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81ST CONGRESS )
f
Session
SENATE
Calendar No. 1528
{
j
1
REPORT
No. 1518
REORGANIZATION PLAN NO. 1 OF 1950, PROVIDING FOR
REORGANIZATIONS I N THE DEPARTMENT OF THE
TREASURY
A P R I L 25
Mr.
(legislative day, M A R C H 29), 1950.—Ordered to be printed
from the Committee on Expenditures in the Executive Departments, submitted the following
MCCLELLAN,
REPORT
Together with the
MINORITY VIEWS
[To accompany S. Res. 246]
The Committee on Expenditures in the Executive Departments,
having had under consideration two identical Senate Resolutions 246
and 247 which provide that the Senate does not favor Reorganization
Plan No. 1 of 1950, reports favorably on Senate Resolution 246, and
recommends that it be approved by the Senate.
PROVISIONS AND EFFECT OF PLAN NO. 1 OF 1950
Section 1 of plan No. 1 transfers to the Secretary all functions
scattered throughout the Department of the Treasury, except the
functions of hearing examiners, and except the operations of the Coast
Guard when, in time of war or otherwise at the discretion of the President, it operates as a part of the Navy. The three other sections of
the plan authorize the Secretary to delegate functions; to appoint an
Administrative Assistant Secretary, with the approval of the President, under the classified civil service at an annual salary of $14,000;
and to make such transfer of records, property, personnel, and funds
as are required to carry out this plan. The complete text of plan No.
1 is given in appendix A.
The statutes controlling the Treasury Department lodge almost all
departmental functions in its operating units. Plan No. 1 would
shift to the Secretary the powers now scattered among 9 of the 10
following operating units (No. 9, Division of Savings Bonds, is already
directly under the Secretary's control), arranged in order of the number of employees on January 1, 1950:1
1 Organization of Executive Departments and Agencies, Committee Report No. 9, Senate Committee
on Expenditures in the Executive Departments, January 1,1950.
2
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
REORGANIZATION PLAN NO. 1 OF 1950
Bureau of Internal Revenue
Fiscal Service
Bureau of Customs
Bureau of Engraving and Printing
Coast Guard
Office of the Comptroller of the Currency
Bureau of the Mint
Secret Service
Division of Savings Bonds
Bureau of Narcotics
Total for Department
Number of
employees
53, 068
9, 907
8, 393
5, 908
4, 963
1, 165
1, 137
737
513
280
86, 990
Plan No. 1 would authorize the Secretary of the Treasury to review
the organization of any or all of the 10 major operating units listed
above. He would be empowered to make changes designed to achieve
greater efficiency and economy.
Under the provisions of the Reorganization Act of 1949, approved
June 20, 1949 (Public Law 109, 81st Cong.), this plan will take effect
upon the expiration of 60 calendar days of continuous session of
Congress after the plan is transmitted, unless a majority of the
authorized membership of either of the two Houses adopts a resolution of disapproval. Because the House of Representatives has been
in interrupted session, the following provision of section 6 (b) of the
act applies.
In the computation of the 60-day period there shall be excluded the days on
which either House is not in session because of an adjournment of more than
3 days to a day certain.
The House of Representatives, with the approval of the Senate,
having been in recess from April 6 to April 18, 1950, under authority
of House Concurrent Resolution No. 193, the effective date of plan
No. 1 will be May 24, 1950, unless it is disapproved.
Senate Resolution 246, which disapproves plan No. 1, has been
submitted in the form prescribed by the act, has been approved by
the committee by a vote of 8 to 3, and is herewith submitted to the
Senate for consideration. Those voting in the affirmative were
Senators McClellan (chairman), Hoey, O'Conor, McCarthy, Ives,
Mundt, Smith of Maine, and Schoeppel. Those opposed were
Senators Humphrey, Leahy, and Benton. Senators Eastland and
Vandenberg abstained.
SUMMARY OF COMMITTEE^ FINDINGS
Hearings were held on Senate Resolution 246 and Senate Resolution 247, during which testimony was submitted to the committee by 2
witnesses in opposition to the resolutions of disapproval, and 12 favoring their adoption. In reporting the subject resolution favorably,
the majority of the committee agrees substantially with the views
expressed by opponents to plan No. 1, which are summarized as
follows:
1. The effect of the plan would be to destroy the present independence of action and broad powers of the Comptroller of the Currency
tn the detriment of the national banking system.
2. It is contrary to the accepted principle established by Congress
that the exercise of the quasi-judicial functions, now administered by
3
REORGANIZATION PLAN NO. 1 OF 1950
the Comptroller of the Currency, should not be controlled by the
President. (See p. 43 of hearings.)
3. The Congress indicated its intention that the Office of the
Comptroller of the Currency should remain independent of control
by the Secretary of the Treasury, by adopting changes in the present
law in 1935 in which it was provided that the appointment of the
Comptroller of the Currency must be made solely by the President
with the advice and consent of the Senate, and not on the recommendation of the Secretary of the Treasury.
4. The propriety of maintaining the independent status of the
Comptroller's Office is further emphasized by the fact that it is
financially supported by contributions from member banks. No part
of its expenditures are paid from public funds.
5. By incorporating two features in existing law, designed to safeguard the independence of the Comptroller and prevent political or
other pressures from influencing his decisions, the Congress provided
(a) that the term of the Comptroller should be for a period of 5 years
and not concurrent with the tenure of office of the Secretary of the
Treasury, or with the term of the President; and (b) that the Comptroller shall be prohibited from accepting employment with any insured
bank for 2 years after he leaves office.
6. Reorganization Plan No. 1, particularly in respect of the Office
of the Comptroller of the Currency, is not in accord with the objectives
of economy and efficiency as recommended by the Hoover Commission. The Hoover Commission made no specific recommendation
relating directly to the Office of the Comptroller of the Currency.
7. The Secretary of the Treasury now has all the statutory authority he needs to coordinate thoroughly the work of his Department
so as to achieve the efficiency and economy recommended by the
Hoover Commission. It follows, therefore, that the approval of
Reorganization Plan No. 1 is not necessary to achieve the primary
purposes recommended by the Hoover Commission, as enumerated
by the proponents of the plan. (See p. 33 of hearings.)
8. The transfer of the functions of the Comptroller of the Currency
to the Secretary of the Treasury will not result in improved administration. The adoption of Reorganization Plan No. 1 would not conform to the Hoover Commission recommendations regarding the
grouping, coordinating, and consolidating of agencies of the Government under functions or major-purpose activities. None of the duties
of the Comptroller of the Currency are related directly to the administrative,fiscal,public debt, or other functions of the Department
of the Treasury, as may be seen by a reading of the act creating the
Comptroller's Office in 1863.
9. The transfer of the Comptroller's Office and functions to the
Secretary of the Treasury would not reduce the number of Federal
agencies by consolidation, or abolition, as recommended by the
Hoover Commission.
10. There is no overlapping or duplication of effort insofar as the
operations of the Comptroller's Office is concerned, since they relate
entirely to the chartering and supervising of national banks, and are
distinct and separate from any functions of the Secretary of the
Treasury.
To this extent, and to the extent outlined in Nos. 8 and 9 above,
the plan does not conform to the purposes of the Reorganization Act
of 1949, as provided in section 2 thereof.
4
REORGANIZATION PLAN NO. 1 OF 1950
11. The plan would shift the functions of the present Comptroller
of the Currency to the Secretary of the Treasury, who could in turn
reallocate such functions elsewhere within the Department in any
manner he might see fit. There was disagreement among the witnesses as to whether this plan would affect funds contributed by member banks under which the Office operates. Some witnesses contended
that the Secretary of the Treasury could transfer these funds for other
purposes which have no relation whatever to those activities. The
proponents of the plan contended that such funds could not be
so transferred.
12. The transfer of the functions of the Comptroller of the Currency
to the Secretary of the Treasury would make the latter officer the
spokesman for national banks in their dealings and relations with
other Federal supervisory authorities in the banking field and their
contacts with State-chartered banks. The effect would be that the
Comptroller would no longer have sufficient initiative, authority,
and independence of action to continue these functions on the basis
intended by Congress. The dual banking system would be disrupted
since the plan authorizes the Secretary of the Treasury, if he so
desired, to serve as a member of the Board of Directors of the Federal
Deposit Insurance Corporation. He could thus influence, for political
or other reasons, policies affecting not only national banks but also
State-chartered banks insured by the FDIC as well.
The effect of plan No. 1 would be to permit the Secretary of the
Treasury, under powers granted to him therein, to emasculate the
Office of the Comptroller of the Currency. This would adversely
affect the status of some 5,000 national banks representing about 56
percent of the commercial banking resources of the country which
have operated heretofore under a safeguarded national banking system
established by Congress 86 years ago.
HOOVER COMMISSION RECOMMENDATIONS
The paramount importance placed by the Hoover Commission on
clarity of lines of authority is demonstrated time and again in its
reports. As indicated by the following excerpts, that major thesis
is first developed in general terms in the text and recommendations
of Report No. 1 on General Management, and is then followed up
in the separate reports dealing with individual functions or agencies
of the Federal Government.
Report No. 1 on General Management
The introductory chapter of Hoover Commission Report No. 1 on
General Management opens with the paragraphs:
In this part of its report, the Commission on Organization of the Executive
Branch of the Government deals with the essentials of effective organization of
the executive branch. Without these essentials, all other steps to improve
organization and management are doomed to failure * * *.
Definite authority at the top, a clear line of authority from top to bottom, and
adequate staff aids to the exercise of authority do not exist. Authority is
diffused, lines of authority are confused, staff services are insufficient. Consequently, responsibility and accountability are impaired.
To remedy this situation is the first and essential step in the search for efficiency
and economy in the executive branch of the Federal Government.
Plan No. 1, like plans No. 2 through No. 6, does not transfer any
organization units to new locations. Instead, they all develop for the
5
REORGANIZATION PLAN NO. 1 OF 1950
designated Cabinet departments the four following numbered recommendations in Hoover Commission Report No. 1 on General Manag6Sent, which are concerned with centralization of functions and an
lequate supervisory staff:
14. Under the President, the heads of departments must hold full responsibility
for the conduct of their departments. There must be a clear line of authority
reaching down through every step of the organization and no subordinate should
have authority independent from that of his superior.
16. Department heads must have adequate staff assistance if they are to achieve
efficiency and economy in departmental operations.
18. Each department head should receive from the Congress administrative
authority to organize his department * * *
20. We recommend that the department head should be given authority to
determine the organization within his department * * *
Report No. 11 on Treasury Department
These recommendations of general applicability are then specifically
developed for the Treasury Department in the Hoover Commission
Report No. 11 on the Treasury Department, as follows:
In our first report we urged that good departmental administration requires
that the Secretary have authority from the Congress to organize and control his
organization, and that independent authority should not be granted directly to
subordinates.
CONFORMANCE TO HOOVER COMMISSION RECOMMENDATIONS
All witnesses appearing before the committee, for or against plan
No. 1, were in full accord with the above-outlined recommendations,
and endorsed the general provisions relating to these over-all objectives.
As has been outlined hereinbefore in this report, opposition to
Reorganization Plan No. 1 was centered on the proposal to make the
Office of the Comptroller of the Currency subordinate to the Secretary of the Treasury, which would have the effect of changing basic
law contrary to the intent of Congress, and is not in accord with any
specific recommendation of the Hoover Commission. The following
is an extract from the Annual Report of the Secretary of the Treasury:
The Bureau of the Comptroller of the Currency is responsible for the execution
of laws relating to the supervision of national banking associations. Duties of
the office include those incident to the formation and chartering of new national
banking associations, the establishment of branch banks, the consolidation of
banks, the conversion of State banks into national banks, the issuance and retirement of preferred stock, and the issuance of Federal Reserve notes.
The Hoover Commission did specifically recommend in Report No.
11 that the "Reconstruction Finance Corporation, Export-Import
Bank, and Federal Deposit Insurance Corporation, independent
agencies reporting directly to the President," should be transferred
to the Department of the Treasury on the premise that "the President cannot give the time necessary for their supervision," and that
"they are accountable to nobody." These recommended transfers
were not included in the plan, and were not the subject of discussion
at the hearings.
TESTIMONY I N SUPPORT OF PLAN NO. 1 OF 1950
There were two witnesses who appeared before the committee at its
hearings on April 11 and 12, in opposition to the resolution disapproving
Reorganization Plan No. 1 of 1950. They were Frederick J. Lawton,
6
REORGANIZATION PLAN NO.
1 OF 1950
Director of the Budget, and Robert L. L. McCormick, research director for the Citizens Committee for the Hoover Report.
These witnesses reiterated the points raised in the President's
messages accompanying the plan, contending that:
1. The plan conforms to one of the most basic recommendations of
the Commission on Organization of the Executive Branch of the
Government with respect to the administration of executive departments.
2. It establishes clear lines of authority and accountability within
the Department of the Treasury, and corrects a great weakness in the
executive branch in the "line of command and supervision from the
President down through the department heads to every employee, and
the line of responsibility from each employee of the executive branch
up to the President/' as recommended by the Hoover Commission.
The plan enables the Secretary to make improvements in the internal
organization of the Treasury Department and provides more adequate
assistance to manage departmental affairs properly.
With these two points there was general agreement on the part of
all witnesses appearing before the committee. The issue has been
developed hereinbefore as regards the transfer of the functions of the
Comptroller of the Currency to the Secretary of the Treasury. In
regard to this phase of the plan, the proponents took the following
position:
1. Those phases of plan No. 1, giving rise to objections centering
on the Office of the Comptroller of the Currency, provide important
general advantages outweighing any valid opposition to its provisions,
and affect the Comptroller less drastically than "has been suggested."
2. Vesting ultimate authority in the Secretary as proposed under
plan No. 1, which was objected to on the part of other witnesses favoring the resolution of disapproval, does not involve any real dangers.
According to the Director of the Bureau of the Budget, there is no
basis for the expressed "fears which, if translated into the case of
every other bureau of Government, would make the Government even
more unmanageable than it is today."
3. The plan would not destroy the independence of the Comptroller
of the Currency because such "alleged" independence is a "fiction."
In this connection the Director of the Bureau of the Budget contended
that the Secretary of the Treasury now has the responsibility for appointing and promoting the staff, including the Deputy Comptrollers,
and that the President has the authority "to fire anybody in the
executive branch provided it isn't a political firing of a civil-service
employee."
BASIS OF OPPOSITION TO PLAN NO. 1 OF 1950
The evidence submitted to the committee by the various witnesses
in opposition to plan No. 1 uniformly stressed opposition to the proposed transfer of the functions of the Comptroller of the Currency to
the Secretary of the Treasury. The following is a brief summary of
such testimony presented at the hearings:
Senator Burnet R. Maybank, chairman of the Senate Committee
on Banking and Currency, submitted to the committee a statement
on behalf of that committee, adopted without a dissenting vote, expressing opposition to the plan and approval of Senate Resolution
7
REORGANIZATION PLAN NO. 1 OF 1950
246. (The statement is given in full on p. 7 of the hearings on April
11, 1950.)
Testimony was also submitted to the committee by the sponsors of
the two identical resolutions of disapproval, Senator A. Willis Robertson of Virginia (S. Res. 246), and Senator Homer E. Capehart of
Indiana (S. Res. 247), both of whom objected to the plan insofar as
it proposed to transfer the functions of the Comptroller of the Currency to the Secretary of the Treasury. These witnesses, as well as
others following, stressed the fact that there was no apprehension as
to the present Secretary of the Treasury abusing such authority in
relation to its application to the national banks, but contended that it
would establish a permanent situation and vesting powers in the
Secretary of the Treasury which might well be abused by future
incumbents of that office.
A letter from the Secretary of the Treasury was incorporated in
the record of the hearings (p. 4). In his communication to the
chairman, the Secretary stated that—
Reorganization Plan No. 1 relates exclusively to the Treasury Department
and I am in accord with its provisions, except to the extent that it would transfer
the functions of the Bureau of the Comptroller of the Currency to the Secretary
of the Treasury.
The Secretary then pointed out that the primary responsibility of
that Bureau, which it had discharged for almost a century, is the
supervision and regulation of the national banking system, and that
the controlled supervision over this system has served as models for
the banking systems of the various States and for their supervisory
principles and practices.
In commenting on the exercise of the quasi-judicial powers vested
in the Comptroller, the Secretary concluded that "it is highly desirable that all such functions in this field should be performed by an
official whose duties are definitely and permanently related to the
national banking system alone." The Secretary stated that while
he would use the powers transferred to him under plan No. 1 "to
preserve the continuity of this Bureau in all possible respects, in
order to maintain a situation which, in my opinion, is most beneficial
both to the National Banking System and to the general economy
* * *. It must be borne in mind that my policy in this respect
would not necessarily be maintained by future Secretaries of the
Treasury." The letter from the Secretary of the Treasury is appended
hereto (appendix B).
The committee has received in excess of 700 communications from
40 States in favor of the resolutions of disapproval on Reorganization
Plan No. 1, practically all of which are from bankers or banking groups.
In every instance the opposition was based on the proposal to subordinate the Comptroller of the Currency and to transfer his functions
to the Secretary of the Treasury.
In addition to the above-named sponsors of resolution of disapproval
the committee also received testimony from eight representatives of
the American Bankers Association and from representatives of State
and national banking groups in favor of the resolution. The substance
of this testimony is consolidated under the heading "Summary of
committee'sfindings"hereinbefore included in this report.
8
REORGANIZATION PLAN NO. 1 OF 1950
CONCLUSION
The majority of the committee, having considered all evidence
submitted at the hearings on Senate Resolution No. 246, and outlined
briefly in this report, recommends that the Senate approve the resolution so that Reorganization Plan No. 1 of 1950 may not become
effective.
The following appendixes include the full text of the President's
message submitted to Congress on March 13, 1950, Reorganization
Plan No. 1, and a letter addressed to the chairman of the Senate
Committee on Expenditures in the Executive Departments by the
Secretary of the Treasury:
APPENDIX A
[H. Doc. No. 505, 81st Cong , 2d sess ]
To the Congress of the United States:
I transmit herewith Reorganization Plan No. 1 of 1950, prepared in accordance
with the Reorganization Act of 1949 and providing for reorganizations in the
Department of the Treasury. My reasons for transmitting this plan are stated
in an accompanying general message.
After investigation I have found and hereby declare that each reorganization
included in Reorganization Plan No. 1 of 1950 is necessary to accomplish one or
more of the purposes set forth in section 2 (a) of the Reorganization Act of 1949.
I have found and hereby declare that it is necessary to include in the accompanying reorganization plan, by reason of reorganizations made thereby, provisions
for the appointment and compensation of an Administrative Assistant Secretary
of the Treasury. The rate of compensation fixed for this officer is that which I
have found to prevail in respect of comparable officers in the executive branch of
the Government.
The taking effect of the reorganizations included in this plan may not in itself
result in substantial immediate savings. However, many benefits in improved
operations are probable during the next years which will result in a reduction in
expenditures as compared with those that would be otherwise necessary. An
itemization of these reductions in advance of actual experience under this plan is
not practicable.
THE
W H I T E HOUSE,
H A R R Y S. TRUMAN.
March 18, 1950.
REORGANIZATION P L A N N o . 1 OF 1950
Prepared by the President and transmitted to the Senate and the House of Representatives in Congress
assembled March 13, 1950, pursuant to the provisions of the Reorganization Act of 1949, approved June
20, 1949
DEPARTMENT OF THE TREASURY
SECTION 1. Transfer of functions to the Secretary.—(a) Except as otherwise
provided in subsection (b) of this section, and subject to the provisions of subsection (c) of this section, there are hereby transferred to the Secretary of the
Treasury all functions of all other officers of the Department of the Treasury and
all functions of all agencies and employees of such Department.
(b) This section shall not apply to the functions vested by the Administrative
Procedure Act (60 Stat. 237) in hearing examiners employed by the Department
of the Treasury.
(c) Notwithstanding the transfer to the Secretary of the Treasury of the
functions of the United States Coast Guard and of the functions of the Commandant of the Coast Guard, effected by the provisions of subsection (a) of this
section, such Coast Guard, together with the said functions, shall operate as a
part of the Navy, subject to the orders of the Secretary of the Navy, in time of
war or when the President shall so direct, as provided in section 1 of the Act of
January 28, 1915 (ch. 20, 38 Stat. 800, as amended, 14 U. S. C. 1).
SEC. 2. Performance of functions of Secretary.—The Secretary of the Treasury
may from time to time make such provisions as he shall deem appropriate authorizing the performance by any other officer, or by any agency or employee, of the
Department of the Treasury of any function of the Secretary, including any
function transferred to the Secretary by the provisions of this reorganization plan.
9
REORGANIZATION PLAN NO. 1 OF 1950
SEC. 3. Administrative Assistant Secretary.—There shall be in the Department
of the Treasury an Administrative Assistant Secretary of the Treasury, who shall
be appointed, with the approval of the President, by the Secretary of the Treasury
under the classified civil service, who shall perform such duties as the Secretary
of the Treasury shall prescribe, and who shall receive compensation at the rate
of $14,000 per annum.
SEC. 4. Incidental transfers.—The Secretary of the Treasury may from time to
time effect such transfers within the Department of the Treasury of any of the
records, property, personnel, and unexpended balances (available or to be made
available) of appropriations, allocations, and other funds of such Department as
he may deem necessary in order to carry out the provisions of this reorganization
plan.
APPENDIX B
T H E SECRETARY OF THE
TREASURY,
Washington, April
H o n . JOHN L .
7, 1950.
MCCLELLAN,
Chairman, Committee on Expenditures in the Executive Departments,
United States Senate, Washington, D. C.
M Y D E A R SENATOR: I want to thank you for your letter of April 4, informing me
of the scheduled hearings with respect to the President's Reorganization Plan
No. 1 of 1950 and inquiring if I desired to be heard by the committee. Although
I have no wish to testify, I do want to cooperate with the committee to the fullest
extent possible and therefore take this opportunity to submit my views with respect
to certain aspects of the plan.
I am in full accord with the fundamental principles of the reorganization plans
recently submitted to the Congress by the President. Reorganization Plan No. 1
relates exclusively to the Treasury Department and I am in accord with its provisions, except to the extent that it would transfer the functions of the Bureau of
the Comptroller of the Currency to the Secretary of the Treasury.
In view of the considerable discussion of this matter in recent weeks, it is
unnecessary for me to dwell at length upon the history and status of the Office of
the Comptroller of the Currency. The primary responsibility of that Bureau,
which it has discharged for almost a century, is the supervision and regulation of
the national banking system. This important function, which relates to institutions holding over half of the Nation's commercial banking resources, is performed
by a relatively small, closely knit organization of career employees. The national
banking system, and its supervision by the Comptroller of the Currency, have
served as models for the banking systems of the various States and for their
supervisory principles and practices.
Effective governmental regulation of national banks has rested at all times
upon the exclusive preoccupation of this Bureau with the well-being of the individual banks and their performance of all the banking services called for by a
vigorous and expanding economy. With very few exceptions, the individual
banks of the national banking system have consistently responded to the recommendations and suggestions of the Comptroller of the Currency, and this has been
true to a considerable extent because of their realization that the Comptroller's
office is not only thoroughly and intimately acquainted with the affairs of all
national banks, but has no other purpose on function than maintaining the soundness and progress of those banks.
I need hardly stress the value of such a relationship of trust and confidence,
built up over many years of contact through carefully worked out and consistently
applied examination and supervisory procedures. By virtue of this relationship,
with which the directors and officers of every national bank have been familiar
throughout their banking careers, the Comptroller's office serves as a coordinating,
steadying, and vitalizing force in the entire banking system.
In the course of his duties, the Comptroller of the Currency exercises a number
of quasi-judicial powers of great importance. In my judgment, it is highly
desirable that all such functions in this field should be performed by an official
whose duties are definitely and permanently related to the national banking system
alone. It should be borne in mind that under present law the Comptroller performs his duties "under the general directions of the Secretary of the Treasury,"
and this provides an entirely adequate integration of the general policies of the
Bureau with those of the Department.
If Reorganization Plan No. 1 of 1950 became effective, I would use my full
powers thereunder to preserve the continuity of this Bureau in all possible re-
10
REORGANIZATION PLAN NO. 1 OF 1950
spects, in order to maintain a situation which, in my opinion, is most beneficial
both to the national banking system and to the general economy. However, it
must be borne in mind that my policy in this respect would not necessarily be
maintained by future Secretaries of the Treasury.
It is my firm conviction that a vigorous national banking system is essential to
the economy of this country. It not only acts as a pacemaker, as I intimated
above, for the State banking systems, but also serves to provide competition for
those systems, and hence increases their strength as it increases its own. It is
also my belief that the national banking system would not long remain intact,
strong, and vigorous without leadership by the Bureau of the Comptroller of the
Currency, which has no other function that its supervision and administration.
The preservation of that system is more important than creating a new channel
of authority where no need therefor appears.
In its report to the Congress on General Management of the Executive Branch,
the Commission on Organization of the Executive Branch of the Government (the
Hoover Commission) summarized the principles which, it felt, should govern the
organization and administration of the Government. This summary emphasized
the importance of managing the operations of the executive branch "effectively,
responsibly, and economically." It is difficult to see how the operations of the
Office of the Comptroller of the Currency could be performed with greater effectiveness or responsibility. As for economizing, that Bureau is one of the few
administrative agencies of government that uses no tax funds; it is supported
entirely by assessments upon the banks it supervises.
For the foregoing reasons, I doubt the advisability of the proposed transfer of
the functions and powers of the Comptroller of the Currency. In all other respects the plan has my unqualified endorsement.
Sincerely yours,
JOHN W .
SNYDER,
Secretary of the Treasury.
MINORITY VIEWS
Mr. Robert L. McCormick, research director of the Citizens' Committee for the Hoover Reports, stated in his testimony before the
Committee on Expenditures, that "Plan No. 1 (dealing with the
Treasury Department) fully accords with the Hoover Commission's
recommendation * * * there is no question about the matter."
The opposition to this plan comes almost entirely from the bankers
of the country. I listened to most of their testimony opposing the
proposed revised status of the Comptroller of the Currency. Reorganization Plan No. 1 simply makes more explicit the relation between the Comptroller and the Secretary of the Treasury that has
existed in fact during the past 16 years.
Because I do not concur with the arguments presented by the
banks, I oppose the resolutions which have been approved by eight
of the members of the Committee on Expenditures and which reject
Reorganization Plan No. 1.
I concur with the Citizens' Committee that plan No. 1 is clearly in
accord with the recommendations of the Hoover Commission and
should not be disapproved by Congress. Further, its disapproval
might indeed be disastrous to forthcoming reorganization proposals
also based on the recommendations of the Hoover Commission. Its
disapproval would further encourage group pressures from all sides.
In its report on the Treasury Department, the Hoover Commission
urged that the Secretary of the Treasury be given authority to organize the Department to achieve sound and efficient departmental
administration. The question before us is whether he shall or shall
not be given this needed authority.
Reorganization Plan No. 1 makes possible a regrouping of those
affairs which logically pertain to the responsibilities of the Secretary of
the Treasury. The plan affects not only the Comptroller of the Currency but eight other operating agencies as well: Internal Revenue,
Customs, Engraving and Printing, Mint, Narcotics, Fiscal Services,
Coast Guard, and Secret Service. Further, of the total personnel involved in the nine agencies, only 1.3 percent, or 1,165 people, are in
the Office of the Comptroller of the Currency.
Mr. F. Raymond Peterson, president of the American Bankers
Association, officially presented the position of the association. He
stated that "the plan would have two, and only two, significant
results." Mr. Peterson testified that, apart from giving to the Secretary of the Treasury a new administrative assistant, "* * * the
only bureau affected by Reorganization Plan No. 1 is the Office of
the Comptroller of the Currency."
These erroneous statements by the head of the great American
Bankers Association show the extent to which the banks have heard
about this plan only from the standpoint of its alleged effect on the
Comptroller of the Currency. This alleged effect they are told is
against their own interests.
11
12
REORGANIZATION PLAN NO. 1 OF 1950
The interests of the banks are of course vital to us all as well as
to them, and must be protected. Further, the bankers are not the
first group to see a problem through their own eyes. This kind of
eyesight must be anticipated by the Congress, as Congress will2
of course, be facing the same problem again and again—and from
group after group—if it faces up to the recommendations of the Hoover
Commission. Such group opposition is the biggest hurdle in the reorganization of the Federal Government. In Connecticut we are facing
the same kind of opposition to the efforts of Governor Bowles, and his
State commission to achieve an efficient administration. Mr. McCormick of the Citizens Committee for the Hoover Report, expressed
this thought in his testimony before the Committee on Expenditures
when he expressed his regret "to see that their (the banks') attitude
appears to be that of reorganizing 'everyone but me\"
If Congress now permits the President to proceed with Reorganization Plan No. 1, I think the present fears of the banks will prove to
be as unwarranted as were their fears at the time the Federal Reserve
Board was established. I think they will prove to be as unwarranted
as at the time the Federal Deposit Insurance Corporation was established. The banks opposed those great steps forward—steps taken
by Congress in the public interest—as they now oppose Reorganization Plan No. 1. Yet I am sure that a more efficient operation of the
Department of the Treasury, and of these nine bureaus for which the
Secretary should be clearly and directly responsible, would meet with
the banks' support—as the Federal Reserve Board and FDIC now
do—when once the issues can be made clear.
Some of the bankers who testified seemed to fear that some future
President of the United States or Secretary of the Treasury might
follow policies designed to destroy the integrity of our banking system.
However, they testified that there is no record in the past of such
intentions on the part of any President of the United States or his
Secretary of the Treasury. If the country were ever to have the
kind of President or Secretary of the Treasury feared by some of the
bankers, it seems to me highly unlikely that the Comptroller of the
Currency could have any status which could stand up against a
political environment of that kind.
But even if it were conceded that no future President or Secretary
of the Treasury would deliberately seek to corrupt the banking system,
a further and legitimate question remains: Might corruption come
accidentally if the protective devices now believed to reside in the
Comptroller of the Currency were to be turned over to the clear-cut
control of the Secretary of the Treasury? Entirely apart from my
feeling that such accidents are highly unlikely, I would like to suggest
that the banks have shown in these recent hearings that they are
exceedingly good watchdogs. They can be counted on to be very
quick to point out any such possible accidental danger.
The Secretary of the Treasury already appoints the Deputy Comptrollers of the Currency; he now prescribes regulations governing the
Office of the Comptroller on the conduct of its officers and clerks and
on#the distribution and performance of its business. The legal work
relating to the Office of the Comptroller of the Currency is under the
general counsel of the Treasury Department. The appointment of
the personnel of the Office of the Comptroller of the Currency,
together with the fixing of compensation, transfer, promotion, demotion, suspension, or dismissal, is vested in the Secretary of the
Treasury.
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REORGANIZATION PLAN NO. 1 OF 1950
It is difficult for me to reconcile the foregoing with the apparent
feeling of some of those who testified that the Comptroller of the
Currency is an "independent officer" and that the reorganization plan
would destroy that independence. As the foregoing shows, the
Comptroller of the Currency is by no means independent. The statute
even provides that the Comptroller "shall perform his duties under the
general direction of the Secretary of the Treasury,, (12 U. S. C. 1)._
r T h i s statutory mandate to the Comptroller has not been a mere
formality. I know from my talks with a high official who has been
personally acquainted with the operations of the Treasury, including
those of the Bureau of the Comptroller of the Currency, throughout the
past 16 years, and including the regimes of three Secretaries of the
Treasury, that the policies of the Comptroller of the Currency have
been, in fact, controlled by the Secretary of the Treasury.
This high official states that the Comptroller could not have functioned with less independence during this period than would have been
the case if this reorganization plan had been in effect. For example,
he states that thefirstDeputy Comptroller of the Currency for a long
period was the personal representative of the Secretary of the Treasury; a Secretary of the Treasury dictated the participation of the
Comptroller of the Currency in an agreement among the three Federal
supervisory agencies on examination policy; the policies of the Comptroller with respect to the approval of branches for one of the largest
banking organizations in the country have been determined from time
to time by the various Secretaries of the Treasury; and the Comptroller of the Currency has not been in position to make recommendations to the Congress with respect to legislation except after consultation and in accordance with the views of the Secretary of the Treasury.
Thus the situation with respect to the Comptroller will not be different
under this plan from what it has been. My authority makes the comment, however, that this reorganization plan will have the merit of
bringing out into the open the lodgment of responsibility in the
Secretary of the Treasury for the determination of policies where
heretofore there has been obscurity as to whether that responsibility
was exercised by the Comptroller. It is better to make responsibility
explicit than to continue to permit it to be covered up.
I do agree that the present confusion created by bankers concerning
the status of the Comptroller of the Currency might delay action on
the part of the President, if he wished to discharge this subordinate, but
it seems apparent to me that with the power to fire the Comptroller
of the Currency, which was conceded in the testimony, the President
does not enlarge on this power by making the Comptroller more clearly
responsible to the Secretary of the Treasury.
The statute concerning the appointment and tenure of the Comptroller of the Currency (sec. 325 of the Revised Statutes, as amended)
reads as follows:
The Comptroller of the Currency shall be appointed by the President, by and
with the advice and consent of the Senate, and shall hold his office for a term of
five years unless sooner removed by the President, upon reasons to be communicated by him to the Senate.
A national campaign of pressure has been conducted to alarm the
bankers throughout the country. The results of this campaign largely
account, in my judgment, for the present majority report of the Senate
Committee on Expenditures. However, many of the letters received
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REORGANIZATION PLAN NO. 1 OF 1950
by Members of the Senate from small banks state bluntly that they
do not understand the problem but that they have been told to write in
opposition.
This campaign obscures the true facts; there is merely superficial
plausibility to the argument that the banks pay for the work of the
Comptroller of the Currency and thus he should be left right where
he is. It is imperative, however, for the Congress to understand the
nature of the campaign against this crucial reorganization proposal
and—in the public interest—to resist it. This campaign is indeed a
good case study for the student of political science—and, more particularly, for the League of Women Voters, the Junior Chamber of
Commerce, and all other groups so deeply interested in the adoption
of the recommendations of the Hoover Commission.
The opposition on the part of the banks, it seems to me, stems
partly from lack of study and thought about the over-all problem and
partly from deep and very real mistrust of our democratic processes
of government. The banks are the trustees of the people's money
and their responsibilities train them to take a dim view of the future
and of mankind in general. A good banker must train himself to
try to foresee the dark contingencies which may lie ahead.
But it is not the business of the Congress to set its policy keyed
primarily to fears of future black-outs. The Congress must assume
that the democratic process will operate successfully. Such black-out
fears, if translated into the operation of other bureaus of government,
would enormously intensify the present great confusion and waste
and inefficiency. They would make the Government even more
unmanageable than it is today, far more inefficient, far more confused
and confusing. They must be resisted. This is a good place to resist.
The Congress, I hope, will have sufficient confidence in the American
people and their elective officers to intrust to those officers the responsibility which is so clearly theirs under our Constitution. If the
Congress turns down Reorganization Plan No. 1, according to the
Citizens' Committee for the Hoover Reports, "the entire reorganization program of the President might well be wrecked."
W I L L I A M BENTON.
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