saved as a result of this consolidation or transfer or change?

Mr. SMITH. In connection with the last reorganization act we presented figures. I do not think that with this sort of thing you can present figures. You might say by this change you can get some increased efficiency, you eliminate certain positions. Then a new program comes along. All of these programs are, after all, Mr. Congressman, authorized by Congress, and we get into a very narrow debate as far as the Bureau of the Budget is concerned, and the responsibility of the President with respect to the Budget: "How much money does the operating department need to carry out those functions ? That is debated on the part of the administration very fully and more comprehensively than anyone believes who does not go through that process, and then it is debated before the Appropriations Committees in Congress. We get into trouble in saying that one of these plans will save a couple hundred thousand dollars and then find when the next proposal comes along—for instance, the Bureau of Marine Inspection and Navigation-because of the fact that the United States of America expanded its merchant marine and has new ships resulting from the war, and that you need 100 percent increase in inspectors. I would think that was a very unrealistic position. I would argue that these are administrative relationships; that if they have any effect whatsoever, they improve the administrative arrangement to the point where you get one or two things, considering first that you have a function to be carried out which is not changed, or does not expand. You see, you get into that problem where you have a function that today is carried out at a particular level, but then there is an urge to carry it out on a little higher level. Assuming the function does not change, you increase the efficiency in carrying it out. You do one of two things: Either you save money in terms of positions and materials, or, on the other hand, you get more for the money which you have spent. My own feeling is that in nearly all of these plans you get more for the money that is available.

Now perhaps when these programs come before the Bureau of the Budget again, or before the Congress, we may cut them; or we may say that, because of these changes, there are adequate funds now for administration. Mr. BENDER. The Bureau of the Budget is the right arm of the President, is that not correct—that is, the Bureau of the Budget comes directly under the President? Mr. SMITH. We serve the President. Mr. BENDER. Had the President said to you, “Last December 20 there was an act passed by Congress known as H. R. 4129,” and has he said to you that that act provides, in so many words—it says, “over all reduction of at least 25 percent in the administrative cost of the agency or agencies affected”? Has the President said to you, “Now you go ahead and make recommendations in keeping with that provision”? Mr. SMITH. I do not wish to be in a position of answering your question and saying something as to what the reaction was, in terms of what the President said to me, but the President went over this act with great care while it was being developed and while it was in the Congress, and he has gone over these plans with great care and has chosen this particular set of plans to be presented to the Congress. Mr. BENDER. These are the first three? Mr. SMITH. Yes; that is right. Mr. BENDER. Here it is June, and you are presenting us with these three plans, and you do not know how much money will be saved, if any, and the law that we passed specifically says that the reduction should be at least 25 percent. Yet, you do not know, as head of the Bureau of the Budget the right arm of the President, how much of a saving, if any, is effected? Mr. SMITH, I do not think the law requires us to report on that. The CHAIRMAN. That is merely “a pious hope” that is section 2 of the law. Mr. BENDER. Well, it is in the law. The CHAIRMAN, Reading paragraph 2, section 2, it says, it is “the expectation” of the Congress that the transfer, consolidation, and coordination will result in a 25-percent cut. Mr. BENDER. That is just like singing a hymn, like singing Onward, Christian Soldiers. Mr. SMITH. In short, the law does not require the Director of the Budget to stick his neck out on a plan here; that is a proposal before Congress, as to how much that plan will save. Now I am not an oracle or a prophet, and I would rather not be in a position of a prophet. I am quite aware, as you are, of the hazards of prophecy around Washington. However, I do not wish to dodge your question; I wish to be perfectly frank about it; but I know those figures are not available. Also, I do not think they would amount to anything if they were presented to you, because they get thoroughly into the realm of prophecy. Once these plans are adopted, and we have some experience with administration, I think we can then measure the extent of the improvement in administration. I am sure that there will be an improvement in administration. If that were not so, there would be little point in bothering you with these plans or my arguing for them, or in the President taking time to go over them. I think there will be an improvement. Mr. BENDER. I do not want to bore you with questions, but I have one thing in mind, and that is that we are endeavoring to economize

here, to achieve economy, and this consolidation and reorganization and
coordination and transfer; and until we do that, what in the world are
we driving at? . Unless you have that as your chief objective, what in
the world is this all about? Until we know entirely and definitely
how much money will be saved as the result of this coordination, there
is no point to all this. -
Mr. CHURCH. Mr. Smith, there are agencies, are there not, that
could go through this subject and measure your savings and give
the Congress an opinion as to whether or not paragraph (c), section
2, could be lived up to as promised before we pass a bill of that kind?
There are efficiency agencies that go into that sort of matter, are
there not, reporting savings and possible savings?
Mr. SMITH. Yes; there are. My point, however, is, that this is
very difficult to measure because you have a lot of factors. -
Mr. CHURCH. The whole point here is that it would be very diffi-
cult to show that there are any savings; is that not true?
Mr. SMITH. Yes; that is the difficulty.
Mr. CHURCH. I believe awhile ago you said that the National Hous-
ing group complained that private housing groups predominated. Do
they still contend that? -
Mr. SMITH, I would not know. The chairman raised the other point,
and I was really making it clear that I heard the other kind of
complaint.
Mr. CHURCH. Do you not think that in America private housing
should still predominate?
Mr. SMITH. I would certainly think so, but I do not think it is a
point that I should pass on as a matter of policy. What I would
argue for, certainly, from the standpoint of development of govern-
mental programs, is that these housing authorities be under one head.
I would recommend that the programs developed by that general head
would be presented to the President and to the Bureau of the Budget.
Certainly there was a great deal of chaos when individual and separate
programs were presented, and, naturally we felt that sort of thing
in the Bureau of the Budget, too. -
By putting these interests—let us say they are somewhat in conflict
over housing—under a head where all of the issues can be debated and
resolved, it seems to me you get a more healthy relationship between
private and public housing and a much better governmental program
insofar as the Government is interested. Obviously, we expect,
I assume, that most of the housing will be done by private developers
when the material and manpower is available.
Mr. CHURCH. You said that about half of these proposals often
come from departments themselves. Is this proposal part W,
National Housing Agency, recommended by the National Housing
Administrator?
Mr. SMITH, I do not know that. I would think possibly not, except
as the previous Housing Administrator testified in general before the
committees of Congress.
Mr. CHURCH. Do you know whether a suggestion has come from the
Federal Housing Administrator? -
Mr. SMITH. I do not know.
Mr. CHURCH. I would say private housing has less encouragement
the more you centralize the power in NHA, would you not, than more
encouragement?

Mr. SMITH, I do not know the answer to that. My own reaction would be that it has nothing to do with the issue. Mr. CHURCH. That seems to be the answer when we cannot obtain figures on savings or economies. Paragraph (c) says it is the expectation of Congress to make those savings of 25 percent in the administration, and so far we have not been furnished with that information. Until that is furnished, I certainly believe that this committee should postpone such plan by reporting out the appropriate resolution to disapprove the plan, otherwise we are going in the direction of more federally controlled private building and private business. Mr. SMITH. I thought you were asking me a double-barreled question there, Mr. Congressman. Mr. CHURCH. Well, you are able to take both barrels and answer each barrel separately. Mr. SMITH. What I did not wish to be drawn into is the question of policy, as to whether we have more or less private or more or less public housing. I do not think that has a thing to do with this proposal as I interpret it. What this does is continue an arrangement that has appeared to work very successfully. I do not know that it has been substantially challenged on that point. In addition, it does give the National Housing Administrator more authority. It is hard for me to argue against that principle. Therefore, as I see it, there certainly was no thought in the background of development of any of these plans that they affected any of the policy issued with respect to the programs involved. That this was an administrative arrangement that we were providing and that it would be an improvement over existing arrangements was what was intended. Mr. CHURCH. I realize your difficulty. Mr. JUDD. Do you know offhand how many agencies are abolished under these three plans: that is, by how much the number of Government agencies is reduced? Mr. SMITH. I cannot tell you exactly. I would think five or six. You would then have to go through the separate plans because there are parts of organizations abolished. For example, in the Organization Plan No. 1, the heading “State Department,” page 8, it says: Office of Inter-American Affairs and all the functions thereof and of the Director of the Office of Inter-American Affairs not otherwise disposed of herein are abolished. I would say there are five or six such cases. Mr. JUDD. That is whether there are agencies within one or the other of the 10 departments, or whether there are agencies outside the department, the total number abolished would be about five or six? Mr. SMITH. That is right. Mr. JUDD. Do you think there would be on an over-all picture, an abolition of personnel, a reduction of personnel? There will be five or six fewer agencies, but will there be a correspondingly great reduction in personnel? Mr. SMITH. There will be some reduction, obviously, and there you relate to, of course, decreases in the work loads of some of these agencies, more particularly to any organization arrangement, I would think. For instance, in the Office of Inter-American Affairs, you abolish some o positions here and put that agency in the State Department to be liquidated. I think that point came up a moment ago

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