TREASURY DEPARTMENT-POST OFFICE APPROPRIATIONS FOR 1951 SUBCOMMITTEE OF THE EIGHTY-FIRST CONGRESS J. VAUGHAN GARY, Virginia, Chairman ANTONIO M. FERNANDEZ, New Mexico GORDON CANFIELD, New Jersey OTTO E. PASSMAN, Louisiana FREDERIC R. COUDERT, JR., New York KENNETH SPRANKLE, Executive Secretary to Subcommittee COMMITTEE ON APPROPRIATIONS CLARENCE CANNON, Missouri, Chairman JOHN H. KERR, North Carolina ANTONIO M. FERNANDEZ, New Mexico E. H. HEDRICK, West Virginia PRINCE H. PRESTON, JR., Georgia OTTO E. PASSMAN, Louisiana LOUIS C. RABAUT, Michigan DANIEL J: FLOOD, Pennsylvania CHRISTOPHER C. MCGRATH, New York FOSTER FURCOLO, Massachusetts JOHN TABER, New York RICHARD B. WIGGLESWORTH, Massachusetts CHARLES A. PLUMLEY, Vermont ALBERT J. ENGEL, Michigan KARL STEFAN, Nebraska FRANCIS CASE, South Dakota H. CARL ANDERSEN, Minnesota JOHN PHILLIPS, California ERRETT P. SCRIVNER, Kansas GEORGE Y. HARVEY, Clerk Η HON. JOHN W. SNYDER, SECRETARY EDWARD H. FOLEY, JR., UNDER SECRETARY JOHN S. GRAHAM, ASSISTANT SECRETARY WILLIAM MCCHESNEY MARTIN, JR., ASSISTANT SECRETARY WILLIAM T. HEFFELFINGER, ASSISTANT TO FISCAL ASSISTANT THOMAS J. LYNCH, GENERAL COUNSEL GEORGE C. HAAS, DIRECTOR, OFFICE OF TECHNICAL STAFF WILLIAM W. PARSONS, ADMINISTRATIVE ASSISTANT TO THE SECRETARY WILLARD L. JOHNSON, BUDGET OFFICER INTRODUCTION Mr. GARY. The committee will come to order. This is the first meeting of our committee, and we will proceed today with the consideration of appropriations for the Treasury Department for the fiscal year ending June 30, 1951. We are pleased to have with us this morning the Secretary of the Treasury, and we shall be very glad to hear from him at this time. Secretary SNYDER. Thank you, Mr. Chairman. I have with me this morning all of the heads of the Treasury Department, who came down to get the general trend of your inquiries, so as to be ready to respond at any time with any additional information you might desire in more detailed fashion. You know Under Secretary Foley, Assistant Secretary Graham, and Assistant Secretary Martin, each of whom has under him certain divisions of the Treasury which he supervises and runs herd on. Then under them are the various heads of the divisions of the Treasury. I did not mean to bring an array of people down this morning, but it was for the purpose of helping to expedite the hearings after I leave that I asked these gentlemen to come in and get the general trend of the inquiries of you and the members of your committee, so that they will be acquainted with them and you can call on them directly, if necessary, and get any information as rapidly and quickly as possible. Mr. GARY. It is the policy of our committee, Mr. Secretary, to hold the number of witnesses in the room at any one time down to a minimum, for the purpose of speeding up the hearing; but we are glad that you have brought with you the heads of your department, because questions of policy and other questions may arise on which it might be well for them to hear your statement and possibly at times they may be able to supply information which you desire in the record. (1) Secretary SNYDER. It was for that reason, as I explained, that I had brought down what might appear to be, maybe, an unusual number. It was not for the purpose of having you hear each one of them this morning, but rather for the purpose of letting them get the feel of the hearing and be ready to respond at any time, as you go into a more detailed study of the various divisions. I have a prepared statement which I should like to read, if I may. Mr. GARY. You may proceed, Mr. Secretary. GENERAL STATEMENT Secretary SNYDER. Mr. Chairman and members of the Subcommittee of the House Committee on Appropriations, I am pleased to have the opportunity of coming before you today. May I say, Mr. Chairman, it gives us great pleasure to be able to get right into this with you as quickly as possible, as the initial group you will hear. We have tried to be prepared to come before you as early as you returned so as to aid you in your expeditious consideration of these appropriations. Mr. GARY. I want to say the chairman hesitated in calling the committee at such an early date; but, if we are going to have a onepackage appropriation bill this year, it is necessary that we complete these hearings as speedily as possible. It was for that reason that I imposed on you and asked you to appear before the committee on such short notice. Secretary SNYDER. It was really no imposition, as we tried to be ready as soon as you got back, because it is to our interest as well as yours to get these matters before the committee early, so that you have ample time to consider them, because we get a better end product by that procedure. Mr. CANFIELD. May I also say in that respect that the TreasuryPost Office bill is usually considered as a clean bill and, since you have been Secretary of the Treasury, you have been making your presentations this way. Secretary SNYDER. Thank you, sir. The Treasury, as you know, is a service organization which is essential to the operation of our Government. It has a vital function, also, in facilitating the many millions of financial transactions involved in the day-to-day business life of the Nation. Unlike many other governmental programs, therefore, the major activities of the Treasury Department are not discretionary. They must be continued if the Government itself is to carry on the duties and responsibilities which it alone can perform, and which are necessary to the smooth functioning of the Nation's economy. The Treasury has taken this situation as a challenge to improved service and lower costs. Important steps have been taken in the Department during my term of office to improve and modernize operations from the point of view of increasing the business efficiency of the organization, and from the point of view of reducing operating costs wherever possible. In addition to its administrative and service functions, however, the Treasury is a vital factor in the financial and economic life of the Nation. With a Government debt of $257,000,000,000, the Treasury Department has serious responsibilities with respect to debt manage ment. MONETARY AND DEBT MANAGEMENT POLICIES The primary concern of the Treasury in formulating its monetary and debt-management policies is to promote sound economic conditions in the country. When I took office as Secretary of the Treasury, the country had only started the tremendous task of converting the economy from a wartime to a peacetime basis. Federal expenditures, which had raised the output of the United States to the highest levels on record during the war years, had been cut back sharply as soon as the war ended. In the fiscal year 1945, Federal expenditures had been just under $100,000,000,000, and had accounted for nearly one-half of the gross national product; in the fiscal year ending June 30, 1946, they dropped to a little over $60,000,000,000. This prompt cut in Federal expenditures after the close of the war was necessary and desirable; but it left the Nation facing the problem of replacing the production which had gone for war purposes with civilian production as rapidly as possible. There were many who felt that the reconversion could be achieved only after the country had experienced serious unemployment and severe economic dislocation. Not Many factors on the economic scene were causing concern. the least of these was the size of the public debt, which had increased more than fivefold during the war years. The size was unprecedented, both in terms of the dollar amount involved and of the debt's relation to the economy of the country. On February 28, 1946, at its postwar peak, the Federal public debt stood at nearly $280,000,000,000. At the present time, the Federal debt amounts to $257,000,000,000 and represents slightly more than 50 percent of the total debt of the country, public and private. At the end of the war, the public debt was widely held. This broad ownership made it possible for the debt to play its part in the flexible fiscal policy which was necessary to promote economic stability in the postwar period. The particular composition of the debt was the result of conscious planning by the Treasury as a part of its policy of fitting Government securities to the needs of various types of investors. Practically all of the securities sold to commercial banks, for example, have been short term, in order that the portfolios of banks would be kept highly liquid. This was essential if banks were to be in a position to finance reconversion needs. Business corporations likewise have been provided with short-term securities for the temporary investment of their reserve funds. Insurance companies and savings banks, on the other hand, have held longer-term securities-largely with maturities over 10 years. Savings bonds have been, of course, the principal type of Government security held by individuals. At the same time, however, that broad ownership of the debt contributed to easing the problems of postwar reconversion; it made sound debt management particularly vital, since every segment of the economy was affected. During the postwar period, the country has enjoyed a level of prosperity never before achieved in peacetime. National income has reached the highest level on record, and it has remained near that level. There is There is no doubt that the Treasury's debt-management policies contributed materially to the maintenance of business stability and business prosperity during this period. The economic strength of our Nation has been well demonstrated during the past year. In my opinion, the outstanding development |