THE PRESIDENT'S

COMMITTEE ON ADMINISTRATIVE MANAGEMENT

REPSRT "OF""FHEC0M,M~rrEE
with

STUDIES OF ADMINISTRATIVE MANAGEMENT

IN THE FEDERAL GOVERNMENT

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Submitted to the President and to the Congress

in accordance with Public Law No. 739
74th Congress/ 2d Session

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 MESSAGE FROM THE PRESIDENT OF THE UNITED STATES
•
To the Oongress of the United States: .
I address this message to the Congress as one
who has had experience as a legislator, as a
subordinate in an executive department, as
the chief executive of a State, and as one on
whom, as President, the constitutional responsi-
bility for the whole of the executive branch of
the Government has lain for 4 years.
N ow that we are out of the trough of the de-
pression, the time has come to set our house in
order. The administrative management of the
I
Government needs overhauling. We are con-
fronted not alone by new activities, some of
them temporary in character, but also by the
growth of the work of the Government matching
the growth of the Nation over more than a
generation.
Except for the enactment of the Budget and
Accounting Act of 1921, no extensive change in
management has occurred since 1913, when the
Department of Labor was established. The
executive structure of the Government is sadly
out of date. I am not the first President to
report to the Congress that antiquated machin-
ery stands in the way of effective administration
and of adequate control by the Congress.
Theodore Roosevelt, William H. Taft, Woodrow
Wilson, and Herbert Hoover made repeated but
not wholly successful efforts to deal with the
problem. Committees of the Congress have
also rendered distinguished service to the Nation
through their efforts from time to time to point
the way to improvement of governmental
management and organization.
The opportunity and the need for action now
comes to you and to me. If we have faith in our
repUblican form of government and in the ideals
upon which it has rested for 150 years, we must
devote ourselves energetically and courageously
to the task of making that Government efficient.
The great stake in efficient democracy is the
stake of the common man.
In these troubled years of world history a
self-government cannot long survive unless that
government is an effective and efficient agency
to serve mankind and carry out the will of the
Nation. A government without good manage-
ment is a house builded on sand.
In striving together to make our Government
more efficient, you and I are taking up in our
generation the battle to preserve that freedom
of self-government which our forefathers fought
to establish and hand down to us. They
struggled against tyranny, against nonrepre-
sentative controls, against government by birth,
wealth, or class, against sectionalism. Our
struggle now is against confusion, against
ineffectiveness, against waste, against ineffi-
ciency. This battle, too, must be won, unless
it is to be said that in our generation national
self-government broke down and was frittered
away in bad management.
Will it be said "Democracy was a great
dream, but it could not do the job"? Or shall
we here and now, without further delay, make
it our business to see that our American democ-
racy is made efficient so that it will do the job
that is required of it by the events of our time?
I know your answer, and the answer of the
Nation, because, after all, we are a practical
people. We know good management in the
home, on the farm, and in business, big and
little. If any nation can find the way to effec-
tive government, it should be the American
people through their own democratic institutions.
Over a year ago it seemed to me that this
problem of administrative management of the
executive branch of the Government should be
a major order of business of this session of the
Congress. Accordingly, after extended dis-
cussions and negotiations, I appointed a Com-
mittee on Administrative Management, to
examine the whole problem broadly and to
suggest for my guidance and your consideration
a comprehensive and balanced program for
dealing with the overhead organization and
management of the executive branch as it is
established under the Constitution.
The Committee has now completed its work,
and I transmit to you its report, Administra-
tive Management in the Government of the
United States. I have examined this report
carefully and thoughtfully, and am convinced
that it is a great document of permanent im-
portance. I think that the general program
presented by the Committee is adequate, rea-
sonable, and practical, and that it furnishes the
basis for immediate action. The broad facts
are known; the need is clear; what is now
required is action.
The Committee on Administrative Manage-
ment points out that no enterprise can operate
III
JV
effectively if set up as is the Government
today. There are over 100 separate depart-
ments, boards, commissions, corporations, au-
thorities, agencies, and activities through which
the work of the Government is being carried
on. N either the President nor the Congress
can exercise effective supervision and direction
over such a chaos of establishments, nor can
overlapping, duplication, and contradictory
policies be avoided.
The Committee has not spared me; they say,
what has been common knowledge for 20 years,
that the President cannot adequately handle
his responsibilities; that he is overworked; that
it is humanly impossible, under the system
which we have, for him fully to carry out his
constitutional duty as Chief Executive, because
he is overwhelmed with minor details and need-
less contacts arising directly from the bad or-
ganization and equipment of the Government.
I can testify to this. With my predecessors
who have said the same thing over and over
again, I plead guilty.
The plain fact is that the present organiza-
tion and equipment of the executive branch of
the Government defeats the constitutional in-
tent that there be a single responsible Chief
Executive to coordinate and manage the de-
partments and activities in accordance with
the laws enacted by the Congress. Under these
conditions the Government cannot be thor-
oughly effective in working, under popular con-
trol, for the common good.
The Committee does not spare the Comp-
troller General for his failure to give the Con-
gress a prompt and complete audit each year,
totally independent of administration, as a
means of holding the Executive truly to ac-
count; nor for his unconstitutional assumption
of executive power; nor for the failure to keep
the accounting system of the Government up
to date to serve as the basis of information,
management, and control.
The Committee criticizes the use of boards
and commissions in administration, condemns
the careless use of "corporations" as govern-
mental instrumentalities, and points out that
the practice of creating independent regulatory
commissions, who perform administrative work
in addition to judicial work, threatens to develop
a "fourth branch" of the Government for which
there is no sanction in the Constitution. Nor
does the Committee spare the inadequacy of
the civil-service system.
Afessage From The President
To meet this situation and bring our admin-
istrative management up to date, the Com-
mittee presents an integrated five-point pro-
gram, which you will find set out in its report.
It includes these major recommendations:
1. Expand the White House staff so that
the President may have a sufficient group of
able assistants in his own office to keep him
in closer and easier touch with the widespread
affairs of administration, and to make the
speedier clearance of the knowledge needed
for Executive decision.
2. Strengthen and develop the managerial
agencies of the Government, particularly
those dealing with the budget and efficiency
research, with personnel and with planning,
as management-arms of the Chief Executive.
3. Extend the merit system upward, out-
ward, and downward to cover practically nIl
non-policy-determining posts; reorganize the
civil-service system as a part of management
under a single, responsible administrator, and
create a citizen board to serve as the watch
dog of the merit system; and increase the
salaries of key posts throughout the service
so that the Government may attract and hold
in a career service men and women of ability
and character.
4. Overhaul the 100 independent agencies,
administrations, authorities, boards, and com-
missions, and place them by Executive order
within one or the other of the following 12
major executive departments: State, Treas-
ury, War, Justice, Post Office, Navy, Con-
servation, Agriculture, Commerce, Labor,
Social WeHare, and Public Works; and place
upon the Executive continuing responsibility
for the maintenance of effective organization.
5. Establish accountability of the Execu-
tive to the Congress by providing a genuine
independent postaudit of all fiscal trans-
actions by an auditor general, and restore to
the Executive complete responsibility for
accounts and current transactions.
As you will see, this program rests solidly
upon the Constitution and upon the American
way of doing things. There is nothing in it
which is revolutionary, as every element is
drawn from our own e:~.perience either in govern-
ment or large-scale business.
I endorse this program and feel confident
that it will commend itself to you also with
your knowledge of government, and to the vast
Of The United States
majority of the citizens of the country who want
and believe in efficient self-government.
No important advance can be made toward
the major objectives of the program without the
passage by the Congress of the necessary
legislation.
It will be necessary to provide for the estab-
lishment of two new departments, a Depart-
ment of Social Welfare and a Department of
Public Works, for the assignment by the Presi-
dent of all the miscellaneous activities to the 12
major departments thus provided, for reorgani-
zation of the civil-service system, for modern-
izing and strengthening the managerial agencies
of the Executive, and for making the Executive
more strictly accountable to the Congress. By
the creation of two new departments nearly 100
agencies now not under regular departments
can be consolidated as to their administrative
functions under a total of 12 regular depart-
ments of the Government.
The remaining elements of the five-point
program, though they must await your action
on the basic legislation, may be initiated
through appropriations and Executive orders.
In placing this program before you I realize
that it will be said that I am recommending the
increase of the powers of the Presidency. This
is not true. The Presidency as established in
the Constitution of the United States has all of
the powers that are required. In spite of timid
souls in 1787 who feared effective government
the Presidency was established as a single strong
Chief Executive Office in which was vested the
entire executive power of the National Govern-
ment, even as the legislative power was placed
in the Congress, and the judicial in the Supreme
Court. What I am placing before you is not
the request for more power, but for the tools
of management and the authority to distribute
the work so that the President can effectively
discharge those powers which the Constitution
now places upon him. Unless we are prepared
to abandon this important part of the Consti-
tution, we must equip the Presidency with
authority commensurate with his responsibil-
ities under the Constitution.
The Coinmittee on Administrative M&nage-
ment, after a careful examination of recent
attempts to reorganize the Government and of
State reorganizations carried out so ably by
Gov. Frank O. Lowden in Illinois, Gov. Alfred
E. Smith in New York, Gov. Harry F. Byrd in
Virginia, Gov. William Tudor Gardiner in
Maine, and by other governors, accepts the
v
view held by my distinguished predecessors
that the detailed work of reorganization is, as
President Theodore Roosevelt said over 30
years ago, "essentially executive in its nature."
The Committee accordingly recommends that
reorganization should be a continuing duty and
authority of the Chief Executive on the basis of
standards set by the Congress. To make this
safe, the Committee insists, however, that the
Congress keep a watchful eye upon reorganiza-
tion both through the annual budget and
through the maintenance of strict executive
accountability to the Congress under the inde-
pendent audit of all financial transactions by an
Auditor General. Under the proposed plan the
Congress must by law establish the major
departments and determine in advance the
general principles which shall guide the Presi-
dent in distributing the work of the Govern-
ment among these departments, and in this task
the President is to act on the basis of careful
research by the Bureau of the Budget and after
conference with those primarily affected. Re-
organization is not a mechanical task, but a
human task, because government is not a
machine, 'but a living organism. With these
clear safeguards, and in view of our past mud-
dling with reorganization, one cannot but accept
the logic and wisdom of the recommendations.
I would not have you adopt this five-point
program, however, without realizing that this
represents au. important step in American
history. If we do this, we reduce from over 100
down to a dozen the operating executive agen-
cies of the Government, and we bring many
little bureaucracies under broad coordinated
democratic authority.
But in so doing, we :::hall know that we are
going back to the Constitution, and giving to
the executive branch modern tools of manage-
ment and an up-to-date organization which will
enable the Government to go forward effi-
ciently. We can prove to the world that Amer-
ican Government is both democratic and
effective.
In this program I invite your cooperation,
and pledge myself to deal energetically and
promptly with the executive responsibilities of
reorganization and administrative management,
when you shall have made this possible by the
necessary legislation.
FRANKLIN D. ROOSEVELT.
THE WHITE HOUSE,
January 12, 1937.
 THE PRESIDENT'S COMMITTEE
ON
ADMINISTRATIVE MANAGEMENT

LOUIS BROWNLOW, CHAIRMAN

CHARLES E. MERRIAM
LUTHER GULICK

JOSEPH P. HARRIS,
Director of Research
January 8,1937
The PRESIDENT,
The White House, Washington, D. O.
DEAR MR. PRESIDENT:
We have the honor to transmit herewith our
report on Administrative Management in the
Executive Branch of the Government of the
United States.
Respectfully yours,
LOUIS BROWNLOW, Chairman.
CHARLES E. MERRIAM.
LUTHER GULICK.
VII
 The President's Committee on Administra-
tive Management was created by the President
of the United States on March 20, 1936, to
make a study of administrative management
in the Federal Government, and to submit rec-
ommendations to the President. By Act of the
Congress it was also required to submit its re-
port and special studies to the Congress. The
Report of the Committee was submitted to the
President in January 1937, and was transmitted
by him to the Congress on January 12, with a
special message.
This volume contains the report of the Presi-
dent's Committee, the message of the President
transmitting the report to the Congress, and
studies on administrative management in the
Federal Government that were prepared by
the research staff and submitted to the Presi-
dent and to the Congress. The statements
and recommendations contained in the research
studies are those of the individual authors as
submitted to the Committee. These and other
research memoranda of the staff were a part of
the body of facts considered in the preparation
of the report of the Committee.
The President's Committee on Administrative
Management desires to express a' deep debt of
gratitude to the many officials of the Govern-
ment who rendered generous assistance by their
counsel and advice and by supplying the staff
of the Committee with detailed information on
many phases of administrative management
and related problems; to the citizens from
various walks of life with whom the Committee
consulted; to the officers and employees of the
National Emergency Council who greatly fa-
cilitated the work of the Committee; and to
the members of the research staff who, though
in no way responsible for the report of the
Committee, greatly aided by their investigation
of special problems.

THE PRESIDENT'S COMMITTEE ON ADMINISTRATIVE MANAGEMENT

LOUIS BROWNLOW, Chairman CHARLES E. MERRIAM: LUTHER GULICK

•
RESEARCH STAFF

JOSEPH P. HARRIS, Director oj Research

G. Lyle Belsley James Hart
A. E. Buck Arthur N. Holcombe
Laverne Burchfield Arthur W. Macmahon
Robert H. Connery Harvey C. Mansfield
Robert E. Cushman ~eiM?Kinlei:!
Paul T. David John F. Miller
William Y. Elliott John D. Millett
Herbert Emmerich Floyd W. Reeves
Merle Fainsod Leo C. Rosten
James W. Fesler Spencer Thompson
Katherine Frederic Mary C. Trackett
Patterson H. French Schuyler C. Wallace
William J. Haggerty Edwin E. Witte
VIII

-
~
 ADMINISTRATIVE MANAGEMENT IN THE GOVERNMENT
OF THE UNITED STATES
•

CONTENTS

Part I. Report of the President's Committee

Page
Introduction 1
I. The White House Staff 5
II. Personnel Management 7
III. Fiscal Management 15
IV. Planning Management 27
V. Administrative Reorganization of the Government of the United States 31
VI. Accountability of the Executive to the Congress 49
Conclusion 51

Part II. Studies of Administrative Management in the Federal Government

PERSONNEL ADMINISTRATION IN THE FEDERAL SERVICE

by
Floyd W. Reeves and Paul T. David

Introduction-The Problem of Effective Personnel Administration 59

Conclusions and Recommendations 62
I. Federal Personnel Administration Today 68
II. The Development of a Service of Personnel Administration 95
III. The Extension of the Merit System 121

FINANCIAL CONTROL AND ACCOUNTABILITY

by
A. E. Buck
Introductory Statement 139
I. Financial Planning-The Budget 141
II. Current Direction of Spending 147
III. Current Budgetary Control 155
IV. Accountability for Financial Acts 159
V. Summary of Recommended Changes 167

THE GENERAL ACCOUNTING OFFICE

by
Harvey C. Mansfield
I. Statement of the Problem 173
II. The Extent of the Control Exercised 175
III. Some Escapes from the Control 185
IV. The Irresponsibility of the General Accounting Office 189
V. Consequences from the Point of View of Administrative Management 193
VI. Objectives of a Proper System 197
VII. Proposed Changes 201
IX
 THE PROBLEM OF THE INDEPENDENT REGULATORY COMMISSIONS
by
Robert E. Cushman
Page
Statement of the Problem 207
I. Historical Background of the Problem 209
II. The Inherent Problem of the Independent Regulatory Commissions-A Basic Dilemma 219
III. Legal Limitations Conditioning Any Solution of the Problem 225.
IV. A Suggested Solution 229
V. An Appraisal of the Suggested Plan 235

DEPARTMENTAL MANAGEMENT
by
~rthur¥(. ~acmahon

Introduction 249
I. Objectives of Departmental Management 251
II. The Emergent Pattern 255
III. The Allocation of Supervisory Duties 259
IV. Recruitment, Training, and Tenure 265

EXECUTIVE MANAGEMENT AND THE FEDERAL FIELD SERVICE

by
James ¥(. Fesler
Summary of Recommendations 275
I. Statement of the Problem 277
II. Recent Experience in the Decentralization of Executive Management 279
III. Conclusions 291

GOVERNMENT CORPORATIONS AND INDEPENDENT SUPERVISORY AGENCIES

by
Herbf'rt Emmerich
Purposes of the Corporation 299
Recommendations 303

THE EXERCISE OF RULE-MAKING POWER

by
James Hart
Summary of Conclusions 313
Summary of Recommendations 316
I. The Nature of Rule-Making Power 319
II. Rule-Making and the Congress 322
III. Rule-Making and the President 329
IV. Safeguarding the Public 335
V. Coordination of the Rule-Making Process 347
VI. Over-all Management of the Service Activities of the Executive Branch 353
Appendixes 354

THE PREPARATION OF PROPOSED LEGISLATIVE MEASURES

BY ADMINISTRATIVE DEPARTMENTS
by
Edwin E. ¥(itte
Introduction 361
1. Principles That Should Govern the Legislative Activities of Administrative Departments 362
II. Present Procedures 364
III. Procedures in Other Governments 370
IV. Major Possibilities for Improvement and Their Practical Difficulties 372
V. Recommendations 375
Appendix 378
x
,I
I
REPORT OF THE PRESIDENT1S COMMITTEE
ON ADMINISTRATIVE MANAGEMENT

XI
 REPORT OF THE PRESIDENT'S COMMITTEE

•
Contents
Page

Introduction 1

1. The White House Staff 5

II. Personnel Management 7

A. Extension of the Merit System

B. Reorganization and Improvement of Personnel Administration
C. Compensation and Classification

III. Fiscal Management 15

A. Budgeting and Administrative Control

B. Direction and Control of Accounting and Expenditures
IV. Planning Management 27

V. Administrative Reorganization of the Government of the United States 31

A. Plan of Reorganization
B. Continuing Executive Responsibility for Efficient Organization
C. Departmental Organization
D. The Independent Regulatory Commissions
E. Government Corporations
Reorganization and Administrative Management
VI. Accountability of the Executive to the Congress 4S

Conclusion 51

Xln
 INTRODUCTION
•
The government of the United States is the
largest and most difficult task undertaken by
the American people, and at the same time the
most important and the noblest. Our Govern-
m~ does more for more men, women, and
children than any other institution; it employs
more persons in its work than any other em-
ployer.. It covers a wider range of aims and
activities than any other enterprise; it sustains
the frame of our national and our community
life, our economic system, our individual rights
and liberties. Moreover, it is a government of,
by, and for the people-a democracy that has
survived for a century and a half and flourished
among competing forms of government of many
different types and colors, old and new.
From time to time the decay, destruction, and
death of democracy has been gloomily predicted
by false prophets who mocked at us, but our
American system has matched .its massive
strength successfully against all the forces of
destruction through parts of three centuries.
Our American Government rests on the truth
that the general interest is superior to and has
priority over any special or private interest, and
that final decision in matters of common interest
to the Nation should be made by free choice of
the people of the Nation, expressed in such
manner as they shall from time to time provide,
and enforced by such agencies as they may from
time to time set up. Our goal is the constant
raising of the level of the happiness and dignity
of human life, the steady sharing of the gains
of our Nation, whether material or spiritual,
among those who make the Nation what it is.
We are too practical a people to be satisfied
by merely looking forward to glittering goals
or with mere plans, talk, and pledges. By
democracy we mean getting things done that
we, the American people, want done in the gen-
eral interest. Without results we know that
democracy means nothing and ceases to be alive
in the minds and hearts of men. With us the
people's will is not merely an empty phrase;it
denotes a grave and stern determination in the
major affairs of our Nation-a determination
which we propose to make good as promptly
and firmly as may be necessary and appro-
priate-a determination which does not intend
to be baffied in its basic plans and purposes by
any cluttering or confusion in the machinery
for doing what it has been deliberately decided
to do.
After the people's judgment has been ex-
pressed in due form, after the representatives
of the Nation have made the necessary laws,
we intend that these decisions shall be promptly,
effectively, and economically put into action.
The American Executive
The need for action in realizing democracy
was as great in 1789 as it is today. It was thus
not by accident but by deliberate design that
the founding fathers set the American Execu-
tive in the Constitution on a solid foundation.
Sad experience under the Articles of Confedera-
tion, with an almost headless Government and
committee management, had brought tl1e
American Republic to the edge of ruin. Our
forefathers had broken away from hereditary
government and pinned their faith on demo-
cratic rule, but they had not found a way to
equip the new democracy for action. Conse-
quently, there was grim purpose in resolutely
providing for a Presidency which was to be a
national office. The President is indeed the
one and only national officer representative of
the entire Nation. There was hesitation on
the part of some timid souls in providing the
President with an election independent of the
Congress; with a longer term than most gov-
ernors of that day; with the duty of informing
the Congress as to the state of the Union and
of recommending to its consideration "such
1
 2 The President's Oommittee
Measures as he shall judge necessary and
expedient"; with a two-thirds veto; with a wide
power of appointment; and with military and
diplomatic authority. But this reluctance was
overcome in the face of need and a democratic
executive established.
Equipped with these broad constitutional
powers, reenforced by statute, by custom, by
general consent, the American Executive must
be regarded as one of the very greatest contri-
butions made by our Nation to the develop-
ment of modern democracy-a unique institu-
tion the value of which is as evident in times of
stress and strain as in periods of q'uiet.
,As an instrument for carrying out the judg-
ment arid will of the people of a nation, the
American Executive occupies an enviable posi-
tion among the executives of the states of the
world, combining as it does the elements of
popular control and the means for vigorous ac-
tion and leadership-uniting stability and flexi-
bility. The American Executive as an institu-
tion stands across the path of those who
mistakenly assert that democracy must fail
because it can neither decide promptly nor
act vigorously.
Our Presidency unites at least three impor-
tant functions. From one point of view the
Presiden t is a political leader-leader of a party,
leader of the Congress, leader of a people.
From another point of view he is head of the
Nation in the ceremonial sense of the term, the
symbol of our American national solidarity.
From still another point of view the President
is the Chief Executive and administrator within
the Federal system and service. In many types
of government these duties are divided or only
in part combined, but in the United States
they have always been united in one and the
same person whose duty it is to perform all
of these tasks.
Your Committee on Administrative Manage-
ment has been asked to investigate and report
particularly upon the last function; namely,
that of administrative management-the organ-
ization for the performance of the duties im-
posed upon the President in exercising the
executive power vested in him by the Consti-
tution of the United States.
Improving the Machinery
of Government
Throughout our history we have paused- now
and then to see how well the spirit and purpose
of our Nation is working out in the machinery
of everyday government with a view to making
such modifications and improvements as pru-
dence and the spirit of progress might suggest.
Our Government was the first to set up in its
formal Constitution a method of amendment,
and the spirit of America has been from the
beginning of our history the spirit of progressive
changes to meet conditions shifting perhaps
more rapidly here than elsewhere in the world.
Since the Civil War, as the tasks and respon-
sibilities of our Government have grown with
the growth of the Nation in sweep and power,
some notable attempts have been made to keep
our administrative system abreast of the new
times. The assassination of President Garfield
by a disappointed office seeker aroused the
Nation against the spoils system and led to the
enactment of the civil-service law of "1883.
We have struggled to make the principle of tIllS
law effective for half a century. The confusion
in fiscal management led to the establishment
of the Bureau of the Budget and the budgetary
system in 1921. We still strive to realize the
goal set for the Nation -at that time. And,
indeed, many other important forward steps
have been taken.
Now we face again the problem of govern-
mental readjustment, in part as the result of the
activities of the Nation during the desperate
years of the industrial depression, in part be-
cause of the very growth of the Nation, and in
part because of the vexing social problems of
our times. There is room for vast increase in
our national productivity and there is much
bitter wrong to set right in neglected ways of
human life. There is need for improvement
of our governmental machinery to meet new
conditions and to make us ready for the prob-
lems just ahead.
Facing one of the most troubled periods in all
the troubled history of mankind, we wish to set
our affairs in the very best possible order to
make the best use of all of our national resources
and to make good our democratic claims. If
America fails, the hopes and dreams of democ-
racy over all the world go down. _ We shall
not fail in our task and our responsibility, but
we cannot live upon our laurels alone.
We seek modern types of management in
National Government best fitted for the stern
situations we are bound to meet, both at home
and elsewhere. As to ways and means of im-
provement, there are naturally sincere differ-
ences of judgment and opinion, but only a
treasonable design could oppose careful atten-
 On Administrative Management
tion to the best and soundest practices of gov-
ernment available for the American Nation in
the conduct of its heavy responsibilities.
The Foundations of
Governmental Efficiency
The efficiency of government rests upon two
factors: the consent of the governed and good
management. In a democracy consent may be
achieved readily, though not without some
effort, as it is the cornerstone of the constitu-
tion. Efficient management in a democracy is
a factor of peculiar significance.
Administrative efficiency is not merely a mat-
ter of paper clips, time clocks, and standardized
economies of motion. These are but minor
gadgets. Real efficiency goes much deeper
down. It must be built into the structure of
a government just as it is built into a piece of
machinery.
Fortunately the foundations of effective
management in public affairs, no less than in
private, are well known. They have emerged
universally wherever men have worked to-
gether for some common purpose, whether
through the state, the church, the private
association, or the commercial enterprise. They
have been written into constitutions, charters,
and articles of incorporation, and exist as habits
of work in the daily life of all organized peoples.
Stated in simple terms these canons of efficiency
require the establishment of a responsible and
effective chief executive as the center of energy,
direction, and administrative management; the
systematic organization of all activities in the
hands of a qualified personnel under the direc-
tion of the chief executive; and to aid him in
this, the establishment of appropriate mana-
gerial and staff agencies. There must also be
provision for planning, a complete fiscal system,
and means for holding the Executive account-
able for his program.
Taken together, these principles, drawn from
the experience of mankind in carrying on large-
scale enterprises, may be considered as the first
requirement of good management. They com-
prehend the subject matter of administrative
management as it is dealt with in this report.
Administrative management concerns itself in
a democracy with the executive and his duties,
with managerial and staff aides, with organiza-
tion, with personnel, and with the fiscal system
because these are the indispensable means of
making good the popular will in a people's
government.
1531(;5-37-2
3
Modernizing our
Governmental Management
In the light of these canons of efficiency, what
must be said of the Government of the United
States today? Speaking in the broadest terms
at this point, and in detail later on, we find in
the American Government at the present time
that the effectiveness of the Chief Executive is
limited and restricted, in spite of the clear
intent of the Constitution to the contrary;
that the work of the Executive Branch is badly
organized; that the managerial agencies are
weak and out of date; that the public service
does not include its share of men and women of
outstanding capacity and character; and that
the fiscal and auditing systems are inadequate.
These wealmesses are found at the center of
our Government and involve the office of the
Chief Executive itself.
"While in general principle our organization
of the Presidency challenges the admiration of
the world, yet in equipment for administrative
management our Executive Office is not fully
abreast of the trend of our American times,
either in business or in government. Where,
for example, can there be found an executive in
any way comparable upon whom so much petty
work is thrown? Or who is forced to see so
many persons on unrelated matters and to make
so many decisions on the basis of what may be,
because of the very press of work, incomplete
information? How is it humanly possible to
know fully the affairs and problems of over 100
separate major agencies, to say nothing of
being responsible for their general direction
and coordination?
These facts have been known for many years
and are so well appreciated that it is not neces-
sary for us to prove again that the President's
administrative equipment is far less developed
than his responsibilities, and that a major task
before the American Government is to remedy
this dangerous situation. What we need is
not a new principle, but a modernizing of our
managerial equipment.
This is not a difficult problem in itself. In
fact, we have already dealt with it successfully
in State governments, in city governments,
and in large-scale private industry. Gov.
Frank O. Lowden in Illinois, Gov. Alfred E.
Smith in New YOl=k, Gov. Harry F. Byrd in
Virginia, and Gov. William. Tudor Gardiner
in Maine, among others, have all shown how
similar problems can be dealt with in large
governmental units. The Federal Govern-
j
4 The President's Oommittee
ment is more extensive and more complicated,
but the principles of reorganization are the
same. On the basis of this experience and our
examination of the Executive Br.anch we con-
clude that the following steps should now
be taken:
1. To deal with the greatly increased duties
of executive management falling upon the
President the White House staff should be
expanded.
2. The managerial agencies of the Govern-
ment, particularly thQse dealing with the
budget, efficiency research, personnel, and
planning, should be greatly strengthened and
developed as arms of the Chief Executive.
3. The merit system should be extended
upward, outward, and downward to cover all
non-policy-determining posts, and the civil
service system should be reorganized and oppor-
tunities established for a career system attrac-
tive to the best talent of the Nation.
4. The whole Executive Branch of the Gov-
ernment should be overhauled and the present
100 agencies reorganized under a few large de-
partments in which every executive activity
would find its place.
5. The fiscal system should be extensively
revised in the light of the best governmental
and private praetice, particularly with reference
to financial records, audit, and accountability
of the Executive to the Congress.
These recommendations are explained and
discussed in the following sections of this
report.
The Purpose of Reorganization
In proceeding to the reorganization of the
Government it is important to keep promi-
nently before us the ends of reorganization.
Too dose a view of machinery must not cut
off from sight the true purpose of efficient
management. Economy is not the only ob-
jective, though reorganization is the first step
to savings; the elimination of duplication and
contradictory policies is not the only objective,
though this will follow; a simple and symmetri-
cal organization is not the only objective,
though the new organization will be simple and
symmetrical; higher salaries and better jobs are
not the only objectives, though these are neces-
sary; better business methods and fiscal con-
trols are not the only objectives, though these
too are demanded. There is but one grand
purpose, namely, to make democracy work
today in our National Government; that is,
to make our Government an up-to-date, effi-
cient, and effective instrument for carrying out
the will of the Nation. It is for this purpose
that the Government needs thoroughly modern
tools of management.
As a people we congratulate ourselves justly
on our skill as managers-in the home, on the
farm, in business big and little-and we prop-
erly expect that management in government
shall be of the best American model. We do
not always get these results, and we must
modestly say "we count not ourselves to have
attained", but there is a steady purpose in
America to press forward until the practices
of our governmental administration are as high
as the purpose and standards of our people.
We know that bad management may spoil good
purposes, and that without good management
democracy itself cannot achieve its highest
goals.
L
 I. THE WHITE HOUSE STAFF
•
In this broad program of administrative re-
organization the White House itself is involVed.
The President needs help. His immediate staff
assistance is entirely inadequate. He should
be given a small number of executive assistants
who would be his direct aides in dealing with
the managerial agencies and administrative de-
partments of the Government. These assist-
ants, probably not exceeding six in number,....-
would be in addition to his present secretaries,
who deal with the public, with the Congress,
and with the press and the radio. These aides
would have no power to make decisions or issue
instructions in their own right. They would
not be interposed between the President and
the heads of his departments. They would not
be assistant presidents in any sense. Their
function would be, when any matter was pre-
sented to the President for action affecting any
part of the administrative work of the Govern-
ment, to assist him in obtaining quickly and/
without delay all pertinent information possessed I
by any of the executive departments so as to
guide him in making his responsible decisions; ,
and then when decisions have been made, to
assist him in seeing to it that every adminis-
trative department and agency affected is
promptly informed. Their effectiveness in
assisting the President will, we think, be directly
proportional to their ability to discharge their
functions with restraint. They would remain
in the background, issue no orders, make no
decisions, emit no public statements. Men
for these positions should be carefully chosen
by the President from within and without the
Government. They should be men in whom
the President has personal confidence and whose
character and attitude is such that they would
not attempt to exercise power on their own ac-
count. They should be possessed of high com-
petence, great physical vigor, and a passion for
anonymity. They should be installed in the
White House itself, directly accessible to the
President. In the selection of these aides the
President should be free to call on departments
from time to time for the assignment of persons
who, after a tour of duty as his aides, might be
restored to their old positions.
This recommendation arises from the grow-
ing complexity and magnitude of the work of
the President's office. Special assistance is
needed to insure that all matters coming to the
attention of the President have been examined
from the over-all managerial point of view, as
well as from all standpoints that would bear on
policy and operation. It also would facilitate
the flow upward to the President of information
upon which he is to base his decisions and the
flow downward from the President of the deci-
sions once taken for execution by the depart-
ment or departments affected. Thus such a
staff would not only aid the President but would
also be of great assistance to the several execu-
tive departments and to the managerial agencies
in simplfying executive contacts, clearance, and
guidance.
The President should also have at his com-
mand a contingent fund to enable him to bring
in from time to time particular persons possessed
of particular competency for a particular pur-
pose and whose services he might usefully
employ for short periods of time.
The President in his regular office staff should
be given a greater number of positions so that
he will not be compelled, as he has been com-
pelled in the past, to use for his own necessary
work persons carried on the pay rolls of other y
departments.
If the President be thus equipped he will have
but the ordinary assistance that any executive
of a large establishment is afforded as a matter
of course.
5
6 The Pre8ident'8 Oommittee
In addition to this assistance in his own office
the President must be given direct control over
and be charged with immediate responsibility
for the great managerial functions of the Gov-
ernment which affect all of the administrative
departments, as is outlined in the following
sections of this report. These functions are
personnel management, fiscal. and organiza-
tional management, and planning management.
Within these three groups may be compre-'
hended all of the essential elements of business
management.
The development of administrative manage-
ment in the Federal Government requires the
improvement of the administration of these
managerial activities, not only by the central
agencies in charge, but also by the departments
and bureaus. The central agencies need to be yo
strengthened and developed as managerial arms
of the Chief Executive, better equipped to per-
form their central responsibilities and to pro-
vide the necessary leadership in bringing about
improved practices throughout the Government.
The three managerial agencies, the Civil v
Service Administration, the Bureau of the
Budget, and the National Resources Board
should be a part and parcel of the Executive
Office. Thus the President would have re-
....porting to him directly the three managerial
institutions whose work and activities would
affect all of the administrative departments.
The budgets for the managerial agencies
~ should be submitted to the Congress by the
President as a part of the budget for the Ex-
ecutive Office. This would distinguish these
vagencies from the operating administrative
departments of the Government, which should
report to the President through the heads of
departments who collectively compose his
Cabinet. Such an arrangement would mate-
rially aid the President in his work of super-
vising the administrative agencies and would
enable the Congress and the people to hold
him to strict accountability for their conduct.
The following three sections deal with these
managerial functions, namely, personnel man-
agement, fiscal management, and planning
management, and contain recommendations for
their development.
-
i.i
 II. PERSONNEL MANAGEMENT
•
The merit system should be extended up-
ward, outward, and downward to include all
positions in the Executive Branch of the Gov-
ernment except those which are policy-deter-
mining in character. At the same time the
civil-service administration should be reorgan-
t ized into a central personnel agency under a
single head and a nonpartisan citizen board
appointed to serve as a watchdog of the merit
system.
Personnel administration lies at the very
core of administrative management. The effec-
tive conduct of the work of the Government
depends upon the men and women who serve
it. Improved plans for governmental organi-
zation and management are of little value
unless simultaneous recognition is given to the
need for attracting, retaining, and developing
human capacity in the public service.
A. EXTENSION OF THE MERIT SYSTEM
Democratic government today, with its
greatly increased activities and responsibilities,
requires personnel of the highest order-compe-
tent, highly trained, loyal, skilled in their.
duties by reason of long experience, and assured
of continuity and freedom from the disrupting
influences of personal or political patronage.
To meet this requirement the merit principle
should be extended to all except the highest
governmental positions. To this course both
of the great political parties are pledged.
The merit system should be extended in three
ways:
Upward to include all permanent positions in
the Government service except a very small
number of a high executive and policy-forming
character;
Outward to include permanent or continuing
positions not now under civil service, whether
After more than 50 years of experience with
civil service in Federal, State, and local govern-
ments, there is overwhelming evidence to show
that the original theory of merely protecting
appointments from political influence through
a legalistic system of civil-service administra-
tion is inadequate to serve democratic govern-
ment under modern conditions. There is still
need for protection, but the urgent new need
today is for the development of a real career
service through positive, constructive, modern
personnel administration. The functions that
the Federal Government has been called upon
to perform are increasingly numerous, technical,
and difficult. It is today the world's largest and
most intricate administrative establishment.
A thoroughgoing modernization and exten-
sion of personnel administration is required.
The great need of American democratic institu-
tions is an able civil service.
located in new or emergency agencies or in the
older departments; and
Downward to include skilled workmen and
laborers in the regular Government service.
This task, however, is by no means simple
and must not be attempted with undue haste.
To bring within the classified service large
groups of employees engaged in activities that
are clearly temporary would be unwise. Care
must be taken that in the process of extending
the merit system, personnel standards are not
lowered and that, at the same time, fair treat-
ment is accorded to those who have demon-
strated their ability in Government service.
The United States Government is the largest
single employer of personneL With the rapid
growth of the country and the constant increase
in the services rendered to its citizens by the
Government, the number of Federal employees
7
 8 The President's Oommittee
has steadily increased. This trend has been
equally true of governments throughout the
world.
During the depression the number of Federal
employees markedly increased because of the
requirements of the new and emergency activi-
ties undertaken by the Government. Most of
these new employees were recruited outside of
the civil-service system. From June 30, 1932,
to June 30, 1936, the civilian employees of the
Executive Branch increased from 578,231 to
824,259. The number of employees in the
classified service increased from 467,161 to
498,725, whereas the unclassified employees
increased from 111,070 to 325,534.
The Civil Service Commission was not given
either the authority or the necessary funds and
staff to enable it to meet the requirements of
Government agencies in recruiting quickly the
large number of employees required in the
emergency period. Now we are coming to the
end of the emergency period. Some under-
takings will be liquidated and continuing func-
tions will be placed in the regular structure of
the Government. As these steps are taken
the classified civil service should be extended
to the continuing activities.
In a democracy it is essential that the very
highest posts be filled by the Chief Executive
with persons who support his program and
policies, and in whom he has entire confidence.
Only in this way is it possible to exercise demo-
cratic control over the permanent civil service,
to avoid the dangers of bureaucracy, and to
translate the mandate of the people at the polls
into responsible governmental policies. There
must always be a sufficient number of high
policy-determining posts at the disposal of a
newly elected President to enable him and his
administration to control the service. The posi-
tions which are actually policy-determining,
however, are relatively few in number. They
consist, in the main, of the heads of exec.utive
departments, under secretaries and assistant
secretaries, the members of the regulatory com-
missions, the heads of a few of the large bureaus '
engaged in activities with important policy
implications, the chief diplomatic posts, and a
limited number of other key positions.
However, the great majority of the highest
positions in the Federal service are not policy-
\J
determining in character but still remain out-
side the merit system. Most of them would
benefit if filled by persons having long and con-
tinuous service in the Government. Many
require the utmost loyalty and probity because
of their large responsibilities. They cannot be
satisfactorily filled by appointment from private
life every time the Administration changes.
The extension of the civil service upward to
these higher administrative posts is It necessary
and important step in the development of a
career service which will attract and retain
persons of high competence in the Government.
Many promising employees leave the service
because of its promotional limitations or remain
at a heavy sacrifice. An increase in the number
of higher posts included in the civil service will
lift its entire morale and will give an incentive
for the recruitment of the best talent in the
lower ,positions. .
Incumbents in positions affected by the ex-
tension of the merit system should not be
blanketed into the classified civil service without
a review of their qualifications. Such action
would violate the basic principle of the merit
system and would weaken and discredit the
civil service. On the other hand, to require
these employees to obtain civil-service status
through open, competitive examinations might
result in loss of the services of many individuals
who have developed in their work experience
and competence of distinct value to the Gov-
ernment. A solution at once satisfactory to the
Government and fair to the incumbents would
be to permit them to obtain classified civil-
service status by passing noncompetitive tests
of fitness prescribeq by the head of the central
personnel agency. In every case the head of
the responsible department should certify that
the employee has served with merit.
The continued requirement that the personal
attention of the President be given to the
filling of numerous position.8 adds to the burden
of the Chief Executive and does not advance
in any way the efficiency of the service. Of
the 40,000 positions in the Executive Branch
subject to direct appointment by the President
there are about 25,000 which are of a military
or foreign service type having merit systems of
their own and excluded from consideration here.
The remaining 15,000 civilian positions are
mostly in the field and are subordinate in
importance to appointments long made by
department heads. They include almost 14,000
postmasters and 400 other field 'positions, such
as United States marshals, collectors of internal
revenue, and customs collectors.
The multiplicity of Presidential appointments
defeats the power of the Chief Executive to
L'
,
On Administrative Management
control his establishment. Instead of increas-
ing his control over personnel, it operates to
weaken and dissipate his authority. It places
him in a position of direct responsibility for
many appointments which he has little time to
consider and robs him of time urgently needed
for attention to important executive duties. It
interferes with the authority that should be
vested in the heads of the several departments
for the proper discharge of their responsibilities.
It is difficult for them to maintain appropriate
relationships, discipline, and morale when their
subordinates feel that they have direct and
immediate responsibility to the President who
appointed them. Conflicts of interest and juris-
diction within departments frequently result.
From every point of view, therefore, direct
appointments by the President should be re-
duced to a very small number of only the
highest positions. The continued appointment
by the President of field officials, such as post-
masters, United States marshals, collectors of
internal revenue, and collectors of customs is
not only antiquated, but prejudicial to good
administration. Furthermore, fixed statutory
terms of appointment now required for these
positions are an obsolete practice and should
be abolished.
Recommendations
In order to extend the merit system we recom-
mend that:
B. REORGANIZATION AND IMPROVEMENT OF PERSONNEL ADMINISTRATION
The extension of the merit system in the Fed-
eral Government requires the reorganization of
the Civil Service Commission as a central per-
sonnel agency. The Civil Service Commission
was established over 50 years ago to meet con-
ditions quite different from those of today. The
number of Government employees was small
and personnel requirements were relatively sim-
ple. Set up as an agency to protect the Federal
executive establishment against the evils of po-
litical patronage, it has made many notable ad-
vances. The Civil Service Commission and its
staff have devoted themselves assiduously to
the public business and have endeavored con-
scientiously to observe the statutes and orders
that have been laid down for their guidance.
The Commission has achieved its greatest suc-
cess in the administration of open competitive
examinations for positions in the lower grades
9
1. The merit system should be extended to
positions in new and emergency agencies
whose activities are to continue, and the
President should be authorized to place such
positions, including those in governmental
corporations, in the classified civil service.
2. The merit system should be extended to
permanent high posts and all other civilian
positions in the regular departments and
establishments. Exceptions should be made
only in the case of such of the highest posi-
tions as the President may find to be princi-
pally policy-determining in character.
3. The merit system should be extended to
the lowest positions in the regular establish-
ments including those filled by skilled work-
men and laborers.
4. The incumbent of any position which is
placed within the classified civil service should
receive civil-service status only after passing
a special noncompetitive examination, follow-
ing certification by the head of his agency
that he has served with merit.
5. All civilian positions in regular depart-
ments and establishments now filled by Presi-
dential appointment should be filled by the
heads of such departments or establishments,
without fixed term, except under secretaries
and officers who report directly to the Presi-
dent or whose appointment by the President
is required by the Constitution.
of the service. It has pioneered in personnel
research and efficiency ratings. Its new series
of general-purpose examinations for recent col-
lege graduates to fill positions at the bottom of
the career ladder was a marked step forward
and has resulted in improved recruitment for
positions requiring general ability and capacity
for development.
Nevertheless, the existing civil-service system v
is poorly adapted to meet the larger responsi-
bilities of serving as a central personnel agency
for a vast and complicated governmental admin-
istration in which there are over 800,000 civilian
employees. Its organization is unsuited to the
present needs. The Civil Service Commission
has not been appropriately staffed to do the con-
structive work which modern personnel manage-
ment presupposes. The absence of an adequate
staff has imposed upon the Commission a nega-
 10
tive, protective, and legalistic role, whereas the
need today is for a positive, constructive, and
active central personnel agency.
v The board form of organization is unsuited
to the work of a central personnel agency.
This form of organization, as stated elsewhere
in this report, has everywhere been found ~,
cumbersomeL- wasteful, and ineffective in the
~ond;~t~f adrciDfSt~~ti;e -duties. Board mem-
bers are customarily laymen not professionally
trained or experienced in the activities for which
they are responsible. They remain in office for
relatively short periods and rarely acquire the
degree of expertness necessary to executive
direction. The board form of organization also
has a serious internal weakness. Conflicts and
jealousies frequently develop within a board
and extend downward throughout the organiza-
tion, causing cliques and internal dissensions
disrupting to morale and to work. Board
administration tends to diffuse responsibility,
to produce delays, and to make effective coop-
eration or vigorous leadership impossible. The
history of the Civil Service Commission has
been no exception to this general rule.
Federal personnel management, therefore,
needs fundamental revision. The Civil Service
Commission should be reorganized into a
\....- Civil Service Administration, with a single
executive officer, to be known as the Civil
Service Administrator, and a nonsalaried Civil
Service Board of seven members appointed by
the President. This Board would be charged
not with administrative duties but with the
protection and development of the merit system
in the Government. The functions of the
Administrator and the Board are outlined below.
The adoption of the plan of a single-headed
executive for the central personnel agency
would give it a degree of unity, energy, and
responsibility impossible to obtain in an ad-
ministrative agency headed by a full-time board
of several members. The Administrator should
be selected on a competitive, nonpartisan basis
by a special examining board designated by the
Civil Service Board and should be appointed
by the President, with the advice and consent
of the Senate, from the three highest candi-
dates passing the examination conducted to
fill the post. In this manner careful attention
would be given to the professional and teclmical
qualifications required by the office and the
merit principle would be extended to the very
top of the Civil Service Administration. The
President should be able to remove the head
The President's Committee
of this managerial agency at any time but
would be required to appoint his successor in
the manner stated above.
The Civil Service Administrator would take
over the functions and activities of the present
Civil Service Commission. In addition, he
. . . - would act as the direct adviser to the President
upon all personnel matters and would be re-
sponsible to the President for the development
of improved personnel policies and practices
throughout the service. From time to time he
would propose to the President needed amend-
ments to the civil-service rules and regulations.
He would suggest to the President recommenda-
tions for civil-service legislation and would
assume initiative and leadership in personnel
management.
It would be a special responsibility of the
Civil Service Administrator to stimulate and
aid the departments and bureaus in the estab-
lishment and development of able personnel
staffs. Personnel management at the depart-
mental and bureau level is exceedingly impor-
tant. The administrative and professional staffs
of the central personnel agency and of the per-
sonnel offices of operating establishments should
be regarded collectively as a unified career
service of personnel administration.
The Administrator should strengthen and
vitalize the present Council of Personnel Admin-
istration as a professional advisory group within
the Government. He should act as chairman
of the council and should develop it as a special
instrument for the formulation of constructive
personnel policies and standards.
The Administrator should give particular at-
tention to a number of important aspects of
personnel administration which are now inade-
quately performed. These include training1-
within the service, the facilities for transfer as
a means of utilizing more completely the per-
sonnel resources of the Government, the
development of executives, the promotion
system, examinations for higher positions, and
cooperation with the personnel agencies of
State and local governments.
Personnel management is an essential ele-
ment of executive management. To set it
apart or to organize it in a manner unsuited
to serve the needs of the Chief Executive and
the executive establishments is to render it
impotent and ineffective. It may be said tha~
a central personnel managerial agency directly
under the President, with the primary duty of
serving rather than of policing the departments,
l
 On Administrative Management
would be subject to political manipulation and
would afford less protection against political
spoils than a Civil Service Commission some-../'
what detached from the Administration. This
criticism does not take into account the fact
that the Civil Service Commission today is
directly responsible to the President; its mem-
bers are appointed by him and serve at his
pleasure; they are not independent of the
President ~nd coufd not be made so under the
Constitution. The reorganization of the Civil
Service Commission as a central personnel
managerial agency of the President would
greatly advance the merit principle in the
Government and would lead to the extension of
civil service.
The valuable services that can be performed
and the contributions that can be made by a
lay board representing the public interest in the
merit system should not be sacrificed, even
though responsibility for actual administration
is vested in a single Administrator. The plac-
ing of large powers of administration in one
official makes it essential to preserve the values /'
of vigilance and criticism that, in a large
measure, have been afforded by the rotation
in office of lay civil-service commissioners who
have hitherto supervised the staff work.
A fundamental flaw in the present organiza-
tion of the Commission would be removed by
the establishment of an Administrator and a
Board. The Commission is now obliged both)
to administer and to appraise and criticize its
own administration. These functions are basic-
ally incompatible. An effective appraisal, crit-
ical and constructive, must be entirely detached
from execution.
The usefulness of a lay Board is not confined
to its function as a watchdog of the merit
system. From the more constructive angle of
supporting progressive programs in the Federal
personnel administration, a Board of lay ad-
visers properly chosen can be a continualleaven\
It can serve to focus the spotlight of public:
opinion on the human side of government. It
can enlist the interest and cooperation of busi-
ness, agriculture, labor, education, and the pro-
fessions in improving the Government service
as a career. It can stimulate the initiation of
progressive personnel programs and serve as a
critic which will protect the service from the
dangers of bureaucracy, spoils, and deadly
routine. It can advise the President and the
Congress on weaknesses in personnel adminis-
tration, policies, and practices.
11
In order to achieve its utmost usefulness,
such a Board must be entirely divorced from
partisan influences and from administrative or
operating functions of any kind; it should be
nonpartisan instead of bipartisan. Its members
should be drawn in, from time to time, from
active participation in various fields of en-
deavor so that they do not become too closely
attached to the Government establishment or
too closely identified with any Administration.
Recommendations
In order to effect the reorganization of the
civil service administration of the United States,
we recommend that:
1. A United States Civil Service Adminis-
tration should be established to serve as the
central personnel agency of the Federal
Government. The officers of the Adminis-
tration should consist of a single executive
officer to be known as the Civil Service
Administrator and a nonsalaried Civil Service
Board of seven members, with the powers
and duties outlined below.
2. The Administrator should be highly
competent, should possess a broad knowledge
of personnel administration, and should be
a qualified and experienced executive. He
should be appointed by the President, with
the advice and consent of the Senate, on the
basis of an open competitive examination
conducted by a special board of examiners
appointed by the Civil Service Board. He
should be responsible to and hold office at
the pleasure of the President.
3. The duties, powers, functions, and au-
thority now vested in the Civil Service Com-
mission should be transferred to the Adminis-
trator. Authority should be given to the
Administrator to' develop and perform the
additional functions which should be per-
formed by an adequate central personnel
agency. He should be authorized to partici-
pate in employee training programs; to make, .
or to cooperate with other groups in making,
studies or investigations of personnel policies,
practices, procedures, and methods in other
governmental jurisdictions and in industry;
and to cooperate with State and local per-
sonnel agencies and with independen t agencies
and corporations of the Federal Government.
The Civil Service Administration should be
authorized to render services to outside gov-
ernmental units under suitable provision for
12
reimbursement for the actual cost of such
servIces.
4. The Civil Service Board should consist
of seven members, appointed by the Presi-
dent, with the advice and consent of the
Senate, for overlapping terms of 7 years.
This Board should be composed of outstand-
ing men and women drawn from private
business, education, labor, agriculture, pub-
lic administration, and professional life.
No person should be eligible for membership
if at any time within 5 years preceding the
date of his appointment he has been a
member or officer of any .local, State, or
national political party committee or has
held, or been a candidate for, any elective
public office. Members of the Board should
receive no salaries, but they should be reim-
bursed for their actual time and expenses,
plus the cost of transportation.
5. The Board should meet not less than
four times a year upon call by the President,
the chairman of the Board, or any four mem-
bers of the Board. It should have authority
and funds to employ temporary personnel for
special investigations in addition to secre-
tarial, clerical, and other necessary services
provided by assignment from the staff of
the Administrator.
6. The functions of the Civil Service Board
should be:
a. To act as watchdog of the merit
system and to represent the public interest
in the improvement of personnel adminis-
tration in the Federal service.
b. To appoint a special board of qualified
examiners whenever there is a vacancy in
the office of the Civil Service Administrator
in order to conduct a new open competitive
examination for the office, and to certify
C. COMPENSATION AND CLASSIFICATION
Salaries in high governmental positions are
of great importance in a democracy. The
United States Government offers rates of pay
to its responsible political officers of Cabinet and
sub-Cabinet grade which are penurious by any
realistic standard of comparison. They are
palpably absurd when viewed in the light of the
responsibilities that most of the higher positions
entail, the insecurity of tenure necessarily asso-
ciated with a political post, and the strain of
public service on conscientious incumbents.
The President's Committee
to the President the names of the three
highest candidates.
c. To advise the President as to plans
and procedures for dealing with Federal
employment questions which cannot be
handled satisfactorily through established
channels.
d. To propose to the President or to the
Administrator amendments to the rules for
the administration of the Federal civil
service and to review and comment upon
amendments proposed by the Adminis-
trator.
e. To make annual and special reports to
the President and the Congress on the
quality and status of the personnel admin-
istration of the Federal Government and to
make recommendations on possible im-
provements in the laws or the administra-
tion of matters affecting Federal personnel.
In this connection, the Board should have
powers to undertake special in-vestigations.
f. To act in an advisory capacity upon
the request of the President or the Admin-
istrator on matters concerning personnel
administration.
g. To study and report from time to
time upon the relations of the Federal Civil
Service to the merit system in State and
local jurisdictions, particularly with refer-
ence to State and local activities in which
there is Federal participation through
grants-in-aid.
h. To advise and assist the Adminis-
trator in fostering the interest of institu-
tions of learning, civic and professional
organizations, and labor and employee
organizations in the improvement of per-
sonnel standards in the Federal service.
They are required to sever their business rela-
tions, transfer their homes to Washington, and
devote their full time to their day-to-day ad-
ministrative duties. Officials of Cabinet rank-
the heads of our great departments and the
President's inImediate advisers-receive $15,000
per annum; under secretaries receive $10,000;
assistant secretaries, $8,000 to $9,000. Heads
of independent establishments in the fields of
lending, relief, and public works, where billions
of dollars are handled and all the intricate
L
 On Administrative Management
welfare, political, and business problems of
modern life are encountered, receive not over
$10,000. "Wanted, a $25,000 man for $10,000
a year" was the recent statement of the Secre-
tary of the Treasury in describing the difficul-
ties of finding a qualified Under Secretary.
The salary for this responsible position is less
than many relatively small banks pay their
vice presidents. It is small wonder, then, that
except in time of war or other emergency, when
men are fired by a zeal for public service, the
wealthy must be asked to fill most of the
responsible political positions.
The career service is hampered by even less
adequate levels of compensation. Under the
Classification Act of 1923 salaries for heads of
the largest bureaus range from $8,000 to $9,000.
In a few exceptional cases the salary is fixed by
law at $10,000, but this is the ceiling to which
career men may aspire. Heads of other major
bureaus receive $6,500 to $7,500, and so on
down the line.
Salary limitations of this kind in the higher
grades must be lifted or they will defeat the
development of a career service. The most
promising and gifted people often do not apply
for competitive entrance into the service be-
cause the top salaries are too low. At this
moment some of the ablest men are leaving the
service, as opportunities open up outside the
Government, because of the limitations of
compensation at the top. Government em-
ployees should be relieved of financial anxiety
and temptation. They should not be given
salaries for responsible work so low that they
are tempted to cater to special interests which
hold out hopes of remunerative private em-
ployment. Though prestige and recognition
are and should be marked incentives to those in
the public service, there must also be an
adequate salary as a foundation and tangible
mark of public respect.
Low compensation has a further bad effect on
the service: It encourages the appointment of
persons not really qualified, because the concept
of the work itself is adversely influenced by the
low salary scale.
The Federal service in its higher posts now
offers considerably less lucrative rewards than
other vocations of comparable responsibility.
Many of the larger States and cities pay more
to their governors, mayors and city managers,
and department heads. The large labor unions
and cooperatives pay more for their chief
13
executives. Heads of colleges, universities,
and private welfare organizations receive more.
Research jobs in industry and private institutes
compensate better by far than do the outstand-
ing technical assignments in the Government.
The professions of engineering and medicine
offer the chance for higher remuneration for
top men. It is common for a Government
attorney receiving a modest salary of only a
few thousand dollars a year to be pitted in
litigation or negotiation involving large sums
against private counsel receiving retaining fees
running into the tens of thousands of dollars for
each case. In comparison with salaries paid by
financial and business organizations, Federal
rates are obviously utterly inadequate.
The Personnel Classification Board in its
wage and personnel survey made in 1931 re-
ported that the Government pay scale for per-
sons in the professional and scientific services
above the $3,800 level is lower than the average
paid for similar non-Government positions, and
that the discrepancy becomes greater as the
importance of the work increases. In positions
in the clerical, administrative, and fiscal serv-
ices, Government salaries are less liberal for
those above the $2,000 level. It is particularly
noteworthy that the Board found that the sal-
aries paid by private concerns to their major
executives exceeded those paid by the Federal
Government to positions of similar responsi-
bility anywhere from 100 to 500 percent.
No greater step for real governmental econ-
omy could be taken than to increase salaries in
the higher administrative and professional
grades. The Government would thereby be
enabled to maintain higher standards in these
posts and to retain its ablest employees. Every
time an able official resigns, the Government
loses costly training and experience. Business
and industry have been keenly aware of the
high cost of turnover, particularly in executive
positions. Government has been inclined to
confuse parsimony with economy and to dis-
regard the high cost of losing the most able.
The cost of the failure to attract the highest
grade of talent to Government service cannot be
estimated, but the expense of developing new
people and paying for their training and errors
must be a very large item. The cost of raising
salary scales in the higher grades would amount
to only a fract.ion of 1 percent of the annual
personnel budget. Within a short time it
would pay large dividends by improving the
14
morale of the entire service, raising the standing
of the service in public estimation, and build-
ing another incentive for a career in the public
servIce.
Salaries for the higher administrative and
professional positions must therefore be in-
creased if the Federal Government is to attract
and retain the services of men and women of
outstanding ability. Such individuals give
direction and tone to the entire service, the
effectiveness of which depends upon their
capacities and understanding. In order to
meet the needs of the service with respect to
the salaries of regular career workers, the
highest grades of the Classification Act should
be amended. This will permit the careful,
orderly, and scientific upward readjustment of
salaries in accordance with the classification
standards thus set by the Congress.
The provisions of the Classification Act
should also be extended to positions now ex-
empted in the field service of the Federal
Government as well as in the departmental
services and in some governmental corporations.
Such action would result in more careful
budgeting of funds for personnel services in
the field, the uniform application of definite
salary standards, the improvement and expedi-
tion of services rendered by the central per-
sonnel agency, and the obtaining of detailed
information about field positions which is not
now available.
Adequate administrative flexibility must be
permitted, however, if classification provisions
are to be successfully extended and applied to
field positions. Thousands of positions in the
field services do not properly fall within the
definitions of any of the five services defined in
the Classification Act. Some modifications are
necessary to satisfy field requirements. Such
needed administrative flexibility can be realized
if the President is authorized, after appropriate
study and recommendation by the Civil Service
Administrator, to extend the general provisions
of classification and to establish suitable classi-
The President's Oommittee
fication services, grades, and compensation
schedules.
Recommendations
In order to make needed improvements in the
salary policy of the Government, we recommend
that:
1. The annual salaries of heads of executive
departments, under secretaries, and assistant
secretaries should be fixed by law at $20,000,
$15,000, and $12,000, respectively. Salaries
of heads of independent establishments and
of members of regulatory commissions should
be fixed by the President at amounts not to
exceed the maximum rate of the appropriate
classification grades in which their respective
positions are placed.
2. Compensation in the highest grades of
the career service should be increased by
appropriate amendment of the Classification
. Act; permanent officials in the highest civil-
service positions, who are charged with the
continuous conduct of the Government's
work and who have no opportunities to
enjoy the honor and prestige of Cabinet and
sub-Cabinet posts, should receive annual sal-
aries ranging from $12,000 to $15,000.
Career officials in the next lower grade should
receive annual salaries ranging from $8,000
to $10,000.
3. The Classification Act should be ex-
tended. to the field service and to exempted
positions in the departmental service and in
some of the governmental corporations. The
President should be authorized to define
suitable services and grades when positions
cannot be fairly and reasonably allocated to
existing services in the Classification Act and
to prescribe schedules of standardized com-
pensation which shall not exceed rates fixed
therein for positions of similar responsibility.
At the same time governmental corporations
and temporary agencies, whether or not they
are subject to civil-service rules, should be
required to apply the merit principle of ap-
pointment and promotion to their personnel.
l
 III. FISCAL MANAGEMENT
•
Sound fiscal management is a prime requisite
of good administration. The responsibility of
the Executive for the preparation of a fiscal
program in the form of a budget for submission
to the Congress and for the direction and control
of expenditures under the appropriation acts
must be carried on faithfully, effectively, and
under clear-cut authority. To establish strict
accountability of the Executive Branch for the
faithful execution of the laws enacted by the
Congress, there must be an independent audit
of financial transactions by an independent
officer reporting directly to the Congress and
who does not exercise any executive authority.
From the standpoint of over-all control the
system of fiscal management of the Govern-
ment now has four major defects, namely, (1)
the inadequate staffing of the Bureau of the
Budget; (2) the vesting in the Office of the
Comptroller General, which yot responsible
to the President, of the settlement of claims,
the final determination concerning the uses of
appropriations, and the prescribing of adminis-
trative accounting systems; (3) the absence of a
truly independent and prompt audit of the
financial tiansactio~s of the Government,
whereby the Congress may hold the Executive
Branch strictly accountable; and (4) the failure
to devise and install a modern system of ac-
counts and records.
Our recommendations for improvement of
the fiscal administration of the Government are
designed to correct these major faults, to return
executive functions to the Executive Branch,
and to make it accountable to the Congress.
Before taking up these recommendations in
detail, we may review briefly the division of
authority and responsibility between the Con-
gress and the Executive Branch for the deter-
mination and execution of fiscal policies. The
general theory underlying the Constitution is
that the Congress shall be responsible for the
determination and approval of the fiscal policies -'
of the Nation and that the Executive shall be
responsible for their faithful execution. The
right of the legislative body to control the purse
was a well-established principle prior to the
American Revolution and was incorporated in
the Constitution. The Congress, as represen-
tative of the people, enacts the laws; the duty
of executing them is placed by the Constitution
upon the President.
This division of authority under our consti-
tutional system was well stated by President
Wilson in a message to the Congress on May 13,
1920.
The Congress and the Executive should function
within their respective spheres. Otherwise efficient
and responsible management will be impossible and
progress impeded by wasteful forces of disorganization
and obstruction. The Congress has the power and
the right to grant or deny an appropriation, or to
enact or refuse to enact a law; but once an appropria-
tion is made or a law is passed, the appropriation
should be administered or the law executed by the
executive branch of the Government. In no other
way can the Government be efficiently managed and
responsibility definitely fixed.
The Congress enacts the necessary revenue
laws, authorizes activities which require the
expenditure of public funds, and makes the
appropriations. But the trust residing in the
Congress does not end with the enactment of
appropriation measures; its responsibility re-
quires also that it possess suitable means with
which to hold the Executive accountable for
the faithful and effective execution of revenue
and appropriation laws. Likewise the respon-
sibility of the Executive Branch can be estab-
lished only if it is given undivided executive
powers. If the Chief Executive is to fulfill the
responsibility of his office under the Constitu-
tion, he must possess undivided executive
powers and adequate means with which to
exercise them.
15

16
A. BUDGETING AND ADMINISTRATIVE CONTROL
The creation in 1921 of the Bureau of the
Budget was a major step in the direction of
effective administrative management in the
Federal Government. It placed upon the
President responsibility for the preparation of a
comprehensive annual budget and recognized
the need for executive discretion and leadership
in preparing and submitting to the Congress a
program of revenue and expenditure. At the
same time it provided the President with one
of the primary instruments needed for effective
over-all management of the executive establish-
ment. The Director at the head of the Bureau
is appointed by the President and, though
within the Department of the Treasury, reports
directly to the President. Through him the
President can review and control the effective-
ness of governmental agencies.
Purpose of the
Budget System
It is the purpose of the budget system to
provide in financial terms for planning, informa-
tion, and control. Through the budget the
spending agencies are required to translate their
work programs in advance into fiscal terms,
so that each activity may be brought into
balance and proportion with all other activities,
and with the revenues and resources of the
Government, and in harmony with long-range
and general economic policies. The budget not
only serves as the basis of information for the
Congress and the public with regard to the past
work and future plans of the Administration,
but also as the means of control of the general
policy of the Government by the Legislative
Branch and of the details of administration by
the Executive. The Bureau of the Budget was
therefore set up as the right arm of the President
for the central fiscal management of the vast
administrative machine and to enable him to
submit regularly to the Congress a complete
report on past activities and a future program
for advance approval by the Legislative Branch.
In addition to its duties in the preparation
of the annual budget, the Bureau of the Budget
was given administrative research functions of
outstanding importance. It was charged with
the responsibility of making a continuous study
of the organization, operation, and efficiency
of the Executive Branch of the Government.
Through its control over budgeting the Bureau
is in a key position to detect weaknesses in the
r
The President's Oommittee !
/ organization and functioning of the various
. departments and agencies and is the appropri-
ate agency continuously to investigate admin-
istrative problems and to make recommenda-
tions to the President and the departments in
the interest of economy and efficiency.
Substantial progress has been achieved
through the Bureau of the Budget during its
15 years of operation. A spotlight has been
thrown on national fiscal problems. The
Executive has been placed in a better position
to plan and control the fiscal program, for
which he is held responsible in the public mind.
It has been possible to scrutinize departmental
needs in detail, and the departments have been
assisted in improving their budgetary practices.
The Congress has been presented not only with
a more intelligible picture of the Nation's
finances and financial problems but with a
clear comparison between estimates and actual
eJl.,})enditures for the particular governmental
activities. Substantial advances in improving
governmental operation and in coordinating
activities have been effected through the
agency of the Bureau. Its staff has aided the
President in the performance of many difficult
administrative duties. The technical phases of
budget making have been constantly improved
and refined.
At no time, however, has the Bureau of the
Budget achieved or even approximated its
maximum possible usefulness and effectiveness
as an instrument of administrative management.
Because of its small operating appropriation,
the Bureau has failed to develop an adeq:uate
staff of the highest attainable competence.
Such a staff is necessary if it is to cope with
the problems raised by a rapid growth in the
magnitude and complexity of governmental
organization and expenditures. It has not
perfected its own organization and methods as
a directing and controlling agency of the Presi- '
dent. Rather, the Bureau has emphasized the
task of preparing the Budget to the distinct
disadvantage of its important complementary
functions. It has only partially developed
supervision over the execution of the Budget
by the spending agencies.
The administrative research functions placed
upon the Bureau are practically undeveloped;
it is in this respect that the Bureau has missed
its greatest opportunity. The Budget and
Accounting Act of 1921 specifically authorized
 On Administrative Management
the Bureau to make detailed studies of the
administrative departments and establishments
for the purpose of advising the President
intelligently as to changes that should be made
in their organization and methods, in the group-
ing of services, and in the appropriations for
various activities. The Bureau of Efficiency
was abolished by an act of Congress, approved
March 3, 1933, mainly on the grounds that it
duplicated work that the law required the
Bureau of the Budget to do. Its records and
files were transferred to the Bureau of the
Budget, but adequate provisions for carrying on
its work are still to be made. Research in
administrative organization has been negligible.
Recommendations for reorganization have been
conspicuously absent.
StaHing of the
Bureau of the Budget
One obtains a vivid realization of the inade-
quate staff of the Bureau of the Budget from
the fact that its appropriation for the current
fiscal year (ending June 30, 1937) amounted to
only $187,000-0. sum considerably less than is
spent by a single finance and accounting divi-
sion of some of the great Government depart- /
ments, and less than 3 percent of the amount v
required to audit the expenditures. It has a
total personnel of only 45 and, aside from the
statutory positions of Director and Assistant
Director, has only two positions compensated
in excess of $6,000 per annum. Only $18,700
was provided for "research, surveys, and assist-
ance." Yet this small staff is charged with
preparing a budget of billions and with aiding
the President in the exercise of his vast re-
sponsibility for the over-all management of the
huge and intricate Federal administrative
machine.
If the Bureau of the Budget is to be devel-
oped into a serviceable tool for administrative
management to aid the President in the exer-
cise of over-all control, it needs greater resources
and better techniques. If continuing power is
given the President to transfer and consolidate
executi~re establishments, he will need adequate
information, based on analyses of the greatest
competence, as a guide to action. The Bureau
of the Budget is the logical staff agency for the
performance of this service. It should be
given appropriations and a staff commensurate
with the magnitude of the assignment. A
relatively small sum invested in strengthening
the Bureau of the Budget as a staff agency of
17
the President will yield enormous returns in
the increased efficiency of Government opera-
tion. It is with this in mind that recommenda-
tions regarding the Bureau of the Budget are
presented.
The Director of the Bureau of the Budget is
one of the few Government officers in a position
to advise the President from an over-all, as
opposed to a bureau or departmental, point
of view. He should therefore be relieved to the
greatest possible extent from the minor details
of administration. He should be released for
duties of maximum importance to the President
and freed" so that he may attend important
conferences of Cabinet officers and planning
groups, where programs are being considered
that may eventually result in appropriation
requests or in changes in governmental organi-
zation or procedure. In accordance with sug-
gestions made elsewhere in this report, the
salary of the Director should be increased. It
should be possible for the President to select a
Director from the career service, though he
should continue, of course, to have the right to
appoint a man of his own choosing.
The position of Assistant Director of the
Bureau of the Budget should be filled under
civil-service rules, preferably by promotion from
the career service. It should be a high perma-
nent post to which career men should be en-
couraged to aspire. Continuity in office is
important if the Assistant Director is to have
the necessary background from which to advise
a new Director concerning the techniques of
budget making and the intricacies of Govern-
ment machinery and if he is to be skilled in the
execution of policies and programs. Breadth of
experience, depth of knowledge, and broad
vision are needed in this office; these can be
obtained only through intensive training and
long experience in the Government itself. The
Assistant Director should maintain the ordi-
nary contacts with the administrative and
budget officers of the departments as well as
with the heads of other over-all management
agencies such as the civil-service establishment.
He should direct the activities of the several
divisions of the Bureau of the Budget and in
every possible way should assume responsibili-
ties that would leave the Director free to con-
cern himself with matters of major policy and
program.
If the Bureau of the Budget is to perform
effectively its functions of fiscal and over-all
management it must be staffed with an ade-
18
quate personnel. Division chiefs of high com-
petence should be appointed from the career
service. It should continue to have a career
man as administrative assistant to attend to
the institutional needs of the Bureau, such as
personnel, appropriations, organization, finan-
cial records, and general services. The Director
should have the authority to appoint a number
of special assistants from inside or outside the
service for special assignments and to retain
consultants from business and the professions
on a temporary basis for investigations or con-
ferences in technical fields. The right to transfer
or detail personnel from other Government
agencies is of particular importance to the
Bureau of the Budget and this should be
authorized. For long-term periods the Bureau
should reimburse the departments from which
the personnel are borrowed. In turn, the
Bureau should be permitted to accept reim-
bursement from Government agencies when it
undertakes studies of organization and pro-
cedure at their request.
Activities of the
Bureau: Estimates
The preparation and execution of the Budget
are essentially executive tasks. The Bureau of
the Budget as a managerial agency of the
President should therefore be made responsible
for the execution, as well as the formulation, of
the budget as a national fiscal plan. The task
of scrutinizing and passing upon departmental
estimates and of exercising some measure of
continuing direction over the execution of the
budget should be assigned to a special division
in the Bureau. The highly important task of
budgeting requires a staff of unusual compe-
tence, breadth of vision, keen insight into
governmental problems, and long acquaintance
with the work of the Government. Only a staff
having these qualifications can be of assistance
to the President, the Congress, and the depart-
ments in the preparation and consideration of a
budget. Well-considered and informed central
direction of bUdgeting is essential; arbitrary,
uninformed, and undiscriminating decisions
must be avoided.
The staff in charge of budget estimates must
keep in constant touch with the entire adminis-
trative machine for the purpose of developing
and executing both short-term and long-term
fiscal plans. Through this staff the President
may exercise effective control over the formula-
tion and execution of fiscal plans and policies
The President's "Committee
and may review carefully and wisely the de-
partmental estimates. In this manner fiscal
planning may assume its proper relationship to
the economic and social planning for which the
Nation holds the President responsible.
Administrative Research and
Other Managerial Activities
The President needs a research agency to
investigate the broad problems involved in the
administrative management of the Govern-
ment-problems of administrative organization,
finance, coordination, procedures and methods
of work, and the many technical aspects of
management. The function of investigation
and research into administrative problems
should be developed as an aid to over-all
executive management.
Economy and efficiency in government re-
quire constant investigation and reorganization
of the administrat.ive structure. It is a mistake
to assume that the Government can be reor-
ganized once for all. Continuous study of the
administrative organization of the huge Federal
machine is necessary; new activities are con-
stantly emerging and old activities are con-
stantly changing, increasing, decreasing, or
disappearing. Unless there is a special agency
equipped to investigate problems of organiza-
tion, new activities are set up without careful
attention to where they should be located and
what kind of organization is required. This
results in costly mistakes and confusion. On
the other hand, when the need for certain
governmental activities declines or disappears,
unless there is a special agency constantly
studying the organizational requirements, ad-
justments are made late or not at all.
A division of administrative research in the
Bureau of the Budget is the logical place to
develop these functions which were authorized
in the act of 1921. It should stimulate the
continuous study of organization, methods, and
procedures at the departmental or bureau level
by the departments and bureaus themselves.
It should engage in such studies on its own
initiative where necessary, but should follow
the policy of aiding and encouraging the de-
partments to study their own organizationaI
and procedural problems. It should endeavor
to develop principles of organization that have
general applicability and to act as a clearing
house and consultation center for administra-
tive research carried on in the departments. It
should not undertake studies in fields in which
l
 On Admini8trative jJfanagement
other agencies of the Government are more
competent or for which they are better
equipped. Above all, persons engaged in ad-
ministrative research should be freed from
detailed routine duties involved in handling
budget estimates.
The administrative research activities should
be concentrated in a separate division of the
Bureau of the Budget. It should be headed by
a permanent chief possessing in unusual degree
imagination, vision, creativeness, and analytical
insight, as well as intimate acquaintanceship
with both the practices of government and the
principles of public administration. The re-
search division must be staffed with persons of
unusually high competence. Important re-
search assignments upon administrative prob-
lems can be carried out successfully only by
highly trained and experienced persons familiar
with the organization and techniques of public
administration. Flexible staff arrangements
are necessary to permit the use of specialists
drawn from the Government and from business
for temporary periods.
A division of information should be estab-
lished to serve as a central clearing house for
/ the correlation and coordination of the adminis-
trative policies of the several departments in
the operation of their own informational serv-
ices, and to perform related duties. The
United States Information Service might well
be transferred to this division. It might also
develop into a service which would supervise
and foster regional associations of executive
officers of the Government and other activities
for coordination of the field services. The
Director of the Bureau has been authorized by
law to approve the use of printing and binding
appropriations for the periodicals and journals
published by Government agencies; the chief
of the division of information could assist him
in carrying out this duty.
The President has turned to the Bureau of
the, Budget for assistance in carrying out a num-
ber of important executive duties placed upon
him. By reason of its close contact with the
operating departments and with the President'
as a. managerial agency, the Bureau is better
able to perform these activities than are other
administrative units.
One of the most important of these activities
is the preparation, consideration, and clearance
of Executive orders. Executive orders have
been used since the early days of the Govern-
ment, and, with the great increase in size and
1;;;U55-37-3
19
complexity of the governmental machine, have
been utilized to an ever-increasing extent. They
are particularly necessary in periods of emer-
gency when there is rapid change in govern-
mental policies and organization. Executive
direction and control of national administration
would be impossible without the use of this
device. The activity of the Bureau of the
Budget as a clearing agency in the issuance and
amendment of Executive orders should be con-
tinued and strengthened by the development of
a more adequate and expert staff. It should
be equipped to aid the President in the con-
sideration of administrative problems and to v
draft the necessary Executive orders.
Wider use could be made of Executive orders
to establish uniform codes regulating manage-
ment throughout the Government. These codes
might well cover such matters as budgetary
and other financial practices and controls, per-
sonnel, supplies, coordination, and Qther matters
related to general organization and manage-
ment. Such regulations should be promulgated
after careful consideration by the departments.
They could be arranged in suitable codes and
would be of material assistance in guiding
administrative officers.
Departmental regulations governing internal
organization and management might also be
cleared with the Bureau of the Budget. The
purpose would not be formal approval or dis-
approval, but to give to the departments such
assistance as the experts of the Bureau might
be able to render and to enable the Bureau to '
inform the President upon any matters which
should be brought to his attention. This clear-
ance would result in the establishment of a
greater degree of uniformity in the depart-
mental management practices in matters in,
which uniformity is desirable. It would pro-
vide a desirable pooling of the experience of
the several departments in many management
activities. The Bureau of the Budget should
be equipped to assist the departments, at their
request, in preparing regulations relating to
their internal management.
Another important activity of the Bureau of
the Budget as a staff aid to the President is in
connection with proposed legislation arising
within the executive departments and estab-
lishments. In addition to his position as the
head of the Executive Branch, the President is
charged by the Constitution with important
legislative duties, including the duty to advise
the Congress "from time to time" of such

20
"Measures as he shall judge necessary and
eJ..,])edient." As Chief Executive he may re-
quire "the principal Officer in each of the execu-
tive Departments" to give him an "Opinion, in
writing, * * * upon any subject relating
to the Duties of their respective Offices."
Though the final authority for all legislative
acts rests with the Congress and the President,
it is the duty of the executive departments to
supply the Congress with information and advice
concerning the laws which they administer.
Inasmuch as a large part of all legislation is
concerned with the structure and functioning
of administrative departments and the creation
and modification of administrative powers, the
Congress is entitled, 'in the consideration of such
legislation, to have from the administrative de-
partments the benefit of their eJ..'])erience and
special knowledge. All legislation recommended
by the Executive Branch of the Government
should be carefully considered before presenta-
tion to the Congress. The administrative, fi-
nancial, legal, international, and other effects
and implications of all such proposals should be
thoroughly examined and the proposed legisla-
tion should be carefully draft~d. Conflicts and
differences between administrative departments
concerning proposed legislation, whether of ma-
jor policies or details, should, so far as possible,
be adjusted before such bills are presented to
the Congress. Though the ultimate decision in
all such conflicts rests with the Congress, its
work is hindered by differences between depart-
ments. These ordinarily should be adjusted
within the Executive Branch of the Govern-
ment in accordance with the constitutional con-
cept of a single, and not a plural, Executive.
During recent years the Bureau of the Budget
has functioned as an agency for the President
in the clearance of the fiscal aspects of legisla-
tive measures proposed by the executive depart-
ments. This clearance is of value to the Con-
gress and to the departments and is essential to
the exercise of the authority and responsibility
of the President. ] t should be applied to all
legislation proposed by the executive depart-
ments and agencies and should not be limited
to fiscal considerations. The Bureau of the
Budget could well take over the present duties
of the National Emergency Council in this
respect.
To aid the President in carrying out this re-
sponsibility the Bureau of the Budget should
develop a staff equipped to act as a clearance
agency on all aspects of proposed legislation
r
The- President's Oommittee
and to provide the departments with expert
and technical assistance. This would enable
the Administration to prepare more expertly
proposed legislative measures and to insure that
ill-considered measures are not submitted to the
Congress.
Recommendations
Our recommendations regarding budgeting
and administrative control may be briefly sum-
marized as follows:
1. The Director of the Bureau of the
Budget should be relieved from routine
duties and thus enabled to devote himself
to problems of fiscal policy and planning.
Provision should be made for an adequate
permanent staff of the highest competence,
implemented by special assistants on assign-
ment from the operating agencies and by
temporary consultants and specialists re-
cruited from business and industry for
special assignments.
2. The execution, as well as the prepara-
tion, of the budget should be supervised by
the Bureau of the Budget and should be
closely correlated with fiscal programs and
plans.
3. The administrative research function of
the Bureau of the Budget should be ade-
quately developed to aid the President in
his duties as head of the executive establish-
ment. The Bureau should carry on con-
structive studies in public administration for
the constant improvement of Government
organization and procedure and should also
stimulate continuous study of these prob-
lems by departments and bureaus.
4. The information function of the Bureau
of the Budget should be developed and im-
proved. The United States Information
Service should be transferred to it, as should
other appropriate activities in the coordina-
tion of the field services of the Government.
5. The Bureau of the Budget should serve
in various ways as an agency of the Presi-
dent. Improvement should be made in its
facilities for the clearance of Executive orders
and the establishment of uniform codes of
management in the Government. It should
assist the departments in their regulations
governing internal organization. It could
render important service to the President
and to the Congress in coordinating and
clearing legislative recommendations which
originate in the Executive Branch.
 On Administrative Management
B. DIRECTION AND CONTROL OF ACCOUNTING AND EXPENDITURES
A second important phase of fiscal manage-
ment is the direction and control of expendi-
tures through the system of accounting. The
present accounting system of the Government
is badly scattered and presents a rather incon-
gruous mixture of antique and modern prac-
tices. Essential parts of the system are now
found in the Treasury Department, divided
among three or four important Treasury units,
in the General Accounting Office, and in the
various operating bureaus, departments, and
establishments. At the same time, the warrant
procedure that dates back to Alexander Hamil-
ton's day pursues its plodding way alongside
the latest machine bookkeeping. Financial
reporting from the various accounts is far from
being systematized, is generally lacking in
telling information for administrative purposes,
and is often delayed beyond the point of any
practical value.
Although the Budget and Accounting Act of
1921 had as one of its main objects the improve-
ment of the Government's accounting system,
very little of real and lasting value has as yet
resulted. The Comptroller General was vested
with authority under this act to prescribe a
system of administrative appropriation and
fund accounting in the several departments
and establishments. Fifteen years have since
elapsed, and still no comprehensive and ade-
quate system of general accounts has been
developed by the Comptroller General's office.
The authority which the Comptroller General
has exercised over departmental accounting
procedures has, in many cases, improved the
accounts in the departments and establish-
ments. But these procedures have continually
stressed the bringing of accounting information
into the General Accounting Office, with little
consideration for the informational needs of the
Bureau of the Budget, of the Treasury Depart-
ment, and ultimately of the President. The
tendency, therefore, has been to deprive the
Executive of adequate accounting machinery,
or even authority to develop this important
instrument of financial direction. Because of
the lack of interest in administration little effort
has been made, for example, toward the
development of unit or cost accounts. It is
very doubtful if the Congress intended that the
accounting provision of the 1921 Act should
work in this way. Certainly it is inconsistent
with Executive responsibility and efficient
administration.
21
The time is ripe for a return to the basic
notion that served as the groundwork for the
original accounting system of the Government.
There should now be installed in the Treasury
Department a modern system of general ac-
counting and reporting that would produce
accurate information quickly and easily con-
cerning expenditure obligations, appropriation
and allotment balances, revenue estimates and
acc!uals, and actual collections, as well as cash
disbursements and receipts. Not only should the
accounting methods be standardized through-
out the governmental agencies, but there should
be a complete revamping of the accounting pro-
cedure which would enable the Treasury De-
partment to secure reliable information at a
moment's notice on the status of all revenues
and expenditures of the Government. There
is abundant evidence that these accounting
improvements are greatly needed and that they
can now be properly made.
Current Cont~ol
of Expenditures
Through the accounting system current con-
trol over expenditures is exercised. This func-
tion is often confused with the function of
audit. Current control involves final decisions
as to proposed expenditures and the availability
of funds. An audit is an examination and
verification of the accounts after transactions
are completed in order to discover and report
to the legislative body any unauthorized, illegal,
or irregular expenditures, any financial prac-
tices that are unsound, and whether the ad-
ministration has faithfully discharged its re-
sponsibility.
A true audit can be conducted only by other
officers than those charged with the making of
decisions upon expenditures. No public officer
should be authorized to audit his own accounts
or financial acts and decisions. The maximum
safeguard is provided when the auditor is
entirely independent of, the administration and
exercises no executive authority. The control
of expenditures is essentially an executive
function, whereas the audit of such expendi-
tures should be independent of executive au-
thority or direction.
Although the title of the Budget and Account-
ing Act indicates that the principal purpose was
to provide a budget system and "an independ-
ent audit of public accounts", the distinction
between "control" and "audit" was confused
 22
in the act. It placed certain control functions,
as well as the auditing function, ~ the Office of
f the Comptroller General, who was thus made
both a "comptroller" and an "auditor." This
has created an undesirable and anomalous situa-
tion: As an auditor the Comptroller General
properly performs his function without the
direction of any executive officer; but as a
comptroller, exercising the executive authority
to determine the uses ~of appropriations, to
settle accounts and claims, and to prescribe
administrative accounting systems-functions
which are universally recognized as executive
in character-he is improperly removed from
any executive direction and responsibility.
Furthermore, the Comptroller General, as a
comptroller, determines in advance the legality
v of expenditures and issues rules and regulations
which govern the administrative procedures
and practices of the executive establishments;
later, as an auditor, he reviews and audits the
action taken under his own previous decisions.
The more the Comptroller General exercises
control over expenditures through advance de-
cisions, approval of contracts, preaudits, and
otherwise, the less competent he becomes to
audit them. This system results in divided
authority and responsibility for the proper
expenditure of public funds and the accounting
therefor; it deprives the President of essential
power needed to discharge his major executive
responsibility. EquaUy. important, it deprives
the Congress of a really independent audit and
review of the fiscal affairs of the Government
by an official who has no voice in administra-
tive determinations, which audit is necessary
to hold the Administration accountable.
The removal from the Executive of the final
authority to determine the uses of appropria-
tions, conditions of employment, the letting of
contracts, and the control over administrative
decisions, as well as the prescribing of account-
ing procedures and the vesting of such authority
in an officer independent of direct responsibility
to the President for his acts, is clearly in viola-
tion of the constitutional principle of the divi-
sion of authority between the Legislative and
Executive Branches of the Government. It is
contrary to article II, section 3, of the Constitu-
tion, which provides that the President "shall
take Care that the Laws be faithfully executed."
In the recent case of Springer v. Philippine
Islands (277 U. S. 189), which involved an
attempt to vest executive powers in a legislative
body, the Supreme Court declared:
The President's Oommittee
Legislative power, as distinguished from executive
power, is the authority to make laws, but not to enforce
them or appoint the agents charged with the duty of
such enforcement. The latter are executive functions.
The settlement of accounts and the super-
vision of administrative accounting systems
are executive functions; under the Constitution
they belong to the Executive Branch of the
Government. The audit, by the same reason-
ing, should operate under legislative direction.
The Comptroller General today straddles both
positions.
Prior to the oooption of the Budget and Ac-
counting Act of 1921, accounts and claims were
settled by the auditors, all of whom were
Treasury officials, and the accounting pro-
cedures were prescribed by the Comptroller of
the Treasury. Strictly speaking, there was no
independent audit. When the Congress adopted
legislation providing for a National Budget
system in 1921, it also provided for an inde-
pendent auditing office. The hearings on the
act, as well as the language of the act itself,
indicate clearly that the purpose in creating an
independent auditing office was to enable the
Congress to secure adequate and full informa-
tion upon the fmances of the Government.
Members of the special committees of the House
and the Senate complained that the auditors
and the Comptroller of the Treasury, being a
part of the administration and subject to
removal, would not come before congressional
committees and criticize the existing financial
practices.
Major attention at that time was focused
upon the provisions of the act relating to the
creation of a National Budget; the far-renching
implications involved in placing the accounting
and controlling authority in an auditing officer
independent of the Executive were not clearly
realized. There was, however, no lack of warn-
ing on this point. During the hearings on the
act, in 1919, a number of outstanding witnesses
who advocated the creation of an independent
auditor stated that he should be charged with
the sole task of auditing expenditures after they
were made and reporting the results of the audit
to the Congress. These witnesses expressed
grave doubt as to the wisdom of giving to this
independent auditing officer the controlling
function as well, for this they regarded as
unquestionably executive in character. Among
those who called attention to tllls important
distinction were men like former Governor
Frank O. Lowden, of Illinois; Senator Carter
On Admini8trative Management
Glass (then Secretary of the Treasury); Presi-
dent Frank J. Goodnow, of the Johns Hopkins
University; President Nicholas Murray Butler,
of Columbia University; Mr. John T. Pratt,
President of the National Budget Committee; .
Mr. Henry L. Stimson, later Secretary of State;
and Dr. Frederick A. Cleveland.
At various times in the hearings, members
of both the House and the Senate committees
expressed their own doubts concerning the wis-
dom of granting controlling and accounting
authority to an independent auditor. But the
final act transferred to the Comptroller General
all the powers formerly exercised by the auditors
and by the Comptroller of the Treasury.
Results of Independent Control
The results of placing executive powers of
control in an independent auditing office may
be reviewed briefly. Before 1921, when the
head of a department questioned a ruling of the
Comptroller of the Treasury, or when the
President requested it, the ruling was referred
to the Attorney General for a legal opinion.
Since 1921 this practice has been discontinued.
An impasse has resulted. The first Comptroller
General of the United States consistently re-
fused to submit any disputed question to the
Attorney General or to modify any of his rulings
in conformance with the opinions of the
Attorney General. It is significant that the
Attorney General has been sustained repeatedly
when the issues were taken to courts of law.
Both the Attorney General and the Comp-
troller General are directed by the Congress to
render opinions or decisions interpreting the
meaning of congressional acts. Executive offi-
cers customarily turn to the Attorney General
when there is any question about the authority
or the legality of an action which they are con-
templating. The present conflict of authority /
between these two officers leads to a great deal
of uncertainty, delay, and expense, and at times
reaches almost to the point of administrative
paralysis. Speed, decision, vigor, and com-
mon sense in the conduct of national affairs
have been subordinated to technical rulings on
doubtful questions.
The virtual discontinuance of the practice of
referring disputed rulings to the Attorney Gen-
eral for an opinion upon legal issues results in
the Comptroller General interpreting his own
jurisdiction and the scope of his authority v
through his own rulings. This is an extraor-
23
dinary principle, clearly contrary to our political
institutions and constitutional theory.
Before 1921 there was comparatively little
complaint that the rulings of the Comptroller
of the Treasury, precursor of the Comptroller
General, encroached upon administrative dis-
cretion. This was probably because the Comp-
troller of the Treasury was a part of the Admin-
istration itself, even though he had semi-
independent status, and because of the practice
of referring aisputed questions to the Attorney
General. From 1921 on, however, the Comp-
troller General, through numerous rulings, has
carried his authority into areas which are
clearly in the realm of executive decision. Any
volume of the published rulings of the Comp-
troller General affords a wide variety of ex-
amples of this invasion of administrative re-
sponsibility. Many of his rulings go far beyond-
the terms of any statute.
Rulings by an independent auditing officer
in the realm of executive action and methods,
even when they seem wise and salutary, have
a profoundly harmful effect. They dissipate
executive responsibility and precipitate execu-
tive uncertainty. Many of the rulings of the
Comptroller General, though issued in the
belief that they are in the interest of strict
legality, undoubtedly impede the work of the
departments and add to their operating costs.
Administrative officers have found it necessary
to go not merely to their superior officers for
the approval of plans but also to the office of
Comptroller General for the approval of-'
legality, form, and procedure. This division
of authority destroys responsibility and pro-
duces delays and uncertainty. It has become
increasingly difficult, and at times simply im-
possible, for the Government to manage its
business with dispatch, with efficiency, and
with economic sagacity.
An effective continuing executive control
over the administration of the Government to
insure economy, legality, and expedition is im-
possible so long as such wide authority over
plans, forms, and procedures is exercised by the
General Accounting Office. The Comptroller
General has also extended his authority into
administrative matters by the expansion of the
preaudit (i. e., audit before payment), by the
increased use of advance decisions, and by his
rulings, all of which have constantly brought
more and more administrative questions to him
for final determination. The operating plans of
 24
the administration are greatly affected, and
somestimes controlled, by his rulings. Fiscal
practices' are to a large extent governed by his
decisions. These are areas of control that are
customarily entrusted to executive officers, both
in Government and in private business admin-
istration.
Numerous delays in administration are inevi-
table under the current procedures and routines
of the General Accounting Office. Every
voucher must be examined and passed upon in
a single office at the seat of the Government.
Final settlements are delayed from a period of
3 months to as long as 3 years after the original
transaction has been consummated. Of what
value to the Congress or to the administration
is an audit which is not completed until after
3 years? Executive officers are unable to ob-
tain accurate current reports on the financial
status of their own departments or bureaus.
The delay in the audit has also created much
uncertainty as to the authority of executive
officers, with consequent delay in administrative
action. Delays are often expensive. Prompt-
ness is essential to vigorous, decisive, and
efficient public administration.
Audit of Expenditures
The General Accounting Office has failed to
achieve an independent audit of national
expenditures. It has not supplied the Con-
gress with the comprehensive information con- .
cerning the financial administration of the"
Government which an audit should render.
The Budget and Accounting Act provides that
the Comptroller General shall report to the
Congress the results of his audit and his investi-
gations into the financial transactions of the
Government and states that he "shall specifi-
cally report to Congress every expenditure
or contract made by any department or estab-
lishment in any year in violation of law."
Except in a few isolated cases the Comptroller
General has not carried out this provision of
the act. He has rarely called attention to
unwise expenditures or unsound fiscal practices.
Since the present arrangement delays the final
settlements of accounts, in some cases for as
long as 3 years, it is impossible for the Comp-
troller General even to complete his audit of
any fiscal year in time for it to be of any material
value to the Congress.
The fundamental reason why the Comptroller
General has failed to provide the Congress with
a complete, detailed, and critical audit of ~he
The PJ'esident's Oommittee
fiscal accounts of the Government, however,
is the anomalous and inconsistent position of
his office.
The results of the vesting of important execu-
tive authority in the Comptroller General, an
I independent officer, who is not responsible to
the Chief Executive, nor, in fact, to the Con-
gress or to the courts, are serious. Effective
and responsible management of the executive
departments is impossible as long as this un-
sound and unconstitutional division of executive
authority continues. At the same time, the
Congress is unable to secure a truly independen t
audit, which is essential if it is to hold the
administration to a strict accountability.
Recommendations
Our recommendations regarding the direc-
tion and control of accounting and e}'."penditures
are as follows: .
1. For the purpose of providing the Chief
Executive with the essential vehicles for
current financial management and adminis-
trative control, the authority to prescribe
and supervise accounting systems, forms, and
procedures in the Federal establishments
should be transferred to and vested in the
Secretary of the Treasury. -This recom-
mendation is not new. In 1932 President
Hoover recommended to the Congress that
the power to prescribe accounting systems
be transferred to the Executive Branch,
stating:
It is not, howeyer, a proper function of an estab-
lishment created primarily for the purpose of audit-
ing Government accounts to make the necessary
studies and to deyelop and prescribe accounting
systems involving the entire field of Government
accounting. Neither is it a proper function of such
an establishment to prescribe the procedure for nor
to determine the effectiveness of the administrative
examination of accounts. Accounting is an essen-
tial element of effective administration, and it
should be developed with the primary objective of
serving this purpose.
In 1934 a special committee of the United
States Chamber of Commerce on Federal
expenditures, headed by Mr. Matthew S.
Sloan, recommended that all accounting
activities be removed from the Comptroller
General and placed in a General Accounting
Office directly responsible to the President.
This committee stated in its report:
Since the Comptroller General is not under
Executive control, as he reports to Congress and is
responsible only to that body, the Executive is de-
On Administrative Management
prived of one of the most essential means of estab-
lishing effective supervision over expenditures,
namely, a. satisfactory accounting system directly
under Executive control. Moreover, the Comp-
troller General is now in the anomalous position of
auditing his own accounting.
The Committee is convinced that accounting
should be segregated from auditing, and that ac-
counting should be centralized in an agency under
the control of the President. Such a. system would
provide the administration with machinery neces-
sary to establish control over expenditures and also
afford Congress an independent agency for checking
the fiscal operations of the administration.
2. For the purpose of fixing responsibility
for the fiscal management of the Govern-
ment establishment on the Chief Executive in
conformity with the constitutional principle
that the President "shall take Care that the
Laws be faithfully executed", claims and de-
mands by the Government of the United
States or against it and accounts in which
the Government of the United States is con-
cerned, either as debtor or as creditor, should
be settled and adjusted in the Treasury
Department.
3. To avoid conflict and dispute between
the Secretary of the Treasury and the de-
partments as to the jurisdiction of the Secre-
tary to settle public accounts, which conflicts
and disputes have so marred the relation-
ship between the Comptroller General and
the departments in the past, and to make it
impossible for the Secretary of the Treasury
to usurp any of the powers vested in the heads
of departments by the Congress, the Attorney
General should be authorized to render opin-
ions on such questions of jurisdiction (but
not on the merits of the case) upon the
request of the head of the department or
upon the request of the Secretary of the
Treasury, and the opinion of the Attorney
General on such questions of jurisdiction
should be final and binding.
25
4. In order to conform to the limitations
in the functions remaining within the juris-
diction of the Comptroller General, the titles
of the Comptroller General and the Assistant
Comptroller General should be changed to
Auditor General and Assistant Auditor Gen-
eral, respectively, and the name of the
General Accounting Office should be changed
to the General Auditing Office.
5. The Auditor General should be author-
ized and required to assign representatives of
his office to such stations in the District of
Columbia and the field as will enable them
currently to audit the accounts of the account-
able officers, and they should be required to
certify forthwith such exceptions as may be
taken to the transactions involved (a) to
the officer whose account is involved; (b) to
the Auditor General; and (c) to the Secretary
of the Treasury.
The auditing work would thus proceed in
a decentralized manner independent of, but
practically simultaneous with, disbursement.
Duplication of effort and delays due to cen-
tralization in Washington could be reduced
to a minimum. It would not be necessary for
the Treasury Department to duplicate the
field audit of the General Auditing Office.
Exceptions would be promptly reported to the
Treasury. Prompt, efficient service could be
afforded in the scrutiny of questioned vouch-
ers and in the review of accounts of disbursing
officers.
6. In the event of the failure of the Secre-
tary of the Treasury and the Auditor General
to reach an agreement with respect to any
exception reported by representatives of the
Auditor General concerning any expenditure,
it should be the duty of the Auditor General
to report such exception to the Congress
through such committees or joint committees
as the Congress may choose to designate.
I
I

L

IV. PLANNING MANAGEMENT
•
In addition to the means already indicated
as desirable for fiscal and personnel management
it is essential that machinery for over-all plan-
ning management be provided for the use of the
Executive.
There are already in existence a number of
agencies in the several departments concerned
with research and planning wi thin departmental
limits. There are also important interdepart-
mental committees dealing with problems that
cross departmental lines.
There are now 47 State planning boards
engaged in the task of making State-wide plans
for the best use of State resQurces, in the various
ways found most suitable in the widely different
sections of the Nation with their widely varying
problems.
There are over 1,100 city planning boards
occupied with the'special problems of urban
communities. County planning boards have
been set up in over 400 counties and are increas-
ing in number and importance.
There are regional planning boards dealing
with problems larger than State boundaries
alone can contain, as the Pacific North west
Regional Planning Commission, the New Eng-
land Regional Planning Commission, the Ohio
Valley Regional Planning Commission.
In addition there are 20 commissions on
interstate cooperation organized under the
auspices of the new Council of State Govern-
ments. Many interstate compacts and other
agreements and arrangements, some legislative,
some administrative, involving central and local
authorities, are being set up.
Further, there is a great variety of agencies
engaged in research and planning management.
Some of these are found in business, some in
agriculture, some in labor, some in the profes-
sions interested in special lines of inquiry, some
in the universities and other research institu-
tions. A vast amount of planning information
..
and experience is available at these sources,
and adequate organization would make it pos-
sible to fit the research and planning programs
of all these groups into our national purposes.
How can the President deal most readily
with these scattered and important agencies
and their relation to the over-all view of
administrative management'!
Establishment of a
Permanent Planning Agency
To meet this situation it is recommended
that a permanent National Rel!'ources Board
be set up to replace the present temporary
committee created by Executive order.· This
committee was first set up by the Public
Works Administrator in 1933, and luter was
established by Executive order as the National
Resources Board. It was then directed "to
prepare and present to the President a program
and plan of procedure dealing with the physical,
social, governmental, and economic aspects of
public policies for the development and use of
land, water, and other national resources, and
such related subjects as may from time to time
be referred to it by the President."
Important reports have been made under
this authority dealing with the prevention of
enormous losses in land use, water use, mineral
use, dealing with long-time planning, timing,
and the division of costs in public. works, with
the organization and activities of State planning
boards, with regional factors in national plan-
ning, with regional planning in New England,
in the Pacific Northwest, in the St. Louis
metropolitan region. A complete water plan
for the United States has been prepared, and
many special reports on water resources. Other
reports have been prepared in the field of social
problems, dealing with urban factors in national
development, with basic population trends in
the United States, with the social implications
27
28
of recent technological changes. Extensive and
important studies in the field of industrial rela-
tions are in preparu tion, concerning the in terre-
lations of national production and consumption.
Planning Activities
The first function of such an agency is to
serve as a clearing house of planning interests
and concerns in the national effort to prevent
waste and improve our national living stand-
ards. Another is to cooperate with depart-
mental, State, and local agencies, and in general
to use the Board's good offices to see that
planning decisions are not made by one group
in ignorance of relevant undertakings or re-
search going on elsewhere. Obviously much of
this is a matter of diplomacy and intelligent
interest rather than of legal authority and high
command.
Another function is that of collecting and
analyzing data relating to our national resources,
both human and physical, and of shaping up
advisory plans for the better use of these re-
sources. The gains of civilization are essen-
tially mass gains. They should be distributed
as fairly as possible among those who created
them. But a frequent recurrence to funda-
mental principles is necessary. Unless some
overhead central agency takes an over-all view
from time to time, analyzes facts, and suggests
plans to insure the preservation of the equilib-
rium upon which our American democracy
rests, there is danger that it will be badly upset.
It is important that the Executive have at hand
ample ways and means of taking such an over-
all view of the best and highest use of the
national assets which we have inherited from
our fathers and which we aim to hand on to
posterity, enlarged and enriched by our efforts.
Our development in this entire field of national
resources policy has been experimental, evolu-
tionary, and at times undoubtedly somewhat
illogical. Our line of progress in business,
agriculture, and labor has been a process of
groping our way forward from point to point,
with the democratic goal and direction in mind,
as we dealt from time to time with land policy,
with industrial monopolies, with conservation,
with special privileges which threatened the
common weal, with social insecurity, with the
social results of discoveries in technology and
management.
We shall proceed in the future as :we have
throughout our history, adapting our institu-
.
The President'8 Oommittee
tions to our resources, our desires, and our
ideals of how men may live and prosper together,
striking a new course where we must invent
one, or profiting by the success of others in
devising means of meeting a specific problem.
It is important, however, to see to it that our
arrangements for making use of the finest and
soundest American experience and judgment in
planning for the American future are the best
that can be set up, and further that they are
meshed in with the machinery, first of adminis-
trative management and finally of policy de-
termination. We confidently believe that the
universal aspiration for economic security and
the increasing enrichment of human lives may
be forwarded by substituting the results of
careful scientific study for uninformed judgment
and political expediency as the basis for the
formulation of governmental plans.
Such a board would work through various
technical committees, consisting partly of
Government personnel and partly of other
qualified persons drawn in for special purposes
from time to time. Examples of this procedure
are the present Land Use Committee, the Water
Resources Committee, and the Industrial Re-
sources Committee. In these committees the
experience and plans of various bureaus and
departments are pooled with those of outsiders,
and the results reported to the National Re-
sources Committee for consideration and even-
tual recommendation to the President.
These problems cut across many departmen-
tal and jurisdictional lines, as in the notable
instances of land, water, public works, and
industrial resources, and require combined
examination, discussion, and interpretation, if
a full measure of success in their utilization is
to be realized. If we look forward a little it is
easy to see many other emerging problems just
ahead, problems which will call for unified
study and planning in many fields of national
resources, both human and physical.
It cannot be too stongly stated that one of
the most valuable services rendered by a
National Resources Board is that of coopera-
tion with the State, local, and interstate plan-
ning agencies throughout the Nation. This
has already been particularly evident in dealing
with land use, forestry, multiple uses of water,
and social needs in general; but the same
principle is capable of far wider application as
time goes on and as the machinery for genuine
cooperation is better adjusted. This coopera-
l
 On Admini8trative AIanagement
tiort constitutes an importa.nt guaranty against
overcentralization in governmental planning
and against decay of local governmental
interest.
Close and continuous relationship between
this administrative planning agency and other
Federal agencies could be maintained through
contacts of its research and planning staff with
the research and planning personnel of the
various departments; and further, through the
intermediation of the President's aides. It
will also be possible through the State planning
boards to keep in close contact with the plan-
ning projects and developments in the different
States and their subdivisions. In this way a
continuing stream of information regarding
planning progress may be kept in circulation
among those whose deternlinations depend
upon such knowledge.
The translation of over-all planning into
action would, however, be the administrative
responsibility of the Executive and dependent
finally, of C01U'se, upon the decision of the
Congress. It cannot be too strongly empha-
sized that the function of the proposed Board
is not that of making final decisions upon
broad questions of national policy-a responsi-
bility which rests and should rest firmly upon
the elected representatives of the people of
the United States. Such a Board is useful in
proportion as it is detached from immediate
political power and responsibility.
Nor should such an agency be involved in
special administrative responsibilities which
properly devolve upon the appropriate depart-
ments of the Government set up for that pur-
pose. This Board should serve rather as a
general staff for gathering and analyzing
relevant facts, observing the interrelation and
administration of broad policies, proposing
from time to time lines of national procedure
in the husbanding of our national reso1U'ces,
based upon thorough inquiry and mat1U'e
consideration; constantly preparing and pre-
senting to the Executive its findings, inter-
pretations, conclusions, and recommendations
for such final disposition as those entrusted
with governmental responsibility may deem
appropriate.
Recommendations
1. It is recommended that a National
Resources Board, consisting of five members .
appointed by the President, without salary ~
29
and with indefinite terms, be created to
serve as a central planning agency under the
President.
2. It is further recommended that there be
a director appointed by the Board, in general
charge of the staff, and an executive officer,
in the classified service; and that the further
organization of divisions of the work be left
to the determination of the Board.
3. It would be necessary for the Board to
have ample provision for the maintenance
of a staff equal to the performance of the
heavy tasks imposed upon it. In general, the
equipment of such a Board as is proposed
would consist of:
a. A permanent skeleton staff of career
men of undoubted competence, with their
assistants.
b. Other governmental personnel with
special skills detailed from time to time for
the work of the Board.
c. Experts and assistants brought in
from time to time to deal with special
problems as they arise. A contingent
fund for this purpose should be available,
but inevitably the amounts required would
vary widely from one period to another, as
different types of assistance were required.
In support of the proposed indefinite term
of office for members of the Board, it may be
pointed out that a long term of office is no
adequate protection against an unfriendly or
indifferent Executive and Congress; and in any
case a deadlock between the Board and the
authorities would make the success of the
Board very dubious. A board may be swept
out of existence by the Congress at any time,
or it mlly be ignored by the Executive and the
Administration.
Life tenure for such a Board, even if it were
possible 16 obtain, would not be desirable, for
it would tend to widen gaps between the Gov-
ernment and the Board, or between the public
and the Board. In a rapidly changing situa-
tion, a Board of this type must be responsive 1?~
to the broad sweep of national interest and)
judgment. .
The personnel of the Board should bring
together insight, experience, and judgment in
the analysis and interpretation of national
planning policies, skill in the invention of ways
and means of utilizing our national resources,
and social vision in the fusion of American
30
interests, techniques, and ideals into sounder
and more satisfactory modes of conserving and
expanding our national resources and facilitat-
ing their equitable award.
The Board should be provided with an annual
appropriation, a considerable part of which
should be used for aiding the several States in
Th~ President's Oommittee
the maintenance of their State planning boards;
another part should be budgeted for stated
projects of research; and another portion be
reserved for other inquiries undertaken at the
request of the President for some special pur-
pose, in cooperation with some of the several
departments or with local agencies.
 V. ADMINISTRATIVE REORGANIZATION OF THE
GOVERNMENT OF THE UNITED STATES
•
The primary purpose of a rational reorgani-
zation of the administrative agencies of the
Executive Branch of the Government is to
/ reduce to a manageable compass the number
of agencies reporting to the President.
The Constitution of the United States sets
up no administrative organization for the Gov-
ernment. The whole matter of executive power
is dealt with in a few brief phrases. First in
importance is: "The executive Power shall be
vested in a President of the United States of
America." Reference is also made to the
Army and Navy, of which the President is
named "Commander in Chief", and, indirectly
to the "executive Departments"; and there is
laid on the President alone the duty to "take
Care that the Laws be faithfully executed." In
these few words, supplemented by those defin-
ing the scope of the Legislative and the Judicial
Branches, there is set forth the constitutional
principle of the separation of powers, which
places in the President, and in the President
alone, the whole executive power of the
Government of the United States.
The administrative organization of the Gov-
ernment to carry out "the executive Power"
thus rests upon statute law, and upon depart-
mental arrangements made under the authority
of law. The history of these laws and arrange-
ments is a reflection of our national problems
and development. At the beginning, in 1789,
there were but four departments: State, War,
Treasury, and the Attorney General. The
General Post Office was permanently estab-
lished in 1794, and 4 years later, the Navy
Department was created. Thus, by 1800 there
were six departments, all of them directly
under the President in accordance with the
constitutional principle of the separation of
powers.
For the next 50 years there was no change.
Then came the creation of the Department of
the Interior in 1849, of Agriculture in 1889, and
of Commerce and Laborin 1903, from which the
Department of Labor was separated in 1913.
Two new kinds of governmental agencies
made their appearance in the generation after
the Civil War. They were, first, executive
agencies under the President but not connected
with any department, such as the Civil Service
Commission (1883); and, second, independent
regulatory agencies, such as the Interstate
Commerce Commission (1887), which were
neither placed under the President nor con-
nected with any department. Many addi-
tional agencies o! these types appeared III
subsequent years.
During the World War a large number of
new agencies were established. These were
chiefly councils, boards, commissions, admin-
istrations, and governmental corporations, and
though not legally connected with the regular
departments, they were definitely within the
Executive Branch and under the President.
In this period the innovation was the govern-
mental corporation, which was found useful
particularly in dealing with financial operations.
Most of these agencies were abolished, or con-
solidated with the departments, in the years
following the war.
During the recent depression similar need
for emergency action has resulted again in the
establishment of a large number of new agen-
cies. These include administrations, boards,
commissions, committees, governmental corpo-
rations, and authorities. The novel elements in
this period are the extended use of the corpo- V
rate form and the introduction of the "author-
ity." Most of these agencies have been placed
in the Executive Branch and under the Presi-
31
 32
dent, but in the main they have not been con-
nected by law with the regular departments.
As a result of this long development, there
are now in the Government of the United States
over 100 separately organized establishments
and agencies presumably reporting to the
President. Among them are the 10 regular
executive departments and the many boards,
commissions, administrations, authorities, cor-
porations, and agencies which are under the
President but not in a department. There are
also a dozen agencies which are totally inde-
pendent-a new and headless "fourth branch"
of the Government.
/ The Executive Branch Today
The Executive Branch of the Government of
the United States has thus grown up without
plan or design like the barns, shacks, silos, tool
sheds, and garages of an old farm. To look at
it now, no one would ever recognize the struc-
ture which the founding fathers erected a
century and a half ago to be the Government
. of the United States. A careful examination of
the Government shows the following facts:
1. The structure of the Government throws
~ an impossible task upon the Chief Executive.
No President can possibly give adequate
supervision to the multitude of agencies
which have been set up to carry on the work
of the Government, nor can he coordinate
their activities and policies.
2. The normal managerial agencies de-
./ signed to assist the Executive in thinking,
planning, and managing, which one would
expect to find in any large-scale organiza-
tion, are either undeveloped or lacking.
3. The constitutional principle of the sepa-
ration of powers and the responsibility of
the President for "the executive Power" is
impaired through the multiplicity and con-
fusion of agencies which render effective
action impossible.
4. Without plan or intent, there has grown
v up a headless "fourth branch" of the Govern-
ment, responsible to no one, and impossible
of coordination with the general policies and
work of the Government as determined by
the people through their duly elected repre-
sentatives.
5. For purposes of management, boards and
commissions have turned out to be failures.
Their mechanism is inevitably slow, cumber-
some, wasteful, and ineffective, and does not
The President's Oommittee
lend itself readily to cooperation with other
agencies. Even strong men on boards find
that their individual opinions are watered
down in reaching board decisions. When
freed from the work of management, boards
are, however, extremely useful and necessary
for consultation, discussion, and advice; for
representation of diverse views and citizen
opinion; for quasi-judicial action; and as a
repository of corporate powers.
6. The conspicuously well-managed ad-
o•..' ministrative units in the Government are
almost without exception headed by single
administrators.
7. Owing to the multiplicity of agencies
and the lack of administrative management
there is waste, overlapping, and duplication,
which may be eliminated through coordina-
tion, consolidation, and proper managerial
control.
These are the major features which stand
out clearly in any examination of the structure
of the Executive Branch of the Government
There flow from these factors many obscure
difficulties and problems. Among these is the
time and energy which have been wasted for
many years because of departmental jealousies
and jurisdictional disputes among the depart-
ment heads and bureau chiefs as to who should
control particular activities. The people of the
country have held the President responsible for
failing to settle these internal quarrels, whereas
in fact, because the President's authority is
not commensurate with his responsibility, often
he has been unable to compose the differences
short of the summary dismissal of one of his
Cabinet Members. The departments them-
selves and groups of citizens interested in
particular activities often seek to settle such
disputes by direct appeals to the Congress,
there again only to find the same or almost the
same differences represented in the jurisdic-
tional jealousies of congressional committees.
Another difficulty is found in the nature of
the regional subdivisions of the departments
and agencies. At the present time there are
109 different plans of geographical subdivision
of the United States iIl. use by the various gov-
ernmental agencies for their local offices. From
the standpoint of the citizen this does not make
good service or good sense. Government
should, of course, be carried to the people
through the decentralization of the Washington
departments, partly to make it fit their needs,
On Administrative 111anagement
and partly to keep it from becoming distant
and bureaucratic, but this decentralization
need not be chaotic and conflicting, provided it
is properly integrated at the center and sub-
jected to over-all management.
The method of decentralization of necessity
will vary from department to department and
from activity to activity within the department.
A general principle that may be laid down is
that the decentralization should be geographical
and that more and more of the administrative
work of the Executive Branch be carried on in
the field in regional units set up to cover all
parts of the United States. In this way the
Government will be brought nearer to the people
themselves and by this regional organization
the Federal Government may the better co-
operate with State and local governments in
the conduct of its affairs.
This geographical decentralization also will
diminish the waste of time and money, to say
nothing of the patience of the people, entailed
by excessive centralization of administrative
activities in Washington. At the same time
it offers the opportunity of lessening the
insensitivity of the bureaucracy by bringing
the persons who actually administer in detail
~'''''~
w~ A. PLAN OF REORGANIZATION
"'>1\, ,
;;
To meet these conditions and make and keep
the Government thoroughly up-to-date, we
make four principal recommendations, as
follows:
1. Provide for 12 major executive depart-
ments, by the addition to the existing 10 of a
Department of Social Welfare and a Depart-
ment of Public Works.
2. Require and authorize the President to
determine the appropriate assignment to the
12 executive departments of all operating
administrative agencies and fix upon the
Executive continuing responsibility and
power for the maintenance of the effective
division of duties among the departments.
3. Equip the President with the essential
modern arms of management in budgeting,
efficiency research, personnel, and planning.
4. Revive and extend the principle of
Executive accountability to the Congress
through the development of an effective inde-
pendent audit and report on fiscal trans-
33
the work of the Government into touch with
the people whom they serve in their own
communities.
The safeguarding of the citizen from narrow-
minded and dictatorial bureaucratic interference
and control is one of the primary obligations
of democratic government. It can be accom-
plished only by so centralizing the determina-
tion of administrative policy that there is a clear
line of conduct laid down for all officialdom to
follow and then by so decentralizing the actual
administrative operation that the Government
servant remains himself one of the people in
touch with the people and does not degenerate
into an isolated and arrogant bureaucrat.
These difficulties and defects in the organiza-
tion of the Executive Branch have been clearly
recognized for a generation and have been
growing steadily worse decade by decade. The
structure as it now stands is inefficient; it is a
poor instrument for rendering public service;
and it thwarts democratic control. With such
a planless organization, good management is
almost impossible-a fact of great importance
in the modern world in which nothing can con-
tinue without good management, not even
democracy.
actions and through the simplification of the
confusing structure of the Government.
It is the purpose of these recommendations
to make effective management possible by
restoring the President to his proper place as
Chief Executive and giving him both a gov-
ernmental structure that can be managed and
modern managerial agencies, and by restoring
to the Congress effective legislative control over
the Executive. One element of this program,
that dealing with managerial agencies, has been
discussed above. As a part of other phases of
this program, many minor changes will be
required. These are discussed in the following
pages in connection with a fuller statement of
our principal recommendations concerning de-
partmental reorganization.
Twelve Major Departments
Any large industrial or commercial enterprise
with plants, stores, or services scattered over a
continent would, for the sake of good manage-
 34
ment, organize the business on the basis of the
separate services, plants, or areas. Each one of
these divisions would then have a manager, and
there would be over all a president or general
manager who would direct the whole enterprise,
working through 8 to 10 executive assistants in
accordance with the policies determined by the
stockholders and the board of directors. This
r
is in general what we propose for the Govern-
ment of the United States, making allowance
for the differences in method and purpose of
the Government as a servant of the Nation.
No man can manage, coordinate, or control
more than 100 separate agencies, particularly
when in some of them responsibility to the
Chief Executive is not definitely placed. The
number of immediate subordinates with whom
an executive can deal effectively is limited.
Just as the hand can cover but a few keys on
the piano, so there is for management a limited
span of control. In the Army this has been
said to be 3 subordinates; in business it has
frequently been set at 5 or 6; and some students
of government have placed the limit at 10 or 12.
Obviously the number is not the same for all
work or for all men, nor can it be determined
mathematically. But one thing is clear: It
should be the smallest possible number with-
out bringing together in any department activ-
ities which are unrelated or in conflict with each
other.
It is thus necessary to determine what are
the new major fields of activity of the National
Government and to make a place for them.
These are disclosed in the multitude of new
agencies and laws of the past 25 years. As we
view them they seem to fall in five grea.t cate-
gories: Public welfare, public works, public lend-
ing, conserva.tion, and business controls. These
are the great thrusts which have come to the
surface in the last generation, not only in this
country, but in all countries, though in different
ways. Certain phases of these activities may
not be permanent, but the major purposes are
apparently here to stay, and deserve appropri-
ate departmental homes.
An examination of the existing executive
departments shows that there is no adequate
place in the present structure for two of these
new developments: Public welfare and public
works. We therefore recommend that new
departments be set up by law to cover these
two fields, and that there be assigned to these
The President's Oommittee
departments by the President not only the
appropriate new activities in these fields but
also the old activ-ities closely related thereto.
The remainder of the new activities, which
have to do with lending, regulating, and con-
servation, may be assigned to existing depart-
ments without altering their fundamental
purposes.
In the case of conservation, however, it
would seem desirable to establish a Department
of Conservation, which would take over most
of the activities of the present Department of
Interior. The name "conservation" should be
among the departmental titles because it
represents a major purpose of our Government
today. We therefore recommend that the
name. of the Department of the Interior be
changed to Department of Conservation.
In accordance with these recommendations,
the operating divisions of the Executive Branch
of the Federal Government would be as follows:
Department of State. Department of Agri-
Department of the culture.
Treasury. Department of Com-
Department of War. merce.
Department of Justice. Department of Labor.
Post Office Depart- Department of Social
ment. Welfare.
Department of the Department of Public
Navy. Works.
Department of Con-
servation.
The establishment of these 12 great depart-
ments directly responsible in administration to
the Chief Executive in place of the present
multitude of independent, and at times con-
flicting departments, boards, commissions,
administrations, authorities, corporations, com- ;
'-'
mittees, and agencies will make possible the
more simple, more effective, more efficient,
more economical, and more democratically
controlled management of public affairs.
General Purposes of the Departments
The departments would have the following
major purposes:
1. The Department of State.-
To advise the President with regard to
foreign affairs.
To conduct international relations and
have custody of documents of state.
On Admini8trative 111anagement
2. The Department oj the Trea8ury.-
To advise the President with regard to
fiscal affairs and the Congress on revenue
bills.
To handle the collection of revenues,
the administration of credits and the debt,
the settlement of claims, the making of
payments, the keeping of central accounts,
and the procurement of general supplies.
3. The Department oj War.-
To advise the President with regard to
military affairs.
To administer the military services.
4. The Department oj JU8tice.-
To give legal advice to the President and
to the heads of executive departments.
To enforce the laws, particularly when
special enforcement agencies are not pro-
vided, represent the Government in court
proceedings, and cooperate in crime con-
trol with other Federal, State, and local
agencies.
5. The P08t Office Department.-
To operate the postal system and its
allied services, and cooperate with other
departments in furnishing facilities for
decentralized service and information.
6. The Department oj the Navy.-
To advise the President with regard to
naval affairs.
To administer the naval services.
7. The Department oj Conservation.-
To advise the President with regard to
the protection and use of the natural re-
sources of the Nation and the public
domain.
To administer the public lands, parks,
territories, and reservations, and enforce
the conservation laws with regard to pub-
lic lands and mineral and water resources,
except as otherwise assigned.
8. The Department oj Agriculture.-
To advise the President with regard to
agriculture.
To conduct research on agricultural prob-
lems; to continue and develop relations
with State and local governments in agri-
cultural research, agricultural education,
and the conservation and development of
private hUlds and other resources affecting
1 ;;;11;j;j-37-4
35
the agricultural supplies of the Nation; and
to enforce and administer laws dealing with
agriculture.
9. The Department oj Commerce.-
To advise the President with regard to
the problems of commerce and industry.
To deal with the problems of commercial
and industrial production and distribution,
domestic and foreign; to carryon research,
collect statistics, establish standards and
practices, and enforce laws with regard to
manufacture, merchandising, commUlllca-
tion, and transportation.
~O. The Department oj Labor.-
To advise the President with regard to
/
labor problems.
To conduct research on employment,
wages, cost of living, and working condi-
tions; to handle labor relations and con-
troversies; to enforce labor laws; and to
administer employment offices find the
Federal aspects of Federfil-State programs
of social security where right rather than
need is the basis of payment to beneficiaries.
11. The Department oj Social Welfare.-
To advise the President with regard to
social welfare.
To administer Federal health, educa-
tional, find social activities; to conduct
research in these fields; to administer
Federal grants, if any, for such purposes;
to protect the consumer; to conduct the
Federal aspects of Federal-State pro-
grams of social security where need is th'e
basis of payment to beneficiaries; to
administer all Federal eleemosynary, cor-
rective, and penal institutions; and to
administer probation and parole.
12. The Department oj Public Works.-
To advise the President with regard to
public works.
To design, construct, and maintain
large-scale public works which are not
incidental to the normal work of other de-
partments, except as their agent on re-
quest; to administer Federal grants, if
any, to State or local governments or other
agencies for construction purposes; and
to gather information with regard to pub-
lic works standards throughout the Nation.
 36
We shall not attempt to assign to each of
these 12 departments particular establish-
ments, agencies, and bureaus. To do so, we
are persuaded, would be to undertake an exec-
utive task which should be performed only
by the Executive, on the basis of careful
research and discussions with those most
intimately involved, after the enactment by
the Congress of a law setting up for his guid-
ance the general departmental structure.
The major departmental structure which
we have suggested is designed to accommodate
all of the existing activities of the Government
without determining whether they are tempo-
rary or permanent. What activities the Govern-
ment is to carry on is not a question of organiza-
tion or a problem for this Committee, but for
the Congress and the President, and should
be settled primarily through the Budget. It
should nonethtless be noted that the general
departments here recommended will not be
affected seriously by the abandonment of all
of the so-called "emergency" activities such as
relief, resettlement, reconstruction, finance, etc.
As long as we go forward with social security,
added to the established activities, we shall
need the 12 departments here suggested.
We do not wish to imply, however, that this
plan of departmentalization is in our judgment
a final or permanent pattern. The number,
the titles, and the content of the departments
B. CONTINUING EXECUTIVE RESPONSIBILITY FOR EFFICIENT ORGANIZATION
The division of work for its effective per-
formance is a part of the task of doing that
work. Under changing conditions, and condi-
tions are always changing, public policy and
efficiency require a continual change in the
division of work of government, that is, in its
organiza tion. Under the circumstances it seems
clear that the Executive should always be held
responsible not alone for the management of
the executive departments, but also for the
division of work among the major departments.
To render the Executive truly responsible for
administration and its efficiency, he must be
required to accept the responsibility for the
continuous administrative reorganization of the
Government.
The duty of the Congress in reorganization
is discharged by the determination of the broad
outlines of reorganization, through the creation
The President's Oommittee
rI
must of necessity change from time to time to
fit the activities of the Government.
There are those who believe that "emergency"
activities should not be brought into the recom-
mended departmental set-up. They fear that
to do so would constitute an acceptance by the
Federal Government of responsibility for the
continuation of a function, and that the dis-
continuance of the work would thus be made
far more difficult. We are led to the contrary
view. The inclusion of temporary and emer-
gency activities within departments, where they
are brought into juxtaposition with established
related services and under the surveillance of
the regular managerial agencies for which we
have provided, will, we think, subject them to
a greater pressure for discontinuance than if
they are left to themselves. As a matter of
fact, demobilization is carried on by the over-
head, not by the staff, and can be more vigorous
when the overhead is permanent, as in a de-
partment, and is not itself marked for extinc-
tion. Moreover, there is the great difficulty of
determining what is and what is not temporary,
and what to do with temporary activities while
we are waiting for them to pass. We have no
hesitation, therefore, in recommending that
every activity and agency be brought within a
department, whether it is intended to continue,
to modify, or to abandon it. Any other solution
is uncertain and unsatisfactory.
of the executive departments and the adoption
of the general policy that all administrative
operating agencies shall be brought within these
large executive departments. This places in
the Congress the settlement of broad policy,
and on the President the executive task of
reorganization in accordance with this policy.
This retains in the hands of the Congress not
only complete control over the things which are
to be done by Government, that is, over policy,
but also, first, the opportunity to review the
effectiveness of the reorganization each year
when the Budget comes before it; second, the
means for holding the Executive accountable
through the independent audit; and, third, the
continuing opportunity and duty of investi-
gating those phases of government and adminis-
tration which the Congress or the puhlic feel
are in need of review.
On Admini8trative hIanagement
The work of reorganization is a continuing
task growing out of and intimately related to
the day-to-day work of the executive agencies.
It is a task that cannot be done once and for
all. It will require continuing attention. The
assignment of the multitude of present activities
to appropriate departments is not something
which can be carried out ruthlessly on a whole-
sale blue-print basis without doing serious
damage to the work and without destroying
executive responsibility. In each instance the
reorganization of the work will require careful
research as to functions, processes, objects, and
personnel, and the arrangements in each particu-
lar case will require not only advance considera-
tion but experimental adjustment. In other
words, the task of reorganization is inherently
executive in character and must be entrusted to
the Executive as a continuing responsibility.
In carrying out the task of continuous ad-
ministrative reorganization of the Government
to meet changing needs and situations, the
President will require careful and expert atten-
tion to organizational problems and proposed
changes of organization, not only by the depart-
ments themselves but by the managerial
agencies directly under the President. Each
department should be required to give continu- \
ous attention to internal problems of organiza-
tion and to take the initiative in proposing
changes in cases requiring action by the Presi-
dent. The Bureau of the Budget, as a mana-
gerial arm of the President, should investigate
broader problems of organization which affect
two or more departments and should render
expert information and advice to the President
upon proposed changes. It should also render
expert assistance to the departments upon their
organizational problems and should have au-
thority to conduct investigations upon its own
initiative. When -new activities are to be
undertaken, or old activities are to be liqui-
dated or reduced, the Bureau of the Budget
should investigate all aspects of the proposed
changes. The central managerial agencies
dealing with personnel and planning will also
be able to give expert assistance and advice to
the President upon the administrative organi-
zation of the Government. The best informa-
tion and knowledge within the Government
should be at the command of the President in
carrying out his responsibility for efficient
organization.
37
The Dynamics of Organization
Government is a going concern, not a static
institution. Each activity therefore has its
period of initiation and development, its period
of normal operation, and in some cases also its
period of decline and liquidation. While this
does not change the principles of organization,
it does alter profoundly their application in
individual cases.
New activities should be organized rather ~
completely on the basis of purpose so that that
purpose may be the central driving force of the
organization. They should be freed from inter-
ference by departments organized on the basis
of process. They should also be given virtually
complete freedom, or extensive autonomy,
within existing departments. In the nature of
the case, new purposes cannot be carried out
without broad freedom to experiment. To tie a
totally new activity either to the regular bureau
pattern or to the regular controls may defeat
its purpose entirely.
When, however, an activity is organized, its
major policies established, its purposes accepted
and understood, and its work in the main placed
upon a routine basis, then the time has come to
bring the activity into the normal structure of
organization and under the normal controls.
To do so will not endanger the objectives of the
organization as such, nor hinder its work, but
will rather increase its efficiency, improve not
only its own work but also the whole work of
government through better coordination, and
render it more truly subject to democratic
control.
Particular attention needs to be given to the
period of decline and liquidation because de-
partments and bureaus like to keep themselves
alive and because they and the pressure groups
back of them are incapable of estimating their
value. There is among governmental agencies
great need for a coroner to pronounce them
dead, and for an undertaker to dispose of the
remains. Both of these processes are advanced
when agencies approaching discontinuance are
deprived of their independent status by being
brought into large departments and are made
subject to the regular controls through the
budget, central accounting, and personnel
administration.
It must be remembered that no organization
of ·so complicated a nature al'd endowed with
so many traditions as the Federal Government
38
can be strictly logical. Good service will re-
quire the continuation also of many divisions,
particularly in regional areas, containing work
processes which duplicate processes in other
agencies national in scope. Such conditions
will require careful consideration from time to
time, and the mutual cooperation of the depart-
ments concerned.
Government is a human institution. It is
made up of men and wamen who work together
in groups to protect and to serve other men,
women, and children scattered over a great
continent. It is human throughout; it rests not
only on formal arrangement, skill, and num-
bers, but even more upon attitudes, enthu-
siasms, and loyalty. It is certainly not a
machine, which can be taken apart, redesigned,
and put together again on the basis of mechani-
cal laws. It is more akin to a living organism.
The reorganization of the Government is not a
mechanical task. It is a human task and must
be approached as a problem of morale and
personnel fully as much as a task of logic and
management.
It must be recognized also that a nice blue-
print, an attractive-looking chart, is not the end
of reorganization. Engineers, accountants, and
efficiency experts have at times led the public
to believe that a neat-looking organization
chart means good government in fact. What
we want is not a streamlined, chromium-
trimmed government that looks well in the
advertisement, but one that will actually deliver
the goods in- practice. The whole basis of
reorganization must not be superficial appear-
ance but the integrity of the social services
underneath, which are the end of government.
Some Agencies May Be Given
Semi-Autonomous Status Within Departments
More fle;;,.-ibility in the internal structure of
departments is needed to meet the present
requirements of good administration. Some
C. DEPARTMENTAL ORGANIZATION
It has been the task of this Committee to
investigate the problems of administrative
organization and management at the central
or over-all level. We have not included with-
in our studies any detailed inquiry into the
internal organization and management of the
executive departments. The problem is differ-
Tlw Pre8ident'8 Committee
of the existing independent agencies should be
accorded a degree of independence within
the department to which they are assigned,
instead of being reduced to bureau status.
In the assignment. of now independent
agencies to the departments, those which
require a degree of independence from the
normal departmental control in any particular
because of their nature or stage of develop.ment
should be accorded a semi-autonomous status
within the departments by the terms of the
Executive order which establishes their status.
In some instances a large and important inde-
p\'ffident establishment would be placed under
the Secretary of a department only to enable
the Secretary to coordinate its broad policies
with those of other agencies in a related func-
tional field also reporting to him. In other
respects it would remain quite independent.
Another agency might be placed under the
department for the sole purpose of reporting
to the Secretary. In other respects it would
remain quite independent. Still another agency
might be placed under the department not only
for the purpose of reporting through the Secre-
tary, as in the instance mentioned, but the
department also would carry on for it its house-
keeping functions, such as budgeting, supplies,
personnel, etc., so as to avoid duplication and
unnecessary expense. Still other agencies now
independent are so small or so narrowly
routinized in purpose and process that they
might be assimilated into the body of the
department itself as a bureau.
By recognizing this principle of semi-autono-
mous status within the departments for certain
activities that should be continued with a large
degree of independence as unified operations,
the advantages of a more orderly organization
may be realized and at the same time the dead-
ening effects of a too rigid bureaucratic scheme
avoided.
ent for each department. Elsewhere we have
pointed out that departments should give con-
tinuous attention to the problem of internal
organization, making the revisions from time
to time which experience indicates are necessary
to the efficient conduct of their work and to the
service of the public. Constant attention should
 On Admini8trative lJ!anagement
be given not only to the organization at Wash-
ington, but also to the field organization.
There are, however, certain aspects of depart-
mental organization which are common to all
departments and, indeed, to the Government
as a whole. Upon these aspects we offer some
brief recommendations.
It is essential to provide for direction and
control of the work of each department by a
small number of policy-determining officers at
the head. These officers include the secretary
of the department, assisted by an under secre-
tary and two or more assistant secretaries. It
is of the essence of democratic government that
these officers be selected by the Administration
in office.
The duties of these policy officers are pri-
marily the consideration and adoption of broad
policies and the representation of the depart-
• ment in its relations with other departments,
with the President, with Congress, and with
the general public. They should be freed of
detail~d administrative duties, for which they
are not usually equipped, and their time should
be released for the consideration of depart-
mental policies and programs.
The secretary of a department, as the chief
executive of a large organization, requires the
assistance of a small number of executive aides.
In private organization this need is well recog-
nized. In government the need is even greater.
The secretary should select his own aides,
choosing them from within or from without the
civil service. Persons from the career service
should be free to accept such appointment, but
should retain their civil-sernce status and
security of position in the sernce. In addition,
every department should have a liberal contin-
D. THE INDEPENDENT REGULATORY COMMISSIONS
Beginning with the Interstate Commerce
Commission in 1887, the Congress has set up
more than a dozen independent regulatory
commissions to exercise the control over com-
~ merce and business necessary to the orderly
conduct of the Nation's economic life. These
commissions have been the result of legislative
groping rlj.ther than the pursuit of a consistent
policy. This is shown by the wide variety in
their structure and functions and also by the
fact that just as frequently the COlloOTess has
39
gent fund for the tempornry employment of spe-
cialists to assist in solving particular problems.
The management of euch of the executive
departments of the Federal Government is a
task of great importance. Several of the de-
partments would rank with the very largest
private corporations in size and complexity.
Practically all of them engage in activities
which, because of their variety and importance
to society, present vastly more difficult prob-
lems of management than even the largest of
our private concerns.
With the development of central or over-all
management of the Government, it is equally
important to devel'Op within each department
corresponding facilities for administrative man-
agement. This requires the development of
managerial agencies under the secretary dealing
with such matters as finance, personnel, and
planning, and centralized institutional services
for legal advice, supplies, records, correspond-
ence, and information. A number of the exec-
utive departments have made notable advances
in this direction.
These managerial and institutional agencies
should be under the direction of a single
executive officer, who should be a career
official. He would be selected by the secretary
of the department from the career service, to
which he would return upon the termination of
his assignment. In the executive officer would
be centered the authority and responsibility
under the direction of the secretary for the
development of administrative management
within the department. This position would
correspond to the manager of a great corpora-
tion. It would be the highest managerial
position in the career service of the Government.
given regulatory functions of the same kind to
the regular executive departments.
These independent commissions have been
given broad powers to explore, formulate, and
administer policies of regulation; they have
been given the task of investigating and prose-
cuting business misconduct; they have been
given powers, similar to those exercised by
courts of law, to pass in concrete cases upon the
rights and liabilities of individuals under the
statutes. They are in reality miniature inde-
 40
pendent governments set up to deal with the
railroad problem, the banking problem, or the
radio problem. They constitute a headless
"fourth branch" of the Government, a hap-
hazard deposit of irresponsible agencies and
uncoordinated powers. They do violence to the
basic theory of the American Constitution that
there should be three major branches of the
Government and only three. The Congress has
found no effective way of supervising them,
they cannot be controlled by the President, and
they are answerable to the courts only in re-
spect to the legality of their activities.
Mixture of Executive and
Judicial Functions
The independent regulatory conumsslOns
create a confusing and difficult situation in the
field of national administration. There is a
conflict of principle involved in their make-up
and functions. They suffer from an internal
inconsistency, an unsoundness of basic theory.
This is because they are vested with duties of
administration and policy determination with
respect to which they ought to be clearly and
effectively responsible to the President, and at
the same time they are given important judicial
work in the doing of which they ought to be
wholly independent of Executive control. In
fact, the bulk of regulatory commission work
involves the application of legislative "stand-
ards" of conduct to concrete cases, a function at
once discretionary and judicial, and demanding,
therefore, both responsibility and independence.
The evils resulting from this confusion of
principles are insidious and far-reaching. In
the first place, governmental powers of great
importance are being exercised under conditions
of virtual irresponsibility. We speak of the
"independent" regulatory commissions. It
would be more accurate to call them the "irre-
vi' sponsible" regulatory commissions, for they are
areas of unaccountability. It is not enough to
point out that these irresponsible commillsions
have of their own volition been honest and
competent. Power without responsibility has
no place in a government based on the theory
of democratic control, for responsibility is the
people's only weapon, their only insurance
against abuse of power.
But though the commissions enjoy power
",ithout responsibility, they also leave the
• President with responsibility without power.
Placed by the Constitution at the head of a
The President's Committee
unified and centralized Executive Branch, and
charged with the duty to see that the laws are
faithfully executed, he must detour around
powerful administrative agencies which are in
no way subject to his authority and which are,
therefore, both actual and potential obstruc-
tions to his effective over-all management of
national administration. The commissions pro-
duce confusion, conflict, and incoherence in the
formulation and in the execution of the Presi-
dent's policies. Not only by constitutional
theory, but by the steady and mounting insis-
tence of public opinion, the President is held
responsible for the wise and efficient manage-
ment of the Executive Branch of the Govern-
ment. The people look to him for leadership.
And yet we whittle away the effective control
essential to that leadership by parceling out to
a dozen or more irresponsible agencies important
powers of policy and administration.
At the same time the independent commis-
sion is obliged to carryon judicial functions
under conditions which threaten the impartial
performance of that judicial work. The dis-
v cretionary work of the administrator is merged
with that of the judge. Pressures and influ-
ences properly enough directed toward officers
responsible for formulating and administering
policy constitute an unwholesome atmosphere
in which to adjudicate private rights. But the
mixed duties of the commissions render escape
from these subversive influences impossible.
Furthermore, the same men are obliged to
serve both as prosecutors and as judges. This
not only undermines judicial fairness; it weak-
ens public confidence in that fairness. Com-
mission decisions affecting private rights and
cond uct lie under the suspicion of being ra tional-
izations of the preliminary findings which the
commission, in the role of prosecutor, presented
to it self.
The independent commission, in short, pro-
I vides the proper working conditions neither for
administration nor for adjudication. It fails to
px;ovide responsibility for the first; it does not
\ provide complete independence for the second.
The Administrative Problem
The independent commissions present a seri-
ous immediate problem. No administrative
reorganization worthy of the name can leave
hanging in the air more than a dozen powerful,
irresponsible agencies free to determine policy
and administer law. Any program to restore
l
 On Admini~trative Management
our constitutional ideal of a fully coordinated
Executive Branch responsible to the President
must bring within the reach of that responsible
control all work done by these independent
commissions which is not judicial in nature.
That challenge cannot be ignored.
At the same time, the commissions present
a long-range problem of equal or even greater
seriousness. This is because we keep on creat-
ing them. Congress is always tempted to turn
each new regulatory function over to a new
independent commission. This is not only fol-
lowing the line of least resistance; it is also
following a 50-year-old tradition. The multi-
plication of these agencies cannot fail to obstruct
the effective over-all management of the Execu-
tive Branch of the Government almost in geo-
metric ratio to their number. At the present
rate we shall have 40 to 50 of them within a
decade. Every bit of executive and adminis-
trative authority which they enjoy means a
relative weakening of the President, in whom,
according to the Constitution, "the executive
Power shall be vested." As they grow in num-
ber his stature is bound to diminish. He will no
longer be in reality the Executive, but only one
of many executives, threading his way around
obstacles which he hus no power to overcome.
We have watched the growth of boards and
commissions transform the executive branches
of our State governments into grotesque agglom-
erations of independent and irresponsible units,
bogged by the weight and confusion of the whole
crazy structure. The same tendency in national
administration will bring the same disastrous
results. That tendency should be stopped.
It is imperative that we discover some tech-
nique or principle by which the work done by
our present regulatory commissions, together
i with such new regulatory tasks as arise in the
future, may be handled without the loss of
responsibility for policy and administration and
without the undermining of judicial neutrality.
Is there not some way to retain the major
advantages that the commissions aim to secure
and, at the same time, to get rid of their basic
unsoundness?
Redistribution of Functions
The following proposal is put forward as a
possible solution of the independent commission
problem, present and future. . Under this pro-
posed plan the regulatory agency would be set
up, not in a governmental vacuum outside the
'/ executive departments, but within a depart-
41
ment. There it would be divided into an
administrative section and a judicial section.
The administrative section would be a regular
bureau or division in the department, headed
by a chief with career tenure and staffed under
civil-service regulations. It would be directly
responsible to the Secretary and through him
to the President. The judicial section, on the
other hand, would be "in" the department only
for purposes of "administrative housekeeping",
such as the budget, general personnel adminis-
tration, and materiel. It would be wholly
independent of the department and the Presi-
dent with respect to its work and its decisions.
Its members would be appointed by the Presi-
dent with the approval of theSenate for long, >
staggered terms and would be removable only
for causes stated in the statute.
The division of work between the two sections
would be relatively simple. The first proce-
dural steps in the regulatory process as now
carried on by the independent commissions
would go to the administrative section. It
would formulate rules, initiate action, investi-
gate complaints, hold preliminary hearings, and
by a process of sifting and selection prepare the
formal record of cases which is now prepared in
practice by the staffs of the commissions. It
would, of course, do all the purely adminis-
trative or sublegislative work now done by the
commissions-in short all the work which is
not essentially judicial in nature. The judicial
section would sit as an impartial, independent
body to make decisions affecting the public
interest and private rights upon the basis of the
records and findings presented to it by the
administrative section. In certain types of
cases where the volume of business is large and
quick and routine action is necessary, the ad-
ministrative section i~elf should in the first
instance decide the cases and issue orders, and
the judicial section should sit as an appellate
body to which such decisions could be appealed
on questions of law.
This proposed plan meets squarely the prob-
lems presented by the independent commissions.
It creates effective responsibility for the ad-
ministrative and policy-determining aspects of
the regulatory job and, at the same time,
guarantees the complete independence and
neutrality for that part of the work which must
be performed after the manner of a court. It
facilitates and strengthens administrative man-
agement without lessening judicial independ-
ence.
42
The plan hus, furthennore, the great advan-
tage of adaptability to varying conditions.
With the administrative and judicial sections
under the roof of the same department, the
details of their organization could be worked
out experimentally by Executive order. The
precise division of labor between them could.
also be readily modified in the light of experi-
ence, and the shifting of a function from one
section to the other would not raise the major
jurisdictional controversies that sometimes re-
sult from propos~ls to alter the status or duties
of an independent commission.
Furthennore, the principle of the plan does
not have to be applied with exact uniformity to
every commission. The requirement and pres-
ent practices of each commission may be taken
into consideration in carrying out this principle.
There is nothing essentially novel or startling
about the proposed plan. There are numerous
precedents and analogies which refute the
suggestion that it is revolutionary or dangerous.
In the first place, we should remember that
for 30 years important regulatory functions
have been carried on by the executive depart-
ments. The powers of the Secretary of Agri-
culture under the Packers and Stockyards
Act are essentially the same in nature and
importance as those of the regulatory commis-
sions. And there are over 20 regulatory laws
similarly administered. By common consent
the departments have done this work well.
And yet under this arrangement the judicial
phases of the regulatory process, involving
important rights of property, are handled by
politically responsible, policy-determining offi-
cials, a system far more open to attack than the
proposed plan which carefully places the
adjudication of private rights in an independent
judicial section.
In the second place, the idea of giving those
phases of the administrative process which
involve policy and discretion to a different
agency from that which issues orders or makes
decisions after the manner of'a court is a very
old one. We find this principle working com-
fortably in our legislative courts, such as the
Customs Court and the Court of Claims, or in
that pseudo court, the Board of Tax Appeals.
These bodies decide cases originating in the
process of administration and presented to
them by administrative officers. It is true that
they are not handling cases which are precisely
the same as those coming before our regulatory
The President's Committee
commissions, but they are established as they
are in order that the functions of administration
need not be imposed upon the officials who are
charged with the adjudication of private rights
and the public interest. This same segregation
of function lies at the heart of the proposed
plan.
A groping after the same principle is found,
in the third place, in those departments and
agencies in which have been set up appellate
bodies, judicialized in varying degrees, which
sift and review the preliminary decisions and
orders of administrative officers. This device
has long been in operation in the Patent Office,
the Immigration and Naturalization Service,
the Veterans' Administra.tion, the Treasury, and
elsewhere. Here again we recognize the desir-
ability of separating the task of ultimate deci-
sions upon private rights from the preliminary
steps in which there is a larger element of
administrative discretion.
Finally, a close scrutiny of the way in which
the more important regulatory commissions
handle their work indicates that the division of
functions between the proposed administrative
and judicial sections is merely a fonnalizing by
statutory enactment of the division of labor
that has already been set up within the com-
missions themselves.' In nearly every case the
commissioners devote the major part of their
time and energy to the deciding of cases and
the issuance of orders on the basis of the records
and findings prepared by the examiners, attor-
neys, and other officers making up the com-
mission's staff. The division of labor is, of
course, very rough and tentative, and there is
no corresponding division of responsibility be-
tween the commissioners and their subordinates.
But the fact that that division of labor has
emerged, not under any legal compulsion, but
because it has proved a normal and convenient
method of getting the commission's work done,
is significant for our present purposes.
The process of setting the proposed plan in
motion would in a sense be merely the following
of a path already roughly pricked out. The
present commissioners as a body would assume
the status of a judicial section. The present
staff of the commission under a responsible
administrative chief could, with a minimum of
disruption, be molded into an administrative
section. It is difficult to see how the transition
could be very disturbing or why the plans should
not work smoothly and efficiently.
On Admini.strative Management
E. GOVERNMENT CORPORATIONS
The Government corporation is a useful and
efficient means of carrying out powers granted
the Federal Government under the Constitu-
tion. It has proved to be an effective device
not only for emergency purposes but for the
continuing operation of a variety of economic
services. Its peculiar value lies in freedom of
operation, flexibility, business efficiency, and
opportunity for experimentation.
These advantages, however, raise unusual
problems in the realm of administrative man-
agement. Special forms of supervision and
control are needed to preserve these values and
at the same time to insure that they are utilized
in the public interest. The supervisory tech-
niques must be suitable to the corporate form
but must insure efficient operation, public ac-
countability, responsiveness to popular will, and
integration with the whole task of executive
responsibility for management.
Considerable variety is found in many aspects
of these special instrumentalities. No one
simple formula will produce the desired result
of adequate supervision in a group of agencies
that differ so widely in their purpose, powers,
organization, and structure. Before installing
appropriate controls careful analysis of the
various types is needed to determine the reasons
for their creation, the method of their forma-
tion, and the varying degrees of Government
participation they require. In no event should
these controls be of a nature to inhibit the
essential values of the corporate device which
were the original justification for its adoption.
Purpose of the Corporation
The corporate device presents factors of
flexibility and business efficiency not often
obtainable under the typical bureau form of
organization. Corporations are generally ex-
pected to be self-supporting enterprises and
to be no burden upon the Treasury, even in
cases where it has subscribed to their initial
capital. They usually have the right to borrow
on their own obligations and to use the income
derived from charges for their services for pay-
ment of their necessary expenses. Freedom
from the necessity of appropriations carries
with it freedom from various governmental
controls and restrictions, such as budget pro-
cedures; personnel regulations governing ap-
pointment, discharge, and compensation; and
various governmental rules regarding purchase,
43
travel, space, and property. Ordinarily they
devise their own systems of accounts, and, with-
in the limits of their eMbling statutes, may
incur obligations and settle claims.
Citizens, particularly when they participate
in their ownership, are more inclined to expect
businesslike procedures from corporations than
from direct Government activity. Corporations
have demonstrated their business efficiency in
such fields as the making and collection of
loans, the management of property, and the
operation of transportation facilities. They
can be held responsible for an entire result by
the accomplishments reflected in their annual
reports and balance sheets rather than by a
minute scrutiny of their detailed transactions.
The corporation makes possible participation
by private interests in the ownership of a
Federal instrumentality. In the Federal Land
banks, for example, the Government subscribed
the original capital stock but with the expecta-
tion that private ownership would be substi-
tuted for the Government investment.
The corporation affords considerable oppor-
tunity for regional decentralization and local
autonomy. Authority and responsibility can
be devolved upon patrons by representation on
regional boards. In a Nation so large and
varied in its natural conditions and habit pat-
terns, this device brings into playa mechanism
which can respond to a regional need more
adequately than conventional governmental
forms. Its regional boundaries need not coin-
cide with political areas but can conform to
economic and social factors of homogeneity
relevant to its purposes. These purposes can
be unitary, such as providing home loans or
farm loans. The Tennessee Valley Authority
has demonstrated that they can be multiple
in the broad field of regional development, in-
.eluding such varied elements as river control,
conservation, power production and trans-
mission, and national defense. So broad a
program affects every aspect of regional welfare
and governmental activity for its advancement.
The corporate form provides a particularly
convenient means for achieving various degrees
of limitation of sovereign immunity when the
Federal Government undertakes to foster busi-
ness-lilm activities in fields it may properly
enter. A Federal corporation can be specifi-
cally authorized to pay State taxes, to sue and
be sued in State or in Federal courts, and by
 44
appropriate legislation can be made subject to
certain State laws that have reference to its
particular activities.
By the use of self-sustaining business corpo-
rations, it is frequently possible for the Govern-
ment to provide an economic service of national
importance without entering directly into busi-
ness itself, thereby obviating additional burdens
on the Federal Treasury.
The use of the corporate device is by no
means new. Since 1791, when the Congress
authorized the creation of the first Bank of the
United States, the Federal Government has
frequently used corporate devices to carry out
its powers under the Constitution. It has
become a well-established doctrine since the
case of :McCulloch v. Maryland that the crea-
tion of a corporation is within the power of the
Congress. As Chief Justice Marshall said,
"The Government which has a right to do an
act, and has imposed on it the duty of perform-
ing that act, must, according to the dictates of
reason, be allowed to select the means * * *"
The history of the establishment of Govern-
ment corporations indicates that those of a
permanent nature have been for the most part
financial and banking institutions established
under the fiscal powers of the Congress. Au-
thority for the creation of most of the other
Federal corporations has been derived from the
war power or from the power to regulate
interstate commerce. Most Federal corpora-
tions have been authorized during periods of
national emergency, such as economic depres-
sions and wars. The employment of the cor-
porate deVice was greatly increased during the
World War, and since the beginning of the
depression in 1929 there has been an unprece-
dented expansion in its use.
"Business" an~
"Governmental" Corporations
For convenience in describing the various
kinds of Government corporations and to deter-
mine the appropriate degrees and kinds of
governmental supervision, they may be divided
into two broad categories: Federal "business
corporations" and Federal "governmental cor-
pora tions."
Federal "business corporations" is the term
used here to designate corporations which are
federally chartered and in which private rights
V are represented by stock ownership and board
representation. These corporations are usually
authorized as a permanent national system
The President's Oommittee
and have been engaged principally in the field
of banking and credit. The introduction of
private ownership and representation creates
an element of contractual relationship which
necessarily limits subsequent arbitrary rear-
rangements of their fiscal and board structures
by the Government. The statutes authorizing
their creation usually confine their operations
to a unitary purpose and describe their organ-
ization, powers, and relationships in con-
siderable detail. As of October 1, 1936, there
were almost 14,000 Federal business corpora-
tions, in contrast to about 90 Federal govern-
mental corporations.
Federal business corporations are usually
institutions serving either a local community
or a region. The localized group includes
national banks (numbering 5,374), national
farm loan associations (5,028), Federal credit
unions (1,739), and joint-stock land banks, in
liquidation (47), Federal savings and loan
associations (1,183), and production credit
associations (554). There are 72 examples of
the regionalized type, all operating in the field
of banking and credit. They include the 12
Federal Reserve banks, the 12 Federal Home
Loan banks, and the 48 regional business
corporations in the 12 farm credit districts-
4 to a district, including the Federal Land
banks.
Federal "governmental corporations" is the
term used here to designate corporations
'"'1whether incorporated under Federal or State
charter) which are federally owned and con-
trolled. In these organizations a majority of
/.,/ the stock is owned by the United States and
no member of the board of directors is elected
or appointed by private interests.
Governmental corporations number about
90. Certain of them were incorporated under
State charters during the World War and are
now inactive. Others were created during the
present emergency to carry on emergency
relief work or construction programs of various
kinds. The Commodity Credit Corporation
and the Federal Surplus Commodities Corpora-
tion are examples of this emergency type.
There are certain older operating services
under State charter, such as the Panama Rail-
road and the Alaska Railroad. The Inland
Waterways Corporation was created under
Federal charter. The largest and most im-
portant corporations of the governmental type,
however, were federally chartered by the Con-
gress during the present emergency. They
 On Admini8trative lrfanagement
receive a large measure of Treasury assistance
by way of capital, loan funds, guaranty of
obligations, or direct appropriations. Of these,
the Reconstruction Finance Corporation, Home
Owners' Loan Corporation, Federal Deposit
Insurance Corporation, and Federal Farm
Mortgage Corporation are lending or financial
agencies headquartered in Washington. The
Tennessee Valley Authority is operating from
a central headquarters in its own region.
Chartering and Supervision
Federal business corporations are, as a rule,
chartered by a supervisory agency provided for
in the enabling statute, which agency is usually
authorized also to examine and regulate their
operations. Supervisory agencies vary in form.
They may be bureaus under regular depart-
ments, such as the Comptroller of the Currency
in the Treasury (national banks); they may be
independent establishments headed by boards,
such as the Federal Home Loan Bank Board;
they may be independent establishments under
single administrators, such as the Governor of
the Farm Credit Administration.
Governmental corporations, such as the
Reconstruction Finance Corporation and the
Home Owners' Loan Corporation, were char-
tered by the Congress and report directly to the
President without the intervention of a super-
visory agency. In some cases the Congress
has speeifically authorized purchase of a State
corporation or incorporation under State laws.
In times of war and other national emergency,
corporations have been chartered under the
laws of the several States by executive officers
of the Government to further some activity
authorized by legislation.
There are great advantages in certainty of
operation if the Federal charter is used wherever
possible. There is grave question as to the
advisability of the continued use of State char-
ters by the Federal Government and further
study of this problem is recommended. There
is reason to believe that unnecessary conflicts
of State and Federal jurisdiction are engendered
and that the use of the State charters threatens
the Federal Government with the impairment
or destruction of its control over its instrument
in the face of State hostility. Considerable
uncertainty and litigation have undoubtedly
"arisen in this connection.
Federal laws which authorize officers of the
Government to charter corporations usually
limit the general purposes or fields of activity in
45
which it is intended that the corporation should
operate but give wide powers to the corporation
to enable it to accomplish its purposes. As
stated above, supervision by special govern-
mental agencies is provided as a safeguard.
This general practice should be followed where-
ever possible.
Governmental corporations and various su-
pervisory agencies over business corporations
have frequently been set up as independent
establishments detached from the regular de-
partments and under full-time salaried boards
of directors having overlapping terms. There
are some strong points in favor of maintaining
the separate identity of these agencies. Their
independence, however, has been extended to
a point where the task of the President is
once again made more burdensome. Agencies
of this type should not be excepted from a gen-
eral plan to reduce the number of lines of direct
contact with the Chief Executive. To preserve
the advantages of independent identity, some
kind of semi-autonomous status in the regular
departments is desirable.
In the case of governmental corporations, va-
rious degrees of over-all management controls
are justifiable, and the President should be
authorized to apply them as may be necessary.
Though these corporations require a certain
degree of freedom and flexibility, they may in
many instances have much to gain by the use
of central budget, accounting, personnel, audit,
and other services. It should be within the
power of the President to see that these services
are appropriately applied in each case.
Recommendations
Our recommendations on Federal corpora-
tions may be summarized as follows:
1. "Business corporations" should be
placed under special supervisory agencies to
be set up in appropriate departments of the
Government to give continuous and careful
scrutiny to their affairs. These agencies
should be provided with the special equip-
ment and staff necessary to supervise com-
petently the particular field in which the
corporations operate.
2. Each "governmental corporation"
should also be placed under a supervisory
agency in an appropriate department. In
addition, there should be continuing author-
ity in the President to place such corporations
under civil service, under other rules regard-
ing personnel, and to apply such over-all
46
governmental controls as may be found
advisable in each case in the fields of budget-
ing, accounting, audit. and the issuance of
obligations.
3. Where it is desirable to preserve the
independence of the supervisory agency, it
should be given semi-autonomous status in a
department. The single responsible admin-
istrator at the head of a supervisory agency
is preferable to the board form. The head of
the supervisory agency should appoint the
boards of directors of corporations in the case
of boards which have government represen-
tation. If heads of supervisory agencies are
to exercise an independent review of corporate
activities, they should not be directors of
corporations they supervise.
REORGANIZATION AND ADMINISTRATIVE MANAGEMENT
Modern management under responsible lead-
ership is the keynote of the reorganization
herein recommended. This is to be achieved
through placing all administrative agencies
under 12 major departments. These depart-
ments may be set up by the Congress and all of
the administrative work of the various agencies
of the Government brought into them or into
the three managerial agencies of the President
by Executive order, after careful examination of
their work, their needs, and their personnel.
The responsibility for maintaining continuously
an efficient and manageable organization with-
in the framework of the broad policies outlined
by the Congress is to be placed directly upon
the President, since itis a continuing Executive
function. The Executive should be 'given the
essential tools for modern administrative man-
agement and at the same time should be made
more effectively accountable to the Congress.
In this reorganization of the Government
every administrative activity should be set up
with a single responsible head. Boards should
not be burdened with administration, but
should be continued for advisory, corporate, and
quasi-judicial purposes. This would require the
separation of the administrative and judicial
functions of the independent regulatory agen-
cies. Their administrative work would be
transferred to a regular department and the
board or commission would be continued within
the department to deal with the judicial work.
The President's Oommittee
4. The boards of directors of corporations
in turn should not attempt to divide manage-
ment work among themselves, but should
assign the task of corporate administration
to a president or general manager who
reports to them. Interdepartmental com-
mittees in charge of corporate activities have
not been successful and should be avoided.
Responsibility is either assumed by one de-
partment or is entirely diffused. Ex-officio
designation of specific public officers as board
members is undesirable and should be dis-
continued.
With these safeguards we are convinced that
the corporate form can continue to be used as
a valuable instrument in effectuating public
policy.
All Government corporations should likewise
be brought under supervision and control
through transfer into regular departments.
They should be established therein as semi-
autonomous divisions, with extension to them
of such budgetary, financial, and personnel
supervision or control as may be appropriate in
any given case.
With the entrance into the departments of
the multitude of agencies now floating around
or loosely independent, the departments them-
selves will require internal reorganization. It
is suggested that the departments should follow
the general pattern recommended for the Gov-
ernment as a whole. Each department should
have at its head a Member of the Cabinet.
Working under him in policy posts there would
be a small number of men of his own selection,
and a group of technical advisers. The opera-
tion of the department would be carried on
through bureaus and semi-autonomous agencies,
manned throughout by civil servants, and under
the administrative supervision of a career ex-
ecutive officer.
By such a reorganization the heads of the 12
great departments will of necessity rise higher
above the level of administrative detail than
they have in the past, will be more responsibly
engaged in the formulation of policy as they
delegate their administrative work to their
subordinates, and collectively the department
heads may act more and more as a council of
On Administrative 3!anagement
state upon whom the President may rely for
advice and whose jurisdictional differences of
opinion he will himself have the power and the
authority to compose.
Such a reorganization of the administrative
agencies of the Executive Branch will reduce
. 47
the number of agencies reporting to the Presi-
dent to a manageable compass and will bring
the machinery of our Federal Government up
to date and enable it to deal economically,
effectively, and democratically with modern
problems.
 VI. ACCOUNTABILITY OF THE EXECUTIVE TO
THE CONGRESS
•
Under the American system the Executive
power is balanced and made safe by freedom of
speech, by elections, by the protection of civil
rights under an independent judiciary, by the
making of laws which determine policies in-
cluding especially appropriations and tax meas-
ures, by an independent elective Congress, and
by the establishment of Executive accounta-
bility.
The preservation of the principle of the full
accountability of the Executive to the Congress
is an essential part of our republican system.
In actual practice the effectiveness of this
accountability is often obstructed and obscured,
and sometimes is defeated by the processes of
diffusion, processes which are at work not only
in the Executive Branch but in the Congress
itself.
If the reorganization of the administrative
departments and the establishment of the
managerial agencies that we have recom-
mended be carried out, tben we believe that the
country may confidently look forward to an
improvement in coordination of administrative
work. Contradictory administrative policies
which are so irritating to the Congress and so
confounding to the people would be minimized.
Thus tbe accountability of the Executive
Branch may be made sharp, distinct, and
effective.
There is, we believe, too little appreciation
among the people of the country of the day-to-
day work of the Congress. Although it is
generally understood that the Members of
Congress spend many days and weeks in the
preparation, perfection, and adoption of legis-
lative measures, the extent of their work is not
generally known. They serve on committees
which llot only prepare legislative measures for
submission to their respective Houses, but con-
duct hearings and investigations which throw
light upon the problems of the country and the
processes of government through which the
people are enabled to see and understand their
Government.
Nothing should be done that would diminish
the importance of the work of the congressional
committees in conducting bearings and pursuing
investigations. Time and time again in our
history investigations conducted by congres-
sional committees have illumined d'ilrk places
in the Government and in the affairs of the
Nation and have resulted in the correction of
abuses that otherwise might have been unde-
tected for years and years. It is with full
realization of the necessity of continuing and
preserving this important function of the
Congress and its committees that we suggest
the necessity for improving the machinery of
holding the Executive Branch more effectively
accountable to the Congress.
This accountability often is obscured by the
Congress itself in imposing upon the Executive
in too great detail minute requirements for the
organization and operation of the administra-
tive machinery. Faced by such mandatory
and detailed legislative requirements (whether
in general law or in a rider on an appropriation
bill), first the bureau chief, then the Secretary
of the department, and then the President is
absolved from part of his executive responsi-
bility, and in consequence the Congress is fore-
closed from adequately criticizing the conduct
of the business.
We have called attention to tbis difficulty
with respect to fiscal accountability. We hold
that once the Congress has made an appropria-
tion, an appropriation which it is free to witb-
49
50
hold, the responsibility for the administration
of the expenditures under that appropriation
is and should be solely upon the Executive.
The Executive then should be held to account
through an independent audit made by an
independent auditor who will report promptly
to the Congress his criticisms and exceptions of
the actions of the Executive. Based upon
these reports the appropriate committees of
the Congress may call upon an executive officer
to explain his conduct and if it has been char-
acterized by illegality or impropriety, the Con-
gress can take the necessary corrective steps
and safeguard the future.
With respect to the accountability of the
Executive Branch to the Legislative Branch for
fiscal and other activities, the difficulty now is
that the diffusion and disperson of activities
in the uncoordinated organization of the Execu-
tive Branch is twinned by a similar diffusion
and dispersion in the Congress. Separate com-
mittees of the Congress must of necessity be set
up to pursue investigatorial activities, hold
TAe Pre8ident'8 Oommittee
hearings, and consider legislation llnd appropria-
tions. But the Congress has not in either House
adequate machinery for the collection and
coordination of the information which it re-
quires if it is to hold the President effectively
accountable for the conduct of the Executive.
Branch as a whole.
With respect to fiscal affairs this need might
be met by the organization by each House of
special committees or by both Houses of a joint
committee on fiscal control to receive the reports
of its Auditor General.
With respect to nonfiscal affairs, the creation
of similar special committees or of a joint com-
mittee to keep currently informed of the activi-
ties of the three managerial agencies dealing
with budget, personnel, and planning, which we
recommend should be set up directly under the
President, would go far toward lessening the
evil effects of the present lack of coordination.
Thus the principle of the accountability of
the Executive to the Congress might be made
effective in action.
1
rI
CONCLUSION
•
Your Committee has no illusions about setting
up a perfect system of administrative manage-
ment, for we realize fully that any substantial
improvement is a task which will require time
for its achievement and that other problems
will always be emerging. To revive the
drooping merit system, to straighten out warped
lines of responsibility, to simplify a topsy-turvy
organizational growth-these are by no means
simple advances.
Moreover, these changes cannot be adopted
and maintained unless the American public
itself fully appreciates the advantages of good
management and insists upon getting them.
The need for reorganization rests not alone on
the idea of savings, considerable as they will be,
but upon better service to society. While good
management is important to those who have
much, it is still more important to those who
have not or have little; for they need the help
of government in their struggle for justice,
security, steadier employment, better living and
working conditions, and a growing share of the
gains of civilization.
In order to avoid any misunderstandings, it
must be made perfectly clear that it was not the
task of this Committee to determine whether
particular activities of the Government should
or should not continue in operation or upon
what scale of magnitude. This is an important
question of policy determination which fell
outside the field of our undertaking. It has been
our problem to consider what forms of adminis-
trative management are most suitable, given
such governmental activities as there are. As
the work of the Government changes, the form
of management will also alter somewhat,
although not greatly unless the changes are
considerable.
It will be noted that we have made no esti-
mate of the amount of money that will be saved
by such a rearrangement and reorganization
of the Executive Branch as we have suggested.
153155-37-5
We have not made such an estimate for two
reasons, despite the fact that we are convinced
that the establishment of the managerial
agencies and the reorganization of the adminis-
trative departments that we have recommended
will result in large savings, not only of money,
but of time and effort.
The two reasons that we have not made such
an estimate are as follows:
First, the scope of our inquiry was limited to
the realm of administrative management and
excluded the realm of policy. It would have
been easy to say that so much might be saved
by utterly abolishing this, that, or the other
activity of the Government. But this was not
our task. We have been charged with the
duty of suggesting means of making more
effective, more efficient, and more economical
the machinery for administering whatever
activities have been decided upon by the people,
the Congress, and the President.
Second, it has been demonstrated over and
over again in large organizations of every type
in business and in government that genuine
savings in operation and true economies are
to be achieved only by the provision of ade-
quate managerial machinery which will afford
an opportunity for central executive direction
to pursue day after day and year after year,
in season and out of season, the task of cutting
costs, of improving the service, and of raising
the standards of performance. It cannot be
done by arbitrary percentage cuts, arbitrary
dismissal of employees, arbitrary consolidation
of agencies. It is an operation that must be
performed, but for its successful performance
we must requisition the skill of the surgeon
and his scalpel and not be tempted to call in
the butcher with his cleaver.
To equip the Executive Branch with better
means of managerial direction, better personnel,
better fiscal controls, better machinery for
planning; to simplify its organization and
51
52
reduce the number of its agencies; and to
sharpen its accountability to the Congress will
result in savings--savings in money, in time,
in energy. To estimate these savings in terms
of dollars and cents would be but to guess in a
situation where not guessing but intensive
scientific research is the means, and the firm
and courageous application of the results of
the research is the method, if the aim is to be
achieved.
The paramount purpose of your Committee
has been throughout to find modern methods
of carrying out the national aims and programs
of America as far as this duty is imposed upon
our Executive by our Constitution. We have
not been concerned with strengthening the
Executive alone and as such, but with the larger
aim of strengthening the American system as a
whole in its practical operations.
We should be the first, moreover, to recognize
that there is wide room for differences in the
details of any program, but we believe that there
should be no division upon the soundness of the
broad principle that the managerial powers and
equipment of the President should be equal to
his responsibilities under the Constitut.ion.
'With the program here suggested, your Com-
mittee believes t.hat this may be accomplished,
and that administrative management in the
office of the President will work more smoothly
and effectively in the task of executing the
judgment and decisions of the Nation and
carrying out the general policies of the Congress.
The proposals of the Committee may be
summarized as follows:
1. Expand the White House staff so that
the President may have a sufficient group of
able assistants in his own office to keep him
in closer and easier touch with the widespread
affairs of administration and to make a
speedier clearance of the knowledge needed
for executive decision;
2. Strengthen and develop the managerial
agencies of the Government, particularly
those dealing with the Budget, efficiency re-
search, personnel, and planning, as manage-
ment arms of the Chief Executive;
3. Extend the merit system upward, out-
ward, and downward to cover all nonpolicy-
determining posts; reorganize the civil-serv-
ice system as a part of management under a
single responsible Administrator, strengthen-
ing the Civil Service Commission as a citizen
Civil Service Board to serve as the watchdog
of the merit system; and increase the salaries
The President's Oommittee
of key posts throughout the service so that
the Government may attract and hoid in a
career service men and women of the highest
ability and character;
4. Overhaul the 100 independent agencies,
administrations, authorities, boards, and
commissions, and place them by Executive
order within one or the other of the following
12 major executive departments: State,
Treasury, War, Justice, Post Office, Navy,
Conservation, Agriculture, Commerce, Labor,
Social Welfare, and Public Works; and place
upon the Executive continuing responsibility
for the maintenance of effective organization;
5. Establish accountability of the Execu-
tive to the Congress by providing a genuine
independent postaudit of all fiscal trans-
actions by an Auditor General, and restore
to the Executive complete responsibility for
accounts and current financial transactions.
These proposals have the merit, we believe,
of eliminating the evils of the patronage sys-
tem; of opening out our civil service more fully
and completely as a sound career service, per-
manent, nonpartisan, competent, fairly com-
pensated, and affording promotion to posts of
eminence; of unifying the responsible direction
of personnel activities while at the same time
providing for disinterested citizen supervision
of the whole program.
These plans are designed to make possible a
more responsible and effective supervision and
direction of fiscal management than hitherto,
first, by strengthening the Bureau of the
Budget, particularly through the development
of efficiency research; second, by returning to
the Executive the powers inappropriately
exercised by the Comptroller General; and
third, by departmental reorganization. This
opens the way for genuine Executive direction
and for efficiency and economy.
At the same time, provision is made for what
is equally essential, namely, genuine accounta-
bility of the Executive Office to the Congress
through adequate audit and through general
supervision of broad policies of fiscal and other
administration.
The proposed arrangements provide for the
organization of planning management through
a National Resources Board with an advisory
function of overhead consideration of the
conservation and utilization of our national
resources, both natural and human. Depart-
ment reorganization, also, will increase the
scope and effectiveness of planning.
 On Administrative Jfanagement
These changes taken together will give to the
Executive agencies of fiscal management, per-
sonnel management, and planning manage-
ment. Under the plans proposed these three
anus of management are knit together in the
White House, under the inunediate direction
of the President.
The drastic reduction in the number of
departments, commissions, boards, authorities,
agencies, and activities from over 100 to 12
will have many implications. It will take us
back to the Constitution in that it ties in the
wandering independencies and abolishes the
irresponsible and headless "fourth branch" of
the Government which has grown up unnoticed.
It will reestablish a single Executive Branch,
with the President as its responsible head, as
provided by the Constitution. Moreover, it will
make it humanly possible for a President to
do his job, and to coordinate the activities for
which he is constitutionally, legally, and
popularly responsible, by greatly lessening the
contacts and detail which now engulf him.
It will make of the Government a businesslike
organization for effective and efficient service,
and, finally, will render the whole Government
more easily understood and controllable by
the people, and thus a more faithful servant
of the people.
At the same time, sharper lines of account-
ability to the Congress are traced, and forms
of decentralization, both geographical and
departmental, outlined.
Your Committee fully appreciates that there
is no magic in managemen t alone. Management
is a servant, not a master-a means, not an
end, a tool in the hands and for the purposes of
the Nation. Public service is the service of the
common good in peace or war and will be judged
by this standard. Not merely lower unit costs
but higher human happiness and values are the
supreme ends of our national life, and by these
tenus this and every other system must finally
be tested. Good management will promote in
the fullest measure the conservation and utiliza-
tion of our national resources, and spell this out
plainly in social justice, security, order, liberty,
prosperity, in material benefits, and in higher
values of life. The adjustments and arrange-
ments we suggest have no other purpose or
justificntion than better public service for our
people through better administrative manage-
ment.
53
It may be said that there is danger that
management itself will grow too great and forget
where it came from or what it is for-in the old
and recurring insolence of office. But in the
judgment of your Committee, based upon broad
observation of the bewildering sweep of recent
events here and elsewhere, the really imminent
danger now is that our democracy and perhaps
others may be led by false or mistaken guides to
place their trust in weak and faltering inaction,
which in the bitter end runs to futility and
defeat. In the late war, democracies showed
vast strength and tenacity in times of strain
that racked every fiber of the ship of state.
And now we face and will master the critical
tasks of reorganization and readjustment of
many tangled parts of our national life on many
new frontiers. The injustice and oppression
intertwined with solid good in our American
system will not always yield without a firm dis-
~lay of our national constitutional powers. Our
national will must be expressed not merely in a
brief, exultant moment of electoral decision,
but in persistent, determined, competent day-
by-day administration of what the Nation has
decided to do.
Honesty and courage alone are not enough
for victory, either in peace or in war. Intel-
ligence, vision, fairness, firmness, and flexibility
are required in an assembled, competent, strong
organization of democracy. To falter at this
point is fatal. A weak administration cnn
neither advance nor retreat successfully-it can
merely muddle. Those who waiver at the sight
of needed power are false friends of modern
democracy. Strong executive leadership is
essential to democratic government today. Our
choice is not between power and no power, but
between responsible but capable popular govern-
ment and irresponsible autocracy.
The forward march of American democracy
at this point of our history depends more upon
effective management than upon any other
single factor. The times demand better gov-
ernmental organization, staffed with more
competent public servants, more free to do their
best, and coordinated by an Executive account-
able to the Congress and fully equipped with
modern tools of management. Thus the Presi-
dent will have effective managerial authority
over the Executive Branch commensurate with
his responsibility under the Constitution of the
United States. '
PERSONNEL ADMINISTRATION IN THE
FEDERAL SERVICE

by
FLOYD W. REEVES and PAUL T. DAVID
1
 PERSONNEL ADMINISTRATION IN THE FEDERAL SERVICE
by
FLOYD W. REEVES and PAUL T. DAVID

•
Contents
Page
Introduction-The Problem of Effective Personnel Administration 59
The Opportunity of the Chief Executive 59
The Difficulties Faced by the Chief Executive 60
The Question of Executive Discretion 60
Conclusions and Recommendations 62
Findings as to Present Federal Personnel Administration 62
Recommendations Concerning Improved Organization for Personnel Administration 64
Recommendations for Extension of the Merit System 66
Long-range Character of the Recommended Program 67

Part 1. Federal Personnel Administration Today

A. Personnel Functions of the Chief Executive 68

Advisory Relationship to Legislative Policy 68
Determination of Major Administrative Policies 69
Appointive Powers of the Chief Executive 71
Routine Personnel Administrative Functions 71
B. Personnel Functions of the Bureau of the Budget 72
Advisory Relationship on Personnel Policies 72
Assistance to Chief Executive on Routine Personnel Matters 72
Fiscal Control as It Affects Personnel 73
Review of Expenditures for Personnel Administration 73
C. The Civil Service Commission 74
Relationship to the Chief Executive 74
Internal Organization of the Commission's Establishment 75
Administrative Functions 75
Rule-making Functions 77
Appellate Functions 77
Developmental Functions 78
Quality of the Commission's Work 80
Development of the Commission as a Central Personnel Agency 82
D. The Council of Personnel Administration 84
E. Other Central Agencies Dealing with Personnel Functions 86
Employees' Compensation Commission 87
United States Public Health Service 87
United States Employment Service 88
Bureau of Labor Statistics 88
Office of Education 89
57
58 Contents

Part 1. Federal Personnel Administration Today-Continued

1'alrl
F. Personnel Administration in Operating Establishments 89
Characteristics of the Federal Service 89
The Development of Personnel Administration 91
Personnel Administration in the Department of Agriculture 91
Need for General Extension of Better Practices 93
Part II. The Development of a Service of Personnel Administration

A. An Adequate Central Personnel Agency 95

Duties and Responsibilities of the Central Personnel Agency 96
The Development of an Adequate Central Personnel Agency 97
Representation of the Public Interest in the Merit System 99
B. Adequate Personnel Offices in Operating Establishments 101
Division of Activities Between Central Agency and Departmental Offices 101
Personnel Administration in Emergency Agencies 102
Personnel Administration in Government Corporations 104
C. The Improvement of Personnel Policies and Standards 105
The Council of Personnel Administration 106
The Place of Research 107
Procedure in the Preparation of Rules and Regulations 107
Procedure for the Preparation of Legislative Recommendations 110
D. The Improvement of Personnel Relations 111
Problems in Connection with Employee Representation 111
Problems of Compensation Levels, Hours of Duty, and Working Conditions 114
Problems in Connection with Individual Grievances 115
E. The Planning of Organization Structure 116
F. General Aspects of the Service of Personnel Administration 118
G. Plan for Placing Recommendations in Effect 120

Part III. The Extension of the- Merit System

A. The Administration of High Administrative Positions 121

Division of High Administrative Positions into Two Groups 121
A Nonpolitical Executive Officer in Each Department 122
Selection Procedure for Nonpolitical High Positions 122
Legislative vs. Executive Action in Establishing Merit Selection 124
Compensation of Higher Administrative Personnel as Related to the Merit System 125
B. Presidential Positions in the Permanent Field Services 127
C. Lower Excepted Positions in the Permanent Services 129
D. Emergency Personnel not Selected through Open Competition 129
E. The Development of the Merit System into a Career System 130

1
 INTRODUCTION
•
THE PROBLEM OF EFFECTIVE PERSONNEL ADMINISTRATION
This study of personnel administration is
devoted to one of the types of administrative
mana~ement for which the Chief Executive has
a maJor responsibility as the administrative
head of the Executive Branch of the Federal
Government. Other phases of administrative
management are for the most part outside the
scope of this study.
Personnel administration, however, cannot
and should not be considered in isolation. It is
only one phase of the larger problem of admin-
istrative management. When viewed from the
point of view of the Chief Executive, it is
apparent that personnel administration is one
of the most important phases of administrative
management and is closely related to other
phases.
The effectiveness of personnel administration
is a problem of vital concern to a Chief Execu-
tive who desires to increase the ability of his
administration to respond to the demands made
upon it. The quality of the personnel in the
service is a direct reflection of the quality of
past and present personnel administration.
Few if any factors affect more vitally the
services of government than the quality of the
personnel administering those serVIces.
Good personnel may admittedly be very
ineffective in the Federal Government if placed
in an organization framework that is structur-
ally unsound. Emphasis upon good personnel
should not be allowed to minimize the emphasis
that properly should be given to sound organi-
zation. Both problems are of major impor-
tance, and in fact interlock. It is difficult to
attract good personnel to an organization that
is faulty in structure, and it is likewise difficult
to improve the structure of organization with-
out the assistance of good personnel through
whom to work. The two problems must be
attacked concurrently by the Chief Executive,
since he is responsible for leadership in both
matters.
The importance of the personnel problem in
the Federal service is measured by the respon-
sibilities of the service. The overwhelming
magnitude and difficulty of those responsibil-
ities as they now exist need no demonstration,
153155-37-6
and they show little tendency to become less
pressing. The trend for many years and in
all Administrations has been toward an increase
in the permanent services of the Government,
and there is no evidence to indicate that this
long-term trend will not continue. Accordingly,
it is of the greatest importance to take steps that
will assure that the standards of competence
in the Federal service shall be as high as the
human resources of the country will permit.
The Opportunity
of the Chief Executive
In view of the importance of the personnel
problem, the neglect that has been viSIted upon
it by most Chief Executives is a matter of some
interest. The reason sometimes given is the
shortness of the term of office. Four years is
a relatively short time in which to deal effec-
tively with a lon~-run problem so full of tradi-
tional and inhibIting influences. It has been
asserted that a Chief Executive has little incen-
tive to undertake activities which may not come
to full fruition until a generation hence. Many
of the benefits of a constructive personnel
program, however, can be obtained almost
immediately.
The toning up of an organization that can
result from improved personnel administration
is far greater than might be expected from the
actual number of aJ?pointments to be made in
a limited period of tIme. An improved quality
of appointments, particularly with recognition
for latent· ability already in the service, is
doubtless the key to the situation, but the
effects of a good appointment are not con-
fined to the immediate position that is filled.
Good appointments can originate favorable
repercussions throughout wide areas of the
serVlCe.
A vi~orous interest in personnel problems
may in Itself result in a rapId change in morale.
A level of morale conducive to great improve-
ment in performance can be achieved with little
change in the personnel actually at work by a
concerted effort to eliminate maladjustments in
placement, to provide training and opportunity
for advancement, and to develop a constructive
59
60
and cooperative relationship between employ-
ees and supervisors. l
The Difficulties
Faced by the Chief Executive
The Federal service is analogous in its prob-
lem of personnel administration to a large and
complex private organization, but the analogy
has limitations that greatly complicate the
problem of personnel administration as viewed
by the Chief Executive. On the one hand is the
democratic ideal of equality of opportunity in
accordance with merit; on the other hand is
the practical political problem of the patronage.
For more than 50 years the ideal of equality
of opportunity in accordance with merit has
found expression in the Federal service through
the selection of candidates for appointment by
means of open competitive examinations. To
the extent that the ideal of equality of oppor-
tunity in accordance with merit is rigorously
adhered to, the discretion of the Executive is
necessarily limited somewhat by a formalized
procedure. Formalized procedures of the civil
service type are rarely used in even the most
efficient private enterprises. The fact that
rigorous adherence to such a procedure may in
some cases be inconsistent with good adrmnis-
tration is recognized in the Civil Service Act.
Provision was made in that act for exceptions
at the discretion· of the Chief Executive; but
in those areas of the service intended to be
filled on merit alone, the Chief Executive can-
not allow either himself or his subordinates to
exercise discretion to the extent that is typical
in private industry.
The patronage areas of the service would ap-
pear to give the Chief Executive an ample op-
portunity for the exercise of discretion in the
performance of a high type of personnel ad-
ministration; but such in fact is not the case.
Even aside from the limitations upon discretion
in connection with the many appointments for
which the confirmation of the Senate is re-
quired, the Chief Executive is faced with diffi-
culty because of his position as a political leader.
It follows that the Chief Executive is con-
stantly faced with conflict between his political
and his administrative responsibilities in the
direction of personnel activities in those areas
of the service for which he has the greatest
discretion in personnel administration. From
1 The Ideas expres!led In the following paragraphs from the annual
report of the Chief of Staff, United States Army, for the fiscal year 1933,
are almost equally applicable to the civilian forces of the Government:
"The military effectiveness of an army is equal to the product of Its
physical attributes, including strength, skill, eqnipment, and organiza.
tion, multiplied by the intangible factor of morale. A unit with hllth
morale will often accomplish the seemingly Impossible, but when this
all'important factor approaches .ero there invariably result Inelficlency,
failure, and tlnally disintegration.
"The unfailing formula for production of morale is patriotism, self·
respect, discipline, and sclf·confid~nce within B military unit, Joined with
fair treatment and merited appreciation from without. It cannot be
produced by pampering or coddling an army, and Is not necessarily de·
strayed by hardship, danger, or even calamity. Though It NIO survive
and develop In adversity that comes as an Inescapable incident of service,
It will quickly wither and die if soldiers come to believe themselves the
victims of Indifference or injustice on the part of their government, or of
Ignorance, personal ambition, or ineptitude on the part of their military
!eaders."
Personnel Administration
the point of view of his administrative respon-
sibilities, the tendency is to seek the best avail-
able personnel and to conduct other personnel
activities on the basis of the requisites for a
high type of performance. From the point
of view of his political responsibilities, leader-
ship in a legislative program of any considerable
magnitude under existing political conditions
requires a constant series of concessions rang-
ing from slight favoritism toward persons with
"clearance" to outright political appointments
to important positions for which the appointees
are unqualified and in which they exert a dead-
ening influence over the quality of work in large
areas of the service. The result is a constantly
shifting pattern, occasionally marked by in-
stances of administration of extraordinarily
fine quality, but on the whole producing a
grade of administration far below what it
might be.
The Question
of Executive Discretion
An important question that must be faced
by the Chief Executive in the improvement of
personnel administration thus arises: Should
he seek more or less discretion over the ad-
ministration of personnel matters throughout
the Federal service? At the risk of appearing
paradoxical, it may be ventured as a pre-
liminary answer that he needs both more and
less.
Re needs restriction upon his appointing dis-
cretion over large numbers of positions. The
existing number of political appointments ap-
pears to be far greater than that required for
political leadership. The number should be
reduced as rapidly as feasible by the extension
of the formalized competitive examination pro-
cedure. This implies a considerable extension
of the classified civil service. This reform is
needed not only to give the Chief Executive a
buffer against political pressure in the perform-
ance of as large a part of his administrative task
as possible, but also to prevent the enormous
wastage of his time and strength that· now
occurs in making appointments open to political
considerations. Pressure in connection with
political appointments must be materially
relieved before the Chief Executive can give
adequate attention to improvement in personnel
or to other aspects of administration.
Appointments, however, constitute only one
aspect of the problem of good personnel admin-
istration. Other major personnel functions
include the classification of positions to clarify
responsibilities and duties and to permit salary
standardization; the administration of status
changes to improve placement and build a
career service; the determination of appropriate
salary levels and the administration of indi-
vidual salary changes; the systematic training
of employees in the performance of their duties
and for advancement; the conduct of employee-
1
in the Federal Service
management relations; the control of working
conditions to promote health, safety, and effi-
ciency; the administration of compensation for
death, disabilities, and injuries in line of duty;
and the retirement of superannuated and dis-
abled employees.
All of these activities are fundamental to
good personnel administration. Some of them,
individually, are as important as the adminis-
tration of the recruitment, selection, and initial
placement of employees. Collectively, they
are much more important in a mature, going
enterprise than the single function of adminis-
tration of original appointments. Since much
improvement of techniques and procedures still
remains to be achieved for each of these activi-
ties, research and investigation are also impor-
tant to constructive personnel administration.
Much of the actual work of personnel ad-
ministration cannot be performed by specialized
61
personnel officers, but must continue to be per-
formed by line supervisors. The training of
supervisors at all levels in the personnel aspects
of their supervisory duties is therefore an im-
portant part of any really constructive job of
personnel administration.
From the point of view of the Chief Execu-
tive, the successful performance of the entire
range of personnel administrative activities is
essential to that efficient conduct of the business
of Government for which he is responsible.
His existing authority over many aspects of
personnel administration is broad in theory,
bu~ in practice it comes to little because of the
lack of properly organized technical assistance.
To some extent he needs additional statutory
authority, but in the main he needs a well-
organized service of personnel administration
at all administrative levels, the principal sub-
ject of this study.
 CONCLUSIONS AND RECOMMENDATIONS
•
The main body of this study is divided into
three parts, devoted respectively to a discus-
sion of Federal personnel administration as it
now exists, recommendations for the develop-
ment of an improved service of personnel ad-
ministration, and a discussion of problems re-
lated directly to the extension of the merit
system. The principal conclusions and recom-
mendations of the study may be summarized
as follows.
Findings as to Present
Federal Personnel Administration
Responsibility rests upon the President, as
Chief Executive, for the conduct and direction
of the most important personnel functions
within the authority of the Executive Branch.
He has a major responsibility for recommenda-
tions to the Congress respecting personnel leg-
islation. He promulgates the civil service rules
and determines many other personnel policies
by issuance of Executive orders under his con-
stitutional and statutory discretion. He is re-
sponsible directly for the most important ap-
pointments in the Executive Branch, although
they are subject to the confirmation of the
Senate in many cases; because of his powers of
appointment and removal, he is able to direct
the administration of personnel and other mat-
ters throughout the service. He performs a
number of incidental personnel functions that
increase the volume of routine work passing over
his desk.
The responsibilities of the Chief Executive
in connection with the determination of per-
sonnel policies, although of the highest im-
portance, have seldom in the history of the
office received the attention they appear to
merit. Presidential recommendatIOns for per-
sonnel legislation have been relatively infre-
quent. The civil service rules have not been
given thorough revision since 1903 and do not
appear to meet the need for a comprehensive
and modern administrative code relating to
personnel matters. Recent regulations gov-
erning conditions of employment on emergency
work have resulted in some improvement in
the administration of emergency services, but
they appear not to be as well integrated with
the permanent policies of the Federal Govern-
ment as they might be. There are a number
62
of reasons to account for the limited amount of
attention to these and other personnel policies
subject to determination by the Chief Execu-
tive, but the numerous demands upon his time
perhaps constitute the most important reason.
The agencies of the Executive Branch below
the office of the Chief Executive that have
responsibility for central personnel functions
include the Bureau of the Budget, the Civil
Service Commission, the Council of Personnel
Administration, and the United States Em-
ployees' Compensation Commission.
The Director of the Bureau of the Budget
has a unique position in the Executive Branch in
that he is the principal official adviser and
assistant to the Chief Executive for most
administrative matters. All Executive orders,
including those amending the civil service
rules and promulgating other personnel policies,
pass through the Bureau of the Budget during
their preparatory states. The Bureau has a
major responsibility for assisting in the deter- I
mination of expendItures throughout the Execu-
tiYe Branch, and reviews the total number and
compensation of the personnel proposed for the
performance of each activity. The Bureau
exerts an important influence upon administra-
tive expenditures throughout the service, includ-
ing expenditures for personnel administration.
The three Civil Service Commissioners are,
collectively, the principal official adviser of the
Chief Executive on civil service personnel
matters and the head of the principal existing
central personnel agency of the Federal Govern-
ment. The CommiSSIOners are subject to
removal by the Chief Executive and are responsi-
ble to him in the same manner as the heads of
other executive establishments. The plural
character of the membership of the Commis-
sion, however, appears to militate against the
maintenance of a close and helpful administra-
tive relationship to the Chief Executive.
The administrative work of the Commission's
establishment includes the operation of the cen-
tral recruitment and examining service for Fed-
eral positions within the classified competitive
civil service, the administration of the Federal
retirement system, and the administration of
review and control activities in position analysis
and salary standardization for the "depart-
mental" service at Washington. The Commis-
sion passes upon certain classes of transfers of
Personnel Administration in the Federal Service
civil service employees, particularly interdepart-
mental transfers, and also passes upon proposed
promotions and reinstatements of such em-
ployees. The Commission's relationship to
placement, transfer, promotion, and reinstate-
ment, however, is primarily the negative one of
making sure that the civil service rules are not
violated.
The Commission has authority to adopt ad-
ministrative rules and regulations governing
various matters, although its authority to adopt
regulations under the Civil Service Act is sub-
ordinate to the rule-making authority of the
President. The Commission, directly, and
through its Board of Appeals and Review, hears
numerous appeals from decisions of its own staff
in examining, retirement, personnel classifica-
tion, and other matters. It is not a central
board of appeals of general jurisdiction in Fed-
eral employee matters. The Commission has
certain investigative and disoiplinary functions,
particularly in relation to improper political
activity on the part of civil service employees.
It carries on a limited developmental program,
designed primarily to improve the quality of its
examining methods, but does not appear to give
much attention to the organization or quality
of personnel administration in the operating
agencies.
The Commission appears to have done its
best administrative work in the administration
of assembled examinations for large groups of
standardized positions, in the administration of
personnel classification control for similar posi-
tions, and in the administration of the retire-
ment system. Its services have been less satis-
factory in the administration of examinations
and of personnel classification control for higher,
specialized, and new positions; the problems
relating to such positions, however, are much
more difficult. In general, the Commission is
often criticized, and apparently with some
merit, for excessive delay in the performance
of even its most important functions, for lack
of sufficient initiative in meeting new problems,
and for failure to comprehend and to give
adequate assistance in meeting many of the
important needs of the operating services in
connection with personnel administration.
Most of the existing central personnel func-
tions, particularly those of a routine character,
have in recent years been consolidated in the
Commission's establishment. It has developed
into a central personnel agency of major impor-
tance. The Commission has shown relatively
little tendency, however, to interest itself in the
constructive and developmental activities of an
adequate central personnel agency. Its major
interest appears to remain in the negative and
restrictive activities attendant upon the enforce-
ment of the civil service laws and rules, rather
than in a positive and cooperative approach
toward improved recruitment, placement, train-
ing, and morale-building activities. It is ques-
tionable whether the Commission in its present
63
form of organization is capable of such a positive
approach.
The Council of Personnel Administration is
an interdepartmental committee to investigate
and recommend improved personnel policies and
procedures. It was established by Executive
order in 1931. The President of the Civil Serv-
ice Commission is Chairman of the Council. It
has organized and prosecuted a number of
studies, but has achieved its greatest success in
the development of an improved efficiency rat-
ing system, which was placed in effect in the
departmental service at Washington by order of
the Civil Service Commission in 1935.
The organization of the Council appears to be
somewhat defective, and the Council does not
seem to have always received effective leader-
ship from the Civil Service Commission, through
which it reports to the Chief Executive. The
limited experience with the present Council does
appear to indicate that important values can
result from well-organized consultation between
the central personnel agency and the personnel
officers of operating establishments.
The United States Employees' Compensation
Commission, an independent commission of
three members, among other functions admin-
isters the Federal Employees' Compensation
Act of September 7, 1916. The act makes pro-
vision for compensation to Federal employees
and their dependents for death, disability, or
injury in line of duty.
The Compensation Commission has no statu-
tory responsibility for the stimulation of
accident-prevention activities in the Federal
service, but has in recent months given in-
creased attention to the promotion of such
activities. Inasmuch as the Compensation
Commission as now constituted is essentially a
quasi-judicial agency not responsible to the
Chief Executive and having little contact with
his office, it is questionable whether its efforts
to promote safe working conditions and prac-
tices will be as effective as might be desired.
Several Federal agencies, in addition to those
previously mentioned, have facilities that may
be used in connection' with particular types of
service-wide personnel problems, although they
have little responsibility for central personnel
administrative activities. The United States
Public Health Service administers physical
examinations to employees and candidates for
employment upon appropriate official request
and has facilities for the study of personnel
problems relating to health and sanitation.
The United States Employment Service and
the affiliated State services offer a recruitment
service that can be used to supplement and
assist the civil service recruitment facilities.
The Bureau of Labor Statistics collects statistics
of employment in the Federal service, makes
studies of the cost of living as it affects Federal
employees, and has facilities for some other
types of personnel research. The Office of Edu-
cation has a large collection of data bearing
64
upon problems of vocational and adult educa-
tion and has facilities for research on the prob-
lems of training for Federal employees. The
resources of these and other Federal agencies
that can be of auxiliary service in connection
with central personnel administration appear
in general to be capable of much greater utiliza-
tion than has been made of them in the past.
The Federal service is so large that personnel
administration must, to a large extent, be decen-
tralized. Although attention has been devoted
in this study primarily to the organization and
quality of central personnel administration,
some consideration has been given to personnel
administration in operating establishments.
Some of the operating establishments are
giving careful attention to personnel adminis-
tration and are developing their personnel
methods along very progressive lines. In the
Department of Agriculture, for example, a well-
staffed departmental personnel office has been
built up over a period of years and is now per-
forming functions of major importance. Per-
sonnel offices have been established and have
been given appropriate responsibilities in some
of the larger bureaus of the Department. At-
tention is also being ¢ven to organization for
personnel administratIOn in the regional offices
of the Department's large decentralized field
services.
The extension of better practices throughout
the entire Federal service is not going on as
rapidly as might be desired. Progress may be
noted in many instances where individual ad-
ministrative officers have taken responsibility
and exercised initiative. In other instances, it
seems likely that no considerable improvement
in personnel methods will take place in the ab-
sence of aggressive central stimulation and
assistance.
Recommendations Concerning Improved
Organization for Personnel Administration
1. The Congress and the Chief Executive
should give attention to the development of
a more unified service of personnel adminis-
tration, designed, organized, and staffed to
carry on constructively the work of personnel
administration for the nonpolitical positions
in the Federal service.
2. The service of personnel administration
should be represented at the highest level of
administrative management by an adequate
central personnel agency, responsible to the
Chief Executive; at the departmental level
by adequate departmental personnel offices
responsible to the heads of departments; and
at the bureau level, in large bureaus and
services, by bureau personnel offices respon-
sible to the bureau chiefs.
3. The central personnel agency should be
expected to perfonu, among others, the fol-
lowing major duties: To assist the Chief
Executive in developing his recommendations
Personnel Administration
to the Congress respecting personnel legisla-
tion; to assist the Chief Executive in provid-
ing for the general regulation of the Executive
Branch within his discretion in personnel
matters; to assist the Chief Executive in
maintaining a suitable amount of control over
personnel administration throughout the Ex-
ecutive Branch; to assist the heads of major
establishments in the development of effec-
tive organizations for personnel administra-
tion in those establishments; to act as the
central review agency for personnel classifi-
cation and salary control; to provide the
operating establishments with an adequate
central recruiting, transfer, and retirement
service.
4. An adequate central personnel agency
should be developed by establishing a new
agency under a well-qualified, nonpolitical
Administrator, carefully selected in accord-
ance with the civil service rules through an
open competitive examination administered
by a special committee of highly qualified
examiners; by transferring to the new agency
the functions, personnel, and records of the
existin~ establishment of the Civil Service
CommIssion, whereupon the Commission
should cease to exist; by providing the head
of the new central personnel agency with a
staff of hi~hly qualified immediate assistants;
by attentIOn to the improvement of the cen-
tral services in connection with recruitment,
transfer, promotion, and retirement; by
authorizing the President to provide for the
performance of additional desirable central
personnel functions through the central :per-
sonnel agency; and by other appropnate
means.
5. A new Civil Service Board of citizens
should be established to assist the President
in the protection, improvement, and exten-
sion of the merit system, and in general to
represent the public interest in the merit
system. It is suggested that the Board con-
SIst of seven members, appointed by the
President, by and with the advice and con-
sent of the Senate, for overlapping tenus of
seven years. Members of the Board should
not be full-time officials and should not re-
ceive fixed salaries, but should receive reim-
bursement for their actual time and expenses.
No person should be eligible for membership
if within the five years preceding the date of
his appointment he has been a member or
officer of any local, State, or National political
party committee or has held or been a candi-
date for any elective public office.
6. The proposed Civil Service Board should
assist in the protection and improvement of
the merit system by appointing the special
committees of examiners to administer the
open competitive examinations to fill vacan-
Cies in the position of head of the central
personnel agency; by approving the member-
ship of other special examining committees
in the Federal Service
to hold open competitive and promotion ex-
aminations to fill vacancies in the highest
civil service positions in the various depart-
ments and agencies other than the central
personnel agency; by approving and certify-
ing panels of persons qualified to serve on
boards or committees of mediation and per-
sonnel relations for the Federal service, such
boards or committees to be appointed from
the panels when needed by the President and
the heads of agencies, under such regulations
as the President may prescribe; by carrying
on regular and special investigations of the
quality and status of personnel administra-
tion throughout the Federal service, and
reporting thereon with recommendations; and
by advising the Congress, the President, and
the head of the central personnel agency on
matters of personnel administration at their
request. To perform these functions, the
Civil Service Board should meet not less than
four times a year upon call by the President,
the Chairman of the Board, or any four
members of the Board. The Board should
have funds and authority to employ special
consultants and employees on a temporary
basis, and should be provided with other
services by the head of the central personnel
agency.
7. The importance of personnel adminis-
tration at the departmental level of adminis-
tration should be recognized by increase in
the number, improvement in the quality, and
addition to the responsibilities of existing
departmental personnel offices.
8. Careful attention should be given to the
division of duties and responsibilities between
the proposed new central personnel agency
and the departmental personnel offices, to the
end that the best balance may be struck
between centralization and decentralization
in personnel administration.
9. Personnel administration for emergency
agencies and units should be organized on a
more flexible basis than is necessary or de-
sirable in permanent establishments. Emer-
gency agencies should not be required to
appoint in accordance with the regular civil
service procedure, but should be authorized
to do so, and in any case should be required
to conduct their personnel activities on a
definitely nonpolitical basis. Directors of
personnel in emergency' agencies should be
given major responsibility for the mainte-
nance of personnel administration in such
agencies on a merit basis. They should
themselves be nonpolitical appointees subject
to the approval of the head of the central
personnel agency. The proposed Civil Serv-
ice Board should be required to investigate
and report on their work at frequent intervals.
10. Personnel administration in Govern-
ment corporations should be required to be
conducted on the basis of merit and efficiency,
but the boards of directors of such corporations
65
should be given reasonable freedom of action in
personnel administration, as in other matters.
They should be required to establish adequate
facilities for personnel administration and to
follow an orderly procedure. They should
be subject to periodic investigation by the
proposed Civil Service Board.
11. The existing Council of Personnel Ad-
ministration should be reorganized to serve as
a professionally competent advisory com-
mittee to the head of the proposed central
personnel agency, and, through him, to the
Chief Executive. Under the leadership of
the head of the central personnel agency, the
Council should be given a major place in the
development of constructive personnel poli-
cies and standards.
12. Adequate provision should be made for
research on importa,nt personnel problems,
particularly those of interest to the proposed
Civil Service Board and to the Council of
Personnel Administration. Existing central
personnel research facilities should be
strengthened under the direction of the head
of the proposed central personnel agency.
13. Careful attention should be given to
improvement in the procedure for develop-
ing recommendations to the Chief Executive
on major personnel policies. The Council of
Personnel Administration should assist in the
preparation of proposed Executive orders
determinin~ major policies; they should be
published III draft form after preliminary
approval by the Chief Executive; the views
of the members of the Civil Service Board and
of the heads of establishments should be
obtained; public hearings should be held by
the head of the central personnel agency; he
should then present each proposed policy
order to the Chief Executive in suitably re-
vised form with his recommendations.
Notice and hearing should be an integral
part of the procedure in the development of
personnel regulations issued by the head of
the central personnel agency and the heads
of departments.
14. The proposed central personnel agency
should assist the Chief Executive in the de-
velopment of his recommendations upon per-
sonnel matters to the Congress. The central
personnel agency should be required to fol-
Iowan appropnate procedure for consulta-
tion with the Civil Service Board, administra-
tive officials, and representatives of em-
ployees in the preparation of recommenda-
tions to the Chief Executive concerning his
legislative proposals.
15. Attention should be devoted to the
development of organization and procedure
to bring about improved personnel relations
throughout the Federal service. As an
initial step, a statement of policy should be
prepared and issued, clarifying the right of
employees to organize and to designate repre-
sentatives. Such a statement of policy
66
should give clear recognition to the principle
of majority rule in the determination of rep-
resentatives. Administrative officials should
be required to confer at their request with
the duly constituted representatives of
employees on matters of mutual interest
within the administrative discretion of such
officials. Whenever disputes arise among
employees as to who are their duly consti-
tuted representatives, such disputes should
be referred to a suitable impartial agency for
determination and certification of represen-
tatives. The establishment of a part-time
Federal Service Personnel Relations Com-
mittee to perform this function when needed
is suggested.
16. The problem of inequitable variations
throughout the service with respect to com-
pensation levels, hours of duty, and working
conditions generallr should be approached
through the genera extension of the Classi-
fication Act to those parts of the service not
under wage boards, through greater standard-
ization of hours of duty, and through con-
tinuous attention to all phases of the problem
on the part of the central personnel agency.
17. The problems arising in connection
with individual grievance cases should also
receive early attention, with the promulga-
tion of suitable policies to govern the han-
dling of individual grievances wherever they
arise. The possibilities for the orderly settle-
ment of grievances within each agency should
be explored under instructions from the
President and with the assistance of the pro-
posed central personnel agency. Eventually
one or more permanent boards of appeals may-
prove to be necessary. Meanwhile, the PreSi-
dent should have authority to establish special
boards of adjustment and mediation as
needed, or to refer serious disputes to the
proposed part-time Federal SerVlce Personnel
Relations Committee.
18. The respective heads of the central
personnel and budget agencies should be
among the principal advisers of the Chief
Executive in connection with major problems
of organization and reorganization within
the Executive Branch. Recommendations
for the consideration of the Chief Executive
and the Congress on organization matters
should be prepared at least annually in con-
nection with the preparation of the budget.
19. The administrative and professional
staffs of the central personnel agency and of
the personnel offices of operating establish-
ments should be regarded collectively as a
unified career service of personnel adminis-
tration. The entire career service of person-
nel administration should be treated as a
unit for recruitment, placement, training!
transfer, and promotion purposes. Specia
attention should be given to the trairun~ of
promising personnel officers in intermediate
grades by transfers at intervals of two to
Per80nnel Administration
five years, particularly transfers in both
directions between the central personnel
agency and the various personnel offices.
20. All members of the permanent service
of personnel administration should be iIll-
eluded within the competitive civil service,
and other personnel officers should also be
appointed on the basis of merit and efficiency,
through an appropriate procedure. As em-
ployees within the merit system, personnel
officers should have no connection with or
responsibility for any political appointment.
Recommendations for
Extension of the Merit System
1. Early attention should be given by the
Congress and the Chief Executive to the
extension of the merit system to include
numerous positions not filled at present on
an exclusively merit basis, and to the im-
provement of the existing merit system.
Such attention will be facilitated by the
establishment of the improved service of
personnel administration previously recom-
mended.
2. Special consideration should be given
to the administration of high administrative
positions. All high administrative positions
In the various establishments should be
divided into two groups, one definitely policy-
forming in the political sense, the other purely
administrative and nonpolitical. The non-
political group in each department or similar
agency should be headed by a well-qualified,
nonpolitical executive officer equivalent in
rank to an under secretary.
3. The high nonpolitical positions should
be filled in accordance with the civil service
rules as rapidly as feasible, in order that
adherence to a merit basis may be self-
evident and self-sustaining. Under normal
conditions vacancies should be filled in most
cases by the promotion of civil service em-
ployees. When it is not feasible or desirable
to fill vacancies by promotion, they should
be filled throu~h open competition.
4. Competitive examinations for positions
of the grade of bureau chief or higher should
be administered by specially constituted
boards of examiners, appointed by the head
of the proposed central personnel agency.
Examining boards for the highest civil serv-
ice position in each department or agency
should be subject to the approval of the pro-
posed Civil Service Board. Each such board
should include one representative of the cen- .
tral personnel agency, a suitable member
designated by the appointing agency, and
from one to three other well-qualified mem-
bers, of whom at least one or two should not
be permanent Federal employees. The out-
side members should be well known, impar-
tial, and expert in an appropriate field of
public administration.
in the Federal Service
5. Consideration should be given to revi-
sion of the salary scale for higher nonpolitical
positions. The salary rates for such positions
should be set at levels that will facilitate
retainin~ the best employees for a career in
the servIce, and that will attract a sufficient
number of well-qualified candidates when it
is necessary to fill positions through open
competition.
6. All non policy forming Presidential posi-
tions in the field services should be placed in
the competitive classified service by appro-
priate legislation as soon as feasible. Mean-
while, all such positions should be placed on
a merit basis of selection by appropriate
Executive action, with special attention to
the filling of vacancies through promotion of
civil service employees, and WIth provision
for their automatic reinstatement upon satis-
factory completion of a term of office as
a Presidential appointee if they fail of
reappointment.
7. Lower positions in the permanent serv-
ices, now excepted from the classified com-
petitive service by Legislative or Executive
action, should be surveyed in detail and
should be transferred to the classified service
by appropriate action as rapidly as feasible.
The Civil Service Act should be amended to
permit the inclusion of laborers within the
regular classified competitive service. Labor
positions should be filled on the basis of merit
and efficiency in all cases, and through an
appropriate civil service procedure so far as
feasible.
S. Incumbent emergency employees occu-
pying positions made permanent who do not
have an appropriate civil service status
should receive It after passing a suitable
qualifying examination and upon certifica-
tion by an approved nonpolitical personnel
officer that they have served with merit for
not less than one year.
67
9. Careful attention should be given to
the development of the existing merit sys-
tem into a sound career service system. The
Federal service should offer to an increased
degree a group of honorable occupations that
may be taken up in youth and pursued until'
retirement, with adequate remuneration at
all stages and with advancement on merit to
posts of high honor and distinction, in order
that the service may attract and develop the
best persons of competence and character
who are interested in choosing careers.
Long-range Character
of the Recommended Program
The entire proposed program for the im-
provement of personnel adntinistration in the
Federal service, as summarized in the preceding
recommendations and described in the following
parts of this study, is not a program that can or
should be carried through completely in a short
space of time.
The major proposals for reorganization can be
placed in effect rather rapidly if they meet with
Legislative and Executive approval, although
they should be carried forward with due regard
for the fact that important organization values
are easily lost during any period when reorgani-
zation is prosecuted with excessive vigor. Some
action is needed immediately, both on the part
of the Congress and of the Chief Executive.
The recommended program as a whole definitely
contemplates a considerable amount of Legisla-
tive and Executive attention over a period of
several years.
Major benefits may be expected from the
proposed reorganization soon after it is begun if
the work of reorganization is done carefully.
The full benefits may not be realized for many
rears to come, but they can be of very great
lmportance to the future of the Federal Govern-
ment and the Nation.
 I. FEDERAL PERSONNEL ADMINISTRATION TODAY
•
The primary purpose of this study is not to
classify and present an accumulation of data
relative to Federal personnel administration,
but rather to present specific recommendations
that may be acted upon, with sufficient evi-
dence to mdicate the merits of the recommenda-
tions. Before considering these recommenda-
tions in detail, however, it seems desirable to
A. PERSONNEL FUNCTIONS OF THE CHIEF EXECUTIVE
The constitutional discretion of the President
over many personnel matters is broad, and
has been supplemented by numerous specific
enactments. As the leader of his party and
as the head of the Nation, moreover, he is
regarded by the public as primarily responsible
for the type and quality of personnel adminis-
tration throughout the Federal service. N ever-
theless, there is very little realization, even
among well-informed persons, of the extent and
manner in which the Chief Executive is forced
by the demands of his office to give attention
to matters of personnel administration. Such
matters range from broad questions of policy
to items of petty detail. In view of the key
position occupied by the Chief Executive, it is
important to review and study his personnel
duties carefully.
Advisory Relationship
to Legislative Policy
Each year the Congress considers a large
amount of proposed legislation directly affect-
ing personnel administration. The three prin-
cipal statutes basic to personnel administra-
tion in large parts of the service, (the Civil
Service Act of 1883, _the 1Retirement Act of
1920, and the Classification Act of 1923, are
now firmly imbedded in the code of laws.
Every recent Congress, however, has seen the
introduction and some consideration of im-
portant amendments to each of these laws.
During the last session of Congress, the laws
relating to vacations and sick leaves were
completely revised. In recent years, the
statutory hours of duty in the navy yards and
68
describe briefly the present framework for per-
sonnel administration in the Executive Branch of
the Federal O:overnment and the methods of per-
sonnel administration now used. The personnel
functions of the Chief Executive will first be con-
sidered. Special attention will then be given to
central agencies of personnel administration,
particularly the Civil Service Commission.
the Postal Service have been revised. Steps
have been taken also that forecast early atten-
tion to general revision in the statutory hours
of duty of other Federal employees. Acts
creating new Federal agencies or changing the
duties or structure of old agencies usually
contain provisions relating to personnel ad-
ministration. Special legislative proposals re-
lating to selection, promotion, compensation,
hours of duty, retirement, and other matters
frequently have been introduced at the request
of particular groups of Federal employees or at
the suggestion of administrative officials re-
sponsible for limited parts of the service.
In the performance of its legislative functions,
the Congress necessarily seeks and receives
advice and assistance from a wide variety of
sources. It rarely considers any important
piece of personnel legislation, however, with-
out obtaining the views of the Chief Executive.
That it should do so appears to be entirely
proper, in view of the fact that no other admin-
istrative official is in so satisfactory a position
to assess the merits of proposed personnel
legislation from the standpoint of its probable
effec.ts upon the administration of the entire
serVIce.
The Chief Executive himself is not in an
entirely satisfactory position to advise with
respect to personnel legislation. He has no
subordinate official or adviser who is in a posi-
tion to take a comprehensive view with respect
to personnel matters. ' The Civil Service Com-
mission has only a limited scope with respect
both to the parts of the service and to the types
of problem ooncerning which it has knowledge.)
The Director of the Bureau of the Budget is
1
 Personnel Administration in the Federal Service
usually well infonned concerning personnel and
other problems throughout the service but
approaches his duties primarily from a fiscal
point of view. The Executive Director of the
National Emergency Council is in a position
for central observation and study, but he has
no primary responsibility for personnel admin-
istration and is not assisted by a pennanent
staff conversant with personnel matters in the
operating agencies. The heads of the depart-
ments and agencies can report to the Chief
Executive on the problems of their own estab-
lishments but are not in a position to take a
comprehensive view.
The Chief Executive is thus forced to coor-
dinate, personally, the advice he receives from
many quarters with respect to personnel ad-
ministration. In view of the pressure upon
his time, he has rarely been able to devote
much attention to even the most urgent matters
of personnel policy. Over a period of many
years his recommendations to the Congress in
this field have been relatively infrequent.
Some of the most important advances in Fed-
eral personnel legislation have in the past been
achieved with little advice, assistance, or even
interest upon the part of the Chief Executive.
The Civil Service Act, the Federal Employees'
Compensation Act, the Retirement Act, and the
Classification Act were notable pieces of legis-
lation of fundamental importance to good
personnel administration. Although these acts
have been supplemented by much desirable
legislation less comprehensive in character, the
description of existing Federal personnel legis-
lation as "a patchwork with many large holes"
is perhaps well taken. There is need for further
legislation. In view of the fundamental impor-
tance of personnel legislation in the administra-
tion of the Executive Branch, more attention by
the Chief Executive to legislative recommenda-
tions in this field would seem appropriate,
and would not in any way infringe upon the
prerogatives of the Congress.
Determination of
Major Administrative Policies
The Chief Executive, within the limits of his
constitutional and statutory discretion, is re-
sponsible for the determination of major poli-
CIes in the field of personnel administration.
Some of these policies are developed through
discussion in the Cabinet and with other ad-
visers, are transmitted verbally, and are not
.Eennanently recorded in any authoritative fonn.
Q.'he historical record does not exist that would
permit discussion of the infonnal personnel poli-
cies in effect during the various administrations,
but it is evident that such infonnal policies may
be of major importanceJ Doubtless they have
been developed and placed in effect on numerous
occasions With little benefit of advice from per-
manent subordinate officials trained in personnel
69
administration, in view of the isolation of the
Chief Executive from all such officials.
ITo a considerable extent, however, major ad-
ministrative policies affecting personnel have
been pJomulgated in the fonn of Executive
orders.J Many of these policies have been gath-
ered together in the civil service rules, the prin-
cipal administrative code relating to Federal
personnel. 1rhe Civil Service Act of 1883 au-
thorized the President to promulgate suitable
rules to place the act in effect and specified cer-
tain provisions to be included in the rules, "as
nearly as the conditions of good administration
will warrant.'C1 Rules are also promulgated in
the exercise of power conferred by the Consti-
tution, and by section 1753, Revised Statutes,
'which provides that:
The President is authorized to prescribe such regular
tions for the admission of persons into the civil service of
the United States as may best promote the efficiency
thereof, and ascertain the fitness of each candidate in
respect to age, health, character, knowledge, and ability
for the branch of service into which he seeks to enter;
and for this purpose he may employ suitable persons to
conduct such inquiries, and may prescribe their duties,
and establish regulations for the conduct of persons who
may receive appointments in the civil service.
This section was in part superseded by the
Civil Service Act, but is still in effect with
respect to parts of the service and to matters
not covered by the act. It is almost invariably
cited as part of the authority for Presidential
regulations concerning personnel matters.
The civil service rules were last given general
revision and promulgation in their entirety on
April 15, 1903, but have frequently been
amended through Executive orders. In 8.
recent instance Section 6 of Rule II, governing
the conditions under which an unclassified em-
ployee may obtain a classified status if his
position is placed in the classified competitive
service, was completely rewritten.
As they now stand, the 16 civil service rules
have the following titles, which indicate the
topics covered:
I. Politics and Religion.
II. Classification of the Service.
III. Examinations.
IV. Boards of Examiners.
V. Qualifications of A:eplicants.
VI. Ratings and Eligibility.
VII. Certification.
VIII. Temporary Appointment.
IX. Reinstatement.
X. Transfer.
XI. Promotion .
XII. Removals and Reductions.
XIII. Report of Changes.
XIV. TestimonY'.
XV. Withholding Salary.
XVI. Regulations.
A thorough treatment of the merits of the
civil service rules as they are now constituted
is beyond the scope of this study. It would
70
entail a discussion of every phase of civil service
administration.
Study of the rules, however, seems to warrant
the conclusion that they could be considerably
improved by a general revision. Parts of them
are distinctly archaic, and as a whole they fall
much short of the need for a comprehensive
administrative code relating to personnel mat-
ters. The rules have been related to the pro-
visions of the Civil SerP,ce Act with a con-
siderable amount of care ~ut exhibit a lack of
integration with the proVIsions of the Classi-
fication Ac!i a statute equally basic to Federal
personnel aaministration for a large part of·
the service and now administered through the
Civil Service Commission. Certain matters
that might well have been covered by amend-
ment of the rules have been cared for by sepa-
rate Executive orders, frequently with some
loss in clarity and consistency, as in the case
of the various Executive orders relating to the
reemployment of classified competitive em-
ployees who have been terminated through
reductions of force.
my virtue of his authority to promulgate the
civlI service rules, the President also has au-
thority to d~termine exceptions from the rules,
and is thus responsible for the determination of
major administrative policies in this fielCU
Many positions and groups of positions are
specifically exempted by law from the werations
of the Civil Service Act and the rules}.but when
no specific instruction is given, the determina-
tion of whether or not a position or group of
positions shall be filled in accordance with the
rules lies with the President.)
Positions excepted by Executive action are
listed in two schedules attached to and made a
part of the civil service rules. ,Schedule A
consists of positions entirely excepted from
examination requirements; Schedule B consists
of positions which may be filled upon the basis
of a qualifying examination without open com-
petitioIl.( The schedules have a tendency to
grow, since orders adding positions are issued
several times a year, while orders revoking
previous additions occur only rarely. In some
cases the reasons for the presence of positions on
the schedules are self-evident and seem justifi-
able, but in numerous other cases the reasons
are not at all clear. In many instances the
positions probably have not been reconsidered
since they were originally added to the sched-
ules. Provision might well be made for periodic
revisions at intervals of two or three years.
Presidential determination of selection pro-
cedure is not confined to the classified civil
service. Two principal groups ofrositions were
excepted from the provisions 0 the original
Civil Service Act by its own terms, namely,
positions filled by persons employed as "laborers
or workmen" and positions filled by appoint-
ment subject to the confirmation of the Senate.
In each case, selection procedure may be deter-
mined by the President under the authority of
PersonneZ Admini8tration
Section 1753 of the Revised Statutes if not
otherwise provided for by law.
Selection procedure for unclassified laborers
is important primarily because of the size of
this group, which in normal times includes
about 100,000 Federal employees. A non-
political, competitive selection procedure for
unclassified laborers employed in larger cities
has been established by Executive order and
is administered by the Civil Service Commis-
sion. Its principal feature is an examination
by a physician to determine ability to perform
manual labor. Considerable improvement of
the procedure appears to be possible, in view
of the advances in public and private employ-
ment techniques in recent years.
Selection procedure for Presidential positions
has been placed upon a formal merit basis in
several instances. The procedure for select-
ing Presidential postmasters has received several
revisions, the latest on July 20, 1936. An ex-
amination procedure is required by law in the
selection of Foreign Service officers, but the
details are left to Executive determination.
The duty of formulating and prescribing regu-
lations has been delegated to a special board of
examiners by the President. Presidential ap-
pointments to the Public Health Service and
the Coast and Geodetic Survey are governed
by various statutory provisions. Some or all
of about 700 other CIvilian Presidential posi-
tions in the Executive Branch mi~ht be placed
upon a formal merit basis of selectlOn by Execu-
tive order, should the President consider it
advisable to do so.
Numerous other matters of personnel policy
subject to Presidential determination might be
cited, but a few of the major ones will suffice.
The Classification Act as amended authorizes
the reallocation of positions to different salary
grades on the initiative of the Civil Service
Commission, subject to the approval of the
President. The President has provided by
Executive Order No. 5473 that such cases shall
come to him on appeal only if protested by the
head of the department or agency within 30
days after decision by the Civil Service Com-
mission.
The Retirement Act of 1920 was adopted
primarily to apply to employees in the classi-
fied competitive service and certain specified
. groups. The President has power, however, to
exclude any group of employees "whose tenure
of office or employment is intermittent or of
uncertain duratIOn" and may bring unclassified
groups under the act upon recommendation of
the Civil Service Commission.
Personnel policies for emergency personnel
have frequently required Presidential consider-
ation and some formal action. Most of the
positions created by emergency legislation since
the establishment of the Reconstruction Finance
Corporation in 1932 have been exempted from
the provisions of the Classification Act; a salary
schedule for most such positions was promul-
in the Federal Service
gated by Executive order. During the rapid
expansion of emergency personnel groups, a con-
siderable amount of competitive bidding for per-
sonnel developed, attended by transfers of emer-
gency employees from one agency to another at
increased compensation. An Executive order
was therefore issued regulating the conditions
of transfer and prohibiting transfers at in-
creased compensation except upon specific
Presidential approval.
This brief account of the powers and duties
of the President in the field of personnel policy
is far from a complete list of instances of formal
action or of specific statutory authorization to
act. Moreover, it is probable that many other
important matters of policy have been decided
by the President by default, without any formal
action under constitutional and statutory pow-
ers that attach to the office of Chief Executive.
The conclusion thus appears to be well
founded that the Chief Executive has a major
responsibility for the determination of person-
nel policies applicable in all parts of the Execu-
tive Branch. Much of that responsibility ap-
pears to be incapable of delegation, although
the Chief Executive may receive instructions
from the Congress and advice from his subordi-
nates. The positions and duties of the various
subordinate officials primarily responsible for
advising the Chief Executive in matters of per-
sonnel policy are discussed in later sections of
this study.
Appointive Powers
of the Chief Executive
The constitutional authority of the Chief
Executive to appoint the heads of departments,
subject to senatorial confirmation, and his
statutory authority to appoint numerous other
officials and employees, with or without confir-
mation, are so well known that it does not seem
necessary to discuss them in detail. In the
exercise of this appointing power, the Chief
Executive is directly responsible for the conduct
of a personnel function of the first magnitude.
Moreover, because of his power to appoint and
the usually attendant power to remove, the
Chief Executive is able to direct subordinate
officials in the conduct of their pemonnel func-
tions throughout all branches of the service.
A tabulation recently- prepared by the Civil
Service Commission mdicates the following
numbers of positions in the Executive Branch
subject to appointment by the President,
conditioned in most cases upon confirmation
by the Senate: Politically responsible heads of
establishments, including members of boards
and commissions, 149; other admini.3trative
officials of the rank of bureau chief or higher,
162; subordinate officers appointed through
some merit system, including postmasters and
the commissioned forces of the Army, Navy,
and Coast Guard, 39,182; and other sub-
ordinate officers not appointed through any
71
formal method of selection, 420. Certain other
positions subject to appointment by the
President are not compensated from Federal
funds and have not been included. Many other
Federal officers and employees are appointed
under statutory authority dele~ated to heads of
agencies by the President, as III the case of all
employees of the Alaska Railroad and all
emplo'yees of certain of the existing emergency
agenCIes.
Many of the lower positions required to be
filled by Presidential appointment are entirely
analogous to positions long filled through
appointment by the heads of the various
agencies. The continued requirement of Presi-
dential attention to the filling of these positions
adds to the burdens of the Chief Executive and
does not appear to advance in any way the
efficiency of the service.
Routine Personnel
Administrative Functions
Various personnel matters of a relatively-
routine character come to the desk of the PreSI-
dent with considerable frequency. Aside from
the routine signing of thousands of commis-
sions, these matters usually arise in the form
of requested exceptions to established policies.
Certam types of exceptions have been approved
so frequently that they have become a matter
of routine.
The appointment of particular individuals
to civil service positions without regard to the
civil service rules ~ccasionally authorized by
Executive order. ,-These cases should be dis-
tinguished from amendments to Schedules A
and B to except particular pQ§itions without
specifying the mdividuais to be appointed to
them.- ) In most cases in which an exception
is ma'de on behalf of a particular individual,
the act is a form of charity and the individual
is granted a competitive civil service status.
During the fiscal year 1935, for example, the
appointment of 15 individuals without regard
to the rules was authorized; 9 of the 15 were
widows of deceased Federal employees. The
custom of so appointing destitute widows of
long-service Federal employees is very old,
although the number of such appointments has
been curtailed in recent ;years.
An amendment of the Retirement Act in 1932
provided that all employees reaching the retire-
ment age limits should be automatically
separated from the service unless permitted to
continue by Executive order of the President.
Prev:ously .the Civil Service Commission· had
authority to grant continuances and the intent
of the amendment was evidently to bring about
a drastic curtailment in the number of em-
ployees retained bElyond the retirement age.
At the end of the fiscal year 1931, the number
of employees serving under continuances by
the Commission was 8,156; at the end of the
fiscal year 1936, the number of Presidential
72
continuances was 116. This drastic reduction
was not achieved without a considerable amount
of Presidential attention to the merits of
individual cases. During the fiscal year 1935,
thirty-two Executive orders permitting or
extending continuances were issued. The statis-
tics as to unfavorable action have not been
tabulated.
The administration of the Executive order
B. PERSONNEL FUNCTIONS OF THE BUREAU OF THE BUDGET
Since the establishment of the office, the Direc-
tor of the Bureau of the Budget has been
recognized as the principal official adviser and
assistant to the President for administrative
matters. The Civil Service Commissioners
take precedence with respect to certain admin-
istrative matters relating to personnel, but the
Budget Director is seldom omitted from con-
sultation even in such cases. Because of the
nature of his office, the Budget Director usually
has a more immediate relationship to the Chief
Executive and a much closer acquaintanceship
with administrative problems throughout the
service than the Commission.
Advisory Relationship
on Personnel Policies
The extent to which the Budget Director
advises on informal personnel policies has not
been determined, and probably varies con-
siderably from time to time. In connection
with policies that receive formal approval as
Executive orders, however, the Budget Director
occupies a highly strategic position and appears
to exercise an important function at all times.
The procedure for handling proposed Execu-
tive orders requires them to be submitted first
to the Bureau of the Budget, second to the
Attorney General, and third to the Director of
the Federal Register, before presentation to the
President. The Attorney General passes upon
legal questions, and the Director of the Federal
Register reviews proposed orders as to form,
but review from the standpoint of general
governmental and administrative policy is pri-
marily the function of the Bureau of the Budget,
and the function is not taken lightly.
Executive orders amending the civil service
rules or determining other major policies to be
administered through the Civil Service Com-
mission usually originate with it, and the policy
questions are usually cleared directly with the
President before the orders are formally drafted.
In these cases the Budget Director plays a
relatively minor part, although the required
procedure is such that he is in a position to
make positive recommendations on any matter
in which he may dissent from the Commission.
Other proposed Executive orders relating to
personnel policies often originate in the Bureau
Personnel Administration
which prohibits the transfer of emergency
personnel at increased compensation unless
specifically authorized by the President has
probably caused him a considerable amount of
labor. About 250 requests for approval of
transfer at increased compensation were ap-
proved by the President during the first SlX
months of 1936, although the number of such
cases is now being markedly reduced.
of the Budget, although they may also be
suggested by heads of departments, employee
groups, or other interested parties. Policies
that do not directly affect the Civil Service
Commission or the civil service rules seldom
originate in the Commission, although they
may be and usually are referred to the Com-
mission by the Budget Director when in his
opinion the views of the Commission would be
helpful.
Assistance to Chief Executive
on Routine Personnel Matters
Personnel matters requiring routine action
by the Chief Executive in most cases are re-
quired to be presented to him by the Budget
Director, and much of the work involved in
preparing such matters for action is performed
in the Bureau of the Budget.
Proposed amendments of Schedules A and B
of the civil service rules to except additional
positions usually originate in the appointing
agencies, although doubtless sometimes inspired
at other sources. Requests for such amend-
ments usually are first presented to the Bureau
of the Budget, but the Bureau secures the
opinion of the Civil Service Commission with
respect to every proposed amendment. The
Commission generally stands on a strictly for-
. mal basis of opposition to such orders. The
Bureau of the Budget, however, appears to be
more sympathetic than the Commission to ad-
ministrative considerations as presented by the
appointing agencies, and it sometimes disagrees
with the Commission in presenting such orders
to the Chief Executive for his consideration.
Proposed Executive orders to permit the ap-
pointment of particular individuals without re-
gard to the civil service rules are considered by
the Bureau of the Budget before they go to the
Chief Executive. Many of these cases arise out
of purely political considerations, but others in
which the rigid application of the civil service
rules is alleged to be undesirable are to be re-
garded as acts of charity. The Civil Service
Commission is requested to review all such pro-
posals and to give its judgment as to the quali-
fications of the proposed appointees. The pres-
ent policy of the Bureau of the Budget is to
recommend unfavorable action on the political
rI in the Federal Service
cases and favorable a~tion on. a limited .nu~ber
of other cases that It consIders meritonous.
The Civil Service Commission sometimes con-
curs in recommending favorable action, but
usually dissents.
Proposed continuances beyond the retirement
age limits are passed upon by the Bureau of the
Budget before presentation ~o the C~~f Exec-
utive with its recommendatIOns. HIS illstruc-
tions as to the types of cases likely to rece~ve
favorable action are conveyed to the employmg
agencies.
The Executive order prohibiting the transfer
of emergency personnel at increased comp~nsa­
tion except with the approval of the PresIdent
is administered through the Bureau of the
Budget. All proposals for such transf.ers are
reviewed by th~ Bo/eau before tr~smittal to
the President wIth ItS recommendatIOns. The
Civil Service Commission assists in the deter-
mination of the qualifications of the employees
to be transferred and the justification for the
proposed salaries.
Fiscal Control
as It Affects Personnel
The Bureau of the Budget ne?essarily c~m­
siders expenditures for personnel m connectIOn
with broader consideration of the programs and
activities of the operating agencies in the prep-
aration of the Budget and in other fiscal control
activities. . of the depression and has urged .th~ nec~ssity of
The standard procedure for the prepn:ratIOn
of the estimates includes the preparatIOn of
tabulations of existing and proposed personnel
in each agency by co~pensation grades. In
reviewing these tabulatIOns, the Bureau passes
upon the total number and compensation of the
personnel proposed for the per!0rmance of each
activity. It frequently consIders whe~her a
proposed new activity can be performed ill part
by personnel from otJIer units of the same agency
or from other agencIes. .
Allocations of positions to compensat~o~
grades subject to final approval by the CIvil
Service Commission are accepted by the Bureau
of the Budget for those parts of the service over
which the Commission has jurisdiction with re-
spect to such salary control, and the compensa-
tIOn rates set by statute or by ,,:age boards are
similarly accepted where applicab~e. Where
compe1}sation rat~s. are l.argely subject ~o the
discretIOn of adillilllstratIve officers, as ill t~e
emergency agencies and in abo'!t 100,000 POSI-
tions in the permanent field serVices, the Bureau
exercises almost the only cen~ral control. and
scrutinizes proposed compensatIOn rates 'Ylth a
considerable amount of care. The a~VI~e 9f
the Classification Division of the COmmIS~IOn IS
frequently obtained in the review of salan~s for
proposed new administrativ~. ~r professlO~al
posItions. The time and facilItIes at the dI~­
posal of the Bureau, however, do not enable It
to carry on the function of central standardiza-
tion and control of compensation to the extent
73
that appears desirable.
Review of Expenditures
for Personnel Administration
Under the direction of the President, the Bu-
reau of the Budget annually prepares the recom-
mended budget for submission to the Congress,
and also prepares other bu~getary recomm~nda­
tions. The recommendatIOns of the PreSIdent
with respect to appropriations are not binding
upon the Congress in a?y sense, .but carry .co~­
siderable weight, partICularly Sillce the illdI-
vidual establishments are forbidden by law to
request appropriations larger than those recom-
mended by the President.
As the agent of the President in the prepara-
tion of his budget recommendations, and als.o
as his agent in the supervision of the expendI-
ture of appropriated funds, the Bureau of the
Budget appears to exercise an important .influ-
ence upon the type and amount of expendItures
for personnel administ~ation. Expendit~r~s
for personnel administratIOn through the CIVIl
Service Commission and in the departments
and other operating establishments are reviewed
by the Bureau in connection with its review of
all estimates for expenditures by or through
these same establishments.
The Civil Service Commission suffered from
curtailed appropriations during the worst ,Years
considerably increased appropnatIOns ill order
to enable it to restore its registers to a current
condition and to facilitnte the performance of
its other functions without undue delay. Its
requests for increased funds have been sup-
ported only in part by the Bl!reau of the Budget,
as indicated by the followmg table of recent
estimates and appropriations:
Estimates and appropriations for the work of the Civil
Service Commission, fiscal years 1935-37 1
Estimate Recom· Approprl·
of require- mended
ments by Bureau by ated by
of Congress
Commis- the Budget
sion
Fiscal year 1935:
Regular approprlatlon! ________ $1,605,000 $1,466,000 $1,522, 816
BuppJemantals and deficlencie!.. 340,000 340,000 334,000
TotaL _______________________
1,945,000 1,806,000 J I, 856, 816
Fiscal year 1936:
Regular approprlatlons ________ 2,405,046 2,095,000 2. 005, 000
BuppJementals and deficiencles_ 599,200 584,600 584.600
TotaL _______________________
3,004,246 2. 679, 600 2. 6711, 600
Fiscal year 1937:
Regular approprlatlons ________
2. 850, 000 2. 335, 000 2, 335, 000
Supplementals and deflcloncles_ None None None
Total________________________
2, 850, 000 2, 335, 000 2,335,000
1 Prepared from data supplied by the Bureau of the Budget.
• Exclusive of $136,403 for salary restorations.
74
The Bureau of the Budget frequently reduces
the estimates of agencies other than the Com-
mission, and the conclusion to be drawn from
its treatment of the Commission's estimates,
therefore, is not entirely clear. Without at
this time passing any judgment upon the
manner in which the Commission pas expended
the funds available to it in the past, it seems
probable that substantially more generous
allotments of funds will be needed in the future
if central personnel functions are to be per-
formed in an adequate manner. This will be
particularly true as long as conditions of severe
unemployment continue to result in unprec-
edented numbers of applications whenever
examinations are announced.
Departments, large bureaus, and other oper-
ating establishments that have attempted to
improve the quality of their personnel work
have experienced some difficulty with the
Bureau of the Budget. The operating estab-
lishments that have built up their personnel
C. THE CIVIL SERVICE COMMISSION
The Civil Service Act of 1883 authorized the
establishment of a Civil Service Commission of
three members, "not more than two of whom
shall be adherents of the same party", and
provided the basis for the establishment of a
merit system of appointment to the Federal
service.
The Commission, as originally constituted,
was almost exclusively an examining agency,
and for many years it displayed little tendency
to become anything else. In recent years,
however, the functions of the Commission have
been broadened to include the administration
of the Federal retirement system and the. ad-
ministration of salary standardization and con-
trol in the departmental service at Washington.
Relationship to the Chief Executive
In the language of the Attorney General,
"the Civil Service Commission constitutes a
subdivision of the power of the Executive for
the more convenient exercise of that power.
. .. The three Commissioners, who constitute
the Commission, are the 'head of a Department'
in the constitutional sense." 2 The Civil Serv-
ice Commission thus appears to have a status
considerably different from that of the inde-
pendent quasi-judicial commissions such as the
Interstate Commerce Commission and the
Federal Trade Commission.
Members of the Civil Service Commission
are appointed by the President, by and with
the advice of the Senate, and, like the heads of
other executive departments, are removable by
the President at any time, It is not customary
137 Ops. Atty. Oen., 231.
Personnel Administration
offices to a high level of excellence through
constant effort over a period of years have had
only a limited amount of support in presenting
their case to the Congress. Other establish-
ments that would be glad to move rapidly in
the development of adequate personnel offices
have had little or no support from the Bureau
for their recommendatIOns for desirable in-
creased expenditures for personnel adminis-
tration.
The need for a broad improvement in per-
sonnel administration throughout the operating
establishments has been much stressed in
recent years and will be emphasized in appro-
priate parts of this study. Increased adnnnis-
trative expenditures alone will not bring about
such improvement, but they are essential to it.
In the interests of good management and over-
all efficiency and economy, the Bureau should
support recommendations for expanded per-
sonnel programs when well-defined and carefully
developed plans are submitted.
for Civil Service Commissioners to offer their
resignations immediately upon a change in
Administration, but the resignation of one or
more Commissioners, perhaps by request, usu-
ally follows a change of Administration within
a few months. The average length of service
by Commissioners, other than those now in
office, has been 4.7 years. A majority of the
membership of the Commission is usually
sympathetic to the objectives of the Chief
Executive in office, and this appears to have
been the intent of the statute creating the
Commission.
The first duty of the Connnission under the
Civil Service Act of 1883 is lito aid the President,
as he may request, in preparing suitable rules
for carrying this act into effect." As pre-
viously noted, the civil service rules are pro-
mulgated by the President, but the Commission
has always been regarded as the principal ad-
viser of the President in the preparation of
Executive orders promulgating and amending
the rules. The Commission states that it
recommends amendments on its own initiative
"whenever conditions so change as to lead the
Commission to believe that an amendment of
any particular rule is required."
The President frequently takes the initia-
tive in requesting the advice and assistance
of the Commission on specific matters, par-
ticularly those which affect civil service ad-
ministration. The Commission occasionally
makes constructive suggestions to the President
on its own initiative, but more frequently it
solicits the interest and assistance of the Chief
Executive when legislative proposals are intro-
""",
in the F ederaZ Service
duced in the Congress which, in the opinion of
the Commission, would have an adverse effect
upon the merit system. There is an absence of
regular contact between the Commission and
the Chief Executive, and conferences between
the full Commission and the Chief Executive
for the consideration of major personnel
policies are of extremely rare occurrence.
The Commission may investigate and report
upon any matter concerning the execution, en-
forcement, or effect of the Civil Service Act and
rules. It gives special attention under this
authority to investigations of violations of the
rule on political activity. On the basis of these
investigations, the Commission frequently rec-
ommends that individual employees be dis-
ciplined by the heads of the establishments in
which they serve. The Commission's recom-
mendations as to penalties are frequently dis-
regarded, but the Commission does not bring
such cases to the attention of the Chief Execu-
tive and apparently makes little effort to secure
his assistance in the enforcement of the rules
as they now exist, although it frequently recom-
mends amendment of the rule on political
activity to require administrative officials to
comply with its recommendations.
The Commission is required to make an
annual report to the President for transmission
to the Congress, "showing its own action, the
rules and regulations, and the exceptions thereto
in force, the practical effects thereof, and any
suggestions it may approve for the more
effectual accomplishment of the purposes of"
the Civil Service Act. The purposes of the act
are "to regulate and improve the civil service
of the United States." The Commission would
therefore appear to have ample authority to
concern itself with and to make recommenda-
tions concerning any phase of Federal personnel
administration.
The recommendations of the Commission as
formally presented in its recent annual reports
are in most cases restricted to a rather limited
number of topics. The Commission annually
urges the extension of the classified competitive
service to include important groups of positions
not now filled through open competition. It
urges the statutory extension of its jurisdiction
over salary standardization and control to
"approximately 100,000 positions in the field ser-
vice the salaries of which are not fixed by specific
legislative schedule or wage-board method", and
to the personnel of recently created agencies
not subject to the Classification Act. It pro-
poses various amendments to improve and
perfect the Retirement Act. For the most
part, the Commission tends to avoid recom-
mendations for Executive action in its formal
reports, although the reports are replete with
recommendations for legislation. It seldom
reports on the quality or progress of personnel
administration in the operating establishments.
75
Internal Organization of
the Commission's Establishment
The Commission's establishment included as
of Juno 30, 1936, a total of 1,236 employees,
1,048 of them permanent and 188 temporary or
emergency employees. Of the total number,
899 were employed in the principal office at
Washington and 337 were stationed at 13
district offices. One of the district offices is
located at Washington and serves Federal
establishments in adjacent states. The ad-
ministrative duties of the Commission are
carried on under the direction of a Chief
Examiner, who is regarded by the Commission
as its chief executive and technical officer and
as its principal adviser on matters of policy,
interpretation, and procedure.
The principal administrative divisions of the
Commission's central office are Examining, Per-
sonnel Classification, and Service Records and
Retirement. The work of these divisions is dis-
cussed below. There are also five other divi-
sions in the Commission. An Investigations
Division is responsible for the investigation of
the character, training, experience, and suit-
ability of applicants for certain classes of posi-
tions, particularly those in law enforcement
agencies; supervises the taking of fingerprints;
and investigates political activity cases and
irregularities in examinations, frauds, and other
matters. A Correspondence Division, an Ac-
counts and Maintenance Division, and a small
Research Division carry on duties indicated by
their titles. A division known as the Board of
Appeals and Review has a special status in that
it reports to the Commission directly for cer-
tain purposes. Its work is given special dis-
cussion below in connection with the appellate
functions of the Commission.
The Commission's 13 district offices are prin-
cipally concerned with the examination and cer-
tification of applicants for positions in Federal
field establishments. They also supervise the
work of the 4,500 local boards of civil service
examiners. These boards are composed of civil
service employees, principally in the postal
field service, and conduct the assembled ex-
aminations which are held from time to time
in more than 700 cities and at other points.
Administrative Functions
The functions of the Commission as a re-
cruitment agenc, continue to give rise to the
largest group 0 activities carried on in the
Commission's establishment. More than half
of the Commission's employees appear to be
concerned primarily with work related to exam-
ining and certification for appointment.
The Commission holds examinations for ap-
:Qroximately 1,700 different types of positions.
During the fiscal year 1935, it examined 466,288
76
applicants for positions, and 40,725 ay'point-
ments were made on the basis of its certificates.
The Civil Service Act emphasizes open com-
petitive examination as the approved method
of entrance to the Federal service, "as nearly
as the conditions of good administration will
warrant," and requires the examinations to be
"practical in their character." Candidates for
appointment to the lower grades of the classified
competitive service are usually required to as-
semble at convenient points to participate in
written examinations under the supel'VlSion of
local boards of examiners. The papers are then
~aded either in the district offices -or at Wash-
mgton. Candidates for professional, scientific,
and administrative positIOns carrying entrance
salaries of $2,600 or above are usually not re-
quired to assemble or to take a written exam-
ination. They are instead required to submit
detailed statements of their training and ex-
perience, supplemented by other relevant ma-
terials, such as specially prepared reports on
specified topics or copies of publications. Rat-
ings are then based upon the application state-
ments and supporting material, all of which
are submitted under oath. Reports may be
obtained from former employers and references,
oral interviews may be required, and character
investigations may be made. Candidates for
the highest classified competitive positions may
be rated by specially constituted boards of
examiners.
Because of curtailment of appropriations,
the examining work of the Commission became
badly in arrears in 1933 and 1934. Registers
that normally would have been renewed by
holding new examinations annually or biennially
were continued in use for a period of from 3 to
7 years. The Commission, in its 1935 report,
stated that over 100 registers 3 years old or
older were still in active use in its central office.
Increased funds have been made available
to the Commission since the beginning of the
fiscal year 1935, and its examining work has
been expanded to the largest volume in the
Commission's history. It has experienced great
difficulty, however, in bringing the work up to
a current condition because of the unprece-
dented number of applications. For example,
when the Commission announced its examina-
tion for railway postal clerk in 1935, the first
such examination in 8 years, over 200,000
applications were received within a few days.
The Commission's activities in connection
with recruitment and placement are largely
confined to examination and certification for
initial entrance into the classified competitive
service. All new appointees are required to
undergo a period of probation, usually six
months, but the Commission does not investi-
gate to determine whether appointees prove
satisfactory. It attempts to assure itself that
appointees are placed in positions of the type
for which certified but does not carryon positive
Per80nnel Administration
administrative activities designed to improve
placement. The Commission maintains reem-
ployment registers for civil service employees
who have been or are about to be terminated
through reductions in force, but ordinarily
does not maintain registers of other employees
available or eligible for transfer or promotion.
Other than these reemployment registers, no
facilities are maintained which would enable
the Commission to recommend former classi-
fied employees who are available for and desire
reinstatement.
. The Commission's relationship to placement,
transfer, promotion, and reinstatement is pri-
marily the negative one of making sure that the
civil service rules are not violated. For this
purpose, it passes upon all promotions and rein-
statements and upon transfers from one agency
to another and from the field service to the so-
called departmental service. When the Com-
mission deems it desirable, an employee pro-
posed for transfer, promotion, or remstatement
may b~ required .to :pass an appropriate non-
competitIve exammatlOn.
Since 1932 the Commission has continued to
administer the Classification Act along the lines
previously pursued by the Personnel Classifica-
tion Board. Although the jurisdiction of the
Commission over salary standardization and
control under the act has not been extended be-
yond the permanent departmental service at
Washington, except for minor exceptions, the
number of departmental positions under its con-
trol increased from 45,431 at the end of the fis-
cal year 1933 to 70,478 as of June 30, 1936.
Personnel classification is a continuing proc-
ess because of the constant changes in assign-
ments of duties and responsibilities. These
changes must be reflected in adjustments of
salaries if uniformity and equity m the deter-
mination of salaries are to be maintained, as
required by the Classification Act for the group
it covers. During the fiscal year 1935, the
Commission received 26,517 position descrip-
tions for review and, in addition, numerous l
requests for advisory review of positions not
subject to its jurisdiction. (
The administration of the Retirement Act
results in a large volume of work, most of which
is relatively routine in character. The Service
Records and Retirement Division of the Com-
miRsion reported 256 employees as of June 30,
I)
1936, and was second in size among the Com-
mission's divisions. This division maintains
central personnel records for all classified com-
petitive employees. The records appear to be
used almost exclusively for routine administra-
tive purposes. A statistical unit was set up
in the division in 1935, however, and the Com-
mission now appears to be moving toward the
improvement of its statistical services to the
pomt where the basic data in the records may
be analyzed for use in the development of
improved policies and procedures.
,
{
1
in the Federal Service
Rule-making Functions
The Commission is authorized by the Civil
Service Act to adopt regulations governing civil
service examinations, "subject to the rules that
may be made by the President." Within the
terms of the civil service rules, the Commission
thus has authority to determine every detail of
policy, practice, and procedure in connection
with examinations. It issues general regula-
tions and interpretations on other matters under
the rules and passes upon specific cases when
rulings are required. It may obtain the opinion
of the Attorney General on questions of law.
Regulations of the Commission under the Civil
Service Act may, however, be overridden by the
President at any time, since they are subordi-
nate to the rules which he promulgates.
The Commission has authority to make
necessary rules and regulations for the adminis-
tration of the Classification and Retirement
Acts, although this authority is much circum-
scribed by the degree of detail into which the
two acts go. In adopting regulations relating
to salary standardization and control and to
retirement, the Commission thus has direct
statutory authority and is not required by
statute to be governed by the views of the Chief
Executive.
The Commission now has authority under
the Classification Act to review and revise sys-
tems of efficiency or service ratings applicable
to employees in the departmental service at
Washington. A complete revision of the rating
system was promulgated by the Commission on
May 6, 1935, and has been used during the last
two annual rating periods. The Commission
receives reports of the ratings and may investi-
gate to determine whether the required pro-
cedure was followed.
Appellate Functions
The appellate functions of the Civil Service
Commission are now largely carried on through
the Board of Appeals and Review, a subordinate
board of three members in the Commission's
establishment. The Board was established by
the Commission late in 1930. At that time,
the Commission stated that it had "always
recognized the right of competitors in examina-
tions to have their ratings reviewed by exam-
iners who did not participate in the original
marking." Previously this function had been
carried on by a special appeals division under
the Chief Examiner. The new appeals board,
however, was given appellate jurisdiction not
only over appeals from exammation ratings,
but also over numerous other types of appeals
cases.
The Board receives, considers, and makes
decisions on the merits of appeals from actions
taken in the various diviSIOns of the central
office and in the various district offices. Such
actions include cancellations of applications
because of failure to meet specified require-
77
ments; ratings assigned in competitive and
non-competitive, assembled and non-assembled
examinations, including examinations for Presi-
dential postmasters; disapprovals of transfers,
promotions, or reinstatements; debarments from
examinations on grounds of unsuitability; deter-
minations of retirement status; compensation
grade allocations assigned positions in the de-
partmental service under the Classification Act;
and actions on cases involving religious or
political activities.
In its 1931 report, the Commission stated:
To insure independent consideration of appeals, the
Commission placed the Board of Appeals and Review,
in the exercise of its functions, under its direct super-
vision, altogether separated from the control of any
subordinate official. Subject only to reversal by the
Commission itself, the decision of the Board is final.
Cases involving broad questions of policy or a multi-
plicity of issues are submitted to the Commission for
action. Thus appellants are assured that their cases
will be considered by a body not influenced by the
official or examiner who made the decision from which
the appeal is taken.
The original authority of the Board to reverse
decisions of all other divisions of the Commis-
sion without reference to the Commissioners
apparently led to friction. Under the present
procedure, the decision of the Board of Appeals
and Review is final, except in certain cases
mentioned below. If the Board is divided as
to the decision which should be reached or if
the office of original jurisdiction objects to a
proposed decision, the case goes to the Commis-
sioners for final disposition. All cases involving
major questions of policy and most of those
relating to the rights, duties, or compensation
of civil service employees and applicants for
positions in the salary grades of $5,600 per year
or higher are referred to the Commissioners.
They may also take jurisdiction on their own
motion.
Although its duties are broad, the Board of
Appeals and Review receives most-of its work
from appeals in connection with examinations.
During the fiscal year 1936 the Board decided
11,337 appeals from examination ratings for
entrance to the classified service. Of these,
2,442 were appeals from ratings on written
tests and 8,895 were appeals from ratings based
upon education and experience. The Board
affirmed previous action in all but 50 of the
appeals from written test ratings, but reversed
previous action in deciding 1,459 of the appeals
from ratings based upon education and experi-
ence. New evidence was in whole or in part
the basis of the reversal in 16 of the changes of
written test ratings and in 1,171 of the appeals
from ratings of education and experience. The
Board passed upon several thousand other
questions with respect to examinations and
referred 196 cases in connection with examina-
tions to the Commission. I t considered 756
classification appeals and 51 retirement appeals.
Although many cases affecting individual
employees go to the Commission for final
78
decision, it is not a general appellate body for
matters relating to the rights of Federal
employees as such. It has only a limited au-
thority to intervene in the relationships be-
tween employees and their official superiors or
to hear appeals from aggrieved employees. In
the 1933 report of the Commission the state-
ment was made that--
The ~ommission is eonstantly receiving complaints of
improper treatment in efficiency ratings, of unjust
removals, suspensions, and other adverse actions, but it
is without power to take rewedial measures except in
cases of dismissal, and then only when it is alleged, with
offer of proof, that the procedure required by the
civil-service rules has not been followed or that the
dismissal was made for political or religious reasons.
Moreover, the Commission has no power to compel the
restoration of an employee to duty if it should find that
he was improperly removed.
The Act of August 24, 1912, provides that
"no person in the classified civil service of the
United States shall be removed therefrom ex-
cept for such cause as will promote the efficiency
of said service and for reasons given in writing,
and the person whose removal is sought shall
have notice of the same and of any charges
preferred against him, and be furnished a copy
thereof, and also be allowed a reasonable time
for personally answering the same in writing;
• * *." The Commission has substantially
no authority to enforce this statute, although
it may call for copies of the charges, answer,
and order for removal.
The Commission in its 1933 report made the
following recommendations for the expansion of
its appellate jurisdiction:
The removal or reduction of employees, and the
infliction of punishment according to the gravity of the
offense, are personnel matters purely, and the Commis-
sion, as the central personnel agency of the Federal
Government, functioning under the supervision of the
President of the United States, logically is the body to
be charged with the duty and responsibility of hearing
and determining appeals in such matters made by em-
ployees in the competitive classified service.
We, accordingly recommend (1) that the Commission
be authorized by statute to investigate and conciliate
differences-arising out of removals, reductions, or sus-
pensions-between employees in the competitive classi-
fied service and their superiors, the decisions of the
Commission to be binding, with no appeal except to the
President of the United States; and (2) that, in order to
facilitate the adjustment of differences within the de-
partments as far as possible, committees be established
by the several departments and independent agencies,
such committees to make inquiry and adjustment
whenever possible, subject to review by the Com-
mission.
The Commission repeated the recommenda-
tion in modified form in its 1934 report, but
did not discuss the subject in 1935.
Developmental Functions
The Commission has labored long and
earnestly to bring about the extension of the
merit system of recruitment, which it un-
doubtedly considers its most important de-
velopmental function. It has also devoted
much attention to needed improvements in the
Personnel Administration
statutes it administers and frequently recom-
mends amending legislation.
The Commission has. been eSp'ecially inter-
ested in the improvement of the Federal retire-
ment system. Five of its nine recommenda-
tions for legislation in its 1935 report were
devoted to suggested amendments of the
Retirement Act. The most important of these
proposed lesislation "to establish a uniform
optIOnal retrrement age of 60 years after 30
years of service, the option to be exercised
either by the Government or by the employee."
This recommendation has been repeated by
the Commission for several years. In 1929,
the Commission stated that--
Seventy years as a retirement age for clerks is too high,
as nearly 30 percent of all annuitants in that group
were retired for total disability before reaching 70,
and a large percent of that group still in the service
must be partially disabled. Sixty-five years as a
retirement age for post-office clerks and carriers is too
high, as over 25 percent of those on the rolls as annui-
tants were retired for total disability before reaching 65.
Inasmuch as the Commission operates one of
the older establishments, it has reason to be
aware of a problem common to all of the older
branches of the service, with their older groups
of employees. An inflexible retirement age
does not appear to be in the interests of the serv-
ice, and a lower optional retirement age would
facilitate the just treatment of partially inca-
pacitated older employees. Many such older
emJ?loyees hold administrative and supervisory
positions, and the Commission, like other
agencies in similar case, has found it embarrass-
ing to demote them to positions of lesser re-
sponsibility after their health and vigor have
begun to fail. The Commission's attention to
this problem may therefore be considered a
significant developmental function.
Most of the developmental work of the Com-
mission not concerned with legislative recom-
mendations has been centered in its Research
Division, which was established in 1922. For
several years, particularly prior to 1929, the
Research Division was given assignments pri-
marily in connection with the improvement of
the Commission's assembled examrnations. Its
work during this period was referred to as
follows by Dr. Herman Feldman, formerly
Economic Adviser to the Personnel Classifica-
tion Board:
In the cursory attempt to trace the development of
these tests and examinations, it has been obvious that
during the past few years the Commission has shown
a striking advance in its methods. Anyone who reads
the sections in the annual reports of the Commisllion,
presenting the work of the director of research, will be
convinced that an attempt is made to apply the latest
and best knowledge and the most practical and scien-
tific technique to the selection of Federal employees.
One acquires the conviction that failings on this score
are due in large part to the difficulties of the problem
itself and to the inadequacy of the staff and facilities
for conducting the investigations. The Commission
has made mistakes normally to be expected in experi-
mental work, but its attitude is open-minded and for-
ward-looking.
j
in the Federal Service
The research unit of the Commission has done some
of ~he best wor~ in the country developing tests for
varIOus occupatIOns, s~ch !'8 postal clerks, policemen,
stenographers, etc., with Improvements in the tech-
nique of both written and oral tests that are regarded
as advances in the science as a whole. It has done con-
siderable technical investigation of the significant forms
and types of questions and their suitable combination,
and of the procedure of administering such tests. Some
of its work has resulted in high correlation figures dem-
onstrating the value of its approach. It is thus ~ne of
the best divisions of the Commission and is a credit to
the country within its field. a
During the fiscal year 1929, the Research
Division was authorized to begin an ambitious
series of p'rojects designed to bring about
greater utIlization in the Commission's own
work and throughout the Federal service of
the advance~ c~rrently being achieved in per-
sonnel' work In Industry and elsewhere. These
projects were planned to include comparisons
of employment standards in the civil service
with st~ndar~s for similar positions in industry;
more IntenSIve development of cooperative
relationships with placement directors in uni-
versities and secondary schools and industrial
personnel directors; study of the career aspects
of the Federal service and means of their im-
provement; dissemination among Federal em-
ployees of information concerning lines of
promotion, possibilities of transfer, and require-
men.ts which must be met ~o qualify. for pro-
motlOn or transfer; preparatlOn and dIssemina-
tion to applicants of information for their
guidance in attempting to obtain positions in
the Federal service.
This work was continued and in part com-
pleted during the fiscal year 1930. In 1931, the
President's Council of Personnel Administra-
~ion was esta~lished, with .the expectation that
m the future It would proVlde a suitable organi-
zation and setting in which to carry on similar
develop'~en~al functions .. The work of the
CouncIl IS dIscussed below In a separate section.
The developmental functions of the Commis-
s~on were so~ewhat ~urtail~d during the depres-
SIon. NotWlthstandmg this curtailment, how-
ever, the Commission continued the improve-
ment of examination methods and procedures
through the Research and Examining Divisions.
Substantial improvements in the reemploy-
ment procedure for civil service employees ter-
minated through reductions in force were de-
veloped, and the regulations &,overning transfers
were revised and somewhat lffiproved. As the
recently created emergency and other new agen-
cies began the development of their personnel
programs, the Research Division of the Commis-
sion was frequently called upon to assist in devis-
ing the testmg and other personnel procedures
adopted by those agencies. The Personnel Classi-
fication Division of the Commission was also fre-
quently called upon, and assisted some of the
new agencies in the installation of classification
plans and the allocation of individual positions.
I HermaD FeldmaD. A PerlOflfld Program for the Federal Cltil Berne.
71st CODIl., 3d seas., H. Doc. 773, p. 129.
79
The annual reports of the Director of Re-
se~r~h were printed with the reports of the Com-
nusslOn f?r many y.ea~ and comprised a val-
uable senes Qf publicatIOns on techniques and
methods for the improvement of personnel ad-
ministration. Since 1932, however the re-
search repo~ts. have not been printed. 'Although
the CommISSIOn states that present facilities
for investigation of personnel problems are not
as adequate as might be desired, apparently it
made no effort to obtain additional funds for
research in presenting its estimates to the Con-
gress for the fiscal year 1936-37.
In 1934, the Commission discussed the need
for an adequate statistical unit in its own estab-
lishment and stated as follows:
Beyond the absolute necessity of having certain
general statistics, the Civil Service Commission should
have adequate and comprehensive data for presenta-
tion, as. required, to the President, the Congress, and
the varIOus Government establishments, including the
Bureau of the Budget. In instances where statistics
requested have not been readily available, it has been
necessary to depend upon hurried compilations or upon
estimates.
A proper analysis of the items which enter into per-
~onnel statistics would also place the Commission itseU
III a more advantageous position to carryon its work
and to make recommendations for changes in civil-
service procedure. Only by an exact knowledge of the
conditi~ns which apply. to Federal employees, and of the
proportionate number of employees to which each con-
dition applies, can the trend, or importance, of any
phase of administration be properly studied.
The Commission therefore recommended
legislation "to establish an adequate statistical
unit in the office of the Civil Service Commis-
sion."
Inasmuch as the Commission operates for the
most part under lump-sum aPJ?ropriations and
has general powers to determme the internal
organization of its own establishment, this
would seem to represent an extreme instance
of recommendation as a substitute for action.
The recommendation was not repeated in 1935,
the Commission stating instead that, "A statis-
tical section, which cooperates with the Central
Statistical Board as necessary, was established
during the year by the consolidation of various
appropriate activities." The statistical services
of the Commission, however, still leave much to
be desired.
The Commission does not aJ?pear to give
much attention to the organizatIOn or quality
of personnel administration iIi the operating
agencies, and seldom discusses the subject in its
reports except in connection with proposals for
the increase of its own statutory powers. It
advocates promotion from within, particularly
when feasible without transfer, as the preferable
method of fillin~ vacancies in higher positions,
but has done little to develop a true career
service in personnel administration or in other
fields. It states a belief that the administra-
tion of the Federal service would be improved
by the presence of a greater number of compe-
tent and well-trained personnel officers, but it
80
has not taken the initiative in securing the
establishment of facilities for training in per-
sonnel administration, except for a training
program of limited scope for its own staff.
As matters now stand, it may be concluded
that the Commission is not giving much atten-
tion to its developmental functions except in
connection with legislative recommendations,
and that it does not appear to have any definite
plan for their prosecution during the next few
years. With the exception of the description
of the improved efficiency rating system placed
in effect in the fiscal year 1935, the last annual
report of the Commission issued prior to this
study is substantially barren of any plans or
projects for the improvement of personnel ad-
ministration through investigation or adminis-
trative action.
Quality of the Commission's Work
The time and facilities at the disposal of this
investigation have not permitted any exhaustive
study- of the work of the Civil Service Com-
miSSIOn. Members of the staff of the Presi-
dent's Committee, however, have maintained a
close contact with the staff of the Commission
over a period of some months, have had pre-
vious contacts with the Commission's work,
and have had an opportunity to secure the
opinions of many practical administrators and
students of public administration who are well
acquainted with the work and functioning both
of the present Commission and of former Com-
missions. Although the fallibility of human
judgments is admitted, it seems desirable,
nevertheless, to record some opinion as to the
quality of the work of the Civil Service Com-
mission as the principal existing central per-
sonnel agency of the Federal Government.
The judgments recorded here relate to the
work of the Commission as it now' exists.
Some of those judgments necessarily are ad-
verse; no institution is perfect, and the Com-
mission appears to be capable of considerable
improvement. The Commission is a relatively
old Federal agency, since it was established in
1883, and it would be unreasonable to expect
its practices and procedures to be undergoing
change and improvement at the rate which
should be character~tic of younger agencies.
Nevertheless, there has been no 5-year period
within the/last 25 years, at least, during which
it has not made significant progress. On the
whole, its work appears to be as good now as
it ever has been, and in many respects it is
commonly regarded in well-informed circles as
better than ever before. Most of the weak-
nesses noted hereafter are of many years stand-
ing, whereas some of the improvements com-
mented upon are relatively recent.
In the first place, the Commission should be
given credit for the faithful and diligent execu-
tion of the civil service statutes and rules.
The Commissioners devote themselves assidu-
Personnel Administration
ously to the public business; the higher execu-
tives of the Commission appear to be a hard-
working group of Federal employees, some of
whom are exceptionally able and well qualified;
and throughout the Commission's establish-
ment, discipline is strictly maintained and em-
ployees generally work hard and long. In the
performance of its duties, moreover, the Com-
mission appears at all times to be desirous of
observing in every detail the statutes and Exec-
utive orders that have been laid down for its
guidance.
The Commission would seem to have achieved
its greatest success in the administration of
open competitive examinations for positions in
the lower grades of the Federal service. The
testing methods used in its assembled examina-
tions for stenographers, clerks, postal em-
ployees, subprofessional groups, and the junior
professional positions have been commended
on many occasions and appear to be selecting
highly competent employees. Recently the
Commission held the second of its new annual
series of general purpose examinations for
recent college graduates. The registers are
being used to fill positions at $1,440 and $1,620
a year and are resulting in improved recruit-
ment to positions requiring general ability and
capacity for development but little specific
experience.
The Commission has experienced difficulty
in developing recruitment and examination
procedures for higher positions that are satis-
factory to appointing agencies. Examinations
for these positions are usually un assembled and
consist principally in ra,ting the candidates upon
the basis of their age, education, and e","perience
Conflicts of opinion between the Commission
and the appointing agencies very frequently
arise in connection with recruitment for such
positions. The Commission attempts to make
its examinations serve for as large a group of
related positions as possible. The higher posi- I
tions are often specialized, and the appointing
agencies naturally lean toward examinations
i' L
specifically directed to the needs of the positions
with which they are immediately concerned.
When the Commission has a suitable general-
purpose register, it prefers to certify in accord-
ance with the general order of standing, while
I.I
the appointing agencies much prefer the certi-
fication of eligibles best qualified for the
specific position in question, regardless of their
position on the general register. These con-
flicts often can be and are resolved in conference
between representatives of the Commission and
the appointing agencies, but the necessary
negotiations are time-consuming and frequently
leave the appointing agencies unsatisfied.
The greatest weakness of the Commission's
unassembled examinations appears to be the
extreme emphasis upon mere quantitative re-
quirements. The rating schemes now in use are
intended to weigh the quality of experience,
but the increments or deductions for quality
1
 in the Federal Service
are made from ratings based upon length of
experience. As one experienced Federal official
has said:
Five years of outstanding and brilliant work at Har-
vard Business or Wharton School may count for less
than ten years of mediocre time-serving at an inferior
institution in qualifying an economist. In setting re-
quirements for qualifying accountants or attorneys,
the varying standards of different States are frequently
ignored. In the case of promotions of incumbents of a
department to positions of higher responsibility, the
number of years of service, rather than the ability to
perform the new duties or the record in performing
present duties is the determining factor.
The Commission defends itself against such
charges by pointing to the fact that length of
experience is capable of relatively exact quanti-
tative measurement, whereas any determination
of quality of experience or ability is at best
highly SUbjective and much dependent upon the
judgment of the examiners who happen to rate
the candidates. Moreover, it appears that the
Commission has not considered it feasible to
maintain a staff of examiners for positions in
the higher grades who are competent to exercise
much judgment in the rating of candidates for
higher positions. The Commission has there-
fore found it necessary to rely upon rating
schemes which are somewhat mechanical in
nature and that require relatively little exercise
of judgment. Such schemes largely eliminate
improper influence or favoritism and maintain
the form of open competition. It is probable,
however, that they often fail to result in the
sele~tion of the best candidates for the public
seI'Vlce.
The weaknesses of the Commission's proce-
dure become most apparent in connection with
recruitment for newly created positions of a
specialized or a responsible administrative char-
acter. After a position has been in existence
for some years, particularly in a relatively ma-
ture organization, duties and responsibilities
become stabilized, and it is possible to define
\
the necessary qualifications for success with a
fair degree of accuracy, even though the posi-
tion may be one of major responsibility. It is
then possible to write an examination announce-
ment with specifications in enough detail to
produce good candidates for appointment with-
out unduly burdening the examination machin-
ery with thousands of applicants.
The problem is much more difficult in filling
the important posts in a new organization
through open competition. In such cases
neither the Commission nor the appointing
agency is likely to know the types of personnel
available, and the appointing agency may not
know specifically what it wants. In such a
case the appointing agency is normally inter-
ested in finding executives with good general
qualifications and a reasonably good back-
ground in the work with which the agency is
concerned, but above all with ability to adapt
themselves to the changing conditions of a new
agency, to develop their own jobs, and to work
81
together to develop the program of the agency.
Adaptability, capacity for development, and
ability to cooperate are, to a conSIderable de-
gree, the very qualities which the present civil
service procedure is least well equipped to meas-
ure. Positions requiring such qualities can be
and are being filled with satisfactory civil serv-
ice appointees, but the negotiations and close
collaboration with the Commission that are
necessary to produce this result frequently tend
to exhaust the time and patience of appointing
agencies.
Administrators wh9 are responsible for the
success of operating programs and who have
their own time schedules and dead-lines to meet
feel keenly that the Commission is isolated
from their administrative problems and unable
at present to give them the service they need
on key appointments to new positions. As a
case in point, the experience of the Interstate
Commerce Commission in establishing its new
Bureau of Motor Carriers may be cited. The
directorship of the Bureau was filled by the
promotion of a civil service employee, but
Presidential authority was obtained for the
noncompetitive appomtment of two assistant
directors, one general supervisor, nine section
(,Jllefs, and eight assistant section chiefs. Com-
missioner Eastman stated that the Interstate
Commerce Commission did not consider it
feasible to fill these positions in a satisfactory
manner through open competition. The Inter-
state Commerce CommiSSIOn is thoroughly ex-
perienced in dealing with the Civil Service
Commission and, on the whole, has ~one further
than most Federal agencies in makmg appoint-
ments in accordance with the civil service rules,
even when not required to do so.
The work of the Commission in the adminis-
tration of the Classification and Retirement
Acts in general appears to be more satisfactory
to the operating agencies than its examining
work. It is true that the administration of
salary standardization and control under the
Classification Act has frequently led to con-
flicts of opinion between the operating agencies
and the Commission, but such conflicts are
inherent in the nature of a situation in which
the Commission is the policing agency. The
criticism has been made by several employing
agencies that the Commission, in determining
the responsibilities of employees in the higher
grades, tends to attach too much importance
to mere numbers of persons supervised and
fails to give sufficient consideration to the
nature of the supervisory duties or to the com-
plexity and general responsibility of the work
of higher employees. Although this criticism
appears to be valid in some cases, particularly
for important new positions with heavy but
relatively undefined responsibilities, the Com-
mission III general seems to be about as sympa-
thetic to administrative needs in considermg
salary problems as it can be without violation
of the Classification Act.
82
The decisions eventually reached by the
Civil Service Commission in the matters laid
before it have not been beyond criticism, as
indicated by the preceding discussion. Other
instances of criticism of the Commission's
policies might be mentioned, aside from the
large body of criticism which relates to appro-
priate and needed functions in which the Com-
mission has not exhibited much interest.
Throughout the Executive Branch, and in other
well-informed circles, there is a lively sense of
dissatisfaction with much of the work of the
Commission. That dissatisfaction might be-
come considerably more vocal were it not for
the fact that any public criticism of the work
of the Commission is usually construed as an
attack upon the merit system, rather than as
honest disapproval of the way in which the
Commission performs its functions.
One criticism of the Commission, however,
which has been chronic for many years and
appears to be well-founded relates to the delay
which attends the performance of almost all
of the Commission's functions. The procedure
for open competitive examinations is cumber-
some a.nd time-consuming; the older appointing
agencies have, through long experience, become
somewhat reconciled to the delay necessitated
byexamina.tions. Under present conditions of
unemployment, and the resulting increase in
the number of applications, a delay of from
six to eight months or more between the
announcement of an examination and the
availability of the registers is not at all unusual
particularly in connection with the large c1ericai
examinations. Even on the recent general pro-
fessional examination for economists the Com-
mission required more than four months to
prepare the registers after the exam.nation
closed.
The amount of delay which attends the per-
formance of other functions of the Commission
is difficult to explain. It is said that it fre-
quently requires weeks to obtain the routine
approval of the Commission for transfers and
promotions. The correspondence work of the
Commission is freguently far in arrears. Ac-
tions on classificatlOn and retirement matters,
and even on requests for certification of eligibles
from existing registers, are said to be unduly
slow.
The reasons for this state of affairs are dif-
ficult to determine. The Commission attributes
its difficulties to lack of funds, although it is
now expending the largest appropriations in its
history. The volume of work has increased
more than proportionately, however, and in
view of this increase the Commission probably
does need larger appropriations for the effec-
tive performance of its functions. Neverthe-
less, It is not at all certain that the funds now
available to the Commission are being spent as
effectively as they might be. The higher ad-
ministrative officials of the Commission are so
few in number, 80 overworked, and in some
Per80nnel Administration
cases so immersed in routine, that for the most
part they appear to have little time or inclina-
tiOI.! ~~ consider. a better organizatio~ of their
actiVitIeS. It 18 thus readily pOSSible that
significant improvements are being overlooked.
This, again, may be largely the result of an
inadequate operating budget. The three Com-
missioners at the head of the agency devote
themselves earnestly to their duties. N ever-
theless, the indecision and inexperience that
frequently characterize a board of laymen in
charge of a technical activity may be in part
responsible for the administrative deficiencies
that seem to have existed in the Commission
throughout its history.
Development of the Commission
as a Central Personnel Agency
The conception of the need for a soundly
developed central personnel agency with broad
functions was almost wholly lacking in the
literature relating to Federal administration
until about 10 years ago. Up to that time, the
Civil. Service Commission had not developed
beyond a central agency of recruitment, and
there was little consideration of its possible
future development for the performance of other
functions.
Various plans for the establishment of an
adequate central personnel agency in the Fed-
eral Government were developed and discussed
by students of administration in the years from
1925 to 1930. Attention began to be directed
to the multiplication of central agencies dealing
with important service-wide problems of per-
sonnel. The Civil Service Commission took
cognizance of this situation in its annual report
for 1931, when for the first time it recommended
the combination into one agency of all existing
Federal agencies having to do with civil service
personnel problems. It was later stated that:
The agencies the majority of the Commission had in
mind were the Civil Service Commission, the Personnel
Classification Board, the personnel functions of the
Bureau of Efficiency, the Employees' Compensation
Commission, and that part of the administration of the
retirement law which is now under the jurisdiction of
the Veterans' Administration.
The Commission's recommendations for con-
solidation of existing central personnel func-
tions have since been carried out, with the ex-
ception of the proposed transfer of duties from
the Employees' Compensation Commission.
The Personnel Classification Board was abol-
ished in 1932, and its functions were trans-
ferred to the Commission. The .Bureau of
Efficiency was abolished in 1933. The ad-
ministration of the Retirement Act was con-
solidated under the Commission in 1934.
The Commission has thus made considerable /' .
progress in the consolidation of activities and -
has at least established a tendency to develop
into a central personnel agen<tr with broad
functions. Moreover, the Commission is at-
1
in the Federal Service
tempting to secure a more ~eneral jurisdiction
throughout the Federal serVIce with respect to
the functions it now performs. The question
arises, however, as to the major central per-
sonnel functions that the Commission has not
developed and is not carrying on.
Attention may first be directed to the prob-
lems of transfer and promotion in the Federal
service. It hardly seems necessary to argue at
this time that when positions above the lower
grades are vacant, appointing officers should in
general consider candIdates with suitable quali-
fications in the following order: (1) employees
in direct line for promotion within the same
unit, (2) employees available for transfer and
promotion withm the same a~ency, with con-
sideration first to those Wlthin the same
geographic area, (3) employees available for
transfer and promotion from anywhere in the
Federal service, (4) well-qualified former em-
ployees of the Federal Government who are
available for reinstatement, (5) eligibles on
existing examination registers, (6) eligibles to
be obtained by new open competitive examina-
tions. Well-qualified employees in so-called
"blind alleY''' positions who are available for
transfer WIthout promotion should often be
given consideration before employees who have
demonstrated their capacity only in lower
positions although qualified for promotion.
The best administered appomting agencies
follow this procedure at present to the extent
that they are able to do so; but they are forced
to rely almost exclusively upon their own
facilities in locating eligibles, up to the point
where they request the certification of eligibles
through open competition, the most expensive
method of all. The Commission is of sub-
stantially no assistance in the location of
eligibles available for transfer from one office
or agency to another, although it is now
attempting to secure funds with which to begin
such a service. Aside from the reemployment
registers of recently terminated employees, the
Commission makes little effort to keep track
of desirable former employees who would be
a vail able for reinstatement if suitable oppor-
tunities offered, and has no regularized proced-
ure for performing such a function.
A central personnel a~ency should provide
adequate facilities for remstatement, transfer,
and promotion. Failure to do so deadens the
morale of employees, increases salary expense,
causes unnecessary delay in the filling of
vacancies, and causes much unnecessary diffi-
culty in the organization of emergency pro-
grams. Moreover, lack of these facilities is
costly to the Commission, since it is often
forced to hold open competitive examinations
at considerable expense, frequently with un-
satisfactory results, to obtain recruits for posi-
tions that might better have been filled through
transfer and promotion from within the Federal
service--if anyone knew where to find the
eligibles.
1531515-37-7
83
A satisfactory central personnel agency for
the Federal Government, moreover, would at
all times keep itself well-informed concerning
methods, policies, and procedures in personnel
administration throughout the Federal service.
It would encourage and support constructive
developments, would disseminate knowledge
concerning them to the laggard parts of the
service, and would provide facilities for stimu-
lating positive interest in improved practices
throughout the service. It would encourage
programs designed to train employees for the
better performance of their duties and to _pre-
pare them to fill posts of greater responsibility.
It would be especially concerned with the
training, develop~ent, and placement of per-
sonnel officers. It would be the focus for
cooperative and responsible negotiations be-
tween representative organizations of employees
and the central management of the Executive
Branch. It would weld itself into the life and
work of the operating agencies by a policy of
encouraging transfers of personnel in both
directions between the central personnel agency
and the personnel offices of operating agencies,
to the end that every high official of the central
agency would be familiar with the needs of
administration as they appear on the firing line,
and every high personnel official in an operating
agency would be thoroughly familiar with the
work of the central agency.
Finally, a sa ti!'lfactory cen tral personnel
agency would occupy a position exceedingly
close to the Chief Executive. Such an agency
cannot develop its highest usefulness without
the active interest and support of the Chief
Executive, and he, in turn, co.nnot perform his
importo.nt personnel functions in a satisfactory
manner without the constant assistance of a
central personnel agency worthy of his respect.
The mvestigations on which this study is
based have found no substantial body of in-
formed opinion to the effect that the Civil
Service Commission is now in process of develop-
ment into the type of central personne), agency
just discussed, or that as now constituted it is
capable of such development. Three major
handicaps may be cited.
First, the Commission's establishment is
required by law to be heo.ded by a board rather
than a single administrator, such as the Director
of the Bureau of the Budget. Moreover, the
tradition is firmly established that a majority of
the board shall consist of persons not profes-
sionallY' trained or experienced in personnel
adminIStration or in public administration
generally. Various consequences flow from this
condition, almost all of which militate against
the development of an active and constructive
central personnel agency.
Second, it may be noted that the Commis-
sion is an old agency, that it has filled its higher
positions through promotion from within its
own ranks almost exclusively, and that it has
never developed a broad training program for
84
its own employees. The higher employees of
the Commission are now for the most part of
the type that might be expected to result from
such a regime, regardless of their original quali-
fications. They are proficient in the routines
of the Commission, they know the civil service
rules and regulations, they work hard, and they
have a high sense of loyalty to the Commission
and to the public service. The Commission-
ers necessarily rely upon their ad vice in prac-
tically all matters, and that advice appears
usually to be reasonably sound within the
gamut of the matters with which they are ac-
customed to deal. There is little reason to
believe, however, that the present administra-
tive staff of the Commission is likely to recom-
mend vigorous and constructive development
of the work of the agency along lines much
needed. It may not prove very adaptable in
the situations which will result if the Commis-
sion is required to undertake responsibilities that
it has not sought and has to some extent avoided.
Finally, the activities of the Commission up
to the present have been largely of the negative,
restrictive, or policing type. Differences of
opinion more or less acute are, in consequence,
of very frequent occurrence in the relationships
between the Commission and the operating
agencies. Because the Commission is amenable
D. THE COUNCIL OF PERSONNEL ADMINISTRATION
The establishment of an interagency com-
mittee to investigate and recommend improved
personnel policies and procedures is not a new
idea in the Federal service. An attempt to
establish such a committee was made in 1921,
when the so-called Federal Personnel Board
was set up by an Executive order issued by
direction of President Harding. The Board
was to consist of one representative from each
department and independent establishment,
a representative of the Chief Coordinator in
the Bureau of the Budget, and the President
of the Civil Service Commission, who was to
serve ex officio as chairman.
The Executive order establishing the Board
provided for a long list of much-needed func-
tions and activities. In general, the Board
was "to formulate policies and plans designed
to place the personnel administration of the
Federal Government abreast of the best prac-
tice in private enterprise, with due regard to
the peculiarities of the public service." The
Board was intended to be investigative and
advisory; it was not given administrative
powers.
The Board never began the exercise of its
functions for reasons described as follows by
Dr. Herman Feldman in an official publication:
The feeling in certain quarters that perhaps the board
would infringe on the existing jurisdiction of other bu-
Personnel Administration
to Executive and Legislative control and is
constantly forced to defend the merits of its
J>rogram against criticism from elsewhere in the
Federal service, it has never developed an
arrogant attitude to the extent alleged to be
characteristic of many of the more independent
local civil service commissions. Nevertheless.
there appears to be a considerable amount of
mutual suspicion and distrust between the
Commission and even those operating agencies
most friendly to sound conceptions of the merit
system. Many friends of the Commission
therefore feel that the more constructive types
of personnel activity cannot be carried on
effectively by an agency which necessarily must
give so much attention to the enforcement of
restrictive statutes. Re~atory activities such
as those of the CommisslOn are said to prevent
the development of the attitudes of friendly
cooperation that are necessary for other types
of central personnel activity.
Whether the Commission as now constituted
is capable of development into an adequate
central personnel agency is the major question
that must be faced in considering how to bring
about a broad improvement in Federal person-
nel administration. This subject will be given
further consideration in connection with the
positive recommendations of Part II.
reaus, and that the Civil Service Commission's super-
vision over it would magnify the power of the Commis-
sion, is believed to have aroused secret opposition early
in its career. Before it could function pressure was
brought to bear upon President Harding to throttle it.
Although the Executive order which created this board
has never been publicly rescinded aud the board nomi-
nally may still be considered in force, no action has eyer
been taken under it.4
The fate that overtook this early attempt to
establish an interagency committee to study
personnel problems is primarily of interest be-
cause of the history and present status of the
Council of Personnel Administration.
The Council was established by Executive
order in 1931, and was constituted along lines
similar to the abortive Federal Personnel Bonrd.
The official membership consists of the heads of
Executive departments, the President of the
Civil Service Commission, the Director of the
Bureau of the Budget, the Chairman of the In-
terstate Commerce Commission, and the Ad-
ministrator of Veterans' Affairs. The President
of the Civil Service Commission is ex officio
chairman of the Council, and the Director of
Research in the Commission is ex officio director
of the Council. The Director of Research has
the duty of carryin~ out approved projects and
of appointing a project committee and the nec-
essary subcommittees.
• 01'. eit., p. 252.
in the Federal Sen,ice
The order establishing the Council directed
the prosecution of a fact-finding study throu~h­
out the Federal service, the findings of whICh
were to show the existing personnel practices,
to "serve as a basis for improvements in selec-
tion, flexibility of registers, announcements,
transfers, promotions, training, and coordina-
tion of personnel activities and administration",
and to "indicate the extent to which the Govern-
ment service does offer, or can be made to
offer, a partial or a permanent career." The
Council was specifically directed to-
a. Establish a liaison system between the Civil
Service Commission and the several departments;
b. With the assistance of advisory committees com-
posed of representatives of industry, business organi-
zations, and educational institutions, and through
cooperation with these organizations, make available
to the Government the best developments in personnel
administration outside of Government service, and
make available to the public and to educational insti-
tutions authoritative information regarding employ-
ment by the Federal Government; and
c. Prepare specific plans for improvement and coor-
dination of personnel administration in the Federal
service, and cooperate with such departments and
establishments as may desire to adopt such plans.
The establishment of the Council was re-
ferred to in the 1931 report of the Civil Service
Commission "as the most important action for
the improvement of the Federal civil service
since the passage of the civil service law in
1883." There is no doubt that the Council
came into existence with the active sponsorship
of the Commission, and there is little reason to
believe that it has encountered serious opposi-
tion at any time from other agencies.
The official members of the Council at the
head of operating departments and agencies
appointed alternates to represent them on the
Council, and a number of meetino-s were held.
A project committee was appointed, and various
advisory and subcommittees were set up from
time to time.
The Council accomplished a number of for-
ward steps during the first two years of its exist-
ence. The fact-finding survey was launched
and actively prosecuted. Problems of training
and administration in connection with the
development of career possibilities in the Fed-
eral service were studied. The active interest
of university authorities was enlisted at a con-
ference on university training for the public
service, held at the University of Minnesota in
July 1931. The nucleus of an improved trans-
fer procedure for the Federal service was
developed by the Council and placed in effect
by the Commission with the cooperation of the
departments during the fiscal year 1932. The
transfer program was later developed into a
reemployment program, but a comprehensive
attack upon the transfer problem was deferred.
Studies were made of lines of promotion and
other opportunities for several classes of pro-
fessional employees, such as chemists, engineers,
and attorneys.
85
The Council appears to have become some-
what inactive in 1933, although some of its
committees continued at work. Inasmuch as
the Council had been created by Executive
order, it may have been assumed initially, after
the change of Administration in 1933, that the
Council had lapsed with the expiration of the
term of the President who had authorized it.
The order was not rescinded, however, and after
a time the Council was revived with the addi-
tion of representatives from new governmental
agencies.
During the fiscal year 1933 the Civil Service
Commission received jurisdiction over the pro-
mulgation of efficiency rating systems for the
departmental service as a result of the transfer
of functions from the abolished Personnel
Classification Board. Shortly after its appoint-
ment, the present Commission took cognizance
of the many complaints concerning the exist-
ing scheme of efficiency ratings and instructed
its director of research, the ex-officio director of
the Council of Personnel Administration, to
make a study of the problem.
The Council proved to be a most useful
vehicle through which to carryon the coopera-
tive studies necessary to bring about real
improvement in the system of efficiency or
service ratings of Federal employees. Study
committees were established in each major
agency through the various representatives on
the Council. Comments on the existing sys-
tem were secured from about 400 other experi-
enced Federal employees. The original differ-
ences of opinion as to how improvement might
be secured were reconciled through a series of
conferences, and a new rating system, devel-
oped in tentative form, was used for over 2,400
trial ratings of individual employees. The
results were studied, and after further revision
the adoption of the new plan was unanimously
recommended by the Council. The Commis-
sion promulgated the plan in time for the 1935
ratings, and after a year's trial continued the
new plan upon the unanimous recommendation
of the Council.
The record of the Council in carrying this
project through to a considerable measure of
success is of importance because of the very
unsatisfactory prior experience in developing
and using schemes of efficiency or service
ratings. Efficiency ratings have been a source
of irritation and at times of violent controversy
in the Federal service for over 20 years. The
Council's approach to the problem through
joint study on the part of the Civil Service
Commission and the operating establishments
may at the time have appeared unduly cumber-
some, but the method was appreciated by the
departments. It led eventually to harmonious
agreement upon a much improved system and
greatly facilitated the introduction of the sys-
tem after it had been formally adopted.
86
After the completion of this project in the
spring of 1935, the Council was again somewhat
inactive for nearly a year, although some of its
study committees continued to work on various
projects. In the spring of 1936, however, the
new sick and annual leave laws adopted by Con-
gress authorized the President to issue detailed
regulations to supplement the laws and to bring
about uniformity in their application so far as
feasible. The President requested the Commis-
sion to prepare suitable regulations and sug-
gested that the work be organized through the
Council of Personnel Administration. The proj-
ect was carried through successfully, again using
a number of interagency study committees, and
the resulting regulations have been promulgated
by the Presldent.
From this brief survey of accomplishments, it
is apparent that the Council, to date, has failed
to develop into an agency of the importance
originally contemplated for it. Officially, the
Council remains an expanded Cabinet commit-
tee, since it includes all members of the Cabinet
and several other high officials. It would seem
that any work that can be carried on collec-
tively by the members of the Cabinet and other
officers of similar rank could more properly be
carried on in the Cabinet itself. In actual prac-
tice, the official members of the Council have
not attended meetings but have sent represen-
tatives. These representatives have varied con-.
siderably in rank, in knowledge of personnel
administration, and in authority to act on behalf
of the agencies they represent.
E. OTHER CENTRAL AGENCIES DEALING WITH PERSONNEL FUNCTIONS
A munber of Federal agencies in addition to
those already discussed deal vtrith one or more
types of personnel problems for large parts of
the service. Of such agencies vtrith a definite
and continuing responsibility, the Employees'
Compensation Commission is the most impor-
tant. It is discussed separately below.
The Executive Council, which later was con-
solidated vtrith the National Emergency Council,
devoted considerable attention for a time to
the personnel problems relating to emergency
personnel. ASlde from the coordinating and
planning activities carried on directly in the
sessions of the Council, a small classification
unit for emergency personnel was organized in
the Council's establishment in the fall of 1933.
This unit was intended to function as the review
agency for allocations of emergency personnel
to salary grades under the Executive order of
November 19, 1933.
The r(\view unit was active for nearly a year
and its work unquestionably resulted in much
more uniformity of salary policies throughout
the emergency agencies than would have been
attained ill the absence of any central review.
Per80nneZ Administration
The manner in which the Council was orig-
inally constituted was perhaps faulty in other
respects, and part of its original assignment was
probably not appropriate for a committee such
as the Council. It appears to have suffered at
times from a lack of leadership. There may
have been some failure to distinguish between
the proper functions of the Council and the
Commission, accompanied by failure to organize
the functions of the two agencies in a proper
relationship to each other.
In prosecuting its studies the Council appears
to have made no effort at any time to enlist the
interest, cooJ?eration, and assistance of the
various orgaruzations of Federal employees. It
does not seem to have given thought to whether
these organizations are capable of making a
contribution to the development of Federal
personnel policies. The disregard of their inter-
est in many of the subjects dealt with by the
Council appears to have militated somewhat
against the complete success of even those
projects in which the Council has made the most
progress. '
On the positive side, the Council appears to
have demonstrated beyond question the value
of a cooperative approach to Federal personnel
problems on the part of the Civil Service Com-
mission and the appointing agencies. There
would seem to be a sufficient number of adminis-
trative personnel problems awaiting further
study to warrant attention to improving the
organization of the Council and expanding its
program of activities.
However, the exigencies of bargaining for essen-
tial personnel under emergency conditions and
the application of political pressure in behalf
of particular incumbents made it very difficult
to enforce the emergency salary scale. This
was particularly true for technical, professional,
and administrative employees, and for the
emergency field services. The review authority
of the central unit was revoked in August 1934,
and the Bureau of the Budget has since been
the only agency of central salary control for
most emergency personnel. The Resettlement
Administration, however, has voluntarily ac-
cepted review and final determination by the
Civil Service Commission, 'and some other
emergency agencies have closely followed the
standards of the Commission. Salary control
for most emergency personnel is thus now in
the same status as that which has existed for
many years vtrith respect to the older field
services not subject to the Classification Act,
to statutory salary scales, or to wage board
procedure.
A central transfer agency for emergency per-
sonnel at Washington, known as the Personnel
in the Federal Se1'1Jice
Replacement Division, was established in the
Works Progress Administration in 1935. The
need had become acute, since a number of emer-
gency agencies were reducing forces at the same
time that others were expanding. The Replace-
ment Division is intended to be only a tempo-
rary organization. It is performing a useful
function, although one which it would seem
might more properly be performed by the public
employment office of the District of Columbia.
A number of permanent Federal agencies have
facilities which enable them to be of use in con-
nection with particular personnel problems,
although they have little or no direct responsi-
bility for administrative activities relating to
servIce-wide personnel problems. The most
important of these agencies are the United
States Public Health Service, the United States
Employment Service, the Bureau of Labor
Statistics, and the Office of Education.
Employees' Compensation Commission
The United States Employees' Compensation
Commission was established by the Act of Sep-
tember 7, 1916, commonly known as the Fed-
eral Employees' Compensation Act, which the
Commission administers. The activities of the
Commission relating to Federal personnel, how-
ever, are now a relatively small part of its total
permanent work, because of the enlargement of
its jurisdiction through the Longshoremen's and
Harbor Workers' Compensation Act of 1927
and the District of Columbia Compensation Act
of 1928. The volume of claims cases arising
under these two acts is considerably greater
than that resulting from the Federal Employees'
Compensation Act.
The Commission also administers the emer-
gency legislation of 1934 providing compensation
for employees on Federal work relief projects
who suffer traumatic injury while in the per-
formance of such relief work. At present this
is one of the Commission's major functions.
The Commission consists of three members
appointed by the President, by and with the
advice and consent of the Senate, for overlap-
ping terms of six years. The Chairman of the
Commission is designated by the President, but
the Commission reports directly to Congress.
The Commission has authority to adopt neces-
sary regulations under the Federal Employees'
Compensation Act and to pass finally upon
claims of Federal employees and their dependents
for compensation for death, disability, or injury
in line of duty. Such re~lations and decisions
are not subject to ExecutIve approval or review.
The Commission thus appears to have the
status of an independent quasi-judicial tribunal
even in connection with Federal employee
matters. In actual practice it has little or no
contact with the Chief Executive in the admin-
istration of the Federal Employees' Compensa-
tion Act.
87
Two personnel functions of major importance
may be distinguished in connection with injuries
received by employees in line of duty. The
first is the determInation and certification for
payment of adequate compensation for such
injuries; the second is the positive and con-
structive function of preventing injuries so far
as possible.
The compensation function was provided for
with considerable care by the Federal Employ-
ees' Compensation Act. Moreover, the act
appears to have been administered fairly and
efficiently by the Commission. The transfer of
this activity to the Civil Service Commission
was seriously considered in 1932, but it was not
demonstrated that any significant economy or
improvement would result.
The accident prevention function, although
very important, has been greatly neglected.
The Federal employee compensation claims
cases now occasion an annual cost for benefits
of more than $4,000,000; and the annual cost
has a marked upward trend. A well-organized
program of safety education and accident pre-
vention throughout the Federal service would, in
all probability, reduce the number and severity
of the injuries sustained by perhaps as much as
one-third, with corresponding reductions in the
cost of claims and a far more important reduc-
tion in the amount of human suffering.
The Employees' Compensation Commission
has pointed repeatedly in its annual reports to
the need for accident prevention work through-
out the service. When first organized 20 years
ago, the Commission commented upon the
omission from its basic act of any provision for
accident prevention work. It succeeded, how-
ever, in stimulating safety programs in the
manufacturing and other establishments of the
War and Navy Departments and in some other
cases.
The Commission recently appointed a safety
engineer and began the publication of a monthly
safety bulletin in which it presents accident sta-
tistics and publishes contributions from safety
engineers in various parts of the Federal service.
It remains to be seen, however, whether an
a~ency so isolated from the Chief Executive and
WIth little responsibility for other central per-
sonnel functions can and will effectively stimu-
late accident prevention work to the extent
needed. It is possible that some of the operat-
ing agencies would be more interested in pre-
venting injuries to employees if they were
required to pay the cost of claims from their
respective budgets.
United States Public Health Service
The United States Public Health Service in
the Treasury Department is an operating and
research agency concerned with the public
health generally and required by law to pro-
vide services for certain specified beneficiaries.
It has a staff of well-trained medical officers and
88
operates 25 hospitals and 131 other relief
stations.
The staff and facilities of the Public Health
Service are available and are used for a number
of purposes in connection with Federal person-
nel administration. All appointees to civil
service positions may be required to pass an
appropriate physical examination, and ap-
pointees to permanent positions are usually
examined by medical officers of the Public
Health Service at the request of the Civil
Service CommiE'sion. Physical examinations
are also frequently made upon appropriate re-
quest in retirement cases, in connection with
non-civil-service appointments in the Federal
Bureau of Investigation and elsewhere, in con-
nection with the administration of the Federal
Employees' Compensation Act, and occasion-
ally when employees on duty are thought to be
suffering from communicable diseases. The
hospital facilities of the Public Health Service,
like those of several other Federal agencies, are
frequently used in the hospitalization of
Federal employees entitled. to such service
under the Federal Employees' Compensation
Act.
Recently the administration of all first-aid
medical relief stations for employees in the
Treasury Department at Washington was
transferred to the Public Health Service. The
transfer of administrative direction and the
resulting reorganization appear to have re-
sulted both in economy and in improved service.
Several other Washington offices have volun-
tarily requested the Public Health Service to
assume direction of their first-aid facilities. It
would seem that the Public Health Service
might advantageously be given the responsi-
bility for directing such services in all Federal
offices at Washington and in many of the
larger field centers of Federal emploYment.
First-aid facilities do much to relieve temporary
disabilities and to promote working efficiency.
Absenteeism under the sick leave law can also
be controlled much more effectively when such
facilities are provided. They are not avail-
able, however, in many large field offices.
The reports of the various investigations and
research studies by the Public Health Service
have been much used by well-administered
private concerns to improve the health and
working efficiency of their employees. Many
large Federal agencies, on the other hand,
have paid little attention to these studies, al-
though the results are available to them. The
Supervising Architect, however, frequently ob-
tains the advice of the Public Health Service in
connection with the lighting, heating, ventila-
tion, and sanitation problems of new public
buildings. The Post Office Department often
secures similar service. The Coast Guard, the
Army Engineers, and the Tennessee Valley
Authority also have frequently had assistance
from the Public Health Service in problems of
health and sanitation
Personnel Administration
United States Employment Service
The United States Employment Service has
the status of a bureau in the Department of
Labor. It was established by the WaO'ner-
Peyser Act of June 6, 1933, which provided for
Federal grants-in-aid to facilitate the establish-
ment of cooperative State-Federal public em-
ployment offices. About 40 States are now
cooperating in the program. In the other
States public employment offices are being
maintained on a temporary basis by the Federal
Government, but it is expected that all States
will eventually join in the cooperative program.
The Employment Service and the affiliated
State services were established primarily to
meet the needs of private industry, to increase
the geographic mobility of available labor, and
to improve the labor market generally. The
facilities, however, are available for use in the
recruitment of Federal personnel.
These facilities are now being used to some
extent by Federal agencies, even aside from
placement on work-relief projects. It is sug-
gested that in the future they might well be
used a great deal more. As the system of
public employment offices becomes stabilized
and reaches a high degree of working efficiency,
it can be depended upon to provide a large pool
of employables, classified as to occupations and
aptitudes, and available for referral to appoint-
ing agencies upon the basis of training and
experience. This service should be particularly
valuable in the recruitment of skilled and
unskilled labor and of some other classes of
employees for temporary and emergency posi-
tions not readily filled through civil service
examinations.
The Employment Service should be regarded
as supplementary to the regular civil service
procedure. The labor regulations and regula-
tions relating to temporary and emergency
appointments should be revised to take account
of it. Managers of public employment offices
with an appropriate civil service or merit
appointment status should be given prominent
places on local civil service boards of examiners
for the Federal service. Announcements of
civil service examinations should continue to
be sent to public employment offices, and the
services of these offices should be actively
enlisted to encourage qualified applicants and
discourage those who are unqualified.
The Employment Service is at present con-
ducting two major research projects of interest,
one on job classification and the other on em-
ployment aptitudes. These projects are being
prosecuted with the cooperation of the appro-
priate divisions of the Civil Service Commission.
Bureau of Labor Statistics
In addition to the Employment Service, a
number of other bureaus in the Department of
Labor investigate problems relating to employ-
in the Federal Service
ment, working conditions, personnel relations,
and other matters of importance in connection
with Federal personnel administration. The
Bureau of Labor Statistics appears to be the
most important of these bureaus.
The Bureau is a large research and statistical
agency. As a part of its general program, it
frequently investigates and reports on problems
relating to public personnel administration. It
has the specific duty of collecting and publish-
ing each month "Iull and complete statistics of
the volume of and changes in employment,
* * * in the service of the Federal Gov-
ernment, * * *," a duty which is per-
formed in cooperation with the statistical sec-
tion oI the Civil Service Commission. Brief re-
ports are published in the Monthly Labor Review.
The Bureau has been pressed into service a
number of times when the cost of living be-
came of material importance in connection
with Federal compensation policies. On the
last occasion, it functioned under the direction
of the President in determining a cost-oI-living
index which could be used as the basis for com-
pensation reductions promulgated by the Presi-
dent under authority of the Economy Act of
March 20, 1933. Presidential authority to
order such reductions has been terminated, but
the President has a continuing authority to in-
vestigate the facts as to the cost of living, and
may do so through the Bureau of Labor
Statistics.
OfAce of Education
The Office of Education in the Department
of the Interior carries on various research,
F. PERSONNEL ADMINISTRATION IN OPERATING ESTABLISHMENTS
The previous sections of this part of the
study all relate to central agencies of manage-
ment and research that perform or are equipped
to perform central personnel functions. The
administration of personnel matters by the
operating establishments of the Federal service
remains to be considered.
The quality of personnel administration in
the various departments, bureaus, independent
establishments, emergency agencies, and Gov-
ernment corporations is of very great impor-
tance, but can be given only brief attention
here. A thorough analysis of operating per-
sonnel problems would require an elaborate
survey. This has not been attempted, and in
any case is not necessary for the major purpose
of this study, which is primarily concerned with
central personnel functions. Some indication
may be given, however, of the complexity and
vanety of the personnel problems that arise in
the operating establishments.
89
advisory, and administrative activities in con-
nection with education, including adult educa-
tion. It administers grants-in-aid to States
to encourage the establishment of facilities for
vocational education and vocational rehabilita-
tion, carries on a program of research in voca-
tional education, and makes information on
vocational education available through publica-
tion~ and through its advisory and consulting
serVICes.
The facilities and information at the disposal
of the Office of Education should be of consider-
able value in the planning of training programs
for Federal employees. It has an accumulation
of data bearing upon problems of foreman and
supervisor training, the organization of appren-
ticeship courses, problems relating to the re-
habilitation of injured employees, and other
questions of vocational education.
The facilities available at the Office of Educa-
tion appear to have been given little attention
by the Civil Service Commission or the Council
of Personnel Administration, but have been
used to some extent by a number of operating
agencies. Within the last few years, the Office
of Education has assisted in the development
of apprenticeship courses for the navy yards
and in the organizatiolJ. and development of
training programs ill the Forest Service, the
Farm Credit Administration, and the Home
Owners' Loan Corporation. In view of the
need for improved programs of training in the
Federal service, it would seem that the services
already provided at public expense in the
Office of Education should be used more
extensively
Characteristics of
the Federal Service
The Federal Government has been the largest
single employer in the United States for many
years, if not since the beginning of the Republic.
As of June 30, 1936, the number of civilian
employees in the Executive Branch of the
Government was reported by the Civil Service
Commission as 824,259. These employees were
reported under 72 separate agencies.
The largest and one of the oldest groups of
positions is found in the Post Office Depart-
ment, with 264,614 employees on June 30, 1936.
The other 9 executive departments contained
376,803 employees. This number included
nearly 80,000 civilian employees in the War
Department, about 70,000 each in the Treasury,
Navy, and Agriculture Departments, and about
45,000 in the Interior Department. The De-
partments of State, Justice, Commerce, and
90
Labor collectively reported approximately
43,000 employees. Seventeen other agencies,
ranging in size from the Veterans' Administra-
tion with 37,456 employees to the Securities
and Exchange Commission with 1,080, reported
a total of 173,448 employees. More than 9,000
other employees were reported in some 45
smaller executive agencies.
The number of Federal employees as of June
30, 1936, was abnormally large because of
emergency and temporary employees recruited
to admiruster relief programs and to assist in
meeting other problems of the depression.
About 145,000 employees were engaged in the
various administrative activities of the works
program. Over half of them were employed in
emergency groups attached to permanent de-
partments and agencies; the others were em-
ployed in emergency agencies. Another 25,000
employees were at work in agencies of an emer-
gency character not under the works program.
Such agencies include the Home Owners' Loan
Corporation, the Federal Housing Administra-
tion, and the Agricultural Adjustment Admin-
istration. Of the remaining Federal employ-
ees, more than 650,000 in number, about 70,000
were reported as having only a temporary
status.
The Civil Service Commission reports that
as of June 30,1936, there were 498,725 positions
in the executive civil service which were subject
to the competitive provisions of the civil service
rules. The remaining positions, 325,534 in
m,unber, consisted principally of emergency and
temporary positions and of positions filled by
unclassified laborers, many of whom were
appointed under the competitive provisions of
the labor regulations. The number of positions
subi'ect to competitive appointment under the
civi service rules increased by 43,496 during
the fiscal year 1936.
Geographically, the Federal service is widely
scattered, although there is a considerable con-
centration of Federal employees at Washington,
D. C., and in some of the larger cities. Em-
ployees stationed at Washington numbered
117,103 of the total of 824,259 on June 30, 1936.
The large cities, such as New York, Phila-
delphia, Boston, Chicago, and San Francisco,
each contain groups of Federal employees
running into the thousands, pince large post
offices, the regional offices of various Federal
agencies z navy yards, army bases and depots,
the serVices that cluster around ports-of-entry,
and numerous other types of Federal field
establishments are frequently found in the
same large cities. Many large field establish-
ments, however, including army bases, navy
yards, construction projects, veterans' hospitals,
and other types, are frequently located at
smaller centers. Some of the large field services,
moreover, are so decentralized because of
the nature of their duties that their represen-
tatives are located in innumerable small and
isolated stations, as in the Forest Service, the
PersonneZ Administration
National Park Service, the I~dian Service, the
Lighthouse Service, and the Coast Guard.
The Postal Service probably has the most uni-
form distribution of employees in proportion to
population of all the Federal agencies operating
outside of Washington. This Service mcluded
260,674 of the 707,156 Federal employees sta-
tioned away from the seat of Government on
June 30, 1936. It is apparent that the com-
mon conception of the Federal service as con-
sisting principally of clerks located at Wash-
ington is far from correct.
The occupations represented in the Federal
service include almost every important calling
or type of work. They include, among others,
many highly specialized occupations that can
be pursued only in public employment, if not
exclusively in the service of the Federal Govern-
ment. The Personnel Classification Board, in
its survey a few years ago, found that the field
service, exclusive of the Postal Service, the
Foreign Service, and positions subject to com-
pensation fixed by wage boards, contained 1,633
distinct classes of positions. Many of these
classes represented different levels of difficulty
and responsibility within the same occupation.
Among the positions studied, however, the
Board found over 100 distinct professional and
scientific occupations; 39 occupations placed
in the so-called "subprofessional" group; 80
different occupations ill the clerical, adminis-
trative, and fiscal group; 104 distinct types of
mechanical crafts, trades, and custodial oc-
cupations; 26 distinct types of inspectional and
investigational work; and some other occupa-
tions in the educational services and in light
keeping and depot keeping-a total of over 350
occupations.
The size and complexity of the Federal service
render difficult any attempt at generalization
concerning personnel policies, practices, and
procedures ill the operating establishments.
Significant variations may be found among
agencies and among bureaus and other major
units within agencies. A substantial measure
of uniformity with respect to some important
matters may be discerned throughout the classi-
fied comr.etitive service, but it is accompanied
by a striking lack of uniformity in this same
group with respect to matters not covered by the
civil service rules or by specific statutes or regu-
lations. There is almost no limit to the variety
of practices, both good and bad, that may be
found among the unclassified ~roups. Person-
nel policies are somewhat umform in the so-
called "departmental" service at Washington
and are frequently used as the basis for generali-
zation concerning the entire Federal service.
This is unfortunate, because in many respects
the policies in Washington are not typical of
conditions in the field service. The Postal Serv-
ice has its own special set of personnel policies
and practices; the other field services differ
widely among themselves although they are per-
haps somewhat standardized individually.
 in the Federal Service
The Development
of Personnel Administration
The development of personnel administration
in the operating establishments of the Federal
Government has been somewhat analogous to
the development in private industry and on the
whole !s probably about as far adv~nced.
UntIl recent years personnel functions in
private industry were regarded simply as part
of the general functions of management. As the
advantages of specialization began to become
apparent, however, and a specialized body of
~nowledge and technique was developed, par-
tICular employees were designated to perform
specific personnel functions. At first these em-
ployees were usually of rather low rank' the
determinn:tion of ~ajor personnel policies' and
the selectIOn of maJor personnel remained with
higher management officials.
The advice and assistance of subordinates
charged wit.h specialized personnel functions of
a routine c~aracter was not highly regarded.
F~equently It was not helpful even when ob-
tamed, because the personnel clerks and assist-
a?~s. were not qualified to carry major responsi-
bIhties. Nevertheless, the personnel fraternity
demon~trated considerable usefulness, acquired
educatIOn through experience and training, and
gradually won recognition and responsibility.
. As matters now stand, personnel functions
m a n~mber of the b~st-administered private
e?terpnses are centr~liz~d under major execu·
tlves who devote theIr tIme almost exclusively
to the planning and direction of personnel
administration and to advising general man-
agers with respect to personnel policies. There
is no doubt as to the existence of the trend
~owat:d more specialization in personnel admin-
IstratIOn, toward more responsibility for the
personnel specialist.s, and toward higher stand-
ards of competence among those specialIsts.
M.any successfu~ and co~petently administered
pnvate enterpnses remam, however, in which
there is little specialized attention to personnel
problems. The movement experienced a tem-
. porary set-~ack during the depression, with
much curtailment of personnel programs that
had not fully demonstrated their usefulness
but the trend toward the restoration of person~
nel programs on a sounder basis is now evident
in private industry.
A similar process has been at work in the
Federal Government. Twenty years aO'o the
title "personnel officer" was practically non-
existent jn the Federal service. All important
persoD?~1 funct~ons, excep~ t?ose carried on by
the Civil SerVICe ComffilsslOn, were diffused
among general administrative officials. Those
of a more routine nature were carried on by the
:various chief c!erks. Specific personnel records
m. most establishme~ts were kept by function-
anes known as appomtment clerks.
This condition continues to be typical even
now among the older field services and may be
153155-37-8
91 \
found. in many of the older establishments at
Washmgton. In recent years, however, a num-
ber of. the larger bureaus and establishments at
Washmgton have centralized their routine
personnel functions under the direction of per-
sonnel officers, who are usually classified in the
salary grades having entrance compensation
rates of $3,800 and $4,600 per year. In the War
Department, for example which reported
79,545 civilian employees or:. June 30 1936 the
Chief of the Civilian Personnel Di~ision' has
~een ?lassified in grade 12 of the clerical, admin-
Istratr~"e, Il;nd fiscal service, and receives com-
pensatIOn m the salary range from $4,600 to
$5,400.. In a few cases, the responsibilities
vest~d m ,Personnel officers have resulted in the
classl~catIOn of their positions in the grade
carrymg an entrance compensation rate of
$5,600. In not more than two or three in-
stances among the older establishments have
their p~rsonnel officers or directors of personnel
b.een .glven responsibilities justifying classifica-
tIO~ l~ the wade starting at $6,500 per year,
whIch IS deSIgnated by the Classification Act as
the lowest executive grade and is equivalent to
a position as chief of a major bureau.
Personnel Administration
in the Department of Agriculture
Among th~ older establishments, the Depart-
ment of Agnculture is almost invariably cited
as ~n excellent ex~mple of an agency that has
achIeved substantial progress towards a high
level of personneIradministration. That prog-
ress is the result of many years of work under
good leadership and with the active interest
and support of various Secretaries of Agri-
culture.
The adoption by Congress of the Classifica-
tion Act of 1923 provided a major incentive for
~he improvement of the central personnel serv-
Ices of the Department. Prior to that time
the central organization for personnel work
consisted only of an appointments section and
an investigatlOns section to handle disciplinary
cases, both in the office of the Secretary. In
1923 a Classification Officer was appointed and
a classification section was established in the
office of the Secretary. With this addition
the number of administrative units in the offic~
of the Secretary and nominally responsible to
him was increased to eight.
The need for improved coordination in the
central management of the Department led to
the issuance in 1925 of Departmental Memoran-
dum No. 530, which provided in part that--
the various offices attached to the Office of the Secre-
tary engaged iT} personnel and other branches of busi-
ness administration are hereby consolidated into one
unit, which is designated the Office of Personnel and
Business Administration. This office will function
through two major branches, one of which will handle
personnel matters and the other genera.l business
administration.
92
Although not regarded as an entirely satis-
factory form of organization this arrangement
continued for nine years.
The great increase in the personnel and in the
financial operations of the Department which
began in 1933 accentuated previous difficulties
and led to a decision to separate the central
units dealing with personnel from other phases
of business manaKement. The reorganization
was effected by Departmental Memorandum
No. 646 of May 17, 1934, which contained the
following provision:
Office oj Personnel
The Director of Personnel, Dr. W. W. Stockberger,
will be the chief personnel officer of the Department. He
will be the general agent and representative of the
Secretary of Agriculture in personnel, salary classifica-
tion, organization and related matters and will exercise
general oversight and supervision of the personnel and
related activities of the Department. The Director of
Personnel will conduct the business of the Department
with the Civil Service Commission and where personnel
matters are concerned with other agencies doing busine88
with the Department of Agriculture.
In the annual report of the Director of Personnel
for 1935 it was stated that-
This action, which brought the organization of the
personnel work of the Department into line wi~h mod.ern
views on personnel management, has made It possible
to give more consideration to the development of morale
and the improvement of human relations within the
service.
As of a recent date, the Office of Personnel
had a total staff of 74 persons, of whom 9 were
classified in grades carrying salaries of $3,800
per year or more. The principal Jivisions of the
Office were Appointments, Classification, and
Investigation.
The Director of Personnel carries on functions
considerably broader than those indicated by
the titles of the divisions he directs. He fre-
quently advises the Secretary on important
departmental personnel policies and upon the
selection or retention of major personnel, con-
sults with and advises the chiefs of bureaus on
bureau personnel policies and problems, partic-
ipates actively in planning the in-service training
activities carried on in the Graduate School of
the Department of Agriculture, and encourages
the formation of voluntary associations of
employees to carry on needed welfare and rec-
reational activities. His status is quite different
from that of the chief of a bureau responsible
for one of the primary functions of the Depart-
ment, but because of his special relationship to
the Secretary, bis rank is equivalent to that of
the chief of a major bureau. His annual report
for 1935, one of the few printed reports of
departmental personnel offices, began with a
discussion of the problem of training for per-
sonnel management and included a recommen-
dation that "training in administration and in
personnel management be made a part of the
permanent program of the Department." On
the whole, this annual report of a departmental
Personnel Administration
personnel office is a realistic and forward-looking
document.
The organization of the departmental person-
nel office, although good, is by no means
perfect. The Director of Personnel is unable
to spend much time in the field because no
provision has been made for a high-grade
assistant director, although 55,950 of the
Department's 67,813 employees 6 on June 30,
1936, were stationed away from Washington,
D. C. No provision has yet been made for a
departmental safety engineer, although the
far-flung activities of the Department result
in frequent demands upon the Federal Em-
ployees' Compensation Fund. Such a position
might well be attached to the departmental
personnel office. The need for more attention
to the training of employees throughout the
Department, especially supervisors, is recog-
nized. It could be fostered more effectively if
a· specialist in employee training were attached
to the departmental personnel office and given
the duty of stimulating and coordinating
training programs in the various bureaus.
The establishment of these various positions
will add to the budget for the departmental
personnel office, but there is evident reason to
believe that if the positions were created and
filled with qualificd appointees, the net result
would be an over-all economy in the cost of the
services the Department is authorized and
required by law to provide.
The advantages of reasonable decentraliza-
tion in the personnel work of the Depa,rtment
have been recognized and the larger bureaus
have been encouraged to establish adequate
bureau personnel offices, although not all have
done so. The bureau personnel offices have a
relationship to the departmental personnel
office that is similar to the relationship it in
turn maintains with the Civil Service Com-
mission and the Bureau of the Budget on person-
nel matters. The bureau personnel offices
maintain direct contact with the personnel
problems of their respective bureaus, advise
I
the bureau chiefs and their subordinate admin-
istrative officers on personnel matters, and care
for the routine aspects of bureau personnel
administration.
l/I
A number of the bureaus of the Department
have large, decentralized field forces. In such
bureaus it is customary to establish regional or
district offices to which a large share of admin-
istrative authority is delegated. In these
bureaus, the central bureau personnel office
becomes a small coordinating and policy-
enforcing agency. District personnel officers
are stationed at most of the district offices and
have immediate responsibility for carrying out
policies formulated by higher authority, for
submitting to the central bureau office all
matters that require consideration either by
• Includes 14,lO!i field service employees engaged In emergency con-
servation work under the supervision of employees of the Department of
Agriculture, but who do not hold appointments in the Department.
 in the Federal Se1"Vice
the bureau or the departmental Office of Person-
nel, and for promoting the morale and general
welfare of the employees within their districts.
This decentralized type of organization is
exemplified by personnel administration in the
Forest Service, one of the largest bureaus of the
Department. The Forest Service has a staff of
several thousand permanent employees and
annually employs up to 30,000 temporary,
seasonal, and emergency workers. It adminis-
ters a tenth of the entire surface area of the
United States. The central Division of Person-
nel Management of the Service is directed by a
well-qualified personnel officer and includes four
sections, Recruiting, Appointment, Training,
and Development and Welfare. It issues a
training publication, Executive and Personnel
Management on the National Forests. Regional
personnel officers are being stationed at each of
the 10 Forest Service regional offices. Each
such officer serves under the administrative
direction of the Regional Forester, but receives
technical instruction and advice from the chief
of the central Division of Personnel Manage-
ment. The chief of the central division inspects
the regional personnel offices from time to time
and reports to the chief of the bureau on the
quality of personnel administration in the
various regicns.
The experience in the Department of Agri-
culture indicates that a rather completely de-
veloped personnel staff is needed in any bureau
or similar unit with 3,500 or more employees,
and may be justified by special circumstances
in smaller units. A proper balance must be
maintained in the division of duties between
bureau and departmental personnel offices but,
generally speaking, the work should be largely
decentralized in order to keep the personnel
staff in close contact with the actual needs of
administration. Departmental personnel offi-
cers would then be able to concern themselves
primarily with major questions of policy, the
selection and promotion of employees in higher
positions, the supervision of departmental train-
ing activities, and administrative inspection and
review of the activities performed in bureau
personnel offices.
Need for General Extension
of BeHer Practices
The above discussion of personnel adminis-
tration in the Department of Agriculture was
presented not because the relatively high level
of personnel administration found in that de-
partment is typical of conditions in other old
agencies, but because it represents one of the
best situations in the Federal service. With
the exception of certain bureaus in other de-
partments, it i.l~ largely true throughout the
service that "tbe chief clerk of twenty years
ago still reigns supreme, even though he may
be camouflaged by a new title connoting all
that is de'Jirable in modern personnel methods."G
93
The forces making for inertia are great. The
officials now responsible for routine personnel
functions are in many cases not highly re-
garded by their superiors. Moreover, when
consideration is given to their background and
training, there is good reason for caution in
conferring additional functions upon many of
them. In old establishments, in order to de-
velop adequate personnel· offices, it would be
necessary in most cases to group functions now
distributed among a number of administrative
officials. It is difficult and sometimes em-
barrassing to bring about such reorganizations
of duties, even though the desirability of group-
ing closely related functions may be admitted.
In some cases higher administrative officials
would like to move rapidly in the improvement
of their personnel services, but have been un-
able to obtain the approval of the Bureau of
the Budget or of the Congress for the necessary
expendi tures.
Until recently, the Civil Service Commission
has never had a register from which personnel
officers might suitably be appointed. Its re-
cent open competitive examination for per-
sonnel officers will to some extent supply this
lack, but V>'I1S not offered in any salary grade
above $4,600 per year, gave little recognition
to the professional aspects of personnel ad-
ministration, and was not given much publicity
among appropriate groups.
The forces of inertia just noted have been
considerably less present in the newer agencies
of the Federal Government. This is true in
part because they are new and in part because
they have operated with a larger degree of
freedom from central controls. That freedom
has in some cases been used unwisely, but in
other cases it has facilitated very real advances.
The administrative heads of a number of new
agencies, such as the Farm Credit Administra-
tion, the Resettlement Administration, and
others, have been aware of the contribution to
the success of these agencies that could be
made by a high quality of personnel admin-
istration. They have profited to a consider-
able extent from the advances in recent years
both in private and in public personnel admin-
istration, have appointed personnel directors
of executive caliber, and have given them major
responsibilities. In many respects a number
of the new agencies are now pioneering in the
improvement of public personnel administra-
tion.
The unevenness in the development of per-
sonnel administration throughout the Federal
service is in some respects a healthy sign.
Certainly every progressive tendency should be
encouraged. 'When any particular bureau or
agency is willing and able to move ahead with
an improved program, it should be allowed to
do so, regardless of whether other agencies are
able to keep pace.
'John E. Devine. Post·Entrv Training in the Federal Strvice Chicago:
University of Chicago. 1935, mimeographed), p. 10.
94
Nevertheless, spontaneous progressive tend-
encies have been too much relied upon .. The
lack of effective central stimulation and sup-
port for adequate personnel programs in the
operating agencies is apparent. N either the
Civil Service Commission nor the Bureau
of the Budget has given adequate attention
to the problem, and to some extent both have
tended to prevent rather than to encourage
progress.
A great improvement in the quality of person-
nel administration throughout the Federal
Personnel Administration
service could unquestionably be achieved if
the laggard agencies could be stimulated to take
over, adapt, and use the personnel methods that
have proved successful in the best-administered
Federal agencies. No rapid or general improve-
ment may be anticipated, however, until it is
stimulated by a well-staffed and effective cen-
tral personnel agency. For success, such an
agency will require the active assistance of
other central management agencies and the
aggressive support of the Chief Executive and
the Congress.
 II. THE DEVELOPMENT OF A SERVICE OF PERSONNEL
ADMINISTRATION
•
In the preceding part of this study attention
was devoted to the present organization for
personnel administration in the Executive
Branch and to methods of personnel adminis-
tration now being followed. A number of
weaknesses in the present organization and
methods were discussed at some length.
This part of the study is devoted to definite
recommendations for the improvement of per-
sonnel administration in the Executive Branch,
and largely to recommendations that relate to
matters of organization. Other recommenda-
tions are presented in Part III, which deals
with problems directly related to the extension
of the merit system and to the development of
the existing merit system into a Bound career
system.
Recommendations concerning organization
are presented first because it is believed that the
most serious deficiencies in Federal personnel
administration as it now exists may be traced
directly or indirectly to faulty organization. It
will be difficult to extend or improve the merit
system unless an improved organization for
personnel administration is first achieved.
The general lines along which improvement in
organization may be attained seem fairly clear.
The Congress and the Executive should give
attention to the develoX:Jent of a more unified
service of personnel a 'nistration, desi~ed,
organized, and staffed to carry on constructIvely
the work of personnel administration for the
nonpolitical positions in the Federal service.
Political positions in the lower grades, so long
as they exist, can also be brought within the
purview of certain phases of the service of per-
A. AN ADEQUATE CENTRAL PERSONNEL AGENCY
The service of personnel administration should
be represented at the highest level of adminis-
trative management by an adequate central
personnel agency. The central personnel agency
should be coordmate in rank with the Bureau of
the Budget and should be closely associated
with it, but should not be located in any existing
department of the Executive Branch. It should
sonnel administration, although that service
should have nothing to do with appointments,
status changes, and terminations of political
personnel.
The conception of a service of personnel
administration is relatively new and is put for-
. ward deliberately to emphasize a number of
important factors that have been much neg-
lected. By a service of personnel administra-
tion is meant a group of persons specialized in
the performance of one or more aspects of the
personnel function and devoting all or nearly all
of their time to it. They should be found at all
levels of administration between the Chief
Executive and the smaller operating units.
The service cannot and should not be a single
unit of organization, but should be orcranized
into specialized units appropriately located
throughout the Executive Branch. Some ad·
ministrative relationships should exist between
these specialized units of personnel administra-
tion, but in the main the service should obtain
unity through a common specialization and
should be knit together by the ties of profes-
sional association and the channels of profes-
sional advancement.
The specific recommendations that follow re-
late principally to the organization, duties, and
relatIOnships of the various specialized units of
organization throu~h which the service of I?er-
sonnel administratIOn may become effective.
In conclusion of this part of the study, certain
general aspects of the service of personnel ad-
ministration are treated and a plan is outlined
for placing the recommendations in effect.
be closely attached to the office of the President,
and the head of the central personnel agency
should report directly to him.
A speCIalized personnel agency at the highest
level of administration is necessary for the same
reasons that specialized personnel agencies are
necessary at all major levels of administration.
General administrators can seldom equip them-
95
96
selves with the technical knowledge and skill
now available for concentration upon the per-
sonnel function, and cannot devote the personal
attention required by the importance of the
problems. The President, as a general adminis-
trator, is no exception to this general rule.
Personnel administration is an inte~ral part
of general administration; the specialized per-
sonnel agency of highest rank should therefore
be closely attached to the President's office.
The principle of division of labor requires that
personnel administration be given the un-
divided attention of professionally qualified
persons; but the responsibility for developing
adequate and constructive personnel policies,
standards, and activities throughout the Exec-
utive Branch of the Government cannot be
segregated from general administration and
separately discharged without disadvantage
both to the administration of the personnel
function and to general administration.
The further development of a central per-
sonnel agency is in full accordance with the
American theory and system of government.
Under the Constitution the President, as Chief
Executive, has the major responsibility for
securing effective administration of the per-
sonnel function. This responsibility was clearly
recognized in the Civil Service Act of 1883,
which established the Civil Service Commis-
sion as a central recruitment agency directly
subordinate to the President. The respon-
sibility of the President under present condi-
tions, however, appears to make necessary
considerable improvement and extension of
the central personnel service.
The central personnel agency should be
closely associated with such other central
agencies of management as may exist or may
be created, particularly the Bureau of the
Budget, because close coordination of their
various activities is essential to effective over-
all management. Every major policy with
which the central personnel agency will be
concerned must also be considered from the
standpoints of its budgetary effects and its
repercussions upon organization structure and
the activiti~s of the operating establishments.
The importance and frequency of the contacts
that should be maintained between the head
offices of the principal central agencies are
obvious.
Especially careful coordination of the work
of the central personnel agency and that of the
operating departments and agencies is and will
be required. It would seem that the major
responsibility for directing such coordination
must continue to rest with the Chief Executive.
The responsibility is not one that admits of
much delegation. Even if there were no other
reason for direct contact between the President
and the head of the central personnel agency,
this reason would appear to be sufficiently
conclusive to make such direct contact ad-
visable.
Personnel Administration
The pressure upon the time of the Chief
Executive is so great that it will not permit the
heads of the central agencies and other estab-
lishments to resort to him frequently. The
coordination of their work should therefore be
largely of a voluntary character, and in practice
should result from the close contact of officials
devoted to the public interest and trained to
appreciate the various aspects of their individual
problems. Nevertheless, the central agencies
and the operating establishments touch at so
many points that conflicts will inevitably arise,
and leadership will be necessary to resolve
them. The responsibility of the Chief Execu-
tive for such administrative leadership would
appear to be inescapable.
Duties and Responsibilities
of the Central Personnel Agency
The central personnel agency should have,
among others, the following duties and responsi-
bilities:
1. To develop constructive personnel pol-
icies, standards, and procedures for applica-
tion throughout the Federal service.
2. To assist the Chief Executive in the
development of his recommendations to the
Congress for improvements in the statutes
governing personnel administration in the
various parts of the Federal service.
3. To assist the Chief Executive in provid-
ing for the general regulation of the personnel
of the Executive Branch, within the limits
of his constitutional and statutory discretion
in such matters as recruitment, examina-
tion, and placement; probation; transfer and
promotion; demotion and dismissal; re-
employment and reinstatement; personnel
classifica tion; discipline; retirement of su-
perannuated employees; establishment of
personnel records; salary and wage scales;
hours of duty; holidays and sick leaves;
health, safety, and welfare.
4. To compile, arrange, index, annotate,
I
and make available currently in the form of
an administrative personnel code the statutes
or parts of statutes, Executive orders, and
other regulations generally applicable to per-
sonnel administration throughout the Federal
service or large parts thereof; and to recom-
mend amendments of statutes, orders, and
regulations in order to eliminate inconsist-
encies, and otherwise improve administration.
5. To assist the Chief Executive in main-
taining a sufficient degree of central control
over personnel administration throughout the
Executive Branch to insure the application
of constructive personnel policies and the
coordination of personnel policies with gen-
eral. administrative policies throughout the
serVIce.
6. To assist the Chief Executive in pro-
viding for and supervising the interdepart-
mental detailing of expert personnel and
J
in the Federal Service
other employees within the limits of statu-
tory authority in order to facilitate the
effective utilization of the expert personnel
of the Federal Government at the points
where their services are most needed and
most valuable and to facilitate the concentra-
tion of other employees at points where work
is temporarily increased or urgent.
7. To assist the Bureau of the Budget in
budgetary planning as it affects the number
and compensation of personnel.
8. To assist the heads of departments and
other establishments in the development
and improvement of an effective service
of personnel administration functioning
throughout those establishments.
9. To act as the central review agency for
position classification and salary standardi-
zation and control throughout such parts of
the service as may be designated by statute
or by Executive order under statutory
authority.
10. To provide the operating establishments
of the Executive Branch and the District of
Columbia with an adequate central recruiting,
transfer, and retirement service.
The central personnel agency should perform
its functions in all cases under the direction of
the Chief Executive. In general, it should re-
ceive its formal authority only through delega-
tion from him by Executive order under his
constitutional discretion and such statutory
powers as are or may be vested in him by the
Congress.
Formal authority should be conferred upon
the central. personnel agency only within limits
carefully determined through study of the
relationship it should have to other adminis-
trative units, and should be subject to change by
Executive action in connection with all matters
for which the President has responsibility.
Responsibility for initiative and recommendation
in matters pertaining to major personnel policies
and standards should be definitely fixed in the
central personnel agency, but should not be
confined toit. Within the limits of major policies
determined by statute and by Executive order,
the central personnel agency should be granted
authority to adopt regulations applicable
throughout appropriate parts of the Federal
service. It should be required to follow an
appropriate procedure in determining its recom-
mendations as to major policy and in the
adoption of regulations. The procedure should
include such provision for consultation with the
duly constituted representatives of the agencies
and employees affected as may be approved by
the President.
Responsibility for the application of policies
and standards and for the administration of
operating personnel activities should be decen-
tralized to the maximum extent compatible
with maintenance of sound policies and stand-
ards and with avoidance of duplication of
97·., ,'.
work. Decentralization 'is essential to~ th~
rapid performance of the business of Govern-
ment and to the development of the initiative
and competence that are necessary throughout
the administrative service. It also facilitates
the recognition of real differences in the con-
ditions under which the various establishments
operate.
The central personnel agency should be
expected to attain a position of leadership in
relation to the personnel function at all levels,
but that leadership should be attained primar-
ily through the merits of its program. If the
central agency is competent, its leadership will
make itself felt with minimum resort to the
coercive authority of the Chief Executive,
although that authority should be available
when needed. Constructive personnel activities
are essentially educational.
The Development of
an Adequate Central Personnel Agency
The extent to which the existing establish-
ment headed by the Civil Service Commission
is capable of development into. an adequate
central personnel agency was discussed in Part
r. Although the Commission is now perform-
ing many of the functions of a central personnel
agency in a partially satisfactory manner, the
conclusion seems warranted that, as now con-
stituted, it cannot be developed into an adequate
central personnel agency except with great diffi-
culty, if at all. Two major recommendations
are therefore presented for consideration.
The first major recommendation is that a new
central personnel agency be created under the
direction of a sin~le, well-qualified nonpolitical
Administrator.l'he admmistrative, develop-
mental, and advisory functions of an adequate
central personnel agency should be vested in
him. The functions, personnel, and records of
the present establishment of the Civil Service
Commission should be transferred to the new
central personnel agency, and the Commission
should cease to exist.
The second major recommendation is that
a new Civil Service Board made up of a number
of nonsalaried citizens be created to perform
certain functions related to central personnel
administration that are suitable for a part-time
citizens' board, as discussed in detail in the next
subsection.
These two recommendations are closely inte-
grated, and it is not recommended that either
be adopted without the other. The Civil Serv-
ice Board of citizens should be organized to give
adequate representation to the public interest
in the development and extension of the merit
system; the office of personnel Administrator
under the President should be established to fix
responsibility for constructive leadership and to
promote administrative efficiency.
The head of the new central personnel agency
should be appointed by the President and
98
should be respom,iLlil directly to him for the
performance of the duties and responsibilities
appropriate and needed in a central personnel
agency. The position should be regarded as
nonpolitical because the p,ersonnel Adminis-
trator should not be responsIble for or concerned
with the development of policies in the field of
partisan politics, although he should have a
major advisory responsibility in connection
with personnel policies of a purely adminis-
trative character.
The success of this recommendation, if
adopted, will depend principally upon the
qualifications of the head of the central per-
sonnel agency. The procedure to be used in
fillin~ the position should therefore be carefully
consIdered, and should be similar to that dis-
cussed in detail in the next part of this study
for other high nonpolitical positions.
In general, the position should not be filled
by promotion without examination, but only
by selection from among certified eligibles ob-
tained through open competitive examination
under the civil service rules. High civil service
employees in the existing establishment of the
Civil Service Commission and in the personnel
offices of operating establishments should be
encouraged to compete, but the position is one
of so special a character and of such exceptional
importance that available candidates within
the service should be required to undergo com-
parison with suitable candidates from outsIde
the Federal civil service. High-grade qualify-
ing experience in public personnel administra-
tion can be and is being obtained in positions
outside the Federal civil service.
The examination should be conducted by a
specially constituted nonpolitical board of ex-
aminers, appointed by the Civil Service Board
and approved by the President. The qualifica-
tions required of candidates should be specified
in broad terms, with emphasis upon successful
and responsible experience in public personnel
administration.
The ideal candidate for appointment would
have responsible and successful experience both
in the personnel office of a governmental
operating agency and in a central personnel
agency, although the number of such persons is
now so limited that it would be undesirable at
this time to make both types of experience
mandatory. The candidates should be re-
quired to offer experience in the direction of
nonpolitical recruitment programs. It is also
imperative, however, that they demonstrate
close personal familiarity with the problems of
operating agencies and the development of
operating personnel policies, in order that the
successful candidate may be able to maintain a
closer and more understanding relationship to
the operating agencies of the Federal Govern-
ment than has been characteristic of the present
establishment of the Civil Service Com-
mission.
Personnel Administration
Candidates should also be required to have
had experience in dealing successfully and
cooperatively with organized employee groups.
In view of the major part that has been and is
being taken by representative organizations of
employees in the development of Federal per-
sonnel policies, no head of a central personnel
agency who is unable to work with such groups
for the improvement of the public service will
achieve more than a limited success.
The creation of a new central personnel
agency and the selection of its head through
the procedure here recommended should re-
sult III a number of advantages.
First of all, it should result in the selection
of an Administrator possessins: professional
qualifications, courage, and ability consider-
ably superior to those usually expected of can-
didates for appointment to the present Civil
Service Commission. The advantages of a
board of laymen to determine policy matters
in a democracy may be admitted without mini-
mizing the fact that personnel administration
is a field in which a considerable amount of
professional specialization has been found de-
sirable. Industrial concerns do not follow the
practice of placing their central personnel divi-
sions under the direction of one or more un-
trained laymen.
Second, the plan would greatly facilitate the
administrative problem of the Chief Executive.
Under existing constitutional and statutory pro-
visions, final decisions on many of the most
important phases of personnel administration
can be made only by the Chief Executive.
Those decisions are perhaps less likely to be
sound and certainly will be m()ore difficult to
execute if the Chief Executive is required to
continue to maintain contact with the central
personnel agency through a board of three
members. There is ample reason to believe
that the Chief Executive can maintain a closer
contact with a single administrator than with
a board. He can obtain responsible advice and
his instructions can be transmitted without un-
due delay and deliberation. Moreover, if the
single head of the central personnel agency
were a nonpolitical administrator selected
through open competition in accordance with
the civil service rules, he would have a pro-
fessional position to maintain and the experi-
ence and qualifications with which to maintain
it. He IDlght readily be both more influential
and more determined in his support of the merit
system th'}R many civil service commissions.
Finally, the adoption of the plan of single-
headed leadership for the central personnel
agency should give a degree of unity, energy,
and responsibility to the direction of the agency
that is very difficult to attain in any agency
headed administratively by a full-time board
of several members. The board form of
organization should seldom be adopted for an
administrative establishment in the absence of
conclusive reasons. l In the language of the
in the Federal Service
founding fathers as stated in the Federalist,
"one of the weightest objections to a plurality
in the Executive * * * is that it tends to con-
ceal faults and destroy responsibility * * *."
As a "subdivision of the power of the Executive
for the more convenient exercise of that power",
the central personnel agency should not be
organized under the direction of an adminis-
trative board.
The organiz!}.tion of the proposed new central
personnel agency can readily be accomplished
without discontinuity of important existing
central personnel services. Legislation will be
required for the change, but the legislation
necessary is relatively simple. It should au-
thorize the establishment of the new central
personnel agency and should authorize the
President to transfer to it the existing functions,
personnel, records, property, obligations, and
unexpended appropnations of the Civil Service
Commission. In so far as he does not already
have it, the President should be given authority
to provide for the performance of all necessary
and desirable central personnel functions, and
to direct the performance of needed adminis-
trative services by the central personnel agency.
An improved form of organization will do
much to strengthen central personnel adminis-
tration, but several needs are apparent that
cannot be met merely by the selection of a
well-qualified personnel Administrator, the re-
organization of existing functions and person-
nel, and the establishment of the proposed new
Civil Service Board of citizens.
First, the head of the central personnel
agency will require a staff of highly qualified
immediate assistants if he is to perform the
important advisory and developmental func-
tions that should be carried on. Part of this
staff can be obtained by transfer from the
Commission, but others should be assembled
from other parts of the Federal service if
possible and otherwise by recruitment through
open competitive examination.
Second, in view of the continuing importance
of the examining function and the volume of
examining that will necessarily result if the
extension of the merit system is carried through
as proposed in the next part of this study,
the central examining staff should be greatly
Btren~thened. A number of highly qualified
exammers in the senior and principal profes-
sional grades should be appointed to carry
immediate examining responsibility for those
higher professional and administrative positions
for which the present staff is least well qualified
to examine.
Finally, immediate attention should be given
to the improvement of the central transfer, re-
employment, reinstatement, and promotion
services. Improvement is already much needed
and would be of critical importance if a major
reorganization of large parts of the Federal
service should be undertaken in the near
future.
99
Further development will be necessary and
should be prosecuted vigorously as the new
central personnel agency shakes down into
running order. The lines of that development
do not require detailed specification, although
various phases are touched upon elsewhere in
this study. The essential elements for con-
structive central personnel administration are
good leadership and an opportunity for that
leadership to make itself effective. It is
believed that this plan for the organization of
the central personnel agency will provide both
in greater measure than any other plan of
organization that appears at all feasible.
Representation of
the Public Interest in the Merit System
The defects of the present form of organization
for central personnel functions are not entirely
administrative. The adoption of the Civil Serv-
ice Act of 1883 was in large part a response to
the awakening of public interest in the merit
system as a necessary feature of good govern-
ment, but the Commission provided for by the
original Act has never been thoroughly repre-
sentative of the public interest. Many of the
members of the Commission have been ou ts tand-
ing citizens noted for their interest in good
government and the improvement of the merit
system. Upon taking office, however, they have
become parts of the Administrations under
which they have served. They are salaried
officials on a full-time basis, removable at the
pleasure of the President. The result has been
the organization of important functions in such
a way that the Nation has received neither the
advantages of professionally competent admin-
istration nor of the impartial and independent
representation of the public point of view.
The public interest in the improvement and
extension of the merit system is great enough
to leave little doubt that a different form of
representation for it is both necessary and
feasible. That representation can best be
provided by outstanding citizens who are not
actively engaged either in partisan politics or
in full-time Government service. There is
every reason to believe that the most eminent
and public-spirited citizens of the United
States would feel honored if called upon to de-
vote a limited amount of their time to the
review of Federal personnel policies .and to
activities designed to protect, improve, and
extend the merit system.
The establishment of a Civil Service Board of
citizens is therefore recommended as a part
of the reorganization of central personnel
functions. The Board should be large enough
to permit adequate representation of the public
interest by drawing in members actively en-
gaged in such broad fields of endeavor as
agriculture, industry, labor, education, and the
scientific and learned professions generally.
A membership of seven is suggested; the mem-
100
bers should be appointed by the President, by
and with the advice and consent of the Senate,
for overlapping terms of seven years. The
President should have authority to designate
the chairman of the Board. No person should
be eligible for membership if WIthin the five
years preceding the date of his appointment he
has been a member or officer of any local, State,
or national political party committee or has
held or been a candidate for any elective public
office. Members of the Board should receive
no salaries, but should be suitably reimbursed
for their actual time and expenses, including
transportation. The authorized reimburse-
ment for services during anyone year should
be limited in view of the part-time character
of the service that is intended. An authoriza-
tion of $1,000 per year for services on the part
of each member, with an additional authoriza-
tion for e}.-penses, should provide for a sufficient
number of sessions of the Board.
The specific functions of the Civil Service
Board should include the following duties and
responsibilities:
1. To appoint a special board of highly
qualified examiners to examine candidates
for the position of head of the central per-
sonnel agency, initially and whenever the
position may become vacant. The Board
should consult with the President to insure
that the membership of each such board of
examiners is satisfactory to him, in order that
his views as to the desired qualifications in an
important subordinate may receive due rec-
ognition in the examining process. The Civil
Service Board, however, should bear public
responsibility for the selection and appoint-
ment of a nonpolitical board of exammers of
appropriate standing and reputation. A new
open competitive examination should be held
each time the position of head of the central
personnel agency becomes vacant, and the
examining board should certify to the Presi-
dent the names of the three available candi-
dates ranked highest.
2. To approve the membership of other
special boards of examiners whenever it.
becomes necessary or desirable to appoint a
special board of examiners to hold an open
competitive examination or a promotion ex-
amination for the highest civil service position
in any agency or department other than the
central personnel agency. The Civil Service
Board should have authority to approve the
membership of such special boards of exam-
iners under such rules of procedure as it may
adopt.
3. To prepare, approve, and certify panels
of persons qualified to serve on special boards
or committees of mediation and personnel
relations for the Federal service. The Presi-
dent should be authorized to appoint boards
or committees of mediation and personnel
relations from such panels whenever neces-
Per80nnel Administration
sary or desirable, and to determine their ten-
ure, compensation, duties, and jurisdiction
within the Federal service. He should also
have authority to prescribe regulations under
which the heads of departments and agencies
would be authorized to appoint special boards
or committees of mediation and personnel
relations from the panels.
4. To undertake regular and special investi-
gations of the quality and status of personnel
administration throughout the Federal serv-
ice, to make annual and special reports to the
President and the Congress on the basis of
such investigations, and to recommend im-
provements in the statutes, regulations, and
administrative activities relating to Federal
personal administration.
5. To study and report from time to time
upon the relations between the Federal civil
service and the merit systems of State and
local jurisdictions, particularly with reference
to State and local activities in which there is
Federal participation through grants-in-aid
or otherwise.
6. To advise and assist the head of the
central personnel agency in fostering the
interest of institutions of learning, civic and
professional organizations, and labor and em-
ployee organizations in the improvement of
personnel standards in the Federal service.
7. To act in an advisory capacity upon the
request of the Congress, the President, or the
head of the central personnel agency on
matters concerning personnel administration.
S. To represent the public interest gener-
aliy in the improvement of personnel admin-
istration in the Federal service and in the
protection of the merit system.
The Civil Service Board should meet not less
than four times a year upon call by the Presi-
dent, by the Chairman of the Board, or by any
four members of the Board. The central per-
sonnel agency should be required to provide
quarters at its offices for the Board, and to make
available its secretarial, clerical, procurement,
accounting, maintenance, and other necessary
services. The Board should have no authority
to appoint permanent employees, which might
lead to duplication of the work of the central
personnel agency, but should be given funds
and should be authorized to appoint temporary
consultants, experts, and employees for the
purpose of carrying on special investigations.
The head of the central personnel agency should
also be authorized to detail employees to the
Civil Service Board for such investigations.
The budget estimates and the regular reports
of the Board should clear through the office of
the head of the central personnel agency but
should not be subject to revision or delay by him.
The functions recommended for the Civil
Service Board are all important. They can be
placed effectively in a Board of the type speci-
fied, and many of them cannot be placed effec-
in the Federal Service
tively in any other type of agency. Such a
Board could render notable service in the initia-
tion and support of progressive programs, it
could enlist the public interest in the develop-
B. ADEQUATE PERSONNEL OFFICES IN OPERATING ESTABLISHMENTS
The service of personnel administration
should be represented at the departmental level
of administrative management by adequate
departmental personnel offices. Such offices
should be under the direction of personnel offi-
cers of professional attainments and executive
caliber who should be coordinate in rank and
status with other directors of central depart-
mental management services.
The reasons for an adequate central personnel
agency all apply with almost equal force to the
establishment and improvement of depart-
mental personnel offices. Each head of a de-
partment is a major administrative officer,
carrying on work of which personnel adminis-
tration is an integral part. Each such depart-
ment head should therefore be provided with
sufficient specialized professional assistance in
connection with this important function.
The work of personnel administration varies
at different levels of administration, but the
work at the departmental level, although differ-
ent from that at the level of highest adminis-
trative control in the office of the Chief Execu-
tive, is in some respects even more important.
The departments are self-contained operating
agencies to a large degree, and must continue
so in view of the limited extent to which it is
physically possible for the Chief Executive to
review their work. Direct rcsponsibility for
many of the most important phases of personnel
work should therefore be lodged in the depart-
ments. From this it follows that major re-
sponsibility for the conduct of the entire per-
sonnel function must, to some extent, be di-
vided between the central personnel agency and
the departmental personnel offices.
The reasoning just presented as applicable to
the departments of Government headed by
Cabinet members is equally applicable to the
other large independent agencies of the Execu-
tive Branch and to the larger bureaus and field
establishments in certain of those departments
and agencies. Where size of unit, responsibili-
ties of the administrative head, and degree of
autonomy warrant, specialized personnel offices
should be established. They should maintain
a relationship to the departmental personnel
offices similar to that recommended between
the departmental personnel offices and the
central personnel agency. Emergency agencies
and Government corporations present special
problems, and will receive special discussion.
In general it may be said, however, that each
unit of administration of considerable size
101
mont of the merit system, and it could provide
the criticism that would protect the service
from the dangers of bureaucracy and of deadly
routine.
should be equipped with a specialized personnel
office corresponding in status to the importance
of the personnel function in the agency in
question.
Division of Activities Between
Central Agency and Departmental Offices
The division of specific activities between the
central personnel agency and the departmental
personnel offices should be developed with due
regard, on the one hand, to the need for central
leadership and, on the other, to the disadvan-
tages of excessive executive centralization. The
allocations of activities, unless determined by
statute, should be subject to the approval of
the President. They might well be the subject
of positive instructions issued in the form of
Executive orders, unless the amendment of ex-
isting legislation proyes necessary or the Con-
gress desires to take jurisdiction.
The major principles that are applicable to
the allocation of specific activities between ad-
ministrative units in the personnel field appear
to be as follows: (1) Power to act should be
delegated in accordance with the location in
which is centered the most important informa-
tion upon which action should be bllsed; (2)
power to act should be decentralized to the
extent necessary to enable the inoividual serv-
ices to meet their special needs; (3) power to
act should be decentralized in accordance with
the exten t to which speed and economy in the
performance of tasks are of major importance
and will be facilitated; (4) power to act should
be centralized in accordance with the extent to
which the rigid maintenance of standards is
more important than speed and economy in
administration; (5) power to act should be
centralized to the extent necessary to prevent
wasteful duplication of specific tasks. In all
cases responsibility for results should accom-
pany the power to act.
The assignment of specific activities bet.ween
the central and the departmental personnel
offices upon the basis of these principles would
be easy if it were not for the fact that in appli-
cation they conflict in the case of some activ-
ities, although possibly to a less extent than
may appear at first thought.
The administration of examinations for per-
manent entrance into the service, for example,
should probably be allocated in its entirety to
the central personnel agency. In most cases
duplication of work would otherwise result, and
the central personnel agency can obtain as
 102
much information upon which to act as the de-
partment. Even in the case of those positions
confined to a single department, the mainte-
nance of standards is of sufficient importance
to make it appear desirable that all examina-
tions should be conducted by the examining
forces of the central personnel agency.
On the other hand, such activities as the selec-
tion of candidates for appointment to particu-
lar positions from appropriate groups of certi-
fied eligibles and the administration of status
changes within a department are of the essence
of general administration. The departments
alone have the information that is necessary for
these actions, and must retain the discretion
essential to the successful yerformance of their
duties. The importance 0 maintaining stand-
ards in such cases is recognized, but there are
methods of accomplishing the result that do
not involve the complete centralization of work.
The other major fields of personnel activity
need not be discussed here at length. The
administration of the Federal retirement sys-
tem and the necessary records should be almost
completely centralized. The classification of
positions and the administration of authorized
salary plans must be subject to some central
assistance, review, and control if interdepart-
mental salary standardization is to be achieved;
. but classification is so intimately related to the
planning of organization structure and to the
mternal administration of the departments that
the departmental and bureau personnel offices
should be responsible for the immediate admin-
istration of rersonnel class~fi?atio~. Other
major fields 0 :personnel adIIllIllstratlOn, such
as the superviSIOn of working conditions to
promote health, safety, and efficiency, the
development of improved employee-supervisor
relationships, and the administration of training
programs, should remain with the departments
with only general coordination and stimulation
from the central personnel agency.
In general, a moderately flexible arrangement
is contemplated under which the allocation of
activities between the central personnel agency
and the personnel offices of operating establish-
ments will be made the subject of informed dis-
cussion among professionally competent offi-
cials, eventuating in recommendations to and
final decisions by the Chief Executive or the
Congress.
Under this arrangement, the central per-
sonnel agency will be directly responsible for
recruiting, interdepartmental transfer, and re-
tirement administration, and for the super-
vision and control of classification activities.
Much more emphasis should be given, however,
to the fact that as the arm of the Chief Exec-
utive, it will serve primarily as the agency for
the initiation, reception, and consideration of
new plans and policies; for the development of
improved personnel procedures; for constant
stuidy of the personnel programs of the oper-
atng departments, and for constructive com-
Personnel Administration
ment upon those programs; for assistance to the
operating establishments wherever feasible;
and for the coordination of personnel policies on
all fronts.
Personnel Administration
in Emergency Agencies
Il! The most basic question to be settled in
connection with personnel administration in
emergency agencies is whether or not all or
most of the positions in such agencies are to be
political or nonpolitical. It has not been con-
sidered feasible to bring most emergency posi-
tions within the scope of civil service adminis-
tration, but the issue as to whether the positions
should be political or nonpolitical has not been
squarely faced in most cases in either Legislative
or Executive action.
In actual practice, there has been great di-
versity of policy. Many large blocks of posi-
tions have been handled almost entirely upon
a nonpolitical basis, other large blocks of posi-
tions have been filled on the basis of qualifying
tests or standards but with political clearance,
and still other positions that mayor may not
be regarded as policy-forming have been filled
through definitely political appointments.
The appropriate policy would appear to be
the establishment of a definitely nonpolitical
status for most emergency positions, and an
equally definite political status for emergency
positions legitimately regarded as policy-form-
ing in the political sense. If it does not appear
feasible to fill the nonpolitical positions through
the normal civil service procedure, their non-
political status should nevertheless be clearly
mdicated by appropriate Legislative or Execu-
tive instrp.ctions to the responsible appointing
officers.
What is needed appears to be something simi-
lar to the English distinction between the "estab-
lished" and the "unestablished" services. Both
are regarded as nonpolitical, but much more
flexible appointment procedures have been de-
veloped for use in connection with positions in
the unestablished service:
Most of the unestablisbed employees are appointed
either by competitive examination involving an inter-
view board or by noncompetitive examination, by de-
partmental examination, by a metbod permitting de-
partment heads to recommend candidates or by a
specific exemption from certification. 7
Emergency agencies probably do require a
greater degree of freedom in many respects
than is permitted the established agencies of
Government, but that freedom at the same
time increases the responsibility of the Chief
Executive for effective direction and control.
The central personnel agency should be used
by the President to maintain methods of con-
trol and assistance that will improve coordina-
tion and protect the public interest without
, Personnel CIlIISlflcatlon Board, IUport 0/ Walle and Penonml Surpetl
70th Cong., 2d sess •• H. Doc. 602. p. 421.
in the FederaZ Se1"VW8
unduly delaying the emergency establishments
in the performance of their du ties. In devis-
ing forms of control it should be kept in mind
that emergency agencies may later be incor-
porated into permanent establishments, and
the controls and personnel standards of emer-
gency agencies should be such as to make that
transition easy.
The early creation of an adequate central
personnel agency is especially desirable because
of the urgent need for constructive central
leadership in connection with the personnel
problems of the existing emergency establish-
ments. Some of these organizations are being
liquidated. The central personnel agency
should play a major part in the development
of their plans for reduction in forces, in order
to render unnecessary the cons tan t recurrence
of requests for the personal attention of the
Chief Executive. Other establishments that
originated as emergency agencies are perform-
ing duties that may deserve recognition in the
permanent structure of the Government. The
personnel problems incidental to the transition
are of considerable magnitude and will require
the highest quality of leadership upon the part
of a central personnel agency.
Each agency now existing as an emergency
agency or that may be established as such
should be required to maintain one or more
personnel offices adequate to its needs. Each
appointment, status change, and termination
of each non\>olitical employee below the policy-
forming indlvidual or group at the head of the
agency should be subject to the approval of a
nonpolitical director of personnel or a subordi-
nate personnel officer. The director of per-
sonnel should be appointed by the head of the
emergency agency, subject to the approval of
the central personnel agency on behalf of the
Chief Executive.
The personnel office of an emergency agency
should be expected to adhere to established
Federal personnel policies so far as feasible,
and, when it is not possible to adhere, to con-
duct its affairs along the lines that would be
followed in any well-operated private business
under like circumstances. Frequently there
will not be time to hold formal examinations
in connection with initial appointments in
emergency agencies, although the emergency
agencies should be expected to use the existing
registers of the central personnel agency to the
extent that they contain the best available
personnel. The facilities of the central per-
sonnel agency should also be used in preference
to any other procedure when problems of mass
recrUltment arise in the emergency agencies,
since the permanent examining agency should
be able to recruit large groups of employees for
standardized positions more rapidly than a
newly organized personnel office that attempts
to maintain even minimum standards.
There appears to be no sound reason why
any emergency agency should be forbidden to
. 103
make appointments in accordance with the
civil service rules, or why large examinations
for the emergency agencies should not be held
by the central personnel agency even if ap-
pointments are not made in accordance with
the civil service rules and civil service status
is not conferred upon the appointees. Since
the central personnel agency usually will not
have appropriations for emergency work, any
emergency agency should be authorized to
transfer funds when it is able to utilize the
services of the central agency to advantage and
the agency is willing to perform the work.
The central personnel agency should be es-
pecially useful to the Chief Executive in facili-
tating and controlling transfers of personnel
from the established services to emergency
agencies. Trained personnel from the per-
manent establishments can be used to great ad-
vantage in building up the organizations of
emergency agencies, although such transfers
may be very disadvantageous to the public
service if the emergency agencies are permitted
to handicap the older organizations by taking
personnel to an unreasonable extent or in an
unreasonable manner. The central personnel
agency should be the clearing center for trans-
fers, and should exercise control under the
direction of the Chief Executive to the extent
required by the public interest.
The Civil Service Board, if constituted as
recommended, should be required to perform
certain policing functions in connection with
personnel administration for the nonpolitical
positions in emergency agencies. It should
investigate and report upon the work of the per-
sonnel offices in emergency agencies at stated
intervals, with special reference to whether
those offices are adhering to standards of merit
and efficiency. The reports, with such com-
ments and answers as may be received from the
agencies investigated, should be presented to
the Chief Executive for transmission to the
Congress.
The Board should further have a positive
duty to prefer charges in writing and to recom-
mend to the Chief Executive the establishment
of a special board of investigation whenever in
the opinion of the Board any employee or
officer, particularly any personnel officer, of an
emergency agency appears to have been guilty
of violation of appropriate standards of officiai
conduct. Similar duties should be carried on
by the Board in connection with all Govern-
ment agencies, but the vigorous performance of
these functions is of special importance for
emergency work carried on with unusual
freedom from the more routine forms of control.
The extent of control over emergency agencies
here proposed will not put them in a straight-
jacket, and will not result in standards of
personnel administration identical with those
preserved in the regular establishments. The
standards maintained in the emergency agencies
under such control may be lower, although it is
104 .
not at all certain that such will be the case.
Even if the standards should prove in practice
to be somewhat lower, those standards are of
less importance in connection with temporary'"
forces of employees who do not obtain a civil
service status.
In any case it appears that an attempt to
apply the usual civil service procedures to
emergency work is almost certain to break
down in practice. It is true that the form of the
civil service routines can be maintained in
emergencies, but the standards suffer materially
in the process because of the haste that is
necessary. The result is to confer civil service
status in many cases where such status is
·neither deserved nor appropriate. These rec-
ommendations are therefore suggested as a
suitable middle ground.
Personnel Administration
in Government Corporations
The increasing number of Government
corporations owned or controlled by the
United States requires that attention be given
to their problems of personnel administration.
Certainly every Government corporation of
significant size should recognize the importance
of the personnel function by gh'ing careful
attention to personnel policies, by establishing
adequate facilities for carrying on its work of
personnel administration, and by following an
orderly procedure in personnel matters.
As a class, however, the Government corpo-
rations present many personnel problems that
distinguish them from other agencies of Gov-
ernment. Moreover, the important individual
corporations in most cases have special problems
that distinguish them from other Government
corporations.
It is impossible to discuss these problems here
in detail, but consideration may be given to
the relationship that should obtain between
the personnel offices of Government corpora-
tions, the central personnel agency, and the
Civil Service Board. In general, the relation-
ship should be determined by the relationship
between the Chief Executive and the Govern-
ment corporation, and should vary accordingly.
If, for example, the Government corpomtion
is established by Executive action under broad
statutory powers and more particularly if its
board of directors consists of ex-officio members
responsible directly or indirectly to the Chief
Executive in the performa~e of their regular
duties, then presumably the Government cor-
poration is amenable to Executive control in
almost all respects. The President should have
authority to prescribe any rebtionship that he
approves between the personnel offices of the
Government corporation, the central personnel
agency, and the Civil Service Board. If such
corporations are engaged in the performance
of emergency work, the previous discussion of
the proper relationship between the central
Personnel Administration
personnel agency and the personnel office of an
emergency agency is applicable.
If, on the other hand, the Government corpor-
ation in question represents a deliberate adop-
tion by the Congress of a device for giving
freedom from the controls to which executive
agencies are usually subject and for placing
administrative responsibility upon a board of
directors selected because of its competence to
conduct a business enterprise affected with a.
public interest, then the administrative respon-
sibility of the President presumably will be
largely confined to the selection and appoint-
ment of the board of directors.
Generally speaking, if the Congress elects to
establish Government corporations, those corpo-
rations should be given large independence with
respect to personnel, as in other administrative
matters. Though it ~oes without saying that
personnel administratlOn in such corporations
should be conducted on the basis of merit and
efficiency, this end should be achieved primarily
through the appointment of boards of directors
cognizant of their obligations in this respect. It
would be desirable to ~ive those obligations
specific statutory recogmtion in every case, as
was done in the act creating the Tennessee
Valley Authority.
The President has responsibili ty to enforce the
laws applicable to Government corporations and
usually, if not in all cases, has authority to re- .
move members of the boards of directors of such
corporations for malfeasance in office. He is en-
titled to investigative powers and facilities com-
mensurate with his responsibility and authority.
In connection with the conduct of the personnel
function in Government corporations, those
facilities should be provided through the Civil I
Service Board. At stated intervals it should be
required to investigate and report upon the
r
conduct of personnel activities in aU Govern-
ment corporations. Power to investigate, how-
ever, should be distinguished from power to
control.
In many cases the personnel offices of the in-
dependent Government corporations will desire
to use the recruitment and possibly other facili-
ties of the central personnel agency and to
obtain the advice of that agency on Important
matters. They should be permitted and en-
couraged to do so, and a coopemtive relation-
ship should be fostered by all concerned. Where
such a relationship to the central personnel
agency is maintained, the investigative duties
recommended for the Civil Service Board will
be much less onerous to the corporation, and
as a matter of practice could become extremely
helpful and suggestive.
The independent Government corporations
have an unusual opportunity to develop con-
structive personnel policies. They stand in the
intermediate ground between Government and
private business and, because of that position,
have many unique and challenging personnel
in the Federal Service
problems. They now have substantially the
same freedom to experiment that is possessed
by private business, yet are under the charac-
teristic obligation of the public service to ob-
serve high standards and to maintain equality
of opportunity based upon merit. The inde-
pendent Government corporations might well
C. THE IMPROVEMENT OF PERSONNEL POLICIES AND STANDARDS
The improvement of personnel policies and
standards now goes on very slowly in the Fed-
eral service for several reasons. In connection
with matters within the authority of the Execu-
tive Branch, there is at present little central
responsibility for leadership either in making
recommendations to the Chief Executive or in
reconciling the frequently divergent views of
the various parts of the service as to the recom-
mendations that should be made.
The personnel policies and standards that
have been given statutory form through adop-
tion by Congress have in most cases been
carefully developed by it, but the legislative
method has distinct limitations in connection
with personnel policies and standards. The
major questions of public policy with which the
Congress must necessarily concern itself pre-
vent it from giving continuous or thorough at-
tention to the administrative problems of the
Federal service. Even though much of the
resulting legislation has been good, the policies
are frozen and are difficult to change in the
light of changed conditions.
It is not the purpose of this study to recom-
mend that the Congress give up any of its
jurisdiction over the administration of person-
nel matters in the Federal service or that it
cease to concern itself with such matters. On
the contrary, it is recommended that the Con-
gress give serious consideration to a number of
changes that can best be effected by statute.
It would seem, however, that many of the de-
tails of administrative policies might well be
left to administrative action: Provided, That
a suitable organization can be established for
the consideration of such policies and that steps
are taken to insure that they are brought into
existence through an orderly procedure that
will give adequate opportumty for expression
to all of the interests affected. It is the pur-
pose of this section to consider the organization
that is needed and the procedure that should
be followed.
The central personnel agency, if organized
along the lines previously recommended, should
be expected to occupy a position of leadership
in the development of constructive personnel
policies and standards. It should utilize its
responsibility for leadership, however, to stimu-
late general participation in the formulation of
policies. In centralization, a tendency fre-
105
utilize their freedom from the rigors of central
personnel control to serve as proving grounds
for the best of new practice. In this way they
can be of material benefit to the established
civil service. Any other use of their freedom
will of necessity require a reconsideration of
their place in American Government.
quently develops toward bureaucratic sterility
of ideas unless fresh thought is constantly com-
ing up from the operating departments and es-
tablishments, from employee groups, and from
outside the service. Channels should be pro-
vided that will give such fresh thought an oppor-
tunity for expression.
The Council
of Personnel Administration
The existing Council of Pel'Sonnel Adminis-
tration should be reorganized as the channel of
expression for professional personnel officers in
major positions. It should be used to focus the
special knowledge of those officers upon the
mutual aspects of their problems, and, through
them, to organize the participation of other
administrative officials and representative em-
ployee groups in the various establishments.
The Council should concern itself I;>rimarily
with the development of plans for the unprove-
ment of personnel policies, standards, pro-
cedures, and activities. It should interest
itself in all phases of personnel administration,
particularly in connection with matters of
mutual interest to several establishments or to
the entire service. It should be especially con-
cerned with the division of duties and activities
between the central personnel agency and the
departmental personnel offices, to the end that
the best balance may be struck between central-
ization and decentralization in personnel ad-
ministration. In the immediate future it
should give consideration to the training,
experience, and professional standards to be
required of personnel officers; to the problems
of career service development in the Federal
service generally; and to the place and functions
of employee organizations in the development
of improved personnel policies.
III establishing the functions of the Council,
the limitations of an interdepartmental com-
mittee should be recognized. Although the
Council can and probably will perform other
functions, its major function should be to serve
as a professionally competent advisory com-
mittee to the head of the proposed central
personnel agency, and, through him, to the
Chief Executive. It should not be given ad-
ministrative duties, and should not be given the
power as a Council to promulgate any policies
 106
requiring authoritative action. Rather, the
Council should serve as the central forum for
the reconciliation of the views of responsible
personnel officers, for the discussion and dis-
semination throughout the service of knowledge
concerning new develo:pments and better prac-
tices, and for the investIgation and development
of new plans.
When well-developed plans can be placed in
effect by a~eement of members of the Council,
and there IS no need for further negotiation or
approval, the members should implement the
work of the Council by direct action in their
respective administrative provinces. In many
cases, perhaps in most, further action will be
necessary by the head of the central personnel
agency, by the Chief Executive, or by' the Con-
~'ress. In thosE}.,cases, the Council may play an
Important advisory part in the developmental
process, and should prepare and submit rec-
omI?e~dations that are .s:pecific even. though
prelImmary. The recognitJOn of other mterests
will be necessary before final action, and this
factor is discussed in a later subsection of this
study.
The organization of the Council should be
determined by its advisory functions. The per-
sonnel officers of the major establishments of
the Executive Branch should each be given a
place upon the Council as official members as
rapidly as the establishments appoint personnel
officers of suitable attainments and give them
substantial responsibilities. No arbitrary line
need be drawn, but the effectiveness of the
Council will, in all probability, be enhanced if
the departmental representatIOn is confined to
personnel officers who carry major responsibil-
lties. In the language of the Classification Act,
this means personnel officers who warrant classi-
fication in not lower than the principal pro-
fessional grade or the corresponding admInis-
trative grade, and preferably in some higher
grade.
In addition to the departmental personnel
officers, the Council might well include repre-
sentatives of a number of central management
and personnel interests. The Bureau of the
Budget should be represented by a responsible
official, if not the Director. Probably direct
representation on the Council should be given
to the United States Employment Service, the
Bureau of Labor Statistics, the Public Health
Service, and the Office of Education, in view
of the contribution that should be made by
each of these agencies to "Federal personnel ad-
ministration. The specialists at the head of
the major divisions of the central personnel
agency should also have membership in the
Council.
The head of the central personnel agency
should serve as the chairman of the Council.
The point is sometimes made that ex-officio
chairmen of committees are not always success-
ful, but in some cases the designation of an
appropriate ex-officio chairman is imperative to
Personnel Administration
the. success of an interdepartmental committee.
Thls would appear to be one of those cases.
. ~he head. of the central personnel agency, if
It IS constItuted along the lines previously
recommended, must serve as the chairman of
an effective Council of Personnel Administra-
tion ?r a similar bo~y. if he is to perform his
f?nctIOns of leadership III personnel administra-
tlOn. If he does not so serve, his recommenda-
tions to the Chief Executive will not be so well
considered as they should be. Furthermore
the Council either will not be able to convey it~
recommendations to the Chief Executive or will
work at cross purposes to the central :personnel
agency. There is little reason to believe that
the head of the central personnel agency will
not be an effective chairman, if selected m the
mann~r recommended. If he should prove at
any tlme not to be a competent chairman, his
failu~e i~ that respect s~ould cO!lstitute grounds
for dISmISsal. The chaIrmanship of the Council
should be regarded as one of his major responsi-
bilities, not as a mere incidental task.
The Council, if reconstituted as recom-
mended, will have a membership of possibly 25
or 30 persons. This appears necessary in order
to make it truly representative of professional
thinking on personnel problems in the Federal
service. It will not be too large to meet fre-
quently and regularly, and should do so. Like
other assemblies of similar size, it will find it
necessary to do much of its detailed work
through committees. The agenda for Council
meetings should be prepared by a small steering
committee directly advisory to the head of the
central personnel agency but containing depart-
mental representatives.
The activities of the Council should be supple-
mented in the same field by other forms of
group activity, with appropriate provision for
integration with the work of the Council.
Consideration should be given to the organi-
zation of a larger conference open to Federal
personnel officers in all grades, meeting at con-
siderably less frequent intervals. Such a con-
ference would provide a channel of opinion for
the subordinate and field officers who have an
especially intimate relationship to the rank and
file of the operating services, and would permit
them to make a direct contribution to the
development of policies. It .would also make
for more general understanding of the policies
actually adopted and would tend to build up
the morale and esprit de corps of the entire
service of personnel administration.
Substantial use should be made of study
committees throughout the departments and
operating establishments in connection with
many of the problems under consideration by
the Council. These committees usually should
not be organized in permanent form, but rather
should be set up on a temporary basis to deal
with particular problems, the membership of
the committees being determined by the prob-
lem at hand. This procedure was used in con-
in the Federal Service
nection with the development of the present
efficiency rating system, as noted in Part I, and
worked well.
Groups outside the Federal service also have
important contributions to make to Federal
personnel administration and should be ¢ven
a means of expression through comIDIttees
advisory to the Council. Such groups include
civic agencies, students of government and
administration, professional associations, educa-
tional institutions, industrial personnel agencies,
and governmental personnel and administrative
agencies outside the Federal service. Joint
discussions through the use of such advisory
committees would clarify the opinions of the
different groups and would bring to a focus the
response of public opinion to the personnel
function of the Federal Government.
The diffusion of advisory authority through
councils, conferences, and committees as herein
proposed may seem cumbersome, but it is
essential if the combined intelligence of the
service and its outside critics is to be brought to
bear upon personnel problems. Rapid and
simple solutions can rarely be found for major
problems in a service so complex, so large, and
so scattered as that of the Federal Government.
It should be noted that this proposal involves no
diffusion of the power to act in the adoption of
policies; only the diffusion and improved organi-
zation of advisory authority is proposed.
The Place of Research
Continuous attention to research and investi-
gation is essential to the creative development,
maintenance, and coordination of the personnel
function. Adequate provision should be made
for research on important personnel problems,
and the research units should be carefully
organized to facilitate the rapid application of
the tested results of research and investigation.
The existing Research Division of the Civil
Service ComIDIssion should be transferred to the
central personnel agency, as previously recom-
mended, and should be strengthened. The
present projects of the Research Division
should, in most cases, be continued. The re-
sults should prove even more· useful than in
the past under the type of leadership here
proposed for the central personnel agE'ncy.
Extended and careful study by a staff trained
in personnel research will be reguired in con-
nection with each major techmcal personnel
problem that may be considered by the central
personnel agency, the Council of Personnel
Administration, or the Civil Service Board,
such as the improvement of methods of recruit-
ment, the development of the training programs
necessary for a career service, the administra-
tion of transfers and promotions to improve
placement and build morale, the improvement
of efficiency rating systems, or the training of
supervisors to obtain a generally higher level
of supervisory work. A staff trained in research
107
is essential if the constructive phases of per-
sonnel administration are to be developed in
the manner contemplated in this study. A
small research unit to deal specifically with
the technical problems involved in the construc-
tion of examinations and in the determination
of the extent to which the examinations are
valid and reliable will also be necessary in
either the research or the examining division of
the central personnel agency.
The personnel offices of the departments and
other large operating establishments should also
be encouraged to develop small research staffs
appropriate in size to their responsibilities and
problems. In general, the research work car-
ried on in the departments should be closely
related to specific departmental problems, since
the more ~eneral type of research should be
carried on ill the central personnel agency.
The research division of the central personnel
agency should be responsible for coordinating
the research activities carried on in all Federal
personnel offices. This should be one of its
most important duties. Coordination is neces-
sary both to prevent duplication of specific
work and to establish a central pool of informa-
tion. The results of research, wherever con-
ducted, should be generally available for appli-
ca~ion wherever similar situations and problems
anse.
The distinction between coordination and
centralization should be carefully observed.
The results of research are much more likely to
be applied if the research is conducted in close
contact with specific operating problems. Per-
sonnel research should therefore be decentral-
ized wherever feasible, and should, to a large
extent, be carried on in the departments and
other operating establishments. When large
projects are organized under the immediate
direction of the central personnel research divi-
sion, the necessary staff should be drawn, so
far as feasible, from the personnel offices of the
operating establishments.
Procedure in the
Preparation of Rules and Regulations
Much public attention has recently been
given to the processes of administrative rule-
making under the ~rants of authority that have
been made at vanous times by the Congress.
In connection with rules that affect the rights
and duties of citizens generally, it is commonly
argued that the procedure for developing and
adopting such rules should be regularized, that
adequate provision should be made for notice
to and hearing of the affected parties while the
rules are in a formative stage, that the rules
when adopted should be published in accessible
form, and that systems of rules, regulations,
administrative interpretations, and leading ad-
ministrative decisions should be currently codi-
fied in usable form so that the citizen may be
able to inform himself at all times of his rights
108
and duties. These points have been empha-
sized by yarious decisions of the courts in pass-
ing upon administrative rule-making and ad-
ministrative decisions.
Administrative rule-making as it affects the
rights and· duties of Federal employees and
applicants for Federal employment is in most
cases not subject to review by the courts. It
has therefore not been subjected in its proce-
dural aspects to the same volume of criticism
that has been directed at rule-making activities
of consequence to citizens generally. Never-
theless, the present procedure for developing
important administrative rules and regulations
in personnel matters is very defective.
The civil service rules, promulgated by Exec-
utive order of the Presldent, are the most
important set of administrative rules governing
personnel matters throughout large parts of the
Federal service. Amendments of the civil
service rules often give effect to major changes
in Federal personnel policies. Such amend-
ments affect the rights, duties, and responsi-
bilities of administrative ofiicials throughout
the service. They also are of vital consequence
to rank-and-file employees, to applicants for
Federal employment, and to citizens interested
in the improved administration of the Federal
service. The procedure followed in developing
recommendations to the Chief Executive for
amendments in the rules is therefore of special
interest.
As matters now stand, the Civil Service Com-
mission prepares proposed amendments of the
rules in draft form, either on its own initiative
or at the request of the Chief Executive. The
Commission is not required at this stage to
consult with any other administrative agency
or to give notice or hearing to any of the
affected parties. No provision is made for the
publication of proposed amendments in draft
form; on the contrary, all publicity is avoided
and proposed amendments are highly con-
fidential until after final approval by the Presi-
dent. The proposed amendments in draft
form are cleared through the Bureau of the
Budget, the Department of Justice, and the
Federal Register Division in the prescribed
manner. Administrative agencies specially af-
fected are usually consulted either by the
Commission or the Bureau of the Budget, but
proposed orders affecting all civil service
agencies and all classified employees usually
are not cleared with other agencies by the
Commission or the Bureau of the Budget,
unless specific instruction is received from the
Chief Executive.
If the proposed central personnel agency is
constituted as recommended, its head will be-
come the principal adviser of the Chief Execu-
tive on personnel matters generally and on
amendments of the civil service rules in par-
ticular. He should be instructed by the Chief
Executive to follow an orderly and suitable pro-
cedure in the preparation of his recommenda-
Personnel Administration
tions for amendments to the rules. The pro-
cedure will be especially important if a general
revision of the rules is undertaken, particularly
of those parts relating to transfer and promo-
tion; the need for such a revision was noted in
Part 1. It is recommended that the following
procedure be given careful consideration, and
that it be followed so far as it proves feasible
in practice.
Proposed amendments of the rules originat-
in~ in administrative quarters should be trans-
IDltted to the head of the central personnel
agency. They should then be presented to the
steering committee of the Council of Personnel
Administration for preliminary consideration.
If they merit further consideration, they should
next be discussed at a meeting of the full Coun-
cil. Any necessary research or investigation
should then be organized through the research
division of the central personnel a~ency,
through special committees of the CouncIl, and
through the facilities available to members of
the Council. As soon as substantial agree-
ment among members of the Council can be
obtained, the head of the central personnel
agency should present each proposed amend-
ment to the President for preliminary approval.
After preliminary approval by the President
the proposed amendment should be published
in draft form by the central personnel agency.
Copies should be sent to the members of the
Civil Service Board, to the heads of all estab-
lishments, to organizations of employees, and
to such other interested organizations or indi-
viduals as may request the service. The Civil
Service Board should take such action as it
may think proper, and the views of heads of
establishments should be obtained through
official channels. Public hearings should be
scheduled by the head of the central personnel
agency and should be held after appropriate
notice to interested persons and organizations.
The results of official inquiries and public
hearings should be digested and presented to
the Council of Personnel Administration for its
consideration. The proposed order should then
be given such revision as may seem appropriate
and should again be presented to the Chief
Executive by the head of the central personnel
agency, with a statement of such major objec-
tions as may still remain and of his recom-
mendations.
The Chief Executive should then take such
action as may seem appropriate to him. In
any case involving major conflicts of opinion
between administrative agencies or between
administrative officials and employees, it is
probable that the matter should receive con-
sideration by the Cabinet, and the Chief
Executive may desire to avail himself directly
of advice from the Civil Service Board and
from other informed sources.
Provision should also be made for the careful
consideration of proposed amendments of the
rules that originate in representative organiza-
I
in the Federal Service
tions of employees or in other responsible
nonadministrative sources. Meritorious in-
formal suggestions should be presented to the
Council of Personnel Administration for study,
followed bY' the procedure outlined above.
Duly constituted representatives of employees
that appear to represent a majority of the
employees affected by any particular matter,
or even a substantial minority interest, should
be authorized to present formal recommenda-
tions to the head of the central personnel
agency. He should then hold public hearings
to ascertain the extent of the interest in any
proposed change, and to obtain the arguments
pro and con in the form of a public record.
If a reasonable case appears to be made for the
consideration of a proposed change, the neces-
sary investigations should be organized through
the Council of Personnel Administration, the
views of the Civil Service Board and of ad-
ministrative officials should be obtained, and
the proposed amendment should be presented
to the Chief Executive in form for action,
with a statement of apparent advantages and
disadvantages.
The procedure outlined above should be
applied with appropriate modifications in con-
nection with all phases of administrative rule-
making in important personnel matters. It
should be followed so far as feasible in connec-
tion with all personnel policies requiring adop-
tion in the form of Executive orders. It should
be followed by the head of the central personnel
agency in developing all regulations of general
applicability that he may promulgate under
such authority as may be delegated to him by
the Chief Executive under his constitutional and
statutory discretion. It should be followed by
the heads of establishments, utilizing their
respective personnel officers as their representa-
tives, in developing important personnel regu-
lations applicable within their establishments.
Notice and hearing are the most important
elements of the procedure outlined above. It
ought not to be necessary to stress the fact
that these elements are essential, both to the
development of good rules and to the main-
tenance of the morale of administrative officials
and of employees in the process. The disregard
of important administrative officials in the prep-
aration of personnel regulations that they must
assist in carrying out 1eads to confusion, mis-
understanding, and numerous administrative
imperfections. The disregard of the views of
emp'loyees is equally unfortunate, since it may
easily result in injustice and discontent, and in
any case fails to use an important method of
stimulating morale through democratic partici-
pation in policy formation.
Notice and hearing, however, are not a com-
pletely satisfactory procedure through which to
resolve differences of opinion between employees
and management. Differences of opinion can
be aired and the issues can be distinguished,
but the procedure may do little to reconcile
109
these differences or to promote agreement as to
solutions.
A well-developed joint conference procedure
is a better method for the reconciliation of the
conflicting views of employees and manage-
ment, when it can be instituted on a feasible
basis. The reconciliation of the points of view
of administrative officers and rank-and-file em-
ployees can seldom be brought about unless
officers and employees are brought face to face
for responsible discussion of the issues. When
this can be done, each group obtains a better
grasp of the problems and difficulties of concern
to the other. A basis of agreement can usualJy
be reached when each group is prepared to dis-
cuss mutual problems in good faith.
At present, it is questionable whether any
individual, organization, or cooperating group
of organizations merits recognition as the duly
constituted representative of all employees in
the entire Federal service, or even of any inter-
departmental group large enough to warrant
the establishment of a national joint confer-
ence procedure. This condition may persist for
some time, although the present cleavage of
the employee groups into dual organizations is
unlikely to continue indefinitely if clear re-
cognition is given to the principle of majority
rule.
No joint conference procedure is likely to be
successful that does not recognize the principle
of majority rule as a premise. It must there-
fore be concluded that at present no recom-
mendation can be made for the establishment
of a national joint conference procedure in the
Fedeml service, although a national joint con-
ference procedure may reasonably develop out
of the proposed procedure for notice and hearing
by the central personnel agency.
The problem is much more simple, however,
in the individual agencies and establishments.
In many establishments, responsible organiza-
tions of employees exist and are unquestionably
representative of a majority of the employees
within appropriate groups. A basis for the
establishment of joint conferences to consider
problems of mutual interest has been developed
through informal contacts and conferences.
The utilization of the joint conference pro-
cedure should therefore be stimulated first
within individual establishments. It should
be expanded as rapidly as both groups, ad-
ministrative and employee, are prepared to
respond in a responsible manner. If properly
organized, conferences between groups of ad-
ministrators and employees or their duly
constituted representatives should be produc-
tive of considerable information of importance
to personnel administration, even though con-
ducted on a limited scale. The Council of
Personnel Administration should give early
attention to this problem. Departmental per-
sonnel officers should take the responsibility,
under the direction of their administrative
110
superiors, for fostering the establishment of
joint conferences where circumstances appear
favorable.
Many responsible administrative officers in
the Federal service may object to the above
recommendations, notwithstanding the fact
they merely apply in the Federal service the
standard prinCiples and public policies for
employee-management relations in large and
complex orgamzations. Those officers may
well ~ve thought to the fact that employee
orgamzations have in the past tended to deal
almost exclusively with the Congress rather
than with administrative officials on matters
that those same officials have regarded as
within their own province. The Congress has
very seldom denied the right of employees and
other citizens to be heard, whereas officials
have sometimes denied the right of employees
to be heard, in customary practice have
usually disregarded it, and only in rare in-
stances have attempted to maintain a cordial
and cooperative relationship with representa-
tive organizations of employees. The results
are apparent in the activities of the. organ-
izations and in the relati vely low morale
that prevails throughout large parts of the
service.
The method by which personnel policies and
standards are formulated is of the utmost im-
portance in connection ~ith their ef!.f<?~cement.
The assignmen,t of tasks IS a responslbility fro!ll
which a superlOr officer cannot escape and ill
which little choice of method is possible, but in
the formulation of policies or rules of the game
within which tasks are performed, he may
choose between the autocratic technique and
its opposite. If it is a matter of policy that
internal administrative rules and regulations,
particularly those relative to personnel, are ex-
pected to emanate from the combined and
collective judgments of the various levels of
the organization pyramid, including rank-and-
file employees, the resultin~ policies usually
force a fair degree of comphance by virtue of
the manner in which they were formulated.
Compliance is then not dependent solely upon
the superior'S enforcement of it, for group and
individual discipline and an inherent sense of
fair play require individuals to conform to the
rules of the game in which they had a voice
during formulation.
The choice as to method, moreover, has
importance running far beyond mere compli-
ance with approved poliCIes and standards.
Conceivably the same expressions of policy
may emerge from the use of either the autocratic
or the democratic technique. But the differ-
ence in participation as between the two meth-
ods is frequently the difference between an
esprit de corps that will show brilliantly under
duress and in emergency, and a. low morale
that will do a. mediocre job no matter how easy
the task may be.
Personnel Administration
Procedure for the
Preparation of Legislative Recommendations
The problem of clearance of legislative recom-
mendations emanating from various parts of
the Executive Branch, or even of the extent to
which such recommendations should be made,
is a delicate one. For the most part it is out-
side the scope of this study, but the problem is
of considerable importance in connection with
personnel legislation.
Responsible administrative officials are usu-
ally expected to make legislative recommenda-
tions in connection with administrative matters,
and, in fact, have done so throughout the his-
tory of the Federal Government. Such recom-
mendations from them are usually considered
appropriate and appear to be of material assis-
tance to the Congress.
Many of the present deficiencies in the stat-
utes regulating personnel matters appear to be
due to the nnmber of administrative officials
who make recommendations concerning per-
sonnel legislation. Until recently, li.ttle effort
was made within the Executive BrRnch to co-
ordinate those recommendations. Steps looking
toward improved coordination have been taken
during the last two years, and it is probable
that further improvement can be achieved.
The responsibility for recommendations pro-
posing major personnel legislation at present
rests largely upon the Civil Service Commis-
sion. As previously noted, it gives much con-
sideration to legislative recommendations and
presents a number in each annual report.
The Commission's procedure for determining
its legislative recommendations, however, ap-
pears to be defective. Although subject to the
direction of the President, through whom it
transmits its report to the Congress, the Com-
mission apparently makes little or no effort to
determine whether its annual legislative recom-
mendations are acceptable to him. He in turn
transmits them to the Con~ess without review
or comment. The Commission seldom clears
its legislative recommendations as found in its
reports with other interested administrative
agencies, and it does not seek in any organized
way to reconcile its views with those of active
employee organizations proposing legislation on
the same topics. In consequence, the formal
legislative recommendations of the Commission
carry little weight and do little to lighten the
burdens of the Congress in giving adequate
consideration to the proposals before it.
If the proposed central personnel agency is
constituted as previously recommended, the
head should give early attention, under the
direction of the President, to the improvement
. of the procedure for developing legislative
recommendations relating to personnel
administration.
In view of the primary responsibility of the
Chief Executive for recommendations relating
to the general administration of the Executive
in the Federal Service
Branch, the central personnel agency should
not be expected or authorized to make legisla-
tive recommendations directly to the Congress
except in answer to specific requests. It should
be utilized, however, in an advisory capacity
by the Chief Executive in developing his recom-
mendations, and should assist him in deter-
mining whether to give the support of his office
to departmental recommendations relating to
personnel administration.
Legislative recommendations originating with
the central personnel agency should be carefully
developed before presentation to the Chief
Executive. Many of those recommendations
will undoubtedly be of interest to nearly every
establishment in the Executive Branch. Pre-
liminary investigation and deliberation should
be organized through the Council of Personnel
Administration. When substantial agreement
has been obtained in the Council, the Civil
Service Board and the heads of the various
establishments should be given opportunity to
express their views. Any remaining differ-
ences of opinion should be reconciled as far as
feasible before inviting the attention of the
Chief Executive and the Congress.
Interested employee groups also might well
be consulted, if the Chief Executive approves,
before leg-islative recommendations are placed
in final form for transmission by him to the
Congress. Such consultation should not be
expected to foreclose the established right of
D. THE IMPROVEMENT OF PERSONNEL RELATIONS
As noted in Part I, the various parts of the
Federal service differ so much in respect to
almost all phases of personnel administration
that it is extremely difficult to generalize as to
existing conditions. The variation is espe-
cially marked in the relations between em-
ployees and their official superiors and in the
maintenance of morale among rank-and-flle
. employees. Parts of the service, especially
some of the closely knit rrofessional groups,
are noted for a high leve of morale that is
reflected in a high order of achievement.
Throughout most of the service, moreover,
there is relatively little dishonesty, laziness,
or inattention to duty, notwithstanding some
favoritism, much petty jealousy, and many
rankling grievances. In some instances, which
are believed to be isolated and exceptional,
dissatisfaction and unrest are so great that they
inevitably are accompanied by slovenly work
and disregard for the obligations of the public
service.
Many of the basic causes of unrest and dis-
satisfaction should rapidly disappear if the
preceding recommendations of this study are
adopted. Improved administrative organiza-
tion at all levels will facilitate the expeditious
111'
the employee organizations to appear and be
heard when legislation is under consideration
by' the Congress, but might well lead to fewer
differences of opinion between employee groups
and administrative officials in connection with
legisla tion.
Differences between employee groups and
administrative officials can best be re~olved
before they have reached an acute stage. Under
the present situation, the Congress is sometimes
presented with sharply opposing views on the
same subjects. In such cases, needed legisla-
tion is delayed and, when finally achieved, is
often far from satisfactory to administrative
officials, employee organizations, or the Con-
~ess. The division of officials and employees
lllto two armed camps in connection with
proposed legislation is conducive to unfriendly
relations in the service, is disruptive of morale,
and is in lars-e part unnecessary.
The functIOns here proposed for the central
personnel agency in connection with le~islative
recommendations should result in conslderable
improvement in those recommendations. The
work of the Congress will, to that extent, be
made easier; but the ultimate responsibility
for the statutory provisions governing major
personnel policies must continue to rest Wlth
the Congress. In view of the importance of
those policies, the Congress should continue to
give them a considerable amount of careful
attention.
and equitable settlement of matters of per-
sonnel administration affecting individual em-
ployees, as well as those involving groups of
thousands of employees, if not the entire
service. An improved procedure for the devel-
opment and adoption of personnel policies, with
opportunity for employee participation, should
also have a very favorable effect upon morale
throughout the service.
The problems of personnel relations in the
Federal service are important enough to war-
rant specific attention by all administrative
officers. To some extent there is a need for
organization specially designed to facilitate
the adjustment of problems of personnel rela-
tions. Not all such problems can be solved by
the same devices, however, and both study and
experience are needed to determine the most
effective means of adjusting each type of
difficulty.
Problems in Connection
with Employee Representation
Some of the most basic problems of person-
nel relations arise from the efforts of employees
to organize and to designate representatives
112
of their own choosing. The right of employees
in the Postal Service to organize for appropriate
purposes and to affiliate with other organiza-
tions not "imposing an obligation or duty upon
them to engage in any strike, or proposing to
a!?sist them in any strike against the United
States" 'Yas specifically recognized by Congress
in 1912. \ Other civilian emplo:r.ees are com-
monly regarded as having similar privileges,
but their right has not been specifically written
into law, except for recognition of the right of
employees, individually or collectively, to peti-
tion Congres~.
There are few parts of the Federal service
today in which a considerable proportion of the
employees are not organized into associations
having some or most of the characteristics of
fully developed unions, although most of the
associations bind themselves not to strike
against the United States.
The activities of the Federal employee organi-
zations include aggressive support of proposed
legislation that they regard as beneficial,
attempts to secure the enforcement of beneficial
legislation when obtained, attempts to deal with
administrative officials on general matters
within the discretion of such officials, and the
representation of individual members in pre-
senting grievances for adjustment.
In the pursuit of these activities, the employee
organizations frequently appear to encounter
the passive, if not the active, opposition of
administrative officials. It is often alleged that
officials attempt to prevent organization, or
attempt to dominate, control, or influence
organizations when formed. Officials are said
frequently to be reluctant to recognize and
confer with representatives of employee groups.
Occasionally gross discrimination against active
organization officials or employee representa-
tives is alleged.
Within the last few years, there have been at
least two important cases of dismissals of em-
ployee representatives in which it was publicly
alleged that the dismissals were based primarily
upon their activities in their representative
capacity. Because of the absence of any estab-
lished or orderly procedure for dealing with
these cases, much unnecessary and unpleasant
recrimination took place with attendant pub-
licity and with very adyerse effects upon the
morale and working efficiency of the groups
affected. After considerable delay, the officials
involved in each case agreed to accept the serv-
ices of Federal agencies dealing with labor prob-
lems. In the first case, the reinstatement of
the dismissed employee representative was or-
dered, after investigation and hearing, and was
carried out. The second case is still pending at
this writing.
The Federal Government has had long experi-
ence in dealing with the major problems of per-
sonnel relations in private industry, particu-
larly in the railroad industry. Settled public
policies have been developed and are being
Personnel Administration
applied successfully within the limits of Fed-
eral jurisdiction. The lessons of this experi-
ence should be applied in the solution of the
problems of the Federal Government as an
employer.
The problems of employee-management rela-
tions in the Federal service are not identical
with those in private industry, but they are
similar. Employee organizations, when recog-
nized and dealt with in a responsible manner,
appear to be capable of making a very real
contribution to the public service. In any case,
the employee organizations are here. They
may at times appear irresponsible, but that
irresponsibility may be in part the result of the
failure or refusal of administrative officials to
meet with the duly constituted representatives
of employees for the purpose of dlscussing and
reaching a common understanding on matters of
mutual interest that are within the administrative
discretion of those officials.
It would therefore seem desirable to clarify
existing Federal policies with respect to the
right of employees to designate representatives
by issuing a new statement of policy as soon as
feasible .. Such a statement mlght be provided
either by legislation or by the promulgation of
an Executive order under the existing powers
of the President. In either case, it should give
clear expression to the following points:
1. Federal employees should have the right
to organize and to designate representatives
of their own choosing for purposes of em-
ployee-management cooperation and of joint
conference with administrative and super-
visory officers and employees, and for other
lawful purposes. In the exercise of this
right, they should be free from any and all
restraint, interference, or coercion on the part
of administrative and supervisory officers
and employees.
2. No Federal employee and no one seek-
ing employment in the Federal service
should be required as a condition of employ-
ment, transfer, promotion, or retention in
service to join or to refrain from joining any
organization or association of employees.
Discrimination against employees and their
representatives because of membership or
activity in any lawful organization or asso-
ciation should be prohibited.
3. The majority of the employees in any
professional group, or craft, or other appro-
priate unit should have the right to deter-
mine the organization, person, or persons to
represent the group, craft, or umt in joint
conferences with administrative officials or
the representatives of such officials.
4. It should be the duty of administra-
tive officials to recognize and confer in per-
son or by representative with the duly con-
stituted representatives of employees at
their request on matters within the adminis-
trative discretion of such officials that relate
I
II
..J
in the Federal Service
to workin~ conditions, hours of service, or
compensatIOn schedules. Administrative
regulations relating to compensation, hours
of service, and working conditions should be
published in form readily accessible to em-
ployees. Except in cases of emergency, at
least thirty (30) days published notice
should be given of any proposed new regula-
tion or proposed revision of any established
regulation relating to compensation, hours
of service, or working conditions, unless
such new regulation or revised regulation is
required by Executive order or by act of
Congress. No new regulation or revised
regulation relating to compensation, hours
of service, or working conditions should be
made final by administrative action until
reasonable opportunity for conference has
been accorded to the duly constituted repre-
sentatives of the employees affected.
5. The existing authority of the President
to promulgate civil service rules and other
personnel regulations by Executive order
should not be limited, but as previously
recommended, an appropriate procedure
should be prescribed to govern the prepara-
tion and presentation to the President of
all such proposed Executive orders relating
to personnel matters in the Federal service.
The procedure should provide reasonable
opportunity for notice and hearing.
6. Individual employees and groups of
employees should continue to have the right
to present grievances to their superiors for
adjustment, personally or by representatives.
The clarification of policies along some such
lines as those just suggested is a necessary
prerequisite to increased participation of re-
sponsible employee groups in the development
of personnel policies. No fundamental im-
provement in morale throughout the service
should be anticipated until there is sufficient
participation in policy development on the part
of employees to assure them that adequate con-
sideration is being given to their interests. In
the absence of such participation, even the best
conceived personnel poliCles are likely to be
received by employees with suspicion and dis-
trust.
The next essential step after the clarification
of policies along the lines suggested is the estab-
lishment of suitable organization and procedure
in the field of personnel relations to give effect
to those policies. In particular, thelrinciple of
majority rule, although easily state as a prin-
ciple, is often difficult to apply in practice.
Disputes among employees as to who are
their duly constituted representatives have been
relatively rare in the Federal service, but they
have occurred in a number of cases when ad-
ministrative officials have attempted to follow
the principle of majority rule III recognizing
the representatives of employees. The general
adoption throughout the Federal service of a
113
joint conference procedure in connection with
the formulation of personnel regulations, al-
though highly desirable for the reasons pre-
viously discussed, is more than likely to lead to
a considerable number of representation dis-
putes among employees.
Fortunately, the principles to be followed in
the settlement of representation disputes have
been considerably clarified through experience
in recent years. It has become apparent that
such disputes can rarely be settled by manage-
ment officials, whether in public or private
service, without leaving substantial ~oups of
employees dissatisfied. When an Impartial
agency is available, however, representation
disputes can readily be settled by holding an
election or by other appropriate procedure.
Some provision for an impartial agency to
adjust and settle representation disputes in the
Federal service thus appears to be highly de-
sirable. The responsibility for settling such
disputes should not be given to the head of the
proposed central personnel agency, since he
should not be placed in the extremely embar-
rassing position of determining which employee
representatives he himself will recognize as
representative of any group. The proposed
Civil Service Board will not be a suitable agency
in which to lodge the responsibility, since its
members are unlikely to be professionally quali-
fied for the performance of so technical a func-
tion in the field of personnel relations. The
existing labor boards established in the Federal
Government to deal with the problems of vari-
ous branches of private industry are competent
but are already overburdened. On the other
hand, it appears probable that the volume of
representation disputes will never become so
great in the Federal service as to require the
services of a special full-time board, and in
normal times will require the services of an
aljusting agency only at infrequent intervals.
The recommendation is therefore made that
t e President be authorized to establish when
necessary an impartial adjusting agency to be
known as the Federal Service Personnel Rela-
tions Committee.) Members of the Committee
should not be fUll-time officials as such, but
should be reimbursed for their necessary travel-
ing and subsistence expenses and should receive
a suitable per diem compensation for time
devoted to official business. The members of
the Committee should be persons experienced
in dealing impartially with labor disputes and
other problems of employee-management rela-
tions. No person regularly in the employment
of the Federal Government or who is an em-
ployee of or otherwise interested in any organ-
Ization of employees should be eligible for serv-
ice on the Committee, except that members of
any Federal board estll.blished to deal with
labor problems in private industry should be
eligible for service on the Committee, without
additional compensation if in a salary status.
Members of the Committee might well be
114
appointed from lists prepared by the Civil
Service Board; they should serve without term
at the pleasure of the President and he should
designate the Chairman of the Committee.
The head of the central personnel agency
should be instructed by the President to provide
quarters and business facilities for the proposed
Committee, to detail an employee to serve as
its permanent secretary, and from time to time
to detail such other experts, assistants, and
employees as may be necessary for its work.
Whenever any dispute arises among Federal
employees as to who are their duly constituted
representatives, it should then be the duty of
the proposed Federal Service Personnel Rela-
tions Committee, upon the request of either
party to the dispute, to investigate and to cer-
tify to the parties in writing within 30 days the
name or names of the individuals or organiza-
tions that have been designated to represent
the employees involved in the dispute. The
Committee should also be required to certify
the results of its investigations to the adminis-
trative superiors of the employees involved in
the dispute and to the head of the central per-
sonnel agency. In carrying on its investigations
the Committee should be authorized to take a
secret ballot of the employees involved, or to
utilize any other appropriate method of ascer-
taining the names of their duly designated rep-
resentatives in such a manner as to insure the
choice of representatives by the employees
without interference, influence, or coercion by
administrative officials or supervisory employees.
The Committee should have authority to es-
tablish necessary rules and to determine the
employees eligible to participate in any election.
The problem of representation disputes has
been discussed in considerable detail in the
belief that the orderly settlement of such dis-
putes whenever they appear is of fundamental
importance to sound personnel relations in the
service. Violations of the principle of majority
rule have wrecked many otherwise promising
plans for improved employee-management re-
lations, both in public and private employment
in this and other countries. Employee or-
ganizations can make a contribution if allowed
to participate in the development of personnel
policies, but only if they are responsible and
truly representative.
Problems of Compensation Levels,
Hours of Duty, and Working Conditions
Throughout the Federal service there are
many inequitable variations in compensation
levels, in hours of duty, and in working condi-
tions generally-variations that bear no reason-
able relationship to the duties and responsi-
bilities of employees, to their qualifications, or
to the needs of the service as a whole. Varia-
tions of these types are not only unjust to
employees, but give rise to much of the dis-
Personnel Administration
content, unrest, and inefficiency that exist in
parts of the service.
The inequities continue because of many
factors. The uneven and uncoordinated char-
acter of existing personnel legislation is un-
doubtedly a major cause. Maladjustment be-
tween specific budgetary allotments and the
amount of work to be performed in particular
administrative units is also a major factor, and
one that will continue so long as the President
and the heads of departments and agencies are
given little authority to transfer funds in order
to equalize working conditions. The com-
plexity of the service and the isolation of some
of its parts will doubtless continue to be a
basic cause. The lack of interest in working
conditions on the part of some supervisors and
administrative officials is responsible for many
difficulties, particularly in the administration
of those parts of the field service where control
is tightly held in Washington by officials not
closely familiar with conditions in the field.
The inarticulateness of the mass of employees
is another major cause, and also applies with
special force to conditions in the field service.
The causes just listed are so basic that the
problems they raise do not admit of any easy
or simple solution. Some immediate steps,
however, can and should be taken.
Most of the compensation inequities can be
eliminated by the general extension of the Classi-
fication Act to cover those parts of the service
not under a suitable wage-board or similar pro-
cedure. The extension of the Classification Act
presen ts a somewha t technical and difficul t pro b-
lem both in legislation and in administration,
but the subject has been thoroughly discussed
by numerous interested agencies and groups,
and the appropriate lines for development are
clear. The problem of administering classifi-
cation for the field service is considerably
more difficult than that of administering it
for the departmental service in Washington,
but it is believed that the difficulties can
readily be surmounted if the previous recom-
mendations as to administrative organization
and relationships between the central personnel
agency and the departmental personnel offices
are accepted.
Preliminary steps toward the elimination of
the greatest Inequities with respect to hours of
duty have already been taken as the result of
the provisions of the annual leave law passed
by the last session of Congress. The informa-
tion now being collected as to hours of duty
and overtime throughout the service should be
given careful attention by the President and
the Congress, and should be followed by
appropriate le~islative and administrative
action to set SUItable limits upon the permissi-
ble hours of duty. Budgetary readjustment
will also be necessary if all agencies and units
are to be provided with sufficient funds to
enable them to perform their work without
excessive overtlme on the part of employees.
in the Federal Service
Beyond these immediate steps, further
equalization of compensation levels, hours of
duty, and working conditions generally will
require honest, careful, and continuous atten-
tion over a period of many years before marked
improvement will be achieved throughout the
service. The central personnel agency should
playa leading part in stimulating such atten-
tion, but for actual improvement the coopera-
tion and support of thousands of scattered
supervisors of relatively low rank must be
enlisted. The employee organizations can
make an important contribution in enlisting
this support through direct contact with su-
pervisors and administrative officials in charge
of particular activities. The central personnel
agency can probably do its work in this field
most effectively by encouraging employee
organizations and supervisors to deal directly
with each other in the consideration of the
numerous problems capable of solution through
mutual cooperation and fair dealing.
Problems in Connection
with Individual Grievances
As noted in Part I, the Civil Service Commis-
sion has at various times commented upon the
complaints that it is constantly receiving from
individual Federal employees, alleging favorit-
ism or discrimination on the part of their
official superiors with respect to efficiency rat-
ings, work assignments, disciplinary actions,
separations from the service, and numerous
other matters. Although the Civil Service
Commission at present has little power of
review in most of these cases, it has on several
occasions recommended a considerable expan-
sion of its powers as a board of appeals. More-
over, the establishment of an independent cen-
tral board of appeals with wide jurIsdiction and
powers of final settlement of disputes has fre-
quently been urged by employee organizations
and other interested parties.
Some of the cases of individual grievances
that have arisen in the past have been of so
serious a character that there has been little
reason to doubt that the services of an impartial
central agency could have been used to great
advantage in their settlement. The cases of
arbitrary and outri~ht dismissal from the serv-
ice because of actiVIty in or as a representative
of an employee organization, and the e~ually
serious cases of arbitrary removal for polItical,
religious, or other extraneous nonadministrative
reasons, obviously fall in this category.
On the other hand, by far the larger number
of grievance cases in the Federal service are of
much less consequence to the service as a
whole, although important to the individual
employees who are immediately affected. It
would therefore seem of doubtful wisdom to
establish a central court of appeals to which
each of the more than 800,000 Federal employ-
ees could go directly with his troubles, however
153155-37-9
115
minor. Such a court would be swamped with
work, it would find it difficult to establish a
sufficient basis in fact for its actions, and its
establishment might readily result in a decline
rather than in an improvement in morale and
working efficiency.
The most immediate need in connection with
this problem is the general extension throughout
the service of the practices and procedures for
the settlement of grievances that have been
found to be sound and workable in the agencies
that have given most attention to the problem.
In general, this means on the one hand that
supervisors must be trained to accept the right
of individual employees and groups of employ-
ees to be represented in the settlement of dIS-
putes and grievances by representatives of
their own choosing if they so desire, and their
right to appeal to higher officials if they con-
sider appeal necessary or desirable. On the
other hand, it means that employees and groups
of employees must accept the desirability of
attempting to settle grievances through estab-
lished supervisory channels before appealing
to the heads of agencies or attempting to bring
pressure to bear from outside sources.
The situation could undoubtedly be greatly
clarified and improved by action no more dras-
tic than the issuance of a simple statement of
policy in the form of an Executive order by the
President, accompanied by instructions to the
heads of the various agencies to establish, with
the assistance of the central personnel agency,
suitable j>rocedures for the orderly adjustment
and settlement of disputes arising within their
respective jurisdictions. The procedure in
every case should clearly provide for the point
at which final action is taken within the agency,
whether in the office of the head of the agencY',
in the office of his director of personnel, or III
some special official or committee representing
the head of the agency. The services of the
central personnel agency should be available both
to assist the various operating establishments
in the installation of suitable procedures for the
settlement of grievances and to assist in the
settlement of the more difficult types of cases.
After these important preliminary steps have
been taken, it is probable that a small residuum
of rather important individual cases may re-
main that cannot be adjusted and settIed within
the agencies where they arise. Consideration
should then be given to the permanent meas-
ures that should be adopted to provide for the
disposition of these cases. In some cases, the
problem may be solved with complete satisfac-
tion by the establishment of jOlllt boards of
adjustment with equal representation of em-
ployees and of officials. In other cases, it may
prove better to provide on a permanent baSIS
for im{lartial boards of adjustment that can be
called mto session when needed.
Meanwhile, the President should have au-
thority to establish special boards of adjust-
ment to hear and decide cases of major im-
116
portance, or should have authority to refer
such cases to the part-time Federal Service
Personnel Relations Committee previously pro-
posed. The present lack of an orderly pro-
cedure for the settlement of major dlsputes
and grievances is highly discreditable to the
Federal Government, particularly in view of
E. THE PLANNING OF ORGANIZATION STRUCTURE
The planning of organization structure
throughout the Executive Branch is one of the
major problems of administrative management
in the Federal Government. It imposes a heavy
responsibility upon the Chief Executive both in
connection with the exercise of the authority
vested in him and in connection wi.th his recom-
mendations to the Congress. The responsi-
bility can be delegated in part to the heads of
departments and other major establishments,
but it would seem desirable to provide general
administrative officers from the Chief Executive
down with some specialized assistance on the
problem of organization planning. Considera-
tion should be given to the extent to which the
central personnel agency and the personnel
officers at all levels of administration may be
able to provide such specialized assistance, in
conjunction with the Bureau of the Budget and
the budget officers of the various establishments.
Every organization has some form of internal
structure that locates the center of executive
authority, shows lines of delegation of authority,
defines dutie::l and responsibilities, and expresses
internal relationships generally. The structure
of an organization may be expressed partially on
a chart or by a set of written positlOn descrip-
tions, but essentially it consists of relationships
that are understood and accepted by the persons
involved. The real structure of an organization
may differ markedly from its formal expression
on a chart.
The importance of continuous attention to
the planning of organization structure and the
inseparability of that planning from adminis-
trative management are generally recognized.
\q'he belief is common and well-founded that
organizing ability is a prime requisite of the
successful administrator. \ Nevertheless, the
planning of organization structure has its own
special principles and body of knowledge, and
persons with specialized knowledge in the field
should be of assistance to general adminis-
trators. The question is where to find such
persons and where to locate them in the frame-
work of the organization in order that their
assistance may be effective.
~udget planning and fiscal control agencies
are frequently considered the ideal place to
locate specialized res£onsibility for review of
organization planning.) Obviously, the budget
function provides an important opportunity
Personnel Administration
the extent to which it intervenes in connection
with the problems of personnel relations in
private industry. This lack should be rem-
edied as rapidly as feasible, but the remedies
must be found through experience, education,
and leadership as much as through authorita-
tive action.
to approach problems of organization. A
study of organization problems through a study
of budget allocations al9ne, h~r, may tend
to emphasize unduly the relationships between
programswith,)"espect to size, cost, and relative
importance. Qp. budget pTanning it is easy to
overlook the important problems involved in
administrative and functional relationships.,,>
Those relationships are expressed in the group:
ing of activities in specific positions and in the
relative rankings of specific positions. They
raise problems that require the analysis of
positions in detail for their solution.
The budgetary approach to organization
planning therefore needs to be supplemented by
an approach specifically addressed to organiza-
tion planning as such. Some definite provision
probably should be made for special staff service
concentrated upon the problem of organization
planning. Such staff service might be set up
as a special branch in the Bureau of the Budget,
or it might be provided by a new central agency
responsible directly to the President, or it might
be located in the central personnel agency if
that agency has a sufficiently direct relationship
to the Chief Executive.
The study and planning of organization struc-
ture can readily be approached through the
techniques of personnel administration that are
employed in the classification of positions.
This approach should be used concurrently with
the budgetary approa.ch and with due regard to
the limitations of each. When the execution
of a particular program or project has been
determined upon, the classification technique
should be used to break down the program or
project into the positions necessary for its
execution, while at the same time study is being
given to the financial requirements and limits
of the program.
In the analysis of positions both horizontal
and vertical relationships must be considered.
In attempting to describe the position at the
head of a project, the classification investigator
must give special attention to the horizontal
relationships between projects in order that he
may define the scope or authority of the chief
position and determine the type of initiative to
be expected of the incumbent of the position.
In describing the position as it relates to the
vertical structure of organization, the classifi-
cation investigator must define the extent to
in the Federal Service
which authority is delegated to the incumbent
and the extent to which he in turn delegates
authority to his various subordinates.
After having analyzed the scope, content,
and authority of each position and its relation-
ships to other positions both vertically and
horizontally, the classification investigator in
government service then proceeds to his prin-
cipal task, that of allocating the position in
question to a specific class related to a salary
schedule or compensation plan. Personnel
classification in government grew out of the
need for salary standardization and control,
and traditionally that is as far as the classifica-
tion investigator is supposed to go. An im-
portant lesson can be learned, however, from
industrial practice and from the better public
personnel agencies. Position analysis should be
used as a major tool of organization planning
rather than as merely incidental to position
classification and salary standardization.
The detailed analysis of positions and their
various relationships to one another should be
used in large part as the basis upon which to
build, revise, and modify the organization struc-
ture in which those positions function. Over-
lapping functions discovered through the classi-
fication approach suggest various alternative
revisions of the assignments of duties and re-
sponsibilities. Conflicts and gaps in authority,
if they exist, are almost certain to be revealed
by the classification approach. When dis-
covered they can seldom be eliminated except
by a clear-cut change in organization structure.
Organization planning upon the basis of the
scientific analYSIS of duties and their relation-
ships, when carried to a reasonable conclusion,
should result in a structure of organization in
which every member can function effectively.
In such a structure, the incumbent of every
position would see clearly the scope of his au-
thority and responsibility, the nature of his
duties, and the relationships of his duties and
responsibilities to those of other positions.
Only under such conditions can the work of
every member of an organization be coordi-
nated intelligently with the work of others.
Under such conditions, self-coordination takes
place to a large extent, with a resultant decline
in friction and increase in effectiveness.
Several very practical recommendations may
be based upon the preceding discussion of the
relationship of position analysis to organization
planning.
1. Regardless of any considerations of
salary standardization, the technique of
positIon analysis should be extended to the
highest positions in the Executive Branch as
a part of the necessary basis for improve-
ment in its organization structure. The re-
sponsibility for study of the higher positions
should be definitely fixed, although not neces-
sarily in the central personnel agency.
2. Although it may be desirable to create
other central agencies for administrative
117
planning, the respective heads of the central
personnel and budget ag-encies should be
among the principal adVIsers of the Chief
Executive in connection with major problems
of organization and reorganization within
the Executive Branch. The head of the
central personnel agency should work very
closely with the head of the central budget
and program planning agency in the develop-
ment of recommendations for an improved
structure of organization in the Executive
Branch. Such planning should be regarded
as a continuing function; recommendations
as to organization should be prepared at
least annually in connection with the prepara-
tion of the budget. Since government is not
static, its structure should always be subject
to necessary revision.
3. The personnel and budget officers in
the operating establishments should have a
similar advisory relationship to the heads of
establishments and large units within estab-
lishments in the solving of problems of'
organization planning. It should be their
duty to prepare recommendations for im-
proved organization at least annually in con-
nection with the preparation of the proposed
budgets for the various establishments.
These recommendations merely give recog-
nition and extension to present trends. The
existing personnel classification work of the
Federal Government has been of great impor-
tance in the clarification of duties and respon-
sibilities, and has been given recognition in
budget and program planning. A material
improvement in the structure of organization
has unquestionably resulted {but the contribu-
tion of personnel classificatioh to that improve-
ment has, to some extent, 'J been overlooked.
Formal recognition of the 'advisory place of
personnel classification in organization plan-
ning will give needed emphasis to an important
service.
Personnel officers should have an especially
vital interest in organization planning because
organization structure is directly reflected in
morale, particularly the morale of executive
and supervisory personnel. The signs of an
unsound organization are conflicts of au-
thority, misunderstandings as to allocation of
functions, duplication of work in some in-
stances, and lack of coverage in others. None
of these situations can exist without very ad-
verse effects upon the morale of the personnel
affected, frequently personnel of very high
rank.
The problems of morale in higher positions
have never been adequately studied, but it is
unquestionable that poor morale in the higher
pOSItions has subtle and far-reaching effects
of the most unfortunate character. The type
of interoffice politics with which many a large
organization is cursed is often a product of poor
118
executive morale, based in turn upon a dis-
orderly, confused, and uncertain assignment of
executive duties. Frequently a condition of
inefficiency and low morale throughout a large
working group may be traced directly to the
situation at the top.
F. GENERAL ASPECTS OF THE SERVICE OF PERSONNEL ADMINISTRATION
The central personnel agency and the other
personnel offices recommended in this study will
not be effective in securing a broad improvement
in personnel methods throughout the Federal
service unless those offices are established and
conducted as a group upon the basis of sound
principles of personnel administration. This
means primarily that the various personnel
offices should be staffed entirely with officers and
employees selected upon the basis of merit and
efficiency, and that the service of personnel
administration must be a true career service,
developed along lines compatible with demo-
cratic institutions.
In a true career service, there must be oppor-
tunity for advancement on the basis of perform-
ance from the lowest to the highest posts in the
service. When the service is in full operation,
vacancies above the entrance grade or grades
should ordinarily be filled by promotion from
within. Suitable provision should be made to
insure that promotions are based upon merit.
The highest position in the service of per-
sonnel administration, in view of its unique
importance, should be filled through open
competition, but persons trained in the service
should be encouraged to compete, and the suc-
cessful candidate should usually be a product
of the service. The service should be recruited
upon a democratic basis that exemplifies
equality of opportunity in accordance with
merit. Vacancies in the entrance grade or
grades should therefore be filled through open
competition. Provision must be made for
training in the service through competent super-
vision and broad experience, supplemented by
organized courses of study. Finally, the salary
levels must be adequate to attract the most
capable of the persons engaged in choosing
careers, since otherwise the service cannot hope
to attract those of more than mediocre talent.
The application of these principles to build
a unified service of personnel administration
in the Executive Branch presents some difficulty
because of the number and relationships of the
administrative units that must be considered.
The importance of the establishment of special-
ized umts for personnel administration at each
major level of administration has been em-
phasized throughout this memorandum. The
recommendation has also been made that the
highest ranking personnel officer in each special-
ized personnel unit should be administratively
Personnel Administration
Active personnel officers can hardly avoid
knowledge of such situations. They should be
on the watch for them, and their services
should be utilized in an advisory capacity by
r~sponsible administrators who are in a POSI-
tIOn to act.
responsible to a general administrative officer.
Thus, the head of the central personnel agency
should report to the Chief Executive; the head
of a departmental personnel office should report
to the head of the department; and the person-
nel officer in a bureau or large field establishment
should report to the bureau chief or other
general administrative head of the unit.
The question therefore arises: How can a
congeries of separate administrative units be
builtJnto a unified service of personnel adminis-
tration? The answer to this q.uestion must be
found basically in the distmction between
formal authority and professional or technical
authority. Formal authority is the power to
give orders and to enforce obedience; It resides
in the structure of organization and is an
inevitable concomitant of the subdivision of
activities into levels. Professional authority is
of an altogether different character; it is not
based upon position in an organization structure,
but rather upon the possession of knowledge
and skill in a particular field. Professional
authority when truly possessed is largely self-
enforcing, because disregard of the advice and
instruction based upon knowled~e carries penal-
ties that do not require application through
formal authority.
In any specIalized service, professional or
technical authority based upon knowledge of
how to do the job becomes more important
than formal authority. It is for this reason
that the head of the central personnel agency
of the type recommended in this study, if
carefully selected, will be in fact the head of
the entire Federal service of personnel adminis-
tration, regardless of the ex!t of his formal
authority over parts of it. he entire service
of personnel administration be closely knit_
together by the channels of professional au-
thority:\
Thetrevelopment of the career aspects of the
service, however, requires something more than
provision for professional association in a com-
mon specialization. A measure of formal ad-
ministrative authority running throughout the
entire service of personnel administration is
necessary, and is not incompatible with the
administrative authority that must be reserved
to the responsible officials of the operating
establishments.
The head of the central personnel agency
should be responsible for the progressive devel-
in the Federal Service
opment of competent personnel officers and
their assistants at all grades of the service. To
meet this responsibility, he should have general
supervision over the training of personnel
officers in their specialized duties and over their
professional advancement. The appointing
power with respect to any particular personnel
officer should remain in the administrative
head to whom the personnel officer is responsi-
ble, but appointment, transfer, or promotion
should be subject to the approval of the head of
the central personnel agency acting on behalf
of the Chief Executive. This control should
a
not be exercised in purely negative manner,
as it could be under the present civil service
rules. The head of the central personnel
agency should be constructively responsible for
advice to the heads of establishments with
respect to the location and availability of
personnel officers qualified for advancement.
The entire serVIce of personnel administra-
tion should be regarded as the usual field of
inquiry in which to find employees qualified for
advancement. The normal channels of pro-
motion should be expected to take the advanc-
ing employee from one agency to another, both
to enlarge the number and improve the quality
of the candidates considered for any particular
vacancy in the higher grades and to broaden
the development of personnel officers during the
course of their training through experience.
Special attention should be given to transfers
between the central personnel agency and the
personnel offices of departments and bureaus.
Few candidates should be considered for ap-
pointment to positions as chiefs or assistant
chiefs of divisions in the central personnel
agency who have not profited by considerable
amounts of experience both in the central per~
sonnel agency and in the personnel offices of
operating establishments. Conversely, few can-
didates should be considered for appointment
to positions as chiefs or assistant cbIefs of the
personnel offices of operating establishments
who have not served in the central personnel
agency as well as in operating establishments.
Defimte attention should be given to the
training of the most promising personnel officers
in the intermediate grades by transfers at inter-
vals of from two to five years, in order to give
them the broad expenence needed in the
highest posts.
The above recommendations should be modi-
fied to some extent in connection with the
central staff concerned with examinations for
professional positions. Examiners for profes-
sional positions must be skilled both in exam-
ining and in the profession for which they
examine. These examiners should in general
be drawn from the appropriate professional
groups in the Federal service and should be
trained in examining by the central personnel
agency.
The best candidates for such positions are
seldom interested in lengthy service in an ex-
119
amining capacity, since the work is necessarily
routine and adds relatively little to their train-
ing in their own professions, although it does
give insi~ht into recruitment and other ad-
ministratIve problems. When they continue
to occupy examining positions for years at a
time, they lose touch with the advances in
their own professions, and cease even to be good
examiners.
The central personnel agency should there-
fore, so far as feasible, recruit its professional
examiners by transfer from the professional
services in other Federal agencies, should keep
them for periods of from three months to not
more than three years, and should then make
every effort to place them again in the appro-
priate professional services in :positions at least
as good as those they preVIOusly occupied.
Such limited periods of service in the central
personnel agency should be of value to profes-
sional employees who later attain administra-
tive rank, and should do much to improve the
central administration of the examining function
for professional positions.
The head of the central personnel agency
should be responsible for stimulating the devel-
opment of appropriate standards of professional
conduct throughout the service of personnel
administration. Some of the more glaring
types of malpractice arc amply covered in the
present civil service rules, but a constructive
and forward-looking code of professional ethics
is badly needed in personnel administration,
both public and private. Such a code should
receive the early attention of the head of the
central personnel agency, the Civil Service
Board, and the Council of Personnel Admin-
istration.
Organized professional association, a written
code of ethics, and the ever-present human
desire to retain the respect of one's fellows would
do much to lift the standards of Federal
personnel administration even in the absence
of specific means of enforcing standards of
conduct. The Civil Service Board, however,
should carryon vigorously the policing activities
previously recommended for it, and should
have the support and assistance of the head of
the central personnel agency and the Chief
Executive.
The relationship of the service of personnel
administration to political parties and to
politically responsible officials requires some
final comment. All members of the permanent
service of personnel administration, including
the head of the central personnel agency, should
be included within the competitive civil service.
Their duties should relate entirely to adminis-
trative management and the formulation of
administrative policies[and should not impinge
at any point upon ~he formulation of policies
in the political fieldJ The personnel offices of
emergency agencies perhaps cannot be entiI:ely
staffed with civil service employees, but appomt-
120
ments to those offices should be made on the
basis of merit and efficiency and without
regard to partisan considerations.
.Af3 employees within the merit system, per-
sonnel officials should have no connection with
any political appointment, promotion, or ter-
mination. The making of a political appoint-
ment is a political responsibility. It is there-
fore improper for a politically responsible official
to delegate the duty to a merit system employee
who is not politically responsible, and it is
equally improper for such a merit system em-
ployee to accept the duty. This may seem a
G. PLAN FOR PLACING RECOMMENDATIONS IN EFFECT
The recommendations of this part of the
study, if placed in effect, will require major
changes of organization in a number of cases.
The recommendations shOUld therefore be car-
ded forward in a deliberate manner and with
due regard to the fact that important organiza-
tion values are easily lost during any period of
rapid reorganization. The purpose should be
to conserve and improve, not to dismantle and
destroy.
The development of an adequate new
central personnel agency should be the first
objective. It is therefore recommended that
the Congress give favorable consideration at
an early date to the need for such an agency
and for the proposed Civil Service Board of
citizens. In view of the proposed position of
the agency as an establishment primarily to
assist the Chief Executive in the better per-
formance of functions he now possesses, it
would seem appropriate for the Congress to
grant authority to him in broad terms to
establish the agency, to define its duties and
responsibilities, and to transfer personnel and
activities to it from the existing establishment
of the Civil Service Commission.
The members of the Civil Service Board
should then be appointed and the head of the
central personnel agency and other principal
officers should be selected and appointed in
accordance v!th the civil service rules and
regulations. \In particular, as previously rec-
ommended, the Initial head of the central
personnel agency should be selected from a
register prepared by a specially appointed
board of examiners of the highest reputation
and public standing, in order that the successful
candidate may enjoy the widest measure of
public confidence and may be reasonably
Personnel Administration in the Federal Service
hard or even impossible rule to some personnel
officers; but no public personnel official is com-
petent to perform his duties who does not count
a high degree of courage among his professional
qualifications.
The recognition of an appropriate division of
duties between politically responsible officials
and civil service employees would eliminate
most occasions for contact between party repre-
sentatives and personnel officials. Any remain-
ing contacts should be carried on under the
direct supervision of officials whose political
responsibility is self-E!vident.
assured of an uninterrupted career in the
public service if he accepts the appointment. \
(The establishment of a strong group of d~­
partmental personnel offices in addition to the
limited number now existing should be the
second major objective.) In most cases legisla-
tion will not be required, but in many cases it
will be necessary to secure the availability of
appropriations for the purpose. This objective
should be advanced as rapidly as feasible, but
the major personnel officers should be selected
and aJ?pointed with great care. Any necessary
delay mcidental to that accomplishment will be
well repaid.
An ~tive(Council of Personnel Administra-
tion will be possible as soon as these two objec-
tives have been attained, and should be used
as the vehicle for planning the further develop-
ment of Federal personnel administration.) The
developmen t of a career service for personnel
officers should receive the early attention of the
Council of Personnel Administration, along with
other problems of a primarily organizational
character. The active consideration both of
immediate and of long-run personnel problems
by the central personnel agency should begin
as soon as it is established, but will be facilitated
when it can rely upon the assistance of a strong
Council of Personnel Administration.
The specific application of the o~her recom-
mendations concerning the service of personnel
administration need not be charted in detaiL
The other steps are almost certain to come in
time if the objectives just listed are successfully
attained. To plan the future is beyond the
purpose of this study. Competent personnel
working through a sound structure of organiza-
tion will develop their own job, and will give the
Federal service a level of personnel adminis-
tration that has rarely been equaled.
 III. THE EXTENSION OF THE MERIT SYSTEM
•
The development of an improved service of
personnel administration along the lines dis-
cussed in Part II will greatly facilitate the
extension of the merit system to numerous
A. THE ADMINISTRATION OF HIGH ADMINISTRATIVE POSITIONS
Attention may first be directed to those
positions now outside the classified competitive
service in which the incumbents exercise the
greatest authority over the administration of
the Federal service. Such positions include
those occupied by Secretaries at the head of
major departments; under secretaries, assistant
secretaries, and principal executive and ad-
ministrative assistants; many of the heads of
bureaus and analogous units within depart-
ments; the heads of emergency agencies and
other administrative .establishments outside
the departments; and the members of semi-
judicial boards and commissions and some of
their principal administrative officers.
Division of High Administrative
Positions Into Two Groups
There appears to be some agreement as to
the appointing policy that should be followed in
filling f}Ome of the positions among those just
listed. ( On the one hand, a Cabinet member
at the head of one of the major departments of
the Executive Branch is regarded as an officer
analogous to the President in that his duties
are both :policy-forming, in the political sense,
and admmistrative.) Cabinet officers should
therefore continue to be appointed as at present,
with appropriate recognition of political as well
as administrative considerations. On the other
hand, although some chiefs of bureaus and
similar units within departments are still
political officials in fact, it is commonly agreed
that the immediate administrative head of an
operating unit such as a bureau should be a
nonpolitical career official. As such he should
have no political responsibilities and should be
appointed or promoted to his post without
regard to political considerations.
Somewhere between these two grades of posi-
tion, however, one largely political and the
positions in the Federal service that are not
at present filled exclusively on a merit basis.
Such an extension is urgently needed, but it
presents problems worthy of consideration.
other exclusively administrative, a line must be
drawn between the high political and the high-
est nonpolitical positions. There is a lack of
general agreement as to exactly where or how
this line should be drawn, partly because the
distinction between political and nonpolitical
administrative positions has been so vague in
past American practi~. It may be stated with
confidence, however I... that few if any changes in
personnel administration could do more to in-
vigorate the public service than a sharp de-
marcation between the high political and the
highest nonpolitical positions, with the reserva-
tion of a number of high posts immediately
below the Cabinet rank for nonpolitical career
adminis tra tors.)
The advantages that would accrue to the
Chief Executive and to the Cabinet officers
from the existence of a highly trained corps of
mature career administrators in positions im-
mediately subordinate to them are worthy of
emphasis. The complexities of governmental
machinery, particularly at the level at which
the Chief Executive and the Cabinet officers
function, require unusual competence, back-
ground, and devotion to the public service.
Those complexities make imperative an acute
and habitual knowledge of what to do to get
results. Newcomers to so complex a machine
must rely upon those who know the rotations of
wheels within wheels, how to start and how to
stop them, and how to make them mesh with
the smooth perfection that will keep adminis-
trative matters in the field appropriate to them.
A corps of career administrators immediately
subordinate to policy-forming officials should
therefore be regarded as indispensable to the
successful functioning of the Executive Branch.
As a matter of fact, such a corps now exists,
although in undeveloped form, and is largely
responsible for the degree of efficiency with
which the Executive Branch functions. Most
121
122
of the members of this group have been selected
on merit and in many cases entered t~ service
initially through formal competition. (In their
present positions, however, they do not receive
the recognition in dignity of office, emoluments,
or security of tenure to which their actual con-
tribution to the business of government entitles
them.) They are thus handicapped in their
work, and the positions they occupy do not
hold out the incentives and opportunities to the
lower grades of the service that are so necessary
to attract new talent to the service and to
improve the morale and performance of that
already present.
The recommendation is therefore made that
all high positions in the various executive de-
partments be grouped as rapidly as feasible into
two classes/one definitely political and policy-
forming fand the other definitely nonpolitical
and purCIy administrative} The political group
at the head of each department should include
the Secretary, a political under secretary or
assistant secretary, and such other staff assis-
tants as may be needed to advise and assist the
Secretary in his political policy-forming duties.
The nonpolitical group might well include an
executive officer eq~ to an under
secretary; a number of aSSIstant executive
officers proportionate to the amount of business
to be supervised; officers responsible for the
work of the departmental offices dealing with
such matters as personnel, budgets, accounts,
and procurement; such other officers as may be
necessary in the central office of the department;
and the heads of the various bureaus.
A Nonpolitical Executive
Officer in Each Department
The recommendation previously included for
the establishment in each department of a non-
political executive officer equivalent in rank to
an under secretary deserves special comment.
Direction, coordination, and control of the
work of each del?artment can be greatly facili-
tated if these dutIes are centered under the direc-
tion of the Secretary in a qualified, nonpolitical
officer of reasonably continuous tenure. In no
other way can the wisdom of experience be
brought to bear in a coordinated way upon the
complicated administrative problems of the
departments.
The position of under secretary now exists in
four deyartments, but the office is regarded as
politica and does not meet the need for a stable,
nonpolitical position at the highest level of
departmental administration. However, posi-
tions which are somewhat comparable to that
of a principal nonpolitical executive officer do
exist in some of the departments under the titles
of administrative assistant or executive assistant
to the Secretary. The advantages that accrue
from the presence of experienced officials of high
caliber upon whom the respective Secretaries
can rely for the administratIve management of
Personnel Administration
their departments are reflected in the results
obtained in those cases.
(The creation of a nonpolitical position of
executive officer in each department would not
eliminate the need for the administrative
officers just referred to but would rather give
them recognition and provide for an increase
in their number., It is assumed that the best
qualified existing' career officers who are per-
forming in part the duties suggested for the
nonpolItical executive officers would be pro-
moted to the new posts. The title of executive
officer would then appropriately signify their
real responsibilities. It would also make it
easier to provide them with the nonpolitica.l
assistant executive officers and other staff
needed for the effective performance of general
direction, coordination, and control throughout
the departments. The change in title and the
increased opportunity for stable and effective
leadership in administration would add greatly
to the efficiency and prestige of the civil service.
Selection Procedure for
Nonpolitical High Positions
The high administrative positions here under
discussion can be firmly stamped with a non-
political character only by a clear-cut provi-
sion for filling them in accordance with civil
service rules. The objective that is sought,
the establishment of the necessary number of
high administrative positions upon a basis of
merit selection and stable tenure, cannot other-
wise be achieved. The problem is not only to fill
the positions on a merit basis in fact, but to do
so in such a manner that adherence to a merit
basis will be self-evident and self-sustaining.
It has frequently been stated that it is im-
practicable to fill such positions through a for-
malized civil service procedure along the lines
of the present civil service rules and practice.
It is believed, however, that the present diffi-
culties are far from insuperable and that they
would be greatly les£ened by the improved
service of personnel administration previously
recommended.
In the normal course of events, most of the
higher nonpolitical positions would eventually
be filled by the promotion of administrative
officers who already have a competitive civil
service status and who have received the neces-
sary training and eXl?erience in the service.
The existing civil serVIce procedure for promo-
tion in such cases is simple, perhaps too much
so, and presents no difficulty to the Cabinet
officer or other appointing officer who is dis-
posed to promote qualified employees with a
competitive status. There is little doubt that
the promotion of suitable civil service em-
ployees to the highest nonpolitical posts would
receive general public approval.
Occasionally It might be necessary to go out-
side the service in filling the higher nonpolitical
positions. Appointment through promotion
in the Federal Service
might prove undesirable or nearly impossible
in some instances. Employees occupying po-
sitions that would normally entitle them to
consideration might not possess the necessary
qualifications, or might be near the retirement
age, or for personal reasons might not desire
to assume the burdens of a higher position.
Suitable employees in departments other than
the one in which a vacancy exists might not
come to the attention of the appointing officers;
if they should, customs of interdepartmental
courtesy might interpose obstacles.
These difficulties would be especially pressing
if a number of higher positions were established
on or changed to a nonpolitical basis in the near
future. Relatively little attention has been
given so far to the filling of understudy positions
and to training for promotion to positions of
high responsibility. Many of the understudy
positions either do not exist at all at present or
are not within the classified competitive service.
Even where eligible civil service employees de-
serving of promotion can be found, they might
not be willing to accept promotion to new posi-
tions where security of tenure has not yet been
demonstrated, however much care is given to
the manner in which the positions are initially
filled.
The problem of establishing a satisfactory
selection procedure that may be used to fill the
higher nonpolitical positions throu h open com-
petition must therefore be faced. 9. To be satis-
factory, such a procedure must be capable of
excluding nonadministrative factors, must select
the best qualified candidates for appointment
with a high degree of accuracy, must operate at
a reasonable cost, and should be capable of
being geared to the speed that is frequently
essential in filling important positions\
The so-calle~ "committee plan" sometimes
used by the Civil Service Commission appears
to offer the greatest possibilities for develop-
ment into a satisfactory method of selecting
higher nonpolitical personnel. This plan has
been used in recent years in at least three cases
in the selection of bureau chiefs through open
competition and has been used in a few other
cases in filling civil service positions carrying
salaries of $5,200 per year or more.
Under this plan, a committee of three, four,
or five members is constituted as a special
board of examiners in accordance with the Civil
Service Act. The members of the committee
as such are legally responsible to the Civil
Service Co~ission alone, by which they are
appointed. tIn practice, however, one member
of the committee is considered a representative
of the agency where the vacanc)f",exists, and is
usually drawn from its ranks.) \lhe chairman
of the committee is named by the Commission,
and is usually the assistant chief of the examin-
ing division in charge of examinations for pro-
fessional positions:1 The other members of the
committee are determined upon in conference
by representatives of the Commission and the
153155--37----10
123
agency having the vacancy, and may come from
elsewhere in the Federal service or from out-
side the service. The incidental expense and
inconvenience have so far militated against
much use of outside examiners on such com-
mittees.
The committee then prepares or approves the
qualifications to be required of candidates, the
vacancy is advertised, and the applications and
such supporting documents as may be required
are rated by the committee. Whenever the
committee considers it desirable to do so,
candidates may be called for oral examination.
A register of eligibles is then made up on which
the candidates are arranged in the' order de-
termined by the committee. The three candi-
dates considered best qualified are then certi-
fied to the agency where the vacancy exists for
final selection and appointment.
This committee procedure appears to be
flexible enough to permit its use, with some
adaptations, even in the selection through open
competition of the proposed nonpolitical exec-
utive officers and other similar officials.
The proposed central personnel agency should
be represented directly on the examining com-
mittees. In selection for the highest positions,
it should be represented by its own highest
administrative officer.' As previously recom-
mended, that officer should be a highly qualified
personnel administrator. As such, he would be
entitled to the same public respect that would
be due a well-qualified departmental executive
officer, and should be capable of judging those
qualities of initiative, judgment, and discretion
that at best are extremely intan!p-ble.
The department or a~ency filling the vacancy
should be represented 1D order that the actual
needs of the position in question may be clearly
presented to the other examiners and may be
given due weight in considering the candidates
who may be induced to compete. In examining
for the proposed nonpolitical executive officers,
the department should be represented by some
person not a member of its staff whom the
Secretary considers competent to represent the
departmental point of view and who is accept-
able to the central personnel agency. For
obvious reasons, any person selected for the
duty should not be politically active in behalf
of the party in power. This would bar a
politically responsible Secretary from personal
service on an examining committee. It would
also be improper for the Secretary to delegate
to any civil service employee of his department
the duty of assisting in the selection of an execu-
tive officer, since such a civil service employee
would then be in the position of helping to
select a superior officer. A nonpolitical execu-
tive officer once in office, however, might well
serve as one member of an examining board to
select any of his subordinates.
In every case where the use of a formal exam-
ining committee is warranted, the committee
should probably include at least one or two
124
persons from outside the Federal service. It
goes without saying that suchlersons should be
well known, highly respecte , and free from
political, religious, fraternal, or class beliefs or
affiliations of a character likely to give rise to
suspicion of bias. Broad training or ex,perience
in an appropriate field of public adminlStration
would be a highly desirable, if not an essential
qualification, in order that the examiners from
outside the service may adequately understand
the duties to be performed by successful candi-
dates and may be able to appraise accurately
the qualifications of the candidates. Participa-
tion in the work of examining committees by
such well-qualified persons from outside the
service would do much to prevent the develop-
ment of an ingrown, self-satisfied, and self-
perpetuating bureaucracy.
An oral examination should be an integral
part of the procedure in determining the final
order of standing of candidates for the position
of executive officer and other high positions.
Many of the characteristics most important for
success in a high administrative position do not
lend themselves to any other method of exami-
nation. To reduce the expense involved, how-
ever, only candidates whose qualifications
merit final consideration should be called for
oral examination.
Two other matters of procedure are deserving
of some comment: the application of the ap-
portionment rule and the extent to which
veterans' preference should be granted in
selection for the higher positions.
The application of the apportionment rule to
any specific class of positions is now entitely
within the discretion of the Presidenq It
would seem desirable to amend the rule by ex-
empting all high administrative positions in the
classified service. 1 Some provision for the pay-
ment of the traveling expenses of candidates
called for oral examination or interview might
well be much more conducive to the objectives
sought through apportionment than the actual
effect of the rule as it now applies to higher
positions.
Preference is required by law to be given to
veterans in all appointments to positions in the
Executive Branch, but the extent and manner
in which preference shall be given is not speci-
fied in the statute. The present detailed pro-
visions of the civil service rules on preference
seem both unnecessary and undesirable in
connection with the higher administrative posi-
tions. Examining boards charged with selec-
tion for such positions should be instructed to
comply with the law, but within the li~its pre-
scribed by law they should be allowed to exer-
cise their discretion in rating t~ candi ates on
the basis of their qualifications....)
The selection procedure outlined above ap-
pears to meet the requisites previously specified.
It should be capable of selecting the best quali-
fied candidates for appointment to higher posi-
tions with a high degree of accuracy and on the
Personnel Administr,ation
basis of merit alone. Selection will be no better
in practice than the quality of the examining
boards, but the publicity which will attend the
appointment of members of these special boards
should in most cases insure a high level of ex-
amining ability.
The procedure is admittedly costly, but the
cost should not become excessive. ill view of
the importance of the positions to be filled.
Due care should be observed in setting up the
qualifications to be required of candidates for
appointment, in order to discourage numerous
applications from unqualified applicants. The
cost factor is important enough, however, to
warrant the conclusion that a formal committee
plan of examination should not be extended
much below the bureau_ chief level. Oral
interviews or examinations -maybe desirable in
examining for many lower pOSItions, but if the
higher positions are filled on. merit and the
central personnel agency is adequately staffed
and efficiently operated, there will be little
occasion to use the formal committee plan at
lower levels of appointment.
The procedure suggested for selecting candi-
dates for appointment to higher positions is
doubtless somewhat more time-consuming than
direct administration of all selection procedure
by an appointing officer, but there appears to
be no sound reason why under normal condi-
tions it should be allowed to consume more
than six weeks. Appointments to higher posi-
tions are usually made in a deliberate manner,
regardless of the procedure followed. Even
under emergency conditions and in the absence
of any required procedure, a period of six weeks
is not at all unusual in completing a major
appointment.
When conditions warrant extreme haste,
however, the procedure outlined above, includ-
ing preparation of the specifications, public
advertisement of the vacancy, and a penod of
a week in which to receive applications, can
probably be completed within 20 to 25 days,
if there is not too much pressure of other
similarly urgent work. It will be necessary
under conditions of urgency to use rapid
methods of .communication and publication and
perhaps to accept preliminary applications by
telegraph, subject to immediate formal com-
pletion. Needless to say, adequate service
within the time limits specified will not be
achieved except from a central personnel agency
cognizant of its obligations and able to conduct
its operations at the speed required by the
necessities of other parts of the service.
Legislative vs. Executive Action
) in Establishing Merit Selection
A few of the higher positions here under
discussion may be formally placed on a merit
basis of selection by revoking the Executive
orders, many of long standing, by which ap-
pointments have been permitted without regard
in the Federal Service
to the civil service rules. No further legislation
appears to be necessary or desirable in connec-
tion with these positions.
Legislation may, however, be desirable in the
case of the so-called Presidential positions-
posit~ons required by la~ to be filled through
app~)lntment by the PresIdent, by and with the
a.dvlC~ of the Senate. The Presidential posi-
tIOns mclude, among others, about 60 positions
at Washington and a few elsewhere that are of
high. rank, .a~though defi~itely below the Presi-
dentIal pO.sI.twns. of a policy-forming character.
These posItIOns mclude those of the chiefs and
in some cases the assistant chiefs of numerous
bureaus and analogous units in the Treasury
Justice, Interior, Labor, Commerce, and Post
Office Departments. They also include a few
existing positions hi~her than the grade of
bure.a~ chi~f that ffilght well become purely
adm~mstratIve, although now regarded to a
co~s~derable extent as policy-forming in the
polItICal sense.
Appropriate legislation would facilitate the
establish~ent of ~he Presidential positions of
a nonpolIcy formmg character upon a merit
basis of selection. The procedure could be
greatly simplified by dropping the requirement
of senatorial confirmation for all positions of a
purely a~mi?istrative character, and by lodging
the appomtive power for all such vacancies in
the heads of the respective agencies, where it
would normally rest. The positions would im-
m.e~iately .be brought within the scope of the
CIvil SerVICe Act and would be placed in the
competitive classified service unless excepted
by special Executive order.
Legislation placing all high nonpolitical
offices within the classified competitive service
and approving in principle a merit basis of
selection would have a strong moral and prac-
tical effect. The permanent transfer of these
positions to a merit basis would be more
assured, and the incumbents appointed on a
merit basis would thus have more cause to
expect reasonable security of tenure.
Similar results can be achieved, however,
through purely Executive action. Even aside
from his constitutional authority to adopt any
procedure he may see fit to select the persons he
nominates for appointment, the Chief Execu-
tive is authorized by the Act of March 3, 1871
"to prescribe such regulations for the admissio~
of persons into the civil service of the United
States as. may best promote the efficiency
thereof. * * *"
Under the commonly accepted construction
of this statute, the President may prescribe
the same procedure in selecting a nominee for
confirmation that would be followed in selection
prior to appointment under the civil service
rules. The only remaining difference in pro-
cedure would consist in the fact that the con-
firmation of the Senate would still be required to
complete the appointment. Such confirmation
has been readily granted in almost every case in
125
which the nominees are selected through some
formal merit system, as in the Foreign Service
the Public Health Service, the Coast Guard'
and the Coast and Geodetic Survey. .'
II legislation for the purpose is not considered
feasible or convenient, it is strongly recom-
men4ed that all high positions of a nonpolicy-
for~mg c~aracter be f?rmally placed upon a
merit baSIS of selectIOn and appointment
through Executive action at the earliest pos-
sible date, regardless of whether or not appoint-
ments to some of these positions remain subject
to confirmation by the Senate.
Such Executive action should provide a suit-
able procedure to insure the consideration of
classified competitive employees who are quali-
fied for promotion to Presidential positions.
Whe.n no classified employee appears to be
qualIfied or available for promotion, a register
of eligibles should be obtained through open
competitive examination along the lines previ-
ously discussed. The three highest eligibles
should then be certified to the President for
final selection and appointment, subject to
confirmation.
The immediate dispJ;tcement of present
incumbents in existing high offices is not con-
templated in the above recommendations and
appears neither necessary nor desirable. A
statement of the policy and procedure to be
followed in filling vacancies should bring about
the desired change in a relatively short time,
and soon enough to yield almost immediately a
material improvement in general administration.
Compensation of Higher Administrative
Personnel as Related to the Merit System
The entire problem of salary policy in the
Federal service is in need of restudy in the light
of present conditions. Those parts of the de-
partmental service at Washington that are sub-
Ject to the operations of the Classification Act
present some semblance of order, and for most
classes of positions are characterized by salaries
that seem reasonably fair both to employees
and to the taxpayers. The Postal SerVICe and
some of the other larger and older field services
have standardized salaries within their own
ranks for their major classes of employees.
In other old field services and in many of the
new services both at Washington and in the
field, numerous disparities exist as between
employees, and as between classes of employees
performing similar work, a.nd there has been no
careful study in recent years of the general levels
of salaries.
An adequate study of salary policy in general
is beyond the scope of this investigation, al-
though it should be one of the first duties of an
improved central personnel agency. The prob-
lem of salary policy, however, does relate very
materially to the present subject of merit selec-
tion of higher administrative personnel.
126
It is obvious that however carefully a non-
political selection procedure based upon open
competition is prosecuted, the salaries adver-
tised for the vacancies will be one of the most
significant factors determinin~ the quality of
the applicants. If the salanes provided are
too low, it may prove impossible to secure
applicants who have a high degree of compe-
tence to discharge the responsIbilities of the
positions.
The salaries now paid for the highest admin-
istrative positions in the Federal Government,
other than those at the heads of departments
and some independent establishments, range in
general from $6,500 to $10,000 per year. The
Classification Act of 1923, as amended in 1930,
provides an entrance salary of $6,500 and a
salary range of $6,500 to $7,500 for heads of
major bureaus. For the heads of the largest
and most important bureaus and similar units,
such as the Bureau of Public Roads, the Forest
Service, the Bureau of Foreign and Domestic
Commerce, the Geological Survey, and the
United States Employment Service, the en-
trance salary provided by the Classification Act
is $8,000 and the salary range is $8,000 to $9,000.
The heads of a few bureaus, such as the Bureau
of Internal Revenue, the Bureau of Reclama-
tion, and the Federal Bureau of Investigation,
receive salaries of $10,000 per year through
specific authorization or appropriation.
The higher administrative personnel of the
departments above the bureau chief level re-
ceive salaries within the same range as those
received by the heads of the more important
bureaus. Under secretaries receive compensa-
tion at the rate of $10,000 per year; assistant
secretaries, $8,000 to $10,000; principal admin-
istrative assistants to Secretaries in some cases
receive $8,000 to $9,000.
The Director of the Bureau of the Budget,
an immediate subordinate of the President and
the head of the principal existing central ad-
ministrative agency of the Federal Government,
receives compensation at the rate of $10,000
per year. The three Civil Service Commis-
sioners receive salaries of $8,500 per year, and
the Chief Examiner, the administrative head
responsible to the Commission, receives com-
pensation in the salary range of $6,500 to $7,500.
The salary rates just listed for various groups
of'higher civilian administrative personnel in the
Executive Branch perhaps do not compare
unfavorably with the salaries paid for compa-
rable positions in the Army and Navy and in the
Legislative and Judicial Branches of the Govern-
ment. Such comparisons are beyond the scope
of this study.
IThe conviction may be stated, however, that
the salary levels now in effect for the higher
administrative personnel of the Executive
Branch are too low. Some years ago, the Per-
sonnel Classification Board reached the con-
clusion that private concerns pay their major
executives from 100 to 500 percent more than
Per80nnel Administration
the salaries paid for positions of similar responsi-
bility in the Federal service, and stated that-
Were it not for patriotic citizens with private means
who are willing to serve their country at a financialsacri-
fice, the Federal Government would not be able to fill
these major executive posts with qualified individuals.
The Government, therefore, cannot hope to recruit a
competent and stable executive personnel in competition
with private business and industry so long as the dis-
parity in salaries continues to be as large as at present.'
This conclusion is the same as that held by most
businessmen, including those who have served
the Federal Government in high administrative
positions. It appears to be sound today.
The recommendation is therefore made that,
as part of the extension of merit selection to
higher positions, the salary scale for these posi-
tions be revised to provide salary rates some-
what as follows:
Departmental executive officers and heads
of central administrative agencies, includ-
ing the Bureau of the Budget and the
proposed central personnel agency _____ $12-15,000
Assistant departmental executive officers__ 10-12,000
Heads of the largest and most important
bureaus and similar units ____________ _ 9-10,000
Hea~B
unltsof other major bureaus and similar_
______________________________
8-9,000
These salary rates will be modest indeed by
comparison Wlth those paid in private industry
or even in the Federal Reserve banks for POS1-
tions carrying similarly heavy duties and
responsibilities, but they are h1gh enough to
permit some hope that the pos1tions can be
filled in a satisfactory manner without excessive
diffi cuI ty .
The desirability of a salary scale similar to
that proposed is indicated by the experience
both of new and of old agencies in recruiting
higher pen;onnel. For example, the Office of
the Federal Coordinator of Transportation
during its temporary existence appears to have
been staffed almost exclusively on a merit
basis, although not through the civil service
procedure. No limitation was placed upon the
salaries paid, inasmuch as the necessary funds
were obtained by special assessments on the
railroad industry. In 1934, three employees of
the Federal Coordinator of Transportation were
receiving salaries at the rate of $15,000 per year,
two at $12,000, and one at $10,000. The
salaries paid were believed to be no higher than
necessary in order to obtain the requisite per-
sonnel; several of the higher employees came
directly from the railroad industry or other
private employment at a reduction in com-
pensation.
The Federal Reserve System presents another
instance in which the salaries of employees are
not paid from Federal funds. The Board of
Governors has therefore been able to pay the
salaries deemed necessary to attract and retain
personnel competent to perform its functions,
and, as shown by its last annual report, has
• Personnol Classillcation Board, Cl03ing Rtporl of Wage and Ptr30nnel
SurDell. 71st Cong., 3d sess .. H. Doc. 771, p. 123.
in the Federal Service
authorized compensation for five employees at
the rate of $15,000 per year, for three employees
at $10,000, and for five at $9,000. Salaries
considerably higher have been permitted in
certain Federal Reserve Banks; for example, the
governor and the Federal Reserve agent of the
Federal Reserve Bank of New York each
received compensation of $50,000 a year as of
December 31, 1935.
The Tennessee Valley Authority is a rela-
tively new agency, carrying on a large-scale
construction program. It is required by law to
make all appointments on the basis of merit
and efficiency, but is forbidden to pay salaries
in excess of $10,000 per year. It pays salaries
comparable to those established in the depart-
mental service by the Classification Act. Dur-
ing the depression it was able to attract a well-
qualified staff of administrative employees. A
recent analysis was made of the salary records
of the 39 employees receiving salaries of $6,800
to $9,400 per year. Of this group, 23 engineer-
ing executives and 9 other higher executives
were 40 years of age or older, and had an
average age of about 50. Their earnings could
therefore be compared with their pre-depression
earnings to some advantage. It was found
that the 23 engineering executives were receiv-
ing average salaries of $7,539 per year; the
average earnings of the same mdividuals in
1929, when they were seven years younger and
less experienced, were $9,235. The 9 non-
engineering major executives over 40 years of
age were receivmg salaries averaging $7,867; in
1929, the same individuals averaged $10,438.
The Authority reports increasing difficulty in
securing personnel of the desired quality to fill
its higher positions. In view of a revival in
business that is rapidly carrying the salaries of
business executives back to the 1929 level, the
reasons are readily apparent.
The Social Security Board has recently ex-
perienced similar difficulties. The salary prob-
lem is said to have been very difficult in connec-
B. PRESIDENTIAL POSITIONS IN THE PERMANENT FIELD SERVICES
Special attention has already been given to
the higher administrative pOSItions at Wash-
ington that are filled by appointment by the
President, by and with the advice and consent
of the Senate. The Presidential positions in
the field service, although less important indi-
vidually, far outnumber those at Washington.
They include several hundred important ad-
mimstrative positions in the Postal Service, the
Customs Service, the Internal Revenue Service,
the Immigration and Naturalization Service,
the mints and assay offices, and the land offices.
They also include two groups of much impor-
tance in the administration of justice-the
United States attorneys and marshals.
127
tion with the recruitment of the chiefs and
assistant chiefs of the major bureaus of the
Board, and has presented some difficulty in the
selection of heads of important divisions and
field offices.
Numerous other illustrations of difficulties
resulting from the present salary scale for ad-
ministrative personnel might readily be obtained
from the experience of the Securities and Ex-
change Commission, the Bureau of Motor
Carriers in the Interstate Commerce Commis-
sion, the Rural Electrification Administration,
and many other agencies both old and new that
have attempted to recruit well-qualified person-
nel for their higher administrative positions.
Even in the case of positions commonly con-
sidered political, it is well known that the aJ?-
pointments regarded favorably by the public
have been accepted in many cases at a mate-
rial financial sacrifice upon the part of the
appointees.
The expectation of such sacrifices may be
appropriate in appointive positions of a polItical
character, in which the incumbents have an
opportunity to serve with great public honor
and in which their services are required only for
a few years. The situation is somewhat dif-
ferent in the higher nonpolitical positions, where
the incumbents are expected to devote the best
years of their lives to the Federal service with
little public knowledge or recognition of their
work.
A salary scale ranging up to at least $15,0.00
per year for the highest nonpolitical positions
thus appears to be highly desirable. It would
do much to attract better personnel to all grades
of the service, would facilitate retaining the
best employees for an honorable career in the
service, and when it is necessary to fill higher
positions through open competition, would be
more likely to secure competition among a
sufficient number of candidates competent to
fill the positions.
The Presidential positions in the field service
were established for the execution of policies
determined at the seat of Government, and,
with a few exceptions not found in the above
examples, they can not be regarded as policy-
forming in any relevant sense. They should,
therefore, be placed upon the merit basis as
rapidly as possible in those cases where they
still remain political. The shift involves spe-
cial difficulties, however, that are present either
not at all or to a much smaller degree in the
Presidential positions at Washington.
In most cases a definite tenure of office of 4
years is established by law for the Presidential
field positions, with the result that incumbents
128
must seek reappointment at relatively frequent
intervals. This factor deters many good can-
didates, including eligible civil service em-
ployees, from seeking a:ppointment to such
positions. It is a constant mvitation to renewed
political intervention even when the positions
have been filled for a time on a merit basis.
Local residence is required by law for post-
masters and collectors of internal revenue,
and the tradition supportin~ the appointment
of local residents is strong m the other cases.
Regard for local residence as a qualification
for appointment prevents promotion from the
smaller to the larger and more important field
offices. The most effective use of efficient
employees and the development of a true
career service are thus prevented, even when
appointments are on the basis of merit. In
many cases, the requirement of local residence
also narrows the field of selection so greatly
that it is difficult to obtain three well-qualified
eligibles for appointment, with the result that
if the three-name rule of civil service certifica-
tion is adhered to, final selection on the basis
of political considerations may continue almost
unhindered.
The recent Executive order revising the
procedure relating to the Presidential appoint-
ment of first, second, and third-class post-
masters illustrates the disadvantages resulting
from the statutory provisions requiring local
residence and limiting the term of office. This
order goes further than any previous Executive
action in an attempt to place new Presidential
appointments to postmasterships upon a merit
basis, and yet the results may prove dis-
appointing.
The disadvantages of the three-name rule
in connection with the local residence require-
ment have been avoided by requiring the ap-
pointment of the highest eligible, but at the
expense of a considerable curtailment of
administrative discretion. In this case, that
curtailment may be advantageous in the end,
since it will encourage the reappointment of
incumbents and the promotion of employees
in the classified service.
The order omits one desirable feature,
namely, a clause requiring the automatic
reinstatement in the classified service of any
employee who is promoted to a postmastership,
completes his term, and is not reappointed.
Without such a clause, the promotion pos-
sibilities may not prove attractive to the clas-
sified employees, and many advantages of a
merit system of appointment to postmaster-
ships will be lost.
The order conforms to the statutory provi-
sions requiring local residence. In conse-
quence, although any civil service employee in
a local post office may now perform his duties
in some hope of promotion on merit to the
highest position in the office, promotion beyond
that point still remains difficult. Honorable
Personnel Administration
service as a postmaster cannot be recognized
by direct promotion to a more important
postmastership. A classified employee quali-
fied for promotion to a more important post-
mastership than that provided in his own office,
however, might be transferred to a larger office,
there to serve the necessary residence require-
ment prior to promotion to the postmastership
of that office.
In the amendment of the postmaster order
and in the preparation of similar future orders
relating to other Presidential positions in the
field service, it would seem desirable to give
special attention to the following recommended
features:
1. Preference in filling vacancies to quali-
fied incumbents and qualified civil service
employees through provision for noncom-
petitive examinations when such incumbents
or employees are recommended· by the
department.
2. Provision for appointment from without
the service through open competitive exam-
ination and certification of the highest eligi-
ble, but only when the department certifies
that the previous incumbent is unsatisfactory
or not available and no classified employee IS
available and qualified for promotion.
3. Reward for meritorious service through
the provision that when an employee who
has been promoted from the classified service
completes a term of office in a Presidential
position in a satisfactory manner, he shall be
recommended for reappointment by the
President or, at the option of the employee,
shall be transferred to a classified position in
a field office of larger size or higher grade.
4. Protection of classified employees who
are promoted to Presidential pOSItions by
provIsion for automatic reinstatement in the
classified service if they fail of reappointment
at the expiration of their term of office for
any reason except misconduct.
5. Extension to the Presidential positions
filled on a merit basis of the same rules govern-
ing political activity that apply in the classi-
fied service.
Eventually it may prove feasible and de-
sirable to place all Presidential positions in
the field services in the classified competitive
service and to fill them in the same manner as
the numerous existing high civil service posi-
tions in the field. At that time, the necessary
legislation should provide concurrently for the
discontinuance of Presidential appointments
to field positions, the substitution of appoint-
ment by departmental officers in accordance
with the civil service rules, the abolition of
fixed terms of office, and the elimination of all
local residence restrictions upon appointment
to administrative positions in the national
services.
in the Federal Service
C. LOWER EXCEPTED POSITIONS IN THE PERMANENT SERVICES
The permanent services at Washington and
in the field include many thousands of positions
in addition to those previously discussed that
have been excepted from the scope of the Civil
Service Act by specific legislation or by Execu-
tive action. Most of these positions are of
long standing and either have never been
brought within the classified competitive service
or were removed from it years ago.
Perhaps the most important group of pro-
fessional positions now outside the classified
competitive service consists of the positions
filled by attorneys and legal assistants. In
1931, the Civil Service Commission reported
2,933 positions in the legal group, of which 924
were filled through open competition. The
situation with respect to permanent positions
does not appear to have changed significantly
since that time.
The deputy collectors of internal revenue
make up another group of several thousand
excepted employees. These positions were
removed from open competition by an act of
Congress approved October 22, 1913. By the
same act, deputy marshals were also placed
outside the classified competitive service. This
act has commonly been regarded as a return to
the spoils system for two large and important
groups of positions that could readily be filled
through open competition.
All of the positlons in the Federal Bureau of
Investigation, except fingerprint classifiers, are
outside of the classified competitive service.
The Bureau is one of the largest law enforce-
ment agencies in the Federal service, but its
recruitment problem appears to be similar to
that in some other Federal law enforcement
agencies that operate under civil service.
Several thousand other excepted positions
that might be made competitlve under the
Civil Service Act are distributed throughout
almost all of the permanent agencies and
represent almost all salary levels and types of
employment above the grade of laborer. Many
of these positions require highly special qualifi-
cations and may have been excepted originally
because of difficulty in reaching agreement as
to an appropriate civil service method of
selection. Others were excepted because of
reasons of convenience or political pressure.
The Civil Service Act itself prohibited bring-
ing "mere laborers" within the scope of the
D. EMERGENCY PERSONNEL NOT SELECTED THROUGH OPEN COMPETITION
Permanent policies to govern personnel
administration for emergency personnel were
recommended in Part II. Those policies are
immediately applicable to the existing groups
of emergency employees, and should be placed
129
competitive civil service. This group of posi-
tions fluctuates widely in number, since the
"unclassified laborer" positions are frequently
temporary; many of them are required in con-
nection with river and harbor work and on
Corce-account construction projects. In normal
times, however, it is not unusual to find as
many as 100,000 unclassified laborers on the
Federal pay roll.
No good reason exists any longer for excluding
labor positions from the classified service.
Permanent labor positions should be filled
through open competition, and other labor
positions should be filled on a merit basis
through an appropriate procedure. The
offices of the United States Employment Service
and the affiliated State services should be
used to facilitate rapid recruiting on a merit
basis, particularly at points where offices are
not maintained by the central personnel
agency.
The entire group of permanent excepted
positions needs to bo studied in detail with a
view to improvement in the selection procedure.
Most of them appear to be closely analogous
to other positions long filled through open
competition. A considerable improvement in
civil service selection techniques may be neces-
sary in order to make those techniques reason-
ably satisfactory to the agencies accustomed to
appoint without regard to the civil service
rules, but such an improvement is not at all
impossible of achievement.
Legislation is needed to give the President
authority to place the labor positions and many
of the other excepted positions within the clas-
sified competitive service. Such legislation
should be adopted by the Congress. It should
be followed by appropriate Executive action as
rapidly as the central personnel agency, in
cooperation with the appointing agencies, is
able to complete plans for selection to fill
vacancies through open competition in accord-
ance with the civil service rules. Incumbents
of excepted positions who do not themselves
have an appropriate civil service status should
be dismissed if they are unable to qualify.
There is every reason to believe that action
along the lines specified will be followed by
substantial economies and a material improve-
ment in administrative efficiency.
in effect as rapidly as feasible. The immediate
application of the policies recommended should
result in a considerable measure of improve-
ment in personnel administration as it relates to
emergency work, but a situation in which large
130
groups of Federal employees are occasionally
recruited without being granted a competitive
civil service status will necessarily continue.
The eventual disposition of such groups of
nonstatus emergency employees should be de-
termined by the dispositIOn of the agencies in
which they are employed.
If the work of an emergency ~ency or divi-
sion reaches a conclusion and is liquidated, the
employees should be dismissed and should
leave the Federal service unless they obtain
other employment in accordance with estab-
lished procedure. This fate has overtaken
various recent groups of emergency employees
and is evidently in store for some others. It
creates a serious but largely unavoidable prob-
lem of morale.
On the other hand, if the functions carried
on by a group of emergency employees prove
eventually to deserve a place among the estab-
lished services of Government, the emergency
agency or division should then be placed upon
a permanent basis or its functions should be
transferred to a permanent agency. The posi-
tions necessary for the performance of those
functions should at the same time be placed
within the permanent classified competitive
service. The question then arises as to the
treatment that should be accorded the incum-
bent employees who do not have a civil service
status.
One solution in such a situation is to dismiss
all incumbent nonstatus employees as rapidly
as they can be replaced by new employees ap-
pointed in accordance with the Clvil service
rules. This solution is almost invariably op-
posed by responsible administrators and other
students of public administration, on the
grounds that it would result in a great loss in
administrative efficiency during the transition
period, would result in much expense in holding
examinations and in training new employees to
replace experienced employees, and is unfair to
employees who have given loyal and efficient
service. Even if the employees are allowed to
E. THE DEVELOPMENT OF THE MERIT SYSTEM INTO A CAREER SYSTEM
The discussion elsewhere in this part of the
study of the procedure to be used in filling
higher positions through open competition
would have been largely unnecessary if in the
past more attention had been given to the
development of the career aspects of the Federal
civil service. In a well-operated civil service
system, it should be possible to find civil service
employees qualified and available for promo-
tion to the highest nonpolitical posts in the
established services. Moreover, the employees
trained in a well-operated civil service system
should usually be better qualified for the
highest posts than candidates from outside the
Personnel Administration
compete for their positions in open competitive
examinations, they may be displaced by others
who place only a few points higher on the reg-
isters and who are much less desirable as em-
ployees because of their inexperience.
An alternative solution is to "blanket" the
incumbent employees into the classified com-
petitive service through Legislative or Execu-
tive action, without the use of any qualifying
procedure. The classified service was estab-
lished originally by this means, and it has been
occasionally used even in recent years. The
method is capable of easy abuse, however, and
has fallen into disrepute, since it is commonly
regarded by the public as a means of conferring
an unearned civil service status upon patronage
employees. It is not supported or requested
by any responsible group of employees; quali-
fied employees appear to resent the stigma
attached to the blanketing-in process.
A procedure intermediate between the two
just discussed is therefore recommended. The
services of emergency employees occupying
positions made permanent should first be care-
fully reviewed in each agency under the direc-
tion of a qualified nonpolitical personnel officer
satisfactory to the central personnel agency.
Each such employee should then be permitted
to receive a civil service status (1) if the
personnel officer certifies to the central person-
nel agency that the employee has served with
merit for not less than one year, and (2) if
the employee passes a suitable qualifying exam-
ination administered by the central personnel
agency.
Emergency employees capable of meeting
these tests appear to deserve a civil service
status if their positions are made permanent.
The procedure can be administered in a simple
and expeditious manner and will fncilitate the
transfer to civil service status without impair-
ment of the standards of selection under open
competition and without loss of morale and
working efficiency on the part of employees.
service who may be drawn in at the higher levels
through open competition.
Open competition for the highest positions is
at best costly and somewhat uncertain in opera-
tion. It may bring very able persons into the
service from other employment, but it is
obvious that those persons will not be seasoned
Federal employees at the time of their appoint-
ment or at any early date after their appoint-
ment, unless they chance to have served the
Federal Government during some previous
period.
The advantages of developing the existing
merit system into a sound career service system
I
\
J
 I
in the Federal Service
of public employment have been so well set
forth in much of the recent literature on public
personnel administration that a lengthy dis-
cussion of the problem does not seem necessary
here. In view of the range of agencies and
occupations represented, the Federal service
should not be a single career service, but should
include many career services, knit together into
a well-integrated career service system and
built upon the existing merit system. The
conditions and foundations of such career serv-
ices have been specified as follows by the
Commission of Inquiry on Public Service
Personnel:
1. There must be public acceptance, acknowledg-
ment, and general understanding of these career services,
and an appreciation on the part of professional and
scientific groups, and of the learned societies and the
press, of the distinctions between the services and of
the nature of the contributions of each to the total work
of government.
2. The general nature of each career service must
be clearly defined by the law and regulations. Each
service must have a definite and concise title, which
retains the same general meaning year after year.
3. There must be a system of public personnel ad-
ministration * * * to see that the career service
system is maintained, protected, and carried forward,
and to supervise the post-entry training of employees.
4 For each career service there must be an ap-
propriate method of entrance based solely on the
characteristics and capacities of the applicant, and so
defined that the conditions of entrance will be relatively
stable and easily understood.
5. Inasmuch as a "career" presupposes a lifetime of
work of growing knowledge and skill, entrance should
be limited, in the ordinary course of events, to the lowest
positions within each service and to a young group of
entrants. A career cannot be said to exist if top
positions are generally recruited from outside, from
men who do not understand the work, and in such a
way as to create an effective bar to advancement from
the bottom to the top of the service itself.
6. Opportunity for advancement and promotion
within each career service must be open to all within
the service on the basis of work done and capacity for
the higher post. Each service must be viewed in the
broadest possible light so that the top posts may be
filled from a wide base and so that those who enter at
the bottom may have the opportunity of reaching
great eminence. * * *
7. The scale of remuneration must be appropriate
to the service, with due consideration for the attraction
vf desired man power and for the maintenance of a
standard of living commensurate with the work to be
performed. The scale should provide both for auto-
matic salary increases for faithful work and for increase
with promotion. Comparable positions in the various
services should be paid alike as far as is possible.
8. Wherever careers in the public service are vir-
tually identical with careers in private life, the defini-
tion of the service, the system of training, the method
of entrance, the opportunities for advancement, and
the compensation should be definitely related, and
opportunities for transfer back and forth should be
provided. But where the nature of the public work
is clearly unique, or governed by different or conflicting
motives, the method of recruitment and the conditions
of service should be different, and transfers back and
forth should be scrutinized with care.
9. Retirement and pension systems are essential not
only in justice to employees, but in order that lon-
gevity and charitable considerations may not upset
the promotion possibilities for other members of the
career service.
10. A workable system of demotions and discharges
is essential in order to maintain the self-respect and the
131
public esteem of any career. There ill a limit to the
amount of deadwood that can be carried in an office,
in a profession, or in a service. It is important, how-
ever, that no discharges be permitted for trivial, per-
sonal, political, racial, religious, or other arbitrary or
extraneous reasons.
11. Officials and employees should be encouraged to
band themselves together according to their own de-
sires to consider professional and scientific matters or
conditions of the services, or to minister to the social
life of the group, or to provide for self-training, and
particularly to exchange information with the publio
employees of other iurisdictions and to cooperate with
them in the nation-wide development of service
standards.
12. The loyal acceptance of the decisions made by
the public, and by their elected representatives, on the
part of the public servants is essential as a condition of
the continued existence of career services * * *. The
right of partisan activity cannot be denied, but must
be so exercised by members of the career service that
newly elected officials will have no reason for doubting
the loyalty of their subordinates, and that the members
of the service may not develop attitudes and mental
habits which make it impossible for them to work effi-
ciently under whatever masters the public may select. g
It is a credit to the Federal service that it
has long given at least partial expression to
many of these principles. Many career services
can now be found within the civilian forces
of the Executive Branch. Some of those
services have reached a high degree of develop-
ment along very progressive lines. The prob-
lem is not one of building a new system of
employment under the Federal Government,
but of correcting deficiencies, closing up gaps,
improving coordmation, and providing stimula-
tion to continued development.
The development of career services has been
worked out most carefully and successfully for
somo of the professional and scientific occupa-
tions, particUlarly those occupations within
the Federal service that are largely confined to
a single bureau or agency. The development
has not made much progress in the professional
occupations scattered out through many bu-
reaus and agencies, and probably never will
until careful attention is given to the individual
characteristics of these occupations by an
adequate central personnel agency.
The great administrative services, such as
the Postal Service, in which professional' quali-
fications are not required of appointees, present
a different type of problem. Positions carrying
salaries of $6,500 to $9,000 per year are within
the merit system in many of these services.
with all or most of the subordinate positions
also under the merit system. In these groups
of positions, open competitive examinations
are seldom or never given for positions above
the lowest grades in each service, and the higher
positions up to and including the highest posi-
tions on a merit basis are, in fact, filled by
promotion. A substitute post office clerk
may rise to the position of Chief Inspector in
the Post Office Department at a salary of
$8,500 per year; an under clerk in some other
department may rise to the position of Ad-
• BeU" Gooernmtnt Per8onnel, Report or the Commission or Inquiry
on Public Service Personnel (New York: McGraw·lIill, 1935), pp. 27-30.
 132
ministrative Assistant to the Secretary at a
salary of $9,000 per year.
These administrative services are now career
services in fact, even though in many cases they
do not extend upwards to the highest positions
that should be nonpolitical. It is questionable,
however, whether in most cases the administra-
tive career services conform to the principles of
a sound career service system. As one Civil
Service Commissioner has remarked, "Our
administrative system has produced many able
administrators; too commonly they have been
fortunate accidents." The career administra-
tive services are not developing as many good
administrators as are needed, and in many cases
they exhibit very unfortunate tendencles be-
cause of that fact. .
Every career service must be constantly on
guard against the dangers of bureaucracy.
Citizens rightly fear the type of bureaucracy
that can arise in an old established career serv-
ice where insufficient attention has been given
to the development of able administrative
leadership. The evils and the immediate causes
of that type of bureaucracy have been expressed
as follows by the Commission of Inquiry on
Public Service Personnel:
* * * The word "bureaucracy" carries several mean-
ings. First, it means a complicated organization so
snarled in red tape and bound by tradition that it can-
not deal in a common sense way even with the smallest
problems. The rules and regulations, the paper work
and records, the precedents, seem to become the whole
purpose of government, and to stand in the way of
action and results. Even more serious is the tendency
for each employee or official to avoid making any de-
cision he can possibly escape by "passing the buck" to
someone else. Every big organization, public or pri-
vate, knows these problems. To a certain extent, the
elements complained of are inherent. There must be
order and system; cach little incident cannot be dealt
with "on its merits," as these may appear to the citizen
who does not realize that his case is personal to him,
but one of many similar cases to the government.
Even some red tape is essential; it is the citizen's guar-
anty of equality-that he will receive the same treat-
ment as any other individual in the same situation.
• The evil manifestations of this kind of bureaucracy
- arise primarily from the kind of personnel we have in
the service, particularly in the top positons. If this
personnel is made up of individuals who never expect
to advance, or have no breadth, or are filling posts
which are too big for them, or are paying no attention
to the job, then this kind of bureaucracy will flourish.l O
The passage just quoted was not written
specifically to apply to the Federal service, and
the deficiencies stressed in it are far from uni-
versally present in the older established admin-
istrative career services of the Federal Govern-
ment. The passage does indicate the dangers to
be avoided in the future and to be corrected
when found under present conditions.
The greatest weakness of most of the present
administrative career services appears to be
their ingrown condition. The intermediate
and higher positions under the merit system
have mostly been filled by promotion, it is
10 Better Government Per30nnel, pp. 67-58.
Personnel Administration
true; but aside from the staffing of central
departmental offices, there appears to have been
excessive reliance upon promotion in direct line
within narrow organization units. Moreover,
when promotion has not been in direct line,
there has frequently been question as to whether
the promotions were in fact on a merit basis.
Promotion in direct line is usually desirable
and sometimes unavoidable; but it does not
develop breadth of experience to the extent
needed. From the point of view of the neces-
sities of the service if the higher positions are
to be competently filled, the broadest fields of
functional specialization should be regarded, so
far as possible, as the units for planning pro-
motion channels. Transfers between units,
sections, divisions, bureaus, and even depart-
ments should be encouraged even at the cost of
some temporary inconvenience when the indi-
viduals who display unusual talent can thereby
be fitted for greater usefulness to the service as
a whole.
The various career services, moreover, should
not be allowed to become closed systems when
they clearly parallel similar work in other
public jurisdictions or in private employment.
Younger employees of unusual ability who can
profit by even greater diversity of experience
than that offered in the Federal service should
be encouraged to undertake other employment
for periods of a few years each. Careful records
should be maintained of the progress of such
employees, and as openings arise to which they
should be drawn back, every effort should be
made to induce them to seek reinstatement.
When feasible, definite cooperative arrange-
ments should be made with other reputable
merit system jurisdictions. Facilities should
be provided for transfer in. both directions with-
out loss of civil service status.
Another major weakness of some of the
present administrative career services is an
excessive reliance upon recruits obtained at too
low a level or, stated otherwise, the reliance
upon a single entrance grade when two or three
might be more appropriate. The administra-
tive grades proper are now filled in some
. services entirely by promotion from the lowest
clerical grades. Those grades in turn are so
low that the recruits at that level under normal
conditions do not provide as many employees
eventually capable of promotion to major posi-
tions as would be desirable.
The administrative grades certainly should
not be reserved exclusively to candidates for
appointment who are college graduates of high
comparative standing in their respective groups,
or to candidates who have had postgraduate
training in business or public administration.
On the other hand, the present procedure is
equally undemocratic in that it militates against
the entrance into the service in many Federal
agencies of the more able college graduates,
particularly those who have undergone thorough
in the Federal Service
and severe postgraduate training in administra-
tion, frequently at public expense and personal
sacrifice. The Federal serVIce will not obtain
its share of such talent if it relies exclusively
upon examinations for the lower clerical grades.
The other opportunities open to those persons
under normal conditions are too attractive,
although they can be recruited at low salary
levels if reasonably assured of early recognition
of such ability as they may demonstrate.
It would seem, therefore, that while the em-
ployees in the lower clerical grades should
continue to be a major source of talent for pro-
motion, attention should also be given to the
recruitment of a sufficient number of young
employees of broader training and background
than IS usually found among the employees
recruited through clerical type examinations.
A promising beginning on the solution of this
problem has been made through the new gen-
eral-purpose examination for recent college
graduates.
Other weaknesses of the present adminis-
trative career services are numerous. Fre-
quently insufficient attention is given to the
initial placement of entrants into the service in
positions to which they are well adapted. Even
though badly placed, they may be overlooked
or may be dismissed without trial on other
work. Review of service during probationary
periods is far from as careful as it should be.
Training programs are now being given con-
siderable attention but need much further
development. Promotion policies are largely
unplanned, and individual promotions are fre-
quently influenced by political intervention,
133
even though the positions are within the merit
system.
These numerous weaknesses indicate the need
for a careful overhauling of personnel practices
throughout the service, and particularly in the ex-
isting administrative career services, that should
lead to the highest nonpolitical positions under
the Federal Government. If needed improve-
ments can be made, it will not be difficult to
fill the highest positions in a very satisfactory
manner through promotion. The advantages
of specialized training in the service will then
be obtained without loss of the values that
result from broad training, varied experience,
and a fresh approach to service problems.
The improved service of personnel adminis-
tration recommended in this study should
supply the leadership that is needed in the
central personnel agency and in the personnel
offices of operating establishments if a broad
improvement in the administration of the public
service is to be achieved.
The service of personnel administration can-
not alone do the job, however. It is the respon-
sibility of the Congress and the Chief Executive,
not only to create an improved service of per-
sonnel administration, but to give it effective
support. Moreover, the Congress and the
Chief Executive have a primary responsibility
for adequate attention to those personnel
matters that cannot be delegated to any service
of personnel administration. In meeting those
responsibilities, they will deserve and should
receive the active mterest and cooperation of
administrative officers, rank-and-file employees,
and the public generally.
FINANCIAL CONTROL AND
ACCOUNTABILITY

by
A. E. BUCK
J
 FINANCIAL CONTROL AND ACCOUNTABILITY
by
A. E. BUCK

•
Contents
Page
Introductory Statement 139
I. Financial Planning-The Budget 141
The Bureau of the Budget-Its Organization and Relation to the Treasury 141
Intimate Connection of the Bureau of the Budget with the Treasury Department 141
Shortcomings of the Bureau of the Budget as Now Organized 142
Reorganization of the Bureau of the Budget 143
Needed Improvements in Aid of Budget-Making 144

II. Current Direction of Spending 147

The Treasury Department and Its Reorganization 147
Proposed Bureau of General Administration 148
Recommended Bureau or Office of Fiscal Control 149
Suggested Bureau or Office of Revenue 150
Bureau or Office of Receipts and Payments Outlined 150
Proposed Bureau or Office of Supply 15]
Financing and Liquidation of Loan Agencies 151
Needed Improvements in Accounting Methods and Procedures 152

III. Current Budgetary Control 155

Methods of Budgetary Control by the President 155
Weakness of the Existing Methods 157
Suggestions Looking toward Effective Budgetary Control 157

IV. Accountability for Financial Acts 159

Organization and Functions of the General Accounting Office 159
Proposals for the Establishment of Accountability 162
General Auditing Office Recommended 162
Joint Congressional Committee on Public Accounts 165

V. Summary of Recommended Cbanges 167

Proposals Concerning the Budget 167
Proposals Relative to Treasury Organization and Procedure 167
Proposals for Establishing Executive Accountability to Congress 168
137
 INTRODUCTORY
•
The working basis of the national fiscal
system is found in certain political and admin-
istrative controls that emanate from the Con-
gress and from the President. Since these two
authorities are mainly independent of each
other under the American scheme of govern-
ment, such controls must be based lar~ely upon
their mutual cooperation. Herein IS to be
found the most serious weakness of the na-
tional fiscal system. Under ordinary circum-
stances, party adherence affords practically
the only unifying force between Congress and
the President. The habit of separation of
these two branches of the Government has
become so firmly fixed, however, that it fre-
quently persists even when both are alined
with the same party. Only under the stress
and strain of major emergencies do the two
branches actually work together.
This situation leads one to question seriously
the adequacy of existing political controls effec-
tively to counteract the pressure that is con-
stantl; being exerted by the special beneficia-
ries 0 governmental spending. This pressure,
if it is to be successfully withstood, must be
met by the full cooperation of the Congress
and the President. In no other way is it pos-
sible to insure the ultimate tapering off of large
public expenditures for emergency purposes and
the increasing of public revenues to bring the
Federal Budget again into balance.
STATEMENT
But a discussion of political controls as related
to national spending is mainly outside the scope
of this study. It is concerned rather with
administrative controls that enable the Presi-
dent to exercise effective financial management.
Such management has at least four main requi-
sites: Financial planning, current direction of
spending, current budgetary control, and ac-
countahIlity for financial acts. Although Con-
gress authorized the President, by the Budget
and Accounting Act of 1921, to prepare the
Budget of the United States Government, it still
competes with him in the formulation of finan-
cial plans. There should be a clearer basis for
cooperation on budgeting, which is not so much
a matter of legislation as of practice. Current
direction of spending and current budgetary
control are essentially executive functions.
Congress should therefore rest the major re-
sponsibility for these functions squarely upon
the President, without hampering restrictions
of one kind or another. But in the end, Con-
gress should demand proper accountability for
financial acts both of the President and of the
administrative officers, and should set up suit-
able machinery and procedure, now practically
lacking, for that purpose.
In the subsequent pages of this study, these
fundamental requisites of financial management
by the President are discussed, and suggestions
are made looking toward their full realization.
139
 I. FIN A N CI ALP LAN N I N G-T H E BUD GET
•
Financial planning serves as the groundwork
of the Budget. More than that, it is in demand
throughout the fiscal year as the most satisfac-
tory means yet devised for ascertaining the
current monetary requirements and for weigh-
ing the importance of the expenditure opera-
tions of the Government. No Executive who
would be a successful public administrator can
afford to be lax in applying the processes of
financial planning.
From a procedural standpoint, fina.ncial plan-
ning involves in the main the preparation of the
Budget and supporting facts, and the voting
of the Budget. The American tendency in
recent years has been decidedly in the direction
of making the Executive responsible for the
preparation of the Budget and for the con-
struction of such long-range programs as might
be needed to support the budgetary plan. This
was one of the main objects of the Budget and
Accounting Act of June 10, 1921. It vested in
the President for the first time the legal author-
ity to prepare and submit a budget to Congress.
The Bureau of the Budget-
Its Organization and Relation to the Treasury
The Budget and Accounting Act crea.ted a
Bureau of the Budget to serve as the staff
agency to the President in the preparation of
the Budget. This Bureau has at its head a
Director and an Assistant Director, both of
whom are appointed by the President to hold
office at his pleasure. The Director is, for all
practical purposes, a member of the President's
Cabinet. If he is a person of ability and strong
personality, he may even overshadow the
Secretary of the Treasury. This has been the
case on at least two occasions since the office
of Director of the Budget was created. Under
such circumstances the administration has, in
effect, two chief financial officers j there is a
duality of positions similar to that in France,
which has been roundly criticized.
Though the duties of the Director of the
Budget relate mainly to the formulation of the
Budget for the President, he has certain limited
powers, not yet fully developed, with regard to
the control of expenditures. He is somewhat
handicapped in exercising these powers, how-
ever, by the fact that authority to prescribe the
accounting procedures of the Government is
placed by law in the General Accounting Office,
which is completely outside his control or that
of the Secretary of the Treasury.
The staff of the Bureau of the Budget con-
sists of about 40 persons, who work mainly
upon the estimates and supporting data. The
estimates of appropriation requirements are fur-
nished by the several departments and estab-
lishments of the Government, and the revenue
estimates are supplied principally by the Treas-
ury Department. The Director of the Budget
and his subordinate officers hold conferences on
the appropriation estimates and revise them
according to the President's instructions based
upon data furnished by the Director. Prior to
these conferences, the estimates are studied by
several budget investigators who are assigned to
examine the needs of the departments and
establishments in the light of their actual oper-
ations. Each department or establishment has
a budget officer who serves as the contact agent
with the Bureau of the Budget.
The relationship of the Bureau of the Budget
to the Treasury Department is anomalous.
Although nominally independent of the Secre-
tary of the Treasury, the Bureau is, as a matter
of law, under the Treasury Department. This
arrangement was the result of a compromise
between the two houses of Congress at the time
the Budget and Accounting Act was approved.
The McCormick bill, which passed the Senate,
placed the Bureau of the Budget in the Treasury
Department, and proposed to make the Secre-
tary of the Treasury into an officer analogous
to the British Chancellor of the Exchequer,
vesting in him responsibility for the formulation
of the Budget. The Good bill, which was
voted by the House, made the Bureau of the
Budget a staff agency of the President and
placed it directly under his office. The con-
ference committee, charged with adjusting the
differences, practically accepted the House
measure, but conceded to the Senate the loca-
tion of the Bureau in the Treasury Department.
Intimate Connection of the
Bureau of the Budget with the Treasury Department
From the standpoint of responsibility, the
Bureau of the Budget has operated since its
creation as a direct agency of the President,
although its work has become more and more
141
 142
an inseparable part of the Treasury perform
ance. Such an intimate relation now exists
between the functions of the Bureau and the
general financial administration of the Treasury
Department that it would be difficult to formu-
late the Budget without an interchange of
information, and even of staff, between the
Treasury proper and the Bureau. This situa-
tion became more apparent after President
Roosevelt appointed Daniel W. Bell, formerly
Commissioner of Accounts and Deposits in the
Treasury Department, to serve as Acting
Director of the Budget. Undoubtedly the.
Bud~et document has been greatly improved
in f()tm and content during the last 2 years by
bringing to bear upon it the broader financial
outlook of the Treasury Department. Budg-
etary control is nominally a function of the
Bureau, but it requires the full cooperation of
the Division of Bookkeeping and Warrants in
the Treasury in order to be at all effective.
Both the preparation and the execution of the
Budget are so closely entwined with Treasury
operations that the Bureau of the Budget
should be made an integral part of the Treasury
Department.
Shortcomings of the
Bureau of the Budget as Now Organized
Aside from its tenuous organizational con-
nection with the Treasury Department, the
Bureau of the Budget has two serious short-
comings: It lacks a strong, broad-gaged staff,
and it has failed to develop some of its im-
portant functions.
The staff of the Bureau was originally as-
sembled by Gen. Charles G. Dawes, who
served as its first Director for about a year.
He was so impressed with the efficiency of Army
personnel and methods that he recruited several
of his chief aides from the Army roster and
applied such Army methods as the coordination
service to the work of the Bureau. Being a man
of vigorous action and strong words, he found
little difficulty in putting the Bureau into the
spotlight of publicity. The directorship then
passed to Gen. Herbert M. Lord, who was not
only imbued with the Army ideals, but who was
also a devotee of economy. During his term of
office, which lasted from the summer of 1922 to
the spring of 1929, he prided himself on keeping
the expenditures of the Bureau-and conse-
quently its staff facilities-at the lowest possible
point. His argument for starving the Bureau
at a time when he should have been encouraging
it to grow into one of the great supervisory
agencies of the Government was substantially
that he could not preach economy to the operat-
ing departments if he did not practice it him-
self. During President Hoover's administra-
tion, the Bureau was under the direction of
Col. J. C. Roop, who made no attempt to ex-
pand or reorganize the staff. By the time Lewis
W. Douglas took the directorship of the Bureau
in March of 1933, the staff had assumed a fixed
Fiscal Management
pattern, and new members were added only
when vacancies occurred. While Mr. Douglas
held this office, economy was again the watch-
word and no additions worthy of note were
made to the Bureau's staff. "'nen he resigned
about the end of August 1934, Daniel W. Bell,
Commissioner of Accounts and Deposits in the
Treasury Department, was appointed by Presi-
dent Roosevelt as Acting Director. Coming
from the permanent service of the Government,
Mr. Bell at once noted the unsatisfactory staffing
of the Bureau and sought to do something
about it through a. gradual realinement of
duties and the addition of certain junior
investigators. .
But the problem of an adequate staff for the
Bureau of the Budget is not so easily solved.
The existing staff has become accustomed to
\ a certain routine of duties and has neither the
inclination nor the time to do anything beyond
this routine. Under such circumstances, it is
not possible to develop the functions of the
Bureau as they should be, even according to
the provisions of present law. Any marked
improvement in the staff, therefore, depends
mainly upon a general reorganization of the
Bureau, both internally and with respect to the
Treasury Department, and a complete realine-
ment of its duties and responsibilities.
In the past, the Bureau of the Budget has
placed its main emphasis upon the prepara-
tion of the Budget for the President. It has
largely failed to develop any supervision over
the execution of the Budget, particularly
supervision embodying administrative control
over expenditures. By reviving the provisions
of the so-called Anti-Deficiency Act of 1906,
the Bureau, ~rting in 1925, sought to establish
quarterly apportionments of appropriations for
the various spending departments and establish-
ments. This scheme, however, lacked a satis-
factory basis both in executive authority and
in accounting technique, and it was not until
temporary authority was granted by Congress
to President Roosevelt under the Economy Act
of March 1933, that the scheme became feasible.
Since then, it has been only partially developed
in spite of the fact that repeated efforts have
been made in this direction.
Continual research and investi~ation into
the processes of administration and mto depart-
mental practices and procedures are necessary
adjuncts of budgetary control. The President
needs in the. Bureau of the Budget a trained
and experienced staff to do this work. The
job of the Bureau is not simply to gather and
compile the estimates, but to follow the day-to-
day operation of the Budget. Departmental
work programs should be studied, and expendi-
ture apportionments should be examined be-
fore approval. Monthly and quarterly reports
should be related to actual performance, econo-
rilles noted, and changes in procedure suggested.
In addition to its other functions, the Bureau
of the Budget is intended to serve as an investi-
gational agency for the President. The act
Financial Control and Accountability
creatj.ng the Bureau specifically authorized it
to conduct a detailed study of the administra-
tive departments and establishments for the
purpose of enabling the President to determine
what changes should be made in the existing
organization and methods, in the regrouping of
services, and in the appropriations for activities.
This investigational service of the Bureau is
practically undeveloped after 15 years. The
Bureau of Efficiency was abolished by an Act
of Congress approved March 3, 1933, mainly
on the grounds that it duplicated work that
the law required the Bureau of the Budget to
do, and its records and files were transferred to
the Bureau of the Budget. Adequate provision
for carrying on this work is still to be made.
This failure to develop investi~ational and
research work is somewhat explamed by the
early practices of the Bureau of the Budget,
when great emphasis was placed on the estab-
lishment of a system of coordinating agencies
(later abolished by President Roosevelt), which
was intended to improve governmental prac-
tice and procedure through general agreements.
In addition, several "clubs" were organized
among Federal employees, such as the One
Per Cent Club, the Correspondence Club, and
the Woodpecker Club, as a means of bringing
about some economies in the operation of
departments and establishments. These clubs
lapsed and were forgotten, however, shortly
after President Hoover took office. The efforts
of the Bureau in establishing coordinating
agencies and clubs, although ins~ired by good
intentions, tended to weaken its mfluence with
the administrative departments and agencies
and to hold it up to ridicule in Congress. If
it had put an equal amount of effort into a
careful investigatIon of the machinery and
methods of the Government, its services would
have been much more valuable, as recent
events have shown, and its standing no doubt
enhanced.
Reorganization of
the Bureau of the Budgp.t
The Bureau of the Budget should be the pivot
of the Treasury organization, preparing the
financial plan of the Government for the
President, and receiving the essential informa-
tion for the current exercise of budgetary con-
trol. Several facts have already been noted
that indicate the desirability of integrating this
Bureau with the Treasury structure. One of
the main arguments against integration-
namely, that the President should have his
own adviser on budgetary matters in the person
of the Director of the Budget-has lost most of
its weight as a result of the experience since
September 1934, when President Roosevelt
named Daniel W. Bell as Acting Director of
the Budget. Mr. Bell was at that time, and
for many years previously, a permanent official
of the Treasury Department. The standard
143
of work maintained by Mr. Bell in the Bureau
of the Budget compares favorably with that of
any of Ilis predecessors; indeed, in some phases,
it is quite. superior. The ordinary channel
through which budgetary matters flow from the
Bureau to the President has come to include
the Secretary of the Treasury, and, as a rule,
the Secretary is present whenever the President
discusses these matters with the Director of
the Budget. Under this arrangement, the
Bureft.u of the Budget has become, for all
practical purposes, a working unit in the
Treasury Department, and the possibility of
rivalry and conflict between the Secretary of
the Treasury and the Director of the Budget
has been reduced to the vanishin~ point.
Through the proper organizatlOn and hand-
ling of the financial administration of the
National Government, it is possible for the
Secretary of the Treasury to assume in the
President's Cabinet something of the im-
portance of the position occupied, for example,
by the British Chancellor of the Exchequer;
but such a position would, in the opinion of the
writer, be impossible of attainment by a bureau
chief, like the Director of the Budget. Since
financial control olver the spending departments
of the Government depends in no small measure
upon the prestige and standing of the con-
trollin~ department, it would seem that all the
authonty, power, and persuasion of a thor-
oughly reorganized Treasury Department is
needed to meet the conditions of the next
few years. The present Bureau of the Budget
does not, of itself, enjoy such prestige and
standing, and it is doubtful that it could
ever acquire them through any scheme of
independent financial organization.
In the reorganization of the Bureau of the
Budget under the Treasury Department, budg-
etary control over expenditures should be
emphasized by establishing a division for that
purpose. Thjs control should be exercised
through a system of apportionments and allot-
ments, which should be geared into the general
accounts maintained by the proposed fiscal con-
trol unit of the Treasury Department, discussed
later in this report. In addition to the esti-
mates and the budgetary control divisions, the
Bureau of the Budget should contain units for
research and investigations and for planning
and coordination. The research and investi-
gational work formerly carried on by the Bureau
of Efficiency has remained practically unexer-
cised since that Bureau was abolished and its
duties and records transferred to the Bureau of
the Budget. It was not intended that this
work should cease, but that it should be con-
tinued through a newer and more appropriate
unit of the Government. A planning and co-
ordination division in the Bureau of the Budget
should perform much of the work that now de-
volves upon the National Emergency Council.
If developed on a broad-gaged basis, this divi-
sion should be of great aid in budgeting.
144
Needed Improvements
in Aid of Budget-Making
Aside from the organizational changes sug-
gested above, budget-making would be greatly
facilitated by a substantial reduction in the
number of appropriation items. Such a step
would improve the exercise of budgetary control
over expenditures and at the same time would
make for departmental economy. Congress
has not followed a uniform scheme in itemizing
appropriations. Some appropriations, running
into millions or even billions of dollars, are made
in lump-sum amounts, whereas others, contain-
ing only a few thousand dollars, are highly de-
tailed. Most of the appropriations, however,
are detailed. It is this minute segregation that
adds scores of pages to the appropriation acts.
In fact, the regular appropriatIOn acts for each
fiscal year usually run around 350 pages in the
Federal statutes,
The itemization of appropriations has gone so
far that it often enables Congress to brush aside
the Executive and to control the administration
directly through detailed specifications in the
granting of money. Frederick A. Cleveland
has admirably summed up the case against this
method of control, as follows:
The best that may be said for the detailed appro-
priations of the past is that they are part of a system
that has operated to prevent administrative action
premised on infidelity and ignorance; that legislative
control over the administration through detailed appro-
priations is a.device adopted for use of.8; political i~s~i­
tution in whIch all the elements essentIal to admlnlS-
trativ~ efficiency are lacking. Given a responsible
government and a real executive, the legislative restric-
tions which go with detailed appropriations are a first
obstacle to efficiency to be removed.!
President Roosevelt recommended in his
Budget message of January 3, 1935, that "Con-
gress establish a special joint com?1i~tee .to ma~e
a detailed study of the appropnatIOn Items m
each regular appropriation bill with a view to
greatly reducing the number of them, consistent
with the proper budgetary and accounting
requirements." Congress has thus far taken no
action in the matter. Perhaps it might be
well for Congress to provide that the President
should submit an "alternative budget" for the
fiscal year 1939, which would show the appro-
priation items in the most desirable form from
the standpoint of the Executive and the
administration.
Another improvement that is needed to
facilitate budget-making is the lapsing of all
unencumbered balances of annual appropria:!;
tions not later than 3 months aft.er the end of
the fiscal year to which they relate. At the
present time, the outstanding balances o~
appropriations must be available, under the"
law, to meet obligations incurred during the
fiscal year for a period of 2 years thereafter.
This requirement, which keeps the appropria-
tion accounts open for 3 years, greatly increases
\
IF. A. Cleveland. "Detailed versus Lump·Fund Appropriations",
a paper prepared for the annual meeting of the Association of Public
Accounting Officers at Chattanooga. JUne 6. 19l3.
Fiscal Management
the difficulties of ascertaining the exact condi-
tion of the Treasury at the close of the fiscal
year. At the same time, it contributes to
mcomplete financial reports and, consequently,
to incomplete information for the PJI,*aration
of the Budget. It should not be . cult to
install in the Treasury Department a central
accounting system that would readily show
all encumbrances a~ainst appropriations; this
would make it pOSSIble to lapse all unencum-
bered balances of annual appropriations at the
end of the fiscal year or immediately thereafter.
The general lines that such an installation
should follow have already been worked out
and applied to the relief appropriations for the
fiscal years 1935 and 1936 under the direction
of E. F. Bartelt, Commissioner of Accounts
and Deposits in the Treasury Department.
This feature will be discussed again in the
course of the present study.
The curtailment of special revenue and
expenditure accounts or funds would also be
of assistance in budgeting. Such accounts or
funds hamper financial management and re-
strict budgetary control. Congress has recently
added a number of special funds to the National
Treasury by earmarking certain receipts for
specific purposes. If this practice continues,
the excellent rule of one fund, the general
fund, for all operating purposes will become a
thing of the past. Congress may well take
action in this regard as it did recently when it
abolished nearly all of the permanent appro-
priations. The arguments are as compelling
in one case as in the other.
An important aid to budgeting was inaugu-
rated by President Roosevelt in the National
Budget for 1936, when annexed budgets were
set up for the major self-supporting or self-
contained units of the Government; namely,
the Post Office Department, the Reconstruction
Finance Corporation, the Tennessee Valley
Authority, and the District of .Columbia. In
the words of the President:
The use of such budgets permits the receipts and
expenditures of each of these units to be clearly and
completely presented in gross figures and in balanced
form, as has not hitherto been done. By following
this method, the net figures for each unit, which may
be either appropriation needs or surplus receipts, are
calculated and then carried to the general budget
summary. Thus the financial requirements of these
units are definitely tied into the general budgetary
plan. The annexed budgets are therefore not in any
sense independent or multiple budgets but simply
integral parts of the Government's general budget. .
The use of annexed budgets may be extended
to other self-contained or self-sustaining agen-
cies of the Government. Corporations, such
as the Inland Waterways Corporation, should
be brought into the Budget on this basis, in-
stead of being left completely outside budgetary
supervision and control.
The policy, inaugurated by President Roose-
velt in 1935, of preparing a resume of the
Budget as adopted by Congress to which fu~l
publicity can be given is commendahle. ThIS
Financial Oontrol and Accountability
resume, showing any modifications or revisions
made by Congress in the Executive's {>roposals,
is an essential step in financial plannmg under
the American form of government. Following
the adjournment of Congress in August 1935 a
"Summation of the 1936 Budget" was prepared
by the Bureau of the Budget and released to
the newspapers on September 30. It carried
a statement by the President relative to busi-
ness and fiscal conditions. It presented revised
revenue and expenditure estimates, reflecting
the effects of changed conditions and the
results of congressional action. This summa-
tion was published in full by several of the
leading newspapers of the country. A second
summation, covering the Budget for 1937, was
issued on September 1, 1936, several weeks
after Congress had adjourned. }j~ven at this
belated date, it was received with a great deal
of public interest. The preparation of this
summation should be continued under legal
requirement, with considerable improvement in
its form and character so as to make it the
kind of statement that will be especially inform.,.
ing to the general public. It should be issued
within 30 days after the adjournment of Con-
gress, and whenever possible before the begin-
ning of the fiscal year to which it relates.
The time element involved in the submission
of the Budget to Congress is an important fea-
ture of budget-making. Under the existing
practice, the President usually sends the Budget
to Congress within a week after the opening of
the annual session on January 3. This means
that the Budget is ready for presentation to
Congress fully 6 months before the opening of
the fiscal year to which it. applies. The esti-
mates, especially those relating to anticipated
145
revenues, are therefore not as accurate as they
would be if they were completed at a later date.
Furthermore, upon the election of a new Presi-
dent, who, under the twentieth amendment,
takes office on January 20, or 17 days after
Congress meets, the Budget, according to pres-
ent usage, would already have been subInltted
to Congress by the outgoing President. From
the standpoint of Executive responsibility for
financial planning, this would be a thoroughly
undeSirable situation. The incoming President
should be given an opportunity to prepare at
least the Budget Message, outlining his finan-
cial policy for the next fiscal year, before pre-
senting the Budget to Congress.
It would seem entirely feasible to arrange for
the submission of the Budget to Congress at a
later date, say, around March 1, as a regular
annual practice. Congress would then have 4
months before the beginning of the fiscal year
in which to enact the necessary appropriations.
It would not be difficult for Congress to devise
rules which would promote the expeditious en-
actment of appropriation bills, so that all such
bills might be disposed of by June 1. An ar-
rangement of this kind would tend to improve
the accuracy of the Budget estimates, would
afford more opportunity for conferences be-
tween the President and the congressional
leaders during the process of budget-making,
and also would avoid the unsatisfactorY situa-
tion that will inevitably arise when a new Presi-
dent is inaugurated. At the same time, this
arrangement would not hamper the work of
the congressional committees on appropriations,
since these committees would have the appro-
priation estimates; as revised by the Bureau of
the Budget, at the time the session opened.
r
II. CURRENT DIRECTION OF SPENDING
•
Once the Budget has been fonnulated and
adopted-steps that constitute a joint responsi-
bility of the President and of the Congress-it
must be executed. The execution of the
Budget is, or should be, essentially a responsi-
bility of the President. In this stage, the cur-
rent direction of spending is a first essential to
successful financial management. Here the
need arises for an up-to-date financial organiza-
tion through which the President can exercise
this direction and can also be fullv infonned on
current receipts from taxes and other sources of
revenue.
The Treasury Department
and Its Reorganization
It is now generally recognized that from the
standpoint of management by the Executive
the financial procedure of the National Govern-
ment is more decentralized and less effective
than is the fiscal machinery of most parlia-
mentary governments, notably that of Great
Britain. The Treasury Department did not
develop along the lines apparently intended by
Alexander Hamilton, its organizer and first
head. He sought to apply the British system
so far as that was possible under the American
Constitution. But instead 6f the Secretary of
the Treasury ultimately reaching a position
comparable to that of the Chancellor of the
Exchequer, he was soon reduced in authority
to the level of the other heads of the adminis-
trative departments. Congress not only as-
sumed the powers of the President and the
Secretary of the Treasury in the preparation of
the Budget, but within a few decades virtually
took away their control ovltl' the execution of
the Budget by detenniningl the details of de-
partmental organization\andby voting itemized
appropriations directly to the administrative
departments and subdivisions~ By this .proc-
ess, the Treasury Department was practICally
reduced, from the pomt of view of budgetary
supervision and control, to a collecting and dis-
bursing agency of the Governmentj maintaining
only such accounts as were necessary to record
these transactions. '.
It was this situation, in part, that the Budget
and Accounting Act of 1921 sought to remedy.
Under this act, two new fiscal agencies were
established, the Bureau of the Budget, already
153155--37----11
discussed, and the General Accounting Office.
The General Accounting Office, which will be
considered more fully in Part IV of this study,
is, from the standpoint of the President, an inde-
pendent establishment of the Government. It
is directed by the Comptroller General, who,
although definitely separated from the Execu-
tive and the administration, is vested with
broad /administrative powers in financial mat-
ters. He is authorized to settle and adjust all
claims either for or against the Government, to
prescribe accounting procedures, and to counter-
sign
.
Issues. \
,
Treasury warrants covering receipts and
When the General Accounting Office was
created, it took over from the Treasury Depart-
ment the functions of the Comptroller of the
Treasury and the six auditors for· the depart-
ments, as well as the personal ledger accounts of
the Division of Bookkeeping and Warrants.
The remainder of the Treasury structure was
untouched.
At the pr~sent time the Treasury Department
collects the major part of the Government's
revenues, such as income and miscellaneous
taxes and customs. It is responsible for the cus-
tody and management of the Government's
funds and the payment of the principal and in-
terest on the national debt. It issues warrants,
with the visa of the Comptroller General, which
permit expenditures to be made from appropria-
tions either directly by the Treasurer of the
United States or through disbursing officers. It r
makes periodic reports on the financial condi-
tion of the Treasury and the status of the
appropriations accounts. It also has certain
functions that are not strictly fiscal, such as the
Public Health Service.)
In addition to the fiscal services of the Treas-
ury Department, each administrative depart-
ment or establishment maintains an accounting
office, just as it did prior to the creation of the
General Accounting Office.2 As a matter of
fact, these departmental accounting offices now
provide the main sources of infonnation required
currently in administering the Budget. They
report to the Bureau of the Budget on depart-
mental expenditures, under Treasury Depart-
ment Circular No. 494, and furnish most of the
data required in the preparation of the Budget.
I The accounts or some departments are not even departmentally
controlled. but are scattered among the operating bureaus and offices.
147
148
They also perform an administrative, or first,
audit of the departmental claims before sub-
mission for payment. On the whole, the audit-
ing work of these offices, as well as the account-
ing work of the Treasury Department, is largely
duplicated by the General Accounting Office.
In view of this situation, there can be little,
if any, doubt that a real need exists for the
centralization of the financial administration of
the Government in the Treasury De'partment.
The organization and functions of this Depart-
ment should be refashioned along the following
general lines:
1. Eliminate from the Treasury Depart-
ment all functions that are extraneous to
financial administration;
2. Make adequate provision for the exer-
cise of genuine budgetary control in the
Treasury Department by integration of the
Bureau of the Budget WIth this Department
and by transfer from the General Accounting
Office of its authority over administrative
accounting;
3. Regroup the internal organizational
parts of the Treasury Department to form
more logical and workable administrative
units and thus reduce the existiri~ scattered
fiscal responsibility to more defimte lines of
authority;(
4. Create a fiscal control bureau or office
in the Treasury Department to exer:cise the
transferred authority of the General Ac-
counting Office to settle all claims and de-
mands either for or against the United
States, and to maintain a central accounting
system for the Government;
5. Establish through the fiscal control
bureau or office of the Treasury Department
a system of checks over revenue accruals and
collections that is independent of the existing
Internal Revenue and Customs Bureaus;
6. Extend the present system for the pur-
chasing and warehousing of commodities and
equipment used by the Government; find
7. Set up a suitable office or unit under the
Treasury Department for the financing and
liquidation of the emergency loan ~gencies.
Certain steps were taken along these lines
when President Roosevelt, by the Executive
order of June 10, 1933, made several changes
in the Treasury Department. Two of these
changes are worthy of mention in this connec-
tion. \One was the creation of a Division of
Disbursement, charged with the payment of
all claims against the Governmen~j, the other
was the establishment of a Procurement Divi-
sion, intended to develop into a central pur-
chasing agency for the Government. ') The
Division of Disbursement absorbed the dis-
bursing officers-numbering more than 2,000
-of all departments and establishments except
the Army, the Navy, the Engineering Corps,
and the Panama Canal.
To carry into effect the broad plan of Treas-
ury reorganization outlined above, it would be
Fiscal ~lI1anagement
advisable to divorce from the Treasury Depart-
ment the Public Health Service, the Comp-
troller of the Currency, and part or all of the
functions of the United States Coast Guard,
particularly those pertaining to lifesaving, and
to locate these activities in other administrative
departments or establishments. The remaining
functions of the Treasury, with some others of a
fiscal character added, should then be set up
under a few major bureaus or offices, grouped
according to effective and economical lines of
procedure and control. In addition to the
Bureau of the Budget,' already discussed, the
Treasury Department should have a bureau of
general administration and four other major
bureaus or offices, concerned with fiscal control,
revenue, receipts and payments, and supply.
Provision should also be made for a Treasury
unit or office that would concern itself with the
borrowing activities and the ultimate liquida-
tion of the various loan agencies of the Govern-
ment that have been set up under emergency leg-
islation. A Treasury organization constructed
along these lines would present an orderly
approach to the whole problem of financial
administration, without which the President
has been, and will continue to be, greatly
handicapped in directing the Government's
finances.
Each of the proposed bureaus or offices of the
Treasury Department should be under the im-
mediate management of a director or commis-
sioner, who would be a permanent service
officer of the Government. In the division and
section staffs of these bureaus or offices, the se-
called political appointees, such as the com-
missioners and collectors of internal revenue and
of customs, the comptrollers of customs, the
Register and the Assistant Register, the Treas-
urer and the Assistant Treasurer, and the
Director of the Mint, should be eliminated or
replaced by permanent service officers.
The heads of the proposed bureaus or offices,
dealing mainly with fiscal matters, would be-
come in effect the assistant secretaries of the
Treasury Department. They would constitute
at all times an advisory staff to the Secretary
and the Under Secretary of the Treasury, and
through them to the President, on all important
phases of financial management in the Govern-
ment~ This might very well be one of the
strongest features of the proposed Treasury
organization, constituting the groundwork upon
which would be erected the main part of the
structure to provide for Presidential direction
and supervision of the national administration.
Proposed Bureau of General Administration
The activities of the Treasury Department
that might properly belong under a Bureau of
General Administration are now widely/ scat-
tered within that Department. Under the
Administrative Assistant to the Secretary there
are certain clerical functions, such as files,
correspondence, printing, and departmental
Financial Control and Accountability
personnel. An assistant to the Secretary
conducts the departmental matters that have
to do with public relations. The statisticql
and tax investigational work of the Treasury
is carried on mainly by the Division of Research
and Statistics. Besides the Secret Service
Division, there are several inspectional or
intelligence services in the Treasury Depart-
ment, such as those connected with customs,
liquor law enforcement, narcotics control, and
miscellaneous taxes. Finally, the legal work
of the Office of the General Counsel, as recent-
ly reorganized, is in the nature of a general
administrative service for the Department.
The need for consolidating and systematizing
these services of general administration in the
Treasury Department should not be over-
looked. A move in this direction was made by
the Treasury under the recent proposal to
establish one general agency service or intelli-
gence unit in the Department. A bill embody-
ing this proposal passed the House on May 6,
1936, and was subsequently reported favorably
by the Senate Finance Committee, but Con-
gress adjourned before it came to a vote in the
Senate.
Recommended Bureau or
Office of Fiscal Control
The National Government is sorely in need
of an integrated accounting structure that will
produce information quickly and accurately
for purposes of Executive direction and budget-
ary control. \ Such information is essentially
an administrative matter and should \be de-
veloped in the Treasury Department; but it
seems quite unlikely that it will be developed
there so 10ng"Q,s the power to prescribe account-
ing procedl!!'~s remains vested in the General
Accounting Office) Neither in theory nor in
practice should the auditing Iluthority of the
Government maintain the general accounts,
which are the main vehicle of financial control,
or prescribe the administrative accounting pro-
cedure. 'The power of the Comptroller General
to "prescribe the forms, systems, and procedure
for administrative appropriation and fund ac-
counting in the several departments and estab-
lishments", provided unde:r:rsection 309 of the
Budget and Accounting Acu, should be made a
duty of the proposed Bureau or Office of Fiscal
Control. ) This authority is 'fundamental to
reporting and to administrative-management
and should not be vested in an officer who is
practically inaependent of the President.
The Bureau or Office of Fiscal Control should
stand, as far as possible, in a neutral position
in the Treasury; that is, it should not be in-
volved directly in the operations that have to
do with the assessment, collection, custody,
and disbursement of public moneys. These
operations should be handled by the other
bureaus or offices of the Treasury Department,
as will be suggested. later. The Bureau or
Office of Fiscal Control should be simply the
149
general accounting and financial control or-
ganization of the Government. It should be
given authority to set up and maintain a mod-
ern accounting system, covering all receipts,
expenditures, supplies, properties, and securi-
ties of the United States. It should also exer-
cise the authority now vested in the General
Accounting Office to settle all claims and de-
mands either for or against the Government.
There should be developed in a suitable unit
of the proposed Bureau or Office of Fiscal
Control a system of central accounts of the ac-
crual type. This system should cover revenues
and collections, appropriations and apportion-
ments, encumbrances and actual expenditures,
funds and special accounts, and should produce
promptly all the necessary statements for
executive and administrative uses. It should
be built up on the basis of centralized manage-
ment and collation of information by the
Treasury, but in its actual operation the system
should be decentralized, using suitable depart-
mental and field offices for the detailed accounts
with speedy and prompt reporting of summary
results to the Treasury. In this way reports
may be made available for Presidential use at
almost any time and within a few days after
the actual period covered by the accounts.
That such procedure is workable has been amply
demonstrated by the accounting methods re-
cently developed by the Commissioner of Ac-
counts and Dep()sits under the emergency relief
appropriations of 1935 and 1936. Once this
system of central accounting has been estab-
lished, it would eliminate the duplication of
accountin~ now existing in the Division of
Bookkeepmg and Warrants, the Division of
Disbursement, the Bureau of Customs, the
Bureau of Internal Revenue, the Treasurer's
Office, and the Public Debt Service of the
Treasury Department, and in the Accounting
and Bookkeeping Division of the General
Accounting Office.
An appropriate unit should be set up in the
proposed Bureau or Office of Fiscal Control
which would receive copies of the asssesment
lists of internal revenue, principally of income
taxes, so that an independent check may he
established on the accrued revenue from such
taxes. This unit should also verify the assess-
ment of duties and the allowance of drawbacks
made by" the several collectors of customs, now
a functIOn of the comptrollers of customs. It
should likewise establish suitable checks over
departmental and miscellaneous revenues, which
are largely lacking at the present time.
There has long been a need for revenue con-
trols that would operate independently of the
two bureaus-the Bureau of Internal Revenue
and the Bureau of Customs-that gather the
bull\: of the Government's taxes and other reve-
nues. At present, the principal accounting
checks over the major sources of national reve-
nue are those exercised internally by these
bureaus. It is believed that accounting checks
are essential to secure the maximum control by
150
the Secretary of the Treasury over the returns
from the tax laws now in force, but that such
checks are a function that properly belongs to
the fiscal control organization of the Treasury
Department rather than to the bureaus actually
making the assessment and collection of the
taxes.
The administrative examination of all ex-
penditure vouchers and claims should be con-
ducted under the direction of a unit of the
Bureau or Office of Fiscal Control. This exam-
ination would constitute a preaudit, that is, an
audit before payment, and would be the ac-
cepted method of establishing control over the
payment of all claims. Following settlement,
these claims would be reviewable by a legislative
auditor, an agent of Congress, to ascertain if the
preaudit had been properly made and if the
claims were regular under the existing law.
Any exceptions or irregularities noted by this
auditor that could not be explained or rectified
by the administrative agencies concerned or by
the Treasury Department would be promptly
reported to Congress for the attention of a
special joint committee, which would recom·
mend suitable action. The le~slative audit will
be discussed in Part IV of this study.
The proposed fiscal control organization
should have a well-staffed unit to make a con-
tinuous study of the accounting methods in the
various departments and establishments and
in the field offices of the Treasury Department.
This unit should devise improved accounting
and reporting procedures and should see that
they are properly installed. The develop-
ment of cost accounting in the business agencies
of the Government should also be one of its
functions.
Suggested Bureau or Office of Revenue
A regrouping of the major revenue-producing
agencies of the Government within a single
bureau or office of the Treasury Department
has already been recommended as being highly
advisable from the viewpoint both of economi·
cal and effective administration and of proper
handling of the detailed tax functions. It has
also been proposed that in this reorganization
the collection of the moneys taken in from the
various taxes and the administrative audit of
the collectors' accounts should be made by
other offices or bureaus of the Treasury De-
partment, in order to correct the present prac-
tice whereby the tax-assessing bureaus are
their own collectors and auditors. Since the
Bureau of Internal Revenue has grown very
large and at some points rather unwieldy, it has
been suggested that its work might be more
satisfactorily managed if separated into three
divisions, namely, income tax, miscellaneous
tax, and alcohol tax. As a matter of fact, the
work of this Bureau has already separated
naturally along these lines. By the integration
of the revenue-producing agencies, there would
also result the opportunity of combining to a
Fiscal Jt;lanagement
large extent the general administrative services
of the Bureau of Internal Revenue and the
Bureau of Customs.
Several countries have found by long experi.
ence that their revenue systems work best when
the assessment and the collection of taxes are
in different hands, so that one set of officials
acts as a check on the other. In sharp contrast
with these systems is the procedure under which
customs and internal revenue are collected in
the United States; here the same officers and
staffs generally have charge both of the assess-
ment and of the collection of these taxes. This
is literally true of customs, and, for all practical
purposes, of internal revenue. The collectors
of customs have under their personal super-
vision both the assessment of the duties and the
actual collection of the cash or checks in pay-
ment thereof. In the case of internal revenue,
more particularly of income taxes, there is an
apparent separation of assessment and collec·
tIOn, though not a very satisfactory one. The
collectors of internal revenue receive the income-
tax returns with checks attached; their cashiers
list the returns, detach the checks, and deposit
them to the account of the Treasurer; where-
upon the smaller returns (under $5,000 gross
income) are audited and filed and the larger
returns are sent to Washington where they are
audited by the central staff of the Bureau of
Internal Revenue. The assessment lists of
the larger returns are then subjected to revision
according to the findings of the central staff.
To this extent, the assessment of the income
taxes may be said to be divorced from their
actual collection.
Under this general scheme of assessment and
collection as applied to customs and to the
bulk of internal revenue, it is possible for tax
agents of the Government to be approached
and perhaps corrupted by unscrupulous tax-
payers, since the latter have to deal with only
one set of agents instead of with two. Further·
more, this scheme adds to the complexities of
auditing the operations of these agents, since
the records do not usually show assessment and
collection as separate steps when performed by
the same individuals. To remedy this situa-
tion, it is suggested that the actual receipt of
checks and currency in payment of taxes in the
offices both of the collectors of customs and of
the collectors of internal revenue should be
placed in the hands of cashiers responsible to the
proposed Bureau or Office of Receipts and Pay-
ments. It may also be pointed out that an
effective internal check is also derived through
the ability of the Bureau or Office of Fiscal
Control to check assessments and collections
from independent sources.
Bureau or Office of Receipts and Payments Outlined
In the evolution of Treasury organization
during the past century or more, the distinction
originally drawn between financial control, on
the one hand, and receipt, custody, and dis-
Financial Oontrol and Accountability
bursement, on the other, has been almost
completely lost. In Hamilton's organization
of the Treasury Department, there was a
Treasurer whose duties comprehended the
receipt, custody, and disbursement of public
moneys, whereas financial control was vested in
an Auditor whose decisions were subject to
review by a Comptroller. But as the Treas-
ury's functions expanded this line of demarca-
tion was gradually oonfused, so that today it
seems to have been generally forgotten that
such a distinction once existed in the Depart-
ment. This confusion has resulted in the
gradual whittling away of the Treasurer's
original duties until now he is little more than
the official custodian of the public moneys
that are held in the various governmental
deposi taries.
It is proposed to establish a Bureau or Office
of Receipts and Payments, with which will be
associated the Treasurer's Office, the collection
of major taxes, the disbursement of Govern-
ment moneys, and, in addition, such related
functions as the Mint Service and the Public
Debt Service. The Treasurer's Office should
carry on much as it does now, with a revision
of its accounting procedure providing simply
for a cash record of receipts and disbursements.
A collections section should supervise the
cashiers under the collectors of customs and of
internal revenue. The Division of Disburse-
ment, now operating under the Commissioner
of Accounts and Deposits, should be transferred
to this organization. The Mint Service, be-
cause of its close connection with the Treas-
urer's Office through the issuance of metallic
currency, should be included i and likewise the
existing Public Debt Service. Thus there
would be constituted in the Treasury Depart-
ment a major bureau or office concerned
chiefly with the receipt, custody, and disburse-
ment of public funds, whereas accounting con-
trol over these funds would be exercised through
a separate organization-the Bureau or Office
of FIscal Control. Such an arrangement would
again establish the framework for logical lines
of financial control and for internal checks
that ha.ve been largely lacking for many yea.rs.
Proposed Bureau or Office of Supply
The steps taken under the Executive order
of June 10, 1933, in the establishment of a
Procurement Division to regulate the purchas-
ing and warehousing of supplies and equipment
for the use of the Government has proved to
be a move in the right direction. It is now
proposed to extend and strengthen this function
by setting up a Bureau or Office of Supply
in the Treasury Department. This organiza-
tion should have a Procurement Division
which would perform the operations now
carried on largely by the supply unit of the
existing Procurement Division. The public
works unit, lately called the buildings unit, of
this Division might be transferred to a suitable
151
place in one of the other administrative depart-
ments, although there is a reasonable argument
for retaining the building repairs function of
this unit under the Procurement Division, since
such work may be carried on along with the
supply function. But the supervision of new
construction, which is one of the principal
functions of the unit, would seem to have little
connection with procurement work. Hence
this function might be placed to advantage
elsewhere.
It is suggested also that the Bureau of
Engraving and Printing should be placed under
the Bureau or Office of Supply. As now
functioning, it is essentially a supply service
for the Government as a whole. It does the
engraving and printing not only of paper
money, bonds, revenue stamps, and so forth
for the Treasury Department but also the
stamps for the Post Office Department and
such stamps and engraved paper as the other
departments may need.
Finally, it is suggested that the now inde-
pendent Government Printing Office might
well be placed under the Bureau or Office of
Supply. This would associate it with the other
supply services of the Govern~ent. Since this
Office now has virtually a monopoly of the
Government's printing, it should be placed
administratively where the maximum economy
of operation will result, and the various depart-
ments and establishments of the Government
should be given the full benefit of this economy
in their printing bills.
Financing and Liquidation
of Loan Agencies
The establishment since 1932 of a number of
corporations and agencies empowered to make
loans to business, industry, and the general
public has created a problem in the Treasury
Department with respect to the financin~ of the
loans which these corporations and agenCies may
want to make from time to time. As a matter
of financial policy! these corporations and agen-
cies should not oe permitted individually to
issue securities to raise funds but should all
obtain their funds through the regular channels
of Treasury financing. The present procedure
has, at times, placed a considerable burden
upon the Treasury, so much so that within
recent months an Interdepartmental Loan Com-
mittee has been set up under the chairmanship
of the Secretary of the Treasury to handle the
financing of the various loan a~encies.
Since lending by these agenCies may continue
for some time and will be followed by a long
period of liquidation, it would seem wise to
mclude in any plan for the reorganization of the
Treasury Department a unit to deal with the
financing and liquidation of emergency loan
agencies. This unit might be placed under the
direction of an administrative officer, who
would also be the secretary" to a Committee on
the Financing and Liquidation of Loan Agen-
152
cies. This committee, acting under the pro-
visions of law, would make all decisions with
respect to the problems of financing and liqui-
dation, which would then be carried out either
by the agency concerned or by the Treasury.
The Committee might properly consist of the
Secretary of the Treasury, or the Under Sec-
retary of the Treasury acting in place of the
Secretary, the General Counsel, the Director of
the Budget, the head of the Bureau or Office of
Fiscal Control, and a responsible officer of the
loan agency concerned.
Needed Improvements in
Accounting Methods and Procedures
Equal in importance to the reorganization of
the Treasury Department, as outlined above, is
the urgent need for a thoroughly up-to-date
central accounting system. The present ac-
counting system of the Government is badly
scattered and presents a rather incongruous
mixture of antique and modern practices.
Essential parts of the system are now found in
the Treasury Department, divided among three
or four important Treasury units, in the General
Accounting Office, and in the various operating
bureaus, departments, and establishments. At
the same time, the warrant procedure that datf':s
back to Alexander Hamilton's day pursues its
plodding way alongside the latest machine
bookkeeping. Financial reporting from the
various accounts is far from being systematized,
is generally lacking in telling information for
administrative purposes, and is often delayed
beyond the point of any practical value.
Although the Budget and Accounting Act of
1921 had as one of its main objects the improve-
ment of the Government's accounting system,
very little of real and lasting value has as yet
resulted. The Comptroller General was vested
with authority under this act to prescribe a
system of administrative appropriation and
fund accounting in the severa) departments
and establishments. Fifteen years have since
elapsed, and still no comprehensive and ade-
quate system of general accounts has been
developed by the Comptroller General's office.
During this period, to be sure, this Office has
prescribed various systems of accounts in
scattered bureaus. But these accounts are
neither complete nor, what is equally important,
are they correlated and tied mto the general
accounts of the Government, which by section
10 of the act of July 31, 1894, are maintained
in the Treasury Department. Consequently,
prompt and detailed information for financial
management by the President cannot be pro-
duced. Indeed, it is virtually impossible to get
out timely general reports on the financial
condition of the Government.
The authority which the Comptroller General
has exercised over departmental accounting pro-
cedures has, in many cases, improved the ac-
counts in the departments and establishments.
But these procedures have continually stressed
Fiscal Management
the bringing of accounting infonnation into the
General Accounting Office, with little considera-
tion for the infonnational needs of the Bureau of
the Budget, of the Treasury Department, and
ultimately of the President. The tendency,
therefore, has been to deprive the Executive of
adequate accounting machinery, and even au-
thority to detennine this important instru-
ment of financial direction. Because of the lack
of interest in administration, little or no effort
has been made, for example, toward the develop-
ment of unit measurements and cost accounts.
It is very doubtful if the Congress intended that
the accounting provisions of the 1921 act should
work in this way, since the outcome is inconsis-
tent with executive responsibility and efficient
administration.
The original accounting system of the Govern-
ment was designed to concentrate all general
accounting work in the Treasury Department,
on the theory that accounting was a necessary
instrument of administrative and financial
control. This system provided that no payment
of public moneys should be made until a claim
or an account therefor h8.d been approved and
certified by an accounting officer of the Treasury
Department. Though this procedure was soon
departed from, through the establishment of
departmental accountants, the act of 1817
sought to return to it. This act carried for the
first time the provision that all claims and de-
mands against the United States and all accounts
in which the United States waSlinterested, either
as a debtor or as a creditor, must be adjusted in
the Treasury Department-a power transferred
to the General Accounting Office under the
act of 1921.
Under the Dockery Act of 1894, the six
auditors in the Treasury Department received
all claims and accounts from the administra-
tive or departmental officers. These officers
approved or disapproved such claims and ac-
counts in whole or in part and added evidence
or comments thereon for the information of the
auditors; whereupon the auditors examined the
accounts and vouchers and certified their
findings to the Secretary of the Treasury.
Their certificates were final and conclusive
upon the departments, subject, however, to
appeals to the Comptroller of the Treasury by
the claimant or by the head of the department
concerned, and subject, further, to the power
of the Secretary of the Treasury to direct a
reexamination (but not a revision) of the ac-
counts and claims. When an account or claim
had been certified by an auditor, it passed to
the bookkeeper of the Secretary of the Treasury,
then through the Comptroller's office to the
Treasurer, and finally back to the auditor, with
the amount and date of payment noted on it.
This completed the accounting cycle. But this
system of accounting, developed under the
Dockery Act, was vitally affected by the pro- ~
visions of the Budget and Accounting Act of I
1921, which transferred the personal ledger
accounts from the Division of Bookkeeping and
Financial Oontrol and Accountability
Warrants of the Treasury to the General Ac-
counting Office. Since this Office then discon-
tinued the reporting of audited expenditures to
the Treasury Department, the change resulted
in eliminating from the appropriation ledgers
kept in the Division of Bookkeeping and War-
rants the information on audited expenditures
under each appropriation.
The time is ripe for a return to the basic
notion that served as the groundwork for the
original accounting system of the Government;
There should now be installed in the Treasury
Department a modern system of general ac-
counting and reporting that would produce
accurate information quickly and easily con-
cerning expenditure obligations, appropriation
and apportionment balances, revenue estimates
153
and accruals, actual collections, and cash dis-
bursements and receipts. Not only should
the accounting methods be standardized
throughout the governmental agencies, but
there should be a complete revamping of the
accounting procedure which would enable the
Treasury Department to secure reliable infor-
mation at a moment's notice on the status of
all revenues and expenditures of the Govern-
ment. There is abundant evidence that these
accounting improvements are greatly needed,
and that they can now be properly made. The
system recently developed by the Treasury
Department in accounting for funds allocated to
the several departments and establishments
under the Emergency Relief Acts of 1935 and
1936 affords an excellent example.
/
 III. CURRENT BUDGETARY CONTROL
•
Current budgetary control is, or should be, a
responsibility of the President, although he may
delegate to fiscal officers under his direction the
a.uthority to exercise such control. This re-
sponsibility does not now rest squarely upon
the President, because of the improper distri-
bution of powers in the present system of
financial administration.
In the first place, Congress makes appropria-
tions directly to the spending agencies of the
Government. This procedure reverses that
normalll followed by parliamentary govern-
ments, ,under which these agencies must come
to the executive for a release of the appropria-
tions before making expenditures. \ It compels
the President to treat with the spending agen-
cies in order to persuade them to schedule the
expenditure of their appropriations over the
months or quarters of the fiscal year, setting up,
if possible, a small reserve which may not be
expended. Under this scheme, current budget-
ary control is little more than a matter of
persuasion. Not only is this so, but Congress
has greatly strengthened the hand of bureau-
cracy in the several spending agencies by
making detailed appropriations and attaching
thereto many stipulations regarding the pur-
poses of expenditure. Although such appro-
priations unnecessarily restrict administrative
action, the bureau chiefs have preferred to be
thus hampered by Congress in making their
expenditures rather than submit to an effective
system of budgetary control by the President.
This situation does not seem to have sufficiently
impressed congressional leaders to cause them
to abandon, as they should, detailed appropria-
tions and vote only major items. Of course, this
would require the establishment of strict execu-
tive control over the spending of all appro-
priations, a step which the bureau chiefs have
discouraged and which Con~ress has been
unwilling to grant to the PreSIdent, except as
a temporary measure under recent emergency
legislation. But with the establishment of
Executive accountability, as recommended in
Part IV, Congress should find it advantageous
to make the appropriations in lump amounts,
subject to Executive release and direction in
theIr expenditure.
In the second place, Congress has made it
difficult for the President to supervise the ex-
penditure of appropriations by vesting certain
153155--37----12
powers relating to c'lrrent control in the General
Accounting Office, Which is completely outside
the President's administrative jurisdiction:)
This Office, by virtue of its authority to settle alI
claims, is in effect the final arbiter in any dis-
putes that may arise in matters affecting the
expenditure of appropriations. It is aided in
the exercise of this authority by the provision
of law which gives it power to prescribe the
procedures of administrative accounting in the
various spending agencies. Any changes in
departmental accounting procedure that the
Treasury Department or the Bureau of the
Budget may desire on behalf of the President
and in the interest of budgetary control must
therefore run the gauntlet set up by the General
Accounting Office before it can become effective.
As will be noted later, this is an improper
practice.
Methods of Budgetary Control
by the President
The foregoing handicaps, springing largely
from a mistaken theory, tend to confine within
rather narrow limits the powers of the President
in the exercise of current budgetary control.
Within such limits, however, the President haa
chosen to act under recent emergency legislation
and has made some pro~ress:--,at least, to the
extent of clearly indicatmg t~ ,great need for
this control as a permanent feature of the
Government's financial procedure.l
Under the provisions of the so-dalled Econ-
omy Act of March 3, 1933, President Roosevelt
issued Executive Order No. 6166 of June 10,
1933, which provided among other things that
the functions (sec. 16) [of making, waiving,
and modifying apportionments of appropria-
tions are transferred to the Director of the
Bureau of the Budget. j Prior to this time,
these functions had been vested in the heads of
the various departments and establishments-
the spending agencies-under the Anti-Defi-
ciency Act of February 27, 1906. This act
provided that-
All appropriations made for contingent expenses or
other general purposes, except appropriations made in
fulfillment of contract obligations expressly authorized
by law, or for objects required or authorized by law
without reference to the amounts annually appro-
priated therefor shall, on or before the beginning of each
fiscal year, be 80 apportioned by monthly or other allot-
155
156
menta as to prevent expenditures in one portion of the
year which may necessitate deficiency or additional
appropriations to complete the service of the fiscal year
for which said appropriations are made; and all such
apportionments shall be adhered to and shall not be
waived or modified except upon the happening of some
extraordinary emergency or unusual circumstance which
could not be anticipated at the time of making such
apportionment * * * and in case said apportion-
ments are waived or modified as herein provided, the
same shall be waived or modified in writing by the head
of such executive department or other Government
establishment having control of the expenditure, and the
reasons therefor shall be fully set forth in each particular
case and communicated to Congress in connection with
estimates for any additional appropriations required on
account thereof.
An added provision imposed a penalty for the
violation of this act under which the guilty per-
son was to be "summarily removed from office"
and might be punished by "a fine of not less
than $lOO or by imprisonment for not less than
1 month." Although spoken of in most
laudatory terms by congressional leaders at the
time of its passage, this act was not regarded
seriously by the spending agencies of the
Government, and the reports submitted to
Congress under it were of a perfunctory nature;
furthermore, the prescribed penalty was never
invoked in any case.
Shortly after the Bureau of the Budget was
established in 1921, the Director of the Budget
issued a circular calling the attention of the de-
partmental heads to the provisions of the Anti-
Deficiency Act and requesting that reports of
the apportionments of appropriations should be
sent to the Bureau as soon as the apportion-
ments had been made. Forms were provided
by the Bureau for these reports and for any sub-
sequent waivers or modifications. The Direc-
tor of the Budget also recommended the setting
aside of a small reserve from the appropriations
for each spending agency. These reserves were
not to be expended by the Bureau chiefs with-
out specific authorization by the head of the
agency, the idea being to reduce the appropria-
tions, if possible, by the amount of the reserves.
This procedure failed to produce satisfactory
results, since the Bureau of the Budget was
without legal authority to enforce its regula-
tions. It could only exert pressure on the
spending agencies indirectly through its power
to review and revise their estimates. Not until
the issuance of the Executive order of June 10,
1933, was it possible for the Director of the
Budget to take part in the scheme of apportion-
ing and allotting the appropriations.
On July 27, 1933, President Roosevelt issued
Executive Order No. 6226, supplementing No.
6166, of June 10, and providing for current en-
cumbrance reports from the various spending
agencies. This order provided that budgetary
accounts relating to the apportionment and
obligation of appropriations would be maintained
on the books of the Treasury Department, and
that the heads of the several spending agencies
would furnish the Treasury with the necessary
reports to set up this information on the books
and to keep it current. The Secretary of the
Fiscal Management
Treasury was then required to furnish the
Director of the Budget with reports on the obli-
gation status of all apportionments and ap-
propriations. Treasury Department Circular
No. 494 of August 5, 1933, with later amend-
ments, provided the forms and instructions for
reporting the apportionments of appropriations
on a monthly basis, with subsequent obligations
and modifications. It was hoped by this pro-
cedure to control the monthly rate of expendi-
ture from appropriations so that deficiencies, at
least, might be avoided.
Within a few months, it became apparent
that the so-called emergency expenditures of
the Government were not being properly con-
trolled from a budgetary standpoint. Hence,
on January 3, 1934, President Roosevelt issued
Executive Order No. 6548, designed to establish
budgetary control over these expenditures.
Immediately this order met with strong pro-
tests from administrative officers, the principal
objection being that the proposed procedure
would greatly hamper and delay expenditures
being made from the appropriations for emer-
gency purposes. On January 6, the President
therefore issued Order No. 6550, revoking No.
6548 and providing merely for weekly reports
of all obligations incurred by the several spend-
ing agencies. Experience showed that this
second order was an ineil·ective compromise.
About a year and a half later the problem of
controlling the emergency- expenditures was
again approached. This tlIlle President Roose-
velt issued three Executive Orders, No. 7126 of
August 5, 1935, No. 7150 of August 19, 1935,
and No. 7174 of September 4, 1935. The first
of these orders applied to 7 emergency agencies,
the second to 6, and the third to 7, a total of 20
such agencies. Included in tIns group of
agencies were the Federal Home Loan Bank
Board, the Home Owners' Loan Corporation,
the Federal Savings and Loan System, the
Federal Savings and Loan Insurance Corpora-
tidn, the Federal Housing Administration, the
Farm Credit Administration, the :Federal Farm
Mortgage Corporation, the Federal Deposit
Insurance Oorporation, the Federal Surplus
Relief Oorporation, the Export-Import Bank of
Washington, the Second Export-Import Bank
of Washington, the Reconstruction Finance
Corporation, the Electric Home and Farm
Authority, the Agricultural Adjustment Admin-
istration, the Commodity Credit Corporation,
the Federal Coordinator of Transportation, the
Federal Emergency Administration of Public
Works, the Fede,ral Emergency Relief Adminis-
tration, the National Recovery Administration,
and the Tennessee Valley Authority. The
orders provided, in brief, that these 20 agencies
should each submit estimates of administrative
expenses to the Director of the Budget for his
approval prior to incurring any obligations for
such expenses. The Director was instructed to
apportion these expenses by monthly amounts
so as to prevent expenditures that might neces-
sitate additional funds. His apportionments /
 Financial Control and Accountability
were to be adhered to unless unforeseen circum-
stances required them to be modified, in which
case any modifications would have his approval.
It is understood that the agencies covered by
these three Executive orders submitted estI-
mates to the Bureau of the Budget for the fiscal
year 1936 aggregating $136,000,000. The
Director of the Budget, after examination,
reduced these estimates by $17,700,000, and in
addition set up administrative reserves of
$2,900,000 within the amounts approved. With
two exceptions, no changes were made in the
original amounts approved and in the reserves
set up. The net savings due to these orders
was estimated at $18,500,000.
On June 23, 1936, President Roosevelt issued
a request to the heads of the various spending
agencies of the Government to set up "sub-
stantial" reserves in their apportionments of
the 1937 appropriations, as called for by
Treasury Department Circular No. 494, "for
the purpose not only of effecting savings in
appropriations where they can be made without
detriment to the service, but to meet unforeseen
needs that may arise during the 1937 fiscal year
and thus provide for them without the necessity
of supplemental appropriations." As a result
of this request, the Bureau of the Budget made
a careful examination of the apportionments of
appropriations and in many cases returned the
apportionment schedules to the spending agen-
CIes with the suggestion that increased reserves
should be set aside. '1'he total of reserves
set up in the 1937 appropriations was stated as
being approximately $30,000,000.
Some other controls of a budgetary nature
have been attempted. As an emergency meas-
ure, Congress in 1933 gave President Roosevelt
broad authority to deal with departmental per-
sonnel in bringing about pay-roll economies.
This authority, exercised largely through the
Bureau of the Budget, was, however, of a
temporary character, and the results attained
were of no lasting value. The transfer of
employees whose salaries are paid from emer-
gency moneys is regulated by Executive Order
No. 7070 of June 12, 1935. This order provides
that all requests for the transfer of such em-
ployees at an increase of salary should be
submitted to the President through the Director
of the Budget.
Weakness of the Existing Methods
On the whole the existing methods through
which the President exercises current budgetary
control are exceedingly weak. They are ham-
pered by congressional restrictions, curtailed
by confused organization and inadequate ac-
cOlmting procedure, and impeded by a left-
handed relationship between the Bureau of the
Budget and the Treasury Department. The
vesting of authority over departmental ac-
counting procedures in the General Accounting
Office instead of in the Treasury Department is
/
157
a major handicap to the development of effec-
tive budgetary control.
Congress has limited the budgetary control
exercised by the President not only by making
deta~ed appropriations but also by creating
certam governmental corporations that are
largely free f~om the regular financial procedure.
Often no lOgical reason can be found for except-
ing these corporations other than perhaps that
they' should be dealt with differently from the
ordinary departments and establishments. The
inevitable result of this practice is of COurse
more and more exceptions as time g~es on.' A~
yet, an adequate and workable procedure for
budgeting and controlling the business corpora..
tions and agencies of the Government has not
been formulated.
Suggestions Looking toward
Effective Budgetary Control
Recent financial experience indicates that
the most effective means of maintaining Budget
control is through continuous planning both of
tho expenditure authorizations and of the
budgeted income of the Government during the
fiscal year to which the Budget applies. This
planning is, or should be, the joint responsibility
of the spending agencies and the central de-
partment of finance-the Treasury Depart-
ment and its Budget Bureau-acting under the
general direction of the President. On the
expenditure side of the Budget, such planning
means the projection of work to be done, which
involves a work program, or its equivalent, for
each spending agency, and the allocation of the
expenditure requirements to the months or
quarters of the fiscal year. The rate of ex-
penditure is thus determined on the basis of
the work program. On the income side of the
Budget this planning means the scheduling of
the revenues and receipts that are expected to
reach the Treasury during the same periods of
the fiscal vear as those followed in the alloca-
tion of the expenditure requirements. The
current budgetary balance is then determined
by a comparison of the total expenditure re-
quirements by months or quarters with the
total anticipated or actual income for the same
periods, taking into account any existing surplus
or deficit.
The budgetary balance, under normal condi-
tions, may be maintained through this means,
either by reducing the spending requirements or
by changing the rate of expenditure at such
times during the fiscal year as the actual
collection of revenues and other income seems
to require. In order to reduce or shift the rate
of expenditure, it is usually necessary to revise
the work programs of the various spending
agencies of the Government. But this revision
cannot take place unless the appropriations are
so authorized by Congress as to permit the
exercise of Executive direction and supervision
in their expenditure, a feature discussed earlier
158
in this study. The programing of work "by
the spending agencies is greatly facilitated when
the appropriations are made in lump sums of
moderate size rather than in rigidly detailed
amounts.
Inasmuch as the expenditure side of the
Budget is the more logical one for the application
of Executive control, there is need for a word
about the general nature of the work program
to show why it is an important means to tbis
end. Being prepared by each spending agency
and approved by the Bureau of the Budget
under the supervision of the President, the work
program is essentially an administrative plan
for carrying on the services or activities of the
agency during the fiscal year. As such, it
translates legislative policy, expressed in the
appropriation acts and in the ~enerallaws, into
the exact terms by which it IS to be realized.
This would seem to be a preliminary and nec-
essary step for any administrator who intends
to proceed systematically with his departmental
duties and responsibilities. When completely
outlined, the work program allocates the ex-
penditure requirements of the agency to months
or quarters of the fiscal year, and thus indicates
the approximate rate of expenditure. By
making a composite of all expenditure require-
ments, as allocated in the several work programs,
the Bureau of the Budget is enabled to forecast
the total Treasury demands for each month or
Fiscal }';lanagement
quarter. Should these demands exceed the
prospective income at any time during the
fiscal year, the President may call into play the
flexibility of the work programs to maintain the
budgetary balance. Within certain limits it is
usually possible to alter each work program
during the fiscal year in order to meet changing
conditions eitber in service requirements or in
realization of income. A small reserve, Bet
aside on a percentage basis from the total
appropriation at the time each program is
formulated, normally provides all the flexibility
that is necessary.
The whole problem of financing the business
agencies of the Government needs to be studied
anew. The use of the annexed budget in
setting forth the financial requirements of
each of these organizations has already been
suggested. The methods of budgetary control
that should be developed for these agencies are,
on the whole, of a different character from those
of the regular spending establishments. Cost
accounting should be widely introduced, espe-
cially where the agencies are en~aged in pro-
ducing or manufacturing operatIons in com-
petition with private enterprise. The infor-
mation thus developed should be used by the
President in criticizing the operations of these
business agencies, and in determining the
expansion or contraction of their functions.
 IV. ACCOUNTABILITY FOR FINANCIAL ACTS
•
Under the American theory of government,
Con~ress is presumed to have control of the
public purse strings through its powers to
provide revenues and to authorize expendi-
tures by appropriations. When Congress has
exercised these powers, the revenues are as-
sessed and collected by certain agencies of the
administration, acting under the general direc-
tion of the President, and the moneys thus
obtained are applied in financing the various
activities of the Government according to the
stipulations contained in the appropriations.
In carrying on these fiscal operations, there-
fore, the President and his administrative aides
assume responsibility for executing the financial
provisions enacted by Congress, and become, or
should become, accountable to Congress for
their financial acts. So far, however, the proper
machinery has not been established through
which such accountability may be exacted.
The General Accounting Office, as created in
1921, was assumed to provide the necessary
organization through which the President and
the administrative officersjare made to account
to Congress' for their financial acts. But for
certain reasons the Office has failed to meet the
situation. In the first place, its status is such
that for yractical purposes it is neither a con-
gressiona arm nor an administrative establish-
ment; it appears to stand just outside the
spheres both of Congress and of the President.
The Comptroller General, as head of the Gen-
eral Accounting Office, recognizes no responsi-
bility to the President, and he is likewise not
responsible to any officer or committee of Con-
gress. He is, so far as his own acts are con-
cerned, virtually a law unto himself. His acts
are final and conclusive, and are not review-
able by either a legislative or an executive .
officer. [His efforts are largely concentrated
upon dictating to the Executive Branch of the
Government not only with respect to the finan-
cial provisions of the law as interpreted by him
and his staff, but also in ~atters involving
administrative procedures. )The question of
making reports to Congress on financial ac-
countability of the administrative heads, which
is of much greater significance/ is almost com-
pletely overlooked.>
In the second place. the functions of the Gen-
eral Accounting Office are incongruous and con-
tradictory to the whole idea of financial ac-
countability to Congress .. The Comptroller
General makes advance decisions involving the
validity of payments under Government con-
tracts and subsequently reviews the expendi-
tures as final auditor. What he does in the
capacity of chief accounting officer, he revjews
and approves in the role of final auditor.t By
this process, two functions-initial determina-
tion and final review-which should be separate
and distinct are inexcusably confounded.\ Such
an arrangement, moreover, is inconsisterlt with
Executive responsibility and efficient adminis-
tration. It largely takes away from the Presi-
dent supervision over the most important
vehicle of ad~istrative control-ithe general
accounting systejn. Without the complete aid
of this system-without the information and
control that it makes possible--financial ac-
countability by the administration is little more
than a farce.
Organization and Functions
of the General Accounting OfAce
It may be well at this point to examine briefly
the existing organization and functions of the
General Accounting Office, now that it has
operated for 15 years. In this period it has
grown to be one of the major establishments
of the Government, employing at the present
time (December 31, 1936) 5,002 persons and
spending approximately $8,000,000 a year.
About six-tenths of this force are selected ac-
cording to civil service regulations; the other
four-tenths are regarded as temporary em-
ployees and are paid from emergency appro-
priations.
The internal organization of the General Ac-
counting Office has been very weak from the
beginning, and at times it has been confused
and ineffective with respect to some functions.
These functions appear never to have been
systematically planned and organized, but sim-
ply to have been picked up, as the necessity
arose, by certain key indiVIduals and shuffled
into more or less appropriate channels under
the pressure of the flow of work. This would
seem to explain why the Office is still without a
satisfactory internal organization after 15 years,
and why some of its important functions are still
undeveloped.
At the present time the General Accounting
Office has, aside from the staffs attached to the
General Counsel, the Chief Clerk, the Chief of
159
160
Personnel, and the Chief of Investigations, five
main divisions, namely, the Records Division,
the Audit Division, the Claims Division, the
Accounting and Bookkeeping Division, and
the Post Office Department Division. The
principal function of the Records Division is
the receipt and preliminary examination of all
claims and accounts received by the General
Accounting Office, except those of the Post
Office Department. The Audit Division is
concerned mainly with the audit of accounts,
vouchers, abstracts, and schedules submitted
by the collecting and disbursing officers, except
those of the Post Office. The Claims Division
examines and certifies for payment, set-off, or
disallowance all classes of cl8J.IDS by or against
the Government. The Accounting and Book-
keeping Division, organized in its present form
in 1936, is in the process of trying to establish
and maintain a complete set of general control
accounts for the Government, although there
appears to be no legal basis therefor either in
the Budget and Accounting Act or in any other
law. The Post Office Department Division
audits and settles all accounts and claims per-
taining to or arising out of the Postal Service.
It is in itself a small general accounting office,
performing all of the essential functions of the
larger office to which it is attached. The na-
ture of this freak arrangement and its effect
upon the Post Office Department will be noted
later.
The principal functions of the General Ac-
counting Office, under the provisions of the
Budget and Accounting Act, are: (1) The
countersigning of Treasury warrants coverin~
receipts and issues; (2) the final settlement and
adjustment of all claims and demands either
for or against the Government; (3) the prescrip-
tion of accounting systems in the several ad-
ministrative departments and establishments;
and (4) the making of investigations for and
reports to Congress on violations of law in
financial matters.
The so-called control of Treasury receipts
and issues through the countersigning by the
Comptroller General of the warrants drawn by
the Secretary of the Treasury, i. e. "covering
warrants" in the case of receipts and "settle-
ment warrants" or "accountable warrants" in
the case of payments, is largely a perfunctory
matter. In the United States the control of
Treasury receipts and issues loses most of the
significance that it has in the British Govern-
ment, where the executive is responsible for
releasing the moneys in the exchequer and for
allocating the lump-sum appropriations before
expenditures can be made by the departments
and agencies. The departments and agencies
of the Federal Government are told what they
may expend through detailed appropriations
made by Congress, and the Executive has little
or no choice in the matter. Hence it is largely
immaterial whether the Comptroller General,
who is presumed to be an agent of Congress,
does, or does not, countersign the warrants of
Fiscal Management
the Secretary of the Treasury. Indeed, under
a proper system of Treasury accounting con-
trol, the procedure calling for the issuance of
these warrants could be discontinued without
adversely affecting the Government's financial
system; on the contrary, such discontinuance
would facilitate the transaction of the public
business and would eliminate needless public
expense.
The final settlement of all claims and demands,
either for or against the Government, by the
Comptroller General involves certain executive
and administrative elements. Both the receipt
and the payment of moneys under these claims
and demands are fiscal functions of the Treasury
Department. For this reason the Treasury
should be definitely charged with the responsi-
bility of making a careful examination, or ad-
ministrative preaudit, to establish the validity
of such claims and demands. Under existing
law these claims and demands are not finally
settled until acted upon by the Comptroller
General-a procedure that tends, in the long
run, to delay and hamper the administration, to
confuse the public, and to detract materially
from the responsibility of the President and his
administrative officers. Congress has not only
set numerous, detailed, and specific limitations
upon the Executive and the administrative
heads in the granting of appropriations, but it
has pla.ced over them an independent officer to
"police" them in their operations under these
limitations and to impose such additional re-
strictions as this officer may himself wish to
devise and apply.
The development of an up-to-date system of
accounts in the several departments and estab-
lishments of the Government has not been
realized in the 15 years that have elapsed since
the creation of the General Accountmg Office.
Steps have apparently been taken within recent
mon ths, without express authority in the law, to
centralize control over the Govelnment's ac-
counting in the Accounting and Bookkeeping
Division of the General Accounting Office. Not
only will such control overlap the functions
vested in the Treasury Department under sec-
tioJ;l 10 of the act of Ju1y 31, 1894, but it will
inevitably interfere with the proper functioning
of the administrative agencies of the Govern-
ment. Aside from the practical difficulties
involved in maintaining a central accounting
system by the General Accounting Office there
is the fundamental objection, namely, that con-
trol over the general accounting and reporting
of the Government is necessary to effective
financial management by the President. As
explained in Part II of this study, administra-
tive accounting is an executive function and
should be developed under the direction of the
Treasury Department, in which all financial
transactions of the Government are centered.
The authority of the Comptroller General to
prescribe accounting methods, under section
309 of the Budget and Accounting Act, is
likewise a function that should properly belong
J
Financial Oontrol and Accountability
to the President and should be applied through
the Treasury Department. Such procedure
is essential to financial management, to budget-
ary control, to uniformity of accountin~ meth-
ods and reporting, and to responsible direction
of spending. An example of what can actually
happen under present practice was the issuance
by the Comptroller General of General Regula-
tion No. 84, dated June 15, 1936, but actually
issued several days later. This regulation
provided for the complete resymbolization of
all receipt and appropriation items, effective
July 1, 1936. It was accompanied by a digest
of symbols, containing several hundred pages,
which did not reach the Treasury Department
and the other departments and establishments
until several days after the effective date. At
that time the accounts for the fiscal year be-
ginning on July 1 had already been set up in
the Treasury and in the accounting offices of
several departments and establishments. The
last-minute rush of the outgoing Comptroller
General in promulgating this regulation at so
inopportune a time, after 15 years in office, is
difficult to understand.
The relations between the General Account-
ing Office and the Post Office Department in
accounting matters place the Post Office in the
most unhappy position of any operating depart-
ment or establishment of the Government.
Here is the Government's largest service
department, doing a cash business that runs
in the neighborhood of a billion dollars annually,
and yet it has no accounting system to speak
of-administrative, cost, or otherwise-that is
being operated under its own direction and
control. The current accounts of the Post
Office Department, such as they are, are being
maintained by the Post Office Department
Division of the General Accounting Office. At
the same time, this Division is performing the
only audit that is being made of these accounts,
and consequently of the whole postal business.
This procedure is such that it practically
eliminates even an administrative check on
postal receipts and payments. The Post Office
Department and the Treasury Department
must, in effect, accept without question the
settlements, statements, and ball:mces of the
Post Office Department Division.
It appears that the postal accounting situa-
tion was not contemplated when the Budget and
Accounting Act was passed in 1921; indeed, a
provision was inserted in that act which was
intended to give the Post Office Department an
accounting system of its own. Prior to 1921
the auditor for the Post Office Department,
working under the supervision of the Treasury
Department, had both kept and audited the
accounts of the Postal Service. This arrange-
ment was declared unsatisfactory on more than
one occasion in authoritative reports made to
special investigating committees of Congress.
So when the Budget and Accounting Act was
before Congress a provision was inserted in it
(sec. 304) to the effect that "the administrative
161
examination of the account.q and vouchers of
the Postal Service now imposed by law upon the
auditor for the Post Office Department shall be
performed on and after July 1, 1921, by a
bureau in the Post Office Department to be
known as the Bureau of Accounts, which is
hereby established for that purpose." This
Bureau was placed under the direction of a
Comptroller of the Post Office Department.
Immediately following the establishment of
the General Accounting Office there was a
division of the functions of the Auditor for the
Post Office Department along the lines obvi-
ously intended by the Budget and Accounting
Act. As a result of this division, the General
Accounting Office took over into its new Post
Office Department Division about 100 employ-
ees of the 700 formerly belonging to the Auditor,
leaving about 600 employees with the new
Bureau of Accounts of the Post Office Depart-
ment. About 9 months later, presumably on
the authority of an opinion from, the Attorney
General, the General Accounting Office again
divided the functions and employees, this tinle
leaving with the Bureau of Accounts fewer than
a score of persons and virtually stripping it of
all accounting work. So staffed and organized,
the Bureau has since continued. During the
present administration, as a result of the initia-
tive of William L. Slattery, who became Comp-
troller in 1933, the Bureau has been able, in
spite of handicaps, to produce some interesting
and useful figures on postal receipts and expend-
itures. Apropos these figures, Mr. Slattery, in
testifyinl; before the House Committee on
Appropnations on December 9, 1935, said:
* * * The set-up between the [Post Office)
Department and the Comptroller General and the
Budget Bureau leaves quite a lot to be desired.
Just to show you-this would sound unbelievable,
but I want to put it in the record-the Comptroller
General has a thousand positions and spends a million
and a qllarter of money a year for clerk hire in his post-
office division. I have 10 people and with these 10
people I state the postal income and expenditure
monthly. I accumulate it for 3 months and then state
it quarterly. I have done that 3 months before he has
done it. On July 19, 1934, I published the figures for
the end of the fiscal year 1934, and on October 23, 1934,
he published the amount. The income, as I stated it,
was off, according to him, to the extent of 0.002
percent. The expenditure was off 0.195 percent; and
the gross nonpostal deficit, which I told Mr. Farley
there should be for that year was off, by what the
Comptroller General stated later, by 1.56 percent.
And some of those expenditure figures, over which I
have no control and over which the Post Office Depart-
ment has no control, are all in the hands of the
Comptroller General. It is wrong from any point of
view.
In carrying out its primary function, that of
making reports to and investigations for
Congress on financial matters, the General
Accoun ting Office has made a poor showing
during its first 15 years. Congress mi~ht have
encouraged this office to do better, If it had
provided a special committee to receive reports
from the Comptroller General and to study and
make recommendations concerning them. No
reports on the audited accounts of the regular
 162
departments and establishments have gone to
Congress from the Comptroller General's Office.
A few reports on special investigations, notably
on the Shipping Board and on the Alien Prop-
erty Custodian, have been made to Congress.
In 1935 a report on an audit of the Tennessee
Valley Authority was prepared, and several
Members of Congress had access to it, although
it was never formally submitted to that body.
The tentative character of the report was given
as the reason for not so submitting it. To date
(October 1936), this report has not been com-
pleted and submitted, notwithstanding the fact
that in its tentative form it was commented on
by several Congressmen much to the detriment
of the Tennessee Valley Authoritv. Perform-
ances of this general type would" seem to be
indefensible.
Proposals for the
Establishment of Accountability
If it is assumed that the President has full
responsibility to direct and control the receipts
and expenditures of the Government, as out-
lined in the first three parts of this study, how
may he be made accountable for his financial
/ acts? The answer is: I Through a postaudit of
his accounts and records by an agent of Con-
gress, with a full report to a special congres-
sional committee which has power to make
recommendations to the whole body. ~
For some time it has been recogmzed that
the functions of the General Accounting Office
should be considerably changed in order to
bring them in line with Executive respbnsi-
bility, management, and accountability. Un-
der the authority granted to him by the Econ-
omy Act of June 30, 1932, President Hoover,
in a message to Congress on December 9, 1932,
asked approval for a plan (published in H.
Doc. No. 493) to transfer from the Comptroller
General's Office to the Bureau of the Budget
the accounting supervision and administra-
tive preauditing work of that Office. He said
that the Budget and Accounting Act had
"conferred upon the General Accounting Office
duties of an administrative or executive char-
acter", and that the act had been so inter-
preted as to permit this Office "to extend its
powers and duties into the field of administra-
tion in the several departments and establish-
ments of the Government to an extent that is
far beyond its primary function." He also
maintained that since "accounting is an essential
element of effective administration" and
"forms the basis of the whole estimating
system of the Government", it should be devel-
oped under the direction of the Executive.
This proposal undoubtedly had considerable
merit, although one may not agree that the
accounting supervision of the Government
should be carried on in the Bureau of the Budget
rather than by a fiscal control bureau or office
of the Treasury Department. Nevertheless,
it was voted down by Congress on the assump-
Fiscal Management
tion that President Roosevelt could have the
problem studied more thoroughly and perhaps
arrive at a more satisfactory solution.
A report of a special committee on Federal
expenditures of the United States Chamber of
Commerce published on October 12, 1934,
called for radical changes in the powers of the
Comptroller General. The report stated that
the power of the Comptroller General to act as
the accounting officer of the Government de-
prives the President of "one of the most
essential means of establishing effective super-
vision over expenditures, namely a satisfactory
accounting system directly under Executive con-
trol." The special committee, the report said,
was convinced that accounting should be
separated from legislative auditing, and that
"accounting should be centralized in an agency
under the control of the President." "Such a.
system", the report continued, "would provide
the administration with machinery necessary
to establish control over expenditures and also
afford Congress an independent agency for
checking the fiscal operations of the adminis-
tration." Finally, the report added, "The
functions of the J>resent Office of Comptroller
General should be limited to- those of an auditor
general as legislative agent, that is, concerned
primarily with the propriety and advisability
of expenditures and fiscal operations rather than
their fidelity." This report presented a suc-
cinct proposal for modifying the powers of the
Comptroller General, as the result of more than
a decade of unsatisfactory experience with the
General Accounting Office. Added significance
is given to this report by reason of the fact that
one of the members of the special committee
signing it was W. F. Willoughby, who was one
of the authors of the Budget and Accounting
Act of 1921, and was formerly one of the
staunchest supporters of the position and func-
tion of the General Accounting Office.
General Auditing Office Recommended
A proposal for the reconstitution of the Gen-
eml Accounting Office may be outlined, not so
unlike those just noted, but perhaps more com-
plete in that it provides for a system of financial
control and accountability, as sketched on the
accompanying chart. 3 This proposal would
convert the General Accounting Office, headed
by the Comptroller General of the United
States, into a General Auditing Office headed
by an Auditor General of the United States.
The method of selection and the term of ap-
pointment of the Auditor General and the
Assistant Auditor General (if there should need
to be one) might be made the same as those of
the Comptroller General and the Assistant
Comptroller General, but adequate training and
experience qualifications should be demanded.
• This proposal was first discussed by the writer In his book on Public
Budgeting (New York: Harper, 1929), pp. 6flO-{i4, after a study of the func·
tions and workings of tho General Accounting Office. It was later elab-
orated upon In his book on The Budget in Governmentl 0/ Todau (New
York: Macmillan, 1934), ch. IX, particularly pp. 285-96, after an examl·
nation of the audit and control systems of other leading countries.
 PROPOSED SYSTEM OF FINANCIAL
CONTROL AND ACCOUNTABILITY

, THE BUDGET

THE PRESIDENT
REVENUE AND APPROPRIATION ACTS
---~---1
I
I
I
BUREAU
Of THE
BUDGET
THE
TREASURY
DEPARTMENT
J
I
eUREAU OR
OFFICE OF
fiSCAL COtnROl

I
J •
I
I
I I
I I I I I I
POST AUDIT OF I
BUOGETARY
SUPER'I:SION
REVENUES APPROPRIATIONS
ACCOUNTING
SUPERVISION
REVENUE
CONTROLS
EXPENDITURE
CONTROLS
I
I
EXECUTIVE AND
ADMINISTRATIVE
ACCOUNTS AND
RECORDS
,.--
I
REVIEw OF REPORTS
OF GENERAL AUCITING
OfFICE
I
I
REPORTS ON
CURRENT
COlLECTIONS
APPORTIONMENTS
AND
ALLOTMENTS
ASSESSMENT AND
COLLECTION ACCOUNTS
fUND "'NO EXPENSE
ACCOUNTS
I
I
I
I
INVESTIGATIONS
FOR CONGRESS
I
I
A I
I
,..
EXAMINATION Of
BUDGET AND ACCOUNT·
ING OFFICERS OF'
ADMINISTRATIVE
CEPARTMENTS
..
I

I
REVISION Of APPROPRIATION. I I I
APPORTIONMENTS MONTHLY AND APPORTIONMENT.
.....
REPORTS TO
COMMITTEE ON
I I
FINDINGS AND
AND QUARTERLY SUTEWENTS AND ALLOTMENT
PUBLIC ACCOUNTS
I
RECOMMENDATIONS
I
AlLOTMENTS CONTROLS
I I
TO CONGRESS

___ JI I
I I L. _ _ _ ~

I L __ ~ __ .J
MONTHLY AND
QUARTERLY REPORTS I
I
STORES CONTROlS
I
I ...
I I
if if ..
I

I
SECURITY AND
PROPERTY RECORDS
I
I
I
I
I
I
I
I MONTIIl' AND
QUARTERlY S'AT[M[NTS
.6 I
I
I I I

I I
I
I
I
I II I
2·I i I
I
I
I
I
I
A-
I

I I r I
FINANCIAL STATEMENTS

__._J
FINANCIAL DATA
FOR THE BUDGET I
fOR CONGRESS AND
THE PUBLIC I
I __ I I
IL __ ..- _____ J.
I
I

I BUDGET AND ACCOUNTING

OFFICERS 'N THE ADN'N': ~

TRATIVE DEPARTMENTS
I
I
AND ESTABLISHMENTS - - - - - - - til- - - - - - .... - - - - - - - - - ..
------------~-----~
164
The functions of the General Auditing Office
would be confined fnainly to a postaudit of the
financial transactions and accounts of the Gov-
ernment and to such examination as might be
necessary of the accounts of subordinate gov-
ernmentf\lpnits and agencies receiving Federal
subsidiesl (At the same time, this Office would
become a real investigating agency for Congress
in all matters relating to the receipt and appli-
cation of public moneysJ In the course of the
~ostaudit of the accounts, maintained in the
Treasury Department or in the various operat-
ing departments and establishments under
Treasury supervision, [the Auditor General
would examine into the legality and propriety
of expenditure,) Any exceptions he might
make would be reported to the Treasury De-
partment and to the spending departments con-
cerned. I He would also check carefully the
sources of Government revenue and the collec-
tions therefrom, which are now largely neglected
so far as an independent postaudit is concerned~
(The Auditor General would then prepare for a
'special congressional committee, at least an-
nually, detailed reports on his audit findings
with respect to the receipts and the expendi-
tures of each administrative department or
establishment,( embodying criticism~ of faulty
financial practices or methods and concrete sug-
gestions for improvements. On expenditures
that he deemed to be unlawfully made, he
would report immediately to the committee.)
Under this new organization, the -existing
functions of the General Accounting Office
which have to do with the final settlement and
adjustment of claims for or against the Govern-
meat, with the keeping of general accounts, and
with the prescribing of departmental accounting
systems would be transferred to the Treasury
Department. As already shown, these func-
tions, when vested in the General Accounting
Office, are incompatible with Executive respon-
sibility in financial matters. They not only
hamper and delay the admimstrati ve processes
but are also unnecessary to the establishment
of Executive accountability to Cqngress.
As a half-way measure in this dIrection, it has
been suggested that the prescribing of depart-
mental accounting procedures and the checking
of fiscal officers' accounts should be takTI away
from the General AccountingfOffice, leaving
with it the function of the settl'ament an adjust-
ment of claims for and against the Gove'rnment.}
It has further been suggested that settlement
and adjustment might be made to seem less
arbitrary than at present if the decisions ren-
dered on any or all of the claims were reviewable
by a special board-a Board of Audit Review-
acting as a sort of administrative court. This
Board would consist, say, of three members
serving for overlapping terms of 12 or 15 years.
It would have the authority to hear and deter-
mine any differences arising between the Treas-
ury Department and the several operating de-
partments and establishments, on the one hand,
Fiscal Management
and the General Accounting Office or Genera
Auditing Office, on the other. ( This procedure
would seemingly meet the obJection that the
Comptroller General, under the present arrange-
ment, can direct the payment of moneys from
the Treasury, his decisions being final and con-
clusive and not subject to review by the Execu-
tive Branch of the Government; furthennore,
that he is not required to disclose the evidence
of any facts upon which the settlements are
made. 'Though a Board of Audit Review
might dnswer this objection in contested C8.ses
by making the decisions of the Comptroller
appear less dictatorial and by disclosing the
evidence which forms the baSIS of such deci-
sions, it would not in the least solve the problem \
of Executive accountability. I Besides, the crea-
tion of such a Board would slIDply add another
step to an already long and tedious procedure
for the settlement of claims, and it would not
in the end assure the administrative depart-
ments or the claimants of any l,ss arbitrary
handling than at the present time. J
(It is therefore proposed that tHe power to (,
settle and adjust all claims for or against the
Government be placed in *e Treasury Depart-
ment (to be exercised by a\Bureau or Office of
Fiscal Control), with the further provision that
such settlements and adjustments be carefully
reviewed and checked by' an Auditor General
and reported on in detail by him to a special I..i
committee of Congress. This is the only solu-
tion that seems compatible with Executive re-
sponsibility, with the speedy transaction of
fiscal matters, with quick and accurate report-
ing for administrative purposes, and, in the end,
with the establishment of Executive accounta-
bility for financial a..cts.
By limiting the functions of the General Ac-
counting Office to postauditing, investigating,
and reporting, functions which properly belong
to a General Auditing Office, the standing and
prestige of this office should, in time, be con-
siderably increased. The internal structure of
the office would, of course, need to be com-
pletely reorganized, and the existing staff
would be reduced to perhaps 15 or 20 percent
of its present size. The staff positions would
neoessarily be confined largely to trained and
experienced auditors and investigators, who
could be sent to the various fiscal offices, wher-
ever located, to make postaudits and investi-
gations, without direct and constant super-
vision. UP'>n completion of their assignments,
they should be able to make satisfactory reports
thereon to the Auditor General. Under this
procedure, the thousands of vouchers, claims,
and accounts would no longer need to flow into
the General Auditing Office, and the present
bottle-neck arrangement in Washington through
which the Government's financial businelis must
be forced would be avoided. Furthennore, it
would be possible to keep the postauditing work
practically current by systematic planning of
the assignments and by the use of the test or
Financial Oontrol and Accountability
partial audit method, so that reports on the
business of each fiscal year would be ready
shortly after its close.
Joint Congressional CommiHee
on Public Accounts
/ the President and of the administration when
/ To receive and consider the reports of the
'Auditor General, it is suggested that Congress
should create a Joint Committee on Public
Accounts. The custom might well be estab-
lished to elect as chairman of this committee a
member of the party in opposition to that of
the President. kt the same time, the existing
committees of the House and of the Senate on
expenditures and accounts should be abolished.
The Committee on Public Accounts should be
appointed at the beginning of each congressional
session, and should be recognized as one of the
most important in Congress. Members of the
Committee should be carefully selected, upon
the basis solely of their qualifications and experi-
ence. They should be largely free from other
committee work. With the majority of tho
membership in 'political opposItion to the
President, the Committee could be counted upon
to be critical at all times of the financial acts
of the Executive and the administration, which
is the service most desired of it.
The Committee on Public Accounts should
sit not only during the sessions of Congress
but at least quarterly during the intervening
periods. In this way it should be able to keep
current with all matters coming before it.
The Auditor General, or his representative,
should sit with the Committee when in session
165
to present and explain his findings and to an-
swer questions. The Secretary of the Treas-
ury, or his representative, together with the
head of the Bureau or Office of Fiscal Control,
should be required to sit with the committee
to explain and defend the financial actions of
attacked or criticized by the Auditor General.
Through this procedure the President would
be kept in constant touch with the decisions
and criticisms of the committee and would be
in a position to take immediate action in all
cases not requiring legislation.
It should be the duty of the Committee on
Public Accounts to hold hearings on the find-
ings of the Auditor General, summoning before
it for examination the departmental budget
and accounting office1s and, if need be, the
heads and otherefficers of the departments
and establishments .. At the conclusion of these
hearings the committee should report to both
Houses -of Congress, giving its criticisms on
financial methods and performances and making
an¥ recommendations it deemed appropriate
for legislative action or Executive guidance.
The Committee on Public Accounts, if it
followed the procedure thus roughly sketched
out, should furnish Congress a satisfactory
means of checking, the financial operations of
the Government, of knowing whether or not
the legislative provisions with respect to reve-
nues and expenditures are being properly car-
ried out, and, last and perhaps most important,
of enforcing accountability on the part of the
Executive and the administrative officers for
their financial acts.
,
,

-
 v. SUMMARY OF RECOMMENDED CHANGES
The recommended changes contained in this
study are based upon certain considerations
that seem fundamental to the present-day needs
and requirements of the National Government.
These changes assume, (first, that it is highly-
desirable, indeed necessary, to make the PreSI-
dent fully responsible for the fin~cial manage-
ment of the GOVernment;)second\ that suitable;
and up-to-date machinery and methods are re- i
quired to aid the ~:r:~sident in attaining effective
financial management; and, third~ that Execu- .
tive responsibility for such management is in-
complete without full accountability to Congress.
The important changes recommended or
suggested in this study may be summarized
under three headings.
Proposals Concerning the Budget
1. The Bureau of the Budget should be
reorganized internally and should be properly
integrated with the Treasury Department.
Its staff should be broadened and strengthened
to handle, in addition to the prep'aration of the
Budl?et, the functions of budgeta~ control and
admmistrative research and inve~tigation.
2. The practice of making highly detailed
appropriations, which Congress has followed
for many years, should be gradually changed
by granting larger, or lump-sum, amounts.
This change would be in the interest of more
effective budgetary (contro~ through appor-
tionments and allotments, and would also
provide greater flexibility in carrying on ad-
ministrative work in the various departments
and establishments.
3. IThe law should provide that the out-
standing balances of all annual appropriations
would lapse 3 months after t}le end of the
fiscal year to\Vliicli they relate. ( At present,
such appropriations are available for 2 whole
years after the end of the fiscal year for which
they are made; the appropriation accounts are
thus kept open for 3 years and the difficulties
of ascertaining the exact condition of the
Treasury at the end of any fiscal year are
increased.
4. The use of annexed bud~ets, a practice
begun by President Roosevelt m the National
Budget for 1936, should be extended to the
important self-contained or self-sustaining
agencies of the Government.
• (
5. A legal provision should require the con-
tinuation of the practice of preparing a
resume or summation of the Budget after the
close of the congressional session. This prac-
Jiice was inaugurated by President Roosevelt
in 1935, and has been found very useful as a
matter of public information.
6. The law should provide for the sub-
mission of the Budget to Congress around
I March 1, instead of the first or second week
in January, as is now the practice. This
c?ange would permit t!J.e incoming President
(maugurated on Jan. 20) to formulate the
Budget; that is, todhave some responsibility
for submitting the nnancial plan under which
he is to work during the first fiscal year of his
administration. It would also make for
greater accuracy in the estimates by per-
mitting them to be revised 2 or 3 months
nearer the opening of the fiscal year to which
they apply. Congress would not be incon-
venienced by this change, since its appropria-
tion committees would have the necessary
information to begin work at the opening of
the session.
Proposals Relative to
Treasury Organization and Procedure
1. The archaic structure of the Treasury
Department should be complet.ely reorgan-
ized, eliminating all functions that are ex-
traneous to financial administration, and
regrouping the other functions under com-
pact and workable administrative units,
thus bringing the financial activities of the
department within definite lines of authority.
The financial functions of the Treasury, aside
from budgeting, fall. naturally into five
groups, as follows: (1) 'Functions having to
do with the general administration of the
Department, which may be grouped under
a Bureau of General Administration; (2) func-
tions of financial control and central account-
ing, which may be included within a Bureau
or Office of Fiscal Control; (3) functions of
the revenue-producing agencies, which may
be organized under a Bureau or Office of
Revenue; (4) functions of collection, custody,
and disbursement of public moneys, which
may be placed in a Bureau or Office of Receipts
and Payments; and (5) functions of purchasing,
167
168
storing, and distributing the supplies, material,
and equipment used by the Government, wmch
may be included in a Bureau or Office of
Supply. In addition, a suitable office or
unit may be established in the Treasury
Department for the financing and liquidation
of the emergency loan agencies.
2. The authority to settle all claims for or
against the Government and the power to
supervise administrative accounting, being
executive functions, should be transferred
from the General Accounting Office to the
Treasury Department and vested in the
Bureau or Office of Fiscal Control.
3. In establishing a Bureau or Office of
Fiscal Control in the Treasury Department,
care should be taken to divorca it from any
direct connection with the assessment, col-
lection, custody, and disbursement of public
moneys; it would thus be placed in a dis-
interested Rosition with respect to these fiscal
operations. )
4. A central accounting system should be
developed in the Bureau or Office of Fiscal
Control of the Treasury Department, con-
sisting principally of summary accounting
controls over detailed departmental and field-
office accounts and reports. The system
would therefore be decentralized, with large
responsibilities placed upon the accounting
officers of the departments and establish-
ments.
Fiscal Management
5. The existing procedure for making ap-
portionments and allotments, as a means of
current budgetary control, should be ex-
tended, strengthened, and properly geared
into the accounting system.
Proposals for Establishing
Executive Accountability to Congress
1. The General Accounting Office should
be changed to a General Auditing Office-
a congressional agency-with authority to
postaudit all receipts and all expenditures of
the Government. The General Auditing
Office should not keep accounts, but should
postaudit the accounts and financial docu-
ments of the Treasury Department and of
the other departments and establishments of
the Government. It should report its find-
ings on the postaudits to a joint committee
of Congress. In addition, it should make
financial investigations for Congress.
2. As a means of establishing accountability
on the part of the Executive and the adminis-
trative officers for their financial acts, Con-
gress should establish a Joint Committee on
Public Accounts to review the findings of
the General Auditing Office, to examine
the Budget and accounting officers of the ad-
ministrative departments and establish-
ments, and to make recommendations to
Congress.
THE GENERAL ACCOUNTING OFFICE

by
HARVEY C. MANSFIELD
 THE GENERAL ACCOUNTING OFFICE
by
HARVEY C. MANSFIELD

•
Contents
Page
1. Statement of the Problem 173
II. The Extent of the Control Exercised 175
"Settlement" of Accounts 175
Postaudit 175
Preaudit 177
The Effect of Centralized Disbursing 178
Control of Receipts 179
Countersignature of Warrants and Requisitions 180
Prescription of Administrative Accounting Forms and Procedures 181
Custody and Routing of Documents 183
Claims 183
Psychological Factors 184

III. Some Escapes from the Control 185

Legislative Relief 185
Judicial Review 186
Administrative Defenses 187

IV. The Irresponsibility of the General Accounting Office 189

Independence of the Executive 189
Independence of the Courts 189
Independence of the Congress 190

V. Consequences from the Point of View of Administrative Management 193

Divorce of Authority and Responsibility 193
Arbitrary and Technical Decisions 193
Delay Hl4
Failure to Provide a Central System of Accounts 194

VI. Objectives of a Proper System 197

Postaudit 197
Investigatory Powers 197
Publicity of Reports 197
Promptness of Audit 197
Congressional Scrutiny 198

VII. Proposed Changes 201

"Settlement" of Accounts 201
Disbursing 201
Administrative Accounting Methods 202
Auditing 202
Warrants 202
Committee on Public Accounts 202
171
..
 I. STATEMENT OF THE PROBLEM
The Budget and Accounting Act of 1921,
which established the General Accounting
t Office as an independent agency, created a new
problem of administration and administrative
law. Broadly stated, that problem is how to
secure effective administration under a system
that divides authority to determine adminis-
trative policy and procedure between the
Executive and the Comptroller General. The
difficulty arises from the failure to distinguish
between audit and control. An audit, as
understood in business practice and in other
governments, is an investigation and report
upon the fidelity and legality of fiscal trans-
actions. I t is ordinarily made by an inde-
pendent officer, to a body having authority to
hold the spending officers accountable. Con-
trol, on the other hand, is the power to pass on
expenditures and prevent their being made.
In business and in government it is normally an
important feature of executive management.
Insofar as the Budget and Accounting Act
provided for an independent audit it marked
an advance over previous practice. An inde-
pendent. audit is highly desirable and creates no
management problems. The Budget and Ac-
counting Act, however, took the unusual step
of vesting both audit and control powers in the
hands of an independent officer.
As a result, administrative officials in carry-
ing out their tasks are responsible in varying
degrees to the President, but they are also
subject to the rulings of the Comptroller
General. The President, under the Constitu-
tion, "shall take Care that the Laws be faith.
fully executed." The Comptroller General, by
the terms of the Budget and Accounting Act,
exercises his powers "without direction from any
other officer." How can cooperative action
. and unified responsibility be secured? It is
clear that the framers of the act (who were
chiefly concerned with its Budget provisions)
were not fully aware of the extent of the problem
they were creating. They thought of the new
officer simply as an agent of Congress.
Efficient and economical administration, es-
pecially financial administration, depends in a
high degree for its success upon harmonious
cooperation between Congress and the Execu-
tive. Congress and the President each have
rights under the Constitution. But as in
marriage more than an insistence upon rights is
needed to make a home, so in governmental
•
- affairs more is needed than checks and balances
Congress establishes administrative agencies
by statute and in so doing it customarily defines
and limits their authority to spend public funds.
It supplies them by means of annual appropria-
tion acts, which also are the vehicles for a multi-
tude of special restrictions upon each agency
(e. g., proportion to be used for salaries in the
Pistrict of Columbia, amounts available for
printing, for motor vehicles, etc.). Moreover,
it has embodied in permanent general legislation
a great many rules governing their procedures
(e. g., as to appointments, promotions, leave,
retirement, travel, bidding for procurement
contracts, etc.), which operate as restrictions.
The scope and detail of these limitations have
varied greatly at different times in the history
of the Federal Government. During the 1790's
appropriation acts contained hardly any limi-
tations other than the amounts of the very
modest sums they appropriated. Nineteenth-
century practice, on the other hand, except
during war periods, called for minute specifica-
tions in appropriation acts of items, purposes,
and admimstrative procedures. More recent
experience leads most authorities in public
finance to suggest that too rigid and detailed
limitations are self-defeating. This belief is
confirmed by observation of the practice in
well-managed large private businesses. If too
much attention has to be devoted to method
and procedure, not enough is left for the sub-
stantive work of the agency. The resulting red
tape may stand in the way of accomplishing the
purpose the agency was established to serve.
However this may be, Congress has the un-
doubted right to compel the observance on the
part of administrative agencies of such limi-
tations as it thinks fit to impose, and to inform
itself fully to that end. It is for this purpose,
among others, that fiscal control is instituted.
But on the one hand, Congress has neither the
constitutional responsibility nor the physical
capacity to supervise the day-to-day operations
of administration, and on the other hand,
spending itself is a means and not an end.
From the point of view of the general public,
then, whom Congress and the President alike
are elected to serve, it is imperative that the
means of fiscal control, while preserving to
Congress its rights, should not unnecessarily
stand in the way of the performance of ad-
ministrative tasks.
173
174
The Comptroller General holds an office of
great power and independence in the Federal
Government. His powers, as set forth in the
Budget and Accounting Act, may be sum-
marized as follows:
1. To settle all claims and accounts in
which the United States is interested either
as debtor or as creditor, such settlement to
be "final and conclusive upon the executive
branch of the Government." Accounts with
private parties and with Government officials
who collect and disburse public funds are
both included.
2. To render advance decisions to depart-
ment heads and to disbursing officers regard-
ing the use of appropriations.
3. To countersign Treasury warrants, in-
cluding the approval of requisitions by
department heads for advances to disbursing
officers.
4. To maintain general fund accounts re-
lating to appropriations, and personal ac-
counts of fiscal officers.
5. To prescribe the methods and pro-
cedures for administrative appropriation and
fund accounting in the several departments
and establishments and for the administrative
examination of fiscal officers' accounts.
6. To investigate "all matters relating to
the receipt, disbursement, and application of
public funds." All departments and estab-
lishments were commanded to furnish infor-
mation and to give access to all records upon
his request, in aid of his duty to report to
Congress. ..
The independence of the Comptroller Geneml
in the exercise of these powers is protected by
his term and tenure of office. His appoint-
ment, to be sure, is vested in the President,
mainly because of doubts expressed that
Congress could constitutionally make such an
appointment itself, or that it could bind suc-
ceeding Congresses by making an appointment
for more than 2 years, the life of a single
Congress. Once appointed and confirmed in
the usual manner, however, the Comptroller
General is, according to the statute, effectually
beyond the President's reach for a term of 15
years. No other appointee outside the judi-
ciary enjoys so complete a guarantee of
independence.
The above resume is sufficient to show that
the Comptroller General is no mere ministerial
hewer of wood and drawer of water. He can
formulate and adopt policies in his administra-
tion of the law, policies that affect the intent of
Congress and the activities of the other ad-
ministrative agencies at every turn. He is
the chief executive of the General Accounting
Office, which employs currently (December
1936) more than 5,000 persons and spends over
Fiscal Management
$8,000,000 annually. In his capacity as nn
administmtor he reacts substantially as other
administrators do 'with respect to such questions
as housing space, appropriations, personnel,
how a program should be carried on, etc.
It is also evident that the combination of
power and independence makes possible a
good deal of conflict between the Comptroller
General and the heads of administrative estab-
lishments unless these heads accept his inter-
pretations of law without question. There
has, in fact, been a great deal of controversy
between the Comptroller General and adminis-
I
trative heads, much of it the result of honest
differences of opinion. Ambiguities in the law
which leave some jurisdictional questions unset-
tled are a contributing factor. More important~
is the basic difference in outlook between the
General Accounting Office and the other
agencies. The Comptroller General must be
primarily concerned with regularity of proce-
dure. As one of the counsel in his Office wrote:
There can be no better discharge of any public officer
of the responsibility thrust upon him than a certificate
from an independent agency that it has audited and
settled his accounts and has found that he has performed
his duties according to law.!
But an auditor's certificate is not the primary
goal of an administrative head who is worth his
salt. He is on the firing line. Congress, the
President, and the country look to him for
results. He expects to get them by means
within his lawful powers, but the full perform-
ance of "duties according to law" involves
more than merely the legal use of his appropria-
tions. The objectives of administrators and of
auditors differ, and so do their backgrounds and
tmining. The effect is almost as though they
did not speak the same language. 2
Can this division of authority in the super-
vision of administrative policy and procedure
be reconciled with economical and efficient
public service? Does the present system enable
Congress to hold the Executive fully account-
able for the execution of its financial policies?
Concretely, it will be the purpose of this study
to indicate the nature of the control now exer-
cised in the General Accounting Office over the
Executive, and the exceptions to it; the rela-
tions of the Comptroller General with Congress
and with the courts; and some consequences of
the system of control as it relates to administra-·
tive management. Upon this framework, and
in the light of studies made elsewhere of the
Treasury's organization for fiscal control, sug-
gestions for changes in accounting and auditing
procedure can be ventured.
I o. R. McGuire, "Government by Corporations", Virginia lAw
R ..i.w, XIV (1928), p. 182, at 188.
I This Is well Illustrated In the hearings before the House Military
Affairs Committee In 1935, on the bill to amend tbe Tennessee Valley
Authority Act, at which Dr. A. E. Morgan and members of his stair
answered the Comptroller General's objections to the Authority's actions.
 II. THE EXTENT OF THE CONTROL EXERCISED
•
"Settlement" of Accounts
The basic authority upon which the power of
the Comptroller General over administrative
officials rests is found in the provisions of title
III of the Budget and Accounting Act. It is
there enacted that "all claims and demands
whatever by the Government of the United
States or against it, and all accounts what-
ever in which the Government of the United
States is concerned, either as debtor or cred-
itor, shall be settled and adjusted in the
General Accounting Office", which settlements
"shall be final and conclusive upon the Execu-
tive Branch of the Government." 1 Con-
cretely, this means that disbursing officers,
whose accounts are rendered to and must be
"settled" in the General Accounting Office,
receive credit for the payments they make
only if the Comptroller General approves them.
His approval is conditioned upon his being
satisfied not only that the particular payments
were for services or materials actually re-
ceived, as shown on vouchers in due form,
) but also that the obligations were validly in-
curred, i. e., that appropriations had been made
available for the particular purposes. And he
must be satisfied by documentary evidence
submitted to him.
This makes the disbursing officers (under
bond) the insurers of the legality as well as the
fidelity of expenditures. They cannot afford
to make payments without assurance that credit
will be allowed for them. Consequently, al-
though the disbursing officers are the adminis-
trative subordinates of department heads, they
may not safely act upon the orders of their
superiors in disregard of the views of the
Comptroller General. It follows that depart-
ment heads, too, before incurring obligations,
must make sure that the procedures they desire
to adopt and the payments involved will meet
those views. This necessity was not relieved
by the centralization of disbursing that was
effected in 1933~2 In practice, the settlement
of accounts gives the Comptroller General final
supervisory authority over any administrative
procedure that calls for the payment of money
from the Treasury.
1 42 Stat. L. 20, 24 (1921).
J But see in/ra, p. 178.
Postaudit
Postaudit is the normal manner of making
settlement. That is, the disbursing officer
sends to the General Accounting Office monthly
or quarterly "accounts current" accompanied
by schedules of collections he has made and of
payments he has disbursed, together with
vouchers supporting the payments. The Gen-
eral Accounting Office then verifies the compu-
tations and audits the items. In the process it
raises and decides any question of law or fact
that is involved in the decision as to whether or
not the appropriation acts and other statutes of
Congress authorize the payments to be made ..
If the decision is adverse or if the information
supplied is insufficient to quiet all possible
doubts, a suspension in the accounts of the
disbursin~ officer is raised. He then has an
opportumty to supply any additional justifica-
tion or information he can give. If this is
still unsatisfactory, the payments are disallowed
and the disbursing officer and his surety are
called upon tp make them good.
It will be seen later that there may be
methods available for relieving the disbursing
officer of a disallowance over the head of the
Comptroller General. And it is true that if
restitution is refused, the reO"ular means of
collection is by a suit instituted and controlled
by the Attorney General, not by the Comp-
troller General. Nevertheless, in such a case a
debt card against the disbursing officer is
maintained in the General Accounting Office,
so that if he dies, or retires with a balance due
him on account of salary, retirement fund
contributions, etc., the Comptroller General
may offset that against a standing disallow-
ance. The Comptroller General can afford
to wait.
Advance decisions.-Because of the personal
responsibility of disbursing officers a practice
arose during the nineteenth century of referring
vouchers about which they had doubts to the
Comptrollers of the Treasury. The custom
was given statutory sanction in 1894, by the
Dockery Act,3 which authorized disbursing
officers and heads of departments to make
• Act of July 31, 1894, ch. 174, sec. 8; 28 Stat. L. 162, 207. ct. W. E.
Hotchkiss, The Judicial Work of the Comptroller of the Treasury, Cornell
Studies in History and Political Sciencf, vol. III (Ithaca' 1911), 164 pp.
175
176
such references, and made the decisions of the
Comptroller, when rendered in advance, bind-
ing in the subsequent audit of those payments.
The Budget and Accounting Act continued
this arrangement and the Comptroller General
now receives a host of questions for advance
decision.
Disbursing officers make such requests only
when they have vouchers actually before them
for payment; department heads may submit
questions in advance of incurring obligations.
Most requests are of the latter sort, and in
view of their frequently broad scope and
general interest they make up a substantial
proportion of the published decisions of the
Comptroller GeneraL The number of advance
decisions now runs into the thousands.' In
the last fiscal year before the Budget and Ac-
counting Act went into effect, the Comptroller
of the Treasury issued about 400 such decisions,
and in 1914-15, a typical pre-war year, about
250. 6 If due allowance is made for the in-
creased scale and scope of expenditures, thesE\.
figures give a rough measure of the characterl
and effectiveness of the Comptroller General's
power.
Administrative officers, anxious to secure
results quickly, tend to submit broad questions
in order to find out without delay what alterna-
tive procedures are open to them. Confined to
matters of procedure, there can be little doubt
of the usefulness of such submissions. But it
is not always easy to differentiate procedure
from policy. The closing of desirable procedural
avenues may mean, in substance, the forced
abandonment of a policy as impracticable.
And if the authority delegated in the statutes is
susceptible of varying interpretations, decisions
on policy may readily be cloaked in procedural
terms. For this reason the legal staffs of
administrators usually prefer to draft the sub-
missions to be made, and to confine the ques-
tions to the facts of a particular case. In this
way the number of submissions is multiplied
and a large body of "common law" regarding
expenditures is built up. Involved analysis of
previous decisions is required and legal dis-
tinctions are refined to secure desired results.
Current financial control thus tends to become
a judicial rather than an executive process.
Requests for advance decisions may also
reflect a deliberate administrative strategy.
Under pressure to show results, and painfully
aware of the Comptroller General's powers of
obstruction, some officials conclude that a
finesse is better policy than a frontal attack.
By laying their problems fully before him in
advance they forego a contest of their legal
powers for the sake of the benefits of greater
immediate cooperation, and trust that if the
'Annual RepoTt of the ComptToUer General of the United Statu fOT the
li'i3cal YeaT 1932, p. 60.
• Based on a rough tabulation of the Index of claimants, etc., in vols.
XXI and XVII o! the Decioion. of the ComptToller of the TreasuTII. In
both years approxImately 3 times as many requests for ad vance decisions
were submitted by the heads of establishments as by disbursing officers
The total number of decisions by the Comptroller Oeneral now amounts
to about 8,000 annually. Annual Report o( the Comptroller General
• • • 1935.
Fiscal Management
restrictions he imp03es prove too great they can
with administration backing secure broader
legislation. This perhaps explains why agencies
confident of congressional support can afford to
be more submissive than others to the rulings
of the Comptroller GeneraL
Another contributing factor is especially
applicable to payments to Government con-
tractors. Because of the constant uncertainty
that arrangements with contractors can be
completed to the point where contractors can
be sure that they will be paid promptly for their
work, administrative officers often feel it
necessary to get the arrangements sanctioned
by the Comptroller General in advance, even
though this results in delaying the commence-
ment of the work.
Control by postaudit.-In his settlement of
accounts the Comptroller General professes to
be guided strictly by the letter of the law. He
disclaims any equitable jurisdiction to allow
payments if the letter of the law does not
authorize them. The laws governing expendi-
tures, however, are exceedingly complicated.
The law as it stands at any particular time is an
accumulation of acts not usually passed with
any consistent regard for one another, and the
difficulties of statutory interpretation and
reconciliation are as great in the settlement of
accounts as they are in the determination of
any other legal question.
The strict letter of the law cannot be a com-
plete and sufficient guide to the Comptroller
General's action. Policy necessarily enters in.
There is usually a choice of possible interpreta-
tions. The needs of good administration and
the interests of the public must be considered.
The Comptroller General in his decisions oc-
casionally betrays recognition of these needs.
For instance, aftRf informing the Postmaster
General that the procedure of his Department
with reference to certain contracts was unau-
thorized, he passed the payments on them with
the following warning: "The payments herein-
before mentioned will not be further questioned,
if otherwise correct, but hereafter the procedure
in the matter of such contracts should be in
accordance with the rules herein stated." 6
Obviously this is tempering the wind to the
shorn lamb. The practice in question either
was authorized, in which case the Comptroller
General had no right to change it, or it was
unauthorized, and on the basis of strict legality
the payments should have been disallowed.
Yet the result achieved was clearly a sensible
one.
Legality is nevertheless the primary criterion
of the Comptroller GeneraL Hence, in most
questions he has to deal with, he looks chiefly
to procedure. Some instances may be found
in which he has denied that appropriated funds
were available for accomplishing a given purpose
in any manner-for example, the building of a
tree shelterbelt in the Great Plains region, in
1934. But usually the activity is legitimate
'14 Compo Oen. 170, 17' (1934).
The General Accounting Office
and the issue is raised over the allowable means
of carrying it on. How may employees be
compens~ted for traveling expenses'? How
maya gIven purchase be made? What proof
must be shown to secure credit for it in the
accounts?
Since l~gality is the test, it is to be expected
that effiClency and economy in administration
do not always result. Instances abound of
practices required by decisions of the Comp-
troller General that are maddening to observe
when better results could be obtained more
q.uickly a~d ~ess eXJ?ensively by different prac-
tlCes. ThlS IS partlCularly true of purchasing
and procurement. In this field the Comp-
troller General, at the behest of disappointed
bidders, sits as a court of review over contract-
ing officers, on the theory that no money is
available to pay the contractor unless he was
the lowest bidder, the specifications were not
unduly restrictive, etc. In judginO' such con-
troversies he cannot possibly be ~o well ac-
quainted with administrative needs as the
contracting officer, and to the extent that he
~n~ertakes ¥> inform himself, the whole process
IS illvolved ill ~elay. No single subject of this
sort has occaslOned so much trouble in recent
years as the purchase of automobiles for Gov-
ernment use, where there have been occasional
administrative abuses; but the Comptroller
General has also interfered with such technical
ml!-tters as the proper types of building ma-
chmery for Te~e~see Vall~y Authority projects,
power generatmg mstallatlOns at Boulder Dam.
microscopes for scientific laboratories and
electric stoves for Army posts. ' It reached a peak in 1930,8 declined thereafter,
A considerable amount of statutory restric-
tion on purchasing methods may be accepted
cheerful!y as an inevitable compromise between
the effiClency that some would practice and the
abuses that others would perpetrate if adminis-
trative discretion were unfettered. But the
restrictions laid down in the decisions of the
90mptroller General go far beyond those found
ill the statutes. They are designed in large
part not to promote economy but to provide the
C.omptroller General with proof satisfactory to
him that the statutory restrictions have been
complied with. In ~ar~, however, especially as
to supposedly r~stnctive .specifications, they
embody ~erely h!-s own notlOns of public policy.
They are ill fact Judge-made law, but they bind
the administrator conclusively.
There is one serious obstacle to the effective-
ness of control through the present system of
pos.tB:udit. Delay is inherent in it. Although
illdIVldual vou~hers are handled quickly by
personal attentlOn, the run of the mine are not
acted upon until from 2 or 3 months to 2 or
!ll0re yea!S after t?e payments are made. This
IS a consIderable Improvement over tbe situa-
tion in 1921, to be sure, but it is still far behind
what is desirable, as the Comptroller General
himself has often said. 7 A large part of the
7 House Hearings, Independen t Offices Appropriation Bill lor 1928.
p. 711. 69th Cong., 2d sess. (1927).
177
ground floor in the spacious old Pension Build-
ing is stacked high with bundles of accounts
waiting their turn, and truckloads of them arrive
every day. The delay is aggravated by the
procedure that holds up final action on all items
m an account so long as a single item is still in
question. . To obviate the delay and to
streilgthen his control, the Comptroller General
has urged, and in a measure has secured the
adoption of a somewhat different routi~e of
audit, commonly called preaudit.
Preaudit
Preaudit provides for approval of expendi-
tures by the Comptroller General after the
obligations are incurred but before payment is
made. Vouchers are prepared and, following
the usual administrative examination are sent
with supporting documents to the' General
Accounting Office. If approved, they are so
certified and forwarded to the proper depart-
ment for payment. Postaudit of such vouchers
is automatic. If not approved, a notice of
exception is issued. A considerable effort is
made. by the Audit Division to expedite the
handling of vouchers. marked for preaudit.
The 48-hour schedule that was attempted,
however, apparently has broken down.
Preaudit was first applied to World War
adjusted compensation payments in view of the
peculiar difficulties involved in recovering such
payments when wrongly issued, and to trans-
por.tation accoun~s. It was offered generally as
an Improved serVlCe to all departments in 1927.
but rose again in 1935 when cotton pool pay-
ments under the Agricultural Adjustment Act
were preaudited. It is now applied to somewhat
less than a third of the total number of vouchers
audited. Departments vary greatly in their
use of preaudit. The Navy Department in
1927 joined in adopting it, with some excep-
tions, for the Bureau of Supplies and Accounts,
only to give it up 5 years later when the Bureau
convinced its chiefs that the delays in payment
were intolerable. No other agency has aban-
doned it completely, but since its use is optional,
departments pick and choose the classes of
vouchers to be sent for preaudit.
The Comptroller General has hailed preaudit
as the best method obtainable so long as dis-
bursing officers remain under departmental
control, and urges its extension.9 He confesses
the inability of his office, however, to handle
more preauditing at present without an increased
staff. Important difficulties stand in the way of
its general acceptance. Speed is essential to
the success of the system, since neither the
departments nor the public will tolerate whole-
sale delays in payment such as attend the treat-
ment of claims. Speed is difficult to achieve in
tae General Accounting Office, congested as it
now is. Preaudit is therefore best adapted to
I See t!~ures on the use 01 preaudit tabulated in the annual reports 01
the Comptroller General. 1928-32.
• Annual reports. 1928. p. 36; 1932. p. 76.
178
routine payments, and is followed in cases
where administrative officers are willing to
forego making payments promptly and prefer
to shift responsibility to the auditor.
Another obstacle to the use of preaudit is the
centralization of the process in the Comptroller
General's office. Many of the controversies
between the Comptroller General and the de-
partments arise from the fact that he must be
satisfied as to all the circumstances attending a
payment, and must be satisfied in his own
office. This means that not merely the voucher,
but also documents to answer every question
he chooses to raise, must be submitted to him.
Matters within the personal knowledge of the
administrative officer, sufficient to satisfy him
of the correctness of his views, must be reduced
to documentary evidence for the Comptroller
General. Difficulties attending this procedure
in the Washington offices are multiplied for
payments made in the field. Preaudlt can be
adopted universally only if it is made in the
field, with auditors from the General Accounting
Office located physically adjacent to regional
Treasury disbursing offices, so that vouchers
can be routed over their desks at places where
all additional necessary information is readily
accessible. This was done in the supervised
field preaudit of cotton pool payments, success-
fully conducted in regional offices of the Agri-
cultural Adjustment Administration in 1935.
But at present this is an exceptional case.
Preaudit is especially favored by the Comp-
troller General because it means the fullest
recognition of his powers by any agency using
it. It operates directly on the disbursing offi-
cers, on whom he has the strongest hold. It
means in practice that no money may be spent
without his permission. When a department
accepts preaudit, it surrenders to the Comp-
troller General any authority it might otherwise
have to make sure its obligations to contractors
are carried out, and exchanges slower payment
for speedier settlement.
The Effect of Centralized Disbursing
At this point the effect of the system of cen-
tralized disbursing instituted in 1933 should be
noted. As already indicated, the keystone of
fiscal control as it grew up was the personal
responsibility of disbursing officers, and its
weakness lay in the fact i,hat they were adminis-
trative subordinates of the same superiors who
were empowered to obligate appropriations.
Before the establishment of preaudit in 1927 the
Comptroller General had several times urged
that disbursing be withdrawn from depart-
mental jurisdiction and centralized-possibly in
his office, or if not, at least in one independent of
any control but his own through advance
decisions and preaudit. He was unable to
secure the necessary legislation for this program,
and adopted preaudit where possible as the best
available substitute for his purposes.
Fiscal Management
Nevertheless, centralized disbursing was
established by section 4 of Executive Order No.
6166, June 10, 1933, under the authority of the
Economy Act. The order provided that the
function of disbursing, theretofore exercised "by
any agency", should be transferred to a
Division of Disbursement in the Treasury.
The final paragraph of section 4 states:
The Division of Disbursement shall disburse moneys
only upon the certification of persons by law duly
authorized to incur obligations upon behalf of the
United States. The function of accountability for im-
proper certification shall be transferred to such persons-
and no disbursing officer shall be held accountable there,
for. [Author's italics.]
By a later Executive order the War and Navy
Departments and the Panama Canal were
exempted from this except as to dvilian depart-
mental expenditures; and the effective date as
to Post Office and foreign disbursements has
been from time to time postponed., Otherwise
the consolidation has been effected.
The transfer of accountability leaves some
legal questions unsettled. The Comptroller
General has taken the position that the purpose
of section 4 "was to impose a new and enlarged
liability on certifying officers for unlawful
payments for which they are responsible,
distinct from, and in addition to, that imposed
on disbursing officers." At the same time, he
denies that the responsibilities of disbursing
officers have been altered:
While the language employed in the closing scntence
of section 4 is not and does not purport to be in form as
usually employed in legislation, when considered in the
light of the fact that accountability for public moneys is
not a matter within the purview of the act of March 3,
1933, the executive purpose therein clearly is to exact
further protection for the public moneys through placing
greater rcsponsibility upon administrative offi-
cials ... * •
So far as the accounting officers of the Government
are concerned the primary and direct action required by
law is upon the disbursing officer who, usually, is
bonded; and while the responsibility of certifying offi-
cials does not lessen the responsibility of the disbursing
officer and his surety ... ... *, where it is shown that
an erroneous or illegal payment was caused solely by an
improper certification as to matters not within the
knowledge of or available to the disbursing officer, the
accounting officers of the Government may and will
raise a charge directly against the certifying offi-
cer ... ... *.10
Thus, at present, charges may be raised
against both officers by the General Accounting
Office. No judicial test of this section of
Executive Order No. 6166 has yet been had.
Another section of the order (transferring the
Shipping Board to the Department of Com-
merce) has recently been sustained by the
Supreme Court.n And it had previously been
held, in U. S. v. Heller,12 that recovery could
not be had in a suit against a War Department
disbursing officer for payments properly certi-
fied, made in good faith, and under orders of
his superiors.
1015 Compo Gen. 362,364 (1935); 13 ibid. 326 (1934).
II [,brandl.en.Motur CO. V. United State., No. 307, October Term, 1936,
Supreme Court of the United States, decided Feb. I, 1937.
.. 1 Fed. Supp. 1 (1932).
1 The General Accounting Oifice
The transfer of accountability, it would
seem, puts the responsibility where it should
rest, upon the one who incurs the obligation.
Even before the change in 1933, the volume of
payments in every large agency was so great
that the disbursing officer's function had
become mainly ministerial. To inquire into
each item in detail was physically impossible
on the basis of appropriations provided by the
Congress for doing the disbursing work. Since
the centralization of disbursing this is even
more true. There was a precedent for the
transfer in a law dating back to 1849 (Rev.
Stat. 285, 31 U. S. C. 106), which directed the
Comptrollers of the Treasury (now the General
Accounting Office) to allow credit in the
accounts of a Navy disbursing officer for pay-
ments made pursuant to the orders of a com-
manding officer in writing, the latter becoming
accountable therefor. Thus a Navy disbursing
officer could protect himself in case of doubt by
requiring a written direction to pay from his
superior. The Comptroller General has long
opposed the extension of this provision to the
War Department, for the same reason that
leads him to object to the change made by
Executive Order No. 6166: That his hold is
more direct and immediate over disbursing
officers than over certifying officers. Further
legislation is needed to clarify the present
controversy over the effect of the order.
Control of Receipts
The Comptroller General, because of his atti-
tude, has never succeeded in establishing any
such effective audit and control of receipts as
he has of expenditures. The reasons are both
practical and legal: First, the unwillingness and
lack of authority of the Treasury to permit him
to revise its judgments on customs and income
tax assessments or to turn over to him the
enormous mass of basic papers involved; and
second, the ultimate fact that he has no hand
in the process of collection until the money is
actually deposited in the Treasury and a cover-
ing warrant is sent him. He has a little more
control over miscellaneous collections by other
agencies, but only a minor fraction of receipts
come in through these channels. No such
holds as preaudit, advance decisions, and
countersignature of requisitions are applicable
to the process of Treasury collections. Thus,
whereas on the expenditure side the need for
independence in audit has carried along with it
independence in control, on the receipt side the
need for administrative control has weakened
the independent audit.
Controversy began early in the term of
Comptroller General McCarl over his attempt
to control customs receipts by an audit of de-
posits checked against an examination of
travelers' and shippers' customs declarations,
which he demanded be sent to his office. To
have applied the same principles he asserted as
to expenditures, of deciding finally every ques-
153156--37----13
179
tion of law and fact involved in determining the
correctness of each transaction, would have set
him up as a one-man board of review over
Treasury interpretations of the tariff acts, a
highly technical function now exercised by the
Court of Customs and Patent Appeals. The
Treasury, backed by an opinion of the Attorney
General, declined to turn over the necessary
documents, which form an important part of its
records. It offered to allow access to them,
however, and ultimately a modu8 'lJivendi was
worked out by which investigators from the
General Accounting Office made occasional in-
spections of collectors' offices at the ports. On
this basis their accounts were cleared and the
papers remained in their offices. 13
Similar rebuffs attended the efforts of the
Comptroller General to get control over internal
revenue receipts and tax refunds. The Gcneral
Accounting Office has not given up hope of fur-
ther control in this field and has plans under
way to obtain it if opportunity offers. At pres-
ent, receipt accounts are maintained in the
General Accounting Office on the basis of the
covering warrants that come over to it; but
little inquiry into the original documents is
made. There is no doubt that a uniform check
on these receipts is desirable, but it can readily
be accomplished through a complete segregation
within the Treasury of the processes of assess-
ment and of collection (similar to that now ob-
taining with respect to income tax returns of
$5,000 and over) in separate bureaus with sepa-
rate staffs, with the further check of such field
audit by an independent auditor as is deemed
desirable.
As to receipts by other departments, the
Comptroller General has lately imposed addi-
tional requirements. By General Regulations
No. 87, promulgated on the eve of Mr. McCarl's
retirement, an attempt was made to bring into
the General Accounting Office an immediate
report of each collection, together with a report
from the accountable officer with whom it was
deposited, with suitable cross-references, both
to be in the General Accounting Office by the
time the coverin~ warrant on the transaction
arrived from the Treasury. This would enable
a full audit of the warrant before it was recorded
in the receipt accounts. In deference to Treas-
ury objections to turning over the original
copies of certificates of deposit, the regulations
as drafted were amended before issuance in a
manner regarded as defective by officials in the
Accounting and Bookkeeping Division of the
General Accounting Office who devised the
procedure. They rejected the Treasury's offer
of desk space to employees of the General Ac-
countin~ Office for the purpose of examining
the certificates as they were made out, and the
Legal Division of the General Accounting Office
concluded that they had no right to go further
in their demands.
11 For Mr. McCarl's version 01 "this misunderstanding and this slight
dl.fllculty that existed between our ofilce and the Treasury Department" ,
see House Hearings. Independent Ofilces Appropriation Bill tor 1928,
p. 722, 69th COlli., 2d sass. (1927).
180
A similar attempt has been made to get con-
trol of receipts arising out of interdepartmental
transactions. General Regulations No. 78,
modified by General Regulations No. 87, estab-
lished a procedure that puts the entire control
of these transfers in the Comptroller General's
hands. The Navy Department secured an
opinion of the Attorney General H holding part
of General Regulations No. 78 invalid because
it prevented the use of a siInpler form of inter-
departmental reimbursement authorized in the
Economy Act, and has followed th.i$ opinion.
The case was clearly one where the Comptroller
General thought his procedure better, and by his
regulations he attempted to repeal a statutory
exemption from it.
The objective of the Comptroller General
with regard to special deposit accounts is to get
all such credits covered into the Treasury in the
form of special funds. This strengthens his
control, since once covered in, they are there-
after available for expenditure only upon
warrants and requisitions, and both require the
countersignature of the Comptroller General.
Administrators already have so little flexibility
in transferring funds that further restrictions in
this direction by the Comptroller General will
be felt as a severe handicap. The manner in
which the Comptroller General, since the
Permanent Appropriation Repeal Act l6 was
passed, has limited advances payable from
special sources to actual collections instead of
on an accrual basis is a recent instance of the
undesirable rigidity of this control. Good
administration, measured either by economy or
by cfficiency, clearly requires a degree of dis-
cretion in the transfer of funds that is incom-
patible with the procedure prescribed by the
Comptroller General.
Countersignature of
Warrants and Requisitions
In the life history of a Government payment,
the Comptroller General's first significant con-
tact with the process is in the approval of a
requisition and the countersignature of a war-
rant. In British practice this is an important
step, because all appropriations there are made
in the form of lump-sum grants to the Treasury,
which releases funds to the operating depart-
ments on requisition. Countersignature of these
appropriations by the Auditor and Comptroller
General provides an independent check on the
Treasury. But in the United States appropri-
ations are made to the spending establishments
directly. The Treasury's functions in making
funds available are mainly ministerial, and
countersignature by the Comptroller General is
usually automatic. 16
It a7 ops. Atty. Oen. 559 (1934).
11 48 Stat. L. 1224 (1934).
11 But see 15 Compo Oen. 601 and 668 (1936). In this instance the
Treasury wanted to extend its centralized disbursing system to include
the payment of claims settled directly in the Genoral Accounting Office.
The Comptroller General returned the requisition and warrant un·
signed as a means of compelling the Treasury to continue the previous
practice of paying such claims by a Treasurer's check based upon a settle·
ment warrant.
Fiscal Management
Following the passage of an appropriation
act the money is made accessible to an admin-
istrative agency on its requisition (stating the
appropriation to be charged), which is sent to
the Comptroller General for his approval.
Thereupon the formal credit is placed on the
books of the Treasury by means of an account-
able warrant originating in the Treasury and
requiring the Comptroller General's countersig-
nature. The countersignature of the warrant
is at present a pure duplication of the work
performed when a requiSItion is approved.
The Comptroller General has occasionally
threatened to refuse to countersign and there
is apparently no method of compelling him to
do so other than possibly by a writ of mandamus
which is hardly a suitable administrative
remedy. There has been no case in the past
10 years of the actual return of a warrant to
the Treasury without his countersignature for
disciplinary reasons, but the threat of such
action may produce results.
An instance occurred in February 1936, as
the culmination of the long dispute between the
Comptroller General and the Tennessee Valley
Authority over the submission of accounts and
documents by the Authority to the General
Accounting Office in Washington. The Ten-
nessee Valley Authority had resisted this de-
mand for over a year. It insisted that the
Comptroller General audit its accounts in
Knoxville, Tenn. He had done so during the
first fiscal year of the Tennessee Valley Au-
thority and under the original act was reim-
bursed by the Tennessee Valley Authority for
the cost. But under the amended act passed
in 1935 the cost was put upon him, and he
declined to pay for a field audit. He finally
threatened to withhold his countersignature
until the required accounts and documents
were submitted in his office. 17 The Tennessee
Valley Authority found no alternative but to
yield and rearrange its office work so that ac-
counts could be transmitted to Washington.
Actual use of the power would create a grave
situation. Requisitions are ordinarily for large
sums covering the entire operation of an agency,
or important parts of it, for substantial periods.
In the 1935 fiscal year 23,690 requisitions were
made for a total of over $7,000,000,000, or an
average of. nearly $300,000 each. The result
of refusing a requisition might be to bring the
entire operation of an agency to a standstill.
Obviously if this were done the principal suf-
ferers would be innocent bystanders-employees
and the public-who would be left without
salaries and without service while the Comp-
troller General and the administrative heads
were settling their quarrel. It seems incredible
that so drastic a power should be lodged in the
Comptroller General without appeal. Under
the Dockery Act the action of the Comptroller
of the Treasury in withholding approval of a
requisition could be overridden by the President
17 The published decisions of the Comptroller Generel do not include
any of the documents bearing on his oontroversles with the 'rennessee
VaUey Authority.
I•
1
The General Accounting Office
in some circumstances, and by the Secretary of
the Treasury- in others. It is not entirely clear
whether thIS provision was repealed by the
Budget and Accounting Act, but if so it seems
essential that some similar provision be re-
enacted. ls
Prescription of Administrative
Accounting Forms and Procedures
Purpose and scope.-From the point of view
of the practical conduct of financial administra-
tion, the Comptroller General's power over
the methods of administrative accounting
probably ranks next in potential importance
after his authority to settle accounts. The
Budget and Accounting Act provides that "the
Comptroller General shall prescribe the forms,
systems, and procedures for administrative
appropriation and fund accounting in the
several departments and establishments, and
for the administrative examination of fiscal
officers' accounts and claims against the
United States." This does not cover the whole
field of administrative accounting, but does
include the basic elements of it. It can pro-
foundly influence administrative practice.
To understand the uses of the power it is
necessary to keep in mind the needs that
administrative accounts serve. These are three,
and correspond to three sets of officials who
are concerned: Departmental, financial, and
auditing. The heads of establishments must
have operating information on the activities
for which they are responsible, including both
obligations and expenditures. For their pur-
poses, the accounts of all agencies need not
necessarily be uniform, but they must be
detailed, complete, and current. The Treas-
ury Department and, through it, the Budget
Bureau, on the other hand, need comprehensive
control accounts that will reflect at any time
the over-all picture-the Treasury to balance
total income and outgo and to make sure that
cash on hand will meet requirements, and the
Budget for current control and future estimat-
ing. They may rely on the subsidiary accounts
of the separate establishments for details as
needed, but for them uniformity in the general
system is a great advantage. Finally, for
auditing, what is required is a system that will
disclose quickly whether advances of funds and
expenditures from them are exceeding appro-
priations. As matters now stand, the Comp-
troller General prescribes the forms and meth-
ods to be used in the departments and in his
own office. His control over Treasury account-
ing has long been a subject of dispute. He has
one serviceable means of enforcing his orders:
Through the refusal of the Public Printer to
execute orders for accounting forms without
a showing that he has approved the forms.
" The Comptroller General, on the contrary, has urged that the repeal
be made explicit. Annual Rtport • • • 19t6, pp. 10-12; Ibid., 1931,
pp. 2-3. The compliers of the U. S. Code Annotated do not think: It
.... as repealed; see U. S. C. A., Title 31, sees. 76, 78.
181
The work of the General Accounting Office
in the field of administrative accounting is
performed by an Office of Investigations. The
Office was established by the Comptroller
General to conduct inspections of disbursing
offices and to furnish special reports on con-
gressional request. It still retains its police
character, but with the decline in this sort of
work it has during the last decade devoted its
main efforts to the approval of forms and the
installation of accounting procedures in vari-
ous agencies. Lately it has drawn on the newly
established Division of Accounting and Book-
keeping for technical assistance.
Use and abuse oj the power.-The Comptroller
General has not as yet installed any single
standard system of accounts. His Circular
No. 27, promulgated in 1926, purported to cover
this field by requiring every administrative
agency to maintain four sets of accounts:
Una.llotted appropriations, unencumbered al-
lotments, unallocated encumbrances, and ap-
propriation expenditures. In practice, however,
the system of each establishment has been
separately approved; and once approved it has
been left alone. Most of the systems are
better than they were before. Some, such as
that of the Department of Agriculture, are up
to date and adequate. Others, of which the
Post Office is a special and important case, are
not. In fact, the Comptroller General has no
adequate means of supervising the systems
once the forms are approved, for he {).oes not
audit the departmental or Treasury accounts
but only the accounts of disbursing officers.
He maintains his own set of receipt and appro-
priation accounts, duplicating those of the
Treasury and the departments, but no regular
reconciliation of the two is attempted. The
Division of Accounting and Bookkeeping is
ambitious to revise Circular No. 27 of July 21,
1926,19 but the subject is still in a prelimiu!l.ry
stage. It has already been too long delayed.
The Office of Investigations professes to con-
sider the needs of the Treasury, the Budget,
and the department heads in the forms and
procedures it prescribes. Officials in these
agencies, however, deny that this is true.
They think they know better what they need
and cite instances of inconsiderate action.
General Regulations Nos. 83 and 84, issued late
in June 1936, are clear cases in point. They
prescribed new forms for keeping appropriation
limitation accounts and a complete set of new
symbol numbers for all accounts. They
obviously required elaborate preparations, new
forms to be printed, instructions to be revised,
etc. They were .issued entirely without notice
or consultation with any outside department,
to take effect almost at once. Disbursing
officers of the Navy, in stations all over the
II "The Accounting and Bookkeeping Division shall also • • •
make recommendation with a view to Improving methods and procedure
for more effective control of appropriation limitations and for complete
coordination or the accounting structure of the Government." General
Regulations No. 82, Aug. 20, 1935, which estahlished the Division .
182
world, and of the Treasury, located all over the
United States, had been sent the usual instruc-
tions and forms for the coming fiscal year long
in advance. Much confusion and annoyance
resulted, and the Treasury ultimately deter-
mined to disregard General Regulations No.
84.l!O This controversy is not yet settled (Octo-
ber 1936). It is difficult to reconcile this record
with the Comptroller General's professions, or
to justify the failure to invite the cooperation
of other interested parties in the change.
Accounting versus auditing.-This incident
~rings iJ;lto sharp relief the basi? ~nconsisten'cy
m lodgmg control over admlllistrative ac-
counting methods in the Comptroller General.
These are the ·tools of the Executive, indis-
pensable for financial management. Their
choice should be left to the Executive. In no
other way can a unified accounting system be
achieved, and this is too important an objective
to allow jurisdictional quarrels to stand in the
way of its accomplishment. Moreover, the
transfer of this power to the Executive would
in no way jeopardize Executive accountability
to Congress. The methods and the results of
financial management alike should receive the
criticism of an external, independent auditor.
Yet how can the Comptroller General criticize
what he has himself prescribed? And who is
there to do it for him, since he is responsible
to no one? Qui custodes ipsos custodient?
It is significant of the confusion of thought on
this subject that the Comptroller General in his
decisions continues to refer to himself and his
office as the "accounting officers of the Govern-
ment," a phrase used by the Comptroller of the
Treasury at a time when no external audit in-
dependent of the Executive existed. Clearly,
the General Accounting Office must be staffed
with accountants if it is to conduct an audit,
but the "accounting officers of the Govern-
ment" should surely be found in the Treasury
and in the departments. The very name
"General Accounting Office" is a misnomer.
The illogical results of the present arrange-
ment were clearly seen by President Hoover,
who in 1932 recommended the transfer of the
Comptroller General's powers over adminis-
trative accounting to the Bureau of the Budget
in the following words:
The Comptroller General should have the power and
duty of prescribing the form and manner in which
accounts are submitted to the General Accounting
Office fo~ the purpose of auditing and to require all
informatIOn necessary for such audit. It is not, how-
ever, a proper fWlction of an establishment created
primarily for the purpose of auditing Government ac-
counts to make the necessary studies and to develop
and prescribe accounting systems involving the entire
field of Government accounting. Neither is it a proper
function of such an establishment to prescribe the pro-
cedure for nor to determine the effectiveness of the
administrative examination of accounts. Accounting
is an essential element of effective administration, and it
should be developed with the primary objective of
serving this purpose. It should be so standardized as to
to In regard to the expense occasioned by these regulations, _ House
Hearings, Navy Appropriations Bill for 1938, p. 387, 75th COng., 1st
8888. (1937).
Fiscal Management
facilitate the preparation of financial data and reports
for the Go:,ernment .as a whole, as well as to provide the
proper baSIS for audit. The accounting forms systems
and procedure prescribed for the Government ~stablish~
ments become the most effective means available for
the. ~s~ of the depa~~en.t head in administering the
actiVities under hiS JurisdICtion, and they also furnish
the information upon which future requirements must
be predicated.
The administrative examination of accounts is as its
name implies, an administrative function. It 'is the
final essential link in the administrative control of the
fiscal activities of a department. It is not restricted to
th~ checking of the accurll:cy.of computation, although
thiS may be a necessary mCldent of the examination.
Its real purpose is the complete and detailed analysis
of the actual expenditures which enables the depart-
mental head to control the activities for which he is
responsible. It provides him information as to the
actual cost of the various objects for which he has
authorized the expenditure of appropriated funds
enables him to furnish the President, through th~
Bureau of the Budget, with justification for estimates of
future requirements, and then forms the basis of the
whole estimating system of the Government. .
The duty of de:,eloping the forms, systems, and pro-
cedure of accountmg, and the administrative examina-
ti.on o~ accounts should, therefore, be under the general
directIOn of the Bureau of the Budget which is vitally
concerned with these purposes. 21 '
Account'ing in the Post Office Department.-
Accounting in the Post Office Department has
been a special victim of this confusion. For
histori?al reasons the General Accounting Office
was given the whole of the administrative
accounting as well as the aUditing work for the
Department, which it carries on throuO"h a
special Post Office Department Division. "'This
Division has remained a separate unit, housed
apart, and carrying on its work in isolation
from the .rest of the General Accounting Office.
Its staff IS almost wholly clerical, immersed in
the gigantic but mechanical task of checking
post o~ce, money order, and postal savings
transactIOns. The first and only direction from
~he 90mptroll~r General to the Division regard-
m~ Its accountlllg procedures was made in 1922.
It IS doubtful whether anyone in the Division is
available to undertake the job of modernizing
the system! or is interested m doing so.
. Meanwhile, such accounting as is carried on
m the Department is done wholly within the
several bureaus and for the bureaus' own pur-
poses. The Bureau of Accounts of the Post
Office Department has been reduced to a purely
statistical agency without access to the docu-
ments from which the figures are taken. The
Post Office Department is not furnished fiscal
data by the accounting division of the General
Accounting Office until several months after
the close of each fiscal year. No current figures
such as are essential to financial mangement'
are kept. '
It appears th~t the q-eneral A.ccounting Office
has no mterest m altermg the SItuation and the
Post Office Department apparently has no power
to alter it. The one has the power, the other the
responsibilit;V' This results mainly from the
failure to dIstinguish between accounting and
auditing. The Post Office Department there-
11 Congrtll/onal Record, Dec. 9. 1932, vol. 76, p. 252.
r
The General Accounting Office
fore presents the astonishing spectacle of the
largest business agency in the Government, an
organization comparable in size to the largest
private corporations in the country, carried on
almost wholly without an up-to-date accounting
system.
Custody and Routing of Documents
An important consequence of the powers of
the Comptroller General, and one which has in
turn become a formidable weapon of control, is
the centralization in his Office of the custody
and routing of a staggering mass of documents.
The originals of all contracts by or on behalf of
the Government, the specifications, and all bids
upon them, must be deposited with him. A
separate section of the Audit Division devotes
its entire time to examining, recording, and
briefing these contracts. All travel authoriza-
tions for Government personnel are similarly
deposited. In 1922 the Comptroller General
ordered that all payments for freight and pas-
senger transportation be approved by his Office
in advance of payment. The Departments of
War, Navy, and Justice denied his authority to
set up this requirement and refused to comply,
but all other transportation bills are sent to him
and a force of tariff clerks is maintained to
audit and approve them. All requisitions for
the advance of funds and warrants of every sort
go to him, together with their supporting docu-
ments. For example, the standard forms pre-
scribed by General Regulations No. 87, for
reporting collections made by departments,
require that the forms be executed in sextuplet
and even octuplet and provide that the General
Accounting Office shall receive the originals.
So, also, pay-roll vouchers and their supporting
documents, such as notices of appointments,
must come to his office. Finally, the Comp-
troller General has the custody of all vouchers
whether paid or disallowed, all papers support-
ing every claim made against the United States,
and all canceled checks. From 30,000,000 to
80,000,000 of these checks are received an-
nually. It is estimated in the General Account-
ing Office that the volume of payers coming
there regularly is sufficient to fil the entire
space in the new National Archives Building
within 10 years if they should be deposited
there. They now fill a number of warehouses
in Washington.
The number of documents that the Comp-
troller General requires has steadily increa.sed
and his attempt to get them has brought
him into numerous conflicts. The controversies
with the Treasury Department over customs
and other tax receipts, and with the Tennessee
Valley Authority, have already been mentioned.
Recently he required the Pubhc Works Adminis-
tration and the Resettlement Administration
to submit the documents proving title to lands
they were purchasing. On the advice of the
Attorney General, they refused, since the law
authorizes the purchase of lands when the title
183
is confirmed by the Attorney General. Some-
what earlier he had been unsuccessful in com-
pelling the Federal Power Commission to turn
over to him the originals of all franchises
granted under the Federal Power Act of 1920
on the ground that these were contracts, al-
though their possession was essential to the
activities of the Power Commission.
Probably no other single factor weighs so
heavily among the reasons why Government-
owned corporations object strenuously to being
brought within the jurisdiction of the General
Accounting Office as the custody of documents.
This custody is in itself an important source of
control. It suggests new questions to be asked
and more documents to be required. Routing
them all to the General Accounting Office
causes enormous delay and duplication of clerical
work. It adds to printing bills and increases
the number of steps that must be taken before
any transaction can go through.
Claims
The settlement of private claims, as dis-
tinguished from the settlement of disbursing
officers' accounts, is another important power
of the Comptroller General. It calls for only
brief mention here, however, since it defines the
rights of citizens rather than the relations be-
tween Government agencies, and hence raises
few questions of administrative management.
The Comptroller General may receive any
private claim based on a legal obligation and
payable from funds already appropriated.
The number filed is large; for the past 5 years it
has averaged between 200,000 and 300,000
annually-of which, however, over three-fourths
are transportation accounts. These are not
truly claims, but most of them are handled as
such in accordance with General Regulations
No. 13.22 Of the remainder, most are claims
that have been refused by the governmental
agency in which they originated, and the others
are there for direct settlement by virtue of
occasional acts of Congress providing for the
settlement of particular classes of claims in
that manner.23 The refusal of an agency to
pay a claim is often based on prior rulings of
the Comptroller General. Sometimes the de-
partments have disagreed with these, and view
the further efforts of claimants sympathetically.
In the great majority of cases, however, the
claims have been administratively disapproved
on their merits, and the General Accounting
Office thus provides an administrative review
of the action taken. It is, however, a fine-
meshed sieve that claims must pass through.
Private claimants, unlike department heads,
are not foreclosed by rulings of the General
Accounting Office adverse to them. They
may bring suit in the Court of Claims notwith-
II 2 Compo Gen. 832 (1922).
II E.g., the act of June 16. 1934, for relief of Government contractors
whose =ts were increased hy compliance with N.R.A. code •• 48 Stat.
L. 974; and the Minnesota Fire Claims Act of Au~. 27,1935, Private, No.
336, 74th Congo
184
standing the action of the Comptroller General.
There they are relieved of one condition limit-
ing the Comptroller General's power to grant
relief. He can allow their claims only if he
finds that appropriations have been made
available to pay them. 2' The Court of Claims,
on the other hand, may allow them if it finds
that under the law they are rightfully due,
regardless of whether an appropriation for them
has been made. 26 Nor is the court bound by
the Comptroller General's view of the law, and
by interpreting it otherwise may allow claims
he has denied. The Government's defense
before the Court of Claims, as in all other courts,
is conducted by the Department of Justice.
Difficulty occasionally arises here because the
Attorney General and the Comptroller General
do not always see eye to eye in construing the
statutes. Cooperation obtains for the most
part, however, since the Department of Justice
is usually dependent on the General Accounting
Office for. the evidence necessary to defend
claims in the court. Of course, claimants may
appeal both from the Comptroller General and
from the Court of Claims to Con~ress, where
neither the lack of an appropriatIOn nor the
absence of a legal debt is necessarily a bar to
relief.
Psychological Factors
Finally, mention should be made of an in-
tangible element in the power of the Comp-
troller General-the moral authority attaching
to a so-called "watchdog of the Treasury." In
the early years of the office several instances of
lax practices growing out of the war and imme-
diate postwar conditions were brought to light
that resulted in the recovery of sums improperly
paid out. These recoveries (many of which,
to be sure, were commenced by the departments
and also by the auditors of the Treasury
Department), together with the first Comp-
troller General's weU-known zeal for his work,
gave his office a considerable prestige. This
has sometimes had the effect of putting on the
defensive in public estimation those who have
ventured to criticize his decisions or to resist
his assertions of jurisdiction.
But this is largely owing to the fact that the
subject matter with which the Comptroller
General deals is excessively complex and ill-
understood, even by those generally informed
on American Government. His powers and
duties in the supervision of public expenditures
go to the question of legality, rather than of
economy. A proper concern for economy is
the political responsibility alike of the Congress
.. Except that he may certify claims to be due under "appropriations
the balances of which have been exhausted or carried to tbe surplus fund"
Iftheclalms are brought within 5 years. U. S. C., title 31. sec. 714. Tbese
are reported to Congress, and appropriations to cover them are regularly
Included In the annual Deficiency Appropriation Acts. as in the case of
Judgments of the Court of Claims. See. e. g., act of July I, 1932, title II,
sees. 4 and 5, 47 Stat. L. 544, 647.
II Congress appropriates annually to pay the Judgments recovered In
the Court of Claims.
Fiscal Mana.gement
and of the Executive. Though the Comptroller
General may share this concern as an individual,
he has no legal power as an officer to question
the decisions either of Congress or of the
Executive on that ground. He may not add to
or subtract from the appropriations made.
His decisions either construe the meaning of
statutes or prescribe the procedure and proof
necessary to satisfy him that their provisions
have been complied with. The fact that such
procedure may not be economical or wise-as
III the case of the affidavits regarding the teach-
ing of communism which were recently required
of all District of Columbia school employees 26_
does not concern him.
"It is", as he says, "impossible to state what
amounts has [sic] been recovered or saved
through the General Accounting Office." 27
The annual reports show collections made
through the office. These average currently
about $2,500,000. The largest single item,
however, amounting to more than half the
total, is the collection from foreign governments
of amounts due for postal services performed
for them in this country. This item is in no
sense a saving but only a net balance due from
the normal interchange of mails between the
United States and foreign .countries. Against
the remaining collections must be offset the
recoveries against the United States in the
Court of Claims for debts that the Comptroller
General has refused to approve; and to these
must be added the costs of defending the suits.
Knowing the vulnerability of any figures on the
subject, the Comptroller General wisely states
that "the greatest results flowing from the
audit are to be found in the unpaid accounts
and claims, a large percentage of which are
never pressed by those claiming. It is the
deterrent effect of the audit on wrongdoing that
illustrates best its importance . . . "28
No one will dispute this benefit of an inde-
pendent audit, whether measurable or not.
It represents a gain as compared with the situa-
tion before 1921 that ought not to be sacrificed;
nor need it be under a system that provides for
proper administrative control with an inde-
pendent postaudit. On the other hand, the
linking of control powers with the audit has
entailed other costs that are directly chargeable
to the system now prevailing and that must be
considered in any appraisal of it. These are the
excessive duplication of records; the printing,
personnel, time, office space, and equipment
necessary to house and handle them; and the
devastating effect on administrative morale
that results from the division of authority
and the consequent absence of clear responsi-
bility for results. These costs, too, are impos-
sible of measurement, but they are undeniably
huge.
"15 Compo Gen. 407 (1935).
11 House Hearings, Independent Offices Appropriation Dill for 1927, p.
190, 69th Cong., 1st Bess. (1926).
.. Ibid., p. 189.
 III. SOME ESCAPES FROM THE CONTROL
•
Legislative Relief
It is not to be supposed that national admin-
istration could have survived 15 years of
subjection to the authority the Comptroller
General asserts without an explosion somewhere.
The end of government is not accounting, and
dominant political needs will find means of
expression. There are in fact some ways of
avoiding his authority. The chlef of these,
and the only one the Comptroller General
recognizes as proper, is additional legislation.
He professes only to carry out the law, and if the
law is changed he is silenced. Indeed, he often
says, in justification of his refusal to permit a
payment, that the administrator may ask
Congress for more specific authority.
The ease with whlch legislative relief can be
secured depends as much upon the political
situation in Congress and the relations between
CODO'ress and the Executive as upon the needs
of O'~od administration. When the Executive
and Congress are at loggerheads, only obviously
worthy relief acts for particular disbursing
officers may get through, and these may ~e long
delayed. The whole process at present IS hap-
hazard and undependable.
"Relief" acts.-Legislation to coun~eraQt the
decisions of the Comptroller GeneralIs of three
general varieties. The first is a "relief" act,
retroactive in effect, and directed to the par-
ticular expenditures that the Comptroller Gen-
eral has disallowed. Half a dozen or more of
these acts are ordinarily passed by Congress
each year, directing the pa~ent of ~laims. or
directing the allowance of credIt to a dlsbursmg
officer. Many more are in~luded as rid~rs. or
provisos in regular and defiClency appropnatlOn
acts. They may be long delayed, for they must
follow the usual paths of private bills. No single
committee acts upon them all. The Comptroller
General has chided Congress OIl this score:
Congr~ss i~self encou.raged, .has . encouraged, is
encouragmg disregard of Its laws ill this: That when.a
disbursing officer has ~ade an unlawful pay~en~ It
not infrequently c1eaz:s hiS record by private legislatIOn.
* * * If there were less of that, if it were less easy
* * * to obtain congressional relief, I think there
would be a determen t [sic] of the tendency to make
these payments * * * it does not make it easier
for the accounting officers to stand up and enfOrce the
laws as you write them, if, in the end, the one disregard-
ing your enactment is to go scot free. * * * 1
I House Hearings, Independent OtHces Appropriation Bill tor 1928, pp.
714-15 69th Cong., 2d sess. (1927). For examples during the second
sessio~ of the 74th Cong., see Public, No. 436 (approved Feb. 11, 1936),
and Public, Nos. 589 and 590 (botb approved May 15, 1936).
It is probable that in most cases where Congress
has given such ad hoc relief from the system, it
has acted upon a better understanding of the
ends of government than the Comptroller
General.
Remedial legislation.-The second variety of
relief legislation specifically authorizes the
agency concerned to do what it was prohibited
from doing by the Comptroller General.
Numerous acts of this kind are also passed each
year. They mayor may not include relief for
expenditures previously made, but in any event
they give the authority for the future. For
example, after the Comptroller General had
disallowed :payments made by the Navy for the
transportatlOn of dependents of officers going
home to await retirement, legislation was
passed that relieved the disbursing officers and
that authorized the Navy specifically to con-
tinue such payments in the future. Similarly,
when the Comptroller General in 1935 ham-
strung the Public 'Yorks Administration in its
low-cost housing projects, legislation was passed
at the succeeding session authorizing the
Public Works Administration to do precisely
those things that the Comptroller General had
forbidden. 2 In this case his action had been in
advance of payment so that there were no
disallowances to be relieved.
Malcing administrative findings conclusive.-
The third legislative escape is one that makes
payment depend on findings of fact by. the
administrative officer and makes those findmgs
conclusive. Where this is provided, the Comp-
troller General is effectively stopped, for the
main basis of his power in settling accounts ~as
been his insistence upon going behind admm-
istrative findings and making his own. Ex-
amples are numerous, and may be found wher-
ever there is a stro~ desire in Congress to see
that money is paId quickly and without
question. Instances are the payment of con-
gressional mileage and allowances, of contmgent
~enses of commit~ees, of the operation .of the
White House executive offices, of the contmgent
expenses of the Supreme 'Court, of the Secret
Service of contingent funds of the State and
Labor Departments, of soil conservation pay-
ments and of veterans' :payments. In all of
these 'cases the certificatlOn of the spending
J Public No. 837, 74tb Cong., 2d sess., approved June 29, 1936. Other
examples ~t the same session: Pub. Res. No. 131 (June 24. 193!l); Public,
No. 575 (May 7,1936); Public. No. 594 (May 15, 1936); Public. No. 771
(June 24,1936); Public. No. 821 (June 26,1936).
185
186
officer is conclusive upon the Comptroller
General.
Incorporation of governmental agencies.-ThE.'
freedom of most Government-owned corpora-
tions from control by the Comptroller General
is a logical extension of legislative relief. Some
of them, such as the Reconstruction Finance
Corporation, the Inland Waterways Corpora-
tion, and the. subsidiaries of the Farm Credit
Administration, are not even audited by him.
An amendment proposing to make the Comp-
troller General the comptroller of the Recon-
struction Finance Corporation, with power to
prescribe accounting Erocedures and to deter-
mine the legal availability of the uses of Recon-
struction Fmance Corporation funds, was con-
sidered and rejected by Congress during the
original debates on the establishment of the
Corporation in 1932.
The corporations that the Comptroller Gen-
eral audits are not all subject to his final power
to settle. 3 He may report to Congress the
results of his audit but he can neither stop the
payments from being made nor enforce any
liability on the corporations' disbursing officers.
The corporate form was first used during the
World War to enable corporations lito employ
commercial methods and to conduct their opera-
tions with a freedom supposed to be inconsist-
ent with accountability to the Treasury under
its established procedure of audit and control
over the financial transactions of the United
States."· It is not open to question that most
of these corporate activities could not operate
in any fashion acceptable either to themselves,
to Congress, or to the public, if they were so
subject.6
On tbe other hand, it does not appear that
Government corporations are the irresponsible
creatures the Comptroller General pictures them
to be. They have on the whole been as well
managed as most of the regular governmental
agencies and have at least as clean a financial
record. They are a convincing demonstration
that it is not necessary to lodge financial control
in the Comptroller General in order to secure
businesslike procedure or administrative results.
Their experience suggests rather the extension
to other agencies of the freedom they enjoy.
Judicial Review
Court oj Glaims.-The Court of Claims pro-
vides a reviewing authority over the Comp-
troller General, but one that is open only to
private claimants, not to administrative heads.
It may grant relief, that he has denied, to those
who can afford the tjme and money to present
their cases. The cost is a minimum of about
• But see Executive Order No. 6M9, Jan. 3,1934. requiring audit by the
Comptroller General of all Government-owned corporations created after
Mar. 3, 1933, unless (as In the case of the Tennes...e Valley Authority) a
different procedure I~ laid down In the statute crenting the corporation.
• Mr. Justice Brandeis, In U. S. ex reI. Skinner & EddV Corp. v. McCarl,
275 U. S. 1 (]927).
• For vigorous testimony on this point, see the letter of Major General
Ashburn, president of the Inland Waterway~ Corporation in hearings
before Senate Subcommittee on Agriculture and Forestry, on Control of
Flolld Waters In the Mississippi Valley, pt. I, p. IO,74th Cong., 2d sess.
(19.1111.
Fiscal Management
$50, plus a contingent percentage of any
recovery. The time may be one or two years
or more. A considerable amount of legal
business in Washington flourishes on these
suits. Many of the claims that departments
are prevented from raying by the rulings of the
Comptroller Genera are taken to the court and
a large number of these are won by the claiman ts.
But if the court is not bound by the Comp-
troller General, neither is he bound by the
court, except as to the particular claimant in
the suit, and then only because Congress later
appropriates to pay the court's judgments.
Taking a different view of the law, he may (and
often does) refuse the next claimant in similar
circumstances, who is then forced to enter suit
before the Court of Claims in order to recover.
The position of the Comptroller General is set
forth in a letter to the Secretary of the Navy,
as follows:
It is not always, however, that cases are so presented
as to give the court such opportunity. Under the
rules of pleading and procedure, and in the matter of
proof and briefs, much is dependent upon the manner
and substance of the presentation on behalf of the
Government, and in the study of actions by the court
urged here as having a bearing on questions for de-
cisions by this Office-and sometimcs suggested as
controlling, as apparently is now urged by you-it has
been found the court was not so fully and faithfully
informed and that, as a matter of fact, there was not
presented to the court for consideration in connection
with its problem certain material matters actually
involved in the question for decision by this Office and
with respect to which the court's action is cited. A
further difficulty in connection with cases in which the
court has not been given full assistance through such
presentation is that of inducing the Department of
Justice to prosecute an attempt for rehca.ring or review
by the Supreme Court, and that Departmen t is especially
handicapped in making a full presentation of the Gov-
ernment's side of cases, not only in the Court of Claims
but upon review, where it has prejudged the matters
and issued and published an opinion adverse to the
Government. * * *
It is such thinp;s that sometimes render judgments
given by the Court of Claims of little assistance in the
solving of questions for decision by this Office and
relating not to matters still to be considered by the
Congress bu t to actual use of an existing appropria.-
tion, and in view of its responsibility to check unlawful
uses of appropriations this Office must, of conrse, de-
termine for itself when decisions of inferior courts are
safe as guides in determining similar questions coming
before this Office for decision.'
The jurisdiction of the Court of Claims as to
the Comptroller General's decisions "is not so
much appellate as it is parallel and inde-
pendent.1l7 For this reason decisions of the
Court of Claims are of little assistance to ad-
ministratqrs. For both legal and practical
reasons they will not incur obligations that can
be paid only in the form of jUdgments of the
Court. Little use, likewise, is now made of
section 148 of the Judicial Code,S which author-
izes department heads to refer claims pending
in their departments to the Court of Claims for
opinions or adjudication. Advance decisions
• House Hearings, Naval Appropriation Bill for 1936, pp. 844-45, 74th
Con!!., 1st sess. (1935).
, Hotchkiss, op. cit., p. 32.
122 Stat. L. 485 (1883); 24 Stat. L. 507 (1887); 36 Stat. L. 1137 (1911
See 53 C. CIs. 370 (1918) and 59 C. Cis. 813 (1924).
The General Accounting Office
of the Comptroller General have ill practice
superseded these references.
Mandamus proceedings.-Other forms of judi-
cial remedies, principally mandamus proceed-
ings, have occasionally been used against the
Comptroller General. Most of these have been
brought by military or naval officers with regard
to pay allowances; contractors have brought
some. There was a wave of them in 1924 and
1925 when he attempted to collect alleged over-
payments to officers by offsets against their
salaries.' The most notable recent case was
Miguel v. McCarl, 291 U. S. 442 (1934), in
which the War Department supported a friendly
suit by a retired Philippine Scout to compel the
payment of retirement allowances, and was suc-
cessful. In effect it thus secured a reversal of
the Comptroller General's decision denying its
authority to make the payment. The Comp-
troller General has been almost uniformly UD.-
successful in the courts except when he has had
the support of the Attorney General. lo In most
of the mandamus cases there has been disagree-
ment between these two officials.
Since the Attorney General controls the de-
fense of suits against the United States and its
officers, decisions in the lower courts adverse
to the Comptroller General have not usually
been appealed. In the reported cases, the
courts have generally failed to find anything in
the law giving the Comptroller a greater degree
of discretionary power by virtue of his inde-
pendence than the Comptroller of the Treasury
enjoyed. ll Nor have they shown any marked
deference to his interpretations of law.12 In
the Jl.liguel case, although the Comptroller
General had stated in an advance decision that
the payment in question was "not authorized
even by the remotest implication of the laws",
the Supreme Court found the disbursing officer's
duty to pay "'so plainly prescribed as to be
free from doubt and equivalent to a positive
command', and therefore is 'so far ministerial
that its performance may be compelled by
mandamus.''' "It seems unnecessary to add",
the Court remarked, "that this duty cannot be
affected by a contrary decision of the Comp-
troller General" 13_a statement, to be sure,
that begged the chief question in the case and
left the legal conclusiveness of the Comptroller
General's decisions shrouded in doubt.
Nevertheless, mandamus proceedings are of
little practical use to the departments as a
means of reviewing the Comptroller General's
decisions. They must be brought by a private
claimant. The claimant may have the Depart-
• The controversy over offsets of debts against salaries was ultimately
settled adversely to the Comptroller General by the act of May 26, 1936
(Public, No. 618. 74th Cong.), which permitted such offsets "under such
regulations as may be prescrihed by the head of the department."
10 As in U. S. er rei. Skinner &: EddU Corp. v. McCarl, 275 U. S. 1 (1927);
McCarl v. Wallen, 38 F. (2d) 942 (1930); McCart v. Hoeppet, 68 F. (2d)
440 (1933).
11 Thus the decision In Miguel v. McCart was rested largely on the
similar result in Smith v. Jackson, 246 U. S. 388 (1918), In which the Court
had sharply rebuked an Auditor for the Panama Canal, who was relying
upon an advance decision of the Comptroller of the Treasury.
12 E. g., McCarl v. Cox. 8 F. (2d) 669 (1925); cert. den. 270 U. S. 652 (1926);
McCarl v. Pence, 18 F. (2d) 809 (1927).
"291 U. S. 442. 454. See Harvey C. Mansfield. "Judicial Review of
the Comptroller GeuAral". Cornell Law Quarterlu, XX (1935), p. 459.
1 :;:31;;;;-37--14
187
ment's support or he may not. If the Depart-
ment and the Comptroller General are not at
'Odds in the case, a suit for mandamus may be
just another embarrassment to the Department
in its administration. Mandamus operates
directly on the subordinate officers and de-
moralizes administrative responsibility. Even
if the Department disagrees with the Comp-
troller General, it must feel very sure of the
outcome before it can welcome a test by man-
damus. There are cogent objections to open-
ing mandamus proceedings to claimants in any
event so long as the Court of Claims is available.
Administrative Defenses
Opinions of the Attorney General.-Without re-
sort to Congress or the courts there are some
administrative defenses against the Comptroller
General. Department heads confident of their
position may ask the Attorney General for his
opinion of their authority to do something that
the Comptroller General has forbidden. The
Comptroller General recognizes no binding
quality in such opinions and has time and again
persisted in disallowing payments thus sup-
ported. 14 On the other hand, any immediate
attempt to collect on these disallowances must
be by suits under the control of the Attorney
General, and the disbursing officer can there-
fore count on not being called upon to make
good a disallowance incurred in pursuance of
the Attorney General's opinion. There have
been a number of such cases. Opinions of the
Attorney General upheld the Treasury Depart-
ment in limiting the Comptroller General's
access to customs declarations and the Navy
Department in its view that it need not follow
the Comptroller General's Regulations Nos. 13
and 78. 15 Opinions of the Attorney General
are, however, of limited value at present as
against decisions of the Comptroller General.
There are too many weapons in the General
Accounting Office arsenal. Defiance at one
point will bring reprisals at others.
Camouflaging transaciions.-'rhe more usual
defense consists in camouflaging transactions
that the Comptroller General will not approve
in forms that he will approve. The present
system inevitably puts a. premium on this pro-
cedure. Decisions-and they are numerous-
which in the opinion of administrative officers
are not warranted in law, justice, reason,
economy, or efficiency, will be avoided or
evaded if means can be found, in this as in
every other field of law enforcement. This
H The Comptroller General's view of opinions of the Attorney General
has heen expressed many times-recently in his letter to the Secretary of
the Navy. cited supra, p. 46. See Albert Langeluttig, The Departmem
of JlUtice of the Unitod Statt!. ch. 13. R. S .. sec. 35fi. which Buthorizes
the Attorney General to render opinions. ~Ives them no binding quality,
but admlnistratl ve practice in all other fields hBS generally recognized
them as conclusive in the absence of court decisions-for the very good
reason that administrators who disregard them and are brought Into
litigation therehy must entru..t their derense to the Attorney General.
The only Supreme Court decision bearing on the subject is Smith v.
Jackson,246 U. S. 388 (1918), in which the Court told the Auditor for the
Panama Canal "that any doubt which he might have had shouid have
been subordinated, first, to the ruling of the Attorney General and,
second, beyoud all possible question to the judgments o[ the courts
beloW." Pp. 390-91.
"33 Op. Atty. Gen. 3S3. 385; spe also, 34 ibid. 346, 317.
188
attitude is not confined to department heads,
but may be expected to obtain in varying de-
grees throughout the rank and file of the service.
There is no way of measuring it, but in the
aggregate it has probably increased in recent
years with the growing power of the Comptroller
General. It is a form of passive resistance to a
control felt to be unjustified, and to be aJ?plied
with more zeal than understanding. It lS im-
possible to defeat it entirely, despite the utmost
efforts of the Comptroller General. A vicious
circle results: The more comprehensive his in-
formation and authority, the more determined
the Comptroller General is to extend it further
so as to stop practices he disapproves; and the
less the discretion left to administrators, the
greater the ingenuity they exercise to circum-
vent the control.
In summary, it may be said that the various
remedies against the Comptroller General avail-
able either in Congress or in the courts are
remedies ordinarily available only to the big
Fiscal Management
fellows and not to the little ones. An agency
with powerful congressional support may get
what It wants and an individual with adequate
financial resources may pursue his way in the
courts. The small claimant, the individual
clerk in a department, the obscure chief of a
small bureau, usually finds that he has no chance
through any of these remedies. As to him, or
his policy, the Comptroller General's decision is
final and without appeal.
It will readily be seen that the possibility,
and the occasional necessity, of circumventing
the Comptroller General tends to make the
execution of administrative policy a battle of
wits. Administrators sit up nights devising
ways of accomplishing what they know needs
to be done, instead of being free to pursue the
policy and procedure they determine to be best
in the light of statutory powers, with judgment
by Congress on the character of their perform-
ance. The result is destructive of departmental
morale and financial responsibility.
 IV. THE IRRESPONSIBILITY OF THE GENERAL
ACCOUNTING OFFICE
•
The foregoing review of the Comptroller Gen-
eral's powers suggests the question: To whom is
he responsible for their exercise? The realistic
answer to the question seems to be: He is effec-
tively responsible to no one. Rather he is a
one-man commission, independent of all other
branches of the Government, and to him the
Executive is made administratively responsible.
This is a matter of capital importance.
Independence of the Executive
It is abundantly clear that the framers of the
Budget and Accounting Act succeeded in their
purpose to create an officer independent of the
Executive. He is independent legally because
his powers "shall be exercised without direction
from any other officer." No one who has had
contact with the working of his office will doubt
that this command has been literally and faith-
fully performed.
He is independent politically by virtue of his
tenure of office. Here again the statute went
the limit. Although appointment is by the
President with confirmation by the Senate, de-
pendence stops there. The term is 15 years,
except that retirement at 70 years of age is
compulsory. An incumbent is made ineligible
for reappointment in order that he may not be
tempted to curry Executive favor. The salary
is $10,000. Removal, except by impeachment,
according to the statute, is by joint resolution
of Congress for named causes, and in no other
manner. The President cannot remove him by
his own action; he cannot initiate removal. A
Rentiment strong enough to accomplish removal
by a joint resolution of Congress would more
likely be expressed in legislation abolishing and
reorganizing the office. Removal, like impeach-
ment, is in this case a remedy for moral turpi-
tude, not a means of securing political responsi-
bility. Finally, to assure continuity in the
office there is provided an Assistant Comptroller
General who acts as Comptroller General during
a vacancy, and who enjoys a similar term and
tenure.
The constitutionality of these arrangements is
open to serious question. President Wilson
vetoed the Budget and Accounting Act as
originally passed because he deemed the with-
drawal of the removal power from the Presi-
dent unconstitutional,t and the changes made
in this respect in the act as signed by President
Harding by no means met this objection. So
far as the decision in Myers v. U. S.2 is still good
law, the act is clearly unconstitutional. And
to whatever extent the more recent case of
Humphrey's Executor v. United States 3 may be
thought to go in limiting the doctrine of the
Myers case, it certainly contains nothing to
support the view that Congress may withdraw
the power from the President completely and
exercise it itself.4 The Humphrey case has no
application to an officer such as the Comptroller
General who exercises executive power. Never-
theless, the question of removal has thus far
remained academic, since no attempt to remove
a Comptroller General has been made.
Another constitutional question remains un-
settled. May the Comptroller General go
behind Executive actions based upon the Presi-
dent's power as Commander in Chief of the
Army and Navy? The War and Navy Depart-
ments are accustomed to the tradition of a
hierarchy of command. They regard division
of authority as indefensible and intolerable, and
on several occasions have contested the Comp-
troller General's authority to review their
findings. The problem during peacetime is
perhaps less acute than formerly, since the
centralization of disbursing has removed civilian
payments from departmental jurisdiction. The
existing system, however, has not yet undergone
the test of a war. It would almost surely break
down in those circumstances as an intolerable
hampering of effective action, and the constitu-
tional question would then be raised whether
the Comptroller General could interfere with
the performance of military orders.
Independence of the Courts
Nor is the Comptroller General in practice
responsible to the courts. The very words of
the act of 1921 make his decisions "final and
conclusive upon the executive branch of the
Government." Judicial review of conflicts
I Congre8lional Record, June 4, 1920, vol. 59, p, 8609.
'272 U, S. 52 (1926) .
• 295 U. S. 602 (1935).
• Commentators who assume the contrary appear not to have noticed
this distinction-W. J. Donovan and R. R. Irvine, "The President's
Power to Remove Members oC Administrative Agencies", Cornell Law
Quarterlu .:XXI (1936), p. 215.
189
190
between the Comptroller General and adminis-
trative heads is virtually limited to decisions so
plainly wrong that mandamus proceedings can
be brought. Even there, the obligations must
already have been incurred, and the suits be
initiated by private parties. Not many have
been brought, and their results are not wholly
consistent. There would be no advantage in
extending this remedy. The Court of Claims
is open only to private suitors. Thou~h it is
not limited to cases of abuse of discretlOn and
may grant relief to claimants, it has no appel-
late jurisdiction over the Comptroller General;
its decisions do not bind him. There is thus
no judicial forum whatever in which adminis-
trators can appeal from his constructions of law.
This is the only field of administrative action in
which Government officials are denied access to
the courts for the purpose of testing the limits of
their authority or the meaning of the laws under
which they operate.
Independence of the Congress
.Any justification for the Comptroller Gen-
eral's position must lie in the conception that he
is an agent of Congress. The most vigorous
defenders of his office in Congress, in the General
Accounting Office, and among academic writers
explicitly assert this.' Yet an examination of
the record leads to the conviction that he has no
real responsibility in this direction either.
From the act it appears that two kinds of
responsibility were contemplated. The first is
legal. Congress by law gives t.he Comptroller
General general and special directions by which
he is legally bound. If it. desires to change a
decision of his, a new specific instruction can
be given by law without resorting to removal.
But this responsibility is not peculiar to the
General Accounting Office. The heads of all
departments and establishments are similarly
given duties by Congress, which are altered
from time to time.
The second is a political or functional type of
responsibility to Congress, held to justify inde-
pendence of the Executive. The Comptroller
General is required to-
* * * investigate, at the scat of government or
elsewhere, all matters relating to the receipt, disburse-
ment, and application of public funds, and shall make
* * * to Congress at the beginning of each regular
session, a report in writing * * * containing rec-
ommendations concerning the legislation he may deem
necessary to facilitate the prompt and accurate rendi-
tion and settlement of accounts and concerning such
other matters * * * as he may think advisable.
In such regular report, or in special reports at anv time
when Congress is in session, he shall make recommenda-
tions looking to greater economy or efficiency in public
expenditures.
* * *
The Comptroller General shall specially report to Con-
* law" have ever been made, nor any reports
gress every expenditure or contract made by any depart-
ment or establishment in any year in violation of law.
• Chairman Good of the House Select Committee on the Budget
Cono~e88i~nal Record, ;May 5, 1921, vol. 61, p. 1090; O. R. McGuire:
"Legl.slatlve or ExecutIve Control over Accounting for Federal Funds,"
lllmo .. La!,! ReVIew, XX (1926), p. 4?5; w. F. Willou~hby, Mgal Sta/us
and Ji'unrhOn, offhe Gen,ral Aceoun/ma Office of the National Government
(Baltimore: The Johns HopkIns Pres_, 1927), pp. 12·21.
Fiscal Management
He shall s~bmit to Congress reports upon the adequacy
and effectiveness of the administrative examination of
accounts and claims * * * and * * * of de-
partmental inspection of the offices and accounts of
fiscal officers. 6
The facilities of his Office were also placed at
the disposal of any congressional committee
"having jurisdiction of revenues, appropria-
tions, or expenditures." To carry out these
duties a comprehensive power of investigation
was .given him, with the right of access to all
offi?Jal record.s, such .as a congressional investi-
gatm~ comnuttee mIght have. How has this
functlOnal responsibility been discharged?
Annual reports.-The Comptroller General
ceased making annual reports to Congress in
1933 when he took advantage of provisions in
the Legislative Appropriation Act authorizing
heads of establishments to discontinue the print-
ing of their reports.7 For the last 4 years the
annual report of the Comptroller General has
been typed and deposited in his files. Con-
gressmen and the public must go to his Office to
se~ a copy. The,last t.hree annual reports con-
tam no general discusslOn or recommendations,
but simply set forth statistical material similar
to that appearing in the appendixes to the
published reports prior to 1933. Even the
earlier printed reports were for the most part
perfunctory, ill-arranged, and of little value.
The form did not distinguish the important
from the trivial; related matters were not
brought together. They contained no sum-
D?-ary or review whatever of the financial posi-
tIon of the Government. They were mainly
concerned with difficulties the Comptroller
General had encountered in his attempt to
control administrative activities, together with
statistics on the volume of work. He called
attention to a number of abuses and suggested
~emediallegislation to increase his own author-
Ity. The Congress, however, in practice dis-
regarded these reports; they failed altogether
to accomplish the purposes indicated in the law.
Special reports.-A number of special reports
have been made during the past 15 years
covering ~uch agencie~ as the Emergency Fleet
CorporatIOn, the Ahen Property Custodian
(this at the request of the President), the Office
of Indian AffaIrs, St. Elizabeths Hospital, and
the Tennessee Valley Authority, which is the
lates.t. Not all' of these reports were regularly
publIshed. Reports of delinquent disbursing
officers were made for some years, but have
been discontinued. They received perfunctory
attention and have in any case ceased to be
~mportant since centralized disbursing was
mtroduced. No reports of "every expenditure
or contract made * * * in violation of
upon "the adequacy and effectiveness of the
• Sec. 312 of the Budget and Accounting Act .
I Act 01 June 30, 1932, pt. I, !ec. I, "Office of Superintendent of Docu-
ments"; 47 Stat. L. 398. Similar language bas been copied into the
~cts f~r st,lbsequent .year,. The 1932 act also provided, however, that
nothmg In thIs sectIOn shall be construed to authorIze the discontinuance
of any report or publication specifically required by law." Ibid., title
lII, sec. 302: 47 Stat. L. 408.
The General Accounting Office
administrative examination of accounts and
claims * * * and * * * of departmental
inspection of the offices and accounts of fiscal
officers," as required by the Budget and Ac-
counting Act.
Thus the main feature of the act has broken
down completely. Administrative action by
the Comptroller General has been substituted
191
for reports to Congress. In place of the con-
stitutional division of authonty over financial
matters between Congress and the Executive,
a third authority has been introduced which
impairs the responsibility of the other two.
The Executive has not the proper power, and
Congress has not the information, adequate
to the discharge of their respective tasks.
j
 V. CONSEQUENCES FROM THE POINT OF VIEW
OF ADMINISTRATIVE MANAGEMENT
•
The general consequences of the present
system of fiscal control from the point of view
of administrative management mal be con-
veniently summarized at this pomt. They
include the divorce of responsibility and
authority, arbitrary and technical decisions,
delay, and the want of any adequate central
system of accounts for control purposes.
Divorce of Authority and Responsibility
The division of authority between the Comp-
troller General and executive officers is a
continual source of conflict between them, and
will remain so as long as the Budget and
Accounting Act is unchanged. Responsibility
is broken down because every executive officer
has an alibi for his failures, while the Comp-
troller General for his part is under no respon-
sibility to see that administrative tasks are
accomplished.
An excessive duplication of records of all
sorts is an inevitable incident to this division
of authority and responsibility. This brings
further rigidity in procedure. Regardless of
the substantive desirability or importance of
doing any .particular thing, it may not be
done unless the procedure prescribed by the
Comptroller General is followed. Though this
amounts only to inconvenience in a great many
cases, it may and does prevent many things
from being accomplished at all. The same
kind of red tape that Lloyd George inveighs
against in his memoirs, when he speaks of the
"military mind", is a growing feature of Ameri-
can administrative procedure in consequence of
the Comptroller General's position. Adminis-
trators confronted with any unusual situation
may find themselves handicapped by this
control. The Post Office Department, for
example, must deal with the reports of 300
postmasters in New Mexico who can neither
read nor write English. The Agricultural
Adjustment Administration must make pay-
ments to cotton ginners who operate family
businesses and keep no accounts or records
whatever. More normal operations are equally
hampered.\ -E;ery agency sending men to the
field by au~obile must give them books of
forms to be used in duplicate for each purchase
of gasoline. Every sort of travel service must
be accompanied or preceded by the most elabor-
ate system of preliminary authorization, all in
due form.
. Administrative officers, instead of spending
their time in thinking out how best to perform
the tasks committed to them, must consider
primarily how to carry on the work of the
Government at all in accordance with General
Accounting Office rulings. For the good of the
service, too much time must be spent in de-
vising ways and means of avoiding these
decisions.
Arbitrary and Technical Decisions
A large number of arbitrary and technical
decisions by the General Accounting Office is
another conspicuous result of the present sys-
tem of fiscal control. This is not a matter of
isolated instances but of the wholesale hamper-
ing of almost every agency whose accounts are
settled by the Comptroller General. A few
examples serve to illustrate.
The Comptroller General objects to delega-
tion to an assistant of authority vested in the
head of a department. Thus, in spite of an act
of Congress permitting the Secretary of the
Interior to delegate to his executive assistant
power to sign "such official papers and docu-
ments as the Secretary may direct", the Comp-
troller General refused to allow credit for travel
expenses for Interior Department employees
changing official duty stations on orders so
signed. Such delegations must be limited to
pro forma matters or routine work. Travel au-
thorizations, in the opinion of the Com.ptroller
General, are matters of discretion requirmg per-
sonal action by the Secretary.l
Similarly the Comptroller General held that
since the Securities Exchange Act author-
ized the Commission to appoint and fix the
compensation of its officers and employees,
there was no authority to delegate any part of
the appointing power to a director of employment
research, and consequently no authority to pay
the salaries of employees appointed through
him. 2
In connection with Government contracts the
Comptroller General attempts to review speci-
115 Compo Gen. 171 (1935).
I 15 Compo Gen. 226 (1935).
193
194
fications and to determine whether or not they
meet administrative needs and are at the same
time not unduly restrictive. This has led him
far into a field in which from every point of
view he is ill-equipped to act.
Travel expenses for Government employees,
already mentioned, are the source of perhaps
more technical decisions than any other single
.subject. Recently the head examiner of the
Interstate Commerce Commission, holding hear-
ings at a number of points throughout the
country, and having his schedule altered in the
middle of his trip, fell afoul of the Comptroller
General in getting reimbursement for a one-way
fare for a part of the journey, although he had
had no notice of the change of schedule until a
telegraphic order from the Commission reached
him in the middle of it.
A very recent decision/ holds that mileage in
lieu of actual expenses for travel on official
business in a personally owned automobile can-
not be paid to an employee who used a car
registered in his wife's name, even though
under the law of the State where the travel
was performed the property of husband and
wife IS common.
By another recent technical ruling, credit
was refused for travel expenses of an Internal
Revenue agent sent at the express direction of
the Secretary of the TreasurJ to investigate the
murder of a narcotic agent. Despite the obvious
interest of the administrative officers in the mat-
ter, and its interest to the next agent assigned
to that position, the Comptroller General held:
The investigation of the murder of a narcotic agent
has no connection with the assessment and collection
of the internal revenue itself, * * * the investiga-
tion of the murder of a Government agent is a matter
primarily for the State authorities, unless committed
under such conditions as to constitute a Federal
crime; * * * in which case the proper bureau of
the Department of Justice would be charged * * *'
Suspensions of 1 cent are occasionally made,6
although the cost of handling these items must
far outweigh the recoveries. Similarly, the'
Comptroller General has required fourth-class
postmasters to install meters, at a charge of
$1.50 a month, to measure accurately the
electric power consumed for lighting in little
post offices where the average monthly charge
for current consumed was $1.
A more important instance was the Comp-
troller General's refusal to allow the Public
Works Administration to dedicate part of the
site acquired for the Techwood low-cost housing
project in Atlanta to the local government for
use as public streets and parks. This decision
was made on the ground that there was no
authority to give away property of the United
States, although all that in fact was being given
away was the future cost of maintenance of
the streets and parks.
Instances of this sort could be multiplied
indefinitely. In practical effect many of them
I J6 Compo Oen. 23 (1936),
• 16 Compo Gen. 32 (1936).
I For an inst8n~'e, see 16 Compo Oen. 25, 26 (1936).
Fiscal Management
amount either to denials of substantial justice
to individual employees, or they insist on pro-
cedures that fly in the face of common sense.
Whatever their individual significance, taken
together they: are a serious indictment of
detailed outSIde control.
Delay
Disheartening delay is an inevitable and
notorious incident of the existing system. The
Comptroller General admits this. Speaking
before the Subcommittee on Appropriations of
the burden of work on his office, and of the
need for a larger appropriation for the fiscal
year 1936, he said: "Few of these duties may
safely be delayed. But in all frankness it must
be stated our facilities are not such as to make
possible such degree of promptness as best
serves the public interest."
So far as claims and payments are concerned,
the chief hardship is on the individuals con-
cerned. Administrators feel it too, however,
whenever the decisions affect the future con-
duct of their work. Actions are continually
held up while advance decisions are awaited,
or until word is received that a contract has
been approved, and this often takes months.
The tempo of administration must be adjusted
to the pace of the General Accounting Office.
That is a bottle neck through which a stagger-
. ing number of questions and papers must pass.
It is impossible to make any accurate estimate
of the cost of delay in time and money, but
there is no question that it, too, is staggering.
Without doubling the staff employed, there is
no prospect of relief from the delay necessarily
involved in the present system.
Even if additional space and personnel were
available, the greater promptness in handling
the work would lead only to greater trouble of
another sort so far as the administrator is con-
cerned. The whole course of experience duri.ng
the past 15 years has indicated that the more
the Comptroller General learns of the activities
of other agencies through the increased number
of papers he receives, the more he has been dis-
posed to interfere further in the determination
of administrative problems. There can be little
doubt that if he had more hands they would be
set to exerting greater control. The result could
only be increased controversy.
Failure to Provide a Central System of Accounts
A final consequence is the present lack of any
proper central accounting system available for
budgetary and control purposes. Such a sys-
tem is indispensable to future progress in finan-
cial administration. The Treasury is the appro-
priate agency to provide it, but the Comptroller
General reads the Budget and Accounting Act
as conferring the power on him. He does not
control Treasury accounting forms and pro-
cedures, and he has made no effort to correlate
administrative appropriation and fund account-
The General Accounting Office
ing in the several departments, which he does
control, with the Treasury system.
As the law now stands, a single unified
accounting system could be secured only
through complete and wholehearted cooperation
between the Comptroller General and the
Treasury, and this has not obtained. The
difficulty lies in a dispute over jurisdiction
arising from the poor draftsmanship of the
Budget and Accounting Act, which carried
over all previous ambiguities in the power of
the Comptroller of the Treasury, and added
some new ones. The Comptroller General has
taken the position that the Division of Warrants
and Bookkeeping in the Treasury Department
is subject to his power to prescribe the forms
and methods of keeping accounts. The Treas-
ury Department denies his authority, but can-
not fit its system into those he has prescribed
for the other departments and agencies. An
impasse has resulted from these conflicting
interpretations of law. This matter is im-
portant enough to warrant quoting the provi-
sions in question.
The Dockery Act provides, in section 5, that
"the Comptroller of the Treasury shall, under
the direction of the Secretary of the Treasury,
prescribe the forms of keeping and rendering all
public accounts, except those relating to the
postal revenues and expenditures therefrom."
Section 10 provides that "the Division of
Warrants, Estimates, and Appropriations in the
office of the Secretary of the Treasurv is hereby
recognized and established as the Division of
Bookkeeping and Warrants. It shall be under
the direction of the Secretary of the Treasury
as heretofore. Upon the books of this Division
shall be kept all accounts of receipts and expend-
195
itures of public money except those relating to
the postal revenues and expenditures there-
from."
In the Budget and Accounting Act it is pro-
vided, by section 304, that "all powers and
duties now conferred or imposed by law upon
the Comptroller of the Treasury or the six
auditors of the Treasury Department, and the
duties of the Division of Bookkeeping and
Warrants of the Office of the Secretary of the
Treasury relating to keeping the personal ledger
accounts of disbursing and collecting officers,
shall, so far as not inconsistent with * * *
[this act], be vested in and imposed upon the
General Accounting Office and be exercised
without direction from any other officer."
Shall the Division of Bookkeeping and War-
rants keep "all accounts" (as provided in section
10 of the Dockery Act) under the direction of
the Secretary of the Treasury, or under the
direction of the Comptroller General? This is
the issue. Evidently no proper central account-
ing system can be established unless the
accounts kept in the Treasury and those main-
tained by each department are parts of a single
system. Evidently also they cannot be parts
of a single system so long as the Secretary of
the Treasury prescribes the forms and pro-
cedures to be followed in the Division of Book-
keeping and Warrants, while the Comptroller
General prescribes those applicable to all other
agencies without regard to Treasury needs. A
central accounting system is so badly needed
that disputes over jurisdiction should be settled
without delay. The Comptroller General is
the only one who could make the present
law work to fill that need, and he has not
done so.
 VI. OBJECTIVES OF A PROPER SYSTEM
•
Recognition of the principle that the carrying
out of the Budget is an executive function and
responsibility carries with it important con-
sequences for the system of auditing and ac-
counting. Accounting is primarily an adminis-
trative function essential to departmental and
budgetary management. It belongs in execu-
tive hands. ~ Auditing is the means of securing
a legislative review of the results of executive
management. It should be handled in an
agency completely divorced from executive
control, as the General Accounting Office now is.
The two functions should not be mingled.
Several consequences follow from this distinc-
tion between accounting and auditing.
Postaudit
First, the auditing agency should postaudit
all receipts and expenditures. The minuteness
of detail with which this is done should be left
to the discretion of the chief auditing officer,
subject to directions from Congress. There is
no reason to believe that all governmental
accounts should be audited in the same degree
of detaiL In many instances the items involved
are so small and the volume of them so great
that the cost of a complete audit would be
greater than the amounts involved warrant.
In such cases a periodic audit, or a sampling on
some basis to be determined by the auditor,
should be ample. On most matters, however,
the audit should be full and complete.
The audit should serve two purposes. First,
it should give a complete check on the fidelity
of officers whose accounts are audited. Only
by an independent audit can such a check be
made and relied upon by all. In the second
place, it should question the legality of expen-
ditures where, though made in good faith, the
statutory authority for them is in doubt. The
auditor IS not the one to settle such questions,
but unless he is satisfied by further explana-
tions he should report them to the body ulti-
mately responsible for maintaining proper ac-
countability-that is, the Congress.
Investigatory Powers
Second, in order to perform a complete and
independent audit the auditing officer should
have the fullest investigatory powers, com-
parable to those of a congreSSIOnal committee.
The Comptroller General at present asserts
such powers, under section 313 of the Budget
and Accounting Act but his attempt to exercise
them has been blocked on a number of occa-
sions. So long as the purpose served by such
investigation is that of control rather than
audit, as at present, it is inevitable that the
departments will resist the Comptroller Gen-
eral's attempts to inform himself more fully.
Stripped of his power to control their actions,
however, no reason appears why he should not
satisfy himself completely as to the facts of
transactions that have occurred. The only
exceptions to this are in such fields as foreign
affairs or national defense, in which the public
interest might be said to justify keeping details
of transactions secret.
Publicity of Reports
Third, the Comptroller General's findin~ on
postaudit should be given abundant pUblicity.
No present policy of the General Accounting
Office is more difficult to condone than its secre-
tiveness. It should, on the contrary, send to
Congress a continuous stream of information,
presented in an easily usable form. Its annual
report should be printed. It should contain a
general survey of the fiscal condition of the Gov-
ernment, as viewed by the auditors, to be read
with the annual report of the Secretary of the
Treasury. It should contain also a review of
each department's fiscal transactions. Special
reports should be made frequently, as occasion
arises, and on the initiative of the auditor as
well as in response to specific requests from Con-
~ess. These should not be limIted to reports of
uregularities. Studies of particular agencies
and cost-accounting analyses of special subjects
would be illuminating and would provide Con-
gress with the material for a more intelligent
consideration of appropriation acts than is now
possible.
Promptness of Audit
Fourth, the audit should be prompt. It is
elementary that the effectiveness of any kind of
law enforcement diminishes with the square of
the distance at which it lags behind the act. So
long as a great part of the work of the General
Accounting Office deals with transactions al-
ready some months or years old, the advantages
197
198
of independent audit are minimized. Employ-
ees whose accounts are found to be irregular
may have died, or may have left the service
Ilnd their whereabouts be unknown. Con-
tractors for the Government who have been
overpaid may have gone into bankruptcy.
Evidence and witnesses become increasmgly
difficult to produce.
The necessary promptness and dispatch can
be achieved only through some geographical
decentralization of the auditing work. This
means the physical location of auditin~ units
wherever the volume of disbursements IS large
enough to keep them occupied, in Washington
and in the field. Assignments could be rotated,
as policemen are shifted from beat to beat, to
make sure that auditors in the field keep their
neutrality. Promptness means also the delega-
tion to them by the chief auditor of some re-
sponsibility, so that routine matters need not
be referred to headquarters. If this were done
the work might shortly be brought to a current
status. Little improvement can be expected so
long as all papers must go through one office
and all questions must be raised and decided
there. The appropriate balance between cen-
tral supervision and local autonomY.' is a matter
to be determined by the chief auditing officer,
subject to congressional direction, on the basis
of safety, speed, cost, and convenience. The
relationship between the Commissioner of
Internal Revenue and the Internal Revenue
agents in charge of the several districts suggests
an approximate model.
Preaudit of routine payments could continue
on request of the spending agency if desired.
But in any event the postaudit should be
accomplished on the spot and immediately and
the results should be brought together promptly
so that following the close of each fiscal year a
completely audited statement of all transactions
could be made to the succeeding Congress. If
the report were made say on March 1, it could
include also the auditor's comments on the
administration's financial reports, which are
rendered early in January. These might well
be of great value. Differences between the
auditor and administrative officials could then
be considered by Congress without the feeling
that it was thereby exhuming an ancient
skeleton.
Congressional Scrutiny
The final objective in a proper system of
accountability is the greater exercise of its
powers and responsibilities by Congress. This
is indeed one of the essential foundations of any
desirable fiscal system. I t means a return to
the basic conceptions held at the very beginning
of the Federal Government. It is needed also
to maintain the separation of powers. It pro-
vides the suitable correlative to the clarification
of Executive power and responsibility. It is
not accomplished by any delegation of author-
ity to the Comptroller General.
Fiscal Management
Concretely, Congress should determine, by its
own vote on recommendation of a standing
committee, what action should be taken upon
reports from the auditing officer taking excep-
tion to payments made. If the case involved
an abuse of administrative authority resulting
in a clearly illegal payment, though without
enrichment of the admmistrative officer, some-
thing akin to the present disallowance might be
called for. Thus the officer would have to make
the payment good out of his own pocket, unless
he could recoup himself from the payee. If the
case turned upon an honest disagreement be-
tween the administrative officer and the auditor
regarding the legal authority to pay, no personal
liability should rest upon the officer, but the
question would be settled for the future by
clarification of the statute. Any case involving
personal dishonesty would of course lead to
administrative action or prosecution in the
courts immediately upon discovery, as at pres-
ent. Such cases are rare and do not ordinarily
require congressional action.
To insure uniformity and restraint without
impairing Executive responsibility, the Treas-
ury should give the eqwvalent of advance de-
cisions on doubtful questions regardin~ pay-
ments. These should govern the actlOn of
administrative officers as advance decisions of
the Comptroller General now do, except that
they might be subject to opinions of the Attor-
ney General regarding the Treasury's jurisdic-
tion to decide questions. Furthermore, ad-
vance decisions would, of course, be within the
range of comment by the auditor. If he found
them objectionable, and the Treasury proved
unwilling to modify them, he should report them
to Con~ress for its action.
A Jomt Congressional Committee on Public
Accounts should be provided for this purpose.
The consolidation of the 11 committees on ex-
penditures into a single committee was a step
m the right direction, but it needs to be carried
considerably further. The joint committee
should not be a large one. It should be em-
powered to sit both during and between ses-
sions. It should be privileged to report at any
time in either House, as the Rules Committee
and conference committees are. It should hear
all reports of exceptions taken to expenditures
and should have instructions from Congress to
report general or special legislation to correct
any situation of which it disapproves. It
should have competent assistance available for
legislative drafting work. It should be a bi-
partisan committee aiming at nonpartisanship
as an ideal. Consideration might be given to
making the chairman of the committee a mem-
ber of the minority party, but if congessional
practice indicated that the recommendations
of the committee might be disregarded by the
majority leaders because of that fact, the chair-
manship should be given to the majority party.
The work of this committee should be too
important to jeopardize its effectiveness by
unnecessary partisan bickerings.
The General Accounting Office
The work of such a committee should be
highly effective. There is abundant evidence
of this at present in the occasional appearances
of Cabinet officers before congressIOnal com-
mittees. If the Secretary of the Treasury or
his deputy were regularly required to appear
199
before this committee to defend in the presence
of the chief auditor all payments and decisions
upon which he and the auditor disagreed, an
ample basis would exist for intelligent and effec-
tiveaction by the committee and by the Congress
to hold the Executive fully accountable.
 VII. PROPOSED CHANGES
•
To give effect to the foregoing suggestions a
considerable revision of title III of the Budget
and Accounting Act is called for. Specifically,
it should deal with the settlement of accounts
and claims, the responsibilities of disbursing
and certifying officers, the supervision and
improvement of administrative accounting pro-
cedures, and the audit.
"Settlement" of Accounts
The power to "settle" all accounts and
claims should be transferred to the Treasury
Department. This would restore the unity of
Executive responsibility that existed from 1817
to 1921. As a matter of practical routine,
vouchers and pay rolls would be made up in
the administrative offices and given an admmis-
trative examination there, as at present. If
preaudit were desired by the department head,
the papers would then be routed over the desk
of an auditing officer. Otherwise the next
step would be transmission to the nearest office
of the Treasury, in Washington or in the field.
There accounts would be kept, and at this
stage central financial management might be
exercised. From the Treasury accounting offi-
cers, vouchers would pass to disbursing officers
located in the J~ame place, and from them to
the auditors, also close at hand. These three
steps might all be accomplished normally in a
few hours or days; claims would of course take
longer.
Exceptions to this system may be necessary
in the case of the War, Navy, and Post Office
Departments, for the same reasons that now
exempt them from the centralized disbursing
prescribed in Executive Order No. 6166 of
June 10, 1933. But that exemption needs
reconsideration in the case of the Service
departments; it seems well founded as regards
the Post Office. 1 Delegations of functions
under Treasury supervision may also be war-
ranted, for economy and convenience, in the
case of small disbursements by isolated field
agencies.
This general procedure would take the place
of the (resent settlement by the Comptroller
Genera. It would make the Treasury a real
I The Post Omce Department has never been formally exempted from
the order, but the Treasury Department has not as yet taken over postel
disbursing, and probably will not so long as postel receipts are not covered
Into the Treasury. It Is expected that formal exemption of the Post Omce
from the order will ultimately be made.
agency of fiscal control. The Treasury would
have the responsibility of deciding legal ques-
tions, such as the Comptroller of the Treasury
had before 1921; and, ill conjunction with the
Bureau of the Budget; the responsibility for the
administrative execution of the budget as well.
Thus, the foundations would be laid for a
central system of control accounts; the present
division of authority would be eliminated; and
financial responsibility, both as to legality and
as to policy, would be clearly imposed upon the
Executive.
To settle any questions of jurisdiction be-
tween the Treasury and the heads of other
departments based upon conflicting interpre-
tations of their powers under the law, disputes
might be referred to the Attorney General, or
to the President for action by Executive order.
Such arbitral action should not go to the merits
of a particular payment, but only to the question
of jurisdiction.
In the handling of claims this change would
involve the transfer of the Claims Division in
the General Accountin~ Office to the Treasury.
The Claims Division IS at present operating
as efficiently as could be expected with the vol-
ume of work it receives, and little change
in its internal organization would be needed.
The elimination of conflicts between the heads
of the departments and the Comptroller Gen-
eral as to their authority to make payments
should substantially reduce the volume of
claims presented, and thus enable this Division
to keep currently abreast of its work.
Disbursing
The present arrangements for disburs~ and
certifying require little change. The proVlSions
of section 4 of Executive Order No. 6166 should
be retained and confirmed. The changed rou-
tine outlined above calls for vouchers, after
certification in the departments, to be sent first
to the Treasury accounting officers, and by
them to the disbursing officers. Disbursing
officers should be held responsible for the
fidelity of their transactions and for the pay-
ment of vouchers irregular on their face.
Responsibility for improper certifications should
rest on the certifying officers in the departments.
A procedure is already available for this J?urpose
by taking Executive Order No. 6166 ill con-
201
202
junction with the act of May 26, 1936 2 (and
substituting the Treasury for the Comptroller
General), which permits the Comptroller Gen-
eral to make offsets against salaries for the
recovery of debts due the United States, under
regulations to be made by the heads of the
departments. Such regulations, however,
should be uniform. To this end they should be
made by the Treasury, subject to Presidential
approval, rather than by each department head
for himself.
Administrative Accounting Methods
The power to rrescribe administrative forms
and methods 0 accounting should also be
transferred to the Treasury. The law should
carry with it an explicit direction to the
Treasury to install, and from time to time to
revise, not only the subsidiary accounts to be
maintained by each department and agency to
show its operations in full, but also a system of
central control accounts to be maintained in
the Treasury Department. This would resolve
the present question whether the Comptroller
General's power under section 309 of the
Budget and Accounting Act extends to the
Division of Bookkeeping and Warrants in the
Treasury as well as to the other derartments
and agencies. Upon the basis 0 such a
system of accounts, the auditors could not
only check expenditures as they are reported,
but also inform Congress at least annually as
to the accuracy of the comprehensive financial
statements published by the Treasury.
Auditing
The foregoing changes require that the name
of the General Accounting Office and the title
of the Comptroller General be changed corre-
spondingly. Since the functions of this officer
would be restricted to auditing in the proper
sense of the word, "Auditor General" would be
an appropriate title. For the agency that he
would head, "General Auditing Office" or
"Office of the Auditor General" is suggested.
This would emphasize the basic theory upon
which the substantive changes are made.
Public, No. 818, 74th Congress.
Fiscal Management
The powers of the Auditor General should
be defined to include audit and investigation,
and they should extend to all governmental
agencies whatever, unless specifically exempted
by Congress.3 His organization should pro-
vide for regional auditing offices paralleling
the disbursing system, but they should be under
his full administrative control. Vouchers ques-
tioned in the regional offices should be trans-
mitted to him, with notice to the Treasury,
and he should be required to report his excep-
tions to the Treasury before taking them to
Congress. Probably most items on his list
could be adjusted by conference between him
and the Treasury, leaving only cases of genuine
disagreement for report to Congress.
Warrants
Following these changes, the archaic system
of warrants might well be abandoned. It is
harmless but cumbersome, and a simpler pro-
cedure could easily be substituted. Advances
and transfers on account of the several appro-
priations made each year could be evidenced
by simple Treasury notices approved by the
Secretary of the Treasury, with copies to the
Auditor General. This would eliminate what
would otherwise become a perfunctory opera-
tion that merely multiplies the number of steps
to be taken and the number of papers to be
prepared and signed. The Auditor General
could, of course, take exception to transfers or
advances just as to vouchers, if he thought
them improper.
CommiHee on Public Accounts
Finally, the Joint Committee on Public
Accounts already described should be set up
by the Congress. This does not require legis-
lation that must be submitted to the President
for his approval, but it does demand concurrent
action of both houses of Con~ess to make it
effective. It is indispensable If Congress is to
enforce proper accountability for the execution
of the Budget.
I Cf. Execut.ive Order No. 8549, Ian. 3, 1934, wbich extended the
Comptroller General's authority to all emergency agencies, Including
Government-owned cnrpomtions created since Mar. 3, 1933 and not
otherwise specifically provided for by law.
I
I
I
J
 THE PROBLEM OF THE
INDEPENDENT REGULATORY COMMISSIONS

by
ROBERT E. CUSHMAN
THE PROBLEM OF THE INDEPENDENT REGULATORY
COMMISSIONS
by
ROBERT E. CUSHMAN

•
Contents
Page
Introduction
Statement of the Problem 207
Synopsis of Study 207
List of Independent Commissions 208
Part I. Historical Background of the Problem
A. The Development of Independent Commissions 209
The Interstate Commerce Commission, 1887 209
The Federal Trade Commission, 1914 210
United States Shipping Board, 1916 211
The Federal Power Commission, 1920 212
The Federal Radio Commission, 1927 212
Securities and Exchange Commission, 1934 213
Federal Communications Commission, 1934 213
The National Labor Relations Board, 1935 213
The Bituminous Coal Commission, 1935 213
The United States Maritime Commission, 1936 214
B. Regulatory Functions in the Executive Departments 214
C. Segregation of Judicial or Appellate Aspects of Administration 215
D. Reasons for the Establishment of Independent Regulatory Agencies 216
Part II. The Inherent Problem of the Independent Regulatory Commissions-A Basic Dilemma
A. The Obstruction of Effective Over-all Management 219
Relation to Legislative Responsibilities of the President 220
Interference with Presidential Management in the Field of Administration 221
B. Danger to the Impartial Handling of Judicial Work 222
Part III. Legal Limitations Conditioning any Solution of the Problem
A. Legal Aspects of Presidential Control through Removal Power 225
Present Law as to Presidential Removals 225
Unsolved Problems of the Removal Power 226
B. Judicial Review of the Regulatory Commissions 226
Part IV. A Suggested Solution
A. Essential Features of the Plan 229
B. Division of Functions between Judicial and Administrative Sections 230
Administrative and Rule-making Functions 230
Judicial Functions 230
"Mixed" Functions 231
205
206 Contents

Part IV. A Suggested Solution-Continued Palre

C. Organization of the Judicial and Administrative Sections 232
The Judicial Section 232
The Administrative Section 233
Relations between Administrative and Judicial Sections 234
D. Long-time Aspects of the Independent Commission Problem 234
Part V. An Appraisal of the Suggested Plan
A. Advantages of the Plan 235
For Administrative Management 235
The Handling of Judicial or Quasi-Judicial Work 235
Flexibility 235
The Strategy of Reform 235
B. Criticisms of the Plan 237
Loss in Expertness of Personnel 237
Dangers of Political Control 237
Danger in Abandoning the Board System 237
Slowing Up of Efficiency 238
C. Comment on Alternative Proposals 238
Improve the Independent Commissions 238
Put Independent Commissions into Executive Departments 238
Convert into Bureaus in Executive Departments 238
An Administrative Court Proposed 239
D. Conclusion 239
 INTRODUCTION
•
Statement of the Problem
By "indepe:J?-dent", as ap:pli~d to a com~is-
sion or board, IS meant that It IS wholly outsIde
\ any regular executive depart~ent. It is not
. subject to control by any CabInet secretary or
by the President. The members of some
"Independent" commissions can be removed
from office by the President in his discretion,
whereas in other cases such removals may be
made only for causes set out in the statutes.
I "Independence", as the term is used in this
study, does not mean independence of Presi-
. dentIal removal, but merely a status of isolation
from the major executive departments. The
term "regulatory" implies governmental con-
trol over private conduct or property interests,
and distinguishes such a body as the Federal
Trade Commission, which is supposed to police
interstate commerce in behalf of fair competi-
tion, from the independent Farm Credit Ad-
ministration, which carries on the work of
lending Government money. The Federal
,Trade Commission regulates, the Farm Credit
Administration does not.
The independent regulatory commissions
present a challenging problem In any program
of Federal administrative reorganizatIOn. They
, stand actually and potentially for decentraliza-
tion. Though they do not escape supervision
by the courts, they are wholly free from control
by the President. Expe~ence has evolved. no
practical means of making them responSIble
to the Congress. As someone has said, they
are a sort of "fourth department" in the N a-
tional Government. . going concerns but to improve, if possible, ~he
Beginning with the Interstate Comme~ce
Commission in 1887, Congress has used the In-
. dependent commission technique in more than
a dozen cases for the handling of various regu-
latory jobs. But in fully as many cases Con-
gress has given the same kind of regulatory
functions to bureaus in the executive depart-
ments, especially in the Department of Agri-
culture. If Congress has followed any con-
sistent principle in choosing between these two
methods, it has failed to disclose whf!-t that
principle is. Sometimes the same functIOn has
been set up in both ways successively, as in the
case of the Shipping Board, which began as an
independent commission, later became a.bureau
in the Department of Commerce, and m 1936
emerged again in the guise of the new inde-
pendent Maritime Commission.
The whole problem may be stated thus: There
is high respect, based on experience, for the in-
dependent commissio? as a devic~ fo! F~deral
regulation. There eXIsts a strong mclinatIOn to
use this method for handling new regulatory
jobs as they emerge. At the same time, t~e
multiplication of these independent bodies
tends inevitably to\vard a decentralized and
chaotic administrative system. They are areas
of unaccountability. They occupy important
fields of administration beyond the reach of
Presidential direction and responsibility. Is
there any logical point at which to stop creating
them? If not, is there any alternative or com-
promise plan by which the major advantages of
the independent commission technique may be
kept and at the same time the administrative
conf~sion that comes from setting up numerous
independent bodies avoided?
The purpose of this study is not to pass judg-
ment on whether the Federal Trade Commission
or any other existing commission ought to be
robbed of its independent status. It is rather
to try to find a principle or a techniqu~ that
may aid in dealing with the problem of lIDple-
menting Federal regulatory functions as a. con-
tinuing or long-time problem. What may be
done in It single case, or even in several cases,
may not be of vital importance. What is.do~e
in the long run as a matter of general pohcy 15
of ve~-great importance. If such a prinCIple
can be discovered some gain will have been
made. To others may be left the problem of
whether that principle should be applied in any
concrete case. The object is not to tear down
plans by which future structures may be built.
Synopsis of Study
The first three parts of this study deal with
the development and nature of the independent
commission problem.
Part I is historical and factual. It traces the
growth of commissions in the United States and
describes the variety of reasons, motives, and
theories underlying their creation. It touches
briefly on the diversity of their functions and
the volume and importance ?f their work: .
Part II analyzes the existmg and contInUlng
problem posed by the commi.ssions. This pr.ob-
lem takes the form of a dilemma that anses
from the merging in an independent body of
both policy-determining and judicial functIOns.
207
208
The status of independence in the field of policy
defeats effective administrative management;
the imposition on a quasi-judicial body of the
job of the law-maker and the administrator
menaces its judicial neutrality.
Part III reviews the constitutional and legal
principles relevant to the commission problem
and its solution. These principles relate to the
.President's power of removal and direction with
respect to the commissions and the supervision
of the work of the commissions by the Federal
courts.
The last two parts of the report present a
tentative proposal for a solution of the inde-
pendent commission problem and an appraisal
of that proposal.
Part IV presents the details of the suggested
plan. It is, in essence, to put the independent
regulatory commission in an Executive depart-
ment by "breaking it down" in structure and
functions into an administrative section respon-
sible to the President and a quasi-independent
judicial section. Careful analysis is made of the
organization of these sections and also of the
division of functions between them.
Part V sets forth the advantages of the plan
and the criticisms directed against it, and pre-
Independent Regulatory Oommissions
sents a compact summary and appraisal of
vanous alternative proposals.
List of Independent Commissions
A list is here given of the independent bodies
that have received attention in the preparation
of this study. The study deals with the problem
of commissions, not with the commissions as
such. The bodies listed have not been studied
with equal intensity. No two of them are iden-
tical and each makes its own contribution to the
problem under consideration, contributions of
widely varying importance and value.
Interstate Commerce Commission.
Federal Trade Commission.
United States Shipping Board (defunct).
Federal Power Commission.
Federal Radio Commission (defunct).
Securities and Exchane;e Commission.
Federal CommunicatIOns Commission
(supplanting the Federal'RadiO' Com-
mission). '.
National Labor Relations Board.
Bituminous Coal Commission.
United States Maritime Commission.
 I. HISTORICAL BACKGROUND OF THE PROBLEM!
•
A. THE DEVELOPMENT OF INDEPENDENT COMMISSIONS
Congress began 50 years ago to create inde-
pendent commissions to handle Federal regu-
latory functions. This movement in the field
of national administration is the result of much
legislative groping-much reliance upon trial
and error. It has developed its own philosophy
as it has gone along. Its major principles have
never been followed with complete consistency
and the commissions set up have varied widely
in form and function. A good deal is known
about some of the commissions, but the com-
mission movement as such has never been
explored. Important questions concerning it
have remained unanswered. Among these are
the following: What motives or reasons led
Congress to create independent commissions?
Why have those commissions varied so widely
in organization and duties? What relatidn-
ships were the commissions supposed to bear
to the three departments of the Government?
. Why has Congress created independent com-
missions to handle some regulatory functions,
whereas in other cases it has given the same sort
of functions to the regular executive depart-
ments? The following brief survey of the com-
mission movement, based mainly upon its legis-
lative history, attempts to throw some light on
these questions.
It is obvious that the full story of the creation
of the major regulatory commissions would com-
prise vital chapters in the Nation's economic
history. There is not space for that story here,
but no account of the commission movement
however brief can ignore the following facts:
First, the decline of laissez faire and the growth
of governmental regulation of business that
followed upon the heels of the Civil War and
Reconstruction. Second, the emergence of
vitally important economic problems demand-
ing Federal rather than State regulation.
Third, the /P'0wth of the technique of govern-
mental regulation through the legislative formu-
lation of "standards" of business conduct to be
applied in concrete cases by the guasi-judicial
decisions of administrative agenCIes. Fourth,
the emergence of the idea that governmental
regulation of business should not be confined to
I This surveyor the history or the regulatory commission movement
Is, or necessity, very cursory. A more thorough investigation, under
other auspices, fa In progress.
the enforcement of criminal penalties but should
pa.rtak~. of continuous and not unfriendly
supervISIon.
It may be noted that early congressional
experimentation with the independent com-
nussion was influenced by the experience of the
States. Twenty-five State commissions were
already regulating railroads when the Interstate
Commerce Act was passed in 1887. The seeds
were being rapidly sown for the growth of the
multitude of State boards and commissions
that were ultimately to produce the almost
complete decentralization of executive power
in the American State.
The Interstate Commerce Commission, 1887
Someone has said that had it not been for
the Supreme Court's decision in 1869 (Paul v.
Virginia, 8 Wallace 168) that interstate in-
surance business is not interstate commerce,
the first Federal commission would probably
have been an insurance commission. Be that
as it may, the Court unquestionably precip-
itated the action that created the Interstate
Commerce Commission by holding, in Wabash,
St. Louis and Pacific Railway Go. v. Illinois
(118 U. S. 557), decided in 1886, that the inter-
state railroad business was subject to exclusive
Federal control under the commerce clause and
that abuses in it could not be corrected by
State law. If the railroads were to be regu-
lated, Congress must do it.
The Interstate Commerce Act was directed
against concrete abuses-pooling, discrimina-
tions, rebates, and the like. Congress had
been considering the problem of regulation for
over a decade and numerous bills had been
introduced. As the discussions progressed,
the issue was drawn between the House and
the Senate over the creation of an independent
commission. The House, led largely by Mr.
Reagan from Texas, favored laws that would
punish rate abuses and rebates, and that would
be enforced by the Department of Justice in
the regular courts. To set up a commission,
it was urged, would b,e to provide a substitute
for action, a sop thrown to the public in lieu
of direct and responsible enforcement of laws
209
210
that had real teeth. A commission would not
be large enough, nor honest enough, to exercise
wide powers of control over the railroad system.
Such a commission, further, would involve
an unconstitutional delegation of legislative
power.
The commission idea was. sponsored in the
Senate by Senator Cullom. He urged that the
mere existence of a commission would prevent a
large number of abuses; many cases would be
settled out of court, and the cost and delay of
litigation would thus be saved; the shipper with
a prima facie case against the railroad would
have that case prosecuted by the Government;
and the commission would be able, as a body
of experts, to study and report back to Congress
on all phases of the problem of railroad regu-
lation.
The compromise between these two positions,
hastened by the decision in the Wabash Rail-
way Co. case,already mentioned, resulted in
setting up' a commission and in putting into
the act mastic prohibitions against railroad
abuses. It is clear that the new commission
was not to "manage" or "regulate" the rail-
roads in any positive or constructive way.
It was not looked upon as a court with authority
to decide anything finally. It was to investi-
gate complaints and start action in the courts.
It was to keep Congress informed as to the
progress of the whole job and recommend
legislation that might be needed.
Congress does not seem to have had any
clearly worked out philosophy as to where the
new Interstate Commerce Commission fitted
into the governmental structure. In some ways
it was to aid the process of legislation, in other
ways the process of law enforcement. It had
no direct relations with the President, nor had
he figured in the movement that led to its
creation. The details of its structure and
organization escaped serious discussion. The
new commission was to send its annual report
to the Secretary of the Interior who was in-
structed to provide the commission with offices
and supplies and to approve its expense
vouchers and the appointment and compensa-
tion of its employees. The Secretary of the
Interior almost immediately asked to be relieved
of these responsibilities and the commission
was made completely independent in 1889.
The new commission got o-ff to an inauspi-
cious start. It was viewed as a natural enemy
by the railroads. The courts looked upon It
with susJ?icion because of its hybrid powers and
by decislOn after decision reduced its meager
authority. But Congress watched its work
closely, considered with care its numerous
legislative proposals, and ultimately strength-
ened it by legislation. By degrees 1t became a
powerful regulatory body. It has been given
many of its later functIOns not because it is
important to have them handled ~y an inde-
pendent body, but because the Commission
could take them over more easily than any
other agency. It has earned the respect of the
Independent Regulatory Oommission8
courts, which now extend it a deference with-
held f~o~ some of the younger and less powerful
comIDlSS10ns.
The first Federal regulatory commission
stands out as the most conspicuous and success-
ful. With a staff of nearly 2,000 and a budget
of six millions, it regulates and manages the
land transportation system of the Nation. Its
powers are legislatIve, administrative, and
judicial. It has a responsibility to the courts
to keep within its statutory powers. It has a
vague responsibility to the Congress with re-
spect to its whole job, but there is no way of
making that responsibility effective except by
additional statutory instructions. It has no
formal responsibility to the President, thou~h
its paths cross his at numerous points. It IS,
in short, a little government in itself, set up for
the purpose of governing the railroads-a sort
of fourth department for the administration of
a single function of vast importance. Small
wonder that Congress has looked upon its
handiwork with satisfaction and has been
strongly impelled to follow the same technique
for the handling of new regulatory functions as
they have emerged.
The Federal Trade Commission, 1914
The Sherman Antitrust Act of 1890, unlike
the Interstate Commerce Act, did not set up
an administrative commission "to aid its en-
forcement. It relied for that purpose on the
Department of Justice and the courts. The
actual enforcement of the act did not inspire
public confidence either in the adequacy of the
law or in the zeal of the Attorney General in
prosecuting those who violated it. A convic-
tion that new and clarifying antitrust legislation
was ~ecessary was reenforced by the Supreme
Coui1['s announcement of the "rule of reason"
in the Standard Oil decision of 1911. If the
Sherman Act did not prohibit an restraints of '
trade, but only those that were unreasonable,
then some way ou~ht to be devised to let the
businessman know ill advance which was which.
Antitrust laws should be enforced not merely
by inflicting punishments but through the
steady supervision of a permanent adminis-
trative agency.
The movement for an "interstate trade com-
mission" received support from three different
sources. "" It came first from those who were
hostile to big business in all its forms and who
demanded the restoration by law of the com-
petitive system. Antitrust laws should be
more detailed and more drastic. A strong
commission with powers to investigate unfair
trade practices would assure vigorous enforce-
ment of the law. It could aid the courts by
expert advice in working out decrees of dissolu-
tion, a job believed to have been badly fumbled '
in the Standard Oil and American Tobacco
cases. It could secure the publicity about
business organizations necessary to keep them
within the law. and could give to Congress its
 Independent Regulatory Oommissions
expert recommendations for further regulatory
legislation . ..j... Second, people in the business
world favored a comInlssion for wholly different
reasons. They believed that the point of
recognizing business combinations, if not mo-
nopolies, had been reached as the inevitable
outgrowth of the modern economic order.
They should be tolerated and supervised. The
businessman had no way of knowing which
trade practices were lawful and which were
not. He favored a commission or board that
would, on his request, scrutinize the conduct
of his business, and either point out his unlawful
conduct or give him a clean bill of health. Jt
should not have too wide powers of publicity
or of regulation but should serve as a friendly
adviser to American business. It should have
authority to legalize numerous trade practices
that might be technical restraints of trade but
that were deemed necessary to wholesome
business expansion. -/-In the third place, a sub-
. stantial body. of opinion believed that large
interstate commerce corporations should be
either licensed or incorporated under Federal
law, a plan calling for an administrative com-
mission for its adequate enforcement.
President Wilson threw his weight on the
side of those who urged the retention and pro-
tection of free competition, and his influence
was controlling. There was to be no under-
writing of business combinations but there was
to be administrative supervision which, com-
bined with the sharper definitions of unlawful
practices in the Clayton Act, would help the
businessman to know where he stood.
Issue was sharply joined on the question of
whether the new Trade Commission was to deal
with "unfair methods of competition" or
whether the law should attempt to define those
methods with some precision. The weight of
opinion was against an elaborate enumeration
of such unfair practices. The Commission,
under judicial supervision, could work out the
exact meaning of "unfair methods of competi-
tion" as concrete cases arose. It is clear, how-
ever, that Congress expected the Commission
to build up its own administrative law of unfair
trade practices and not be limited rigidly to
what had already been held to be unfair trade
practices at common law.
There was little discussion of the exact organ-
ization of the Federal Trade Commission. The
Interstate Commerce Commission provided a
model and influenced legislative thinking. It
was frequently alluded to and its management
of the railroad problem was compared Wlth the
enforcement by the Department of Justice of
the Sherman Act, very much to the Depart-
ment's disadvantage. It was assumed that the
new Commission must be independent, but it
seemed to be felt that the desired independence
would be secured by bipartisan membership.
It was recognized that the functions of the Com-
mission were administrative and quasi-judicial,
and it was given important powers of investi-
gation and legislative proposal. But it is clear
153155--37----15
211
that the experimental and exploratory nature of
the CommIssion's job was recognized on every
hand.
The Federal Trade Commission has never
acquired the strength and prestige of the
Interstate Commerce Commission. Congress
has given it meager support and has paid rela-
tively scant attention to its legislative proposals.
The Export Trade Act of 1918 resulted from
the investigation and report of the Commission
and enlarged its powers. Its investigation of
the packers, 1918-20, resulted in the Packers
and Stockyards Act of 1921, but the enforce-
ment of the new regulatory measure was given
to the Secretary of Agriculture and not to the
Commission. Enforcement of the Securities
Act of 1933 was given to the Commission; but
that power was transferred to a new Securities
and Exchange Commission by the Act of 1934.
The Trade Commission has been given the task
of administering the new Robinson-Patman
price discrimination act. It is obvious, how-
ever, that it is only one of several agencies
dealing with the problems of unfair trade
practices.
United States Shipping Board, 1916
American foreign shipping has declined pretty
steadily since the Civil War. For many years
the feeling had been growing that the Govern-
ment Jhould take a hand in the situation.
Shipowners and allied business interests favored
Government subsidies. Shippers, though not
opposed to subsidies, wanted relief from exorbi-
tant and discriminatory rates. In 1914 a
Senate committee presented an elaborate report
'On the condition of American shipping. The
committee proposed a commission with power
to fix rates and prohibit specific abuses in
the shipping industry. Simultaneously Mr.
McAdoo, the Secretary of the Treasury, set in
motion a drive for a $50,000,000 Government
ship-building program. The outbreak of the
war and the sudden demand upon American
shipping which it created resulted in the merg-
ing of the two programs of regulation and
promotion. The Shipping Board set up in
1916, originally designed to have drastic regu-
latory power, found itself devoting its time and
attention to the building and operating of
vessels. The regulatory function was practi-
cally forgotten. The Shipping Act of 1920
attempted to restore s(lmething approximating
peace-time conditions. Still the major task of
the Shipping Board, with its adjunct the
Emergency Fleet Corporation, was the liquida-
tion of the Government's own shipping interests
and the problems incident to its ownership of
some 2,000 vessels. Only very gradually did
the regulatory aspects of the Shipping Board
job come back into the picture.
When the Shipping Board bill was under dis-
cussion in Congress in 1916 it was urged in the
House that two Cabinet secretaries should serve
as ex-officio members. There was a long
 212
debate, and finally, under pressure from the
Senate, the proposal was dropped and the Board
was made a full-time independent commission.
From the beginning the Board was hampered
by a requirement of geo~aphical representation
in its organization. This led to regional trading
for ships and services and prevented the Board
from handling many of its problems in a strictly
impartial manner. It was not until the
Economy Act in 1932 reduced the membership
of the Board to three that the worst results of
regional representation were eliminated.
At an early stage in the legislative history of
the Shipping Board bill it was urged that the
problem of dealing with common carriers by
water should be turned over to the Interstate
Commerce Commission. The conclusion was
reached, however, that it would be better to set
up a separate body rather than to burden the
already overworked Interstate Commerce Com-
mission with a new and important job.
The President was authorized by the statute
to name the chairman of the Shipping Board,
and the problem of chairmanship domination
became a very difficult and controversial one
during the later history of the Board.
The Shipping Board ended its career as an
independent regulatory agency on August 10,
1933, when it was transferred to the Department
of Commerce by Executive order of the Presi-
dent and became the United States Shipping
Board Bureau.
The Federal Power Commission, 1920
The Federal Power Commission of 1920 was
unique in being a wholly ex-officio body. It
consisted of the Secretaries of Interior, War,
and Agriculture. Its creation was a victory
for forces that had been demanding increased
Federal control over water power interests.
They had been vigorously opposed, of course,
by the private water power interests.
The history of the Act of 1920 fails to disclose
any clean-cut congressional policy for dealing
with the power problem. It seems to have been
agreed that something needed to be done and
that it ought to be done by a body that could
give detailed study to the problem. Congress
in creating the Commission passed on to it
responsibility for important matters of policy.
Its principal powers were to collect data upon
which future legislation might be worked out and
to license water power developments on the nav-
igable streams subject to Federal jurisdiction.
Since the Commission was composed of three
Cabinet secretaries, the problem of internal
administration became vitally important. A
single executive secretary was set up. The staff
available for the extensive job assigned to the
, Commission was far from adequate and the
administrative work fell badly in arrears. At
the same time the power interests, recognizing
the executive secretary as the key man, sub-
jected him to terrific pressure where their
problems were concerned. The whole scheme
Independent Regulatory Commissions
worked badly and showed that an ex-officio
commission is likely to be unsatisfactory. In
the nature of the case it must have very rapid
turnover of personnel, and the heavy responsi-
bilities of the Cabinet officers leave them inade-
quate time and energy for problems of planning
and policy.
DIssatisfaction with the Commission and
the general power policy of the Government
brought on a Senate investigation in 1930
which resulted in the enactment of the Feder;!
Power Act of 1930. That act abolished the
ex-officio Commission and set up in its place a
full-time independent commission with five
members. The new body inherited a number
of controversies as to personnel and had some
difficulty in getting on its feet. It has func-
tioned more satisfactorily, however, than its
predecessor. Under the Roosevelt adminis-
tration it has been drawn into a broader power
conservation program by the creation in 1934
of the National Power Policy Committee, of
which it is one of the cooperating members.
The Federal Radio Commission, 1927
The problem of regulating radio transmission
has been unique. An imperative physical need
for the regulation of an industry crowded itself
upon Congress oefore there was either oppor-
tunity or wisdom to evolve any well-thought-out
policy of control. Some attempt to deal with
the problem of radio transmission had begun
in the Department of Commerce as far back as
1912. Under Secretary Hoover the matter had
received more attention and one of the bureaus
of the Department of Commerce took over a
certain degree of responsibility in the radio
field. The Secretary of Commerce, however,
had no power to license broadcasting stations,
and as time went on the necessity for providing
for this power became perfectly obvious.
The radio industry wished to have the new
regulatory authority given to the Secretary of
Commerce. They had confidence in Mr.
Hoover and they believed that better adminis-
tration would come from a single headed admin-
istrative unit than from a commission. This
view was strongly supported in the House. The
Senate, however, insisted upon the creation of
an independent commission, which was finally
set up in the Act of 1927. .
The legislative debates show that Congress
had very vague notions as to what sort of regu-
lation the radio industry needed and it did not
give its newly created Commission Itny con-
tinued support. The problem was complicated
by the steady demand for representation of the
different geographical sections of the country.
Oongress watched the Commission with suspi-
cion and for a series of years legislated it out of
office every year. The members, however, were
reappointed in each case. A careful study of the
whole problem finally led to the creation in 1934
of the Federal Communications Commission,
mentioned below.
Independent Regulatory Commissions
Securities and Exchange Commission, 1934
The administration of the Securities Act of
1933 was given to the Federal Trade Commis-
sion, which added some 65 persons to its staff to
handle its new responsibilitIes. When the regu-
latory task was about to be greatly increased by
the Securities and Exchan~e bill of 1934, how-
ever, the Senate leaders Insisted that a new
independent commission be set up. The House
Committee urged that the Trade Commission
be expanded to handle the new job. There was
no open criticism of the Trade Commission, but
it was urged that the size and technical charac-
ter of the task and the added prestige resulting
from independence made a separate agency
desirable. The Securities and Exchange Com-
mission was accordingly set up. Several sug-
gestions that the Commission be composed in
part of cabinet members, bankersl and stock
exchange representatives were discarded in
favor of a full-time body representing no special
interests.
Federal Communications Commission, 1934
The background of the Federal Communica-
tions Commission has been outlined in com-
menting upon the Federal Radio Commission.
The new body was set up under an act that
definitely increased its regulatory authority,
made its powers much more specific, and turned
over to it the regulation of the telegraph and
telephone systems of the country, a power that
had previously been vested in the Interstate
Commerce Commission. The requirement of
geographical representation, which had worked
so badly in the Radio Commission, was not
imposed on the new body. When the Com-
munications bill was introduced in Congress it
provided that the members of the commission
should be removable only for causes stated.
The act emerged without this provision, though
there is no record of why the change was made.
The National Labor Relations Board, 1935
There was at first no machinery for handling
labor disputes under the National Recovery
Administration. In August 1933, the Presi-
dent issued a press release creating the National
Labor Board, formalized by Executive order in
December 1933. This Board consisted of three
representatives from labor, three from industry,
and an "impartial" chairman. This was fol-
lowed by the National Labor Relations Board
of 1934, created under Executive order author-
ized by statute. This Board was established
"in connection with the Department oj Labor."
It was independent of the Secretary, but it
utilized the facilities of the Department and
submitted its recommendations to the President
through the Secretary. It was succeeded, after
an unsuccessful career, by the National Labor
Relations Board created by statute in 1935.
213
This Board is the first genuinely regulatory
establishment that has been set up in the labor
field. It has substantial powers similar in
character to those of the Federal Trade Com-
mission. The act defines specifically some
seven or eight unfair labor practices that are
declared to be unlawful. The Board, following
the general technique of the "cease and desist"
orders issued by the Federal Trade Commission
may proceed against employers found guilty of
any of these unfair labor practices.
It was strongly urged that the Labor Rela-
tions Board should be set up as an independent
agency but inside the Department of Labor.
Secretary Perkins strongly supported this idea.
She proposed that the Board should be quite
independent with regard to its positive duties,
but that for purposes of budget, personnel, and
materiel administration it ought to be housed
in the Department in order to stop the growing
tendency toward the creation of n~w independ-
ent agencies. This position was strongly en-
dorsed by the American Federation of Labor
and other representatives of labor. In the com-
mittee hearings on this question, the labor repre-
sentatives, with no very great shrewdness, urged
that the Labor Relations Board '3hould be placed
in the Department of Labor, because the De-
partment of Labor was the traditional friend of .
organized labor. This argument was hardly
convincing to the employers. They preferred to
see the Board made independent of a Depart-
ment claimed by labor as its special friend.
The Bituminous Coal Commission, 1935
The Guffey Coal Act was an attempt to
stabilize the soft coal industry after the break-
down of the coal code as a result of the N. R. A.
decision. Its purpose was to prevent the cut-
throat competition which for many years had
been ruining the soft coal industry and to es-
tablish more satisfactory working conditions.
It au thorized the establishing of minimum
prices as a means of controlling competition.
The administration of the act was turned over
to a Bituminous Coal Commission which had
wide authority to establish and administer the
detailed regulations necessary. The decision of
the Supreme Court in the Carter case in 1936
invalidated the major portions of the Guffey
Act and left the Commission with practically
nothing to do. .
The Bituminous Coal Commission is unique
in the development of American administration.
It is the one instance of a wholly independent
regulatory body set up inside a department.
The Commission is completely independent of
departmental control as to Its decisions; its
members can be removed from office by the
President only for stated causes; but it is never-
theless in the Department of the Interior,
which means that its budget and its general
servicing clear through the Department. It
makes, therefore, an interesting contribution
to the study of administration.
 214
The United States Maritime Commission, 1936
The placing of the Shipping Board in the
Department of Commerce as a bureau in 1933
did not alter the Board's regulatory powers,
which had never been extensive. The most
that the Shipping Board Bureau seems to have
accomplished was to require certain ship com-
. panies to post tariff rates. It had no authority
to fix minnnum or maximum rates.
Congressional interest in doing something
definite for American shipping revived, how-
ever, and President Roosevelt's interest in the
same project had long been keen. The United
States Maritime Commission was the ultimate
result of this general movement.
The legislative history of the Commission
discloses two very different purposes and poli-
cies that had to be reconciled. In the first
place, Mr. Eastman, Coordinator of Transpor-
tation, proposed to Congress a Water Carrier
bill which would have given to the Interstate
Commerce Commission wide powers to regulate
interstate and intercoastal shippin~, as well as
foreign shipping. Mr. Eastman's mterest was
in the coordination of the entire transportation
problem of the United States. Second, there
was a vigorous drive for adequate shipping
subsidies to put the American Merchant
Marine on its feet. A Presidential message had
strongly urged such a program. The objective
here was Government support rather than
B. REGULATORY FUNCTIONS IN THE EXECUTIVE DEPARTMENTS
The establishment of independent commis-
sions has been only one of the techniques used
by Congress to organize regulatory functions.
In many cases it has given to bureaus or divi-
sions in the regular executive departments the
same type of duty that has been given to the
independent commissions. The Department
of Agriculture has been the one to receive most
of these delegations of powers.
The movement seems to have begun with the
enactment in 1906 of the Food and Drug Act.
The same year saw the passage of the 28-hour
law for the transportation of livestock, and in
1907 the Meat Inspection Act went into effect.
Though these functions were established on a
modest basis at the outset, they have come to
be highly important and to affect a very large
number of persons subject to control. In 1912
important powers of regulation were granted
in the Plant Quarantine Act; in 1916 the
Cotton Futures Act and the Warehouse Act
were passed. In 1921, as a result of the Fed-
eral Trade Commission's investigation of the
packing industry, Congress passed the Packers
and Stockyards Act. Instead of placing the
enforcement of this statute in the Federal
Trade Commission, it was given to the Secre-
tary of Agriculture, who still administers it.
Under the act the Secretary exercises a rate-
Independent Regulatory Commissions
Government regulation. The Senate commit-
tee brought in a bill that represented a mixture
of both elements. It established a liberal pro-
gra~ .of subsidie~ ~nd provided .for a separate
marItime COmmISSIOn to exerClse regulatory
authority over rates. The proposal to confer
the new powers upon the Interstate Commerce
Commission was discarded in favor of a separate
body because of the widespread belief that the
Interstate Commerce Commission was already
overburdened and the further conviction in
many quarters that it was "railroad minded."
Durmg the discussions on the bill the State
Department pointed' out that any effective
regulatory authority over foreign shipping
might conflict with many of the trade a~ree­
ments with foreign countries and complicate
in terna tional relations.
The result was that the Maritime Commission
as finally set up has only the regulatory power
which the Shipping Board Bureau had pre-
viously enjoyed, that is to say, merely the
authority to ask shipFing companies to post
their rates. The main part of its job is the
vast managerial function of administering con-
struction and operating subsidies and the build-
ing and chartering of Government-owned ves-
sels. Its quasi-judicial functions are negligible,
and the act provides that after two years the
Commission's regulatory functions may be
transferred to the Interstate Commerce Com-
mission by Executive order.
making authority very similar to that of the
Interstate Commerce Commission and has
other important powers as well. In the same
year Congress passed the Grain Futures and
Commodities Exchange Act; which has since
been amended several times. In 1923 the
Cotton Standards Act was passed. These a!'e
some of the more conspicuous instances in
which regulatory authority, involving not only
administrative policy but quasi-judicial power,
has been turned over to bureaus or divisions
in the Department of Agriculture. A more
thorough examination of the statutes reveals
more than 40 of these acts.
Why has Congress followed this policy in
these particular cases? In the first place, the .
Department of Agriculture, created to provide
adequate representation of the agricultural
industry, has always enjoyed a prestige which
exceeds that of most of the other executive
departments. Set up under very auspicious
circumstances, it developed quickly a tradi-
tion for sound administration and career serv-
ice that has not been duplicated in equal
measure in the other departments. Conse-
quently there does not arise in Congress the
same objection to placing an important regu-
latory function in this Department that would
have to be met if it were suggested that such
 Independent Regulatory Commissions
a job be given to some of the other depart-
ments.
In the second place, most of the regulatory
functions mentioned above affect primarily
the agricultural industry. The Department
itself has large forces in the field. It is equipped
in personnel to take on with a minimum of
expense and effort a new regulatory job.
Though there were political reasons involved
in the decision, it is also true that one of the
reasons why the Packers and Stockyards Act of
1921 was given to the Secretary of Agriculture
for enforcement was because that. Department
C. SEGREGATION OF JUDICIAL OR APPELLATE ASPECTS OF ADMINISTRATION
In dealing with the broad subject of this
study, some attention should be given to the
evolution of an administrative technique con-
nected with the regulatory problem that is
quite different from the techniques so far dis-
cussed. This is the segregation either ill
appellate administrative bodies or in boards or
courts of review of the function of reviewing
the decisions of administrative officers who
perform regulatory duties, or the establish-
ment on a more formal plane of administrative
or legislative courts to do the same type of
work. This development may be explored
along three separate lines.
In the first place, it has seemed desirable in
a number of instances to provide some kind of
appellate body in a department or commission
r to review the decisions made by the adminis-
trative officers. These appellate bodies are
not courts, and many of them operate without
the formalities of a strictly judicial procedure.
The followin~ are the more conspicuous ex-
amples of this arrangement. There has long
been in the Department of the Interior a Board
of Appeals to review cases coming up in the
public land divisions. The Civil Service Com-
mission has a Board of Appeals and Review
for the hearing of cases }lassed upon by the
staff of the Commission. There is a Board of
Appeals in the Patent Office which handles a
large volume of business within the Depart-
ment of Commerce. In immigration cases in
which the Secretary of Labor has final author-
ity, there is an intermediate appellate body
with advisory functions for the review and
sifting of cases. In Mr. Eastman's proposal
for the internal reorganization of the Inter-
state Commerce Commission, :provision is
made for a division of the CommIssion into a
group of administrative sections which should
make the initial determination in most of the
cases now coming before the Commission,
coupled with a board of control or review
which would serve as an appellate body to
review the cases decided by the trial sections.
This technique has most often been employed
where the volume of administrative business is
so large that a vast number of individual deci-
215
already had the facilities for administering it.
In the third place, the regulatory work that
has been mentioned here is somewhat narrower
in its scope and stirs up much less controversy
and antagonism than work such as that of
the Federal Trade Commission. These re~­
latory functions are, in the main, policmg
functions and they are in a broad sense helpful
to the very interests that are subject to them.
Any opposition that might arise from those
immediately affected would be overshadowed
by the advantages that were brought to the
agricultural industry as a whole.
sions must be made. It is important that they
be handled with speed. A ~reat many of them
are purely routine matters m respect to which
no review would be asked, but it is important
to provide a way of correcting the mistakes that
are likely to creep into the handling of such a
mass of business.
A second and more formal device for sepa-
rating out the judicial phases of the regulatory
process leans in the direction of an administra-
tive court. In 1910 Congress established the
Commerce Court for the purpose of relieving
the circuit courts of the task of reviewing the
decisions of the Interstate Commerce Commis-
sion. It was felt that a body of men who gave
exclusive attention to railroad problems would
acquire an expertness that would facilitate the
handling of these important cases. This exper-
iment merits closer study than has yet been
given to it. The court was curiously organized;
its judges were drawn from the Federal circuit
bench, with selection by the Chief Justice of
the United States. They were to serve for five-
year terms, at the end of which they were to go
back to their circuit court duties. The Com-
merce Court did not grasp the significance of
the experiment which was being tried. It
insisted upon trying de novo practically every
case brought before it from the Interstate
Commerce Commission and its own decisions
were reversed by the Supreme Court on appeal.
The impeachment and removal from office of
one of its members, Judge Archbald, accentu-
ated the unpopularity which it had earned on
other grounds. It was abolished in 1912.
In 1924 Congress established the United
States Board of Tax Appeals to take over the
functions that had previously been performed
by the Committee on Appeal and Review in the
Treasury. The Board of Tax Appeals is prac-
tically a legislative court. Its functions are
judicial in character. It exercises no discre-
tion other than that exercised by any court of
law. Its members are appointed for 12-year
terms and may be removed by the Pre~ident
only for causes stated in the statute. It IS not
in the Department of the Treasury but is
declared to be an independent establishment in
 216
the Executive Department. There was strong
congressional opposition to having it in any way
subject to Treasury influence. It handles a
vast volume of business coming to it from the
various bureaus and divisions of the Treasury
involving problems of tax law.
In the third place, Congress has set up certain
legislative courts for reviewing particular classes
of administrative decisions These courts are
not organized under the judiciary article of the
Constitution but are set up by Congress in the
I exercise of its various delegated powers. The
Court of Claims was set up in 1855, and some-
what changed as to its procedure and power in
1866. In 1909 Congress created the Court of
Customs Appeal, to take over the work that
had been handled by the Board of General
Appraisers in the Treasury. It created the
D. REASONS FOR THE ESTABLISHMENT OF INDEPENDENT REGULA TORY
AGENCIES
From this review of the history of the regu-
latory commissions it is possible to summarize
the more important reasons that have led Con-
gress from time to time to set up independent
commissions. It is apparent that these reasons
are not in every case arguments. In some in-
stances they are merely explanations of why
Congress acted as it did. They may be listed
as follows:
1. Independent regulatory commissions have
been given important judicial or quasi-judicial
duties. It is not easy to defend the turning of
judicial work over to responsible administrative
officers. The judicial function should be per-
formed by independent and impartial persons.
. Therefore when the quasi-judicial element in
any regulatory job is of primary importance, it
has seemed plausible to suggest that the func-
tion be handled by an independent agency.
2. It . has seemen desirable to have the
important regulatory functions kept free from
the pressures and influences of political domina-
tion. Sometimes it has been feared that an
impoftant task would be turned over to persons
selected for pr:.rtisan reasons and be left subject
to definitely partisan control. Sometimes the
very magnitude of the regulatory job has made
it seem dangerous to place it in a department
subject to the normal political controls that
must have free play there. Underlying this
reason has been a conviction that more honest
and efficient administration will be secured if the
task is placed in the hands of an independent
body.
3. Many of the tasks of regulation are
complicated and technical in the extreme. It
has seemed easier to secure the services of
experienced experts for the handling of such
jobs if they were freed from the political
pressures that normally prevail in the de-
partments.
Independent Regulatory Commissions
Customs Court in 1922, and in 1930 converted
the Court of Customs Appeal into the Court
of Customs and Patent Appeals. The judges
of all of these courts have life tenure and
perform no administrative duties.
This whole movement in the direction of
segregating the judicial aspects of the admin-
istrative or regulatory process is well worth
exploring. It has been easy to create these
tribunals where the administrative functions
involved are in the main of a routine character
and where the questions presented are essen-
tially questions of law involving no substantial
amount of administrative discretion. Where
the plan has been tried it has, on the whole,
worked well. It provides a review of adminis-
trative action by an impartial and yet expert
tribunal.
4. The adequate handling of some problems
has seemed to require regional representation.
This was an important element.in the organiza-
tion of the Radio Commission and the Shipping
Board. Geographical representation could be
more readily secured in independent com-
missions than in executive departments.
5. Congress has set up some of the inde-
pendent commissions because it has not known
what else to do with new regulatory jobs.
There was no logical place in the Execu ti ve
Branch of the Government in 1887 in which
to put the task of railroad regulation. It was
much easier to create a new and independent
agency. In some instances there has been no
department performing any functions which
had any connection with a particular regulatory
task. In other cases such departments existed
but were felt to be biased or partisan with
reference to the job to be done.
6. Some regulatory tasks have been experi-
mental in the extreme. Congress itself has not
known exactly how the job ought to be done
and has not been able to set forth any very
specific instructions. I t has seemed easy and '
natural to solve the problem temporarily by
creating a commission with authority to inves-
t;gate and explore the whole field, develop
standards of regulation, and report back to
Congress on legislative changes that might
seem desirable.
7. Some regulatory tasks involve important
rule-making authority. This sublegislative
power has often been of great importance and
has vitally affected the interests of business
and industry. There is a popular belief that,
important rule-making functions ought to be
performed by a group rather than by a single
officer, by a commission rather than by a depart·
ment head.
8. Finally, the prestige and the traditions of
Independent Regulatory Commissions
the Interstate Commerce Commission and the
general success with which it is commonly
supposed to have handled its important job
have undoubtedly influenced Congress to set
up other commissions modeled upon it. The
217
most cursory examination of legislative debates
upon the various regulatory acts under review
indicates the extent to which the Interstate
Commerce Commission model has weighed in
the minds of Members of Congress.
 II. THE INHERENT PROBLEM 0 ~ THE INDEPENDENT
REGULATORY COMMISSIONS-A BASIC DILEMMA
•
No clear analysis of the job done by the
regulatory commission, viewed in the light of
its complete independence, can fail to empha-
size a sharp conflict of principle involved in its
make-up and functions. It suffers from a sort
of internal inconsistency. The Commission has
imposed upon it important duties of administra-
tion and policy-determination. The vast pow-
ers of the new Maritime Commission in the
managing of shipping subsidies are of this sort.
For the dOlllg of such work the Commission
ought to be clearly and effectively responsible
, and that responsibility, if it is to exist at all,
must be to the President. The Commission has
other duties of a judicial nature for the proper
performance of which it needs, not responsibil-
ity, but complete independence. An example
is found in the power of the Interstate Com-
merce Commission to decide reparations cases.
Then it is given another class of duties called
. <].uasi-judicial because they are both discre-
tIOnary and judicial. The commission deter-
mines policy by the same process by which it
judges the rights of parties. The vast bulk of
the regulatory commission job is of this kind.
It is illustrated by the cease-and-desist order of
the Federal Trade Commission, through which
the business man learns from the same act of
the Commission 'vhat the law of unfair compe-
tition is and that he has violated it. Here the
Commission does work with respect to which it
ought to be at the same time both politically
responsible and judicially independent.
This seems to be a dilemma. If the regula-
A. THE OBSTRUCTION OF EFFECTIVE OVER-ALL MANAGEMENT
The President is the general manager of the
United States. The very purpose of an Execu-
tive Department under the Constitution is to
center upon a unified and powerful Executive
responsibility for a coordinated policy of ad-
ministration and its efficient execution. Con-
gress, by its very nature, is incapable either of
doing administrative work or of holding ac-
countable in any effective way the many officers
or agencies engaged in administration. The
President's duties and responsibilities in this
153155--37----16
tory commissions, present and future, are
wholly independent they are completely irre-
sponsible for the doing of very important policy-
determining and administrative work. The
mixing of discretionary and judicial duties in
the same hands and even in the same task
encourages pressures and influences that tend·
to impair complete judicial neutrality. On
the other hand, to rob the commissions of their
status of independence is seriously to menace
the impartial performance of their judicial and
quasi-judicial work. If there is no escape from
this dilemma, no middle course or alternative
principle, then the problem of the independent
commission simmers down to a balancing of the
disadvantages of the status of complete inde-
pendence against the potential dangers of
political domination. In that event it is
pretty clear that the choice would be to keep
the commissions independent .
But before exploring the possibility of any
middle-ground proposal for dealing with the
commissions, it will be profitable to analyze
the actual disadvanta~es of giving complete
independence to comnussions that must do so
many and such "mixed" jobs. This leads to a
study, fir§t, of the extent to which the "inde- .
pendence" of the commissions obstructs effec-
tive over-all management in the Federal
administration; second, of the extent to which
the merging in toe commissions of judicial,
nonjudicial, and "mixed" functions tends to
undermine the neutrality with which the
judicial work is done.
field are not routine in nature, but carry with
them broad discretionary powers.
At the same time the Constitution gives the
President a share in the law-making process.
More important than his power to veto Bills
or to call special sessions of Congress has come
to be his power to advise Congress on legis-
lative matters and to make legislative proposals.
The Constitution declares that he "Shall from
time to time give to the Congress Information
of the State of the Union, and recommend to
219
220
their Consideration such Measures as he shall
judge necessary and expedient." (Art. II,
sec. 3.) Congress has by law given to the
President a vitally important power of legisla-
tive initiation by commanding him to formu-
late and submit the annual budget. The
exigencies of party leadership have, of course,
broadened his responsibilities in this regard.
In short, Congress and the country at large
definitely expect the President to have a legis-
lative program; they have become dependent
upon his having such a program. It is neces-
sary, therefore, to study the impact of the
policy-determining functions of the mdependent
commissions upon the President's responsi-
bilities in the field of legislation, as well as upon
his administrative policies.
Relation to Legislative
Responsibilities of the President
Heavy responsibilities have been placed on
the President in the field of legislative proposal.
Congress and the Nation look to him for broad
programs of national policy as well as the initia-
tion of detailed measures, such as the budget.
His responsibility in this field comes not merely
from his position as leader of his party. It
comes also from the fact that from his vantage
point as head of the administration he has a
better opportunity to know, to appraise, and to
coordinate national policy proposals than any
other officer or group of officers. What the
President strives to do is to provide a leadership
that prevents conflicts and confusion. Insofar,
then, as substantial powers of policy-deter-
mination and legislative proposal are scattered
about among a growing crop of independent
bodies to be exercised in "insulated chambers,"
to that extent are conflict and confusion of
policy encouraged and the President's effective-
ness and responsibility weakened. The com-
missions vary a good deal in the degree to which
they affect the President in this regard. But
all of them interfere some; some interfere a good
deal i and the independent commission move-
ment as such interferes, potentially, with the
President's authority and responsibility in this
field. This interference occurs in connection
with broad policy proposals and also in the more
restricted field of initiation and sponsorship of
specific measures.
The extent to which the independent com-
missions interfere, actually or potentially, with
the President's responsibility in the field of
broad policy proposal will depend on how much
discretion they enjoy in matters of policv.
Some enjoy very little, others a good dea:!.
The actual extent to which the President has
been bothered in this regard by the independ-
ence of the .commissions is perhaps of less
interest here than are the potentialities of inter-
ference. The President and the commissions.
have had their disagreements, hut they are not
Independent Regulatory Oommissions
chronically at loggerheads, and the conmrissions
can probably be counted upon. to cooperate
with the President most of the time. The
important fact is, however, that they do not
need to cooperate unless they wish, and the
President cannot, therefore, depend upon that
cooperation. A few illustrations will show the
nature and importance of this problem.
The Interstate Commerce Commission has
broad control over the whole transportation
system. The Transportation Act of 1920
placed on the Commission the "duty of taking
steps toward development and maintenance of
an adequate national transportation service."
This is, and is intended to be, policy-deter-
mination in its broadest sense. And smce the
maintenance of a transportation system in-
timately concerns nearly every other phase of
the economic life of the Nation, it is clear that
policy-determmations by the Commission im-
pinge at many points upon any well-conceived
program affecting national social and economic
problems. It is certainly hard to defend on
any basis of theory a status of independence for
such vast policy-determining functions free from
any directing authority to integrate them into
the general legislative program of the Nation.
The Interstate Commerce Commission has a
number of functions that involve policy-
determination, among them rate-making in its
general phases. In whose interests are the
rates to be made or what balance of interests
ought to be struck? Under what circumstances
should rates be reduced on farm products or
farm machinery for the benefit of the farmers?
The fixing of a "just and reasonable" rate in a
specific instance may be a quasi-judicial task.
But these broad questions are not judicial, nor
even quasi-judiCIal; they are questions of
policy. President Hoover issued the statement
aft~r the Supreme Court's decision in the
O'Fallon valuation case, "I am confident that
there will be no increase in railway rates as
the result of the O'Fallon decision." 2 Profes-
sor Sharfman criticizes the President's action
because it "constituted a declaration of policy
for the Commission."3 Certainly it was a
declaration of policy, but upon a question so
closely tied into the whole economic structure
of the Nation that it intimately affected any
broad policy proposals the President might
have. He was not telling the Commission
how to decide cases. He was expressing an
opinion that a boost in rates would be bad for
the country.
Consolidations and mergers of railroads are
under the Commission's jurisdiction. It is
authorized to formulate plans for the consolida-
tion of railroads into groups and report those
plans to Congress. It has the further power
to sanction consolidations, mergers, and pur-
• United Statu Dailv. May 22. 1929. Vol. IV, p. 691.
• 1. L. Sharfman. The Interstate Commerce Commulion; a Studv in
Administrative Law and Procedure (New York: Commonwealth Fund,
1931-30). Vol. II. p. 457.
 Independent Regulatory Oommissions
chases of railroads if it finds that these "will be
in harmony with the plan for consolidation of
railway properties established pursuant to Sec.
3 and will promote the public interest.'" There
can be no question as to the broad range of
policy-determination here involved and the de-
gree to which it may impinge upon other general
economic policies. Here again it would seem
that President Hoover's statement of December
30, 1930, with respect to the four-system merger
plan of the eastern trunk-line roads, if intended
to influence the Commission, was intended to
influence them on a matter of policy so im-
portant that it was bound to obtrude itself
upon the President's broad economic program.6
The Commission also has important author-
ity in matters relating to competition between
railroads and water carriers and between rail-
roads and motor carriers, authority over the
construction of new lines and the abandonment
of old ones, and power over the issuance of
railroad securities. These are all powers over
policy, and as such may have importance in
national economic planning. The authority
over railroad securities may easily have a direct
impact on the credit and fiscal :policies of the
Government with respect to whICh the Presi-
dent has important responsibilities.
The Federal Communications Commission
is another agency that has important powers of
policy-determination. In issuing broadcasting
station licenses it must deal not only with
countless questions of radio engineering, but also
with such far-reaching problems as the news-
paper ownership of broadcasting stations and
the problem of chain broadcasting. Its statu-
tory guide for this and all its other work is
the "public convenience, interest, or necessity."
Interference with Presidential Management
in the Field of Administration
The President is the responsible head of the
national administration, but the independent
commissions, by their very nature, undermine
his administrative authority and responsibility.
To them has been parceled out complete inde-
pendence in several important fields of adminis-
tration. This has not been inadvertent.
Congress has definitely intended to place the
commissions beyond the reach of Presidential
management. It is sometimes said that they
are responsible to Congress in respect to their
. administrative duties-that they are "agents"
of Congress. The Supreme Court has so
referred to them. 8 In reality, however, this
"agency" is confined to making investigations
and reports to Congress. Congress has no
effective means of supervising the administra-
• See. 5-b, Insterstate Commerce Act as amended.
I Sharfman, op. cit., Vol. II, p. 457.
... In making investigations and reports thereon for the information
of Congress under §6, in aid of the legislative rower, It [the Federsl
Trade Commission) acts as a legislative agency ••. To the extent
that It exercises any executive function-as distinguished from executive
power in the constitutional sense-It does so in the discharge and effectua·
tion of Its quasi·legislative or quasi-judicial powers. or as an agency of
the le~islative or Judicial departments of the government." Rathbun v.
United Slat.,. 295 U. S. 602 (1935).
221
tive activities of the commISSIOns and has
shown little desire to do so. The net result is
that in the field of administration the commis-
sions are not held accountable to anyone. And
yet to them is entrusted the administration of
laws dealing with some of the most vital
economic and social interests of the Nation.
The Constitution commands the President to
"take Care that the Laws be faithfully exe-
cuted" (Art. II, sec. 3); but obviously he cannot
see that the Interstate Commerce Act or the
Federal Trade Commission Act is faithfully
executed, because the job has been given to
someone else. In forming and carrying out his
own administrative policies he must reckon
with the administrative policies of a dozen or
more wholly independent bodies, whose activi-
ties overlap his own sphere of responsibility at
many points. The results, actual and potential,
of this decentralization in the administrative
system may be considered more closely.
In the first place, the aggressiveness and
effectiveness of the President's general law-
enforcement program will be impaired by any
lack of vigor on the part of the independent
commi:;sions. This may be illustrated from
the history of the Federal Trade Commission.
It has important duties in discovering violations
of the Sherman and Clayton Acts as well as in
ferreting out and suppressing unfair competitive
trade practices. The enforcement of the anti-
trust laws and other laws regulating business is
not an automatic process. Vital questions of
administrative policy are bound up in it. The
Trade Commission Act recognizes this by in-
structing the Commission to move in the case
of an unfair competitive practice "if it shall
appear to the Commission that a proceeding
by it in respect thereof would be to the interest
of the public."7 One President may adopt a
policy of noninterference with business and
confine the activities of his administration to
violations of law too obvious to escape notice.
Another President may be a "trust-buster" and
push with vigor the regulation of business and
the discovery and punishment of business
crimes. These are matters of policy so impor-
tant that they sometimes become issues in
Presidential campaigns. Noone denies the
right of the President to determine which policy
he will follow, or his responsibility for it. But
a President who is a militant "trust-buster"
will find his policy of business regulation
seriously crippled if the Federal Tr~de Commis-
sion is composed of men who believe business
ought to be let alone. This was exactly the
belief of Commissioner William E. Humphrey,
appointed to the Commission by President
Coolidge in 1925. Until his removal by Presi-
dent Roosevelt in 1933 he was able to cast a
deciding vote and thus to dominate the policy
of the Commission. He openly announced a
policy of friendly toleration toward business,
embarrassing investigations were cut to the
minimum, and a more lenient regulatory policy
, Trade Commission Act. Sec. 5.
222
was pursued. This attitude was not in serious
conflict with the policies of Presidents Coolidge
and Hoover, but when President Roosevelt took
office he requested the resignation of Mr.
Humphrey on the ground that "your mind
and my mind do not go along together on either
the policies or the administering of the Federal
Trade Commission."
In the second place, effective coordination of
national administrative policy is osbtructed by
the independent commissions. This obstruc-
tion is, again, both actual and potential. The
commissions frequently deal with problems cer-
tain aspects of which are handled by other
agencies. There is considerable overlapping of
functions and even conflict of jurisdiction, not
only between the commissions and the depart-
ments but also between the commissions them-
selves. The dividing line between the juris-
diction of the Power Commission and the Secu-
rities and Exchange Commission over power com-
panies is badly confused and full of potential
conflict. Yet each is independent and the con-
flicts will have to be ironed out either by diplo-
matic negotiations or by an act of Congress.
Several agencies besides the Federal Trade Com-
mission have authority over unfair trade prac-
tices, but there is no central authority that can
whip conflicting policies into line. Many of the
commissions have large powers of issuing rules
and regulations on various subjects, but there
B. DANGER TO THE IMPARTIAL HANDLING OF JUDICIAL WORK
The most important work done by the inde-
pendent commissions is either judicial or quasi-
judicial. Such work calls for the highest
measure of impartiality in order that justice
may be done and public confidence may be
mamtained. To secure such impartiality has
been the most important and cogent single
reason for making independent commissions
independent. Were it not for their judicial and
quasi-judicial work it would be hard to find
any intelligent reason for their independent
status. And yet, in the very nature of the
work the commissions do, there are inherent
elements that menace the neutrality and im-
partiality with which their judicial and quasi-
judicial functions are performed. Two of these
undermining influences may be considered.
The first danger to the neutrality of the
independent commission lies in the fact that
it must combine its judicial work with work of
policy-determination. Courts protect them-
selves by refusing to do nonjudicial work. The
independent commissions cannot so protect
themselves. They must add to the duties of
the judge those of the lawmaker and the ad-
ministrator. This is not inadvertent or acci-
dental; it is inherent and inescapable. It is
true that the commissions have some duties
that are pretty clearly legislative, some that are
purely administrative, and others that are quite
Independent Regulatory Oommissions
"is no authority to require any centra] clearance
for these or to see that they harmonize with the
President's policies in the same or closely re-
lated fields. It seems clear that the important
managerial and administrative duties of the
new Maritime Commission will impinge at
many points upon the administrative policies of
the Interstate Commerce Commission, not to
mention the policies of the State Department,
in the field of foreign trade.
Then, too, independent commissions are
inclined to strive for a high degree of self-
sufficiency. Since they are independent they
are indisposed in many cases to utilize the
services already existing in the departments,
but establish their own statistical, economic.r
and legal divisions. They, of course z neea
these services, but they are under no obligation
to integrate them into the larger administrative
structure, with the result that there is some
needless duplication of staff and much over-
lapping of function.
It may be admitted that the administrative
confusion resulting from any single independent
commission may not in itself be serious. Fur-
thermore, the evil is abated by the cooperative
spirit that the commissions show some of the
time. But if more of these independent bodies
are created the disintegration of effective and
responsible administrative management by the
President will be increased.
definitely judicial. These may be separate and
distinct. But the vast bulk of the duties given
to independent commissions are "mixed" func-
tions. They contain, in varying degrees, the
qualities that are associated with legislation,
administration, and adjudication. The best
example of a "mixed" function is the application
by an administrative body of "standards" to
the conduct of individuals or business. The
method is to incorporate in a statute a "stand-
ard" that is to be applied by the commission to
concrete cases. "Unfair competitive trade
practices" is such a standard; "just and
reasonable rate" is another. The application of
such a standard is an interesting process by
which the commission at the same time deter-
mines policy and prosecutes violations of that
policy. It is performing in the same act the
duties of lawmaker, prosecutor, and judge.
This merging in the commission's work of
elements that are discretionary with elements
that are judicial subjects the commission to
pressures from many sources. It is not objec-
tionable to try to influence policy by honest and
open methods. But when policies are being
determined bX a body also doing judicial work.
it is impOSSIble to influence policy without
danger of demoralizing the impartiality of the
judge. In most of the cases in which "pressure"
has been brought to bear on the independent
r
Independent Regulatory Oommissions
commission the purpose has been to influence
the discretion of the commission rather than the
judicial part of its duty. On occasion the
President has exerted J?ressure when the com-
mission's policies have lmpinged upon his own.
Private interests have exerted pressure, some-
times directly, someti~s through the inter-
vention of members of Congress, and this
pressure has not always been confined to com-
mission policy but has sometimes sought to
influence adjudication. The commissions are
being asked to perform judicial tasks interwoven
.. with determinations of policy which at times are
, the subjects of acute partisan controversy or
edonomic class antagonisms. This is not tha
atmosphere in which the rights of individuals
ought to be judged. It is a vital and inherent
we!tkness of the independent commission system
that it makes this necessary.
A second danger to the neutrality of the
independent commission lies in the fact that in
handling some of its most important work it
acts both as prosecutor and as judge. This not
only undermines judicial fairness; it weakens
public confidence in tha£ fairness. This unfor-
tunate situation exists in the work of the
Federal Trade Commission. An important
part of the Commission's job is to ferret out
unfair competitive trade practices and issue
cease-and-desist orders against them. There is
a first stage in the proceeding in which the
Commission, with the aid of its staff, makes an
investigation and draws up a complaint. The
second stage is a formal hearing before the
Commission in which it decides whether the
charges in the complaint have been proved and
either issues a cease-and-desist order or dis-
misses the action. The temptation fpr the
Commission to decide that it has proved its
. own case must be very strong, and the business-
man not unnaturally resents having his rights
settled by an "interested" tribunal. As is
clearly brought out in Gerard Henderson's
study of the Federal Trade Commission,S one
I Gerard C. Henderson. The Federal Trade Commluion; a Studu In
Admlnutralt., Law and Procedure (New Haven: Yale University Press.
1924). 382 pp.
223
of the reasons why the Supreme Court paid
such scant respect to the Commission's findings
of fact is because the records showed a disposi-
tion in many of the Commission's cases to
"build up" a record that would support its
orders. The Court was suspicious of this bias
and ruthlessly reexamined the evidence for
itself.
This double role of prosecutor and judge is
played by the Federal Communications C01n-
mission in deciding whether to renew a broad-
casting station license. Refusal to renew such
a license is not a criminal penalty, but may be
much more serious to the station owner. Here
again the proceeding that may result in denying
a license is conducted by the Commission in the
role of investigator. Later the Commission
decides whether it has made out a good enough
case to justify refusin~ to renew the license.
This unfortunate practIce of combinin~ in the
independent commissions the functlOns of
prosecutor and judge is carefully analyzed and
sharply attacked in the able Report of the Special
Oommittee on Administrative Law of the American
Bar Association in 1936.9
It appears, therefore, that the independent
commission, as an institution or technique,.
obstructs effective administrative management
by giving important policy-determining func-
tions to independent bodies. It also appears
that this same combination of functions im-
perils the judicial neutrality of the commissions.
It appears further that the difficulty is inherent,
since the same functions are at once policy-
determining and judicial. To put the inde-·
pendent commissions, as they now exist, into
the executive departments and subject them
to direct yolitical and administrative control
would stil further threaten the impartiality
with which they do their judicial work. Part
IV of this study suggests a plan to meet these
difficulties and at the same time retain the
ID!1j<?r advantages of the independent com-
mlsslOn.
I See pp. 221-22.
 III. LEGAL LIMITATIONS CONDITIONING ANY SOLUTION
OF THE PROBLEM
•
There are two legal problems that bear upon
the independent commission. The first is the
legal aspect of the President's power to control
commissions, which depends upon his power of
A. LEGAL ASPECTS OF PRESIDENTIAL CONTROL THROUGH REMOVAL POWER
Whatever power of control the President has
over the independent commissions will spring
from his power to remove members from office.
The present status of that removal power will
therefore be explored.
But a word may be said, first, about the
practical aspects of the removal power. It is
indispensable to effective administrative man-
agement. There is no way in which an officer
may effectively control or direct his subordi-
nates unless he can dismiss them. The impor-
tance of the removal power is not measured by
the frequency with which it is used. If the
power exists, that very fact makes its frequent
use unnecessary.
If the President had power to remove the
members of the independent commissions,
certain practical results would follow. First,
the power would probably be used very spar-
ingly. Durin~ the years when it was supposed
that the PreSIdent did have this power, few
removals were made or attempted, and those
only when the President felt acutely the con-
flict between the commission's policy and his
own. President Coolidge tried to avoid the
necessity of removals, in one or two ca<>es, by
asking commissioners for undated letters of
resignation. This reflected the common Presi-
dential reluctance to appear to be interfering
with agencies which the public thinks of as
quasi-judicial.
In the second place, if the President could
remove independent commissioners, he would,
as a result of the impact of that relationship,
get from the commissions a greater degree of
cooperation in matters of policy and adminis-
tration. This would be due less to fear of
removal than to the subtle sense of account-
. ability to the President resulting from the
mere existence of the power.
In the third place, the removal power would
enable the President to secure from the com-
removal. The second is the problem of the
judicial supervision of the work of the commis-
sions. These will now be examined.
missions compliance with Executive orders.
The power of the Presiaent to issue Executive
orders comes from several sources. But what-
ever the source, the problem of securing com-
pliance with the orders is the same. They
can be enforced. where the removal power
exists. They cannot be enforced where it
does not.
The present law as to the President's power
of removal may now be examined.
Present Law as to Presidential Removals
Though the law ",ith respect to the Presi-
dent's power of removal is uncertain and con-
fused at many points, three things have been
pretty definitely settled by the Supreme Court.
First, the President cannot be restricted by
Congress in his power to remove executive offi- .
cers whom he appoints with the consent of the
Senate, or presumably, without that consent.
He gets this power of removal from the grant of
Executive power in Article II, sec. I, of the
Constitution. Congressional interference with
it would, therefore, violate the separation of
powers. This was decided in 1926, in the case
of Myers v. United States (272 U. S. 52). This
decision strengthened the hand of the President
in his responsible management of the Executive
Branch of the Government.
Second, Congress may properly provide that
the members of commissions set up to perform
quasi-legislative and quasi-judicial work, rather
than "purely executive" work, shall be remov-
able by the President only for the causes stated
in the statute. This was the Court's decision
in Rathbun (Humphrey) v. United States (295
U; S. 602), decided in 1935 in a case involving
a member of the Federal Trade Commission.
Third, if Congress sets up no restriction, the
President may remove any officer whom he
appoints, even if he is not a "purely executive"
225
226
officer. The removal power of the President is
implied not only from Article II of the Consti-
tution, as above noted, but also from the power
to appoint. This has been law ever since the
case of Ex parte Hennen (13 Peters 230) was
decided in 1839. Though Congress may pro-
tect a regulatory commission from the Presi-
dent's discretionary removal power, it must do
so by positive legislation. If the statute is
silent as to removal, as in the case of several
of the boards and commissions reviewed in
this study, the President has full power of
removal.
Unsolved Problems of the Removal Power
Several important questions connected with
the removal power, however, are not answered
by the decisions just mentioned. The an-
swers may only be guessed at.
Perhaps the most important of these is the
question of just which officers or agencies may
be placed by Congress beyond the reach of the
President's power of removal. VVhat are their
distinguishing characteristics? The Rathbun
decision stated that Congress intended to make
the Federal Trade Commission independent,
that the Commission did quasi.-legislative and
quasi-judicial work, that it was therefore an
"agent" of Congress and the courts, and that
its functions were not "purely executive."
There is not space here to analyze these state-
ments, but the Court's language, if taken at
its face value, would make it possible for Con-
gress, by adroitly conferring on them a mixture
of functions, to withdraw from Presidential
removal practically every officer and agency in
the national administration. This, of course,
the Court did not intend to sanction, as is indi-
cated in the concluding sentence of the opinion
in the Rathbun case:
B. JUDICIAL REVIEW OF THE REGULATORY COMMISSIONS
When the regulatory commissions were first
being set up they were attacked on the ground
that legislative and judicial powers had been
unconstitutionally delegated to them. These
attacks did not prevail, and it may be accepted
as settled that Co~ress has the power to endow
independent commIssions with broad regulatory
power. But by the very decisions in which
these delegationj; of power were upheld, the
Court served notice that the regulatory powers
would have to be exercised under judicial
scrutiny. The scope and practical results of
this judicial supervision will be examined.
Review by the courts of the regulatory func-
tions of the commissions rests primarily upon
what is commonly referred to as the "rule of
law" or the "supremacy of law." This means
that the citizen has his legal rights determined
in the last analysis in the courts of law. He is
entitled to his "day in court", a right that is
Independent Regulatory Oommissions
To the extent that, between the deC)!f~n in the
Myers case, which sustains the unrestrict'able power
of the President to remove purely executive officers,
and our present decision that such power does not
extend to an office such as that here involved, there
shall remain a field of doubt, we leave such cases as
may fall within it for future consideration and deter-
mination as they may arise.
Another unanswered question is what is
meant by the various causes for which members
of the commissions may be removed, and what
procedure must be followed in removing an
officer for one of the causes. The exact state-
ments of these causes for the commissions under
consideration in this study appear in an appen-
dix. The statutes usually define the cause of
removal in terms of incompetence, neglect of '
duty, or misconduct in office. One statute,
that creating the National Labor Relations
Board, requires notice and hearing before re-
moval for the causes stated, but the others
are silent as to procedure. Some legal anal-
ogies drawn from State practice will throw
light on the causes and procedures of removal
and would be likely to carry weight with the
Supreme Court.
It is generally agreed that when the removal
of an officer is limited to stated causes the re-
moving officer must make a public statement
that one of those causes exists and must give
the officer notice and a hearing. Such pro-
cedure seems in every way desirable. By the
weight of authority and of opinion, however,
the officer making the removal does not have to
"prove" the charges to the satisfaction of a
court to which appeal may be taken. Since the
Supreme Court has steadily refused to interfere
in any way with the President's exercise of his
discretionary powers, it seems most unlikely
that his public statement that an official was
removed for a cause stated in the statute would
be subjected to court review.
easily and appropriately assimilated to the con-
stitutional guarantee of due process of law.
The rule of law, however, does not mean that
every decision affecting private rights must be
made by a court. The courts early recognized
that many such decisions, like those made in
the various stages of the regulac,ory process,
must be made by administrative officers. What
the rule does require is a procedure by which
all such administrative decisions may be re-
viewed by the courts, at the demand of the
citizen, to make sure that his rights have been
justly decided by administrative agencies that
have not overstepped their legal powers. This
judicial review operates in two ways.
First, the courts will review the decisions and
orders of the regulatory commissions on all
questions of law. Some of these will be ques-
tions of constitutional law. The most common
constitutional questions are those in which the
...
 Independent Regulatory Commissions
procedure of the administrative body is alleged
, to be so unfair as to deny due process of law,
or those in which the regulatory power itself is
attacked as an arbitrary deprivation of property
or liberty and hence a denial of due process.
Much more numerous are the legal questions
, of ultra vires action by the commission. Has
it in any way exceeded the powers given to it
by Congress? Or has it interpreted wrongly
the law which it is its duty to administer?
Since the courts are the peculiar guardians of
the law under the American constitutional
system, they properly claim and exercise full
power to correct all legal errors that may creep
into the administration of regulatory statutes.
Second, the courts have also insisted in some
cases upon reviewing findings of fact made by
, the regulatory commissions. It is in these
findings of fact that the experience and the
expertness of the administrator is supposed to
be of peculiar value. Consequently, any wide-
spread takin~ over by the courts of this special-
ized task is likely to defeat the major purposes
for which administrative machinery has been
set up. The grounds upon which the courts
review such findings of fact by the regulatory
commissions are two in number. . of discretion which it enjoys. That discretion
In the first place, the courts will decide
whether the commission has correctly deter-
mined what are called jurisdictional facts. 4n
illustration will make clear what such a fact IS.
If a commission administering an employees'
compensation law has authority to make awards
to persons injured while actually employed,
then the commission's finding that a man was
actually employed at the tIme of his injury is
the finding of a jurisdic~io;nal fact.. ~f ~e :was
so employed, the commISSIOn has JunsdlCtIOn;
if he was not, it has none. The courts have
refused to regard commission findings of juris-
dictional facts as final.
In the second place, the courts will review
administrative fact-finding when necessary to
the decision of a constitutional question. This
situation comes up in the review of rate orders.
A rate is unconstitutional if it is confiscatory.
It is coIifiscatory if it does not bring in a fair
return on a fair valuation of the property
invested. In determining the fair value of the
property the correctness of the findings of fact
are of vital importance. In reviewing the
reasonableness of the rate the courts feel free
to reexamine in their discretion all the issues of
fact entering into the computation, since they
deem it necessary to a full and fair considera-
tion of the constitutional question. The courts
are not, howeverz rigidly consistent in this
matter of the reVlew of issues of fact. They
follow a somewhat flexible policy, ranging from
an acceptance of the findings of the commission
"if supported by evidence" to a thorough re-
examination of the entire issue as a case de
novo.
Behind all these rules governing judicial
review of the regulatory process is the basic
227
principle to which the courts have committed
themselves, that they will intervene to prevent
essential injustice or abuse of power upon the
part of administrative officials, regardless of
legislative efforts to make the decisions of such
officials final and conclusive. This judicial
attitude is clearly expressed in the words of
Mr. Justice Harlan:
The courts have rarely, if ever, felt themselves so
restrained by technical rules that they could not find
some remedy, consistent with the law, for acts, whether
done by the government or by individual persons,
that violated * * * justice or were hostile to the
* * * prinCiples devised for the protection of the
essential rights of property.1o
If these principles of judicial supervision over
the regulatory commissions were definite a:nd
inflexible, they would present merely routme
problems of adjustment ~<? a fixed legal order.
But a study of the deCISIOns shows that the
aggressiveness with which the courts supervise
the processes of administration varies with a
number of factors that are practical and not
wholly legal. Some of the more important of
these will be reviewed.
The courts are influenced in their attitude
toward a regulatory commission by the breadth
may be very extensive. In many such cases the
courts have not hesitated to take over the task
of reviewing that discretion. The Feder~l
Trade Commission has jurisdiction over unfaIr
competitive trade practices. The legislative
history of the act shows that Congress hoped to
build up an administrative law of u~fair com-
petition by the d~cisions of a body of md~pend­
ent experts. This, howeve~, the ~ourts did not
permit. In an early case mvolvmg the Com-
mission's power the Supreme Court hel~ ~hat
"It is for the courts, not the COmInlSSlOn,
ultimately to determine as a matter of law what
they [the words 'unfair method of. c?mpeti-
tion'] include." 11 Instead of permlttmg the
concept of unfair competition to be developed
by an administrative process of trial and error,
the Court has kept it fairly rigidly confined to
common law precedents. Had Congress put
into the Trade Commission Act its own defini-
tions of unfair competitive practices,. t~ose
definitions, subject only to due process hml.ta-
tions could have included much more sweepmg
restrictions than the Court has been willing to
sanction in the findings of the Commission
itself. The practical result of giving to t~e
commissions powers that inv?lv~ .broad ~lS­
cretion may be to encoura~e a J~dic~al scru?nY
of the way in which that discretion IS exerCl.sed
which amounts in some cases to a. I?racti~al .
taking over by the courts of the administrative
job. .,.
The procedure followed m exerclSmg a regu-
latory function will also influence the closeness
of the judicial supervision. This involves more
than purely formal procedure. It refers to the
II M01lOngahe14 Bridge Co. v. United State•• 216 U. S. 177. 195 (1910).
11 Federal Trade Com million v. Gratz. 253 U. S. 421 (1920).
228
general spirit of fairness existing within the
limits of a technically sound procedure. If it
appears to the courts, as it did during the earlier
years of the Federal Trade Commission, that
the Commission is issuing its orders on the basis
of complaints and findings reflecting the hostile
bias of the prosecutor, they will be more
strongly inclined to supervise with aggressive
diligence every aspect of the Commission's
work.
Independent Regulatory Commissions
Though these are not the only factors that
enter into the situation, it is justifia.ble to
assume that any measures that can be taken to
sharpen and clarify the discretionary power of
the regulatory commission, and anything that
will render more orderly and impartial the pro-
cedure under which it regulates private rights,
will tend to reduce the degree to which the
courts will be inclined to take upon themselves
the essential job of administering the law.
 IV. A SUGGESTED SOLUTION
•
The historical background of the independent
regulatory commission problem in the Federal
Government has been briefly reviewed and the
legal and practical difficulties involved in making
these commissions independent of the Execu-
tive Branch have been pointed out. The prob-
lem of the independent commission arises, as
has been indicated, from the merging in the
same body of administrative and policy-deter-
mining functions with respect to which It ought
to be accountable to the President, and quasi-
judicial functions in the performance of which
it ought to be wholly independent. A solution
is needed that will establish responsibility for
the administrative and policy-determining as-
pects of the regulatory job, and 'at the same
time will guarantee the neutrality of the judicial
and quasi-judicial part of the work. It should
facilitate administrative management without
lessening judicial independence.
It is very probable that there is no one solu-
A. ESSENTIAL FEATURES OF THE PLAN
The main features of the suggested solution
of the independent commission problem will be
set forth briefly before exaInining in detail the
major problems involved in putting it into
operation. The plan would put independent
commissions into regular executive departments
if "suitable" departments now exist or can be
provided. "Suitable" departments are those
that have functions relevant to those of the
commission, and that are neutral with respect
. to the regulatory duties of the commission
rather than "promotional" or otherwise biased.
If suitable departments cannot be provided,
commissions should be independent.
The commission, in being put into a depart-
ment, would be broken down into two sections.
One of these would be the Judicial Section,
which would be "in" the department for
purposes of "administrative housekeeping", but
otherwise completely independent. Its mem-
bers would be removable by the President only
for incompetence or misconduct, and neither
tion of this problem. Certainly a careful in-
vesti~ation, preferably conducted by a quasi-
judiCIal body, should precede any material alter-
ation of the organization of the independent
commissions, particularly of those that have
been in existence for many years. In some in-
stances it might be decided to make no change
in the existing organization, whereas in other
instances it might be found advisable to place
a commission within one of the executive de-
partments and to separate its administrative
activities from those of a quasi-judicial char-
acter.
With this possibility in view, the following
plan is suggested for consideration. It is a
plan that may be modified greatly to fit the
particular situation, and should be regarded as
a general rather than a specific proposal. Other
and better ways of meeting the problem may be
discovered. The plan is outlined as one pos-
sible solution.
the Cabinet Secretary nor the President could
review its decisions. This section would
handle the judicial and quasi-judicial aspects of
regulation. Alongside it would be set up an
Administrative Section, which would be a bu-
reau or division in the department and fully
responsible as such to the Secretary and the
President. The bureau chief, as well as the
staff, should be on a career basis under appro-
priate civil service rules. To this section would
be given the rule-making, administrative, and,
in general, the policy-determining aspects of
regulation. To assure internal flexibility,
changes in the structural details of these sec-
tions and the division of duties between them
might be made by Executive order of. the
President. Such Executive orders, however,
like those authorized in the Economy Act of
1933 for the reallocation of administrative
agencies and functions, might be made subject
to congressional disallowance within a fixed
time (60 days),
229
230
B. DIVISION OF FUNCTIONS BETWEEN JUDICIAL AND ADMINISTRATIVE
SECTIONS
The greatest difficulty to be encountered in
setting up the suggested plan is that of dividing
the work of the independent commission be-
tween the Judicial Section and the Administra-
tive Section. If it is to achieve its purpose and
be workable, this division of labor must be
clean-cut. The Administrative Section must
not do judicial work, nor should it be responsible
to the Judicial Section on matters of policy.
The Judicial Section must not do policy-de-
termining work nor be responsible to policy-
determining officers.
If the work of the regulatory commission
could all be neatly classified as rule-making,
administrative, and judicial, it would be easy
to distribute it between the two sections pro-
posed. But the bulk of the regulatory job is
not clearly one thing or another, but a IDlXture
of two or three things. It is a "mixed" func-
tion, combining in the same act elements that
are policy-determining and judicial. How can
these "mixed" functions be given either to
an Administrative or to a Judicial Section
without resulting in the very dilemma it is
sought to escape? The following plan for
distributing functions between the two sections
answers this difficult question along with cer-
tain easier ones that are dealt with first.
Administrative and Rule-making Functions
Clearly administrative and rule-making func-
tions, or mixtures of them, go to the Adminis-
trative Section. This is plain sailing. By
definition these functions are all policy-deter-
mining in varying degrees, or to putit differently
they are by definition nonjudicial. They
clearly belong in the Administrative Section.
Some of them have been dumped onto the com-
missions by Congress for want of a more ap-
propriate place to put them and form no part
of their major regulatory work. A few illus-
trations will make clear the nature and scope
of these duties.
Clearly administrative duties have been
given to many of the commissions. One of
these is the task of discovering violations of the
law and reporting them to the Attorney
General for action. Such power is ~iven to the
Federal Communications CommiSSIOn, and to
the Federal Trade Commission in connection
with violations of the antitrust laws. The
duty is in no sense judicial. It is analogous to
that of a district attorney. The Interstate
Commerce Commission has important powers of
regulation and inspection in the safety appliance
field, but it is instructed by law "to lodge with
the proper district attorney information of
any such violations as may come to its notice."
Many commissions have powers of investiga-
tion, research, and report. These are clearly
administrative functions, even though the
Independent Regulatory Oommissions
investigations may result in legislation, prosecu-
tion, or mere publicity. Finally, there are
several cases in which broad managerial powers
are given to the commissions. The new
Maritime Commission will devote most of its
energy to the administering of construction
and operating subsidies for shipping, and the
chartering of Government-owned vessels. These
are all administrative duties.
The rule-making functions that are given to
most commissions establish the important power
of issuing rules and regulations of general appli-
cability setting up guides to future conduct.
This power is qwte different from the power
to issue orders of individual application. It
results in the production of large and important
bodies of substantive law. This is likely to be
an increasingly important part of the regulatory
job. This is true whether the task be handled
by an independent commission or by one of the
regulatory bureaus in the Executive depart-
ments. If policies for the guidance of indiVIdual
conduct are to be determined by regulatory
bodies it is desirable that such policies be em-
bodied increasingly in carefully drawn rules that
all may read and understand, rather than being
pricked out point by point in ad !we decisions.
There is growing feelin~, for example, that the
law of unfair competitIOn ought to be formu-
lated in rules by the Federal Trade Commission,
rather than being pieced together out of a long
series of individual cease-and-desist orders.
The rule-making functions involved in the
task of regulation are and ought to be of grow-
ing im~ortance. The Federal Communicn:tions
CommIssion makes rules with respect to nearly
every aspect of radio broadcasting. The Inter-
state Commerce Commission makes rules and
regulations for the transportation of explosives
in interstate commerce, for bills of lading, etc.
The new Motor Carrier Act empowers it to set
up regulatioRs "with respect to continuous and
adequate service, transportation of baggage and
express, uniform systems of account, records,
and reports, preservation of records, qualifica-
tions and maximum hours of service of employ-
ees, and safety of operation and equipment."
Judicial Functions
Clearly judicial functions go to the Judicial
Section. They, however, do not make a very
impressive list. Quasi-judicial functions are
not included here, smce they combine discretion
with the judicial work of determining the rights
of parties. The power of the Interstate Com-
merce CommiSSIOn in reparations cases is quite'
strictly judicial. The proceeding is in the
nature of a civil damage action based on a
violation of law. The duty of the Federal
Trade Commission to aid the Federal courts
in working out decrees of dissolutIOn in anti-
Independent Regulatory Oommissions
trust actions (a service it has never been called
upon to render) is a subjudicial function per-
formed under the direction of the court. It is
judicial in the same sense that the work of a
master in chancery is judicial.
"Mixed" FunCtions
Functions in which judicial power is "mixed"
with discretion are "broken down" by a hori-
zontal procedural cleavage so that the initial
stages are performed by the Administrative Sec-
tion and the final stages by the Judicial Section.
Up to this point it has been possible to distribute
functions between the :proposed sections by fol-
lowing a vertical clasSIfication of duties that
are rule-making, administrative, or judicial.
Distribution of the "mixed" functions is a much
more difficult and important task. These are
the functions in which the work of the judge is
combined with that of the lawmaker, or the
administrator, or both. Perhaps the most im-
portant part of the job of the regulatory com-
missions is the "mixed" function of applying
"standards" to the conduct of individuals or
businesses. This has been mentioned, but it
needs closer examination. The Trade Com-
mission Act sets up the "standard" that all
"unfair competitive practices" are forbidden.
The task of applying that standard to concrete
cases is given to the Federal Trade Commission.
The process involves three elements.
First, there is a lawmaking element in deter-
mining as a rule of law that a particular adver-
tising device is an "unfair competitive trade
practice."
Second, there is an investigation to secure
evidence that a businessman has indulged in
the practice.
Third, there is a determination, followed by a
prohibitory order, that the evidence so secured
does prove a violation of the rule so set up.
Some or all of the same elements are present
in the application of "standards" of other sorts,
such as "just and reasonable rates" or "public
convenience, interest, or necessity", although
the resulting action will vary. How can this
complicated process be parceled out between
an Administrative and a Judicial Section?
Under the suggested plan these "mixed"
functions, in their initial stages, are to be per-
formed by the Administrative Section. There
are cogent reasons for this.
First, important policy-determination enters
into the interpretation of any of the "stand-
ards" listed above. There is a lawmaking
element in it. With respect to such policy-
determination there should be effective respon-
sibility.
Second, important duties of inquisition and
prosecution are involved in these functions.
Adequate law-enforcement as a Presidential
policy may depend on the aggressiveness with
which this work is done, and there is need, again,
for effective responsibility.
231
Third, it is desirable to have the earlier stages
of these "mixed" functions handled by persons
"immersed in administration" in order to assure
a fair and adequate recognition of the public
interest. A purely judicial body, trained in the
common law and with attention riveted almost
exclusively on the rights of individuals, may
easily ignore major considerations of public
interest. Accordingly, under the proposal these
"mixed" functions will be turned over first to
the Administrative Section for action. From
that section the business will be routed to the
Judicial Section, which will either make an
adjudication upon the record presented to it,
or, sitting as an appellate body, review the
action taken by the Administrative Section.
Each of these alternatives will be explored more
fully ..
The Judicial Section will make decisions
upon the records prepared and presented to it'
by the Administrative Section. This would
make up the bulk of the work of the Judicial
Section and would be in essence an exercise of
original jurisdiction. If one examines the steps
in the routing of most business through the
present regulatory commissions, it is clear that
there is a line which roughly separates the
preliminary steps by which a more or less formal
record or complaint is produced, and which are
handled by the commission's staff, from the
final work of decision by the COmmISsion itself
acting upon that record. Under the plan
suggested the Judicial Section steps into the
picture at just the point at which the commis-
sion at present begins to act judicially upon the
case or record sent up by its staff. As a rule,
the commissioners do not themselves help
prepare these records; certainly there is no
necessity for their doing so. There are, in fact,
substantial reasons why they should not do so,
since if they do the;r accentuate the unfortunate
merger of the dutIes of prosecutor and judge.
Nor would it be necessary or desirable for the
Judicial Section to help prepare the records
upon which their decisions are made, any more
than for a court of law to engage in such work.
It is true that, at present, the commissioners do
handle or direct important administrative work,
but this is not necessary for the effective
handling of the quasi-judicial task of deciding
cases; it is, on the contrary, a competing and
distracting responsibility that sometimes inter-
feres seriously with the work of adjudication.
A concrete illustration will indicate the ease
with which this jurisdictiont111ine can be drawn
between the two sections proposed.
There are eleven steps in the procedure by
which a cease-and-desist order is ISsued by the
Federal Trade Commission. 12 The first nine of
these are the recei:pt of the informal complaint,
followed by a siftmg process of investigation,
report, hearings, review, recommendation, is-
suance of the formal complaint, further hear-
II See the chart Outline of Procedure in Cases before the Federal Trade
Commission, Annual Rtport of lh' Federal Trad. Commi••ion • • •
19.'5, p. 42.
 232
ings, and final report of findings. This is all
done by the Commission's staff, with one excep-
tion. The statute requires that a formal com-
plaint be issued by the Commission itself, and,
therefore, the full Commission must itself take
this formal action. This seems wholly unneces-
sary, since issuing the complaint, though an
important step, is a purely preliminary one.
It seems clear that if these first nine steps were
all handled by an Administrative Section, and
if a Judicial Section :performed the two final
steps of considering bnefs and final arguments,
and either issuing an order or dismissing the
complaint, it would merely be formalizing a
little more sharply the division of labor that
already exists.
The Judicial Section will also have appellate
power to review certain decisions or other ac-
tions of the Administrative Section. Though
the bulk of the work of the Judicial Section will
be the exercising of original jurisdiction, there
are important groups of cases where this bifur-
cated procedure is too slow and too clumsy. It
C. ORGANIZATION OF THE JUDICIAL AND ADMINISTRATIVE SECTIONS
Since a sound division of labor can be worked
out for the proposed Administrative and Judi-
cial Sections, how should those sections be
organized for the proper handling of their
respective tasks? Before the details of or-
ganization are considered, further emphasis may
be given to the point that regulatory commis-
, sions ought to be put into executive depart-
ments only if suitable departments exist or can
be provided.
The first test of suitability is relevance of
function. To put a commission in a depart-
ment that has nothing to do with its work would
obstruct rather than aid effective over-all
management. The commission would suffer
from the type of neglect that springs from in-
difference or ignorance. It would be merely a
cog in a big machine, unable to utilize effectively
the unified and coordinated drive of the ma-
chine itself.
The second test of suitability is neutrality
with respect to the regulatory job to be done.
The department should provide an atmosphere
free from bias and pressure. Some of the exec-
utive departments are very largely "promo-
tional." The Departments of Agriculture and
Labor were created in response to organized
poup demands for the recognition of group
mterests: The Department of Commerce ex-
ists mainly to render service to American busi-
ness. It may be doubted whether a regulatory
or disciplinary function will be aggressively and
impartially handled by such a service depart-
ment. Concretely, is the present Department
of Commerce sufficiently "neutral" to take over
effectively the job of the Federal Trade Com-
mission? At the same time, neutrality in a
department might result if the promotional
Independent Regulatory Oommissions
is necessary that decisions be reached and ac-
tion taken quickly. The public interest cannot
wait upon the formalities of a quasi-judicial
trial. The Administrative Section should have
full authority to handle these cases and make a
decision, but that decision should be subject to
review on questions of law, at least, by the
Judicial Section. The functions that call for
this procedure are those where the volume of
business is large, where usually a routine has
been developed for the exercise of discretion,
and where quick action is desirable. Examples
are found ill the issuance by the Interstate
Commerce Commission of certificates of con-
venience and necessity to motor carriers, the
granting of station licenses by the Communi-
cations Commission, and the registration of
securities and probably of exchanges by the
Securities and Exchange Commission. From
the decisions and orders of the Administrative
. Section in these cases, a prompt, simple, and '
inexpensive appeal should lie to the Judicial
Section on all legal questions involved.
and regulatory work given to it were properly
balanced in amount and importance. If a
department now devoted mainly to rendering
"services" to industry were given major re-
sponsibilities in the field of regulation, the
necessary coordination of the two policies might
even increase the broad social efficiency of the
regulatory job without impairing the impartial-
ity of its administration.
It may be stated again that unless a suit-
able department exists to house a regulatory
commission, the commission should remain
independent or be set up on an independent
status.
The Judicial Section
The Judicial Section should be set up on an
independent basis in the executive department,
and its name might well contain the word
"judicial" or "court", in order to draw attention
to the judicial nature of its work. Such a
judicial label would measurably increase the
prestige of the section. It would strengthen
the President's hand in making proper appoint-
ments, attract a higher type of person, and
create a certain protection against ulterior
pressures.
The relation of the Judicial Section to the
department is perhaps the most novel feature of
the suggested plan. The section is to be "in"
the department, but not "of" it. It is to be
"in" the department for purposes of general
service administration, or "housekeeping", but
it is to be completely independent as to its
substantive functions and its members are to be
removable only for cause. In the actual work
of making decisions, issuing orders, etc., it
Independent Regulatory Oommissions
would not be responsible to the secretary or to
the President. It would be as completely in de-
pendent in these matters as any court of law.
There is one case of an independent agency
"in" a department-the Bituminous Coal Com-
mission. The statute reads: "There is hereby
established in the Department of the Interior
a National Bituminous Coal Commission",
with four-year terms but removable by the
President only for cause. The Commission is
now dormant, so it contributes little to a
knowledge of how the plan works. A similar
status "in" the Department of Labor was
proposed for the National Labor Relations
Board and the idea was strongly defended by ~Section itself and would create an incentive to
Secretary Perkins in the hearings on the crea~t::~· .~ffi.cient administration by offering possible
tion of the Board.
In the case of the proposed Judicial Section,
being "in" the department will mean at least
four things. First, it will mean that its
budget will clear through the department.
Budgetary control may be a coercive weapon,
but there could be little reason to use it to put
pressure on a Judicial Section. The budget
of the Judicial Section would be fairly static
and might safely be left to departmental
control. Second, insofar as the Government
has a uniform personnel policy and administra-
,tionit should apply, through the department,
to the Judicial Section. Third, the Judicial
Section should be relieved of all burdens
incident to procurement and other phases of
materiel administration. Fourth, the section
should be subject to all routine Executive
orders of uniform application necessary to the
administration of the Executive Branch of
the Government. Most of these would be
administered through the department. None
should impin~e on the substantive duties of the
Judicial SectIOn.
Certain organization facts relating to the
Judicial Section may now be suggested. In
the matter of size no arbitrary rule can be laid
down, but the section should be kept as small
as possible and still do its work effectively.
Excessive size retards judicial deliberation,
but a body that must handle a complex job
by setting up panels or sections will need more
members than one that does not. The existing
commissions range in size from three to eleven.
Probably most Judicial Sections could manage
with five members. A body doing only quasi-
judicial work could be smaller than one burdened
with rule-making and administrative duties.
The members of the Judicial Section should
be appointed by the President with the consent
of the Senate. This would make them major
appointments with the protection resultmg
from the J?ublicity they would receive.
In deCIding what qualifications members
should have, both negative and positive sugges-
tions occur. The customary bipartisan re-
quirement seems relevant only to policy-deter-
mination and should be ruled out. The same
is true of geographical or sectional representa-
tion and group or class representation. Pos-
233
sibly those havin~ business or financial interests
within the jurisdiction of the section should be
ineligible. On the other side of the picture,
thought should be given to the occupational
or professional qualifications that bear on the
work to be done. The British Railway Act
of 1921 sets up a Railway Rates Tribunal of
three members who must be experienced in
commercial affairs, railway business, and law,
respectively. It might be well to develop the
tradition that one DWllber of the Judicial
Section shall have htttritdministrative experi-
ence in the upper le.urs of the Administrative
. Section. This would be helpful to the Judicial
-'~';';1>romotion to a position of greater prestige and
security of tenure.
The terms of office should be 12 or 14 years,
and appointments should be staggered to assure
continuity of policy and experience. Every-
thing should be done to encourage the re-
appointment of competent members. Remov-
als from office should be only for incompetence
or misconduct. Salaries should be adequate.
The Judicial Section should have power to
formulate its own internal rules and procedure,
subject possibly to some check, preferably of
judIcial origin. It should have such a staff
as is normally attached to a judicial body.
There is no reason why it should have examiners
or attorneys of its own.
The Administrative Section
The Administrative Section is a bureau or
division of an executive department. Since
the aim is to make the Administrative Section
effectively responsible, it goes, of course, di-
rectly into the executive department and
becomes an integral part of it. There is noth-
ing novel about such status, and it need not be
discussed in detail.
The section should have bureau or division
status, depending upon the size and import-
ance of its job in relation to the work of the rest
of the department. The administrative sec-
tions of the Federal Power Commission and
the Interstate Commerce Commission would
call for different treatment in this regard. It
is scarcely necessary to point out that as a
bureau or division in a department the Ad-
ministrative Section would have a responsible
head, replacing the board or commission form
of organization.
Every effort should be made to set up the
Administrative Sections on a career basis.
This should apply to the responsible bureau or
division chiefs as well as to the staffs. The
bureaus in the Department of Agriculture
under civil service chiefs have long and enviable
records of efficient and aggressive administra-
tion. The resources of civil service experts
have by no means been exhausted in the present
regulations and it is possible to look forward to
the use of techniques whereby positions of even
234
greater importance and responsibility can be
filled by civil service methods.
Certain problems of coordination will be
faced in relating the work of an Administrative
Section to that of its neighbors in the same de-
partment. It will not exist in a vacuum. It
will have active relationships with other ad-
ministrative sections as well as other bureaus
and divisions. Effective coordination will be
of great importance. Perhaps it could be
worked out through a deputy under secretary
and with the aid of conference committees. It
lies outside the scope of this study to formulate
the details of such a plan. It may well be that
through such coordination of the work of sec-
tions and bureaus it will be possible to guarantee
that "neutrality" of atmosphere deemed neces-
sary in a department before the administration
of a regulatory function may be safely confided
to it.
D. LONG-TIME ASPECTS OF THE INDEPENDENT COMMISSION PROBLEM
Perhaps the chief reason for worrying about
independent regulatory commissions is that
they are continually bemg created. A few such
administrative excrescences can be assimilated
without undue disturbance. But the problem of
regulation for which independent commissions
are being used is a long-time problem. The pro-
posed plan may therefore be examined as a tech-
nique for dealing with this long-time problem.
It seems clear that the movement for govern-
mental regulation will go on. It may move
slowly or rapidly, but it is not likely to stop.
Its past history supports this view. Regula-
tory commissions have not been set up for
partisan reasons. Each party has created
some, and others have resulted from bipartisan
efforts. No party coming into power has abol-
ished any regulatory commission created by its
opponents. Some commissions have been set
up because an imperative need for regulation
was felt by the very interests to be regulated.
The regulatory problem, in short, is inherent
in the progressive development of a complex
.economIC society. There is every reason to
suppose that Congress is going to face the same
temptation in the future that it has in the past
to set up these independent bodies.
It is easy to see that there are practical and
strategic difficulties in applying the proposed
plan to an existing commission that would not
arise in dealing with a new regulatory function.
The difficulties are by no means insuperable,
but they cannot, nevertheless, be left out of
account. Some of the independent boards
and commissions, such as the Interstate Com-
merce Commission, have entrenched them-
selves in the public esteem and enjoy great
prestige. This is a factor both practical and
psychological, which could not be ignored in
deciding whether to "break them down"
under the proposed plan. Also the technical
administrative job of fitting an already estab-
lished independent commission into an existing
Independent Regulatory Commissions
Relations between Administrative
and Judicial Sections
The relations between Administrative and
Judicial Sections would, in actual practice, have
to develop by trial and error. The two sections
are separate and distinct and their formal con-
tacts are limited to those made necessary by
their respective duties. The Administrative
Section exercises no control over the Judicial
Section and is responsible neither to it nor for it.
At the same time, the two sections each have a
share in a common problem. Their informal
contacts should be close and cordial. They
should not be separated physically, but should
be twin units in the same division of the depart-
ment. The wisdom and experience of each
should be available to the other through infor-
mal conferences or through joint membership
on advisory committees.
department will be much more complicated
and arouse much more internal hostility than
would be the case in setting up an entirely new
unit. Many of the existing staff might feel
the change from independent status to be a
demotion. The problems of overlapping staff
and functions might cause friction. The
adjustment of salary scales to the departmental
levels would create further difficulties.
At the same time, the suggested plan seems
peculiarly adapted to newly emergmg regula-
tory functions. Many of these are, in the
beginning, "exploratory" in nature. They in-
volve the application of very vague "standards"
to the conduct of industry. Wide discretion is
involved, and there is pressing need for effective
responsibility for this important policy-deter-
mining work. At the same time there is also
acute need for the proper "judicialization" of
the quasi-judicial work involved. The very
vagueness of the "standards" set up increases
the difficulty of knowing in advance the impact
and liabilities of the law, and increases the evils
resulting from merging in one body the duties
of prosecutor and judge. The proposed plan
meets effectively both of these problems. In
addition, the plan contains within itself ele-
ments of flexibility that make it peculiarly use-
ful in handling problems that may need to be
dealt with by the trial and error method. It
would be easy to adjust the structure of the
proposed Administrative and Judicial Sections,
or the precise division of labor between them, to
meet any peculiar problem of regulation that
might rise, or to any change in the nature of the
regulatory task. The proposal is, in short, not
so much a program, definite and rigid in its
details, as it is a principle for the allocation and
organization of functions. As such its utility is
not limited to the present. It may be used
whenever and wherever Congress may decide to
establish a new form of Federal regulation or
reorganize an old one.
 V. AN APPRAISAL OF THE SUGGESTED PLAN
•
Though some of the probable results of the
suggested plan have been alluded to in explain-
ing its nature and operation, the advantages it
A. ADVANTAGES OF THE PLAN
The advantages that the plan should accom-
plish are varied and important. They fall into
four groups which may be dealt with separately.
For Administrative Management
First, from the point of view of administrative
management the plan will increase the coherence
. and unity of the national administrative struc-
ture. All "fifth wheels", or rather all wheels
from the fifth on, will be eliminated. It will
work back to the simplicity of major depart-
mental lines and tend to reduce the chaos of
independent agencies. Simplicity of adminis-
trative structure is not an end in itself; but it
makes possible the tigh tening of the lines of
responsibility so necessary to effective adminis-
trative management. By turning back to the
executive departments the functions of policy-
determination and administration handled by
the independent commissions, a coherent and
coordinated policy may be formulated and an
equally coherent and well-directed administra-
tion of that policy will be facilitated. Policies
and their administration will no longer be
disorganized and obstructed by the activities
of the independent commissions in the sanctu-
. aries of unaccountability which they now
occupy.
The administrative and policy-determining
work now handled by the commissions ought to
be handled more efficiently by an Administra-
tive Section relieved of the burdens of quasi-
judicial labor. The most trenchant criticism
directed against the Interstate Commerce Com-
mission is that its task is so vast and so intri-
cate that the broad problems of planning and
policy can receive less and less attention from
the overburdened commissioners. I t seems
reasonable to expect that the division of labor
between the proposed Administrative and Judi-
cial Sections would provide better opportunities
for broad planning and closer scrutiny of the
efficiency of the administrative work.
The same division of labor would make it
easier to merge within a department the Admin-
offers, the criticisms it must meet, and the
relative value of certain alternative proposals
may be taken up in turn.
istrative or Judicial Sections doing similar jobs.
If the new Maritime Commission were put into
a department, under the suggested plan, its
very meager quasi-judicial duties could easily
be combined with those of some Judicial Sec-
tion charged with the regulation of other trans-
portation rates. Instead of increasing the inde-
pendent dumping grounds into which Congress
is prone to put miscellaneous functions not easy
to allocate, the plan provides for· the easy
assimilation of such functions into the depart-
mental structure.
The Handling of Judicial
or Quasi-Judicial Work
Second, some of the most important ad-
vantages of the suggested plan lie in the han-
dling of judicial or quasi-judicial work. The
Judicial Sections will be as completely inde-
pendent in respect to their judicial and quasi-
judicial work as the independent commissions
now are. They will be even more independent,
for they will be free from those subtle pressures
that menace the judicial neutrality of the inde-
pendent commiSSIOn and that are the inevitable
result of its important policy-determining duties .
One of the chief gains will be the abandon-
ment of the vicious principle of merging in one
body the role of prosecutor and judge. A
Judicial Section, relieved of the equivocal duty
of passing final judgment upon its own pre-
limmary findings, should be able to decide cases
more justly and command greater public con-
fidence than a body suffering from this liability.
There is deep-rooted and well-justified preju-
dice against this merging of prosecuting and
judicial duties, and the practical and psycho-
logical gains in putting an end to it would be
very great.
One of these gains would take the form of a
much more wholesome attitude toward the
regulatory function upon the part of constitu-
tional courts. The courts have shown no hesi-
tation in subjecting the work of the independent
regulatory commissions to a judicial scrutiny so
235
236
strict as in some cases to amount almost to a
usurpation by the court of the commission's
power and responsibility. There has been
scant respect shown by the courts for findings
of fact made by the commissions. This judicial
aggressiveness has been most conspicuous
where, as in the early history of the Federal
Trade Commission, there was ground for sus-
pecting that the commission's formal com-
plaints and final orders were rationalizations of
Its preliminary findings made in the role of
prosecutor. A Judicial Section, as proposed,
would be free from this suspicion, and the
purely judicial and quasi-judicial nature of its
work would remove the chief excuse that the
courts have for injecting themselves into the
administrative and discretionary processes of
regulation.
Upon the basis of one or more Judicial Sec-
tions it would be possible to set up some form
of administrative court, if and when that
seemed desirable. The details of such a plan
need not be discussed, but tradition and
experience might easily come to justify the
same sort of development that has occurred
in the case of the Board of Tax Appeals. That
body has become an administrative court in all
but name and now deserves not only the name
but also life tenure.
The Judicial Section, freed from policy-
determining duties, would not need the close
contacts with Congress and political leaders
that the independent commiSSIOns, because of
their independence, are obliged to maintain on
matters of budget and general policy. This
would make it unnecessary to appoint men
who have facility in these political and legisla-
tive contacts, and would leave the President
free to choose as members of the Judicial
Section men who are judicially minded.
Flexibility
Third, one of the obvious advantages of thA
plan is its flexibility and its adaptability to
yarying conditions. With the Administrative
Section and the Judicial Section under the roof
of the same department, the details of their
organization can be worked out experimentally
by Executive order. The division of labor
between them can also be modified in the light
of experience, and the shifting of a function from
one section to the other would not raise the
major jurisdictional controversy and possible
politicnl storm that sometimes result from
tampering with an independent commission.
Furthermore, the principle of the plnn does not
have to be applied with relentless thoroughness
in order to be applied at all to advantage. As
has been said, it does not need to be applied to
any particular existing commission. I t can be
applied to some and not all.
N or does the principle suggested for assigning
the duties of the two sections need to be applied
with rigid consistency. It is quite possible to
Independent Regulatory Commissions
have the Judicial Section handle certain ad-
ministrative jobs of unique importance if it is
thou~ht that the gain in havin~ them done by a
judiCial body outweighs the loss in adminis-
trative responsibility. Secretary Roper is said
to believe that the vast interests involved in
the granting of ship subsidies ought not to be
confided to a single-headed department. This
is highly debatable, but in applying the pro-
posed plan to the Maritime Commission it
would be ~uite possible to give the subsidy job
to the JUdICial Section.
The fleXibility of the plan makes it peculiarly
useful in dealing with the evolutionary aspects
of the problems of regulation. The life histories
of many of the independent commissions show
startling changes in the process of growth. Set
up often in a tentative and fe'eble fashion to
explore the possibilities of regulation, they have
gained in assurance and experience and have
had their powers clarified and increased. They
have undergone changes in structure, procedure,
and function. Some of the needed adjustments,
possible only through legislative change, have
been difficult to achieve and long delayed. The
ready adaptability of the suggested plan to the
progressive development of any regulatory
problem should be apparent from the earlier
analysis of it. It is this quality that makes it
especially useful in dealing with the long-time
aspects of the problems of regulation. .
The Strategy of Reform
Fourth, the suggested plan is neither so novel
nor so revolutionary as to rule out the practical
possibility of its being considered on its merits
and adopted. As already pointed out} the
policy of putting an independent cOmIDlssion
"in" an executive department was followed in
the case of the Bituminous Coal Commission.
It was seriously considered for the Social
Security Board and the National Labor Rela-
tions Board. An analogy not quite so close is
the Board of Tax Appeals, which took over in
1924 the job done before by the Committee on
Appeals and Review set up in the Treasury.
The careful protection and segregation of the
judicial and quasi-judicial work of regulation
m a Judicial Section, with a prospect of
eventual administrative court status, should'
meet in large measure any fear of weakening
judicial independence. That independence is
not weakened but strengthened. The mem-
bers of existing independent commissions are
fond of emphasizing the judicial nature of
their work and take justifiable pride in it.
They should not look with hostility upon in-
creased recognition and independence for that
judicial work.
If it seemed desirable to apply the scheme to
any existing commission it could be done with
a minimum disturbance of present arrange-
ments. The commission itself could be carried
over bodily as the new' Judicial Section, and
Independent Regulatory Commissions
would find its new job not startlingly different
from its present one. The present staff of the
B. CRITICISMS OF THE PLAN
Several criticisms of the suggested plan may
now be stated and appraised.
Loss in Expertness of Personnel
In the first place, it is pointed out that the
"mixing" of the functions performed by the
regulatory commissions is itself an advantage.
If the same body is doing policy-determining
and administrative work, as well as judicial and
quasi-judicial work, each part of the task will
be better done because of the richer training and
experience that results from the mixture of
functions. This added wisdom and efficiency
would be lost by the segregation of duties in the
proposed plan. It is urged that this loss would
be especially serious in the case of such a body
as the Interstate Commerce Commission. It
formula tes and administers broad policies and
it also makes quasi-judicial decisions. But it
should make its decisions with its broad
policies clearly in mind, and this would be
much harder to do if the two jobs are confided
to separate bodies. Every administrative task
that the commission performs increases the
expert wisdom it brings to bear on its judicial
work. Its work in the field of administration
and policy is made more impartial and stable
by the sobering influence of its judicial responsi-
bility. Administration and adjudication would
both suffer from the proposed split-up of the
regulatory job.
This is very true in the sense that any admin-
istrator or judge is wiser and more efficient the
more he knows about the background and
technical aspects of the problems with which
he deals. In a Govemment still committed
after 150 years to the principle of the separation
of powers, it is, however, possible to over-
emphasize the value of mixing different gov-
emmental functions in one body in order to
insure the competent performance of anyone
of them. As already seen, a heavy price is
paid in loss of administrative responsibility
and in threat to judicial neutrality for this very
mixture of functions in the independent com-
missions. This criticism of the proposed plan
poses a problem that can be solved only by the
weighing of relative values and liabilities.
But the proposal does not alter the present
distribution of regulatory duties so drastically
as appears on the surface. Division of labor
within the regulatory commissions has become
imperative with the increasing volume and
complexity of the work to be done. A situation
is developing in which the commissioners them-
selves are handling the quasi-judicial work,
whereas the administrative work is being done
by the commission's staff. Each Interstate
237
commission, with a responsible head added,
could be welded into an Administrative Section.
Commerce Commissioner is the head of one of
the eleven bureaus set up in the commission.
But each of those bureaus has a director, and
when the writer asked Mr. Eastman how
actively each commissioner managed his bureau
he replied, "They practically run themselves."
The proposed plan merely makes more formal
and clean cut the rather normal division of
labor that most of the commissions have been
obliged to work out.
Dangers of Political Control
A second criticism is directed against turning
the important policy-determining and adminis-
trative work of the commissions over to depart-
ments that are politically controlled. Shall the
vast interests at stake in the regulation of the
railroads or the merchant marine be subjected
to the sinister control of the spoilsman or the
political opportunist? There are instances of
subversive political interference with the regu-
latory process. In December 1930, the Secre-
tary of Agriculture, under pressure from the
refiners of com sugar, reversed a ruling by the
Food and Drug Administrator that when com
sugar (dextrose) was used as a substitute for
sugar in jams, preserves, and jellies, the label
must show that fact. 13 It will not be denied,
however, by those familiar with the facts that
the regulatory bureaus in the Department of
Agriculture and other departments are in the
main fearlessly handled by civil service ad-
ministrators who testify to their freedom from
higher executive interference. There is no rea-
son why the suggested Administrative Sections,
manned and headed by career men of high
caliber, should not give a fearless and impartial
administration of the law. There can be no
effective administrative responsibility without
the conferring of discretionary power. If
wrongly used, it may lead to bad results, but this
is not a problem confined to the field of Federal
regulation.
Danger in Abandoning the Board System
Third, itis urged that important rules and reg-
ulations should not be issued by a single officer
but should come from the collective deliberation
of a group. It is also urged that some of the
administrative or managerial tasks of the regu-
latory commissions are too important to be
handled by one man. The suggested plan is
critized because it confides all these tasks to a
single-headed bureau in a department. This
criticism will not survive close examination. In
II See E. Pendleton Herring, Public Adminbtratlon and the Public
Interest (New York: McGraw-Hill Book Co., 1936), pp. 238-39.
238
the first place, rule-making by an Administra-
tive SectIOn does not mean rule-making by a
single officer, but by an entire hierarchy of
officers whose successive checks are as effective
as the collective efforts of any board. The rule-
making now done by executive departments
is quite as satisfactory as that done by inde-
pendent commissions, with the added element
of effective responsibility to its credit. The
administrative bureaus make quite as much
use as do the commissions of the valuable
technique of advisory conferences on the
formulation of rules. On the other hand, so far
as administration carried on by a group is
concerned, there is little to commend it. It
is on the purely administrative side that the
independent commissions are weakest, and gain
rather than loss would result from centralizing
control and responsibility, even in the adminis-
tration of vitally important regulatory powers.
C. COMMENT ON ALTERNATIVE PROPOSALS
Other pla.ns for dealing with the independent
commissions have merit in varying degrees,
but it is believed that no one of them meets so
squarely the major issues raised by the com':-
mission problem as does the plan suggested
in this study.
Improve the Independent Commissions
The first alternative proposal would retain
the independent commissions but would im-
prove them. It is not within the scope of this
report to study in detail the various ways in
which the independent commissions could be
"tinkered up." None of these incidental im-
provements goes to the heart of the commission
problem. The more important ones may be
mentioned, however, since some of them are
well worth working for, even if nothing more
thorough is done.
Mergers of existing commissions are not
out of the question. The new Maritime Act
permits the transfer by Executive order to the
Interstate Commerce Commission after two
years of the meager regulatory duties of the
Maritime Commission. Other shifts and com-
binations might possibly be made. In setting
up a new regulatory power every effort should
be made to put it into an existing agency
rather than a new one.
Changes in internal organization might in-
crease the efficiency of the commissions. Most
of these would effect a better division of labor.
Such changes have been made in the Interstate
Commerce Commission, and in 1935 Mr.
Eastman proposed much more drastic changes
which did not win the Commission's approval.
Changes of this kind are likely to set up divi-
sions for handling specialized jobs and some
sort of review of the work of such sections.
Independent Regulatory Commissions
Slowing Up of Efficiency
Fourth, it is urged that tq "break down" a
commission in a department, as here suggested.
would mean a general slowing down of its
tempo and efficiency, due to the fact that it is
no longer a self-sufficient unit but is merely a
cog in a vast machine. Though there may be
an element of truth in this, it is not a serious
indictment. There is no reason why the ad-
ministrative subunits of the existing commis-
sions should not be transferred almost bodily
under the proposed plan and continue to
function very much as they do now. Whatever
review or supervision they receive from above
should not take appreciably more time and
enerlP' than is now ~ven to them by the commis-
sion Itself. Nor is It possible to impeach on this
ground the efficiency of the adminIstrative jobs
handled by the regulatory bureaus now working
inside the waIls of executive departments.
The procedure of some of the commISSIOns
has been sharply criticized, and it has also been
urged that the unsatisfactory reporting of the
decisions of some commissions has made it
difficult for those subject to regulation to know
what their rights and liabilities are, which has
retarded the proper development of an ad-
I
ministrative law in the field. Obviously, meas-
ures to correct these evils where they exist are
to be supported strongly.
Much administrative confusion would be 1
eliminated if the independent commissions
were made clearly subject by statute to Presi-
dential Executive orders of general application '
necessary to the administration of the Execu-
tive Branch. This could be done without en-
dangering the judicial neutrality of the com-
mission and would be highly desirable. I
Put Independent Commissions
into Executive Departments
A second alternative would put independent
commissions into executive departments but
leave them independent. It would be possible
to apply more broadly the policy followed in
setting up the independent Bituminous Coal
Commission "in" the Department of the In-
terior. What would be accomplished at the
most would be the subjecting to departmental
control of the budget, personnel, and materiel
of the commission. It is doubtful whether
any gains from this change would be great
enough to justify the' administrative disruption
of the transition.
Convert into Bureaus in Executive Departm'ents
Third, it is suggested that independent com-
missions be converted into bureaus in executive
Independent Regulatory'pommisswns
departments. There is not much support for
thIS drastic proposal, although the successful
operation of the regulatory bureaus already in
the various departments makes it impossible
to rule it out completely. In order to secure
effective responsibility for the policy-deter-
mining side of the regulatory job, it sacrifices
the independence necessary for the neutral
handling of judicial work. Since the plan
su~gested in this study. accomplishes the same
gam without making this sacrifice, it seems
clearly preferable.
An Administrative Court Proposed
Fourth, a different kind of attack on the
independent commission problem comes from
the legal profession. Typical of this was the
proposal for an administrative court presented
to the American Bar Association by its special
Committee on Administrative Law in 1936 but
not adopted by the Association at its annual
meeting of that year. This proposal was
directed against two aspects of present admin-
istration believed by the Committee to be ob-
jectionable. One is the merging of policy--
determining, prosecuting, and judicial work ill
the same hands. The other is the refusal of
the constitutional courts to review as such the
findings of fact that are made the basis of
regulatory power by administrative officers.
The Committee's immediate proposal was less
sweeping than its ultimate objective. It may
be summarized as follows:
1. There is to be an administrative court of
40 judges, under the judicial superintendence
of a Chief Justice, 35 of whom would be the
members of the existing Court of Claims,
Customs Court, Board of Tax Appeals, and
Court of Customs and Patent Appeals.
2. The court would have a tnal division of
at least four sections and an appellate division
with enough sections to handle its work.
3. The sections of the trial division would
D. CONCLUSION
The main lines of this study may now be
pulled together in brief summary.
The independent regulatory commissions con-
stitute a serious and increasing problem. They
exist as areas of complete irresponsibility within
which important policy-determining and admin-
istrative functions are being carried on. By
that very irresponsibility they obstruct effective
over-all management in the Executive Branch
of the National Government. They hinder
coordination of policy and coordination of ad-
ministration. At the same time, the policy-
determining aspects of the regulatory job are
interwoven with judicial and quasi-judicial
duties. The functions of prosecutor and judge
are placed in the same hands, and the impartial-
ity so necessary to the proper handling of
239
take over the present jurisdiction of the legis-
lative courts over claims. customs, and tax
matters. This division would have original
jurisdiction to revoke and suspend all licenses,
permits, registrations, or other B'rants for regu-
latory purposes. The CommIttee found 54
cases in which administrative agencies now do
this. The trial division would also take over
the present jurisdiction of the courts of the
District of Columbia to issue extraordinary
writs against Federal officers and employees.
4. The appellate division would review the
decisions of the various trial sections and would
take over the present jurisdiction of the Court
of Customs and Patent Appeals. This review
would extend to all issues of law and fact.
5. The derisions of this administrative court
would be final, subject only to review by the
Supreme Court on certiorari.
This proposal is open to criticism upon two
major grounds.
First, it transfers administrative work, the
revocation of licenses, etc., to a separate and
independent court. This is, admittedly, only
an entering wedge. It is expected that other
similar functions might later be taken over in
the same way. This can hardly fail to impair
the efficiency and the unitX of the regulatory
job and we'aken the responSIbility of the admin-
istrative agencies. In the words of John Dick-
inson, "I do not see how these quasi-judicial
functions can be torn from the executive or ad-
ministratm agency and leave more than a crip-
pled torso behind." At the same time, this
transfer of functions imposes on a strictly judi-
cial body the making of decisions involving ele-
ments of administrative discretion. Second,
the proposed review by the appellate division
of the administrative court of all findings of
fact as well as law involves judicial intrusion
into that aspect of the regulatory function
which should be the peculiar province of the
administrative agency. This, however, is not
an essential part of an administrative court plan.
judicial work is imperiled by the pressures, both
subjective and objective, which tend to influence
the commissions on matters of policy. Thus
the problem is not an accidental or superficial
one; it arises from the inherent nature of the
commissions and their work. It will remain as
long as the commissions are kept; it will increase
in seriousness as they are multiplied.
The plan here suggested embodies the only
principles by which the independent commis-
sion problem can be solved, the principles of
effective responsibility for policy-determining
and administrative work, and of complete in-
dependence for judicial and quasi-judiCIal work..
The proposed Administrative Section would be
an integral part of the Executive Branch of the
Government. The Judicial Section would re-
240
main wholly independent in the handling of its
cases and the making of its decisions.
The analysis of the details of the suggested
plan shows that the regulatory work now han-
dled by the independent commissions can be
satisfactorily divided up between the two sec-
tions. The initial stages of the regulatory job,
where action is being initiated, investigations
made, complaints filed, and records of findings
prepared, are administrative in character and
would be handled by the Administrative Sec-
tion. The later stages, in which decisions are
made or in which the preliminary decisions of
administrative officers are reviewed as to their
legality, are judicial or quasi-judicial in char-
acter and would be handled by the Judicial
Section. In making this division of labor the
suggested plan, so far from being novel and rev-
olutionary, follows closely the general proced-
ural steps through which the business of the inde-
pendent regulatory commissions is now routed.
It can, in short, be put into operation with a
minimum of disturbance and readjustment.
The criticisms urged against the plan are not
impressive. The success with which regula-
torr. functions are now being handled under
civIl service bureau chiefs in the Department
of Agriculture refutes the idea that an Admin-
istrative Section cannot be set up in a depart-
ment on a career basis and do its work free from
partisan and other ulterior pressures. The
dividing up of the regulatory function between
the two proposed sections will, of course, de-
prive each of the added experience and expert-
ness that it might achieve if it performed the
)
Independent Regulatory Oommissions
whole job itself. But to emphasize unduly the
disadvantage supposed to result from this
aspect of the proposed plan is virtually to
allege that if all administrative work could be
placed in the hands of the courts the job of ad-
ministration would be more impartially done
and the work of adjudication more wisely and
expertly handled. No such gains in expertness
can possibly offset the loss of responsibility for
the administrative job and the subtle undermin-
ing of judicial impartiality.
The advantages of the suggested plan are
substantial. It meets squarely the problem of
the independent commissions. It creates the
clear responsibility for policy-determining and
administrative work that IS so essential to
effective over-all management. At the same
time, it not only preserves the judicial inde-
pendence with which regulatory functions are
now handled by the commissions, but it assures
even more complete independence by relieving
the proposed Judicial Section of the anomalous
duty of functioning both as prosecutor and
judge. Furthermore, in setting up the proposed
sections and allocating their functions it is easy
to retain a flexibility that will make the plan
adaptable to different kinds of regulatory prob-
lems and to the evolving phases of the life
history of any single regulatory function. The
plan provides a principle or a technique by
which the existing regulatory commissions may
be dealt with if that seems desirable, but above
all it affords a method of dealing with the
continuing and long-range aspects of the
independent commission problem.
 The independent regulatory commissions
[
~
Size of Report to '"
~
Agency Date created com- Tenure of office Method of removal Qualifications and disqualifications Reeligibility Salaries whom Chairman appointed by
mission
;:l
.....
Feb.4,1887 _______ 1 15, 17'1 7 years staggered till suc-

i
Interstate Commerce By President, for Ineffi- 1. No more than 6 members from I Noconlment. Have $12,0001 Congress ____ 1 Members of Commission
Commission. '9, Ill. cessor chosen. ciency,neglect of duty, political party. been reappointed. for I-year term.
malfeasance in office. 2. Members must not be interested in
any road under the Commission.
3. No other employment.
Federal Trade Commis- Sept. 26,191L __ .. 1 7 years staggered.. ____ •.I._. __ do ___ . ________ . ____ __ I. Not over 3 from same political No comment ______ __ 10,000 I. ____ do ______ .! Members of Commission. 0-
party.
sion.
2. No other business while member of ~
Commission.
United States Shipping Sept. 17,1916, and I 15, '7, '3 6 years (1916) staggered;.L __ .do _______ . _________ __ I. Due regard to efficiency and ability. _. __ .do __________ • __ __
3 years (1932) staggered;_ 2. Fair geographic representation.
, 7,500 1____ .do _______ 1191&-Members of Board.
• 12,000 192o-President.
~
Board.- Mar. 3, 1933. ;:l
hold tilJ successor. 3. Only 3 from same political party.
4. No other job or financial interest in ;:l
Federal Radio Commis-
sion.-
Feb. 23, 1927... __ .1
shipping companies.
6 years staggered ______ . .1 No comment. .. ________ . I. Members must be residents-l from
each of 5 zones.
....~.
<::>
2. No financial interest in any radio __ ... do ____ .. _______ __ • 30 L ___ .do•• ____ .1 Members of Commission. ;:l
concern. Co
3. Only 3 from same party.
Federal Power Commls· lune 23,1930. ___ . .1 5 5 years staggered ________ . L. __ .do ________ . ______ • ___ I. Only 3 from same party. ____ .do. ______ . __ . __ __ 10,000 1____ .do ______ .1 I\Iembers of Board to ex·
sion. 2. No employee or pecuniary interest piration of his term of
in power company. office.
5 I ____ .do .• ______________ . .I ____ .do ... _____________ __ 1. Only 3 from same party, and to be
Securities and Exchange
Commission.
lune 6,1934. _____ _
appointed from alternate parties
as nearly as practicable.
____ .do ... __________ • 10,000 1____ .dO __ . ___ .! Members of Commission
annually.
2. No other lob or stock market opera·
tions.
Federal Communications lune 19,1934_____ __ 7 1 7 years staggered _______ .1. ____ do ____________ • ____ . 1. Only 4 from same party.
2. No financial interest in products or _____ do. _________ . ___ 10,000 1. ____ do. ______ 1 President.
Commission.
services controlled.
3. No other lob.
National Labor Relations
Board.
luly 5, 1935,.. ____ _ 3 5 years staggered. _____ __ By President, upon I. No other job.
notice and hearing,
for neglect of duty or
May be reappointed. 10, 000 ICongr6S!' andl
President. Do.

malfeasance in office.
Aug. 30, 1935_____ ._ 4 years __ . _____________ __ By President, for ineffi· 1. No financial interest in mining, gas, No comment _______ 10,000 Secretary of By members, annually.
Bituminous Coal Com·
mission. ciency, neglect of duty, transportation, or associated in- Interior.
malfeasance in office. dustries.
U. S. Maritime Commis· lune 29,1936___ . __ . 6 years staggered. ______ . By President, for neglect I. Only 3 from the same party.
sion. of duty or malfea· 2. Appointed with regard to special
sance. fitness. ____ .do ...• ________ __ 12,000 I Congress .... I President.
3. No financial interest in any ship·
ping company for 3 years prior to
appointment and DaDe current.
4. No other lob.

11887. '1906. 11917. • 1920. I Extinct • '1916. 7 1932. , Per d~while at work.

t.;)
~
~
 The independent regulatory commissions-Continued tv
~
Personnel-Civil service--
June 30. 1936 Adminis-
Agency Duties Subdelegation of powers Modes of enforcement RevIew by courts trative
budget
Classi- Unclas- Total 1936-37
fied sified
------------ ----------------------------1--1---1--1---
Interstate Commerce 1. Rates and traffic-Just and reasonable rates and Any function or work of the Com- If order of Commission has been Transcript of hearing before Com- 1,873 liS 1,931 $5,850,656
Commission. routing of tra1llc. mission may be delegated to an regularly made and duly served mission shall serve as facts of case
2. Organization and finance-selection of plans for individual Commissioner or (in eyes of court), an Injunction unless new evidence is admitted
consolidation and new security Issues. Board of Employees olthe Inter- may be obtained to enforce obe- by district court. Appeal may
3. Propertu ~aluat/on-to serve as rate base. state Commerce Commission. dience of carrier. be taken to Supreme Court.
4. In~estigations-research and violation of regu- Parties aHected by the decisions
lations. of such delegated authority may
5. &rvice and salttl/-hours of employees, service petition for hearing before Com-
and safety standards. mission.
6. Account. and report.-form prescribed for all
carriers.
7. Prosecmion-of violations o( regulations or
orders. No comment ______________________ I__ .
Federal Trade Commis- 1. PrtrJention 01 unlair [method. 01 competition. _____ 1Transcript of hearing before Com- 306 266 572 1,603,309
sion. price discrimination and other corporation mission shall serve as facts of case
practices In restraint o( trade. unless new evidence Is admltted
2. Admini$/ration 01 Ctauton Act. by district court. Appeal may
3. Trade practIce conlerenctl-wlth Industry for be taken to Supreme Court (ex-
trade standards. cept under Webb-Pomerene
4. Economic inveatigation.-at direction of Presi- Act; there Commissioners hold
dent, Congress. or Commissioners. hearings for facts but turn case
over to Attorney General for en-
forcement).
_____ do ____________________________ I_____ do ____________________________ , __________ , _________ _
U. S. Shipping Board '-- 1. Sub3idize merchant fleet-useful (or commerce Direction of various activities may '124 • 407.000
. and defense. be assigned to one or more Com-
2. Regmate carriers bl/water-no deferred rebates. missioners.
discrimination, etc.
3. Reuarch-cost of construction abroad and dis-
crimination against American exporters.
Federal Radio Commis- 1. Classify radio statlons _______________________ _ No comment ______________________ 1 By licensing all stations ___________ 1 No comment ______________________ , __________ , _________ _ '124 • 465,380
sion.' 2. Prescribe services to be rendered.
3. Limit area to be served. _____ do ___________________________ _
Federal Power Commis- 1. Regmalion bV IIcense-of accounting metbods, 1. Licenses may be denied on L ____ do ___________________________ _ 239 93 332 379,024
sion. issuance of securities and wholes81e rates In stated grounds.
interstate commerce of all licensees and rates 2. Preliminary permits may be
of licensees in States which have no regula- canceled.
tory body. 3. Licenses may be revoked by
2. In~estigation of water-power utilization, sites,
Bnd cost of production.
3. CoUtttion o( fees for licenses. etc _____________ _
equity proceedings in district
court by Attorney Generai on [
request of Commission.
4_ Failure to obey regulations Is ~
misdemeanor. '"
Securl,Ues and Exchange
Commlsslon_
1. Regulation of securities exchanges and their 1---
members by power to revoke registration
----- 1. Revocation of registration privl- 1 1. Findings o((act by Commission
leges_ supported by evidence, con-
617 463 1,080 2,264,494
~
2_
privileges.
Investigatiom to uncover violations of law ____ _
2. May only apply to district elusi ... e. New evidence ad- ~
court for injunction, to re- mitted by court first returned
3. Regulation of new securities issues ___________ _ strain violations of statute or to Commission_ ~
by mandamus proceeding.

1
2. Criminal penalties enforceable
in United States Federal
courts by Attorney General.
Federal Communica- 1. Radio regulation by Issuance of licenses to all Any duty or function may be as- Injunctions of enforcement ob- Review by district courts. Com- 582 157 739 1,525,000
tions Commission. but Government stations. signed to an Individual Com mis- tained from district courts by mission's findings of fact prima c
2. Telephone and telegraph regulation:
(a) Ratts must be Just and reasonable In all
missioner or to a board of one or
more employees of the Commis-
Attorney General at direction of
Commission.
facie evidence. ~
Interstate powers of Commission. sion except Investigation on
(b) Interlocking directoratea must be ap- Commission's initiative and con- ~
proved by Commission.
(e) Valuation studies. form of accounts pre-
tested proceedings invol.,.lng
hearings, unless parties of action
~
scribed. agree. Parties affected by deci- ~
(d) Certificates 01 conrenience and neceuitu sions of delegated power may ~.
must Issue from Commission. petition for rehearing before 00
Commission. e'
~

- - - - - - - - - ..------------------------------
 ,
N aUona! Labor Rela-
tions Board. merce. agent or agency for the purpose
I
1. Prevefllwn of unfair labor practices In com- Board may delegate functions to Same as Interstate Commerce
Commission, etc.
Same as Interstete Commerce
Commission, ete.
100 93 193 , 735,000
[
2. lnvelligalion of facts, Issues, and practices of of holding unfair labor practice
... employers and employees in labor con-
troversies .
hearings. ~
"', ~

..."" 3. Protection of employees' right to organize and

bargain collectively.
g: Bituminous Coal Com- 1. Con,ervation of bituminous-coa! resources of No comment ______________________ 1 Commission may apply to United Commission's orders reviewable tI50 '150 • 900,000 ~
I mission.' U nUed States.
2. Stabilization of industry and promotion of
States Circuit Court of Appeals
in district of violation for an en-
In United States circuit court on
basis oOa wand may be appealed
'33 , 27 '60 , 215,000 ....
~

interstata commerce by price and produc- forcement of its orders. to the U. S. Supreme Court. ~
~

T tion agreements. <c::.

.
,!..
SiOD.
3. ReseareA and recommendations on problems
confronting Industry.
U. S. Maritime Commls- 1. Operation of Government-owned merchant _____ do ____________________________ .! Same as Interstate Commerce
1Ieet. Commission, etc.
Same as Interstate Commerce ,__________ , _________ _
Commission, etc.
(') (I)
~
~
....
<::>
2. Limited regulation of private water carriers In
foreign commerce. ~
3. Construction and ,ub,idll of merchant and naval
auxiliary 1Ieet. ~
~
'Extinct.
• Personnel and budget for 1IscaI year 1932.
....~
• Regulation part of Guffey bill creating commission declared unconstitutional by Supreme Court, Ma} 1936. "'~."
• Estimate for 1937 1Iscal year. <::>
, Actnal personnel and budget for fiscal year 1937 following Supreme COllrt decision. ~
Qo
, Not yet organized.

tv
~
DEPARTMENTAL MANAGEMENT

by
ARTHUR W. MACMAHON
r
DEPARTMENTAL MANAGEMENT \
by
I)
ARTHUR W. MACMAHON

•
Contents
Page
Introduction 249 .
I. Objectives of Departmental Management 251
To Deal with Questions of Policy 251
To Promote Coordination 252
To Liberate the Operating Units 252
II. The Emergent Pattern 255
Organs of Policy 255
Organs of Management 255
Incipient Departmental Managers 256
III. The Allocation of Supervisory Duties 259
Alternatives 259
Functionalized Types of Supervision 260
Subdepartments 261
IV. Recruitment, Training, and Tenure 265
Assistant Secretaries; the Failure of Impermanence 265
The Permanent Managerial Personnel 268
Staffing for Policy 268
247
 INTRODUCTION
•
The construction of departmental buildings
in Washington during the last decade has
brought congeries of bureaus under common
roofs. Physical proximity in itself is an ad-
vantage. Departments remain geographical
expressions, however, until they achieve al
managerial core above the level of their bureaus.!
Lacking this, departments fail to accomplish
their necessary role in the scheme of coordina-
tion through hierarchy.
The departmental system is assumed in all
discussions of Federal Government. So far as
possible, the tasks of supervision and coordina~
tion must be absorbed within departments;
otherwise the problems that rise to the center
become overwhelming in their detail. The
process of adjustment is a double one, with both
internal and external phases. Internally the
departmental management can arrange relation-
ships among the bureaus. Externally it plays
its part in the administrative management of
the Government as a whole. It equips the
Secretary for his relationships outside of the
department, with the President and with the
heads of other agencies, individually or in the
Cabinet and directly or through staff represen-
tation. In these connections, it brings up to
the Secretary, properly simplified and sharp-
ened, information regarding the situations that
call for discussion and decision; and when ar-
rangements have been made, it transmits the
directions that translate intentions into action.
In addition, departmental management facili-
tates the necessarily numerous and specialized
relationships through which much of the work
of coordination must be conducted. A man-
agerial personnel in itself provides the con-
veniently appropriate focuses for many of the
interdepartmental contacts that are involved.
It can encourage such contacts at the bureau
level or below, furthermore, without losing sight
of the need for a comprehensive concert of
administrative action.
249
\~
 I. OBJECTIVES OF DEPARTMENTAL MANAGEMENT
•
Consideration of the appropriate organs of
departmental management should be preceded
by a discussion of the objectives to which it is
addressed. Summarily stated, these are:
1. To enable the department head to deal
effectively with questions of policy, both in
point of formulation and of executIOn.
2. To promote coordination both within
the department and without.
3. To liberate the energies of the operating
units.
These three overlapping purposes cannot be
conceived of separately; but as points of de-
parture in an approach to the question of the
staffing needed at the apex of a department, it
will be useful to take them up in turn.
To Deal with Questions of Policy
In the first place, the department head must
be enabled to deal effectively with questions of
policy. The need arises in a double setting.
He must be equipped to handle the questions
of policy that are involved in his own depart-
ment. In addition, he must deal with policy
externally, often quite apart from the opera-
tions of his department.
The treatment of policy as it arises within the
department involves two processes that can be
differentiated but hardly separated. In the
first place, decisions must be thought out.
Sometimes this process will start from the
SecretaryJs own mmd. Oftener the problem that
evokes the policy will be thrown up in the work of
the department. In either case the Secretary
must have at hand some facts on which to act.
In the second place, the Secretary must trans-
mit his thought in order to have it translated
into action. If his decision can be indicated
by giving or withholding his signature on a
paper, it is, or it seems, easy. If it can be
expressed as a simple order, it is also easy.
But important policies cannot be transmitted
so simply. The word spoken at the top must
be translated into terms that make it aklpli-
cable, often over a considerable period of tlIlle,
all the way down the complicated line. A policy
may be a process engendered implicitly by a
precedent. The effective tranSmISsion of the
prime decisions that are the creative elements
ill policy entails the aid of persons so well ac-
1. quainted with the department that they know
I how every part is involved.
The external responsibility of a department
head in matters of policy has three aspects.
153155--37----18
Even from the standpoint of the distinctive
preoccupations of the klarticular department,
far::reaching consideratIOns call for atten-
tion outside. It is necessary to observe the
impinging effect of action elsewhere in the Gov-
ernment upon the vocational elements with
which the department especially deals. The
Department of Agriculture, for example, cannot
be indifferent to the policies of other agencies
that react on agriculture. This would not be
less true if the Secretary were to announce that
his sole interest was in the welfare of agriculture.
The second external responsibility of the
department head is an individual consultatiVe} 1-
relationship to the President, to the administra-
tion as a whole, and to the committees of Con-
gress. Each department represents, if not an
attitude, at least a point of view in the sense of
perennial concern with the problems of certain
complexes of interest. In the light of this
concern, the de:partment head is called upon to
advise on questlOns that are raised for decision
outside the department. A forceful illustration
is afforded by the position of the Secretary of
Labor. The Department of Labor is small and
the problems that arise immediately out of its
operations are limited in range, but issues of
policy that touch on labor appear constantly
throughout the Government. The Secretary
of Labor is the administration's natural con-
sultant in re~d to these issues.
In the third place, the Cabinet system' ?
draws the heads of departments into council.: oJ
It is desirable that each shall have points of
view on the over-all klolicy of the administra-
tion. This expectatIOn has doubtless never
been realized, as the paucity of Cabinet discus-
sion on so many occasions has testified. The
fulfillment of the theory certainly assumes that
Cabinet meetings will be for larger p~oses
than the discussion of the particular affru.rs of
particular departments. It assumes that there
Will be counsel through a concert of minds. A
prerequisite condition is that the head of each
department will have time and means with
which to inform himself regarding large ques-
tions that do not arise in his department and
may not touch it at all.
The coupled words, "time and means", may }
well be echoed. Whether matters of policy be
internal or external, time for their consideration
is the Secretary's crying need. Staffing as a
means has a double aspect. Partly it involve~
facilities of investigation, information, and
advice. But, on the managerial side, it implies
the existence of directive personnel which, while
251
 252
strengthening the coordinating role of the de-
partment, will free the Secretary from the
,",pressure of details. Against the tyranny of this
pressure, lacking the means of. liberation,
Secretaries who have understood and wished to
cultivate the innovative role appropriate to
the political chief have often protested. HI
had thought perhaps as a member of the
Cabinet", wrote one, HI would have an oppor-
tunity, say once a month or so, to think upon
questions of statecraft and policy, but I find
myself locked up in a cocoon-no wings and no
chance for wings to grow." I
To Promote Coordination
The second objective of departmental man-
agement is coordination. No matter how
functions are grouped in bureaus, there are
bound to be points of interdependence, with
opportunities for conflict as well as for coopera-
tIOn. Questions of exact jurisdiction must
remain incessant. These elements, varying
with the departmental work, reinforce the need
for coordination created by the ramification of
1 universals such as personnel, finance, publicity,
I and legislative contacts.
Some of the coordination is so special that it
cao be effected by the assembly of technicians
from various agencies. Even in connection
with such relatively facile relationships, how-
ever, there is need in departments for those
whose points of view and interests are broader
than a single bureau but who have a back-
ground of knowledge of bureau affairs. It is
necessary to avoid the impasse that so· fre-
quently occurs when those who can decide are
not those who know. When the stake is
greater, the spirit of professional collaboration
will not suffice. If the department is to have
any reality, it must be equipped to impose the
v coordinating supervision which is its prime
reason for existence. That is an indispensable
contribution to a still more inclusive process of
management.
To liberate the Operating Units
The third objective of departmental manage-
ment is the liberation of the energies of the
operating units. Adequate staffing at the top
of a department does not restrict the bureau
chiefs; it frees them. It is impossible to avoid
a bottle neck unless the Secretary is adequately
assisted by staff aides and works with and
through a managerial organization. These
facilitate the operating units in several ways.
In the first place they will dispose of the
masses of detail that rise to the top of the
department.! Admittedly, too much that is
1 The Utter. 01 Franklin K. Lane (New York: Houghton Mlmln,
1922), p. 138.
t In addition to the routine flow of questions relating to personnel and
finance. the classes of Bubject matter handled at departmental centers
Include:
1. Complatflt, aflll rtqut,!td uception •. -These come up In part from
disgruntled employees. The Secretary's office Is a court of appeals.
In large part they come directly from outside groups a/Jected hy the
department's activities. Many come through Members of Congress,
Departmental Management
perfunctory goes Up; but the causes are not easy
to remove. Statutory law, supplemented by
precedent, requires that large classes of papers
go to the Secretary's office for approval and
even signature. The tendency has undoubtedly
defeated itself. But it is not likely that the
requirements in this regard, whether written
or customary, will be soon relaxed. Tlie
practical solution is to avoid congestion in
handling the inevitable prolixity. The matters
must be disposed of promptly or the accumula-
tion of petty delays paralyzes action below,
with far-reaching benumbing effects on morale.
But celerity is not all. Nor, amid so much
that is routine, can the treatment be merely
formal. Those who handle the mass must be
able to detect (1) items that involve unanswered
I points of policy and (2) items that require
further interbureau or interdepartmental con-
I sideration. The judgments that are involved
can be made only by men who know the
department and the Government as a whole.
The critical need, obviously, is to have men
who, though working in a procedural atmos-
phere, 'have the initial gifts of mind and per-
sonality and subsequent experience that prevent
them from unduly subordinating substance
to form.
Second, staff aides and a managerial organiza-
tion will facilitate the operating units by dis-
posing of the mass of petty complaints and
suggestions that reach the top of the depart-
ment. The content of the subject matter that
appears in a department above the bureau level
is paradoxical. Extremes are mixed. Some of
the callers are important; others are mere
cranks. It is frequently bizarre episodes of no
inherent importance rather than major policies
that bring mail and visitors. Congressional
inquiries, by telephone or interview, are apt to
( relate to specific situations. It is important
that the department be able to elicit informa-
tion promptly from any of its parts. That is
part of the task of conducting administration in
a democracy. It is equally desirable that the
complamts shall not be allowed to clutoor and
impede the operations of the bureaus.
sometimes voicing grievances without. What Is petty to the point of
being laughable Is mingled with the Important, even the momentous.
2. Rtlation. with Congru•.-These range from complaints and requ~sts
for special treatment (disguised usually as inquiries, In which the Mem-
ber of Congress Is often content to be ahleto say that he has referred the
matter), all the way up to questions of new legislation. On the one hand
Is Involved permanent organic or corrective legislation; on the other,
annual regular and deficiency spproprlatlon acts.
3. Signing 011>O'[J<T•. -A multitude of papers flow to the top. Some
concern personnel routine. Much of the material Is legally formal,
Involving contracts, leases, etc. A large proportion of It, although
trifling in character, goes up because of statutory requirements. There
are traditions, In addition. which have emphasized the Importance of
securing the written approval of a Presidential appointee. The treatment
of this large mass of material Is necessarily perfunctory, at least under
present conditions of departmental organization. Nevertheless Its prolix,
repetitive details secrete questions of the utmost delicacy and danger.
(.Specially In the relations of the department to private interests.
4. Tht promulgation of dtpartmtf1tal ordtrl and !ht preparation of
Ertcutiut ordtrl.-Their origin Is random; later the departmental solici-
tor's office enters and Is part of the cent1'81 entourage. Hearings. ordi-
narily, are a hureau affair, hut the extent to which legislation now rests
rule·making in the Secretery, and the attitude of the courts toward the
Issue of delegation, seem likely further to Involve the heads of depart-
ments, as such, In the processes of rule·maklng and order-issuing.
6. Publlcitv ttnd. to btcome a ctfltrallunctlon.-It Includes aid to the
bureaus In getting out their releases, and supervision of their puhllcations.
It Includes aid to the Secretary In the preparation of speeches, articles,
hooks, and annual reports. The latter becomes a phase of the adum-
bration of broad departmental policy.
 Departmental Management
The foregoing can be generalized by saying
that the central organization in a department
vean liberate the working units by acting as a
buffer. This service has probably been the
most important contribution rendered by tran-
sitory assistant secretaries appointed on a party
basis. The argument is important but it does
not establish the case for this mode of appoint-
ment and tenure. Some assistant secretaries
have protected the bureau chiefs below them
against their own party tribesmen as well as the
world at large. But fire does not always fight
fire. The effect may be to project pressures
downward instead of diverting and muffling
them at the top. The development of this re-
buttal belong.. in later paragraphs. Summarily,
it is enough to say here that the stream of mis-
cellaneous complaints and requests, pouring in
253
at the top of the department, is one of the
strongest reasons for the existence of a depart-
mental management which is firm as well as
tactful.
Third, the central organization in a depart-
ment can assist the operating units by seeing to
it that, amid all that has been mentioned, bureau V
heads receive attention and an early answer
when they have plans for approval. This is a
tra:cscendent necessity. In the way in which it
is met lies much of the difference between ener-
getic and nerveless administration. Partly the
solution is a matter of keeping the Secretary
available for the consideration of important
choices. Partly the solution lies in the existence
of a departmental manager authorized to ap-
prove plans within the framework of policy that
the Secretary has indicated.
r
II. THE EMERGENT PATTERN
•
Merely to express the foregoing objectives
has been to sketch the outlines of the requisite
departmental staffing. Its ideal pattern is con-
firmed in the developing practices of the depart-
ments themselves. Indeed, spurred by the
hard necessity of circumstances, facts have out-
distanced theory. A double need has been indi-
cated: The consideration of policy, both exter-
nally and internally; and its coherent applica-
tion through management. Two kinds of
organs must exist at the center of the depart-
ment in order to give reality to the theory of
political responsibility on the one hand and of
coordination through hierarchy on the other.
Organs of Policy
First the Secretary needs a flexible corps of:
aides, free from routine responsibility. They'
would be essentially and frankly' an organ of
policy, informative and advisory. They them-/
selves would be a source of suggestions. They I
would be available to work up problems. pre-'
sented or soon to be presented by the depart-
ment to the Secretary for decision. Their ac-
tivities would in no way be a substitute for the
research that is diffused through the working
units and that is organically related to opera-
tions. Nor would their existence be a sub-
stitute for a permanent planning unit, so far as
it seemed possible to integrate one at the de-
partmentallevel. Rather, they would be a link
by which the Secretary could draw, at any ap-
. propriate time and pomt, upon the vast bodies
of information already in the bureaus of the
department. They would be a link, further-
more, to the wider streams of research going on \
in the Government as a whole. Within the
de~artment they would represent the Secretary;
in mnumerable conferences, although in no way,
acting as regular supervisory officials charged
with the transmiSSIon of policy. Without,
through their contacts with the staff aides in
other agencies, they would be in touch with the
nascent policies of the various departments.
Much that they would do would be focused on
the decisions of the hour. Some of it would be
broadly interpretative and formative. In help-
ing to prepare speeches and writings, they would
have an opportunity to aid the Secretary not
only in mobilizing data but also in working out
the broadly theoretical bases of his policy.
Even so apparently routine an affair as the prep-
aration of an annual report would afford an
opportunity for a quiet investigation and eval-
uation of operations as well as a thoughtful
formulation of departmental objectives.
Organs of Management
But there must be facilities of another kind-
composite; but to be regarded as one organ con-
stituting the heart of departmental manage-
ment. Its com.£osipion would vary, depending
upon the make-up of the department and the
manner in which its bureaus were grouped or
its work subdivided functionally for purposes of
general supervision. This is not the place for
a discussion of the ~siderations that affect
the combination of of the choice between these
methods of departmental division, involving
significant pOSSIbilities in the further develop-
ment of the functional assignment of the
principal aides. These problems are left to
later paragraphs. The treatment of the anat-
omy of the managerial organ, therefore, may
profitably be postponed.
Collectively, those comprising this organ
would be the culmination of the administrative
scale of the department. Afferently, th~'
would receive the matters that rose above th
bureaus or that flowed in directly from th
outside. They would clear what they coul
applying the coordinates of settled policy.
They would sift out what was important for the
especial attention of the Secretary. Efferently;
they would transmit instructions. They would
be the natural consultants of the Secretary on
the problem of implementing his intentions .
Part of this work would be managerial in the
narrower sense, sometimes called institutional.
This phase would involve, notably, the depart-
ment-wide administration of personnel and of
finance (including supplies), conducted, of
course, in concert with schemes for coordina-
tion through the Government as a whole. But
the tasks of management would not be limited
to these matters, important as they are. As
a point of contact with the outside, as the
regular link betw.een the Secretary and the
department, and as the coordinating supervisor
of all its activities, the organ of management
would necessarily be concerned with the sub-
stance of departmental work from other stand-
points than personnel and finance. Nor would
It confine itself to procedural aspects, although
the nature of supervision emphasizes these as
the basis of control.
Managerial organs, obviouslYj could not work
in isolation from policy. Yet, m essential atti-
255
 256
tudes they would not be policy-determining.
\ The flow of work in great departments reveals
the futility of seeking to draw the distinction
in any other terms than attitude. There is a
range of degree in policy itself, of course, illus-
trated in the difference between the kind that
appears in organic legislation and the kind
involved in the interstitial discretion left to the
departments. One may borrow and extend the
phrase of Justice Holmes from another context
and suggest that, while Cabinet officers are
constrained from molar to molecular motion,
the managerial personnel is confined to the
atomic. In point of the final power to deter-
mine, as contrasted with the dutY' to prepare,
this is sometimes true. Practically, however,
the distinction between organs of policy and
organs of administration cannot be made to
follow the line between matters great and mat-
ters small. Policy can neither be prepared nor
be conducted apart from administrators. They
are inevitably consulted in connection with
proposed legislation, even that which others
conceive, and for the precise reason that they
are administrators.
There are further entanglements from the
other side. Questions of policy, as they rise
out of departmental operations (and the process
is incessant), appear imbedded in situations.
Characteristically, therefore, the setting of even
a major problem is a complex of detail. The
strict isolation of policy is impossible. If ad-
ministrative status were denied to all who must
touch it, a permanent civil service could hardly
exist. Only one basis of segregation is possible:
Attitude. Experience has shown that there is
an attitude that can administer policy without
aggression, conscious of being its instrument,
mindful of its implied logic, hesitant only when
it is important that it speak freshly.3 The oc-
currence of this attitude is not fortuitous. It
can be made to inhere in positions, in the manner
of recruiting to them, in the tenure that they
hold.
Generalizing on the organs that are needed.
to give reality to the departmental idea, one is
tempted to recall a familiar and fruitful dis-
tinction: Applying the term "staff" to the
organ of policy and describing the managerial
organ as the culmination of the departmental
"line." So far as the distinction points t9
differing attitudes toward policy, it is helpful,
'guiding tendencies regarding recruitment and
tenure. But the staff concept must not be
unduly narrowed. Its functions, as they mani-
fest themselves in practice, are not confined to
the investigative and informative roles that
facilitate action; they are also supervisory.'
A critical distinction is thus indicated within
staffing itself. This is not less fundamental
J Th. principal "policy" adviser to the head of a department, In ex·
plalnlng the limits of his role and Its demarcation from that of a depart-
mental manager, bas said he can expres, simply a rule which he also finds
It relatively simple to apply: PoUey-1n the only sense that he need recog·
nize-Is new policy.
• lames D. Mooney and Alan C. Relley, Onward Indu6trvl-Tlie Prin·
ciple. 01 Organization and Thtir Signifitanet to Modern Indmtru (New
York: Harper, 1931), pp.60, 339.
Departmental :Management
because of daily intimacy between the partici-
pants from both sides. The managerial organ I
of a department may properly be considered i
part of Its general staffing; but it must serve as
the pivot of the line: Transmitting, receiving,'
clearing, controlling. Almost inevitably such
duties, however functionalized below, must
center in a single experienced departmental
manager.
~ncipient Departmental Managers
The pattern that has been outlined is the
forecast shadow of the actual. Both the
reality of the need and the practicability of the
remedy are confirmed in persistent tendencies
through a score of years. They have involved
not only integration of departmental manage-
ment for particular purposes; they have also
been attended by the rise of the virtual post of
general departmental manager. This has been
a development of the last decade especially.
It has bridged a change of party control. It
has proceeded under an administration that was
consciously innovative. The outcome in the
Treasury, Agriculture,6 Interior, Com.merce,
and Labor Departments need not be detailed
here. The differences are important; but more
striking has been the common movement toward
a departmental management which is function-
ally elaborated but professionally focused in
experienced civil servants.
The full significance of the movement can be
read, not in the imperfect results which are be-
ginnings, but in the difficulties that have been
encountered. The unification of management
has had to get its start amid processions of
personal aides. It has had to win its place in
the face of the fluctuating supervisory assign-
ments of transient assistant secretaries. It has
had no benefit of impressive titling-terms like
"administrative assistant to the Secretary"
have had to suffice. Such underemphasis has
not been without offsetting advantages in the
early stages. If has offered the protection of
obscurity; but obscurity is a qualified asset.
'With each change in the political leadership Of\
the Department it has been necessary to demon-
strate afresh the need of trained supervision.
This very uncertainty has been harmful: The'
incipient manager, uv.stire of his position, may
find it safer to compliment than to complement!
.his political.chief. . :
The rise of departmental managers, further- \
more, has had to overcome obstacles that have :
I What has been said has Implied the existence of a single person In
whom the managerial organism Is articulated. It must be added, how-
ever, that one of the most advanced instances of departmental manage·
ment. though providing continuity of leadership in Its posts, has not
put the head on a permanent basis. In the Department of Agriculture
the elements of personnel, finance, and publlclty are supervised by
stable aides (elements like coordination of research being added); but
In the multiple management, the Secretary Inserts a personal executive
assistant. The general applicablllty of" the example must be doubted.
Although bureau decentralization In the Department of Agriculture has
been strongly marked. the Department as a whole has been Infused with
a common professional temper which the Secretary himself has sometlmell
shared. In this sense the Secretary 'In office since 1933 could almost be
called a professional. The ractors tbat have predisposed cohesion ha\"o
been unusual. Such advantages are not cbaracterlstlc of national depart-
ments. Nor can the present arrangement In the Department of Agri-
culture be considered ultimately Ideal.
(
 Departmental }'1anagement
inhered in the nature of the personnel system
itself. So far as recruitment has been placed
on the basis of competitive examination leading
vto permanency of tenure, the emphasis, es-
pecially where educational background was in-
I volved at all, has been heavily upon the tech-
i nically professional. This arrangement has
not been calculated to recognize or to offer
inducements to those whose very lack of special-
ized interest might conduce to aptness in super-
visory roles that would rise above the essentially
procedural.
Management must involve ends as well as
means; and in the ultimate sense, ends rather
than means, although departmental affairs
inevitably come up as complexes. It was
natural, however, that managerial supervision
should develop first in connection with facilities-
equipment, personnel, finance. It elaborated
and lifted functions that had their beginnings
in the work of chief clerks. The stamp of this
procedural milieu is still pronounced. Already,
257
however, in the face of all of the handicaps
noted, the group of virtual departmental
managers in question have been drawn by sheer
necessity into the broader and more difficult
fields where facility meets formative policy.
The degree to which this development has
gone varies from department to department.
The ambiguities of existing situations some-
times confuse the choice between the descrip-
tion "business manager" and what is implied in
the words "general manager." The differences
rest partly in the nature of departmental affairs.
In the State Department, for example, issues
of policy can doubtless appear in isolation
from machinery more readily than in other
departments. The differences rest partly in
personalities, both of secretaries and of those
who have been available for the task of general
departmental direction. In the face of these
reasons for divergence, it has been impressive
how nearly the pattern of a general manager
had been approximated.
 ,
III. THE ALLOCATION OF SUPERVISORY DUTIES
The foregoing discussion of incipient depart-
mental managers has properly stressed the need
of a focal personality. But he must have
assistance. Where details are multitudinous,
effective supervision involves subdivision.
Alternatives
But subdivision on what basis'! There are
two main alternatives. The first and, on the
surface, the simplest type involves the fixed
assignment to assistants of groups of bureaus.
The second entails assignments that may be
described as functional: Following topics wher-
ever they are found in the department, although
perhaps involving some bureaus more than
others. The choice between these types, of
course, will never be complete; for if the first
is used in supervising operations, the second
will certainly be retained at least in connection
with personnel and fiscal matters. The choice
lar~ely poses the question of the extent to.
which the functional break-down of supervision
can advantageously be applied to the substance
of the work of the bureaus. A comparison of
the two methods will lend perspective, although
the answer must rest 0n the further develop-
ment of managerial personnel and the existence
of experienced general managers.
The fixed assignment of clusters of bureaus
has characteristically accompanied supervision
through assistant secretaries in departments
provided with more than one of these officials. 8
The arguments in favor of this method of allo-
cating supervisory duties are colored by this
historical association. They fall- into two
grooves.
First, it is urged that assistants to the head
of the department cannot be effective in their
work within the department, and still less in
their interdepartmental negotiations, unless
they know considerable detail. It is difficult
enough to get this background for a few bu-
reaus. It would be impossible to get it for all
the bureaus of a department, even if the assist-
ant was supposed to confine himself to certain
• Multiple assistant II8C1'8taries exist in the Departments of Stata,
Treasury, Interior, Commerce, and Labor. From the standpoint of
the immediate comparison, it should be noted, the Assistant Attorneys
General and the Assistant Postmasters General may be treated as
bureau chiefs. The division of too whole department between the
assistant secretaries in terms of groups of bureaus is clean-cut only In
Interior and in Commerce. The Department of State has lsrgely gotten
away from the arrangement. With too exception of the AssIstant Sec-
retary who Is assigned to Latin American affairs, the assistant secretaries
have assignments that are prlmarUy functional (in too sense toot they do
not follow too geographical lines so characteristic of too bureau structure):
Administration; trade relations; legal questiOns (with, however, a special
assignment to questions arising In eastern Europe).
•
ramified problems. 7 This contention is sup-
plemented by complaints regarding the promis-
cuous, incoherent composition of the depart-
ments. Amid this heterogeneity, assistants ask
to be allowed to specialize in certain groups of
bureaus. s
Second, it is argued that functional ass~­
ments to assistants would entail vague, cnss-
crossing jurisdictions and resulting confusion.
It is always difficult to define the scope of a
function. Even if two or more assistants to
the department head understood their respec-
tive fields, the bureau chiefs would remain
confused. Each bureau head would find him-
self dealing with two or more assistants. He
might yield to the temptation to playoff one
against the other. He would often have an
opportunity to offer an alibi, meeting the com-
plaint of one by saying that he had understood
the other to intend something different.
On the other hand, arguments in favor of
_ further emphasis upon a more functional type
of assignment are influenced by considerations
that assume the high development of central
departmental management. The gist of these
arguments may be summarized thus: Super-
vision is justified largely in terms of the need
of points of view broader than those of a single
bureau. This points to the desirability of
functional assignments which, though special-
ized in terms of sets of problems, w;ll be as
wide as. the department. This arrangement
facilitates coordination within the department
and at the same time equips the assistants thus
assigned for effective participation in compre-
hensive efforts at functional coordination
through interdepartmental committees and the
like.
What has just been said from the standpoint
of facilitating coordination is supported by
another consideration. Considerable flexibility
of supervisory assignments is desirable. The
allocation of bureau blocs does not lend itself
to flexibility.9 Indeed, so far as the argument
in favor of the method rests upon the need of
acquiring an acquaintance with bureau detail,
I This objection has been expressed by most of the 8S8istant secretarlea
now or recently in otllce who have been asked to comment on this problem.
I This point of view was expressed by a former AssIstant Secretary of
Commerce; yet the development of his argument was not without Incon-
sistency, for he observed that there was hardly a common denominator
among the 5 bureaus assigned to him: Foreign and Domestic Commerce
(requIring about half of his time), Census, Standards, Patents. and
Fisheries.
I In the assignment of groups of bureaus to assistant secretsries. adjust·
ments have been made infrequently. usually at the accession of the
Incoming otllcials and then with reference to the largely fortuitous
elements of personal predilection rather than to changes In the working
relationships of the department.
259
 260
shifts would defeat it. Assistants who are
capable of functional supervision-being the
moving parts of a stable management with
preexisting familiarity with the Government as
a ~hole-are able to adjust themselves to fluid
asslgllments.
Functionali%ed Types of Supervision
Breadth of jurisdiction, with consequent
opportunities for coordination both within the
department and without, can best be accom-
plished by breaking down supervision flexibly in
~ets <!f pro~lems. Ai~es who were thus special-
lZed m thell' current mterests, but seasoned in
. back~und, would be the appropriate repre-
~entatlves of departments in many types of
mterdepartmental conferences (leaving out of
a?c.ount those s? detailed that only bureau tech-
lllClans need be mvolved). The aides with fixed
assignments to the ubiquitous fundamentals of
personnel and finance would be linked continu-
ously to the inclusive staff organs concerned
with these phases of management through the
Government as a whole. But the conduct of
s~pervi;sory a~signments of these kin~s is fraught
WIth difficultIes. It calls for experIenced aides
whose mutual accommodation has become an
instinct of a common background. Further it
calls for continuous integration of. their activi-
ties through the oversight of a departmental
manager.
On the institutional side, naturally functional
extensions of supervision have gode furthest.
They have become universal practice in con-
nection with both personnel and finance. Here
their conduct departmentally is vitalized by
contacts with even more general schemes of
supervision, still imperfectly developed. 1o Per-
sonnel officers and finance officers exist in all
departments, sometimes as separate individuals
sometimes combined, sometimes fused in th~
person whose status is coming to approximate
that of general manager. As the role of general
ma?ager I?atures, a devolution will take place.
It 18 not Improbable that it will eventuate in
one principal aide or deputy to the manager in
charge of the direction of the institutio~al
p~ases of the departm.ent, whose description
mIght be compressed m the term "business
manager", as distinguished from "general
manager." . Below this deputy, the degree of
the separatIOn of personnel, finance, and supply
would be partly a matter of convenience (taking
acco~nt o! the personalities at hand); but
esp~Clally It would be shaped by the design of
busmess management existing in the National
Government as a whole.
Other aspects of the functionalizing of the
processes of supervision and of facilitation are
developing. It is well marked in connection
with publicity and publications. An .experi-
enced, oriented office such as that headed by
I. The fi!lance officer ot a large department remarks that, In any real
dIspute wl~h a bureau, he drop. the appdlatlon "director ot finance"
and calIs hlInselt simply "budget officer."
Departmental Management
the II~ector of informa~ion" in the Department
of Agnculture renders mvaluable aid both to
the head of the department and to its bureaus
~dividually .. A siD?ilar tendency can be traced
III legal work mvo]vmg construction and drafts-
manship, so far as it is performed departmen-
tally, and with it a disposition to experiment in
the centralizing of legislative contacts.
The functional organization of supervision is
more difficult when applied to action apart
from the means that are utilized. On~ of the
!!lost persistentyroblems in human association
IS presented. The departmental division into·
bureaus follows vertical lines; the supervision
cuts horizontally. The phrasing that has been ,
used. echoes Fr~derick Winslow Taylor'S con-
ceptIOn of functIOnal foremen; the logical diffi-
cult;r recalls the .co~troversies. that his proposal
contmues to eXCite m theoretical discussions of
industrial organization. . Yet few deny that in
all large operations the seeming dilemma must
be incul!e~ and that it can be resolved.
"'nether It IS resolved is one of the most search-
ing tests of administrative competence.
The evolution of central management in
some of the departments has afforded significant
examples. Recent developments in the Treas-
ury are in 'p~int. It is ne?essary to say, by
way of prehmmary explanatIOn, that the politI-
cal aSf'istant secretaries assigned to groups of
bureaus have been relatively unimportant.
On the other. hand, a number of special assist-
ants .have dIs~harged ~ore or less standing
functIOnal assIgnments m concert with the
officer called administrative assistant to the
Secretary. An' exaraple has been the assign-
ment of a special aide to matters of law enforce-
ment as they arise in the department or in its
external relations with other agencies. It has
be~n possible t<,> prese~e the vitality of such
aSSIgnments while keepmg them from jangling.
But the lesson,is missed if ..two things are over-
~ooked .. One 18 that the special aide in the
illustratIOn has spent his active life in the civil
ser~ice, has gained wide acquaintance with the
vanc"ls parts of national administration while
in the employ of the former' Bureau of Effi-
ciency, and has served in something like a
managerial capacity in two departments other
than the Treasury. The second concerns his
relation to the administrative assistant who
has in fact been a general manager for the
Treasury Department as a whole.
Developments in the Department of Agricul-
ture during the last two decades have been even
more suggestive. A professional managerial
organ appeared after 1913 in tre person of an
administrative assistant to the Secretary. The
~econce~tration of his growing burdens seeILed
Imperative. In the course of reorganizations
after the war, during which extra assistant secre-
~aries had been provided on an emergency basis,
It was suggested that supervision and coordi-
nation should be organized permanently along
functional lines. Five lidirectors" were created
,
Departmental Management
during the next few years. One was "director
of personnel and busmess organization", whose
work was subsequently divided between the
"director of personnel" and the "director of
finance." In another field, likewise one essen-
tially of facility, was the "director of informa-
tion", heading a well-developed division of that
name. In addition, three other directors were
set up in what was intended to be a stimulative
and coordinating relationship to as many
phases of "work" in the department generally:
A "director of scientific work", a "director of
regulatory work", and a "director of educational
(extension) work." From the standpoint of
these three, the idea that they embodied passed
into eclipse in the decade after 1925. The
over-all assignments to "extension" and to
"regulation" were abandoned; the directors in
charge became bureau chiefs. The "director
of scientific work", though actively used as a
consultant down to 1929, was increasingly
isolated thereafter; and his post was dropped
in 1933.
But the idea of functional supervision reas-
serted itself. From the outside, it was em-
bodied in suggestions made in 1935 by a special
committee instituted by the Science Advisory
Board, at the request of the Department, to
consider possible reorganizations in the work
and relations of one of the scientific bureaus.u
The committee, finding the situation before it
a phase only of a general problem, recommended
that an assistant secretary, protected by civil
service or in some other manner to insure per-
manence in appointment, should be created to
give all of his time to the coordination of
research activities throughout the Department.
About the same time an act of Congress author-
ized the annual appropriation of a reseap;lh
fund which was to be subject to the direction
of the Secretary of Agriculture. This fact was
the immediate impetus in the designation in
1936 of a "director of research." The signif-
icance of the development, from the point of
view of this discussion, is qualified by the
fact that the assignment was given to the Chief
of the Office of Experiment Stations, through
which the new funds were to be partly chan-
neled. In general, the experience of the De-
partment of Agriculture with "directors" has
indicated that their posts were vital only when
elements of leverage were available. It has
been a warning of the difficulties involved; but
on the other hand it has been an emphatic
confirmation of the need for intradepartmental
coordination along functional lines.
Subdepartments
The foregoing analysis has not confronted the
question of departmental divisions that might
have virtually the nature of subdepartments.
Thus far the discussion has been in terms of the
supervision and coordination of bureaus. From
II Second Report 01 the Selenc. 'AdDilorll Boord. Sept 1,1934, to Aug.
31, 1935 (Washington, D. C.: 1935), pp. 124-25.
261
that standpoint it could stress (while admitting
conflicting values) the flexible, essentially func-
tional assignment of the principal managerial
aides. It is necessary to deal with the possi-
bility of major vertical segmentation much
more pronounced than the vague iurisdictions
that have been given to assistant secretaries
in some departments in the past. The basic
choices involve considerations in the grouping
of governmental activities which lie outside the
q'lestion of departmental management. The
achievements of departmental management are
significant here in clearing the ground, by dem-
onstrating that if still larger departments seem
necessary they can be given some inner reality
by central staffing.
The interdependence of the two matters-
managerial organization and scope of depart-
ments-warrants a little analysis. It can best
be approached through a comparison of the
a priori cases for relatively smaller and rela-
tively larger departments.
The case for numerous, relatively smaller
departments can be sketched in these terms:
1. The larger the department, the harder
it is to serve the ideal of a homogeneous, if not
strictly unifunctional, content.
2. When the department becomes too
large, it prevents the political head from
being effective in his three capacities:
First, as a transmitter to the President of
departmental questions of policy for final
decision. Where the departmental spread is
too great, the Secretary may not have
enough background to explain what is in-
volved in particular questions. As a result,
there is either "government by headlines",
when matters are handled by resummarized
memoranda, or the Secretary gets into the
hll.bit of sending subordinates to the White
House offices, multiplying the persons with
whom the President, or at least his staff, must
have direct contact.
Second, as a member of the Cabinet, for
he may lack the background of contact with
what is going on in his department necessary
for realistic. reporting on activities and
realistic advice.
Third, as a corrective influence to bureau-
cracy, since he is too distant from the real work
of the department to be able even to influence
its tone, let alone check it in point of detail.
Thus the virtue of political oversight is
sacrificed.
3. No department can be inclusive enough,
furthermore, to avoid external relations.
These relations must be coordinated inter-
departmentally, either by central staffing or
through horizontal devices like interdepart-
mental committees and other forms of liaison.
Very big departments create an illusion of
coordination and delay the real solution,
which must be sought not only depart-
mentally but also at the center in over-all
supervision.
262
4. From the point of view of the vocational
interests that become vested in administra-
tion, two things can be said alternatively:
On the one hand, if it is thought desirable
to get rid of such fixations as exist, the most
practicable course is not to seek to abolish
by absorption the departments that are
vocationally alined. The feasible course is to
cut past them by creating new aggregations,
and thus subordinate them.
On the other hand, so far as it seems
desirable to have a relationship between a
department and a particular body of opinion
which supports and vitalizes it, the end can
be achieved; and achieved safely, only by
departments of limited scope and moderate
size.
5. Small departments, 'it can be urged
further, avoid the bottle necks that may
appear when a Secretary whose action is
necessary on so many classes ,of papers is
asked to cover too large a range. Nor are
those who advance this argument content
to be answered in terms of management.
The corrective, they assert, is apt to be the
development of the kind of staffing that
formalizes and routinizes, killing the spirit of
the department even when it avoids delay.
6. Negatively, it can be argued in conclu-
sion, large departments will be divided into
major divisions. The leadership of these
divisions will seem important politically.
There will be both theoretical and practical
reasons for putting political assistant secre-
taries in charge. Despite the added impor-
tance of the office, divisional responsibility
and cohesion will not be accomplished. Direc-
tion at the divisional level will conflict with
supervision from departmental headquarters.
On the other hand, it is said, departments
compact enough to avoid undue stress on
major subdivisions would be more likely to
build on the existing managerial elements by
extending the career principle to its culmina-
tion in a permanent under secretary.
Against the foregoing case for small depart-
ments can be set another set of arguments in
favor of departments of wider jurisdiction.
These may be summarized as follows:
1. With large departments, the Presiden-
tial "span of control" will be narrowed, or at
least held within bounds.
2. So far 'as coordination is the objective
of departmental structure, large departments,
by definition, accomplish this better than
small ones. As a matter of practice, it may
be added, the substantial accomplishments in
intradepartmental coordination in the past
have been in large rather than in small
departments. Down to 1933, the Labor
Department, smallest of the 10, was un-
doubtedly the most headless. The same
equipment that is developed within a great
department for purposes of internal coor-
Departmental Management
dination provides points of contact for inter-
departmental relationships.
3. The more inclusive the departments, the
greater is the extent to which the problems of
managerial coordination can be absorbed at
the departmental level. This is an advan-
tage, because over-all staffing (directly con-
nected with the Presidential office or other-
wise), though necessary in any case, must not
be overloaded. Comprehensive departments,
blending the varied and even conflicting
elements in a set of problems, would offer the
appropriate jurisdictions in which to develop
plan-preparing organs of an intermediate
character. This is indispensable. At that
level inquiry and forecasting can be related
to departmental coordination. It can build
upon the detailed work that goes on in the
bureaus, as in the preparation of a 5-year
developmental program for each of the
national parks by the National Park Service.
4. The advocates of large departments are
prepared to admit thai they will be loose,
indeed almost federal, in structure. This
they find an advantage. It will be easier to
persuade the advocates of autonomy to
consent to the assignment of functions now
conducted independently to departments of
this type. In the light of long tradition (not
to mention the delicate operations involved)
it is impossible to conceive of their absorption
in compact departments, unless each is
treated as a department in itself, which
would result in an undesirable multiplication.
5. By enlarging departments, furthermore,
it may be possible, without attempting the
difficult task of getting rid outright of the
vague identification of administrative units
with particular vocational or social groups, to
cancel out vested vocational interest at the
departmental level, before it enters the
Cabinet or becomes involved in the critical
tasks of coordination or review. The ele-
ments of vested vocational interest compre-
hended by a large department would be
multiplied and balanced. The argument has
another side. To increase the number of
departments in the hope of bypassing those
which were vocationally alined would be a
self-defeating corrective. Each professional
or other interest would' be invited to contend
for the right to identif:y itself with some one
among the splintered departmental units.
There would be no end of the vicious circle.
6. Secretaries should not be expected to
, know details. A virtue should be made of
I this fact, in taking advantage of their polit-
i ical sense and in asking that they apply it in
. broad fields. In big departments, Secretaries
will be dissuaded by sheer necessity from
involving themselves in managerial detail.
This will encourage the further development
of the permanent corps of management. In
small departments, Secretaries may be tempt-
ed to essay both the political and the man-
agerial roles and may fail in both.
r Departmental Management
7. The case for large departments may
appropriately be closed with a double argu-
ment that expands the point that has just
. On the one hand is the seeming certainty
been made and raises the issue that is ger-
mane to the present discussion. First, it is
said-truly enough-that the managerial ele-
ment has already developed sufficiently in
relatively large departments (like the Treas-
ury) to show that it is reasonable, within the
existing potentialities of personnel, to hope
to provide the elements of control in even
bigger departments.
Second, and more positively, it is argued
that larger departments will give greater
opportunity for the development of the
career principle. The claim has two phases.
that departments of vast sweep will have
or~ans of central management. Since the
263
pnmary purpose of such departments will be
coordination, the matters that will come to
the center will be of the greatest interest,
important but complicated. The task will
require aides of experience, capable of
responsibility. Their posts would be goals
that would galvanize the civil service.
On the other hand is the possibility that
would lie in the recognition of great divisions
which would be subdepartments for purposes
of operations. They might be considereli as
enlarged bureaus. Their heads might be
placed on a career basis, providing stable,
traine'd guidance.
 IV. RECRUITMENT, TRAINING, AND TENURE
•
It is on the last point, precisely, that the case
for larger departments is most attractive and
most dubious. The importance of their major
divisions as areas of administrative coherence
should be a compelling reason for placing the
heads of these divisions in the permanent
service. 12 This very imP9rtance, misunder-
stood, might be made the reason for putting
the posts on a political basis. The issue in-
volves a question that merges into problems of
recruitment, training, and tenure. Immediately
it calls for comment on experience with assistant
secretaries.
Assistant Secretariesj
The Failure of Impermanence
On the surface, as a matter of theory, the
posts of the assistant secretaries have had
several advantages. They have provided an
opportunity for points of view broader than
that of a single bureau. Assistant secretaries
have been available for coordination, both
within the department and interdepartmentally.
They have been available as buffers, protecting
f the bureau chiefs from interruptions and pres-
sures. This has involved cont.act with Mem-
bers of Congress and with the spokesmen of
the interested groups, economic and social, that
are affected by the work of the various bureaus.
Finally (as theory would have it), assistant
secretaries have helped to freshen the tone of
the bureaus, consonant with the policy of the
hour, being men who come to know a good deal
about the details of bureau problems though
preserving the outsider's perspective, awareness
of public reactions, sense of final objectives,
and capacity for novelty.
It will be observed that the first two of the
utilities attributed to assistant secretaries can
be performed whether they are temporary or
permanent officials. Both services concern co-
ordination, which profits by knowledge, so that
a career background is a probable advan~age.
Even in the case of the third role, a permanent
official can act as a buffer in sparing the heads
of the operating units. The safest kind of
buffer, indeed, would be the supervisory official
of broad sympathies, tactful with all comers,
" Rigorous statement Is Inappropriate. It Is possible to Imagine depart-
ments in certain fields deliberatelY constructed with snoo a loose union
or parts that the situation could be better described 88 the assignment of
a ministar, without portfolio, to (allow, report on, and advise a group of
non-Cabinet departments. Under circumstances so autonomous, there
might be good 88 well as strong reasons (or Presidential appointment of
the heads of these departments on a (rankly political basis. Even under
such conditions, the Cacts might point to the opposite conclusion. Where
automony was the desideratum, it might better be sought in the protec-
tive principle o( nonpolitical tenure.
anxious to learn the unforeseen effects of the
operations below, but at the same time suffi-
ciently sure of his position to be able to dis-
regard insinuations and importunities.
The fourth point of utility assumes political
recruitment. So far as it emphasizes the cohe-
sion of programs, it assumes partisan selection,
although not necessarily partisan affiliation.
The theory must be matched against the record
of the facts, taking account of the prevalent,
not the exceptional. The history of the posts
of the assistant secretaries indicates that selec-
tion has been on a political basis but that the
circumstances of this method have not pro-
moted departmental cohesion. The desiderata.
of appointment have been considerations of i
sectional recognition and the like. Department!
heads have often been allowed little or no initia-/
tive in the matter. They have been asked to
accept persons whom the administration felt it
must reward.
Not surprisingly, under these conditions,
there has been little correlation between prior
experience and the qualifications it has engen-
dered, on the one hand, and the subject matter
of the departmental assignment, on the other.
Tenure has been transitory. The duration
of the service of assistant secretaries and under
secretaries since the creation of the posts in the
several departments is shown graphically in
the accompanying chart. The average serv- \
ice (the average being one that is mislead-'
ingly raised by a few exceptional instances quite .
out of the tradition) has been considerably less
than the duration of an administration. Yet
assistant secretaries have testified that it takes
at least a year to begin to master enough back-
ground to do more than move with the wheels.
A realistic estimate would doubtless make the
period longer.
N or does experience give any basis for assum-
ing that a statutory increase in the direct respon-
sibilities of assistant secretaries would react
upon their recruitment and tenure. 13
The consequences of political recruitment
have struck in two directions. Lacking knowl-
edge of the department as a whole, let alone
familiarity with governmental relationships
generally, assistant secretaries have usually not
been suited to functionally flexible types of
" The Army Reorganization Act of 1920 vested the responsibility of
supply and industrial mobilization in the Assistant Secretary of War.
It was assumed in the theory of the legislation that the Assistant Secretary
would prevailingly be an industrialist. In practice, the important duties
imposed by law have brought no discoverable reflex, either in vocational
specialization or in general enhancement o( prestige. reflected in ap-
pointments.
265
 t-.j
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TENURE OF UNDER AND ASSISTANT SECRETARIES

1861 - 1936
SHOWING ALSO CHANGES IN PRESIDENCY, CABINET AND PARTY CONTROL

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 Departmental Management
supervisory assignments. But the fixed alloca-
tion of groups of bureaus among inexperienced
assistant secretaries has created ambiguous lines
of organization. Even when assistant secre-
taries have minimized their administrative role,
so that their participation has become almost
wholly perfunctory, there has been some dissipa-
tion of responsibility and at least some loss of
motion. Thus it has happened that matters
routed through assistant secretaries and perhaps
bearing their approving initials have been
handled virtually de novo in the offices of ad-
ministrative assistants to department heads.
When untrained assistant secretaries have
sought to playa more active role, the ambigui-'
ties inherent in the situation have frequently
been deepened. Unacquainted with the prob-
lems, assistant secretaries have sometimes
clogged operations. Without supplying creative
elements of leadership, they have sometimes
tended to assume credit for the big achievements
of the bureaus, with a depressing effect. So far
as active but unversed assistant secretaries have
been channels of commwiication within their
departments, it has been necessary for the
bureau chiefs to explain their purposes to the
Secretary (and through him to heads of other
departments and to the President) through men
who might lack the background necessary for
effective transmission. Bureau plans might
drop on stony ground because of clumsy sowing.
The same weak line of communication would
isola'te the Secretary from his department and
impoverish both his work within and his rela-
tionships above. The attempt to maintain the
line of supervisory control on this basis results
in the dilution alike of professional administra-,
tion and political leadership. Yet the outcome
is equally bad when the line is broken and bureau
chiefs play up to assistant secretaries when they
are favorable and bypass them when it is
convenient.
On the surface, the foregoing analysis might
seem an argument against the desirability of
allowing elements of supervision to come be-
tween the head of a department and its bureaus.
To assume this would be specious. The justifi-
able conclusion points only to the impractica-
bility of any attempt to make impermanent
assistant secretaries act as substantial links in
the chain of directive and supervisory respon-
sibility.
It is conceivable, of course, that transitory
amateurs in charge of major divisions might act
in conjunction with permanent officials who
would be the real divisional managers.l~ This
, .. Some of the features of this pattern have been present in the Post
Omce Department. The direction of most of its activities has been
divided among the 4 Assistant Postmasters General. Under each of these
has been a deputy, whose post has been in the competitive classified servo
ice. The analogy Is blurred, however, by two facts: (1) The deputies,
like the division heads below them, have tended to shift with changes at
the tOPr although all supervisory positions below Assistant Postmaster
GenerBl have been tilled on an ostensibly career basis from within the
Postal Service itself; (2) the Post Omce Department has not developed
a single permanent head above the Assistant Postmasters General.
Structurally discrete, with its higher personnel ever changing, the vast
establishment has been held together by the sheer coherence of routine.
267
cannot be accepted as a satisfactory solution.
It, too, would interpose a political stratum be-
tween the fermanent heads of divisions and the
manageria corps of the department as a whole.
One of two things would be likely to result. If
the permanent elements were strong, the as-
sistant secretaries might be virtuallY short-
circuited. Even then they would survive as
complicating factors. If the assistant secreta-
ries were forceful and assiduous, departmental
coherence might actually be weakened, for, as
has b~en indicated, the party tie has not insured
compatability between secretaries and assistant
secretaries.
The conclusion is inescapable. Departments
cannot be realities unless they have a permanent
managerial focus. Between that focus and the
details of execution there is no place for elements
that are not also nonpolitical and permanent..
This is true whether those elements are func- .
tional aides, serving the departmental managers
in essentially staff relations, or are divisional
general managers, directing assemblages of
units, among which there is need for union but
not for the fuller unity of bureau structure.
The name "assistant secretary" might appro-
priately be won for both the principal aides and
submanagers. This would be no more than the
logic of well-marked tendencies. The incipient
departmental managements are already com-
prised of a career personnel. A large propor-
tion of bureau chiefships are formally in the
competitive classified service, and even where
this is not the case the practice of recruitment
by promotion is pronounced. 16
If it should seem impossible to divest the term
"assistant secretary" of its political associations,
those bearing the title should be withdrawn
wholly from the departmental line. The appel-
lation "assistant secretary" might be dropped.
It would not be inappropriate, however, in con-
nection with participation in the staff attached
to the Secretary to assist in the formulation or
expression of new policy. The importance of
this organ has been indicated; it is as necessary
in the conduct of the departmental system as
the factor of permanent management. The
assistant secretaries in the past whose contribu-
tions have been outstanding (apart from those
whose long tenure has been a demonstration of
the increasing returns that attend continuity in
management) have been the sorts that would
find even greater scope for their creative and
freshening touch, shrewdness, or popularizing
gifts in connection with an organ unburdened
by departmental routine.
" The extent to which bureau chiefs are already chosen by promotion
is shown by the figures on the mode of selection ot the 59 persons who at
the close of 1936 headed bureaus in the Departments of the Treasury,
Justice, Interior, Agriculture, Commerce, and Lahor. As a matt.er of
formal reqUirement, 25 of tbe posts were in the competitive classified
service, and 3 others were subject to special schemes of commissioned
personnel peculiar to the services in question. In the case of the 31
positions not covered by such restrictions, 14 of the bureau chiefs had
been chosen by promotion and 2 had been taken from related State or
local administrative work. Coguate prior experience, gained in semi·
public capacities. was present in varying degrees in at least 8 of the
remaining appOintments. In only 7 instances in the 59 bureaus could
the choice of the Incumbent head be called political In the ordinary sense
01 the term.
 268
The Permanent Managerial Personnel
The ingredients of departmental management
have already been indicated. In its present
stage of development, an analysis of its recruit-
ment must be more pointed than a study in
personnel; .it b~comes.a personal story, to be
read only m blOgraphical terms. The details
reveal the sources of managerial talent within
the <:t<!v~rnment already available for tapping.
IJ?phCIt m the same facts, however, are the con-
ditlOns of personnel that handicap the maturing
of m~nagement in the national departments.
It 18 hardly necessary to remark how far the
practice o~ the principle of permanence-with
Its corollanes of early recruitment and advance-
ment by promotion-has been associated in the
United States with posts and duties that are
. technically professional. The concerns of man-
agement are not special, however peculiar are
its elusive aptitudes and however much the use
of ju?gment. depends upon familiarity gained
only m expenence. The appropriate recruiting
ground for prospective managers in the National
: Government has been in the congeries of em-
ploYD?-ents now .grouped ~ the Clerical, Admin-
lstratlve, and FIscal SerVIce. The matetial that
has been available for advancement during the
last two decades to functions that rose above
the procedural entered the service before even
the present degree of opportunity was apparent.
Nor y;:ere there J?eans for the discovery of
promlsmg apprentlCes. No severer set of hand-
icaps could be 'imagined with which to test the
ability of a personnel system to produce a group
of general managers.
It would be 10~cal to find limitations at the
source reflected m the outcome. Experience,
however, has neither confirmed nor refuted this
assumption in the case of those who have em-
bodied the beginnings of departmental manage-
men~.. It is impossible to say what further
q~ahtles of leadership the incipient managers
mlght .show if .their utility was more clearly
recogmzed, theIr status surer, and their own
staffing more adequate. Still more it is impossi-
ble to say how much abler they would now be
in dealing with the broad substance of depart-
mental business if, on the basis of the same
~ti~l training, their progressive experience
WIthm the Government had involved contact
with problems of organization and method in
/ terms of somewhat different subject matter.
A~ t~e very least, the potentialities of even the
eXlstmg resources remain far from exhausted.
Within the still small circle of those who have
becpme .the virtual managers of departments or
theIr pnncipal aides, it is significant how many
were. at some tiI?e e~ployed by the Bureau of
EffiCIency. WhIle thIS Bureau existed it acted
selectiv~ly in both an active and a passive sense.
It looked for, or was sought out by civil serv-
ants in the various departments wh~ had a zest
f?r organization.. Their assignments were va-
rIed. The acquamtance with the Government
as a whole which was thus acquired ripened
Departmental Alanagement
their yalue to particular. departments. This
seasonmg process was not Ideal, of course from
the point of view of the larger aspects or'man-
agement. The emphasis of the Bureau both
in surveys and installations, naturally tended to
be formal and methodical. But a relationship
of permanent value was illustrated. It sug-
gested how advantageous it would be for those
who were destined to high managerial posts in
the d~partments to pass at some time through
agenCIes concerned with the coordination of
!l-dIDi?is~rative actio~ .. The difficult problem of
Identlfymg and trammg potential managers
would be partly solved. But this would not be
the only or the most important byproduct. It
would increase the likelihood that the manager-
~al .persoD?el in the departments would be
mstmct With the sense of departmental inter-
dependence and the need and means of
coherence.
M~agement impli~s continuity. The cir-
culatlOn of managenal personnel is no less
?-esirable.16 The development of such personnel
m recent years has offered 'concrete evidence
both of the feasibility of the practice and of its
value. In the majority of cases, careers have
involved experience in more than one depart-
ment, and in a few instances transfers have
taken place after general managerial rank has
been attained. An incidental advantage of a
reasonable degree of circulation in managerial
posts will be found in the fact that it facilitates
adjustments of personalities which are occasion-
ally desirable in the course of shifting political
leadership.
. T? p~aise such circula~ion of personnel, with
Its mCldental opportumties for. adjustment,
weakens not at all the assumptIOn that the
sine qua non of the departmental system lies in
the essential permanence of its corps of
managers.
Staffing for Policy •
For the Secretary who wishes to stand in a
creative relation to policy, the first essential is
the presence of dependably stable manage-
ment. 17 But this is not all. Secretaries must
be equipped to be, if they 'will, excitants both
.of policy and of administrative innovation. At
the very least, they must be staffed for purposes
II It is unnecessary-since Its literal application is not int.ended-to
discuss the extent to which technology may have qualified the truth 01
Bagehot's remark that departments, like mountains, are more alike the
hl"her one ascends.
",The head 01 one 01 the departments thus expressed his sense or alter·
natives as he laced them and recorded his regret that he was constrained
to ~h.oose the I~r part whicb likewise seemed the more pressing: "The
posItion 01 a C?~bmet omcer in.our Government Is in some ways curious.
Is he an admmlstrator, the actIve head ola lorce or many thousand men
engaged in constructive or scie~titlc work? Yes, he is that. and that,
!ilone makes large demands on time and tbought. But a Cabinet omcer
IS more tban a worklng executive, He Is a counselor In preparing and
developing national policies, many 01 whlcb cover matters far outside or
bls ~xecutlve reach. One 01 these two great (and sometimes contlicting)
duties must be done; the otber cannot be lelt undone
"Tbe fri~nd may not have been wbolly wrong wbo'said tbat I looked
at my duties to? mucb as a business matter-too little as the creative
~rvl~ alan adViser. The dilemma was always tbere is some measure--
dlffermg, 01 cours~, according to tbe scope 01 each particular department.
We bave not J:'et rlSCn ~? the point wbere we can relieve It by a permanent
undersecretaTial staff. -W. C. Redtleld. With Congr ... and Cabinet
(New York: Doubleday, Page, 1924), p. 00.

Departmental Management
of external contact, as buffers, interpreters,
popularizers. At the best, they should be
staffed for the thinking that runs before the
event, sometimes immediately, sometimes at a
. distance. The occasions are partly depart-
mental, but, as the discussion of objectives in
staffing has indicated, the Secretary's scope as
an adviser is necessarily br~ader than his
departmental concerns.
To assume the desirability of another type
. of organ in addition to the permanent depart-
mental management does not mean that the
permanent management is not also an agency
of consultation as well as of action. The
managerial line is the natural channel for the
communication upward of the creative im-
pulses of bureau ~owth. It is the normal
avenue by which mformation needed at the
top is gathered from the units of research and
statistics attached to o~erations. Nor is its
role only that of transnussion or mobilization.
Proposals, whether they come from without or
within, must be embodied administratively,
with adequate consideration of existing pro-
cedures and of the bearing of related, activIties
already in motion, which may ramify far
beyond the department. Those who are famil-
iar with its management are inevitably involved
as advisers.
In addition, however, there is need of staff
elements wholly separated from the depart-
mental line of command. The characteristics of
such staffing have been'indicated in sketching
the emerging pattern of the organs that depart-
ments have begun to create in response to
inescapable needs. On the consultative side,
the essence of organization is flexibility. The
variations are best illustrated in personal
terms. Certain broad problems of recruitment
and tenure, however, may be commented upon
in general terms.
Secretaries, obviously, should have freedom
of choice of staff advisers. Staffing for policy
will range widely. At anyone time it is likely
to involve a diverse personnel. In an in-
timately personal way, it may ramify in the
occasional use of consultants on a ~er-diem
basis. Impersonally, it may spread mto the
use of advisory committees. The appropria-
tions to departments should permit a choice of
methods as well as unhampered discretion in
the selection of immediate staff advisers.
Despite the closeness appropriate to purely
staff relationships, however, Secretaries are wise
in avoiding undue dependence upon the element
of personal attachment. The effect of this
dependence is paradoxical. The purpose of
using family fnends or former business and
professional associates and subordinates is to
enable the temporary head to master his depart-
ment. In fact, it frequently isolates him.
Imponderables of relationship are introduced,
about which the permanent personnel of the
department and those who have transactions to
conduct with the department can only guess.
The further result is to restrict rather than to
•
269
open the channels of communication between
the Secretary and the department. This is the
more likely because friends and former asso-
ciates or subordinates are seldom used singly.
When there are several, it is human for them
to become unconscious rivals, each trying in an
excess of loyalty to make himself the unique
avenue by which matters reach the Secretary.
Thus-quite apart from the element of lack of \
knowledge of departmental affairs-the attempt
of a new political head to rely on those with
whom he is personally familiar to encompass
what is strange may turn out to be self-defeating.
This difficulty, of course, is especially marked on
the managerial side, where it may break the
chain of effective control. It is not absent in
the gathering of aides intended to help Secre-
taries in their relation to nascent policy.
The combination of elements needed in a
policy organ must vary. Some Secretaries
may choose to content themselves with arrange-
ments under which staff aides will be essentially
means of conserving time in connection with
outside contacts. There is a wide range of
callers to see the political head of any depart-
ment; there are letters of suggestion or com-
plaint. The Secretary needs assistance, fur-
thermore, in stemming the tide of requests for
articles and speeches; he needs a substitute
who can share his duty in explaining properly
the work and tendencies of the department.
There are further needs which come closer to
the day-to-day decisions by which new ad-
JIlinistrative policy is actually made. While
departmental busmess goes forward, it must
be constantly reviewed with a fresh eye. The
choices that are creative in their effect, whether
by way of innovation of work or renovation of
method, require the rapid assemblage of precise-,
information.
Continuing agencies of research at the centers
of the departments may be important factors
in the process of policy formation. Under
any conditions, of course, most of the detailed
work of technical inquiry will be carried on in
the bureau!!. 'Where departments are focused
on well-marked major functions, however,
there is a place for the type of analysis not
intended for public distribution but for the
purpose of providing a broad basis for current
action. For some years this has been illus-
trated in the use Secretaries and Under Secre-
taries of the Treasury have made of what is
now called the Division of Research and Statis-
tics. The same relationship has been im@cit
in the role of the Bureau of Agricultural Eco-
nomics in the Department of Agriculture,
although in this case the magnitude of the
Bureau's routine operations has obscured its
distinctively staff relationship. The same ob-
servation may be made of the Bureau of Labor
Statistics of the Department of Labor.
Beyond this, Secretaries will profit by having
at hand small groups of aides who are free from
routine responsibilities and who will be available
either in preparing the way for the specific
270
decisions that Secretaries are called upon to
make or in considering broad possibilities of
change. It would be inconsistent with the
flexibility already stressed in this connection to
attempt to particularize the qualifications or
modes of recruitment of these aides. The needs
are various and the personnel must doubtless
be blended from a variety of aptitudes and ex-
perience. Training cannot be disregarded. It
is one of the essentials in the effective personal
staffing of Secretaries who, in accordance
with the assumptions of party government,
wish to be a freshening influence within their
departments as well as counselors of policy at
large. The questions that come up for decision
and the programs that are presented for more
leisurely consideration call for a background as
well as for sympathy with a tendency. This
background is partly technical in the ordinary
sense; but, as governmental problems, the ques-
tions and the programs alike are technical in
the further sense that they involve some knowl-
edge of the characteristics of governmental
procedure. The aspect of background involves
an awareness, not only of the methods of govern-
ment, but also of the complex cClnflicting social
forces with which the department must deal.
This double awareness should be present, in the
person of one assistant or several, in the small
group of aides to the Secretary.
• The acquisition of this background does not
entail prior membership in the civil service.
The experience of one of the depnrtmen ts in
recent years may be cited, among other some-
what similar examples, to illustrate another
possibility. In this department, in addition
to an administrative assistant who has acted
as a general business manager, the Secretary
has had an outstanding aide through whose
hands, as intimate staff adviser, passes the
flow of important matters on which the Secre-
tary finally acts. This staff aide has never
been a civil servant, though on two widely
spaced occasions he was the personal assistant
of administrators bearing great responSibility,
and at another time was secretary of a goyern-
mental commission engaged in an extended
inquiry into trends of public policy in the
very fields with which the department in
. question must deal. In the interim, through
three decades, his semipublic connections
have kept him in touch with the classes of
subject matter which have been the especial
concern of the department. His sophistica-
tion as well as his enthusiasm is at the Secre-
tary's disposal.
Some of the needed elements of experience,
however, can be drawn from the civil service
itself. More is meant than the practice of
summoning, on occasion, civil servants who
remain at their regular posts. That usage is
well marked and will continue. Apart from
this, however, it should be possible to detach
Departmental Management
members of the classified service from their
bureau duties, in order to permit them to act
intimately as staff aides to the Secretary.
This may be accomplished by detail, while the
individuals who are thus used remain on the
rolls of their bureaus. The full development
of the relationship may require appointment to
exempt positions, to be filled at the Secretary's
discretion. In this circumstance, the civil
servant, though in no way directly protected,
would retain his personal status in the com-
petitive classified service.
Both of the variations in recruitment just
mentioned have been illustrated in the per-
sonnel of the small group of technical consul-
tants whom the Secretary of Agriculture has
usefully attached to his office for purposes of
investigation, contact, advice, and adjustment.
An obvious but not insuperable difficulty is
thus created. It is in fact a double one. Can
the relationship that has been described be
pursued without reacting unfavorably on the
civil service itself? Can it be conducted with-
out destroying the civil service careers of those
called upon to serve temporarily as consultative
aides? The answer to the first question cannot
be free from doubt, for its rests upon the
restraint of the practice. Experience has
indicated that where appointment and service
are on an essentially technical basis, even though
participation in controversial policy is involved,
there is no infection that starts a contagion of
illicit ambition in the civil service. The second
question, though likewise uncertain, can also
be resolved affirmatively. Even where civil
service employees have been appointed to
exempt and unprotected positions, it has been
shown to be possible to arrange for their return
to classified posts before a change in the leader-
ship of the department. At the worst, the
penalties that they pay, if such they can be
called, are the loss of excitement, relapse to
lower salaries, and perhaps the temporary
curtailment of opportunities for rapid promo-
tion. Even these do not follow inevitably.
The research conducted on behalf of the Govern-
ment is wide in range; it is conducted under
varied auspices. There are always numerous
points at which to recognize and to use the
experience of technicians who have demon-
strated ability in the application of knowledge
to policy. What has been said assumes that
anonymity will for the most part characterize
the type of staffing which is here under con-
sideration. Certainly anonymity increases its
value to the Secretary, quite apart from the
proteetive obscurity with which it surrounds
participating civil servants. IS
" Civil servants who, as consultants to heads of department~, are made
especially conspicuous may by this fact cloud their civil service career;
but-If their reputation for technical integrity remains unimpaired-their
unique experience is almost sure to open attractive opportunithis In the
universities or in the research institutes. This possibility is not a sub-
stitute for a return to a civil service career but it is at least a counter
balancing factor.
 EXECUTIVE MANAGEMENT
AND THE FEDERAL FIELD SERVICE

by
JAMES W. FESLER
EXECUTIVE MANAGEMENT AND THE FEDERAL FIELD SERVICE
by
JAMES W. FESLER

•
Contents

Page
Summary of Recommendations 275
Field Organization of Institutional Services 275
Coordination of Field Administration 275
Reporting 275
Local Public Relations 275
I. Statement of the Problem 277
II. Recent Experience in the Decentralization of Executive Management 279
A. Area Coordinators and Federal Business Associations 279
The Federal Coordinating Service 279
Federal Business Associations 280
B. The National Emergency Council 282
Informational Functions 282
Cooperation among Federal Agencies 283
Liaison between Federal Agencies and State Administrations 286
Reporting Service 286
C. The Tennessee Valley Authority 288
Cooperation with Other Governmental Agencies 288
Decentralization of Administration 289
III. Conclusions 290
Field Organization of Institutional Services 290
Coordination of Field Administration 291
Reporting 293
Local Public Relations 293
Summary 294
273
 SUMMARY OF RECOMMENDATIONS
•
Field Organization
of Institutional Services
1. Institutional services, such as personnel,
purchasing, and disbursing agencies, should
be encouraged to select common headquarters
cities.
2. If such common centers are established,
and if all institutional services are part of a
service of general administration at Wash-
ington, it may be useful to appoint a regional
coordinator for such services.
Coordination of Field Administration
1. Federal business associations should be
revitalized and should be supervised by a
central coordinating staff agency responsible
to the President rather than by the Procure-
ment Division of the Treasury Department or
by any other agency with a specialized interest.
2. The State offices of the National Emer-
gency Council should be abolished.
3. Annual State-wide informational meet-
ings should be held under the sponsorship of
the national staff agency charged with
coordination.
4. The coordinating staff agency, if estab-
lished, should have a field force of 10 or 12
men (with such assistants as may be neces-
sary) qualified to perform four functions: (a)
To act as trouble shooters when a neutral
official with prestige is needed in the field to
settle disputes between officials of different
Federal bureaus. (b) To foster the State-
wide informational meetings. (c) To make
special administrative studies on a functional
or territorial basis of the operation of Federal
agencies. (d) To act in an advisory capacity
to Federal business associations.
5. Greater identity of field headquarters
should be encouraged; standardization of the
boundaries of all Federal administrative
regions, however, should be recognized as
undesirable.
153155--31----19
6. Positions in the field service should be
classified.
Reporting
1. The field reporting service of the
National Emergency Council should be
abolished.
2. The field representatives of the Presi-
dent's coordinating staff agency should, on
direction from Washington, conduct intensive
studies in a sample area of the conflicts
among Federal agencies or of the operation of
a particular agency; the reports of such
studies should furnish clues for continuing
administrative reorganization, and for the
proposal of new legislation by the Executive.
3. Federal business associations, postmas-
ters, and the staff representatives in the field
should be required to file reports of their
activities-as IS customary in most staff and
line agencies.
Local Public Relations
1. Informational functions of the State
offices of the National Emergency Council
should be abolished.
2. Post offices should be designated and
publicized as local clearing houses for infor-
mation on Federal activities. Appropriate
manuals, training courses, and supervisory
devices should be provided to insure that this
new function is performed efficiently and
with sufficient regard to the need for courtesy
and tact in dealing with the public.
3. Reports of the annual State-wide infor-
mational meetings should be published and
distributed to key persons in the States.
4. Federal busmess associations should be
encouraged to maintain liaison with local
business and social organizations, to sponsor
informational radio broadcasts, and other-
wise to bridge the gap between the public
official and the citizen.
275
 I. STATEMENT OF THE PROBLEM
•
The prime objectives of executive manage-
ment are to render administration as efficient
and as serviceable to the public as possible;
economy in the sense of giving the greatest
amount of public service per dollar expended
follows as a corollary. Since 80 percent of
Federal administrative employees are stationed
at points other than Washington, and since it is
mostly with these field employees that the
public comes in contact, advance toward the
objectives of executive management will not be
rapid unless the steps taken are preceded by a
consideration of their implicatlOns for field
administration.
The following pages are intended to present
the more important aspects of field organization
as they relate to over-all management. The
questions that have particularly served to
focus the study are four. In the first place,
the narrowest view of executive management
is one which emphasizes integrated control by
the President of the housekeeping or institu-
tional functions of the Government, such as
budgeting, purchasing, disbursing, and per-
sonnel administration. Since all these activi-
ties have their field aspects, would it not be
desirable to establish central institutional
service offices in the field instead of permitting
each service to establish field offices and to
carry on its field work independently of the
others?
In the second place, one of the most important
phases of Presldential management involves
the coordination of administrative agencies
with respect to their policies and administration.
In connection with such ooordination as the
President may attempt at Washington, should
there not.also be an attempt to coordinate the
field work of these agencies at a subnational
level?
The third problem relates both to the Presi-
dent's positlOn as principal coordinator of
administrative agencies and to his position as a
frequent initiator of national policies. In
both of these capacities the President greatly
needs reliable sources of information. If he is
to attempt coordination of adm nistrative
agencies at Washington he must have means
of learning what conflicts exist among agencies.
Since those conflicts are likely first to become
evident in the course of field administration,
the question arises as to how the President is to
learn of them in time to prevent their becoming
serious. If the President is to propose legisla-
tion to the Congress he must know what needs
of the public remain uncared for by existing
statutes. These needs are best discovered in
the field. The third question, therefore, is:
How can the President reliably be kept in touch
with field evidences of lack of coordination and
of needs for new legislation?
The fourth question deals with the relation
of the public to administration. The opposi-
tion to the broadening of Federal powers to
enable the National Government to deal with
national problems is based not so much on a
belief that the National Congress is unable to
pass appropriate legislation as it is on the fear
that the administration of national laws will
involve centralized regimentation of the re-
motest hamlet by an unsympathetic bureau-
cracy. If this fear could be countered by
humanizing Federal administration and by
properly orienting it with reference to the
citizenry that it is intended to serve, there
might be a more general willingness to permi~
the formulation of national policies by the
National Government. The fourth question
then, is: How can Federal field administration
be brought into a closer relationship with the
citizen so as to be more accessible, more service-
able, and more responsive to individual needs?
These are perplexing questions. Yet they
are questions that must be answered if the
President is successfully to carryon his execu-
tive management functions. Although the
Government has never made a concerted effort
to deal with all of these over-all problems of the
field service, there have been several attempts
to deal with some of them separately. Part II
describes these attempts and analyzes their
successes and failures in order to lay a basis for
the reasonings and recommendations that are
presented in Part III.
277
II. RECENT EXPERIENCE IN THE DECENTRALIZATION OF
EXECUTIVE MANAGEMENT
•
A priori reasoning is not adequate as a basis
for decisions concerning the decentralization of
executive management. One must probe into
the experience of agencies that have attempted
to perform those activities which are now asso-
ciated with the term "executive management"
and essay a critical evaluation of their perform-
ance, in order that the administrative principles
and devices which have been proven successful
A. AREA COORDINATORS AND FEDERAL BUSINESS ASSOCIATIONS
The Federal Coordinating Service
From 1921 to 1933 there existed, under the
Bureau of the Budget, a Federal Coordinating
Service charged with the function of "enabling
the President, in matters of routine business,
to so coordinate the activities of the different
departments and establishments as will insure
the most economical and efficient expenditure
of monies appropriated by Congress." 1 At
Washington the Service was headed by a Chief
Coordinator and carried on its principal work
through a group of interdepartmental com-
mittees dealing with such subjects as printing,
motor transport, hospitalization, traffic, real
estate, contracts, and office procedure. In the
field the Service consisted of area coordinators,
varying in number f;rom 7 to 9 during ~h~ 12-
year period, and Federal business assoCIatIOns,
which at one time numbered almost 300. The
functions and organization of these field agencies
are of interest here.
The official statements of the functions of the
field branches of the Federal Coordinating
Service were so broad that they would lead the
unwary to believe that they covered coordina-
tion in all its aspects. For example, the
Manual for Area Coordinators declared: "What
the Federal Coordinating Service aims to ac-
complish is nothing more than to secure a
proper degree of teamwork on the part of the
nearly two score Government departments and
independent establ,ishments and a recognition
of the principle that the interests and needs of
the Government as a whole are supreme, and
always should take precedence over those of.
its component activities." 2
I Executive Order No. 3li78, Nov. 8, 1021.
I Pt. I, sec. 3, par. 7.
may influence the framing of recommendations
for future administrative organization.
Limitations of time have necessarily confined
this inquiry to the administrative experience of
some of those agencies that have figured most
prominently in field-management activities
during the post-war period, such as the Bureau
of the Budget, the Procurement Division of the
Treasury Department, the National Emergency
Council, and the Tennessee Valley Authority.
As a matter of fact, however, coordination
was almost entirely confined to the business or
routine aspects of Government; other aspects,
such as the ironing out of conflicts in operating
policies, were left practically untouched. A
catalog of the specific functions performed by
area coordinators and by Federal business asso-
ciations, described below, would include the
following: Transfer of surplus property; super-
vision of the use of Government-owned office
and storage space; investigation of the cost of
rented space; coordination in the use of Govern-
ment-owned motor and water transportation
facilities; arrangement for the use of the idle
capacity of Government-controlled communica-
tion facilities; reduction of cost of the service
furnished by public-utility corporations to
Federal agencies; initiation of temporary loans
of equipment, personnel, and services; and
encouragement of consolidated purchasing of
supplies.
This emphasis on a narrow view of coordina-
tion was a logical result of the original purpose
of the Federal Coordinating Service, of its
location in the Bureau of the Budget, and of
the policy of that Bureau during the formative
years of the Service. When General Dawes
established the Service on July 21, 1921, the
primary purpose in mind was the more effective
handling of the surplus supplies that the several
executive agencies had accumulated during the
World War. The creation of area coordinators
to operate in the field was explained by Dawes
on the ground that "the points of location of
Government stocks are so scattered, and the
diffusion of the points of purchasing activities
so great that central boards at Washington
would be unable to cope with the situation
without representation at all centers of govern-
279
280
mental purchasing and sale activities." 3 The
assignment of the Federal Coordinating Service
to the Bureau of the Budget necessarily served
to guide the Service's activities into problems
of business efficiency and economy even after
the war stocks had been in large part disposed
of. Finally, the policy of the Bureau of the
Budget up to 1929 caused the area coordinators,
as well as the rest of the Bureau, to overem-
phasize the type of economy that is effected
through a parsimonious use of paper clips,
pencils, and electric lights. The narrow canali-
zation of the work of area coordinators and of
Federal business associations should be well
noted, for it means that the .organizational
details devised for their activities are not con-
trolling precedents for an agency charged with
the broader aspects of coordination.
For purposes of field coordination the United
States was at first divided into nine areas coinci-
dent with the nine corps areas of the Army, and
to each was assigned an area coordinator.
General Dawes, at the time of setting up the
organization, characterized it as "in effect the
old Pershing A. E. F. plan of coordination of the
existing agencies of a decentralized organiza-
tion",' and he credited General Moseley with
authorship of the idea of using the corps areas
as territorial units for coordination. The
areas were thus selected not because of ahy
distinctive virtue they would have for purposes
of coordination, but rather because they were
laid out along lines familiar to the founders and
first administrators of the Coordinating Service.
When, in turn, a Navy man, Admiral H. H.
Rousseau, was appointed Chief Coordinator,
there was a tendency to shift boundaries so as
to make coordination areas conform more
nearly to the administrative regions used by the
Navy. During the 12-year life of the Service
there were a few other boundary changes
effected in recognition of the fact that corps
areas were not necessarily the best coordination
areas. Some areas, for example, were com-
bined under a single coordinator. In another
case, boundaries of the Philadelphia and New
York Corps Areas were modified so that Phila-
delphia might have jurisdiction oyer its tribu-
tary section of New Jersey.
Each coordinating area was, in turn, sub-
divided by its area coordinator into coordi-
nating "zones" comprising one or more counties
each. In each zone it was desired that there
should be formed Federal business associations
with representation from all Federal agencies
operating in the zone.
The Federal Coorrunating Service was not
financed by an appropriation from Congress
but relied largely on the appropriations made
to regular departments, even for the pay of its
employees.
Staffing of the Service was handled by detail-
ing employees of existing agencies, on the theory
• Charles O. Dawes, Tht Firot Year of tht Budga of tilt Uniltd Stal ..
(New York:: Harper, 1923), p. 123.
I Ibid., p. 39.
Executive Management and
that through an informal rotation of personnel
all Federal agencies would share equally in the
advantages and burdens of such details. As a
matter of fact, almost all coordinating personnel
was drawn from the Army and the Navy-a
result, it may be deduced, both of the direction
by military personnel of the Bureau of the
Budget until 1933, and of the familiarity of the
Army and Navy with the procedure of brief
details. The absence of civilian coordinators
was doubtless equally due to the lack of a gen-
eral statutory authorization for the loan of per-
sonnel by the civil establishments. Details
were customarily for a period of 4 years, al-
though recall to regular duty by the employing
department was possible at the end of 2 years
of coordinating service. It was the policy of
the Bureau of the Budget to favor brief tours
of duty on the assumption that an appreciation
of the tasks of coordination would thereby more
rapidly become a factor in the routine admin-
istration of the executive departments and
establishments. The policy was thus stated:
"It is desirable to have as rapid a turn-over
on coordinating duties as efficiency will permit
so as to return officers to their departments with
a knowledge of the Federal Coordinating
Service and thus spread a better understanding
of it throughout the Government." 6
The frequency with which the ability and
special knowledge of experienced men had to
be sacrificed in order that novitiates might be
introduced to the mysteries of coordination
seriously impaired the effectiveness of the Fed-
eral Coordinating Service in performing its
immediate functions. The process of infiltrat-
ing coordinating ideas was confined largely to
the War and Navy Departments, however, and
it is doubtful that the in-service training-school
principle on which the Service operated was
warranted.
The Federal Coordinating Service, including
the area coordinators, was abolished by Execu-
tive Order No. 6166, dated June 10, 1933.
This abolition was a logical culmination of the
decline of the Service during the previous ad-
ministration. By June of 1933, the area coordi-
nating work was languishing, and it was deemed
better to abolish it completely than to revive
it along the old lines.
Federal Business Associations
The Federal business associations, however,
sponsored by the Federal Coordinating Service,
were not abolished. These associations were
established as a means of reducing departmental
objections that would result from area coordi-
nation by agents of the Bureau of the Budget
in the Federal Coordinating Service. They
were expected to exercise many coordinative
functions on a basis of cooperation rather than
of direction from above. The territorial juris-
diction of each association consisted of a
I Federal Coordinating Service, Manual fOT Art. Coordinatoro, pt. I,
sec. 5, par. 3. (4).
 the Federal Field Service
zone made up of one or more counties. The
designation of the actual boundaries of such
zones rested with the appropriate area coordi-
nator.
The number of Federal business associations
reached a peak of 293 in 1930.6 With the abolition
of the Federal Coordinating Service, the busi-
ness associations were transferred to the Pro-
curement Division in the Treasury. There now
exist [October 1936] only 135 associations, and
probably many of these are virtually inactive.
The Federal business associations were in-
tended to be "the instruments for carrying out
in the field the business policies of the President
and of the Chief Coordinator." 7 Their officially
enunciated purpose was to "promote coop-
eration between Federal activities with a view
to increased efficiency in the transaction of
Government business through closer acquaint-
ance of the members, interchange of ideas not
only in discovering more efficient methods of
carrying on the routine work of their respective
offices, but also in assisting in the solution· of
problems which arise from time to time in the
zones or are referred to the associations by the
Chief Coordinator or the area coordinators." 8
In practice, Federal business associations ha ve
focused attention upon economy through inter-
departmental coordination of such matters as
supplies, equipment, and office space. Had it
not been for the natural emphasis placed by
the Bureau of the Budget upon economy, the
associations might have carried on much broader
activities. The transfer of the associations to
the Procurement Division has necessarily re-
sulted in a continuation of the early emphasis.
Membership in a Federal business association
automatically appertained to "every Federal
executive activity having an independent func-
tion within the zone" 9 of the association. At-
tendance at meetings of the association was
obligatory on the official heads or principal
assistants of all Federal activities within eco-
nomical travel distance of the place of the
meeting. Each Federal activity was entitled
to one vote. Dues, when provided for, were
voluntary with respect to the individual
member.
The typical association elected annually a
president, a vice president, and a secretary;
standing committees were created on personnel,
publicity, real estate, supply, traffic, and such
• The growth and decline of Federal bnslness associations Is shown In
the following table, drawn from Leonard D. White, Trend8 in Public
Adm/njatration (New York: McGraw·Hill, 1933), p. 161, and amended
by a current stetement obtained from the Procurement Division of the
Treasury Department:
Fiscal year
1923 ___________________ _
Number
69
Fiscal year
1928 ___________________ _
Number
1924 ___________________ _ 86 1929 ___________________ _
1925___________________ _ 124 1930___________________ _
1926 ___________________ _ 176 1936 ___________________ _
1927___________________ _
234
'Office of the ChieC Coordinator, Bulletin No. 101, Supplement No. I,
sec V, par. 8.
, Ibid., sec. V, par. 3.
, Ibi •. , sec. V, par. 5.
281
other subjects as might be of particular interest;
the chairmen of the standing committees con-
stituted an executive committee to act for the
association in emergent situations arising be-
tween association meetings. The officers and
the members of committees were, of course,
chosen from among the members of the associa-
tion, and performed their association duties in
addition to those assigned them by their respec-
tive Federal departments. No additional pay
was given for such extra services. Of the 695
officers of business associations in 1929, about
70 percent were drawn from three departments:
Post Office, Agriculture, and Treasury.lO This
placed a rather heavy burden on a few depart-
ments. The selection of many officers from the
Post Office Department and from the Depart-
ment of Justice, which was fourth in number of
association officers, also meant probably that
many officers were brief-tenured political ap-
pointees. Balancing this objectionable feature
is the probability that they occasionally brought
enthusiasm and new ideas into the organization.
The frequency and nature of meetings, beyond
the prescribed minimum of one meeting a quar-
ter, were matters for local determination. In
some associations the meetings were monthly;
in some they were monthly except for a lull
during the summer months; in others the mini-
mum of quarterly meetings was not exceeded.
Meetings usually were held in the afternoon
during working hours and were often preceded
by luncheons. Customarily one speaker would
discuss interesting aspects of the work of his
agency. Each association submitted the min-
utes of its meetings to the area coordinator who,
monthly, transmitted them to the Chief
Coordina tor.
At present Federal business associations are
relatively inactive. They receive little atten-
tion from the Procurement Division at Wash-
ington, and they no longer have the active
supervision and stimulation of an area coordi-
nator. Attendance at meetings is not now com-
pulsory, and in most associations there is no
representation from the agencies established
since 1932. The only definite power which the
associations now have is that of providing
clearance on office space to agencies that desire
to locate in the city of the association. Thus,
if the Resettlement Administration decides to
establish an office in Atlanta, contact must be
made with the president of the Atlanta Federal
II The 695 officers of Federal business associations in 1929 were divided
among the departments and establishments as follows:
Post Office _________________________________________________________ 253
j~~!!~;::======:=:==========:=:=================:=::=::=:=:::==: ~~
War_______________________________ ______ ________ __ ___________ ______
Interlor_____________________________________________________________
42
28
267 Veterans' Bureau___________________________________________________ 24
280 Commerce__________________________________________________________
Labor ______________________________________________________________ 21
19
293
135 Civil
Navy8ervice_______________________________________________________
____ __ __ ______________________________ __________________ __ _____ 14
9
National 8oldiers' Home_ __________________________________________ 2
8mpplng Board_ ___________________________________________________ 1
These figures are drawn from the 1929 report oC the Director of the
Bureau oC the Budget. A slight discrepancy exists between the 695
officers claimed and the total of the Itemized column, which is 696.
282
Business Association. It is his duty to inform
the Resettlement Administration if there is
federally owned or federally rented office space
available in the city. If there is none, he is to
give Resettlement a letter stating the lack of
Federal space. Unless it obtains such a letter,
Resettlement cannot rent privately owned
office space. Since clearance on office space is
a function that could probably be more appro-
priately performed by an employee of the
Procurement Division or by the postmaster of
the city, it is apparent that the continuance of
the business associations must have some
justification other than this work.
. From the beginning, the significant value of
the Federal business association from the point
of view of coordination in its broader sense has
been, not in its peculiar functions with relation
to supply and equipment, but rather in the
furnishing of a forum where Federal officials
may meet and discuss their problems. Since
personal acquaintance of the principal officials of
B. THE NATIONAL EMERGENCY COUNCIL
The National Emergency Council was created
on November 17, 1933, by an Executive order
issued under authority of the N ationalIndustrial
Recovery Act. An order of October 29, 1934,
merged the Executive Council and Industrial
Emergency Committee with the National
Emergency Council. On June 13, 1935, the
National Emergency Council was continued
by the President under authority of the Emer-
gency Relief Act of 1935.
The functions of the National Emergency
Council are (a) to provide for the orderl~ presen-
tation of business to the President; (b) to co-
ordinate interagency problems of organiza-
tion and activity of Federal agencies; (c) to
coordinate and make more efficient and pro-
ductive the work of the field agencies of the
Federal Government; (d) to cooperate with any
Federal agency in performing such activities as
the President may direct; and (e) to serve in an
advisory capacity to the President and the
Executive Director of the National EmergencY'
Council. The third function-that of coordi-
nating and making more efficient and produc-
tive the work of the field agencies of the Federal
Government-is one that is central to this
study.
In order to carry out its field functions, the
National Emergency Council has placed a
representative in each State,!l whose functions
are four: (a) To operate a bureau of informa-
tion concerning the Federal agencies and their
activities; (b) to promote cooperation among
Federal agencies; (c) to act as a liaison officer
between the Federal agencies and the State
administration; and (d) to report biweekly to
Washington on the progress of each Federal
agency in the State, critically appraising the
II A territorial director has also been appointed In Alaska.
Executive Management and
Federal units is the most important factor in
effective field cooperation and coordination of
Federal agencies, it is recommended that
Federal business associations be revitalized
and encouraged to broaden their interests.
Revitalization involves divorcin~ the associa-
tions from the Procurement DlVision in the
Treasury Department and from the continuing
emphasis on paper-clip economy as the principal
obiective.
It might be thought better to set up entirely
new luncheon clubs or other media for the
meeting together of Federal officials in the
field and accordingly to abolish the remaining
Federal business associations. It is submitted,
however, that it would be unfortunate to
abandon existing organizations where they are
capable of conversion to new and more use-
ful purposes. It would be particularly dis-
couraging to many persons now devoting·
considerable energy to the building up of
associations.
effectiveness of its work and analyzing the ade-
quacy of the Federal program to meet the needs.
In order to determine the efficacy of the field
organization of the National Emergency Coun-
cil in executing these functions, on-the-ground
studies were made in four States-Michigan,
Wisconsin, Georgia, and North Carolina. The
first three were designated by the Washington
office of the National Emergency Council as
being among the States in which the Council
was operating particularly well. The evalua-
tions, therefore, are based on a more than fair
sample.
The personnel of the State offices of the N a-
tional Emergency Council is uniformly small,
running from three to six employees. Of these,
approximately one-half are secretarial and
clerical assistants receiving less than $2,000 per
year. The total field personnel for the country
in 1936 was 227 persons and the cost of the
field offices in the aggregate amounted to
$56,156 per month or $673,872 per year.
Many of the State directors have political
backgrounds; a number are independently
wealthy; a few are field officials of other Federal
agencies. The salaries of the State directors
range from $4,320 to $6,800.
Informational Functions
It is apparent that if the National Emergency
Council is to serve as a bureau of information,
people should know of this service and that it
should be readily accessible to them. In most
States the National Emergency Council has
attempted to make itself known through pub-
licity work in the newspapers and on the radio
and through the establishment of contacts with
private citizens. Its accessibility to people who
r
,
the Federal Field Service
wish to contact it personally rather than by
mail is largely a matter of physical location.
In most cases the Council office is located in
the largest city of the State-which is also
generally the principal nexus of railroads and
highways. 12
The informational function of the State offices
of the National Emergency Council involves,
to some extent, the dissemination of informa-
tion through media more general than individ-
ual correspondence and conference. In all
States the Council prepares press releases on
various aspects of the emergency program, the
material for such releases coming from the
Washington office. The greater part of this
type of work is concerned with preparing
"county break-downs" of figures (e. g., the
amount of Public Works Administration funds
expended in a particular county) for distribu-
tion to county weekly newspapers, which are
not generally reached by news releases over
national press association wires. The National
Emergency Council is also ready to serve as a
central press relations bureau for any Federal
agency requesting such service. 13 In most
States, however, agency administrators prefer
to make their own press releases, or even to
distribute in undigested form detailed reports
of their activities.
The National Emergency Council has also
made some effort to enlist local citizens in the
task of furnishing to the public information on
the respective jurisdictions or activities of the
many Federal agencies. In Michigan, for ex-
ample, the United States Government Manual
has been distributed to postmasters, other
Federal officials, librarians, newspaper editors,
chambers of commerce, State and local officials,
and "representative citizens." It is to these
persons that the citizen will ordinarily go for
information if he does not call directly on the
National Emergency Council. Armed with the
manual, such persons can at least tell the citi-
zen which agencies he should contact for
appropriate solution of his problems. The
enlistment of local citizens for informational
work is obviously made necessary by the fact
that the National Emergency Council offices
are readily accessible only to inhabitants of the
headquarters cities. It is conceivable that
definite points of contact should be established
in all communities, where the public might ob-
tain information with regard to Federal agen-
cies and present particular problems requiring
solution.
11 The Detroit offices are located In the Federal building, which is
easily reached. In Milwaukee the offices are in the Mariner Tower, a
large office building, readily accessible. In Atlanta tbe offices are in the
centrally located Federal Reserve bank, but within the building they
are quite inaccessible; there is no building directory of the location of
offices, there is no Sign at the door of the office indicating that it is that of
the National Emergency Council, and entrance to the office is through
cumbersome sliding doors. The Atianta State office, furthermore, does
not publicize its location in any of its releases, but rather publicizes its
mailing address-a post-office box. North Carolina has no one city that
stands out as the hub of the whole State. The National Emergency
Council has selected Durham as headquarters-a city that Is geographi·
oally almost in the center of the State and that is adequately served by
railroads and highways. The offices are located in the 2·story Federal
I.
building.
This does not mean that the typical State office of the Council has
on Its statf persons technically qualified to handle press relations.
153155--37----20
283
This possibility is considered further in Part
III.
Cooperation among Federal Agencies
For t~e second function-that of promoting
cooperatlOn among Federal agencies-it is
necessary that each agency should be informed
as to the po~t~ ~t which its activities impinge
upon the actIVIties of other Federal agencies,
th~t there should be a personal acquaintance-
ShIP among the heads of Federal agencies, and
that it should be possible for these heads to
gather in conference at very short notice. It
may further be desirable that there be some
neutral Federal agency to serve as sponsor and
chairman of such meetings, and that there be
means of forcing recalcitrant agency heads to
cooperate.
Aside from such information as may be
gleaned from the Government manual or
absorbed in the process of actual administra-
tion, the principal opportunity for an agency
to learn of the activities of other agencies is at
the semiannual "coordination meetings" spon-
sored in each State by the National Emergency
Council Director. Save that they lay the
informational basis for coordination, these meet-
ings are misnamed, for no effort at actual
coordination is made. Heads of practically all
Federal agencies with headquarters in the State
attend, and frequently regional officials attend
for those agenCIeS that have no State offices.
In most States the semiannual meeting lasts
at least a full day, a representative of each
agency gives a prepared report on the activities
of his agency smce the preceding meeting, and
most people attending are bored. One method
of making the semiannual meetings more useful
~ould be to.group the 60 or ~O Federal agencies
m a State mto several sectlOns, according to
interest, and confine the individual agency
reports to section meetings. For instance, all
housing agencies might be grouped together;
then the Federal Housing Administration
Director for the State would not be forced to
hear detailed reports from the Navy, the Bureau
of Customs, and the Bureau of Fisheries, but
would hear full reports only from those agencies
with whose activities the Federal Housing
Administration is most concerned. The various
sections might then assemble in one large
meeting to hear general reports on section
meetings. One person might be designated
to make a ~eneral report, for example, on
housing actiVIties of the Federal Government
in the State.
Even as now organized, the large coordina-
tion meetings perform a very useful informa-
tional function, that should continue after the
emergency has passed. The heads of all
Federal agencips speak highly of their informa-
tional value. Not the least important aspect
of these meetings is that the reports of the
various agencies are combined by the National
Emergency Council in a mimeographed book
284
which constitutes an excellent supplement to
the Government manual. It shows the agen-
cies in action and provides a valuable picture
of the Federal services to particular States.
As the emergency passes, however, it is desir-
able that the meetings be held only once a year.
In the Nation as a whole they should be stag-
gered to enable the attendance of regional
officials of agencies at all State meetings falling
within their regions, and to make it possible for
Washington officials of the National Emergency
Council and other agencies to attend more than
a few meetings.
The existence of personal acquaintanceships
among the heads of Federal agencies constitutes
a basis for cooperation. Agency heads fre-.
quently praise the semiannual meetings of the
National Emergency Council on the ground
that they make possible these personal acquaint-
anceships. One district manager of the Civil
Service Commission has emphasized the point
that most of his conflicts with agencies in the
enforcement of civil service regulations occur
from misunderstandings that can quickly be
cleared up if he can telephone heads of agencies
or write them informally. He therefore regards
it as fortunate that tWIce a year he can attend
National Emergency Council meetings and
greet everyone with whom he wishes to estab-
lish contact. The Civil Service Commission,
in consequence, saves considerably on traveling
expenses and on its district manager's time.
There is some question as to whether the
National Emergency Council should have
undertaken the function of promoting coopera-
tion which was formerly and is still to some
extent performed in many cities by Federal
business associations. The National Emer-
gency Council, however, operates on a State
basis and the associations on a local basis, and
it is conceivable that each might complement
the other.
Effective cooperation among Federal agencies
in the field is possible only if the heads of the
various agencies are so located that they can
confer together at short notice. This cannot be
accomplished unless the field headquarters of
the agencies tend to be located in the same
cities. Otherwise the factor of distance inter-
feres with the holding of personal conferences
as well as with informal telephone consulta-
tions. In all the States visited, with the ex-
ception of Georgia, there is a lack of concentra-
tion of Federal agency headquarters in a single
city of the State. In Michigan, for example,
many agencies locate their offices at Detroit,
the largest city of the State; several agencies,
however, have selected Lansing as their State
headquarters, primarily because their work
necessitates close cooperation with the State
government. In Wisconsin a parallel situation
is presented: Most agencies are located in Mil-
waukee, but some are in Madison. In Georgia,
Atlanta is the only large city and there, too, is
located the State capitol. The only competi-
tion comes from Athens, the home of the State
Executive Management and
College of Agriculture, which has succeeded in
luring a few agencies from Atlanta. In North
Carolina, as was earlier pointed out, there is no
single city that dominates the State. Conse-
quently, agencies are dispersed among Durham,
Raleigh, Chapel Hill, Greensboro, Asheville, and
other moderate-sized cities. No solution pre-
sents itself for this problem of location of head-
quarters. In general, greater identity of head-
quarters would be desirable from the point of view
of coordination, but the competing tugs of the
large metropolis and ofthe State capi tal will pro b-
ably continue to be effective as well as logical.
The problem of cooperation is further aggra-
vated when a Federal as:ency has no State
offices. The Rural Electrification Administra-
tion operates directly from Washington, yet its
loans for the construction of rural electricity
lines may need coordination with other Federal
construction and agricultural programs in, for
example, the State of Michigan. The Resettle-
ment Administration, the Farm Credit Admin-
istration, and the Civil Service Commission
are examples of agencies whose most important
field officers have jurisdiction over groups of
States rather than over single States. If the
National Emergency Council D;rector for the
State of Michigan, for instance, wishes to call
local administrators of these agencies into con-
ference, he must try to hail them from, respec-
tively, Milwaukee, St. Paul, and Chicago.
A~ain, no proposals appear adequate to meet
this difficulty. It has been proposed that the
field representatives of the National Emergency
Council should be regionalized, and that they
might perform, on a regional basis, the same
type of coordination that the State directors
perform on a State basis. The obvious difficulty
is that the regions of the various regionalized
agencies are not coincident and that, conse-
quently, the boundaries for regional coordina-
tion would be difficult to choose, and, when
chosen, would be only a slight improvement
over the State areas now in use.
The effectiveness with which agency heads
can confer is not dependent merely on the
factor of physical location. Coordination con-
ferences can be effective only if the persons
conferring can make definite commitments for
their agencies. Where some State adminis-
trators can make no move without approval
from Washington, coordination will necessarily
bog down.
Two further means of promoting cooperation
have been suggested. One of these is the exist-
ence of a neutral Federal agency to serve as
sponsor and chairman of coordination activities.
A large part of the justification for the field
service of the National Emergency' Council
rests upon the belief that the Council provides
such a neutral agency. Two questions present
themselves: First, does cooperation require
active promotion, or does it naturally follow
when Federal agencies have established the
informational and personal acquaintanceship
bases already emphasized? The second ques-
r
the Federal Field Service
tion is whether the National Emergency Coun-
cil has been a neutral agency.
If it were possible to analyze the coordination
activities of the National Emergency Council
on a statistical basis, the analysis probably
would show that the Council has been trying to
iron out difficulties almost exclusively with
regard to the small group of agencies engaged
in the Works Program. The Council has had
some success in getting the Works Progress
Administration, the Public Works Administra-
tion, the National Reemployment Service, and
the Bureau of Public Roads to work together
in an appearance of harmony. The great bulk
of the Federal agencies come into active contact
with the State offices of the National Emer-
gency Council only twice a year-at the semi-
annual coordination meetings, which, as has
been suggested, are not essentially related to
coordination, but rather to the informational
functions of the Council. The permanent
agencies of the Government, both the so-called
old-line and the more permanent New Deal
agencies (e. g., the Home Owners' Loan Corpo-
ration, the Farm Credit Administration, and the
Federal Housing Administration), as they have
grown older have tended to carve out their par-
ticular channels of activity in such a way that
they do not come into frequent conflict with
other agencies. It is the new agencies that are
feeling their way, and that in the States are
frequently headed by persons either personally
ambitious or overly anxious to do a good job,
that extend their activities further than they
should and so trespass on the functional juris-
dictions of other agencies.
The Works Program agencies have suffered
to an unnecessary degree because of the nature
of the administrative mechanism that was
created for the program. In each State the
program is supposed to be handled in such a
way that employment on relief projects is
scattered through the State in accordance with
need; that the agencies do not all reach their
peak demand for skilled labor simultaneously;
that the more useful and permanent projects,
such as those of the Public Works Adminis-
tration and the Bureau of Public Roads, are
given precedence over Works Progress Adminis-
tration relief projects; and that private em-
ployment is given precedence over all employ-
ment on Government projects. In no State,
however, is there any single head for the whole
Works Program, although the interrelations
between the agencies of the program make it
apparent that some integrated management in
each State would be desirable. The National
Emergency Council has attempted to make
up for the lack of such management, but having
no actual authority to do more than make
suggestions to the several agencies, it has been
unable to overcome their rivalries and isola-
tionism. Their conflicts are primarily the
result of three factors: The uncertainties of
jurisdiction because of the emergency character
285
of the program, the nature of the administrative
structure for the Works Program. and the failure
at Washington to bring about effective coopera-
tion and singleness of purpose in the central
offices.
With the reduction of emergency activities
and the establishment of more definite lines of
jurisdiction there will be little need for a special
Federal agency primarily charged with the
function of field coordination. Further treat-
ment of this possibility is reserved for Part III.
The State organizations of the N ationaJ
Emergency Council as at present staffed ane
organized fall short of the requirement ot
neutrality in a coordinating agency. The
political connections of some State officers of
the Council necessarily act as a barrier to effec-
tive coordination of old-line agencies under
civil service. Aside from political affiliations,
the State directors occasionally have connec-
tions with particular agencies, and this impairs
their effectiveness as neutral coordinators. The
State director for Georgia, for instance, is also
manager of the local office of the Reconstruc-
tion Finance Corporation, agent of the RFC
Mortgage Co., and agent of the Commodity
Credit Corporation. Eight additional State
directors also serve as State administrators for
other Federal agencies. The Federal agencies
so represented are the Federal Housing Admin-
istration, the Works Progress Administration,
and the Social Security Board. As a matter of
policy, such dual office holding is objectionable.
It is likely to affect the director's neutrality,
and in any event will prevent his making a full-
time job of his National Emergency Council
work.
Certain State administrators of operating
agencies feel that effective coordination neces-
sitates the granting of substantial authority to
the coordinator to issue orders to recalcitrant
agency heads. Interestingly enough, the State
directors of the National Emergency Council are
strongly opposed to being given such authority.
Coordination, they emphasize, is essentially a.
matter of tact and diplomacy, of persuasion
backed by the prestige of being "the President's
personal representative." This view would
seem substantially correct, and it is strongly
reinforced by the obvious confusion of lines of
responsibility that would exist if, for example,
the State director of the Public Works Admin-
istration were required to take orders both from
the National Administrator and from the
State director of the National Emergency Coun-
cil. Most State administrators are already
willing to cooperate: Where they find them-
selves at an impasse in cooperation, it is gener-
ally the result of their being bound by regula-
tions from their respective functional chiefs in
Washington. The maintenance of functional
lines of authority is sufficiently important to
warrant discarding the proposal of crossing
such lines with lines of authority to territorial
chiefs.
286
Liaison between Federal Agencies
and State Administrations
The third function of the State director of the
National Emergency Council is to act as a
liaison officer between the Federal agencies and
the State administration. Curiously, in three
of the four States visited, the State administra-
tion either was not Democratic or was not of
the wing of the Democratic Party that would
be inclined to cooperate wholeheartedly in the
New Deal program.14
In view of these natural antipathies, the
State directors deserve commendation for
their achievements in performing their liaison
function. A man in politics has the advantage,
of course, of a wide acquaintance and knows
how to get things done in the State. Whether a
person recruited by civil service would be able to
master the technique of personal contact, and of
achievement by indirection, is a matterfor doubt.
A civil servant, however, might arouse less
antagonism than a politician. It was originally
intended that the field representatives of the
National Emergency Council should not only
contact the State adrmnistrative agencies but
should also supervise the contacts of Federal
agencies with State legislatures. This function
has never been exerClsed to any considerable
extent, both because the State directors are
obviously incompetent to handle the technical
details of such bills as those dealing with unem-
ployment insurance and because Federal
a~encies are loath to place the fate of legislation
VItally important to them in the hands of
anyone outside their own respective organi-
zations.
Reporting Service
The fourth function of the State offices of the
National Emergency Council is to report
regularly to the Washington office of the Council
on the progress in the State of each Federal
agency.
The reports made by the State directors are
biweekly, average about 25 pages, and cover
the affairs of the 2 weeks preceding the dates
on which the reports are mailed. At Wash-
ington a staff of young research assistants
prepares digests of these reports both accord-
mg to States and according to agencies. The
digest for a report of 25 pages would be about
4 pages in length. To each major agency at
Washington is sent the digest of all State
directors' comments on its work. To the
President is sent a digest of about 4 pages
covering all subjects of importance.
Since the National Emergency Council al-
U The Michigan administration was Republican, the Wisconsin admln·
Istration was Progressive, and the Georgia administration was headed by
an antl·New Deal Democrat. Since the State directors at the National
Emergency Council are characteristically strong Democrats of the
Federal Administration faction, they are probably not the best men to
obtain the cooperation of State administrations under the control of other
parties or of other Democratic factions.
Executive }.{anagement and
ready maintains at Washington a clipping
service covering 416 newspapers, and since
most important agencies maintain clipping
services of their own, it is apparent that this
reporting pervice of the Council must do some-
thing more than summarize the contents of the
newspapers of the various States. Further-.
more, most of the major agencies of the Govern-
ment have their own reporting services for the
activities of their field officers and many
agencies supplement these services by secret
investigative activity that provides a continu-
ing administrative audit of the work of the
agency in the field. The reporting work of the
National Emergency Council, in order to be
useful to other Government agencies, must
therefore provide advantages not available
through these agency sources of information.
It is by no means certain that the National
Emergency Council draws upon sources of in-
formation sufficiently different from those of
the regular agencies to warrant the expense
involved in the reporting service. Most State
Council offices devote considerable attention to
the analysis of newspaper comment, and
through it, of public opinion. These State
offices usually subscribe to between 50 and 100
daily and weekly papers in the State, from which
are clipped significant news or editorial com-
ments on Federal agencies. The clippings are
digested, or at least are read by the State
director before making his biweekly report to
Washington, so that he is able to send in a
characterization of current newspaper opinion
in the State.
Part of the information that goes into the
biweekly field reports comes from the agencies
themselves. This is particularly true of statis-
tical data as to projects completed, projects
under construction, amount of labor employed,
proportion of the project labor that is drawn
from relief rolls, etc. Obviously, statistical
reports of this kind merely duplicate the re-
ports that the field offices of the particular
agencies send to the centrul office at Washing-
ton, and are less reliable. Some statistical
material, particularly on general business condi-
tions, bank clearances, etc., is obtained from
chambers of commerce, or from any other
private, semiofficial, or official sources the State
director may chance upon.
To varying extents, the impressions that the
State director gets from personal contacts with
citizens enter into the reports. The reliability
of such impressions depends very greatly upon
the type of persons with whom the director
comes in contact. If the director's contacts
are primarily with bankers, his reports will be
colored accordingly; if they are with the unem-
ployed, another attitude will be reflected.
Reliability also depends upon the extensiveness
of the sampling process. For example, a
director's contacts with bankers might be so
few as to be unreliable as bases for reflecting
r the Federal Field Service
the views of the bankers of the State as a
group. If a director relies almost entirely
upon his personal contacts with people as he
travels over the State, there is a danger that
he will not meet enough people to be able
properly to evaluate the work of the several
agencies. A partial remedy for this danger
has been devised in Michigan where there is
maintained a mailing list of 1,300 representa-
tive citizens most of whom have been urged to
write to the State director their impressions
of the administrative work of the various
Federal agencies. To this method, which ad-
mittedly secures a wider base for the generalized
reports to Washington, the objection has been
ralsed that people do not tell the whole truth
in correspondence; that in con versa tion, on the
other hand, people will fully unburden them-
selves.
Personal observation of the work of agencies
is a further basis for reports. When, for ex-
ample, a citizen writes the National Emergency
Council that the houses being built by a
particular Federal agency are costing an exor-
bitant amount, or that the houses are being
improperly constructed for the climate of the
country, the State director or his assistant can
visit the project and form an independent judg-
ment. The extent to which this is possible,
however, is dependent upon the mobility of the
director. In a State such as Texas, the oppor-
tunity for personal observation would be
severely limited by distances. It is further
dependent upon the technical competence of
the director to make independent judgments.
There is some opinion among the heads of
Federal agencies to the effect that a National
Emergency Council director presumes a great
deal when he reports to the President through
the Washington office of the Council that an
agency is working well or ill, and that the cause
is thus and so. He cannot possibly have mas-
tered, the argument runs, the administrative
rules under which the agencies operate; he
cannot, furthermore, be competent to judge, for
example, whether a construction job is following
sound engineering principles or not, whether
the quality of material entering into a project
is adequate for the purpose, and whether a
Civilian Conservation Corps project for the
checking of blister rust is worth while or not.
An investigation of the treatment by other
agencies of reports of the National Emergency
Council bears out the doubts as to the usefulness
of the reporting service. The digests prepared
for agencies and for the President reach them
a week and a half after the arrival of the reports
in Washington, 2 weeks after the final date of
the period covered by the report, and 4 weeks
after the initial date of that period. This
287
delay is certainly a point for criticism. IS The
extent to which the digests of reports are used
by the President has not been susceptible of
determination. In the case of the Washin~ton
offices of Federal agencies it is found that little
use is made of the digests. It is a general
opinion that the State directors' reports are
based principally upon newspaper clippings or
upon the casual contacts of the directors. The
reports are declared to be factually inaccurate,
and to be unreliable in their attempt to mirror
pu blic opinion. Such value as they have
derives from the fact that they furnish an
outside check on the accuracy of the intra-
departmental reporting service; in most cases
they furnish no new information.
There is a further question of the compatibil-
ity of the exercise of the functions of coordina-
tion and confidential reporting by a single
agency. Coordination rests upon a feeling of
friendliness and mutual confidence among
agencies, and it certainly needs such a relation-
ship between the coordmating agency and the
agency to be coordinated. Confidential report-
ing, on the other hand, has about it the air of
trying to catch someone "with the goods", of
uncovering instances of maladministration for
reference to Washington; it would seem to be con-
ducive to the development of an air of hostility
between the reporting agency and the agencies
it is investigating. It is difficult to find corrob-
oration for this point of view in the field; most
agencies have no resentment of the National
Emergency Council on the ground of its report-
ing service. It is possible, of course, that the
reason no resentment has occurred is that the
reporting work the Council does is relatively
innocuous. Certainly a reading of the State
reports will indicate that the director waxes
most indignant when he is reporting instances
of lack of coordination at Washington. It is
over questions of policy or of administrative
organization that the reports become vigorous
in their criticisms. Another reason for the lack
of resentment is the personality of the State
directors. In many cases they do have in-
~atiating personalities, and in a few cases, as
m Michigan, elicit sincere regard and respect.
The backing of the Council by the President in
public statements has also greatly enhanced the
prestige of the State directors and has served
to quiet criticism. When the emergency is
past, should the President cease to bolster the
National Emergency Council by periodic state-
ments, and should civil servants or less out-
standing men be chosen as State directors, it is
possible that the functions of coordinating and
reporting will be found to be incompatible.
.. It should be observed. however. that If emergencies arise the State
directors are free to report them hy teiep-am or letter withont waitlnc
for the time of their reguiar reports.
288
C. THE TENNESSEE VALLEY AUTHORITY
The Tennessee Valley Authority presents
several points of interest for this study. In
itself it IS an interesting device for subnational
Federal planning and administration; it has
developed practical methods for coordinating
its work with that of other Federal agencies
operating in the Tennessee Valley area; and
within the valley itself the Authority is at-
tempting to decentralize its activities without
losing in the process all the values of integrated
controUG
As a Federal corporation with jurisdiction
for certain purposes in a particular area, the
Tennessee Valley Authority has been regarded
by some as a model method of decentralizing
Federal activities. In the first session of the
Seventy-fourth Congress over a dozen bills
were introduced affecting 10 drainage basins
whose territories combined equal about haH
the territory of the United States. Govern-
ment corporations generally similar to the
Tennessee Valley Authority were proposed
for the Columbia River drainage basin; the
upper Mississippi River Valley; the Arkansas,
White, and Red River Valleys; the Wabash
and White River Valleys; the Connecticut
River drainase basin; and the Merrimack River
drainage basm. The principal interest of the
sponsors of these bills was not the promotion
of administrative efficiency through a real
coordination of Federal activities so mucb
as it was the promotion of the industrial and
agricultural development of their home regions.
The establishment of such regional develop-
ment agencies, however, no matter what the
purpose in their sponsors' minds, would radically
alter the problem of field service organizations.
Cooperation with Other Governmental Agencies
Whether or not other regional corporations
are set up, the devices used by the Tennessee
Valley Authority for facilitating coordination
of its activities with those of other Federal
agencies deserve attention. Reliance has nat-
urally been placed, to a large extent, upon the
cultivation of happy personal relations between
Authority officials and the field officials of
other agencies. But these have been supple-
mented bv more formal agreements. The co-
operative' work of the Authority is provided
for in the Tennessee Valley Authority Act,
which states that the board of directors of the
Authority may "request the assistance and
advice of any officer, agent, or employee of any
executive department or of any independent
office of the United States, to enable the Cor-
poration the better to carry out its powers
successfully, and as far as practicable shall
II Many of the factual data with respect to valley authority proposals
in Congress, and with respect to cooperative relationships of the
Tennessee Valley Anthorlty, have been adapted from the report of the
National Resources Committee, Reuional Facto,. in National Planninu
and Developmenl (Washington: Government Printing Office, 1935),
pp.83-116.
Executive Management and
utilize the services of such officers, agents, and
employees * * * " 17
The cooperative relations of the Tennessee
Valley Authority have been summarized in a
report of the National Resources Committee
under three categories: (a) Exchange of data
and information, (b) financial assistance, and
(c) direct cooperative set-up for joint work.
The exchange of data and information has been
extensive, but a few examples will suffice. The
Bureau of Chemistry and Soils has made avail-
able to the Tennessee Valley Authority its
county soil survey reports; the study by the
Corps of Engineers of the Tennessee River and
its tributaries has been used by the Authority;
the Bureau of Animal Industry has furnished
information on the processing of meats; and the
Bureau of Plant Industry has advised with
respect to the seed cooperative development in
North Carolina. Occasionally the flow of
information has been the other way, as in the
case of the land classification data collected by
the Authority, which has been made available
to the Agricultural Adjustment Administra-
tion, the United States Forest Service, the
National Park Service, and the State forestry
departments.
The Tennessee Valley Authority has given
financial assistance to other Federal and State
agencies. It has provided funds for the em-
ployment by the Federal and State extension
services of assistant county agents to serve in
the valley. It has borne about 70 percent of
the cost of collecting stream-flowage data in
areas of interest to the water resources branch
of the United States Geological Survey. The
Authority contributes approximately $50,000
per year to the soil survey of the Bureau of
Chemistry and Soils and to State experiment
stations in return for the agreement of those
agencies to concentrate within the Tennessee
drainage basin the funds and facilities they are
now using in each of the seven Valley States.
Although this arrangement may be justified in
this case, it illustrates the danger of establishing
areal authorities interested in directing the
activities of other agencies to the particular
area in which the Authority is interested,
to the possible neglect of other equally deserv-
ing areas.
The direct cooperative set-up for joint work
is exemplified by the establishment, under a
memorandum of understanding of November
20, 1934, of a council on agricultural programs
composed of one representative each of the
Tennessee Valley Authority, the Department
of Agriculture, and the State agricultural
colleges of the area as a group. This arrange-
ment provides for both interdepartmental and
intergovernmental coordination for a particular
function on an areal basis. There has also been
IT Tennessee Valley Authority Act, PubUc, No. 17, 73d Cong., sec. 6 (I).
the Federal Field Service
created a technical forest council for the Ten-
nessee Valley of which the chief forester
of the Authority is chairman. Represented
in the membership are the United States
Forest Service, the National Park Service, the
Forestry Division of the Office of Indian M-
airs, and each of the seven State forestry
departments. An advisory board on malaria
control includes in its membership represent-
atives of the United States Public Health Service,
the Department of Agriculture, and the Rocke-
feller Foundation.
These cooperative relationships are notable
accomplishments, but there is not unanimous
satisfaction among other Federal agencies with
regard to this phase of Authority work.
There has been some feeling that the readiness
of the Authority to obtain assistance from other
agencies in pursuing its own program has not
been paralleled by sufficient consideration for
the programs of other agencies. Nor can one
be sanguine as to the adaptability of these
cooperative arrangements to areas of the coun-
try where there exists no planning and develop-
ment agency comparable to the Tennessee Val-
ley Authority.
It is evident that the effectiveness of the
cooperative relationships has been due to the
existence of a fairly well integrated objective
related primarily to physical planning and
development. The existence of such a definite
objective seems essential for worth-while coor-
dination. If there is a definite job to be done,
each agency will be' anxious to join in doing it
and consequently will be eager to get a clear
picture of its part in the program and to make
certain that conflicts in administrative juris-·
diction do not occur. This would not be the
case if a more generalized coordination were
attempted. Definite, integrated objectives
must exist and the agencies brought together
must have related functions. Even the Ten-
nessee Valley Authority, it will be noted, has
not attempted coordination in relation to its
general objectives but has established special-
ized coordination for some of its particular
activities. Experience suggests that in the
country at large any area coordination on a
generalized basis, except that concerned with
institutional services common to all the coop-
erating agencies, is likely to be unsuccessful.
Area coordination, aside from institutional
services, to be fruitful must take place through
the grouping of agencies into something like the
interdepartmental committees already used on
a national scale.
The success of the Tennessee Valley Author-
ity in coordination, if considered as a model of
what might be done in other sections of the
country, should be studied in relation to the
quality of its personnel, its possession of finan-
cial resources, and the interest in it of the
officials of other Federal agencies. The per-
sonnel of the Authority is young and eager and
of a remarkably high quality. The Authority
has consequently obtained an enviable prestige
289
and good will among Government units that has
greatly facilitated its efforts to obtain coopera-
tion from other agencies. An area corporation
staffed with politically minded personnel or
routine bureaucrats could not achieve the same
success. The ability of the Tennessee Valley
Authority to enter into financial arrangements
with those agencies that agree to cooperate with
it has made cooperative work far more attrac-
tive to some Federal bureaus that it would
otherwise have been. It is probable that if
future areal authorities are established Congress
will erect barriers to restrict this type of sub-
sidizing. Finally, the Tennessee Valley Author-
ity, by reason of its unique character and sig-
nificance, has had ready access not merely to
the field employees of Federal agencies, but to
their national chiefs as well. In other words,
much of the accomplishment of the Authority
in regional coordination has actually been based
on negotiations at Washington with bureau
chiefs and higher officials. The question of the
amount of discretion permitted field agents has
been bypassed as an obstacle to coordination
in the Tennessee Valley, and it is quite possible
that the Tennessee Valley Authority'S experi-
ence demonstrates more what can be done on
a national scale for a region than it does what
can be done by coordination through negotia-
tions among field officials.
Decentralization of Administration
The internal organization of the Tennessee
Valley Authority has been examined in the
hope that it might give a miniature picture of
an improved structural scheme for the whole
Federal field service. The Authority has dis-
covered that centralization at Knoxville of
administration for an area of over 40,000 square
miles is no more desirable than is centralization
of national administration at Washington. It
also has learned, however, that if each func-
tional department decentralizes, there is likely
to be a clash in the field among the employees
of related departments and that some type of
coordination in the various areas is therefore
essential.
The program now being initiated contem-
plates the existence of three areas within the
Tennessee Valley, in each of which there will
be an area coordinator authorized to iron out
such conflicts as occur in his area. Actually.
the outlines of this program are still so vague,
and the steps thus far taken to execute it are so
definitely exploratory, that it is of little positive
value as a guide for the Federal field service in
general. Some persons, for instance, think that
the area coordinator will have no powers to
make decisions or give orders, but will merely
explore problems and advise. Others con-
template that the area coordinators will develop
into area managers, that administration will be
completely decentralized to them, and that in
the central office there will be only a staff of
experts, consultants, and appraisers.
290
The most valuable lesson to be drawn from
the plan of the Tennessee Valley Authority is
the recognition of the importance of making
modest efforts toward area coordination rather
than drafting blueprints of an elaborate coor-
dinative organization. It is more important to
establish hooks on which to hang coordinative
functions than it is to determine ahead of time
what these functions shall be. The Tennessee
Valley Authority does not offer any novel solu-
Executive Management and the Federal Field Service
tions for the problem of conflict between terri-
torial lines of authority and functional lines of
authority. If the area coordinator has power to
give orders to field employees of functional
departments, there is bound to be conflict. If
he lacks such power, there is bound to be a
large amount of business that will have to be
referred to the main office for settlement instead
of being handled in the field-which is the
object of decentralization.
 III. CONCLUSIONS
•
The experience of Government agencies in
grappling with the problems involved in decen-
tralization of executive management functions
should serve as a salutary warning to anyone
who pretends to have a panacea for the difficul-
ties now faced by the field service. Unqualified
answers to the questions posed in Part I cannot
be advanced. To point out one of the most
important qualifications, the quality of Federal
personnel will certainly be responsible for much
of the success or failure that attends the adop-
tion of the recommendations made here.
The four questions with which this study has
been concerned are the field organization of
institutional services, the coordination of Fed-
eral field administration, the furnishing of
confidential field reports to the President, and
the improvement of local public relations
through making the Government more acces-
sible, more serviceable, and more responsive to
individual needs. Part II presents the factual
data underlying the recommendations here
made for the better handling of these problems,
as well as much of the argumentation that
leads to these recommendations. The recom-
mendations will therefore be summarized con-
cisely, with only such reference to supporting
argument as seems essential.
Field Organization
of Institutional Services
1. Institutional services, such as personnel,
procurement, and disbursing agencies, should
be encouraged to select common headquarters
cities.
2. If such common centers are established,
and if all institutional services are part of a
service of general administration at Wash-
ington, it may be useful to appoint a regional
coordinator for such services.
Certain points should be kept in mind in
considering these proposals. Cooperation
among the housekeeping services of the Federal
Government in the field at present appears to be
relatively sli~ht, and there is little interest
shown by CIvil Service Commission district
secretaries, Procurement Division officials, and
regional disbursing officers in the establishment
of a single set of regions or headquarters to
serve all the housekeeping services. The
district secretary of the Civil Service Commis-
sion may certify to the local Procurement
Division officer persons qualified to serve as
janitors for public buildings, and the regional
agent of the Disbursement Division may mail
pay checks to the janitors appointed. But
these relations are no more intimate than those
which each of the agencies concerned has with
the regular operating agencies of the Govern-
ment. Because it is conceivable, however, that
in the event of more extensive decentralization
of authority within institutional services, cooper-
ation in the field among these services will
become more important, it is recommended
that they should have common headquarters
cities.
Some institutional functions have not yet
been decentralized on a regional basis. The
Supply Branch of the Procurement Division,
for example, has not set up regional purchasing
offices, although it has been authorized to study
the advisability of such a move. Even if the
establishment of such offices were determined
upon, it is possible that the existing regional
centers for institutional services would not be
the best selection for the supply function.
Some flexibility must therefore be permitted
in the location of institutional service head-
quarters; certainly every possible encourage-
ment should be given, however, to concentration
in selected centers.
The proposal of a regional coordinatin~ officer
with administrative authority over the mstitu-
tional services in the region should not be
adopted unless the institutional services are
organized at Washington into a single agency.
The conflict between territorial and functional
authority is an ever-present obstacle to author-
izing areal coordinators to give orders to
agencies which in Washington have no common
superior except the President. If, on the other
hand, the institutional services were grouped
together in Washington, regional coordinators
might be established. Conflicts would still
arise, but appeals for their settlement would be
made to the chief of the institutional service
group and would not plague the President.
Coordination of Field Administration
1. Federal business associations should be
revitalized and should be supervised by' a
central coordinating staff agency responSIble
to the President rather than by the Procure-
ment Division of the Treasury Department
or by any other agency with a specialized
interest.
2. The State offices of the National Emer-
gency Council should be abolished.
291
292
3. Annual State-wide infonnational meet-
ings should be held under the sponsorship of
the national staff agency charged with
coordina tion.
4. The coordinating staff agency, if estab-
lished, should have a field force of 10 or 12
men (with such assistants as may be neces-
sary) qualified to perfonn four functions:
(a) To act as trouble shooters when a neu-
tral official with prestige is needed in the field
to settle disputes between officials of different
Federal bureaus. (b) To foster the State-
wide infonnational meetings. (c) To make
special administrative studies on a functional
or territorial basis of the operation of Federal
agencies. (d) To act in an advisory capacity
to Federal business associations.
5. Greater identity of field headquarters
should be encouraged; standardization of the
boundaries of all Federal administrative
regions, however, should be recognized as
undesirable.
6. Positions in the field service should be
classified.
The prerequisites for the promotion of coop-
eration among Federal agencies have been
described as (a) acknowledgment by each
Federal agency of the points at which its activ-
ities impinge on the activities of other Federal
agencies; (b) personal acquaintanceship among
the important field officials of Federal agencies;
and (c) physical ease of getting officials together
for conference. To meet the first prerequisite
it is recommended that annual meetings of
representatives of Federal agencies be held in
each State; at these meetings each agency would
present a report of its activities for the year.
The agencies should be grouped along fune-
tionallines for the purpose of holding round ta-
bles of agencies engaged in rela~,ed activities, at
which meetings detailed reports would be given.
Each round-table group, in turn, should present
a report to the full conference, and the reports.
in such digested fonn as seems advisable, should
be bound together in pamphlet fonn as an
annual report of Federal activities in the
State. These meetings and published reports,
together with the United States Government
Manual, should suffice to infonn each agency
of the points at which its activities bear in-
timate relationship to the activities of other
agencies.
For the development of personal acquaint-
anceship the Federal business associations
should be useful, provided that they broaden
their interests beyond matters of real estate
and supply. As luncheon clubs meeting
monthly, or at such intervals as the local situa-
tion may justify, they may be exceedingly
valuable in breaking down the aloofness of
bureaus and in providing the setting for coor-
dination through infonnal conversation. The
annual State meetings should also be of some
value in introducing to one another the State
administrators of Federal agencies.
Executive Management and
The physical ease of getting officials together
depends chiefly upon the extent to which Fed-
eral agencies select the same cities for field
headquarters. Unless officials are accessible
to one another their contacts must be largely
through fonnal correspondence, whereas per-
sonal acquaintanceship and infonnality are
basic to effective coordination. No binding
regulation for unifonn location is desirable,
however, for if field officials are to have ready
access to their specialized objects of adminis-
tration-be they Indians, dams, or oil wells-
bureaus will have to be permitted some freedom
to select cities and towns not generally chosen
by other agencies. But within these limits it
would be desirable to establish regional centers
for the Federal field services. Identity of
boundaries for Federal administrative regions,
on the other hand, is not desirable. Such
identity is not so essential to effective coordi-
nation as is the selection of common head-
quarters cities. Unifonnity would, further-
more, reduce the operating efficiency of the
individual bureaus so much that there would
be a net loss to Federal administration, despite
the facilitation of coordination thereby accom-
plished.
It is recommended that the State offices of the
National Emergency Council be abolished.
The basis for this recommendation is the con-
viction that conflicts in the field occur much
less frequently than is generally imagined, that
two-thirds of the conflicts that do occur are
caused by lack of coordination at Washington,
and that fully half of the conflicts in the field
must be settled at Washington. If these state-
ments are correct, it would appear that coordi-
nation in the field is far less important than
coordination at Washington. It is true that
administration comes into contact with the
public in the field, but the point of contact is not
necessarily the point for treatment of the disease
of lack of coordination. The majority of
instances in the field are merely symptoms of
diseases whose source, and hence point for
treatment, lies in Washington. It would ap-
pear, therefore, that the elaborate field service
of the National Emergency Council will not be
necessary once the Works Program is abandoned
or is administered through a different structural
scheme.
There are occasions, of course, when conflicts
do arise in the field as a result of personal
antagonism between the field administrators of
Federal bureaus. In order to handle this type
of conflict it is desirable that there should be
some one strategically placed who could be
sent by the President or by a central staff
agency to the locus of the conflict as a neutral
conciliator. If the efforts of the conciliator
were not successful, he would have the oppor-
tunity, of course, of reporting the facts of the
situation to the staff agency where, presumably,
machinery could be started to adjust the con-
flict. These field representatives might be
the Federal Field Service
allotted particular regional jurisdictions within
which they would act not only as trouble
shooters but would also foster the State-wide
informational meetings and act in an advisory
capacity to the Federal business associations.
Some kind of supervision for these two types of
coordinative work will be essential, and field
representatives appear the logical persons to
perform the task.
Probably the most important function of the
field representatives, however, would be that
of making special adminis~ative studies ?f t?e
operatio~ of Federal agencIes .. On. a terntonal
basis, this would mean studymg m a sample
area the adequacy of Federal agencies as a
group to meet. the need~ of. the people, a~d t~e
points at which dup~lCatIOn ?f functIOn .IS
occurring. On a functlOnal basIs these studIes
would be made through a Nation-wide inven-
tory of a particular agency in order that an
evaluation might be reached as to its success
or failure. At present, for example, it is prob-
ably virtually impossible for the President to
get an impartial and informed evaluation by
competent investigators of the work of the
Resettlement Administration, or of the Works
Progress Administration, or of any other agency
that is subjected to public criticism. The
existence of facilities to make these evaluations
would appear to be essential for performance
by the President of his functions of e.:'{ecutive
management.
The territorial type of study, particularly,
should indicate to the President the points at
which coordination at Washington is necessary.
Where coordination is inadequate as a means of
dealing with the conflicts and duplications that
are reported, administrative reorganization may
be called for. Basic information to guide the
President in his decisions to abolish, reform, or
enlarge individual agencies will also be furnished
by the functional studies.
It is urged that positions in the field service
should be classified. Cooperation among agen-
cies in the field is, in one phase at least, depend-
ent upon the ease with which personnel may be
transferred and detailed from one agency to
another. This is virtually impossible where
similar positions fail to pay comparable wages.
The field service, too, is no doubt troubled by
the same type of interbureau jealousy that exists
at Washington between the old-line classified
agencies and the New Deal agencies which are
exempt from the classification provisions. The
unity of the Federal Government will not be
brought home to field employees unless the
Federal Government treats its employees
equally, regardless of their bureau affiliations.
Reporting
1. The field reporting service of the N a-
tional Emergency Council should be abol-
ished. . The average citizen is not able to go to the
2. The field representatives of the Presi-
dent's coordinating staff agency should, on
293
direction from Washington, conduct intensive
studies in a sample area of the conflicts
among Federal agencies or of the operation
of a particular agency; the reports of such
studies should furnish clues for continuing
administrative reorganization, and for the
proposal of new legislation by the Executive.
3. Federal business associations, postmas-
ters, and the staff representatives in the field
should be required to file reports of their
activities-as IS customary in most staff and
line agencies.
The defects of the reporting service of the
National Emergency Council have been de-
scribed. Instead of maintaining a continuous
reporting system through an elaborate and
expensive field force, it is proposed that field
representatives of the coordinating staff agency
should discharge particular tasks assigned them
by the staff agency. Their reports should be
useful to the President in discharging his
functions of executive management. For his
information on general business conditions and
the progress of Federal agencies in general, the
newspaper clipping service now maintained at
Washington, and the internal reporting systems
of the Federal agencies themselves, should prove
adequate. The accuracy of these reports may
be occasionally checked by the field repre-
sentatives of the staff agency if the President
should feel this necessary.
Regular reports on their activities should be
required from Federal business associations,
postmasters (for reasons explained below),
and regional staff representatives. These re-
ports will be necessary for proper supervision
and guidance by the Washington agency, and
it may also furnish useful side lights on the
work of other Federal agencies.
Local Public Relations
1. Informational functions of the State
offices of the National Emergency Council
should be abolished.
2. Post offices should be designated and
publicized as local clearing houses for infor-
mation on Federal activities. Appropriate
manuals, training courses, and supervisory
devices should be provided to insure that this
new function is performed efficiently and
with sufficient regard to the need for courtesy
and tact in dealing with the public.
3. Reports of the annual State-wide infor-
mational meetings should be published and
distributed to key persons in the States.
4. Federal business associations should be
encouraged to maintain liaison with local
business and social organizations, to sponsor
informational radio broadcasts, and otherwise
to bridge the gap between the public official
and the citizen.
State headquarters of the National Emergency
Council to get information, and naturally finds
294
correspondence a somewhat unsatisfactory way
of obtaining personalized information. The
Government, from the point of view of admini-
strative structure, must necessarily be com-
plex, yet to be of service to the public, it must
appear to be simple and easily understandable
to the layman. It would be folly to attempt
to simplify Government to the extent that the
layman desires. On the other hand, it is
essential in a democracy that the Government
should bend its efforts to be of service to its
citizens. Apparently, therefore, if the attempt
to give simplicity on a national or State basis
through the establishment of informational
offices has not proved adequate, it would be
well to establish local offices of information
where the citizen, uninitiated in the details of
governmental structure, may go for guidance
in the handling of his problems.
If this proposal were carried through under a
separate organizational scheme it would neces-
sarily mean a great expense to the Government
and a duplication, to some extent, of already
existing facilities. The use of postmasters as
the local sources of information is not an entirely
satisfactory solution of the problem. Nonethe-
less, to avoid setting up special offices in every
community in the country and to take advan-
tage of the fact that the postmaster, in many
communities, does represent the Government
to the public of that community, it is believed
that the use of postmasters is desirable. Post-
masters are performing a good many non postal
functions, and the proposal is not so startling,
therefore, as it might otherwise appear. Their
use for the distribution of bonus bonds, for the
custodianship of Federal buildings, for manage-
ment of the postal savings bank, and for the
furnishing of information on civil service ex-
aminations, all serve as precedents for this
proposal.
The distribution of reports of the annual
State-wide informational meetings should be
useful in keeping the citizens informed of the
work of the Federal Government in their State.
This will be far more vital than mailing them
the reports of national agencies, for the citizen
is primarily Interested in the meaning of Federal
activities to his own locality. Students of
public administration have so consistently em-
phasized the necessity of having Government
bureaus report to the public, if their responsi-
bility under a democracy is to be driven home,
that it is unnecessary to stress further the
importance of this proposal.
Federal business associations will be la~ely
social luncheon clubs and are the appropnate
Executive Management and the Federal Field Service
agencies for maintaining liaison with the local
citizens and for attempting to bridge the gap
between the Government official and the citizen.
This phase of the activities of business associa-
tions will have to be worked out in accordance
with local situations, but it deserves emphasis
as one of the main functions of the business
associations.
Summary
The broad outline that emerges from these
proposals is that of a staff agency in the Execu-
tive Department, charged with coordination on
national lines. This agency will have 10 or 12
field representatives who will perform such
coordinating work as is capable of performance
in the field, will see to it that State-wide infor-
mational meetings of Federal agencies are held
annually, arid will give such guidance as is
required to the Federal business associations.
Their principal functions, however, will be to
act as arms of the staff agency, performing for
it specific assignments involving what may
be called administrative audits. Within the
States there will be no agencies comparable to
the present State offices of the National Emer-
gency Council, but the informational meetings
that they have inaugurated will be continued
on an annual basis, their reports to be published
for the information of Federal administrators
and the public. Federal business associations
will exist on a local basis, holding meetings
monthly or less frequently, primarily for the
purpose of promoting the personal acquaint-
anceship of field officials in the Federal Govern-
ment and of establishing an esprit de corps
among Federal employees regardless of their
particular bureaus. Postmasters will be trained
to furnish information to individual inquirers
in the community on the functions of the sev-
eral Federal agencies in order that citizens may
readily discover how to get their problems
handled.
The structure here proposed is skeletal. What
flesh it may acquire will depend upon factors
that cannot be anticipated at this time. Expe-
rience with the attempts of agencies to perform
some of the functions of executive management
in the field has shown all too clearly that pro-
posals which, on paper, appeared sound, have
failed because of poor personnel in the field or
because of poor direction from Washington.
The structure proposed is decidedly tentative
and should be regarded as open to adjustment
to changin~ circumstances as much as must be
the adminIstrative organization of the whole
Government.
 GOVERNMENT CORPORATIONS
AND INDEPENDENT SUPERVISORY AGENCIES

by
HERBERT EMMERICH
 GOVERNMENT· CORPORATIONS AND INDEPENDENT
SUPERVISORY AGENCIES
by
HERBERT EMMERICH

•
Contents
Page
Purposes of the Corporation 299
Distinction between "Governmental" and "Business" Government Corporations 300
The Chartering and Supervision of Corporations 301
Advantages of Federal Charters 301
Recommendations 303
297
 GOVERNMENT CORPORATIONS AND INDEPENDENT
SUPERVISORY AGENCIES 1
•
The Government corporation is a useful and
efficient means of carrying out powers granted
the Federal Government under the Constitu-
tion. It has proved to be an effective device
not only for emergency purposes but also for
the continuing operation of a variety of eco-
nomic services. Its peculiar value lies in free-
dom of operation, flexibility, business efficiency,
and opportunity for experimentation.
These advantages, however, raise unusual
problems in the realm of administrative manage-
ment. Special forms of supervision and control
are needed to preserve these values and at the
same time to insure that they are utilized in
the public interest. The supervisory techniques
must be suitable to the corporate form but must
insure efficient operation, public accountability,
responsiveness to popular will, and integration
with the whole task of executive responsibility
for management.
Considerable variety is found in many aspects
of these special instrumentalities. Noone
simple formula will produce the desired result
of adequate supervision in a group of agencies
that differ so widely in their purpose, powers,
organization, and structure. Before installing
appropriate controls careful analysis of each
type is needed to determine the reasons for its
creation, the method of its formation, and the
degree of Government participation it requires.
In no event should these controls be of a nature
to inhibit the essential values of the corporate
device which were the original justification for
its adoption.
This variety is not 'necessarily disadvanta-
geous. Certainly no convincing proof has been
submitted either of the possibility or of the
desirability of enacting a general Federal statute
to govern the chartering and supervision of all,
Government corporations. An attempt to draw·
such a general statute would necessitate an
ability to forecast the various fields of operation
in which corporations would be called upon to
engage, as well as the powers that they should
be granted to carry out their purposes. If, as
seems likely, the public corporation is found to
be the most suitable type of agency for the
operation of new Government enterprises, such
1 The author of this study has drawn liberally upon data submitted to
the President's Committee on Administrative anagement by Dr.
Patterson H. French; upon notes furnlshed by r Charles McKinley'
and upon the legal references and advice of P n . vans, gener
counsel of the Farm Credit Administration. The author, however,
assumes responsibility for the recommendations contained in the study.
as certain hydroelectric proj ects now under
construction, carefully planned legislation, de-
signed specifically for the purposes in hand,
should be devised.
Unlike the general powers of incorporation
exercised by the States, there seems to be no
general power in the Federal Government to
charter corporations. The authority for the use
of corporations by the Federal Government
derives from the fact that they are a means of
discharging some power conferred upon Con-
gress by the Constitution.
Purposes of the Corporation
The corporate device presents factors of flex-
ibility and business efficiency not often obtain-
able under the typical bureau form of organiza-
tion. Corporations are generally expected to be
self-supporting enterprises and to be no burden
upon the Treasury, even in cases where it has
subscribed to their initial capital. They usually
have the right to borrow on their own obliga-
tions and to use the income derived from charges
for their services for payment of their necessary
expenses.
Freedom from the necessity of appropriations I
carries with it freedom from various govern-I
mental controls and restrictions, such as bud~et
procedures; personnel regulations goverrung
appointment, discharge, and compensation; and
various governmental rules regarding purchase,
travel, space, and property. Ordinarily corpo-
rations devise their own systems of accounts,
and, wjthin the limits of their enabling statutes,
may incur obligations and settle claims. These
exemptions from ordinary governmental rou- :
tines and procedures give corporations the
power to act with a speed and economy neces-
sary for those enterprises set up in national
emergencies, such as war and panic, and for
others that are rendering continuing economic
services that compete with, and will inevitably
be compared with, private enterprise.
Citizens, particularly when they participate
in their ownership, are more inclined to expect ,
businesslike procedures from corporations than
from direct Government activity. Corporations
have demonstrated their business efficiency in
such fields as the making and collection of loans,
the management of property, and the operation
of transportation facilities. They can be held
responsible for an entire result by the accom-
299
300
plishments reflected in their annual reports and
balance sheets rather than by a minute scrutiny
of their detailed transactions.
The corporation makes possible participation
by private interests in the ownership of a Fed-
eral instrumentality. In the Federal land
banks, for example, the Government subscribed
the original capital stock with the objective of
eventually exchanging private ownership for
the Government investment.
The corporation affords considerable oppor-
tunity for regional decentralization and local
autonomy. Authority and responsibility can
be devolved upon patrons by representatIOn on
regional boards. In a Nation so large and
varied in its natural conditions and habit pat-
terns, this device brings into playa mechanism
which can respond to a regional need more
adequately than conventional governmental
forms. Its regional boundaries need not coin-
cide with political areas but can conform to
economic and social factors of homogeneity
relevant to its purposes. These purposes can
be unitary, such as providing home loans or
farm loans. The Tennessee Valley Authority
has demonstrated that they can be multiple in
the broad field of regional development, includ-
ing such varied elements as river control, con-
servation, power production and transmission,
and national defense. So broad a program
affects every aspect of regional welfare and
governmental activity for its advancement.
The corporate form provides a particularly
convenient means for various degrees of limita-
tion of sovereign immunity when the Federal
Government undertakes to foster businesslike
activities in fields it may properly enter. A
Federal corporation can be specifically author-
ized to pay State taxes, to sue and be sued in
State or in Federal courts, and by appropriate
legislation can be made subject to certain State
laws that have reference to its particular
activities.
By the use of self-sustaining business corpo-
rations, it is frequently possible for the Gov-
ernment to provide an economic service of
national importance without entering directly
into business itself, thereby obviating additional
burdens on the Federal Treasury.
The use of the corporate device is by DO
means new. Since 1791, when the Congress
authorized the creation of the first Bank of the
United States, the Federal Government has
frequently used corporate devices to carry out
its powers under the Constitution. It has
become a well-established doctrine since the
case of McCulloch v. Maryland that the creation
of a corporation is within the power of the
Congress. As Chief Justice Marshall said,
"The Government which has a right to do an
act, and has imposed on it the duty of perform-
ing that act, must, according to the dictateH of
reason, be allowed to select the means * * *."
The history of the establishment of Govern-
ment corporations indicates that those of a
Government Corporations
permanent nature have been for the most part
financial and banking institutions established
under the fiscal powers of the Congress.
Authority for the creation of most of the other
Federal corporations has been derived from the
war power or from the power to regulate inter-
state commerce. Most Federal corporations
have been authorized during periods of national
emergency, such as economic depressions and
wars. The employment of the corporate device
was greatly increased during the World War,
and since the beginning of the depression in
1929 there has been an unprecedented expan-
sion in its use. (See exhibit 2.)
Distinction between "Governmental" and
"Business" Government Corporations
For convenience in describing the various
kinds of Government corporations and to de-
termine the appropriate degrees and kinds of
governmental supervision, they may be divided
into two broad categories: Federal "business
corporations" and Federal "governmental
corpora tiom,.' ,
Federal "business corporations" is the term
used here to designate corporations which are
federally chartered and in which private rights
are represented by stock ownership and board
representation. Certain regionalized corpora-
tions, having directors on their boards selected
by private interests, enjoy a large measure of
autonomy and operate on a self-supporting
business basis. They have been included in
this category even though at present the
Government may own a majority or even all of
their capital stock.
Federal business corporations are usually
authorized as a part of a permanent national
system and have been engaged principally in
the field of banking and credIt. The introduc-
tion of private ownership and representation
creates an element of contractual relationship
which necessarily limits subsequent arbitrary
rearrangements of their fiscal structures by the
Government. The enabling statutes authoriz-
ing their creation usually confine their opera-
tions to a unitary purpose, describe their
organization, powers, and relationships in con-
siderable detail, and provide for a system of
governmental supervision or regulation within
certain general limits of policy. As of October
1, 1936, there were approximately 14,000
Federal business corporations, in contrast to
about 90 Federal governmental corporations.
Federal business corporations are usually
institutions serving either a local community or
a region. The localized group includes national
banks (numbering 5,374), national farm loan
associations (5,028), Federal credit unions
(1,739), and joint-stock land banks, in liquida-
tion (47), Federal savings and loan associa.
tions (1,183), and production credit associations
(554). There are 72 examples of the region-
alized type, all operating in the field of banking
and credit. They include the 12 Federa.l
 Government Corporations
Reserve banks, the 12 Federal home loan banks,
and the 48 regional business cory orations in the
12 farm credit districts-4 to a district including
the Federal land banks.
Federal "governmental corporations" is the
term used here to designate corporations
(whether incorporated under Federal or State
charter) which are federally owned and con-
trolled. In these organizations a majority of
the stock is owned by the United States and no
, member of the board of directors is elected or
appointed by private interests.
Governmental corporations number about 90.
Certain of them were incorporated under State
charters during the World War and are now
inactive. Others were created during the
present emergency to carry on emergency relief
work or construction programs of various kinds.
The Commodity Credit Corporation and the
Federal Surplus Commodities Corporation are
examples of this emergency type. There are
certain older operating services under State
charter, such as the Panama Railroad and the
Alaska Railroad. The Inland Waterways Cor-
poration was created under Federal charter.
The largest and most important corporations
of the wholly owned type, however, were
federally chartered by the Congress during the
present emergency. They receive a large
measure of Treasury assistance by way of
capital, loan funds, guarantee of obligations, or
direct appropriations. Of these, the Recon-
struction Finance Corporation, Home Owners'
Loan Corporation, and Federal Farm Mortgage
Corporation are lending or financial agencies
headquartered in Washington. The Tennessee
Valley Authority is operating from a central
headquarters in Its own region.
The Chartering and Supervision of Corporations
Business corporations are, with few excep-
tions, federally chartered by a supervisory
agency provided for in the enabling statute,
which agency is usually authorized also to
examine and regulate their operations. Super-
visory agencies vary in form. They may be
bureaus under regular departments, such as the
Comptroller of the Currency in the Treasury
(na.tional banks); they may be independent
establishments hea.ded by boards, such as the
Federal Home Loan Bank Board; they may be
independent establishments under srngle ad-
ministrators, such as the Governor of the
Farm Credit Administration.
Governmental corporations, such as the Recon-
struction Finance Corporation and the Home
Owners' Loan Corporation, were chartered by
the Congress and report directly to the Presi-
I dent without the intervention of a supervisory
, agency. In some cases the Congress has specifi-
, cally authorized purchase of a State corporation
or incorporation under State laws. In times of
war and other national emergency, corporations
have been chartered under the laws of the sev-
eral States by executive officers of the Govern-
301
ment to further some activity authorized by
legislation. Examples of this type of incorpora-
tion are the Commodity Credit Corporation,
the Federal Surplus Relief Corporation, and the
Electric Home and Farm Authority, all of which
were originally chartered under State laws
pursuant to authority given by Executive order
to further emergency relief programs adopted
by the Congress. In certain cases corporations
have been placed under the supervision of an
existing Federal bureau or department without
the creation of a new independent agency.
The Federal Prison Industries, Inc., under the
Department of Justice, and the Alaska Railroad,
under the Department of the Interior, are
examples.
Governmental corporations and various sup-
ervisory agencies over business corporations
have frequently been set up as inaependent
establishments detached from the regular de-
partments and in charge of full-time salaried
boards of directors having overlapping terms.
There are some strong points in favor of main-
taining the separate indentity of these agencies.
Their independence, however, has been ex-
tended to a point where the task of the Presi-
dent is once again made more burdensome.
Agencies of this type should not be excepted
from a general plan to reduce the number of
lines of direct contact with the Chief Executive.
To preserve the advantages of independent
identity, some kind of semiautonomous status
in the regular departments is desirable.
Several advantages have resulted from the
merger under supervision of the Farm Credit
Administration of a large number of corporate
bodies concerned with agricultural credit. This
merger points the way to a needed reduction in
the number of lines of responsibility to the
President. It also supports the desirability of
substituting a single responsible administrator
for board management in an agency responsible
for the supervision of a large group of Govern-
ment corporations. It illustrates, furthermore,
the desirability of givihg the President the power
to appoint the officer supervising the corpora-
tions and of giving this officer in turn the right
to choose the Government's representatives on
boards of directors. The logic of this principle
of responsibility, in turn, requires that boards
of directors assign the tasks of corporate admin-
istration to a president or a general manager.
Where boards of directors have undertaken to
divide management work among themselves the
results have not been conspicuously successful.
Advantages of Federal Charters
There are great advantages in certainty of
operation if the Federal charter is used wherever
possible. There is grave question as to the
advisability of the continued use of State
charters by the Federal Government and
further study of this problem is recommended.
There is reason to believe that unnecessary
conflicts of State and Federal jurisdiction are
302
engendered and that the use of the State
charters threatens the Federal Government
with the impairment or destruction of its control
over its instrument in the face of State hostility.
Considerable uncertainty and litigation have
undoubtedly arisen in this connection. Certain
evidence may be submitted in support of the
recommendation for Federal charters.
In the past, whenever the Federal Government
has decided to charter corporations under the
laws of the several States or the District of
Columbia, many difficult problems have arisen
because of conflicts between State and Fed~ral
authorities. Cases involving these questions
have been numerous and have obstructed the
orderly conduct of the business of the Govern-
ment. These suits have not only been expen-
sive to conduct, but have caused the corpora-
tions involved to sustain substantial losses.
The right of the States to tax the business and
property of Federal corporations has been the
most fruitful source of litigation. Several of
these cases have been taken to the Supreme
Court of the United States. During the World
War the Government incorporated the United
States Spruce Production Corporation under
the laws of the State of Washington. Subse-
quently Clallam County undertook to tax the
property of the corporation. Their contention
was based on the fact that the Government had
obtained a charter from the State of Washing-
ton, and that therefore the corporate prorerty
was a proper subject for taxation by loco. and
State authorities. After extended and expen-
sive litigation the Government was successful
in maintaining the immunity of its corporate
instrumentality.2
As a result of chartering the Grain Stabiliza-
tion Corporation under the laws of the State of
Delaware, pursuant to authority contained in
the Agricultural Marketing Act, numerous cases
arose in connection with the right of the States
to tax wheat and other grain purchased by the
Corporation with Government funds. Six cases
involving this question arose in the State of
Kansas alone. Dickinson, Wyandotte, Sedg-
wick, Shawnee, and Osborne Counties all under-
took to tax the wheat involved in the Govern-
ment's stabilization operations. The State and
local authorities in six counties in Nebraska
also undertook to levy taxes against wheat
stored in that State by the Grain Stabilization
Corporation. In each instance suits were insti-
tuted by the Corporation and the United States
of America in the United States District Court
for the District of Nebraska, Omaha Division,
to enjoin the collection of these taxes. The liti-
gation in Kansas and Nebraska was pending for
nearly 3 years.
Troublesome questions of jurisdiction and the
right of the United States to protec,t its rights in
the Federal courts have also arisen whenever the
• See Clallam Count v, W/Uh/ngton v. UnUed Stat .., 263 U. S. 341; aIIo
UnUed State. Spruce Product/on Corporation v. Lincoln COIlIllV, 285 Fed.
388; and Port Angeln Wntern R. R. v. ClaUam Countv, 20 Fed. (2d) 202.
Government Oorporations
Government has chartered corporations under
State laws. 3
Many controversies have also arisen between
Federal and State Governments as to their
respective authority over the conduct of the
business of corporations having State charters.
In some instances the States have sought to
impose conditions and restrictions upon the
business and activities of these corporations
that would have made impossible the fulfillment
of the purposes for which they were created.
The right to do business in the several States has
been a constant source of trouble to the RFC
Mortgage Corporation. Serious questions of
conflict between Federal and State authority are
still unsettled so far as the corporation is con-
cerned. The Commodity Credit Corporation
has had similar difficulties of a serious nature.
In all probability many if not all of these
questions would never have arisen if the cor--
porations had been chartered under an enabling
statute passed by the Congress of the United
States. Careful draftsmanship of such legis-
lation would have resulted in a specific and
accurate statement of the general purposes for
which the corporations were created and a broad
delegation of general powers necessary and
incident to the proper execution of such pur-
poses. In short, there is no power which a
corporation chartered under State law may
possess that may not be authorized and enjoyed
in proper cases by a corporation chartered
under a Federal statute.
Federal laws which authorize officers of the
Government to charter corporations usually
limit the general purposes or fields of activity in
which it is intended that the corporation should
operate but give wide powers to the corporation
to enable it to accomplish its purposes. As
stated above, supervision by special govern-
mental agencies is provided as a safeguard.
This general practice should be followed
whenever possible.
It is as important to give leeway to the cor-
poration in its methods of doing business as it is
to define the purposes for which it is created.
Freedom of operation in a proper field is one of
the main reasons for using the corporate device
to discharge Federal powers. Particularly in
the case of permanent, as opposed to emergency,
corporations, freedom of operation finds justifi-
cation in the fact that they are financially self-
sustaining. The balance sheet incentive is
present to insure efficient and economical
administration without the imposition of the
usual Government controls. In establishing
the degree of control and supervision that the
Government is warranted in assuming, careful
distinction must be made, however, between
corporations that are, in fact, self-sustaining and
self-financing and those that rely upon financial
assistance from the Government.
I United Stat .. v. CzarnltOll-Rionda Co., 40 Fed. (2d) 214; Crane v.
UnUed StaU', M Fed. (2d) 734; Enright v. UnUed Statu, 54 Fed. (2d) 182'
Ruuelt Whetl and Foundrv Co. v. United Statu, 31 Fed. (2d) 826; Un/te'J
Stat .. v. Courtright·Dinnick Co., 28 Fed. (2d) 142; UnUed Stale. v. Waller,
263 U. S. 13; United Stat .. Grain Corp. v. Phillip., 261 U. S. 106.
Governmenl Corporations
Recommendations
1. "Business corporations" should be placed
under special supervisory agencies to be set up
in appropriate departments of the Government
to give continuous and careful scrutiny to their
affairs. These agencies should be provided
with the special equipment and staff necessary
to supervise competently the particular field
in which the corporations operate.
2. Each "governmental corporation" should
also be placed under a supervisory agency in the
appropriate department. In addition, there
. should be continuing authority in the President
to place such corporations under civil service
under other rules regarding personnel, and t~
apply such over-all governmental controls as
may be found advisable in each case in the
fields of budgeting, accounting, audit, and the
issuance of obligations.
3. Where it is desirable to preserve the inde-
pendence of the supervisory agency, it should
be given semiautonomous status in a depart-
ment. The single responsible administrator
303
at the head of a supervisory agency is preferable
to the board form. 'rhe head of the supervisory
agency should appomt the boards of directors
of corporations in the case of boards which have
G:overnment .representation. If heads of super-
VISOry agencIes are to exercise an independent
revi~w of corporate act.ivities, they should not
be dIrectors of corporatIOns they supervise.
4. The boards of directors of corporations in
turn should not attempt to divide mana~ement
work among themselves, but should asSIgn the
task of corporate administration to a president
or general manager who re:ports to them. Inter-
departmental committees m charge of corporate
activities have not been successful and should
be avoided. Responsibility is either assumed
by one department oris entirely diffused. Ex-
officio designation of specific public officers as
board members is undesirable and should be
discontinued.
With .these safeguards the corporate form
can contmue to be used as a valuable instrument
in effectuating public policy.
 EXHIBIT 1
Federal corporations as oj Oct. 1, 1936 1
1. FEDERAL "BUSINESS CORPORATIONS" (FEDERALLY CHARTERED; PRIVATE PARTICIPATION
IN STOCK OWNERSHIP AND BOARD REPRESENTATION)

Name Number Supervising agency

a. Local
National banks_______ __ __ __ __ __________ _________________ 5, 374 Treasury Department.
(June 1, 1936) (Comptroller of Currency.)
Federal savings and loan associations_______________________ 1,183 Federal Home Loan Bank Board.
National mortgage associations____________________________ (2) Federal Housing Administration.
National farm loan associatioils____________________________ 5,028 Farm Credit Administration.
Federal credit unions_____________________________________ 3 1,739 Do.
Joint-stock land banks (in liquidation)______________________ • 47 Do.
Production credit associations_ _____ __ _____ ______ ___ __ __ ___ 554 Do.
Subtotal _________________________________________ _
13,925
b. Regional
Federal Reserve banks ___________________________________ _ 12 Board of Governors, Federal Reserve
Federal land banks ______________________________________ _ System.
12 Farm Credit Administration.
Federal intermediate credit banks _________________________ _ 12 Do.
Banks for cooperatives __________________________________ _ 12 Do.
Production credit corporations ____________________________ _ 12 Do.
Federal home loan banks ________________________________ _ 12 Federal Home Loan Bank Board.
Subtotal _________________________________________ _
72
c. National
Central bank for cooperatives _____________________________ _ 1 Farm Credit Administration.
Textile Foundation, Inc _________________________________ _ 1 (Secretaries of Commerce and AgrI.
culture are directors.)
Subtotal_________________________________________ _
2

1 As there is no central inventory of corporations it Is not feasible to establish with certainty whether this list Is absolutely complete.
'None formed.
a 25 to 30 are inactive.
'·4 are In receivership.
304
Government Corporations 305
II. FEDERAL "GOVERNMENTAL CORPORATIONS" (UNDER FEDERAL OR STATE CHARTERS'
MAJORITY OF STOCK OWNED BY THE UNITED STATES; NO MEMBER OF BOARD OF DIRECTORS
ELECTED BY PRIVATE INTERESTS)

Name Number Supervising agency

Regional agricultural credit corporations (in liquidation) _____ _ 12 Farm Credit Administration.
Federal Farm Mortgage Corporation 5 _____________________ _ 1 Do.
Home Owners' Loan Corporation 6________________________ _ 1 Federal Home Loan Bank Board.
Federal Savings and Loan Insurance Corporation 5__________ _ 1 Do.
Tennessee Valley Authority ______________________________ _ 1 Reports directly to President.
Reconstruction Finance Corporation ______________________ _ 1 Do.
RFC Mortgage Co ______________________________________ _ 1 Reconstruction Finance Corporation.
Commodity Credit Corporation 6 _________________________ _ 1 Do.
Electric Home and Farm Authority 5 ______________________ _ 1 Do.
Export-Import Bank of Washington ______________________ _ 1 (Interdepartmental officers in Re-
construction Finance Corporation,
Commerce, State, and Treasury
Departments.
Federal Deposit Insurance Corporation ____________________ _ 1 Reports directly to President.
Federal Prison Industries, Inc ____________________________ _ 1 Department of Justice.
Federal Surplus Commodities Corporation _________________ _ 1 Department of Agriculture.
National Academy of Sciences ____________________________ _ 1 Reports directly to Congress.
United States Housing Corporation _______________________ _ 1 Department of Labor.
Virgin Islands Company _________________________________ _ 1 Department of the Interior.
Alaska Railroad ________________________________________ _ 1 Do.
Panama Railroad Company ______________________________ _ 1 War Department.
Inland Waterways Corporation ___________________________ _ 1 Do.
Warrior River Terminal Company ________________________ _ 1 Inland Waterways Corporation.
Corporation of Foreign Security Holders (authorized but not 1 Federal Trade Commission.
formed).
War Finance Corporation (in liquidation) __________________ _ 1 Treasury Department.
United States Shipping Board Merchant Fleet Corporation __ _ 1 Department of Commerce.
Tennessee Va.11ey Associated Cooperatives, Inc ______________ _ 1 Works Progress Administration, Re
settlement Administration.
Rural Rehabilitation Corporations (39 in liquidation-I4 25 Resettlement Administration.
liquidated) .
Federal Subsistence Homestead Corporations e______________ _ 31 Do.
Public Works Emergency Housing Corporation 5____________ _ 1 Public Works Administration.
Public Works Emergency Leasing Corporation 5 ____________ _ 1 Do.
Subtotal _________________________________________ _
93
Summary
1. Federal "business
Local corporations":
__________________________________ _
13, 925
RegionaL ______________________________ _ 72
N ational _______________________________ _ 2
13,999
II. Federal "governmental corporations" __________________ _ 93
Total ________________________________________ _
14,092

• AlIlliated with supervisory agency but actually responsible directly to President. • Inactive.
 EXHIBIT 2
Federal corporations created between January 1929 and October 1936
Government corporations created between January Government corporations created between March 1933
1929 and February 1933: and October 1936-Continued.
Federal home loan banks. Federal Home Loan Bank Board group:
Reconstruction Finance Corporation. Home Owners' Loan Corporation.
Regional agricultural credit corporations. Federal Savings and Loan Insurance Corpora-
Stabilization corporations-Cottoni grain. tion.
Textile FoundatIOn, Inc. Federal savings and loan associations.
Government corporations created between March 1933 National mortgage associations (none formed).
and October 1936: Federal Prison Industries, Inc. .
Commodity Credit Corporation. Public Works Emergency Housing Corporation.
Corporation of Foreign Security Holders (auth- Public Works Emergency Leasing Corporation.
orized but not formed). , RFC Mortgage Co.
Federal Deposit Insurance Corporation. Rural rehabilitation corporations.
Electric Home and Farm Authority. Federal subsistence homesteads corporations,
First and second export-import banks. (parent and subsidiaries).
Farm Credit Administration group: Federal Surplus Relief Corporation (later Federal
Banks for cooperatives. Surplus Commodities Corporation).
Production credit corporations. Tennessee Valley Authority.
Federal Farm Mortgage Corporation. Tennessee Valley Associated Cooperatives, Inc.
Production credit associations. Virgin Islands Co •
Federal credit unions.

EXHIBIT 3
Federal supervisory agencies oj Government corporations, October 1, 1936 (Line oj responsibility between
the President and various corporations)
Board of Governors, Federal Reserve System: Federal Deposit Insurance Corporation:
Federal Reserve banks. (Reports directly to the President.)
Department of Agriculture: Federal Home Loan Bank Board:
Federal Surplus Commodities Corporation. Federal home loan banks.
Department of Commerce: Home Owners' Loan Corporation.'
United States Shipping Board. Federal Savings and Loan Insurance Corporation.'
Merchant Fleet Corporation. Federal savings and loan associations.
Department of Interior: Federal Housing Administration:
Virgin Islands Co. National mortgage associations.
Alaska Railroad. Federal Trade Commission:
Department of Justice: Corporation of Foreign Security Holders. 3
Federal Prison Industries, Inc. Interdepartmental officers:
Department of Labor: Textile Foundation, Inc. (Secretaries of Commerce
United States Housing Corporation. and Agriculture are directors).
Department of the Treasury (Comptroller of Currency): Export-Import Bank of 'Washington (officials of
National banks. Reconstruction Finance Corporation and of
Department of War: Commerce, State, and Treasury Departments
Panama Railroad Co. are trustees).
Inland Waterways Corporation. Tennessee Valley Associated Cooperatives, Inc.
(Warrior River Terminal Co.) (Works Progress Administration. Resettlement
Farm Credit Administration: Administration).
Federal land banks. Public Works Administration.
National farm loan associations. Public Works Emergency Housing Corporation.'
Federal intermediate credit banks. Public Works Emergency Leasing Corporation. 2
Banks for cooperatives. Reconstruction Finance Corporation:
Central bank for cooperatives. The RFC Mortgage Company.
Production credit corporations. Commodity Credit Corporation.'
Production credit associations. Electric Home and Farm Authority.'
Federal credit unions. Resettlement Administration:
Federal Farm Mortgage Corporation.' Rural resettlement corporations.
Regional agricultural credit corporations. 2 Federal Subsistence Homestead Corporations. 2
Joint-stock land banks.' Tennessee Valley Authority:
I Affiliated with supervisory agency but actually responsible directly
(Reports directly to the President.)
to the President.
J Not active.
• Authorized but not formed.
306
 EXHIBIT 4
Principal Federal banking, credit, and lending agencies and bureaus according to type of responsibility,
October 1, 1936
Chartering and supervisory agencies:
Federal Reserve Board (Federal Reserve banks).
Comptroller of Currency (national banks).
Federal Housing Administration (national mort-
gage associations).
Farm Credit Administration.
. Home Loan Bank Board.
Insuring and supervisory agencies:
Federal Deposit Insurance Corporation.
Federal Housing Administration.
Federal Savings and Loan Insurance Corporation.
Lending agencies:
Reconstruction Finance Corporation:
RFC Mortgage Co.
Commodity Credit Corporation.
Electric Home and Farm Authority.
Farm Credit Administration (direct lending func-
tions) :
Federal Farm Mortgage Corporation.
Home Owners' Loan Corporation.
Rural Electrification Administration (lending
functions) .
Resettlement Administration (lending functions).
Export-Import Bank of Wa.Qhington.

EXHIBIT 5
Government corporations created by Federal officers, by State of incorporation, date, and officer or agency
instrumental in creation
--------------------------~----------------~----------------------------------
Corporation State of Incorporation Date Officer or agency instrumental in creation

Panama Railroad ____________________ _ New York ___________ _ Bought 1904__ Privately created.
Alaska Railroad _____________________ _ Washington __________ _ Bought 1915 __ Do.
Emergency Fleet Corporation _________ _ District of Columbia __ _ 1917 ________ _ Shipping Board.
Food Administration Grain Corporation_ Delaware ______ _____ __ 1917 ________ _ Food Administration.
United States Russian Bureau, Inc ____ _ connecticut _________ _ 1918 ________ _ War Trade Board.
United States Housing Corporation ____ _ New York, Pennsyl- 1918 ________ _ Department of Labor.
vania, District of
Columbia. 1918 ________ _
Sugar Equalization Board _____________ Delaware ____________ _ Food Administration.
Spruce Production Corporation_ ________ Washington __________ _ 1918 ________ _
Division of Aircraft Production.
Grain Stabilization Corporation ________ Delaware ____________ _ 1930 ________ _
Farm Board.
Cotton Stabilization Corporation ____________ do ______________ _ 1930 ________ _
Do.
Surplus Relief Corporation _________________ do ______________ _ 1933 ________ _
Federal Emergency Relief Ad-
ministration.
Commodity Credit Corporation _____________ do _______________ 1933 ________ _ Agricultural Adjustment Admin-
istration.
Public Works Emergency Housing Cor- _____ do ______________ _ 1933 ________ _ Public Works Administration.
poration.
Subsistence Homesteads Corporations ________ do ______________ _ 1933 _________ Secretary of Interior.
Public Works Emergency Leasing Cor- _____ do ______________ _ 1934_________ Do.
poration. 1934 ________ _ Tennessee Valley Authority.
Electric Home and Farm Authority { __.--~o-----------.----
----- DIstrIct of ColumbIa __ _ 1935 ________ _ Reconstruction Finance Corpo-
ration
Tennessee Valley Associated Coopera- Tennessee_ _ ______ __ __ 1934 ________ _ Tennessee Valley Authority.
tives, Inc.
Export-Import Banks ________________ _ District of Columbia ___ 1934 ________ _ Various.
Rural Rehabilitation Corporations _____ _ Various States ________ 1934-36 _____ _ Federal Emergency Relief Ad-
ministration.
RFC Mortgage Co.________ _ _ _________ Maryland_ _ __________ 1935 ________ _ Reconstruction Finance Corpo-
ration.
----------------------------~---------------~--------~-----------------------
307

153155-37---21

Classification oj Federal corporations according to fields oj activity October 1, 1936
Corporations that have been engaged in banking and
credit activities by direct lending operations or by
insuring loans and deposits:
IN THE AGRICULTURAL FIELD
Federal land banks.
National farm loan associations.
Joint-stock land banks (in liquidation).
Federal intermediate credit banks.
National agricultural credit corporations.'
Regional agricultural credit corporations
liquidation) .
Banks for cooperatives.
Production credit corporations.
Production credit associations.
Federal Farm Mortgage Corporation.
IN OTHER FIELDS
War Finance Corporation.!
Reconstruction Finance Corporation.
Federal home loan banks.
Home Owners' Loan Corporation.
Federal savings and loan associations.
Federal Deposit Insurance Corporation.
Electric Home and Farm Authority.
Federal Savings and Loan Insurance Corporation.
National mortgage associations.
Federal credit unions.
Export-import banks.
RFC Mortgage Co.
Corporations that have carried on activities of a
"business" nature:
GENERAL .. OPERATING" ACTIVITIES OF A BUSINESS
NATURE
Panama Railroad.
Alaska Railroad.
Inland Waterways Corporation.
Federal Prison Industries, Inc.
Virgin Islands Company.
, Not active.
308
EXHIBIT 6
STIMULATION OF PRODUCTION AND CONTROL OF DISTRI-
BUTION AND FOR OTHER WAR PURPOSES
Emergency Fleet Corporation.!
Food Administration Grain Corporation.'
United States Sugar Equalization Board, Inc.!
United States Spruce Production Corporation.!
United States Housing Corporation.!
United States Russian Bureau, Inc.'
CONCERNED WITH COMMODITY PRICES AND SURPLUSES
(in
Grain stabilization corporations.!
Cotton stabilization corporations.'
Commodity Credit Corporation.
CONSTRUCTION OF PUBLIC WORKS AND NATIONAL PHYS-
ICAL DEVELOPMENT, WITH OPERATION OF THEIR
PROJECTS WHEN COMPLETED
Tennessee Valley Authority.
Tennessee Valley Associated Cooperatives, Inc.
Public Works Emergency Housing Corporation.'
Federal subsistence homesteads corporation.'
Public Works Emergency Leasing Corporation.!
GROWING PRIMARILY OUT OF RELIEF ACTIVITIES
Federal Surplus Commodities Corporation.
Rural rehabilitation corporations.
ENGAGED IN RESEARCH ACTIVITIES
Textile Foundation, Inc.
I
!

THE EXERCISE OF RULE-MAKING POWER

by
JAMES HART
 THE EXERCISE OF RULE.MAKING POWER
by
JAMES HART

•
Contents
Page
Summary of Conclusions 313
Regularization 314
Group Consultation 314
Postnatal Publicity 315
Coordination 315
Institutional Management 315
Summary of Recommendations 316
Principles of Legislation 316
Principles of Administrative Management 317
1. The Nature of Rule-Making Power 319
Definition of the Rule-Making Power 319
Some Elementary Distinctions 319
Executive Orders and Proclamations 320
Terminology 320
II. Rule-Making and the Congress 322
The Rule-Making Power a Practical Necessity 322
The Ideal Relation between Statutes and Regulations 323
Special Advantages of the Use of Rule-Making 323
Executive Regulations and the Rule of Law 324
Interpretative Regulations as a Means of Increasing the Certainty of the Law 326

III. Rule-Making .and the President 329

Location of the Rule-Making Power 329
The Legal Scope of the President's Power of Direction 331
The Rule-Making Power and Government by Commission 332

IV. Safeguarding the Public 335

Purposes of Presidential Rule-Making under the General Power of Direction 335
Executive, Legislative, and Judicial Safeguards 335
Haphazard Features of the Exercise of the Rule-Making Power 335
Possible Abuses 336
Two Classes of Safeguards: Prenatal and Postnatal 337
Safeguards that Depend upon the Powers of Congress 337
Prenatal Safeguards: Regularization of Rule-Making 337
Prenatal Procedural Safeguards: Advisory Committees 339
Notice and Formal Hearings 340
311
312 Contents

IV. Safeguarding the Public-Continued. Page

Publication of Draft Regulations 341
Informal Contracts with Groups Affected 341
Progression from Voluntary to Mandatory Standards 342
Postnatal Safeguards: Judicial Review 342
Adequate Publicity 345
Central Publication: The Federal Register 345

V. Coordination of the Rule-Making Process 347

The Need for Coordination 347
Prerequisites of Effective Coordination by the President 347
Existing Clearance of Executive Orders and Proclamations
under Executive Order No. 7298 349
Criticism of Executive Order Clearance 350
Extension of Clearance to Rules and Regulations of Federal Administrative Agencies 351

VI. Over-All Management of the Service Acth'ities of the Executive Branch 353

Appendix A-Number of Proclamations for Each Administration 354

Appendix B-N umber of Executive orders for Each Administration 354
Appendix C-Executive Order No. 7298 355
 SUMMARY OF CONCLUSIONS
•
At the center of the problem of administra-
tive management in the Federal Government
stands the rule-making power, and this for two
reasons: First, there are no fewer than 115
Federal agencies that, under 964 statutory
provisions and 71 Executive orders and procla-
mations, issue rules and regulations that affect
the public. This means that rule-making con-
stitutes no inconsiderable part of the total
function of administration for the supervision
of which the President is responsible to the
people. Second, rule-making in the form of
Executive orders is one of the principal tech-
niques available to the President for the over-
all management not only of departmental rule-
making but also of the service operations of
the Executive Branch.
The rule-making powers of these 115 Federal
agencies find their source in statut.ory delega-
tions. Such delegations are no recent novelty
in the Federal Government. The practice is
sanctioned by a history that dates from the
administration of President Washington, but
reached its highest peaks in four periods of
national emergency. Quite aside, however,
from any emergency, there has for several
decades been a general trend in the direction of
increased use of this technique.
This trend is not to be deplored. Long ex-
perience teaches the unmistakable lesson that,
in a complex and rapidly changing modern
economy, delegated rule-making is an indis-
pensable feature of governmental regulation.
"Nearly everyone concedes", said the 1934
Report of the Special Committee on Adminis-
trative Law of the American Bar Association,
"that the necessities of modern Government
business require a certain amount of such
delegation."
It is possible conservatively to go further.
This trend is not even to be looked upon as
a necessary evil. It is rather to be regarded as
a normal and, if properly safeguarded, highly
desirable development of the American system.
For rule-making is a principal means by which,
entirely within the framework of the Constitu-
tion as interpreted by the Supreme Court, the
machinery of an eighteenth century Govern-
ment has been adapted to the requirements
of twentieth century governmental problems.
The rule of law demands that the basic
policies of governmental regulation be em-
bodied in statutes; but it does not demand that
the Congress freeze into its statutes a mass of
details. The ideal statute steers a middle
course between the Scylla of attempting to
anticipate e,ery possible situation and the
Charybdis of expressing no policy except that
in an empty formula. It defines in general
terms the policy that the administrator is to
pursue, the objecti,es that he is to seek, and
the limits within which he is to operate. It then
authorizes him to translate that policy into
more concrete terms before applying it to
particular cases. In this view the rule-making
power appears as a means of introducing the
rule of law at the administrative level.
By deliberately adopting this philosophy of
legislation, the Congress would acquire more
time for its primary tasks: Deliberation on the
fundamentals of policy and investigation of
the use that administrative agencies make of
their delegated powers. It would materially
strengthen the position of Congress as the
forum of national debate, as the representative
assembly of the Nation, and in its real control
of administration.
As a means of working out policies in detail,
regulations have decided advantages over
statutes. For this there are two main reasons.
First, regulations are more readily altered.
This enables the administrator more easily to
correct mistakes, to keep pace with changing
conditions-in short, to achieve flexibility and
avoid red tape. Second, the professional ad-
ministrator is altogether in a better position
than the legislator to utilize technical informa-
tion and guidance.
One of the most serious aspects of govern-
mental regulation of business is the uncertainty
of the law. The administrator must neces-
sarily interpret the law in the very act of
applying it; and the Congress may authorize
interpretative regulations. But this by itself
does not furnish certainty to the businessman.
Under the American system the courts are the
final interpreters of the law, and may later
determine that the administrative interpreta-
tions were incorrect. By amendments to the
Securities Act of 1933 and the Securities
Exchange Act of 1934, the Congress expressly
enacted that no provision of those acts imposing
any liability should apply to any act done or
omitted in good faith in conformity with regu-
lations, notwithstanding that such regulations
might thereafter be determined by judicial or
other authority to be invalid for any reason.
Coupled with a general power to issue inter-
313
314
pretative regulations, this new technique
enables the businessman to secure advance
information of what his liabilities under the
statute are, and, more important, guarantees
that this information can safely be relied upon.
It is recommended thlit this technique be con-
sidered in connection with other regulatory
legislation.
Unless the President is able to supervise
rule-making, that unity of the Executive which
the Federalist emphasized is in danger of being
destroyed. In the last two decades Executive
unity has been especially threatened by the
multiplication of regulatory boards and com-
missions, some of which possess extensive rule-
making powers and others of which do what in
effect amounts to rule-making as a byproduct
of their so-called quasi-judicial functions. The
recent Humphrey decision held that the Con-
gress may regulate the tenure of members of
these boards and commissions and so remove
the legal basis of the President's general power
of direction. The problem thus raised broadens
out beyond the scope of this study.
A strict application of the Federalist doctrine
of unity of the Executive calls for vesting rule-
making powers in the heads of the appropriate
departments. This is freguently done at the
present time, and it is entIrely consistent with
safety, full deliberation, and due respect for
technical authority. With adequate consulta-
tion of those affected, there will be an abun-
dance of counsel. Under a career service system,
the regulations will actually be prepared by
officials who have a professional outlook.
Even so, there remains, especially in economic
regulation, a residuum of discretion. The
surest way to safeguard the public is to place
the exercise of this discretion directly under the
control and hence under the unique respon-
sibility of the President. One-man responsi-
bility to the President, in turn, is preferable to
decisions by boards, for the reason that a board
is a screen behind which responsibility can be
hidden and defeated.
There are other safeguards to the exercise of
the rule-making power. Rule-making has an
inherent check in that, since every rule applies
to numbers of people, its defects will be criticised
on a wide front, and pressure will be brought
to bear for its improvement. Again, the rule-
making power is delegated, and what Congress
gives Congress may take away. Furthermore,
though the Courts have upheld the constitu-
tionality of the delegation of rule-making
powers, they have frequently held regulations
invalid as ultra vires, and have recently en-
forced limitations upon the authority of the
Congress to delegate these powers.
Nor is this all. To vest rule-making powers
in department heads is to place them under the
President's general power of direction. Through
this power he is enabled not only informally to
jrhe irxercise of
guide his subordinates' discretionary choices
but also himself to employ the rule-making
technique for the following principal purposes:
(1) Regularization of the rule-making process
at the departmental level; (2) extension and
improvement of the use of prenatal procedural
safeguards designed to provide group consulta-
tion; (3) insurance of adequate postnatal pub-
licity; (4) coordination of Federal rule-making;
and (5) prescription of uniform regulations gov-
erning the service or institutional operations of
the Executive Branch.
Regularization
The rule-making power, like Topsy, just grew.
There has been some improvement m the is-
suance of rules, but much remains to be done.
The rule-making process should be re~larized
to insure validity of rules, to guard agamst hap-
hazard methods, to require consultation of
technical authority, to improve draftsmanship,
and to reduce the maze of rules and regulations
to an understandable system. To these ends
the President, without prescribing rigid details,
could by Executive order outline a systematic
procedure for the flow of rules and regulations
m the course of their preparation. This pro-
cedure would locate in a single permanent offi-
cial responsibility for each major aspect of the
process. It would require clearance within the
particular department for legality, teclmical
justification, form, draftsmanship, systematic
numbering, and uniform nomenclature. The
President could also require periodic codifica-
tion, and could provide in the Bureau of the
Budget a pool of expert draftsmen to advise
departments on this all-too-neglected phase of
rule-making. He might also provide in the De-
partment of Justice a pool of legal experts to
give departments advice on legality. An ounce
of admmistrative prevention is worth a pound
of judicial cure.
Group Consultation
Group consultation in the process of rule-
making is now insured where the authorizing
statute or official practice provides one or more
of the following prenatal procedural safe-
guards: (1) Advisory committees; (2) notice
and formal hearings; (3) publication of draft
regulations; (4) informal contacts with groups
affected; and (5) progression from voluntary to
mandatory standards. All five methods, how-
ever, need to be used more extensively and to
be directed to more carefully thought-out ob-
jectives. Their applicability, obviously, varies
with circumstances. The President could pro-
mote examination of the problem of prenatal
procedural safeguards by administrators them-
selves by requiring reports on present practices
and recommendations for extenSion and im-
provement.
Rule-Making Power
Postnatal Publicity
Postnatal publicity has been greatly ad-
vanced by the inauguration of central publica-
tion of regulations in the federal Register.
The Federal Register, however, would be more
usable, both by the public and by Federal
agencies in distributing regulations to mailing
lists, if the President instructed the adminis-
trative committee not to clutter up its pages
with notices of hearings, which belong rather
in an official gazette, and to change its form
from one in which the regulations are not
separable to a ring-binder series of slip-form
regulations. By Executive order the Presideut
could also require general use of the best prac-
tices in such matters as prefacing regulations
with explanatory memoranda.
Coordination
Over the wide range of Federal rule-making
serious conflicts inevitably develop. Ideally,
coordination should take place in the formative
stages. This is another reason for the publica-
tion of draft regulations. By Executive Order
No. 7298 the President has already set up ma-
chinery for the prenatal clearance of Executive
orders and proclamations; that is thoroughly
justified, despite the inevitable delay it entails.
The chief defect is that proposed Executive
orders are not automatically cleared with all
departments.
Some such clearance procedure should be
extended to the rules and regulations of all
agencies under Presidential control. Purely
administrative regulations of internal manage-
ment need to be cleared through the Bureau of
the Budget to insllIe conformity with whatever
uniform regulations the President may have
prescribed on personnel, materiel, financIal con-
trol, and other aspects of public administration.
Coordination of regulations that affect the pub-
lic could be secured through the same machinery.
It is not proposed that all such regulations be
cleared, but only those that some agency claims
are in conflict with its own policies, that the
Bureau of the Budget has reason to believe are
in conflict with the policies or long-range plans
of the President, or that belong to a class which
153155--37----22
315
this Bureau designates as sufficiently important
for automatic clearance. To the Bureau should
be attached a small group of specially selected
officials whose sole business it would be to dis-
cover and report conflicts in their formative
stages. In this way many conflicts might be
forestalled by conferences on the basis of comity.
To make this coordination more effective
and at the same time to relieve the President of
some of the burden of routine, numerous series
of routine decisions might be worked out which
could be made by the Bureau of the Budget
under standing instructions from the President.
This practice is followed by executives in large
private enterprises. The President could in-
crease his efficiency and the effectiveness of his
supervision by employing the same technique.
The Bureau would not become a bottle neck
because it would have no power to decide novel
questions in the President's name, and there
would always be reserved to "line" agencies the
power of direct appeal to the President even
from the routine decisions of the Bureau.
Institutional Management
The President can use the rule-making
technique to govern the purely administrative
operations common to all agencies and depart-
ments constituting the Executive Branch of the
Government. By Executive order he can
prescribe uniform regulations governing budget-
ary practice, financial control, personnel and
materiel administration, administrative organ-
ization, research, statistics, information, co-
ordination, and planning. For this purpose the
President needs to equip and utilize the "staff"
agency created by law in 1921: the Bureau of
the Budget. His general power of direction
enables him to issue ExecutIve orders that will
bind his subordinates within the limits of their
statutory discretion in these matters. The
difficulty is that the Congress has frozen so
many purely administrative details into law.
The way out is for the Congress to authorize
the President to modify these details of "statu-
tory administration" by Executive order. Then
he can become in fact what he is recognized to
be in theory: the general manager of the busi-
ness aspects of the Federal Government.
 SUMMARY OF RECOMMENDATIONS
•
The recommendations of this study may be
summarized in terms of (1) l::~~les of legis-
lation and (2) principles of a .. trative man-
agement.
Principles of Legislation
The following general principles of legisla-
tion are recommended to the Congress:
1. Modern legislation should seek to steer
a clear course between the Scylla of attempt-
ing to anticipate every possible situation and
the Charybdis of expressing no policy more
definite than some such empty formula as
"public interest, convenience, or necessity."
2. Since past practice has frozen a mass of
details into the existing body of statutory law,
Congress should, in general terms, author-
ize the President to change such details by
uniform regulations. Where these details
affect private persons, the Executive orders
that are authorized to override them should
be required to be submitted to Congress, and
should become effective only if neither House
has passed a resolution to the contrary within
30 days after such submission. On the other
hand, Executive orders by which the Presi-
dent employs his power of direction to pre-
scribe purely administrative regulatlOns
should be authorized to supersede directly
and immediately any statutory details with
which they may be in conflict.
3. Having defined in general terms the
policy that the administrator is to pursue,
the objectives that he is to seek, and the
limits within which he is to operate, the mod-
ern statute should introduce the rule of law
at the administrative level by delegating to
the agency charged with its administration
the general power to elaborate its principles
in more concrete form, by uniform rules and
regulations having the force of law, prior to
their application to particular situations.
4. In line with this principle, Congress
should consider whether it is not desirable
for the rule-making power further to pene-
trate into those areas of policy determination
now preempted by commissions that develop
such policies as a mere byproduct of adminis-
trative adjudication.
5. The modern regulatory statute should
seek to promote certainty in the law by
authorizing the agency charged with its
316
administration to issue, upon application, or
upon its own initiative, regulations defining
and interpreting any and all terms and
provisions of the statute and their applica-
bility to any generally defined situation;
and should expressly provide, in the terms
of the statutes administered by the Securities
and Exchange Commission, that "no provi-
sion of this . . . [Act) imposing any liability
shall apply to any act done or omitted in good
faith in conformity with any . . . [such in-
terpretative) regulation of the . . . [agency],
notwithstanding that such . . . regulation
may, after such act or omission, be amended
or rescinded or be determined by judicial
or other authority to be invalid for any
reason."
6. Although emergencies necessitate blan-
ket delegations of rule-making power, the
powers granted in such cases should expressly
be made to terminate with the end of the
war or, in the case of peacetime emergencies,
after not more than 2 years unless previously
renewed.
7. The location of the rule-making power
should be determined upon well-defined
principles, the chief of which is adherence
to the framers' conception of a single execu-
tive. Thus all emergency powers should
be delegated directly to the President as
Commander in Chief or as leader of the
Nation in time of crisis. The same principle
applies to all powers that impinge directly
upon the functions of the President as con-
ductor of foreign relations. But in all such
cases practical necessity requires that he be
authorized to redelegate these powers. All
powers of administrative reorganization and
management should also be delegated to the
President. For exercising these powers, how-
ever, he should be equipped with adequate
staff assistance to prepare Executive orders
and to make routine decisions in his name
and under his general instructions, but sub-
ject to appeal to him by the heads of line
agencies. Where legislation has imposed
these purely routine decisions upon the
President, the Congress should in general
terms authorize him to devolve such decisions
upon staff officers under the safeguards
already mentioned.
8. On the other hand, final authority to
issue ordinary rules and regulations should
 The Exercise of Rule-Making Power
be located, as a general practice, in the
responsible head of the appropriate depart-
ment, and in this way subsumed under the
control and hence under the unique re-
sponsibility of the President.
9. The principle of the single executive
implies, as corollaries, subsuming all Federal
rule-making powers under Presidential con-
trol and exempting no agency from the
service regulations of the President as general
manager. Hence, the Congress should:
a. Refrain from further splitting up of
the Executive Branch of the Government
th.ro~gh the creation of independent com-
mISSIOns.
b. Consider the problem of so reinte-
grating the administrative structure of the
Federal Government as to make Presiden-
tial coordination of rule-making possible.
c. Authorize the President, in any event,
to apply his purely administrative regula-
tions (as distinguished from functional
direction) to independent boards and com-
missions, and give him as a sanction the
power to remove their ml."mbers for diso-
bedience of such regulations and/or to
allocate, in his discretion, funds for their
administra ti veexpenses.
10. Modern legislation should throw all
practicable safeguards around the rule-
making power. Hence, the Congress should:
a. Require, as a base for the rule-making
power to rest upon, that every department
that possesses such power shall be com-
pletely organized, aside from the Secretary
and such political aides as he may need,
on a career service basis, from a permanent
Under Secretary down.
b. Investigate the advisability of pro-
viding a means of challenging the validity
of re~ulations that affect the public by a.
simplified procedure, without delay, and
at a nominal cost.
c. Consider, in connection with every
delegation of rule-making power, the ad-
visability of requiring the following pre-
natal safeguards:
I. Advisory committees.
II. Notice and formal hearings.
III. Publication of draft regulations.
IV. Informal conferences with groups
affected.
V. Progression from voluntary to
mandatory standards.
Principles of Administrative Management
The following general principles of ad min is-
trative management are recommended to the
President in terms of the purposes for which he
should employ his general power of direction:
1. Regularization of the rule-making proc-
ess at the departmental level. This involves
requiring by Executive order:
317
a. That each department set up a
regularized procedure for the flow of rules
and regulations in the course of their
preparation and issuance, and that certain
principles be observed in such procedure.
b. That all rules and regulations be
cleared through the office of the Solicitor
of the department for legality, and through
designated experts for technical justifica-
tion, form, draftsmanship, systematic num-
bering, uniform nomenclature, conformity
with Federal Register requirements, and
conformity with the procedures prescribed
by statute or by Executive order.
c. That in each department a final
clearance officer be made responsible for
checking to insure that the regulations
have been initialed by the officer in charge
of each major feature of the rule-making
process, for filing with the Federal Register
those found to be in regular order, and for
executing the requirements for postnatal
publicity.
d. That each department begin the
training of expert draftsmen; that it clear
all regulations which affect the public
through such draftsmen; and that it
similarly clear all departmental bills and
legislative reports for incorporation of
provisions for the proper relation between
statutory definition of policy and delegated
rule-making and for preparation, for the
use of the congressional committee con-
cerned, of a memorandum explaining why
the delegation is needed and the technical
reasons for its wording.
e. That every rule-making document be
identified in its title or in a subtitle as
a "regulation", an "interpretative regula-
tion", an "administrative regulation", or a
"rule" .
j. That in initiating documents for the
President's signature each department ob-
serve his rules for regularization of the
forms of his own documentary action.
g. That, through standing or ad hoc
interdepartmental committees or other
means, interdepartmental coordination of
rule-making be sought at the departmental
level.
h. That departmental rule-making con-
form to such uniform system as the Presi-
dent may introduce for the numbering of
all regulations that affect the public.
i. That regulations shall never provide
generally that all prior regulations incon-
sistent therewith are thereby repealed, but
that each amendatory document shall
specify the sections of prior documents
which it amends and restate them fully as
amended.
j. That each agency conform to such
rules as the President may prescribe for
periodic codification of its rules and regu-
lations.
318 The Exercise oj Rule-l.falcing Power
2. Insurance and improvement of prenatal
group consultation. This involves, as a first
step, requiring that all agencies submit to the
President reports on the present use of the
five aforementioned prenatal procedural safe-
guards and on ways and means of extending
and perfecting their use, whether by law or by
Executive order.
3. Promotion of postnatal publicity for
rules and regulations. This involves re-
quiring by Executive order that the best
practices in this matter be regularly and
uniformly followed by all agencies that
exercise rule-making powers.
4. Devolution upon an appropriate staff
agency of defined series of routine decisions
to be made in the President's name and under
his general instructions, but with reservation
in all cases to the heads of line agencies of the
right of appeal directly to the President, to
the end that, instead of being overburdened
with perfunctory routine, the President may
make his over-all management more effective
by making it more general. This involves:
a. Requesting of the Attorney General
a comprehensive report on the extent to
which such devolution may go under
existing law and the drafting of a bill
designed to remove any existing statutory
obstacles.
b. Amending those Executive orders by
which the President has imposed upon
himself purely routine decisions or tied
his own hands for the future so as to
hamper his exercise of over-all management.
c. Instructing the appropriate staff agen-
cy to define, upon the basis of experience,
and from time to time ae new situations
emerge, series of routine decisions which
the President may devolve upon it under
the safeguards mentioned above.
5. More effective coordination of policy
formation in general and rule-making in
particular. This could be accomplished
through:
a. Improvement of Executive order clear-
ance under Executive Order No. 7298 in
the light of the criticism made in this study.
b. Extension of clearance to rules and
regulations of Federal administrative agen-
cies to the extent and in the manner
described in this study.
6. Improvement of draftsmanship and
insurance of legality of rules and regulations
through provision of staff assistance to the
several line agencies. Concretely, this calls
for:
a. Provision in the clearance staff of
the Bureau of the Budget of a "pool" of
expert draftsmen to give technical drafting
advice to agencies in the course of the
preparation of their regulations.
b. Provision in the clearance unit of the
Department of Justice of a "pool" of
lawyers to advise agencies on legality in
the course of the preparation of their
regulations.
7. Prescription of a code of administrative
regulations designed to establish uniform prin-
ciples governing the service or institutlOnal
activities of the whole Executive Branch.
Specifically, this calls for the initiation, through
an appropriate staff agency, of uniform regu-
lations relating to budgetary practice, financial
control, personnel and materiel administra-
tion, general administrative practice, organi-
zation, reorganization, research, statistics, in-
formation, coordination, and planning.
r
I. THE NATURE OF THE RULE.MAKING POWER
•
This study undertakes to examine the rule-
making power in Federal administration. It
considers the nature and future role of this
power; its relation to the legislative power of the
Congress and to the executive power of the
President; and the principal means of safe-
guarding the public against its possible abuse.
The central purpose, however, is not to present
a comprehensive picture of the rule-making
power as such, but rather to view it in relation
to the larger problem of administrative man-
agement.
The rule-making power stands at the very
center of this larger problem, and that for two
reasons. First, there are no fewer than 115
Federal agencies that, under 964 statutory pro-
visions and 71 Executive orders and proclama-
tions, issue rules and regulations that affect the
public. 1 This means that rule-making consti-
tutes no inconsiderable part of the total func-
tion of administration for the supervision of
which the President is responsible to the people.
Second, rule-making in the form of Executive
orders is one of the principal techniques avail-
able to the President for the over-all management
not only of departmental rule-making but also of
the service operations of the Executive Branch.
Definition of the Rule-Making Power
For the purposes of this study the rule-making
power may be defined as the legal authority of
administrative officers or agencies of Govern-
ment to prescribe discretionary or interpreta-
tive rules and regulations of general applica-
bility and. legal effect, or to determine the
existence of the conditions under which con-
tingent statutes are to become operative. 2
Some Elementary Distinctions 3
The documents produced by the rule-making
power may be approached from several different
points of view to bring out several elementary
distinctions that it is important to bear in mind.
From the standpoint of the element of dis-
cretion involved, rules and regulations are to
be distinguished from documents that, b;r de-
termining the existence of certain conditions
1 American Bar Association, Report of tht Special Committet 011 Ad·
milliltratiDt Law (1936), p. 272.
I cr. James Hart, Tht Ordinanal Making POWtrl oftht President (Balti·
more: The Johns Hopkins Press, 1925), ch. II; John Preston Comer,
Ltgi8latiDt Functiom of National Admini8tratiu Authoritit8 (New York:
Columhia University Press, 1927), chs. I and II.
I Hart, 011. cit., ch. III.
or the occurrence of a certain event, bring into
operation a statutory provision.' Thus under
the flexible tariff the President may fix a duty
up to 50 percent higher or lower than the
statutory duty,O whereas in the Tariff Act of
1890 Congress itself fixed the duties to be im-
posed on named articles on the free list when-
ever the President found the duties of the other
country "reciprocally unequal and unreason-
able." 6
From the standpoint of their nature and
effect, rules and regulations may be mere inter-
pretations of the law, or may on the other hand
be issued under statutory authority to fill up
the details 7 of the law. The former, often
called rulings, are given great weight by the
courts; but, as the final interpreters of the law,
the courts may hold them to be incorrect inter-
pretations. s The latter, on the other hand,
have the force and effect of law,9 provided only
the delegation is constitutional and the regula-
tions infra vires. Examples of the first are
Treasury rulings; of the second, quarantine
regulations.
From the standpoint of who is legally bound,
rules and regulations may apply to private
persons or alternatively only to Federal agencies
or persons in their capacity as officers, agents,
or employees of the Government. Examples
are rules and regulations of the Securities and
Exchange Commission governing the exchanges,
as contrasted with recent Executive orders of
the President on annual and sick leave. Of
course, some regulations may fall into both
classes, or th~se of one, class may indirectly
affect persons III the other class.
From the standpoint of the relation between
the Government and the citizen, regulations
that affect the public include: Those which
impose duties for the violation of which Con-
gress has made the citizen criminally or civilly
liable or liable to revocation of his license to
do business; those which define privileges which
the Government grants the citizen, such as
grazing cattle on public lands; those which
relate not to the substance of legal relations,
but to procedural matters, such as the method
• Comer, 011. cit., pp. 32, 64. He aptly calls such leg!sJatlon "contingent
legislation. "
I 42 Stat. L. 858.
e 26 Stat. L. 567. 612.
7 This phrase was used hy Chiel Justice Marshall in Wallman v
Southard. 10 Wheat. 1 (1825).
, Comer, 011. cit., ch. V.
• But not nece..qgarlly lor all purposes. See Schumer v. Caplin, 241
N. Y. 346,150 N. E. 139 (1925).
319
320
of applying for a Government loan or the rules
governing a public hearing.
Regulations imposing duties are to be divided
into those of a military or political character/a
those which deal with matters that are. under
the plenary control of Congress,ll or those
intimately related to the constitutional powers
of the President,12 on the one hand; and those
which control the exercise of common callings,
of the presumptive right to engage in economic
enterprise, or of free control over property, on
the other hand.
The importance of the last-mentioned dis-
tinction is that delegations ma~ apparently go
further in the former types of sItuation than in
the latter.13
Executive Orders and Proclamations
The President's own rule-making powers are
exercised through Executive orders or procla-
mations. Presidential proclamations have been
issued since the administration of George
Washington, who issued SLX. The only Presi-
dents who did not issue any were William Henry
Harrison and James A. Garfield. Taft issued
7.60 proclamations for every month in office;
Theodore Roosevelt, 4.52; Franklin D. Roose-
velt, 3.78; Wilson, 3.76; Hoover, 3.50. 14
Executive orders have also been used over a
long period. In the early days of the War
Department, the adjutant commanding would
send a letter to the Secretary of IVar making a
certain proposal. After receiving endorse-
ments this letter went to the President who
would mark it "Approved" and sign it. As
early as 1848, such decisions came to take on a
more formal character and to be entitled
Executive orders. Old employees in the State
Department say the numbering of Executive
orders began in 1895; at that time they found
orders going back to 1862, and so No.1 in the
series is an Executive order of President Lincoln.
In 1905 the State Department made the first
effort, by a circular letter, to centralize their
custody. In 1906, President Theodore Roose-
velt's secretary wrote' to the Hon. Elihu Root,
Secretary of State, that thereafter the originals
of Executive orders would be sent to the Depart-
ment of State, which should furnish copies to
the departments concerned. 15 The number of
orders jumped from 68 under Cleveland, and
50 under McKinley, to 1,011 under Theodore
Roosevelt. Extensive use has been made of
Executive orders since that time. Wilson
issued 1,770; Harding, 484; Coolidge, 1,248;
Hoover, 1,004; Franklin D. Roosevelt, 1,616,
IG Cr. Martin v. MoU. 12 Wheat. 19 (1827); Dakota Central Telephone
Co. v. South Dakota. 250 U. S. 163 (lg)g).
11 Buttfield v. Stranahan. 192 U. S. 470 (1904).
11 United Statu v. Chemical Foundation. 272 U. S. 1 (1926).
"Cf. the majority opinion in Panama Refining Co. v. R,Ian. 293 U. S.
388 (1935). See especially Un/I,d Stnt .. v. Curti•••Wright Export Corpora·
tion (New York TImes. December 22. 1936, p. 18).
a See Appendi.l A for table.
" This information was obtained from an official who is thoroughly
familiar with the history of the Executive order.
The Exercise of
as of August 31, 1936. The average number
~er month is: Cleveland, 1.41; McKinley, 0.93;
Theodore Roosevelt, 11.23; Taft, 14.56; Wilson,
18.43; Harding, 16.68; Coolidge, 18.63; Hoover,
20.91; Franklin D. Roosevelt, 38.47. 16
There is no clear line of distinction between
Executive orders and proclamations. A statute
may specify the use .of a proclamation, or the
content of the document may seem to call for
the more dignified form. Thus the flexible
tariff clause specifies the proclamation of
changes in customs rates; and matters involving
foreign relations are usually handled by the
same form.
Both the Executive order and the proclama-
tion are used for the exercise of the rule-making .
powers of the President, but other forms also
are sometimes used for such exercise, and these
two forms may, on the other hand, be used for
quite different purposes from rule-making.
Thus, the President sometimes embodies ad-
ministrative directions in letters to his subordi-
nates 17 or in directions decided upon in a meet-
ing of the Cabinet or of the National Emergency
Council. For example, the requirement of the
clearance of departmental bills, reports, and
testimony before committees of Congress is not
embodied in an Executive order, but in Budget
Circular No. 336, which quotes a direction of
the President given in a meeting of the Na-
tional Emergency Council. Again, although
Executive orders and proclamations are fre-
quently of a rule-making character, many are
acts of particular application or of no legal
effect whatsoever. For example, the President
may, by Executive order, authorize the ap-
pointment of named persons, the civil service
rules to the contrary notwithstanding; whereas
proclamations may be merely declaratory,
informatory, such as those announcing the
death of a distinguished person, or hortatory,
such as the annual Thanksgiving Proclamation.
Terminology
In Federal rule-making there is no consistent
terminology. The most usual expression is
rules and regulations. The Federal Housing
Administration distinguishes its rules from its
regulations. The President amends the civil
service rules by Executive order. For the sake
of clarity and consistency it would be desirable
to make a few elementary distinctions in termi-
nology to correspond with the classifications
given above. Indeed, it would be desirable for
the President, by Executive order, to require
that Federal agencies identify their different
types of rules and regulations by appropriate
names. It would also help if he used these
names as subtitles to his own Executive orders.
.. See Appendix B for table.
I! See. for example, the letter of President Harding quoted in James
Hart. "Some Legal Questions Growing out of the President's Executive
Order for Prohibition Enforcement". Virginia Law Review. XIII (De-
cember 1926). pp. 8(}-107.
Rule-Making Power
The choice of any such terminology is arbi-
trary and the system employed should not be
too complicated. It is suggested that the term
"regulation" be applied to a document by which
is exercised the power to fill up the details of a
substantive law that affects private persons;
that the term"interpretative regulation" be ap-
plied to a document by which is exercised the
power to make general administrative interpre-
tations of the meaning of statutory provisions;
that the term "administrative regulation" be
321
applied to a document by which is exercised the
power to regulate internal administration; and
that the term "rule" be applied to a document
by which is exercised the power to prescribe pro-
cedure. Is The problem of terminology is com-
plicated, however, by the fact that the statutes
frequently use descriptive names for documents
that they authorize to be issued; for two names
for the same document might be confusing.
!8 Great Britain, Committee on Ministers' Powers, Report (London:
H. M. Stationery OtIice, 1932 (Cmd. 4060», p. 64.
 II. RULE.MAKING AND THE CONGRESS
•
The Rule-Making Power a Practical Necessity
In the simpler days of the agricultural era it
was assumed that Congress would produce prac-
tically all the uniform rules required for the
operation of Government. The statutes were
e:>..-pected to be concrete, specific, and detailed.
This would reduce administration to a clerical
function.
But never in the history of the Federal
Government has practice completely conformed
to this traditional conception. As early as 1794
Congress authorized President Washington,
during its recess, to lay an embargo "when-
ever, in his opinion, the public safety shall so
require." The act continued: "And the Presi-
dent is hereby fully authorized to give all such
orders to the officers of the United States, as
may be necessary to carry the same into full
effect." 1 This was the broadest of the early
delegations; but the fact remains that delega-
tions of one sort or another have been scattered
through subsequent history. They are no
recent novelty in the Federal Government.!
Delegation of rule-making powers reached
ma:>..'imums in four periods of emergency. The
first was 1789-1815, the period when the United
States was trying to defend its neutral trade
against British orders in council and Napoleonic
decrees. The second was 1861-75, the period
of the Civil War and Reconstruction. The
third was 1917-18, the period of participation in
the World War. The fourth was 1933-35, the
period of the New Deal attack upon the
depression.
The necessity for exceptionally broad emer-
gency delegations, however, should not obscure
the general trend over many years in the direc-
tion of an increase in the number of rules and
regulations issued by various Federal agencies
in pursuance of delegated authority not con-
nected with any emergency. The use of execu-
tive rules and regulations has, in fact, long since
become a normal method of government. It
is sanctioned by a long history, dating from a
time practically contemporaneous with the
adoption of the Constitution. Within broad
limits it has been sanctioned by the Supreme
Court of the United States in a series of deci-
sions dating from the Brig Aurora . case 3 in
1Stat. L. 372.
Icr. Hart, The Ordinance Makinu Power, of the President. ch. IV;
Comer, 01'. cil., ch. III.
'7 Cr. 382 (1813).
322
1813. The leading case is Field v. OZark l 4
decided in 1892. Recent Supreme Court deci-
sions have defined the scope of delegated
authority but have not challenged its validity
as a method. There can at this date be no
serious question of its practical necessity or of
its constitutionality. "Nearly everyone con-
cedes", said the 1934 Report of the Special
Committee on Administrative Law of the
American Bar Association, "that the necessities
of modern Government business require a cer-
tain amount of such delegation." 6
There are obvious reasons not only for the
necessity for the rule-making power, but also
for the necessity for its growth in recent decades.
These reasons parallel closely those for the
growth of the regulatory and service functions
of the Federal Government. Regulation re-
quired legislation. The demands for new laws
increased the burden upon Congress. The
conditions to be controlled were not simple and
familiar, as they had been in the agricultural
era, but extremely complex and technical.
With the coming of the industrial age conditions
changed more rapidly than ever before, and, as
unprecedented problems emerged, the public
demanded new controls, but there was no
experience to teach the best methods of control.
The net result has been a change in the
regulatory role of Congress. It has been com-
pelled to devolve much of the detail of regula-
tion upon commissions created for the purpose
or else upon the regular departments. It is,
of course, the task of Congress to define basic
policies and to fix the limits of administrative
action. But Congress often finds it inexpedient
to do more. It then delegates a limited dis-
cretion to the agencies charged with the admin-
istration of its laws. Such delegations often
authorize the issuance of uniform rules and
regulations that are later to be applied equally
to all persons who come within the same reason-
ably defined class. Rule-making is thus shown
by long experience to be a necessary and
normal technique of twentieth century Ameri-
can government. This conclusion is increas-
ingly verified by experience and practice in the
several States. 6
• 143 U. S. 649 (1892). Ct. Hampton v. United Stat." 276 U. S. 394
(1928).
, Bee also Report of Committee on Mini,ter,' Power" pp. 5, 51, 58.
'Ct. State v. Whitman, 196 Wis. 472,220 N. W. 929 (IP28l.
 The Exercise oj Rule-Making Power
The Ideal Relation
Between Statutes and Regulations
The tradition in favor of detailed statutes is
the perversion of a principle that is fundamental
to the system of government in the United
States. Nobody questions the principle that
the basic policies of government must be em-
bodied in statutes of Congress. But it does
not follow from this-indeed, it is both un-
historical and unsound to hold-that Congress
must state in minute detail either its basic
policies or the administrative methods by
which they are to be carried out.
The practice of delegating rule-making au-
thority to administrative agencies represents
the adaptation of eighteenth century govern-
mental machinery to twentieth century govern-
mental problems. This adaptation has taken
place within the broad framework of the
Constitution. But it has been piecemeal and
empirical. The rule-making power is often
"grudgingly conceded",7 as a sort of necessary
evil. Like the British Parliament, Congress is
still apt to delegate authority to fill up the
details only in those cases in which it "is either
highly inexpedient or practically impossible" 8
for it to provide the details itself.
Thus, in the United States delegation is not
based on a philosophy of legislation as it is in
France. In France the statutes are written on
the assumption that it is the function of the
popular assembly to block out only the general
principles of policy, and that it is the function,
as well as within the constitutional power, of
the Executive to concretize these principles by
uniform but more specific regulations before
they are applied to individual cases. The
power of the President to execute the laws
carries with it the power, without special statu-
tory authorization, to supplement all statutes
by completing rules and regulations. In the
United States, this is not, and need not be, the
interpretation of the corresponding constitu-
tional power of the President. The Executive
may render more concrete the general provisions
of the statutes only when, and to the extent
that, he is authorized to do so by express, and
in exceptional circumstances tacit,Y delegation
from Congress. But Congress may, within
limits defined by the courts, attach express
delegations to its statutes as it enacts them.
Suppose Congress adopted a philosophy of
legislation whereby it deliberately refrained
from freezing details into the statutes, confined
itself to the declaration of a policy, and dele-
gated to the agency charged with administra-
tion of that policy the power, within defined
limits, to issue the rules and regulations neces-
sary to the execution of that policy. What
would be the consequences?
, See Report 01 the Com mittie on Min/8Ien' Powerl, Annex VI.
I A. V. Dicey, Introd~i01l to the Studv 01 the Law of the COllltitution
(8th ed., London: Macmillan and Co., 1915), p. 50, n. 1.
, United Staten. Midwest Oil Co •• 236 U. S. 459 (1915).
323
Special Advantages
of the Use of Rule-Making
Executive regulations have certain special,
though in some cases only potential, advantages
over detailed statutory legislation. Certain
safeguards, to be mentioned later, are also
needed to create the conditions under which
these potential advantages can be fully realized.
But what are these special advantages?
First, there is an important advantage from
the point of view of Congress itself. If the
legislative body has to consider only the funda-
mentals of policy the legislators will have more
time for their deliberate consideration. At the
same time, public opinion can more easily
focus upon the essential issues during the legis-
lative debates; details will not be the football
of party conflict; and the statutes will be free
from those unworkable amendments that often
result from compromises when Congress tries
to be too specific. The effect upon Congress
as the forum of national debate would be
beneficial. It would be strengthened as a
representative organ. Its control over admin-
istration would also be strengthened, for it
would give ample time for the important task
of investigating the manner in which administra-
tive agencies exercise the discretion as to details
which Congress has vested in them.
A great deal of the time both of Congress
and of administrators is now taken up with
bills that deal with the most petty details of
administration. The reason for this is simply
that those details are frozen into the statutes
and can thus be changed only by Congress
itself. An example may be taken at random.
In the United States Code, title 16, section 439,
there appears a provision by which Congress
some years ago granted the Secretary of the
Treasury permission to use permanently a strip
of land 60 feet wide belonging to the grounds of
Fort McHenry, so that he might have access to
and from· the Baltimore immigration station;
gave him the same power to construct railroad
and other facilities upon this outlet as had
been provided in an earlier act setting aside a
site for an immigration station and providing
for an outlet therefrom; but gave the War
Department an equal use of the railroad track
and other roads so constructed, over which to
reach the city streets and railroads beyond from
the other part of the fort grounds. Surely ad-
ministrators could be trusted to decide such
details. If there were conflicts of jurisdiction,
the President should be authorized to resolve
them by Executive order. This would not
only avoid needless delay and waste of energy
but would also free Congress from business
details and permit it to perform more effectively
its really fundamental functions.
Second, by constantly rubbing elbows with
their particular probleIllS, administrators are
in a peculiarly advantageous position to attain
an intimate and specialized knowledge, born of
324
experience, which gives them a "sense of what
is practically enforceable" and enables them to
"plan a program of development." 10
Third, because of the necessary and proper
slowness of legislative procedure and the fact
that Congress is not in continuous session, it
results that its laws cannot be changed so
readily, to correct mistakes and to meet
changing conditions, as can the regulations of
administrators.
Fourth, if a legislative rule is both specific
and unworkable, the administrator is in a
dilemma. He must either try to work the un-
workable, and thereby invite litigation and
defeat of the real purpose of the statute, or he
must evade or ignore the letter of the law.
Legislative details often multiply administrative
difficulties and tie the hands of the adminis-
trator in red tape. On the other hand, the
administrator in working out the details can at
first make flexible rules, increase their rigidity
by degrees, and meanwhile win over the inter-
ests to be regulated by tact and diplomacy, by
mixing "suasion with command." Such a
policy, for example, has been followed by the
Securities and Exchange Commission in the
regulation of the stock exchanges.
Fifth, although the administrator should not
become a slave to precedent, if he is "suffi-
ciently detached from the strife of interest and
imbued with a sense of professionalism," he
will develop "objective responsibility" 11 to
precedent, to expert opinion, and to professional
ethics. In a matter like quarantine, he is
limited also by the techniques of his science.
These "inherent checks which in professional
organs evolve principle out of constantly re-
curring action" enable th'e permanent official
to "substitute principle for discretion", whether
he is evolving regulations or making case-to-case
decisions. Specifically, under a proper person-
nel system, an administrative agency is better
able than Congress to utilize technical infor-
mation and guidance, both in matters of sub-
stance and in matters of form and technique.
This is no reflection upon Congress, for its
proper role is not to deal with such matters but
to translate into law the objectives of public
opinion which its administrative agents are
then to effectuate in action. It is only when
Congress invades the administrative field that
the special disadvantages of statutory prescrip-
tions as compared with executive determina-
tions apply.
Executive Regulations and the Rule of Law 12
By the rule of law is here meant the system
whereby governmental action in the individual
10 Ernst Freund, "SUbstitution of Rule for Discretion In Public Law,"
American Political Science Review, IX (November 1915), pp. 666-76.
Except where otherwise indicated, quotations in this section are from
Freund.
II Carl Friedrich. "Responsible Government Service Under the Ameri·
can Constitu tion," in Problems of the A merican Public Service (New York:
McGraw·Hill, 1935), pp. 37-38.
II Cf. generally Hart, The Ordingnce Making Power, of the Pre6idem,
Ch.IL
The Exercise oj
case is guided by uniform rules to which the
administrator may be required to conform by
appeal to a tribunal which is impartial in the
sense of being independent of the administrator.
The rule of law is frequently contrasted with
discretion; but this is misleading. The rule-
making power is itself discretionary; it involves
discretion as to a uniform rule. N or can dis-
cretion be eliminated from the application of
such a rule to particular cases. The effort
would be impracticable and, if it were attempted,
would stifle initiative by red tape.
The purpose of the rule of law is rather to
minimize arbitrary, discriminatory, or hit-or-
miss exercise of authority. If uniform rules
work hardships, there will be general criticism,
and the rules will be changed. Even if such
hardships endure for a while, they apply
equally to all, and hence seem less unjust than
discriminatory action.· The rule-making au-
thority thus has inherent checks that do not
operate in the exercise of power in individual
cases. It is there that arbitrariness creeps in,
personal spite finds expression, and favoritism
and discrimination are readily possible. For
these dangers there are only two safeguards:
First, the provision of uniform rules to guide,
canalize, and to some extent narrow down the
otherwise untrammeled discretion of the ad-
ministrator and, second, the provision of appeal
to an independent tribunal authorized to pro-
tect the individual against orders that do not
conform to those rules.
On the whole, then, discretion as to uniform
rules is less dangerous than discretion as to
individual cases and discretion as to individual
cases is less dangerous if guided by preexisting
rules than if untrammeled.
It is worth repeating that it does not follow
that such rules can or should so narrow discre-
tion in the issuance of particular orders as to
eliminate it. Human experience is notable for
the recurring emergence of new or even unique
situations; hence, there must always be room,
under proper safeguards, for flexibility and in-
dividualization, for the assumption of responsi-
bility for the exercise of sound judgment. To
be sure, a new situation may call merely for the
definition of a new class and the drafting of a
new rule suited to that class. As experience
develops, furthermore, cases that at first seemed
unique may begin to fall into some general
classes. But human experience is too varied
and variable to be reducible to formulas with-
out curtailment of progress. This is especially
true in an age of transition.
The appropriate degree of discretion in par-
ticular cases depends upon circumstances.
Thus, complete executive discretion is needed
for matters like pardons, where no known rules
are considered applicable and each case must
be judged on its own merits. Even in the ad-
ministration of rules, varying degrees of dis-
cretion must be permitted in particular cases.
Rule-Making Power
Especially in the early stages of regulation, it
may be necessary to proceed from case to case
under a very vague mandate, after the tra-
ditional manner of the common law courts.
Nevertheless, the rule of law has important
general bearing upon the rule-making power.
In the first place, it means that Congress should
make every effort to define a policy rather than
merely to dump a regulatory problem in the lap
of an administrative agency with no more
guidance than that it shall act in accordance
with public interest, convenience, or necessity.
This conclusion is not inconsistent with the
idea that Congress should state a general policy
rather than freeze a mass of specific details
into the statute. An example of what is meant
is found in the Wagner-Connery Labor Rela-
tions Act. In this act Congress did not merely
tell the Labor Relations Board it should decide
disputes concerning the rights of labor to col-
lective bargaining in accordance with the public
interest. It defined in general terms several
unfair labor practices and empowered the
Board to eradicate them. In so doing, it
steered a middle course between attempting to
anticipate every possible situation and express-
ing no policy except that in an empty formula.
This is sound legislative technique, quite aside
from the merits of the policy itself, for the rule
of law means first of all that the legislature
should seek to express the objectives which the
administrator is to seek.
This conclusion cannot be applied, however,
as a rigid formula. When the definition of the
functions of the Federal Trade Commission was
before Congress, one view was that the statute
should list a long series of unfair methods of
competition; while the other view, which
finally prevailed, was that Congress should not
define the term. Without assuming to pass
judgment on this issue as of 1914, it may be
admitted that when a new type of regulation
is undertaken, there may be general agreement
only on the necessity of tackling the problem
and not on its essential features, nor on any
very clearly defined objectives. It may seem
best to set up an agency to explore the problem
by trial and error methods. All that can be
said in such a case is that Congress should
first explore carefully the alternatives, and that
after some years of experience it should recon-
sider the whole problem.
There is still another difficulty. At some
crucial point it may be politically inexpedient
for Congress to define a clear-cut policy. Thus
when the Labor Relations Act was passed, a
split was emerging within the ranks of labor
itself on the issue of craft versus industrial
unions. Congress left to the Board the task of
selecting the appropriate bargaining unit in
each case as it arose. To do more would have
been impracticable at a time when the issue was
still an open one.
It is thus frankly admitted that the ideal
which has been set forth must yield to practical
325
circumstances, but this does not destroy its
value as a goal to be sought within the lImits
of practicality.
The same conclusion applies to the second
point at which the rule of law bears upon the
rule-making power. The rule of law suggests
that when Congress defines a general policy and
delegates discretionary power to execute this
policy, it should always at least consider grant-
ing such power in the form of authority to make
uniform rules and regulations which will make
its general policies more specific before they
are applied to individual cases. For in this
way the administrator generalizes his own
policies under the congressional mandate, and
the citizen has more specific guidance as to
what his obligations are.
Viewed in this light, the rule-making power
is not in conflict, but rather in conformity, with
the rule of law as applied to the actual problems
of present-day government. It is a means of
introducing the rule of law at the adminis-
trative level.
The extent to which the administrator can
concretize legislative abstractions in the form
of rules and regulations, which have the force
of law and bind him until they are modified,
must necessarily vary with the circumstances
of each type of regulation. Some problems in-
volve the constant recurrence of the same kind
of situation. Again, at many points in the law,
what is above all desired is a rule that is definite,
even though necessarily arbitrary, and which
thus furnishes a certain guide to businessmen.
This is especially the case where the rule may
readily be changed by an administrator if it
proves unsatisfactory. Abstract justice has
nothing to say about the rule of the road, but
public convenience requires that all drivers of
vehicles be habituated to driving on the right
side of the road, and be required to do so. Sim-
ilarly, it may be that the Federal Trade Com-
mission should establish a definite percentage of
wool (with a definite tolerance) as necessary to
keep the advertising of cloth as "all wool" from
being an unfair method of competition. If so,
it would be well for Congress to delegate the
power to issue regulations having the force and
effect of law in regard to such matters as could
be handled in this way.
On the other hand, full weight must be given
to the fact that a matter like rate making is of
a different order. It may be that Congress could
define the factors which constitute a reasonable
rate, and could delegate to the Interstate Com-
merce Commission power to render these factors
even more concrete, not only for its own guid-
ance but for that of the railroads. But in the
last analysis it is probably wise, and indeed
necessary, to leave much to the sound judgment
of the Commission in each case.
In any event, it is more important to guide
and to canalize discretion in the particular case
than to narrow it down. To leave the applica-
tion of rules to sound discretion is safer in the
 326
long run than to hem in the administrator by
a network of rules that reduce him to an un-
thinking automaton. What is desired is the
golden mean, and that varies with circum-
stances.
It is worth repeating, however, that the rule-
making power is in entire conformity with the
idea of the rule of law as applied to twentieth
century American government. That idea can
no longer mean the rule of detailed statutes.
It means rather, first, that Congress should
guide the administrator by as careful a defini-
tion of general policy as is possible, and, second
that the gap between congressional mandat~
and administrative orders in particular cases be
bridged, though by no means narrowed to mere
red tape, by the rule-making power. It is the
problem of Congress to decide in each case the
scope of rule-making and hence the scope within
which particular discretion may operate most
efficiently. This cannot be decided by any rule
of thumb.
One final consideration may conclude the
discussion of executive regulations and the rule
of law. If Congress gives an administrative
organ a mere empty formula for its mandate,
and then simply tells it to apply this formula
by the case-to-case method, the courts are apt
to interfere; for interpretation of this formula
is a question of law on which the courts have
the last word. The famous Gratz case 13 is an
example. But if Congress delegates to the
administrative organ the power to supplement
its policy by complementary rules and regula-
tions having the force and effect of law, then
the courts Will interfere only if the delegation is
unconstitutional or the rules and regulations
are ultra vires.
This is an especial reason why it is well for
Congress to consider extension of the rule-
making power into still other areas. It is not
in conformity with the rule of law, as properly
understood, to have the meaning of the law
uncertain until the courts finally interpret it
retroactively. Furthermore, judicial interfer-
ence with what is really an area of development
of new public policy is certainly undesirable.
~he courts are properly the guardians of private
rIghts and the protectors of the individual
against arbitrary administrative action; but
this means that they are not suited to the
dete~ination of public policy. Their primary
functIOn makes them tend to maintain the
status quo even where new standards of conduct
need to be evolved in the public interest.
~en they di.ctate publi? policy, they neces-
sarpy. do so m a ~egatlve, hampering way.
ThIS IS a burden WhICh should not be imposed
upon th~~,. if they are to be protected against
harsh CrItICIsm and prevented from hamstring-
ing the development of new social standards. I'
"FtdtTal Tradt Commluion v. Gratr, 253 U. S. 421, 427 (1920) .
.. Frederick F. Blachly and Miriam Oatman, Adminiotrative Ltquta.
~~~d Adjudication (Washington: Brookings Institution, 1934) , PP.
The Exercise oj
Interpretative Regulations as a
Means of Increasing the Certainty of the Law
r:t;he traditional technique of regulation in the
Umted States has been the enactment of a
statutory rule and enforcement of that rule by
the. co.ur~s. E~forcement was initiated by the
plamtIf! m. a prIv~te suit or by the Department
of JustICe IJ?- seekmg a criminal indictment.
.In the slIDple days of the agricultural era
thlS procedure worked well enough. The
statute was apt to be specific and the language
understandable by all. Even an abstract
s~and~rd got content from being related to
SItuatIOns that came within the ran~e of experi-
ence of the average citizen. In this It resembled
such a common law standard as reasonable care
which g~t its meaning from the customs of th~
?ommumty. Under these circumstances, the
JUry system was admirably adapted to the
function of holding a man to the generally
accepted s~andar4s of the time and place.
. In the m~ustrlal era, however, this tradi-
tIOnal techruqu.e has developed grave defects.
Statutory reqmrements relate more and more
f~equently to specialized relations that are out-
SIde the r~nge of the layman's experience; and
~uch. requrreme~ts are often necessarily stated
m highly technical language. A striking ex-
ample is the Securities Act of 1933.
No statute. ca~ be se~f-explanatory. The
!ram~rs word It With certam types of situation
l:J?- mmd. They cannot anticipate all varia-
tIOns from type, especially since new situations
are .constantly emerging from the kaleido-
SCOpIC. pattern of events that constitutes the
twentIeth century economy.
The process of statutory amendment is not
~dequll;te for clarification, for it is slow and
mtermlttent. Each occasion for amendment
moreover, opens the gates to competing pres~
sures. as well as to changes carefully devised in
~he ~ght of administrative experience. In the
m~erIID between amendments, uncertainty pre-
vails; and after an amendment is passed the
first question that arises is: What do~s it
mean? Does it cover this or that situation?
Nor is this uncertainty overcome by having
the courts years later decide retroactively what
th.e .statu~e mea~s as applied to private or ad-
~mlStratn'.e a~tIOn already taken. Judicial
mterpretatIOn IS as inadequate as statutory
am~nd:r:nent in telling those affected what therr
oblIgatIOns are.
. In suc~ cases! moreo:,"er, the jury system may
give a ~It-or-IDlSs applIcation of a legal rule-
one which may be not only discriminatory in its
net effect ~ut also productive of uncertainty.
What one JUry may do is no certain indication
of what the next will do, especially when the
legal standard relates to something about which
the j~r~rs kn~w very little.
ThIS IS no light matter. The public interest
may require regulation; but the businessman
needs to be able to discount the future. Cer-
-
Rule-Making Power
tainty in the law is essential to the conduct of
his business, for under a system of private enter-
prise uncertainty as to future governmental
action has a depressing or deflationary effect
upon trade. There thus emerges from the
technique of regulation this serious dilemma:
Governmental controls are necessary in the
public interest, but thoy slow down business
activity and thus hamper reemployment.
This seemed the heart of the reasonable com-
plaints about the Securities Act of 1933, as
originally enacted: The issuance of securities was
alleged to be hampered by uncertainty as to the
liabilities of those responsible for issuance. It
is the most frequent complaint about all new
regulatory statutes. Indeed, there is some
reason to believe that such statutes tend to
simmer down, especially when conservatives are
at the helm, to rather ineffective forms of con-
trol, for the simple reason that it seems
impracticable to hold business to standards
which it can learn only retroactively, after there
has been litigation.
This cannot be the final answer when control
is required by the public interest. What is
needed is a technique that will break through
the dilemma with a minimum of change in
traditional methods.
The original technique of regulation did not
require elaborate administrative machinery,
except for tax collection, for a service like the
postal system, and for a few other matters.
But as regulatory problems increased in number
and complexity, judicial enforcement proved
ineffective. The courts acted only when cases
were brought before them. The procedure of
the courts was slow. Juries did not produce
uniform application of statutory standards.
As a result, Congress began to create agencies
which would function continuously to enforce
its regulations. Even this, however, did not
solve the problem of uncertainty. An agency
directly charged with the administration of a
statute can issue rules and regulations having
the force of law only within the limits of specific
statutory delegation. Though it must neces-
sarily mterpret the statute in the process of
applying it, such interpretations do not have
the force of law. The courts give them great
weight as a form of administrative practice i 16
but they may find that as a matter of law the
interpretations are incorrect. The practical
effect is to create confusion and to keep the
interpretations from guaranteeing certainty to
businessmen.
What is needed is a satisfactory middle term
between legislation and final adjudication, both
of which are essential parts of the American
system. The problem of finding such a middle
term arose in connection with amendment of
the Securities Act of 1933. As a result, Con-
gress adopted a new technique which seemed so
sensible that it was later incorporated in the
"Cf. United States v. Hill, 120 U. s. 169 (1887).
327
amendments to the Securities Exchange Act of
1934. In this form it reads:
The Commission and the Board of Governors of the
Federal Reserve System shall each have power to make
such rules and regulations as may be necessary for the
execution of the functions vested in them by this title,
and may for such purpose classify issuers, securities,
exchanges, and other persons or matters within their
respective jurisdictions. No provision of this title
imposing any liability shall apply to any act done or
omitted in good faith in conformity with any rule or
regulation of the Commission or the Board of Governors
of the Federal Reserve System, notwithstanding that
such rule or regulation may, after such act or omission,
be amended or rescinded or be determined by judicial
or other authority to be invalid for any reason. 16
It is proposed that this technique be consid-
ered in connection with every similar regula-
tory statute. Such a statute might well provide
that the agency charged with its administration
may, upon its own initiative, or upon applica-
tion, issue interpretative regulations defining
and interpreting any and all the terms and
provisions of the act and their applicability to
any generally defined situation; and that no
provision of the act imposing any liability,
whether civil or criminal, shall apply, in the
absence of collusion, to any act done or omitted
in good faith in conformity with any such
interpretative regulation, notwithstanding that
such regulation may, after such act or omission,
be amended or rescinded or be determined by
judicial or other authority to be invalid for
any reason.
At first glance this may appear to be a st.art-
ling delegation of power. But several things
are to be remembered. 17 This is no blanket
delegation of power to make regulations having
the effect of law such as was contained in the
National Industrial Recovery Act. Congress
may legislate in as much detail as. it sees. fit,
and still the problem of uncertamty anses.
Furthermore, the proposal merely delegates the
power to do by general rulings what the agency
charged with the administration of the statute
must actually do every time it applies the act
to a particular case. "Of late", says Comer,
"the judiciary has come out with the definite
pronouncement that the authority to adminis-
ter an act gives the Executive the implied au-
thority to interpret it, since interpretation is
necessary to the performance of its ~uty of
administration." 18 General interpretatIons are
certainly as permissible as p~rticular interpre-
tations, especially when specifically authonzed
by statute. It may be added that .the COU!ts
look with more favor upon delegatIOns which
involve the privileges and immunities of citizens
than upon those which involve duties and
liabilities. .
The only novel feature of this new technique
is the formal authorization of general interpre-
tations merely upon application or upon the
II Public, No. 621, 74th Congo 2d sesS. .
11 See Walter Wheeler Cook, "Certainty In the Construction of the
Law", American Bar Association Journal, XXI (January 1935), p. 19.
11 Comer, op. cit., p. 140.
328 The Exercise oj Rule-:Making Power
agency's initiative-merel:y, that is, to give
certainty to one who is ill doubt about his
obligations under the statute-plus the statu-
tory guaranty of immunity from the statutory
liabilities for those who, in good faith, comply
with this official guidance.
The proposal does not oust the courts from
jurisdiction finally to interpret the statute. It
merely relieves a man from liability for having,
prior to the decision, followed in good faith a
mistaken interpretation of the administrator.
Indeed, in the absence of collusion, there would
be no criminal intent to violate the statute on
the part of one who, in good faith, conformed
to authorized interpretative regulations.
A similar reasoning applies to the proposed
immunity from civil liability for one who con-
forms to authorized interpretative regulations.
The plaintiff in a civil suit has a claim created
by the statute, and he is entitled to no more
than the statute gives him. Congress may
certainly make the right to damages, which it
grants him, subject to a qualification which is
so reasonable and is, indeed, only common-
sense justice to the defendant. 19
It is evident that this simple technique is in
entire accord with the American system of
government, and that at the same time it
furnishes the needed middle term between
legislation and adjudication. It enables the
businessman to secure advance information of
what his liabilities under the statute are, and,
more important, it guarantees that this advance
information can safely be relied upon. It is
submitted that if this new technique, which has
already proved satisfactory to the Securities
and Exchange Commission and those affected
by it, were made a regular feature of regulatory
statutes, it would help in resolving the dilemma
between reform and recovery.
" In his article Cook cites the case of La Bouroovne, 210 U. S. 95, 134
(1908).
 III. RULE-MAKING AND THE PRESIDENT
•
Location of the Rule-Making Power
From the fundamental relation of the rule-
making power to the legislative power of
Congress, one turns next to the relation of this
power to the Chief Executive. It is recom-
mended that, as a general practice, final
authority to issue rules and regulations should
be located in the responsible political head of
the appropriate department, who is appointed
and removable at pleasure by the President. It
is further recommended that, aside from this
political chief and such political assistants as
he may need, the personnel of ever:y rule-
makina- department be completely orgamzed on
a care:r service basis,! from a permanent Under
Secretary of the department down.
For both of these recommendations there are
very special reasons. A career s~ryi~e. system
is clearly the best means of mlmmlzmg the
dangers of abu~e and of estab.lishing the condi-
tions under whIch the potentIal advantages of
the rule-making power may best be realized.
A bureau composed wholly of permanent offi-
cials must faithfully carry out any policy im-
posed by the departmeI?-t head; otherwis~, it will
have a professional attItude toward polIcy. A
genuine career s~rvice will k~ep .the pe~manent
officials from losmg perspectIve m routme, and
from substituting t.raditional pr?cedure f<;lr. a
scientific approach m the executlOn. of pO~I?leS
determined by Congress and theIr pohtlCal
chief.
Before considering the policy of vesting final
authority in rule.-maki.ng in depart~en~ hea~s,
it is well to examme bnefly the constltutlOnalIty
of this arrangement. In the Rathbun case/
the Supreme Court held that the earlier Myers
decision,a which had claimed for the President
an illimitable power to remove at pleasure every
executive officer whom he appoints, applies
only to "purely executive" officers. The Court
declared that Congress may regulate the tenure
of officers in whom are vested quasi-legislative
and quasi-judicial powers.
It seems highly probable, however, that
unless Congress has positively interfered the
President may remove at pleasure every officer
that he appoints, except the judge of a con-
I See Better Government Per.onnel. Report of the Commission of In·
quiry on Public Service Personnel (New York: McGraw·HIII, 1935).
'296 U. S. 602 (1935). Rathbun, Executor, v. United States is the
docket title of this case. The title in 295 U. S. is Humphrey's Executor v.
United Stat ...
'272 U. S. 52 (1926).
stitutional court. Actuallv, there are many
statutes on the books which vest rule-making
powers in single officers concerning the Presi-
dent's power to remove whom there has never
been any question. It is clearly consti~u­
tional, therefore, to vest Federal rule-making
powers in sin~le officers who are subject ~o
presidential dIrection a~ to t~e manner. m
which they shall exerCIse thell' rule-making
discretion.
Since the choice thus lies with Congress,
what policy should it adopt? . It is o~t~n ?~ld
that rule-making powers are, hke quasI-JudiClal
powers, properly vested .in. a board or even in
an independent commlSSlOn. The analogy,
however, is extremely superficial. The r.easo~s
for vesting final control of rule-makmg m
a single political officer responsible directly
and completely to the ~resident are, o~ t~e
other hand, quite compellmg. Rule-making IS
properly to be considered the. discretion~ry
choice of general means of rendenng the polIcy
of a statute more specific. The courts will not
go behind the exercise of discretion ,unless it
results in ultra vires rules and regulatlOns. In
a sense it is true, the rule-making officer is
an aa-en't of Cona-ress. But so, in a sense, are
all officers
b
whomb Congress ?rea tes and'm wh o.m
it vests statutory executrye powers as ~lS­
tinO"uished from the constItutlOnal executIve
po~ers of the President. They are all ~harged
by 9~ngres.s wit? duties connected WIth the
admmlstratlOn of ItS laws.
If, by calling any or all such officers agents of
Congress, it is meant thll;t Congress may super-
vise them or even that It should remove them
from the ~dministrative control of the President
as the head of the Executive Branch of the
Government, that is a horse of a differen~ ?olor.
If this view prevails, then Federal ~d~lStra­
tion is tending toward an approXlmatIon <?f
that of the States. The original. State cons~l­
tutions were generally charactenzed by, legls-
lative supremacy. They were later reVlsed to
conform more faithfully to the separation of
powers,4 but even then State constit:ations, by
comparison with the Fed~ral, embodied a r~la­
tive supremacy of the legIslature and a relative
weakness of the governor. The fra~ers of the
Federal Constitution deliberately reJected the
• See citations In James Hart, Tenure o[ Oflice under the Co,!stitution;
a study in Law and Public Policy (Baltimore: The Johns Hopkms Press,
1930), pp. 284-86, n. 26a.
329
330
idea of a plural executive, and meant to create
in the Presidency a single executiye.
For long there was thus a striking contrast
between the administrative position of the
President and that of the State governor. 5 The
latter was merely the chief executive, and chief
in a political rather than an administrative
sense. The Federal Constitution, on the con-
trary, vested "the executive power" in the
President. The President could remove all
department heads, whereas the governor was
only one of the elective executive officers of the
State, and the legislature could create inde-
pendent boards and commissions.
The twentieth-century movement for State
administrative reorganization has had as a
major purpose to make the governor adminis-
tratively stronger. It has sought more nearly
to approach the Federal analogy. Indeed,
under the vigorous executive leadership of the
then Governor Byrd, Virginia went so far as
to amend her constitution so as to elect only the
Governor, the lieutenant governor, and the
attorney general.
During this same period, however, Congress
began creating independent Federal commis-
sions. The current danger is that government
by commission, together with the Rathbun
decision, will reduce the President to merely one
member of the Federal executive department,
at the very time that the States, under the
leadership of strong governors, are in the process
of remaking their governments along the lines
of the original conception of the Federal framers.
That conception is well stated in the famous
Fe<kralist papers, written by Hamilton, Madi-
son, and Jay to convince the people of New
York that the State convention should ratify
the proposed Constitution of the United States.
In these papers "energy in the Executive" is
called "a leading characteristic of good govern-
ment." And what is the "first" of "the ingredi-
ents which constitute energy"? Nothing else
than "unity." And one of the others is "com-
petent powers." The Federalist, furthermore,
speaks of "a due responsibility" as one of "the
ingredients which constitute safety in the re-
publican sense", adding significantly that "one
of the weightiest objections to a plurality in the
Executive . . . is that it tends to conceal faults
and destroy responsibility." 6
In a democracy it is an anomaly to devolve
powers even of subordinate policy determina-
tion upon officers who are not politically re-
sponsible. If there were objective criteria of
science to which they could be responsible, the
conclusion might be different. The fact that
this is the case only to a very limited degree is
why official discretion exists. The scientific ap-
proach can best have its due influence, without
loss of political responsibility, through the de-
• This contrast was noted by Alexis de TocqueviJIe in his Democracu in
America. See 00. V, section on "The Executive Power of the State," and
ch. VIII, section on "In What Respects the Federal Constitution Is
Superior to That of the States."
• FederaUst, Nos. LXX and LXXI.
~he IVxercise OJ{
velopment of a career service system as a base
for final political decision to rest upon.
The principal argument for rule-making by a
board is that "in a multitude of counselors there
is wisdom." But the department head does not
get in a room by himself and come out to pro-
mulgate regulations. He does not write them at
all, but merely puts the final stamp of his ap-
proval upon them. He gives general directions
about the policies they shall embody, or indi-
cates how they must be changed before being
approved by him. In the bureau where the
rules are framed, they pass through a number of
hands; and if the prenatal safeguards listed
below are applied, there is an abundance of
counseL
This being so, the reason for a board is re-
moved. And the board form of organization has
serious disadvantages: It is a screen behind
which responsibility can be hidden; it is a
ready-made technique for buck-passing. The
President cannot hold a board responsible as
easily as one man. It is important to have a
one-man responsibility to the President, if the
founding fathers' conception of a single Execu-
tive is to be preserved.
The public still applies that original concep-
tion. It regards the President as politically
responsible for all that goes on in his adminis-
tration, If his is the final responsibility, an
elementary principle of public administration
demands that his also should be the final choice
of administrative policy. "His only real con-
trol", said Woodrow 'Vilson, "is of the persons
to whom he deputes the performance of execu-
tive duties." 7
This conclusion is strengthened by the fact
that the President bears a unique responsibility
to the country as a whole, In an age when
pressure politics is of the essence, he is naturally
not unaffected by it. But he is the only officer 8
whose constituency is the whole Nation, and he
is thus relatively better able to take something
like a national view of affairs. The Presidential
election is the periodic check in which the Presi-
dent is made the focal point for the majority
expression of approval or disapproval of the
way things are going in general.
The President also bears, in unique degree,
responsibility in a more personal sense of the
term. The character of the office tends to bring
out the best in a man. National publicity beats
upon the White House with the intensity of a
great searchlight.
All these factors suggest the importance, for
making administrative rule makers responsible,
of bringing them effectively under the control
and hence under the unique responsibility of the
President. 9 To exercise this control in an
effective manner, he needs adequate means of
I Woodrow Wilson, Co1lotituliOMi Government In tM United Staleo
(New York: Columbia University Press, l00~), pp. 66-tii. See generally
ch. III.
• Except, of course, the Vice President.
• Cf. James Hart, "The President and Federal Administration," In
E ..au. on the Law and Practice of Governmental Admi1listration (Balti-
more: The Johns Hopkins Press, 1935), pp. 17-93.
Rule-Making Power
over-all management at his disposal. But that
is the second step. The first is to insure his
legal power of control. Hence it is in order to
examine, in broad outline, the legal scope of the
President's power of direction.
The Legal Scope of the President's Power of
Direction 10
The President derives his authority for direc-
tion from three sources: First, his constitutional
powers, such as his power as Commander in
Chief; second, powers delegated to him by
Congress, as by the Economy Act and the
flexible tariff clause; third, the general power of
direction which he derives from his relation of
administrative superior to heads of departments,
a relation which is logically implied in his power
to remove them at pleasure.
The President derives powers of direction or
over-all management from each of these three
sources. Thus Congress must place the prin-
cipal officer of the Departments of State, of
War, and of the Navy under the full direction
of the President. In creating these offices all
it can do is to place at his disposal agents
through whom he may exercise his powers as
conductor of foreign relations and Commander
in Chief of the Army and Navy. In these
three cases he has a constitutional power of
direction. ll
Again, some of the rule-making and other
discretionary powers which Congress delegates
to the President involve the direction of his
subordinates. These are thus statutory powers
of direction. An example is the Pendleton
Act of 1883 in which Congress authorized the
President to issue rules of personnel adminis-
tration known as the civil service rules. Very
recent examples are Executive Orders Nos.
7409 and 7410/ 2 by which the President estab-
lished uniform regulations governing annual
and sick leave. These orders were issued under
Public Acts Nos. 471 and 472, Seventy-fourth
Congress.
What Congress gives, Congress may take
away .. So for present purposes the third source
of the President's power of direction deserves
special attention. This power may be called
his general power of direction, to distinguish
it from his constitutional and statutory powers
of direction.
This general power supplies the President,
without need for statutory authorization, with
a. reservoir of power for over-all management
which he has used from time to time, but the
vast resources of which he has scarcely tapped.
It enables him to control his subordinates in the
exercise of their sta.tutory discretion, as well
as in the p0!itical. aspects of t~eir resp~ctive
jobs. It denves SImply from his admInIstra-
tive relation to these subordinates as an inci-
dent of the relation of administrative superior
to administrative inferior. This relation, in
10 See Hart in Virginia Law Retliew, XIII, p. 86.
II cr. James Hart, Tenure of Office under the Con..titution, ch. VII.
12 See 1 F. R. 8981I.
331
turn, is a corollary of the President's position as
"The" Executive, taken together with his
constitutional duty to take care that the laws
he faithfully executed and his constitutional
powers of appointment and removal at pleasure.
The general power of direction is thus purely
an administrative power. It is a constitutional
power in the sense that it is a byproduct of an
administrative relation which follows from the
constitutional position of the President, as well
as in the sense that Congress may not disturb
this relation in the case of any officer that the
President appoints and that the courts class as
a "purely executive" officer. But it is not
confined to the limits of any specific range of
power. Rather, it is as broad as the range of
the subordinate's discretion. This includes
all choices incidental to the subordinate's job.
It includes especially all choices involved in the
exercise of the subordinate's legal discretion.
The range of such legal discretion is completely
defined in the statutes. Hence, the general
power of direction is dependent upon the
statutes; for insofar as Congress goes into
detail, and thus reduces the functions of
executive officers to clerical or ministerial
functions, to that extent they have no choices
for the President to controlP Even so, however,
the general power of direction covers the whole
range of the subordinates' discretionary choices
-administrative, regulatory, political. For
when Congress vests discretion in them, it
necessarily does so on the condition that the
President is in a position to instruct them as
to how this discretion shall be exercised. 14 He
may, of course, do this in conversation, by
letter, or by Executive order. He may also
do it either by directing a particular act or
by an administrative regulation that prescribes
a course of future action.
A classical example of prescription of a course
of action is the famous Executive Order No.9,
issued by President Grant on January 17,1873.
This order provided that, after March 4 next,
persons holding Federal offices would, with
specified exceptions, be expected not to accept
or continue to hold State, Territorial, or munic-
ipal offices at the same time. Action contrary
to this order would be deemed a resignation of
the Federal office; and the heads of departments
and other appointing officers of the Federal
Government were required to apply this order
within the sphere of their respective depart-
ments or offices and as related to the several
persons holding appointments under them.
Such an order has full force and effect, not
only during the administration of the issuing
President, but until modified or rescinded by a
later Executive order of that President or one
of his successors. Thus the Grant order is still
in effect, as amended several times, notably by
No. 4439, of May 8, 1926, issued by President
Coolidge to aid prohibition enforcement.
11 KendaU v. United Statrs, 12 Pet. 524 (1838).
.. Cr. llart, The Ordinance 1.faking Powe" of the Pre.ident, Ch. VIII.
332
The Grant order cited no specific constitu-
tional or st.atutory authority for its issuance.
Its authority was t.he general power of direc-
tion. Conceived as a purely administrat.ive
direct.ion, such an Execut.ive order probably
does not. have t.he force of law before t.he courts.
The only ones bound are t.hose to whom t.he
directions are addressed and t.hose who, in t.urn,
are under t.heir direction. An appointment in
violation of Executive Order No.9 might not
in law be invalidated by that fact. The court
might merely look to see whether the appoint-
ment had been made in conformity with a valid
statute. Furthermore, such directed action is
valid in law only so long as it is within the
limits of the discretion vested in the department
head by the statute and not in conflict with any
relevant statutory law. The subordinate's
first duty is to the law, and if he obeyed the
President in violation of the law, his action
would doubtless be held illegal by the courts in
a proper case.
These qualifications, however, leave the gen-
eral power of direction as a most important
basis for over-all management, and the Execu-
tive order as an important form of such man-
agement. It is by virtue of this power that
the President gave the direction for the clear-
ance of bills a.nd testimony before congressional
committees which is contained in Budget Cir-
cular No. 336, and issued Executive Order No.
7298 on the form, preparation, and clearance of
Executive orders and proclamations.
For the exercise of this power the President
does not need the power to appoint or remove
permanent officials under the civil service, in-
cluding permanent Under Secretaries of the
several departments, if such offices were created.
Their functions are so defined that they are
subject to the direction of their political supe-
riors in matters of discretion. The extension
of the merit system into the higher ranges of
the Federal service is conditioned upon accept-
ance of the idea that the permanent officials
will, in good faith, carry out the policies of
their political superiors, regardless of what
party is in power.
Under the recent Rathbun case, Congress may,
in effect, curtail the President's power of direc-
tion with respect to officers whose primary
functions are quasi-legislative as well as qUasl-
judici~l. But this power presumably remains
unless Congress explicitly limits the President's
power to remove such officers at pleasureY
It also seems logical that Congress may not
withdraw "purcly executive" powers from
Presidential control by placing them along with
quasi-judicial and quasi-legislative powers in
" Presumably the President may, in the absence of statutory restric·
tion, stl!1 re!D0ve at pleasure all otfi~rs whom he appoints except judges
of constitutIOnal courts. In such CIrcumstances the power of direction
certainlr remains to control discretionary rule-making. In the MUtr,
cast ChIef Justice Taft said tbe President "cannot in a particular case
proper!y control" 8 Quasi-judicial decision. He thought, however, tbet
"even In such a case he may consider the decision after its rendition as 8
reason for removing the otficer, on the ground that the discretion regularly
entrusted to that otficer by statute has not been on the whole intelligently
or wisely exercised."
~he ~xercise oJ'
the hands of officers not removable at pleasure
by the President. Furthermore, although the
r~e-n:a~ing P?wer is presumably quasi-legisla-
tIve, It IS unlikely that Congress will fail to
recognize that, unlike quasi-judicial functions,
it involves discretionary action which should
ordinarily, as a matter of policy, be subsumed
under Presidential control. It would require a
considerable overhauling of the Federal code to
vest the rule-making powers now vested in
executive officers in independent commissions
or in departmental boards. Fortunately, no
such overhauling is contemplated.
The Rule-Making Power
and Government by Commission
Special reference needs to be made to the
bearing of the conclusions reached above as
to rule-making upon the twentieth century
phenomenon of Federal Government by com-
mission. The Federal Trade Commission has
no rule-making power; but it does have policy-
forming powers as a byproduct of the exercise
of its power to issue cease-and-desist orders.
The question thus arises whether Congress
should authorize the Commission to issue
regulations concretizing the legislative abstrac-
tion "unfair methods of competition" prior to
the application of this abstraction to particular
situations. Or should Congress in any event
authorize the Commission to codify the policies
inplicit in its cease-and-desist orders in the form
of regulations to be issued periodically or as
ca~es develop these policies? The Securities
anq. Exchange Commission, by way of contrast,
has as one of its principal functions the power
to issue rules and regulations to carry out the
general policy of Congress. But whichever
commission is taken, it is evident that the future
role of the rule-making power is in no small
degree tied up with the problem of government
by commission. Even when policies are deter-
mined otherwise than by rule-making, the
question necessarily arises whether they ought
not to be so determined, at least in part.
This problem raises two principal questions.
In the first place, is it not desirable that the
rule-making power should penetrate further
into those areas of policy determination which
are now _preempted by a commission like the
Federal Trade Commission? This Commission
operates not by rule-making but solely by a
quasi-judicial procedure which applies a legis-
lative abstraction in the issuance of cease-and-
desist orders.16 It is one thing to allow suffi-
cient discretion in individual cases to make
possible the adaptation of general rules to the
peculiar facts of each case. It is quite another
to have no general rules, other than empty
statutory formulas, to guide partiCUlar adjudi-
cations. Where this is the case, the courts
interfere with the development of public policy.
"Cf. Milton Handler, "Unfair Competition," in Iowa Law Journal,
XXI (January 1936), p. 175.
Rule-Making Power
The second question raised by the problem
of government by commission in relation to
P?licy f?rmatio!l, and hence ~irectly or in-
dIrectly In relatIOn to rule-makmg is the rela-
tion of the policy-determining pow~rs of such a
commission to the President's economic pro-
gram. The question is fundaments,lly the
sam~ :vhether the com~ission determines policy
explICitly by rule-makmg or incidentally by
administrative adj udication.
. The conclusion reached above was that the
rule-making power should ordinarily be dele-
g.ated to single officers who are directly respon-
SIble to t.he President. But it is often urged
that the mdependence of the commission pro-
duces decisions which are both expert and
impartial.
The use of experts in government is one of
the hopeful signs of the times. But science is .
no ~agic of pulling "correct" answers, like
!abblts, out. of a s~k hat. Legislative criteria
Involve varIables like "just and reasonable"
rates and "Ul~fai~ methods of competition."
From the applIcatIOn of such standards discre-
tion .canno~ .be eliminated. Expert opinion
remams OpInIOn. Under such circumstances
furthermore, impartiality is but another nam~
for the economic bias of the commissioners. A
~resident may. appoin~ to regulatory commis-
SIOns conse~va~Ively m~nded !llen who lose sight
of the p~lbl~c. m~erest I~ ~heIT perfectly sincere
zeal for mdICIalimpartialIty. If such appoint-
~es constitute a tribun~l at once impersonal and
I~dependent, the PreSIdent will not be respon-
SIble for the consequences of the exercise of his
appointing power. If the number of these tri-
bu~als is. multiplied, numerous areas of public
polIcy Will have been turned over to various
impersonal groups of men who are responsible
sol~ly .t? the ~egu~ar courts. The very object
of JudICIal reVIew IS to safeguard private inter-
ests rat~er. than to develop new social values in
the PUb!IC mterest. Thes~ areas of policy, more-
over, will be dealt With pIecemeal and without
coordination, by a number of u~elated com-
missions. If each of these commissions deals
only with situatio?s as they arise, it may not
see tp.e wood~ of Its own policy for the trees.
~he mterrelatIOns of public policy, both in par-
tIcular fields and along the whole economic
front, J?ay ~e obs~ured. .A general plan of
economIC. policy. will certamly be impossible.
The PreSIdent will be unable to carry- into effect
the program on the basis of which he was
elected by the people. 17
Some persons fayo! commission independence
to ~rotect commISSIOns from a conservative
PreSIdent. Independence, however makes it
impossible for a vigorous liberal P~esident to
use these commissions in ~he strengthening of
needed controls over busmess. An adminis-
trati.v~ trib~nal is not. ~n effective agency for
admInIstrative superViSIOn. The few excep-
IT Hart, "The President and Federal Administration," pp. 47-93 ..
333
tions .p~ove the rule. It J?ay .accomplish more
than If It were under the directIOn of a reaction-
ary President, but it will certainly accomplish
far less than a President who comes into office
with a mandate for reform. And it must be
remembered that permanent advances are nor-
mally made under the latter sort of President.
It is inherent in political life that when the
pendulum of politics swings from liberalism to
conservatism, controls in the public interest
slow down, and the "permanent proaressives"
must bide their time. It is better toOhave full
power commensurate with his responsibility in
the hands of a reform President than to have a
permanently "independent" but ineffective con-
trol of business. It is vital that the President
who leads a reform movement have a free hand
to meet squarely the organized opposition of
business and thus to establish the controls
which business later may accept or even wel-
?ome. In no o.ther way can the predominant
mfluence of busmess be prevented from making
reform impossible.
It is quite possible to effect the necessary
changes in the organization of commissions
with?l!-t e.s~ablishin~ political control over their
quaSI-JudICial functIOns. Indeed, there is now
a latent ambiguity in the very purposes for
which our regulatory commissions have been
set up. This becomes apparent as soon as it is
realized that discretionary choice is involved in
their functions. An administrative tribunal is
at once a regulatory and a judicial organ. Its
raison d' eire is to protect a public interest by
initiating control of special groups, but its pro-
cedure involves a judicial hearing. It is both
prosecutor and judge, and one of these functions
must be subordmated to the other. If the judi-
cial function predominates, the commission will
not .be e~ective in deve~opi~g and enforcing
publIc polIcy. The solutIOn IS not to subordi-
nate the judicial function, but to separate these
incompatible fUnctions and to place the rule-
making aspects under Presidential control.
Even before this is done, it is a question
whether the President could bring these inde-
pendent commissions within the scope of his
power of direction in matters of governmental
housekeeping, as distinguished from their quasi-
judicial and quasi-legislative functions. Clearly,
as general manager of governmental business,
he should be able to do so, quite irrespective of
the larger issues discussed above.
N ow if the first sentence of article II of the
Constitution be interpreted as a grant of "the
executive power" to the President, and if house-
keeping (as distinguished from functional)
supervision be conceived as an inherent part
of "the executive power", then it follows that
the President cannot be deprived of this phase
of the power of direction even as regards inde-
pendent commissions.
The question of sanctions remains, however,
for cases where the authority of the President
is disputed. Could he remove an independent
334 The Exercise oj Rule-Making Power
cOmmlSSJOner for violation of his strictly ad-
ministrative regulations? Congress has given
him control over budget recommendations for
commission expenses. Should it not make dis-
obedience of his housekeeping directions a
proper cause of removal? Or should it not
give him as a sanction the discretionary alloca-
tion of funds for administrative expenses?
That Congress should do one or both of these
things is indicated by the fact that the interpre-
tation of article II mentioned in the preceding
paragraph is so dubious that it was not made
the basis of the earlier explanation of the
President's general power of direction. This
being so, a statutory power of direction is the
surest way to insure Presidential control over
the housekeeping or institutional aspects of
government by commission.
 IV. SAFEGUARDING THE PUBLIC
•
Purposes of Presidential Rule-Making
under the General Power of Direction
To vest discretion in departmental heads 1 is
to place it under the President's general power
of direction. This power enables him (1) to
control his subordinates' discretionary choices
in such particular cases as come to his atten-
tion, and (2) to employ the rule-making tech-
nique to give them general directions for the
exercise of their discretion and for the sub-
mission to him of the crucial choices. The
first of these powers, however, cannot be
effectively exercised in practice unless the Presi-
dent uses the second to systematize the pre-
sentation to him of those questions of policy
in which he desires to make the final choices.
The central problem thus becomes the purposes
for which and the manner in which the Presi-
dent shall use this rule-making technique in
the exercise of his general power of direction.
In the remainder of this study five such pur-
poses will be considered: 2 (1) Regularization
of the rule-making process at the departmental
level; (2) extension and improvement of the use
of several prenatal procedural safeguards de-
signed to provide group consultation in connec-
tion with rule-making; (3) insurance of ade-
quate postnatal publicity for departmental rules
and regulations; (4) coordination of Federal rule-
making, so as to prevent or iron out conflicts
and keep regulations in line with the policies
of the President; and (5) prescription by the
President of uniform regulations governing the
service or institutional activities of the various
departments and agencies of Federal adminis-
tration.
Executive, Legislative,
and Judicial Safeguards
These five purposes will now be examined in
the order in which they have been list.ed. The
first three constitute three aspects of the more
general purpose of safeguarding the public in
1 The Constitution and the statutes vest certain discretionary powers
directly in the President. But these are either exercised in his name
by the appropriate department heads, or else the President signs or
refuses to sign documents prepared (or him by these same department
heads or by subordinates under their general direction. The only
important exception is where the President takes the advice of, or signs
documents prepared by, Informal advisers or stall (as distinguished
from line) officers. It is for this reason that this study does not dis-
tinguish more sharply between the regulations of the President and
those of his subordinates.
, Other related purpO!!es, such, (or example, as regularization and safe-
guarding of the quasi'Judicial functions exercised within the depart·
ments, are outside the scope of this study.
relation to the rule-making power. But since
Congress and the courts also act in this capac-
ity, executive, legislative, and judicial safe-
guards may conveniently be considered together
in this part of this study.
Haphazard Features in the
Exercise of the Rule-Making Power
Some background of the problem of safe-
guards must first be given. The dangers against
which the public needs to be safeguarded will be
indicated under the two captions of "haphazard
features" and "possible abuses." 3
Since the rule-making power, like Topsy, just
grew, it was at first delegated and exercised in a
rather haphazard manner. Usually there was
no regularized procedure for the flow of rules and
regulations in the course of their preparation
and issuance. Preparation was often careless,
without due regard to form and legality. The
proper roles of the expert and of the draftsman
were not thought out. There was no system
for giving a short title, for indicating in each
regulation the statutory authority under which
it was issued, for the careful definition of terms,
or for the consistent use of terms as words of
art. There was usually no uniform or con-
sistent nomenclature as between different
agencies, or even within the same agency.
Titles did not correspond with content. Num-
bering might be haphazard. In the case of
Executive orders, the use of fractional number-
ing made it impossible to tell whether impor-
tant orders had been missed. Sometimes
.regulations or amendments thereto were stuck
in a drawer or file and never published. 4 There
was no one central place where the official or
citizen could turn to find all Federal rules and
regulations which affected the public. There
was no coordination of the rules and regulations
of a multiplicity of Federal agencies. Current
tables and indexes showing the effect of later
upon earlier rules and regulations, of later
statutes upon earlier rules and regulations, and
of rules and regulations upon the authorizing
statutes, were lacking. Periodic codification
was often neglected.
The results were unfortunate. It was diffi-
cult in many cases to determine the current
3 See the (01l0win2 section.
• See Hosrings before Subcommittee No. 11 of the Committee on the
Judiciary, House of Representatives. 74th Con g., 2d sass. (serial 16),
pp.18-1Q.
335
 336
status of the law, and often impossible, after
careful search, to be absolutely sure of it.
There was no satisfactory check to take care
that rules and regulations were not ultra vires.
These and similar criticisms were pointed out in
a notable article 6 by- John A. Fairlie as a result
of his experience m Washington during the
World War. Fairlie recognized that the war
emergency exaggerated these defects, but that
the problem was not a new one, even then.
On the whole, there has been improvement
in most of these respects in recent years. Ad-
ministrators have become more self-conscious
about the rule-making process, and this self-
consciousness was stimulated by the Supreme
Court's criticism in the famous hot-oil case. It
has been further stimulated by the establish-
ment of the Federal Register 6 and of the
. clearance of Executive orders and proclama-
tions under Executive Order No. 7298. It can
be further directed into useful channels bv
some of the safeguards mentioned below. • Government to realize the extent to which
There are two problems, however, connected
with the preparation of rules and regulations
which have not yet even been recognized.
Though the tendency has undoubtedly grown
to clear such documents through the office of
the solicitor of the issuing agency, the lawyers
to whom they go are not expert draftsmen.
They acquire, in time, a sort of empirical
expertness as a result of their experience with
drafting problems. But there is need to
recognize that drafting is a highly technical
art which a man does not possess merely
because he is a lawyer-even a first-rate lawyer.
Indeed, legal training is in some important
respects a handicap in the expression of a regu-
lation in clear, simple, and understandable
language.
The second problem arises from the fact that
the solicitor of an agency is apt to give his
superior the advice that he wants; for these
solicitors are not, as they formerly were, officers
of the Department of Justice. Legal officers
should he in a position to advise administra-
tors as to how to accomplish legally what they
need to accomplish for the effective prosecution
of their duties. But they should also be in a
position to say "No" when they ought clearly
to say "No." Unfortunately, the Department
of Justice regards itself as if it were a court
rather than counsel to all Federal agencies;
whereas agency solicitors, as counsel, are too
dependent. They let by, without any advice
or control from the Department of Justice,
things which that Department is later called
upon to defend in the courts. The task of
insuring the legality of rules and regulations
thus falls between two stools. This pr0blem
must be noted, though its solution involves
factors beyond the scope of this study.
I John A. Fairlie," Administrative Le~1slati~n," Michigan Law RtrJiew,
XVIII (January 1920), p. 181.
e Requlrement~ relating to tbe preparation of rules and regulations
which are filed witb tbe Divh.ion of the Federal Register appear in the
printed regulations of the administrative committee.
Jrhe irxercise 0./
Possible Abuses
. The rule-makin~ p~wer, like all power placed
m human hands, 18 hable to abuse. There is
no panacea for human frailty; but it is well to
point out the factors in the set-up that make
abuse possible and then to suggest safeguards
calculated at least to minimize it.7
In rule-making the principal danger is that
pressure politics will weaken the proposals
worked out by the experts. In a large depart-
ment, the bureau may be practically autono-
mous; and if the bureau officials are political
appointees, the rule-making power will be
exercised by politicians who bear no effective
public responsibility, and are, indeed, two de-
grees removed from direct responsibility to the
~eneral public. Or, if the department head
mterferes with the exercise of the power, that is
apt to be as a result of pressure politics.
It has been said that one has to be in the
pressure politics operates in administration, as
it is a matter of common knowledge that it
operates in legislation. Much of this pressure
is brought by individual Congressmen on be-
half of some constituent.
N or is the reason hard to see. To take a
relatively minor example cited by Pendleton
Herring, $100,000 was saved the trade by a
change in the regulations for stamping a certain
product. s When a special group does not get
what it wants in the Bureau, it goes upstairs
to the Assistant Secretary or the Secretary.
Powerful interests may even get the ear of a
President himself.
There is ordinarily nothing corrupt in all
this. It is simply that American society is now
composed of a complexus of economic groups,
that governmental action impinges upon the
interests of these groups, and that they express
their views and exert political pressure in their
own economic interest.
Nor is this a peculiar feature of administra-
tion or of rule-making. Pressure politics
operates upon both of the political branches of
the Government.
The results are a mixture of good and evil.
The larger problem of twentieth century Ameri-
can democracy is precisely how so to adjust
these special groups that they will work to-
gether for the common welfare without resort
to the methods of fascism.9 Meanwhile, pres-
sure politics must be taken as a fact, and safe-
guards must be devised to seek to get from it
better recognition of the public interest.
The dangers of pressure politics arise partic-
ularly from the fact that it tends to cause more
consideration to be given to the views and
interests of articulate, well-organized, and
T Cf. Report of CommUt" on Mini,te ..' Powe", pp. 51,54, 58.
I Pendleton Herring, Public Adminiltration and the Public Inttrut
(New York: McGraw·Hlll, 1936), p. 52.
, cr. the tbesis or John Dickinson, Hold Fa,tthe Middle War· an Out·
line of Economic Challengu and Alternatiou (Boston: Little; Brown,
Bnd Co., 1935), 238 pp.
Rule-Making Power
economically (and hence politically) powerful
groups than to the vague public interest, or
the interest of the weaker groups, or the
interest of such an unorganized category of
persons as consumers.
This problem does not apply to permanent
officials removed from the stress of politics so
much as to the politically responsible adminis-
trators who make the final decisions. Indeed,
were it not for political considerations, there
might be another danger which now seldom
develops. The officials concerned might lack a
"sense of what is politically expedient," 10 and
wreck worth-while reforms by the hasty adop-
tion of regulations that are too drastic.
This suggests another factor: Rule-making
may run into problems of compliance, because
the moral authority of rules and regulations is
not so high as that of statutory law.
Permanent officials are also apt to lose per-
spective in routine and to substitute traditional
procedure and inefficient red tape for creative
judgment, unless for the mere negative protec-
tion of their tenure there is substituted a modern
career service system 11 of personnel adminis-
tration.
Finally, unless special care is taken, the rule-
making power may be exercised without
sufficient publicity or prior public discussion.
Two Classes of Safeguards:
Prenatal and Postnatal 12
The safeguards to the exercise of the rule-
making power fall into two classes: prenatal
safeguards, or those which operate prior to the
formal issuance of rules and regulations; and
postnatal safeguards, or those which operate
after their formal issuance. It will be con-
venient to discuss the subject of safeguards in
terms of this distinction.
Safeguards that Depend
upon the Powers of Congress
Certain general safeguards depend upon the
powers of Congress. Some are prenatal; some
postnatal. All are extremely important; but
they are so familiar that it will suffice merely to
enumerate them.
Congress has the reserve power of impeach-
ment. Congress controls the purse. Congress
may formally request information. Con-
gress requires annual and other reports. Com-
mittees of Congress may call administrators to
testify at hearings. They may ask for depart-
mental reports on pending bills. They may
conduct elaborate and searching investigations
of administrative agencies and activities. Mem-
bers of Congress may air criticisms of the rule-
making power on the floor of the Senate or the
House. The statutes of Congress are the sole
10 In connection with the remainder of this section, see article by
Ernst Freund cited above.
11 See BeUfT Government Personnel.
12 These terms are borrowed from Mr. Cecil T. Carr. See his Dele·
ated Leoi.lation (Cambridge: University Press, 1921).
337
source of all powers to make rules and regula-
tions having the force and effect of law, except
to the limited extent that the President de-
rives such powers directly from the Constitu-
tion, as when he issues general amnesties by vir-
tue of his pardoning power .13 Congress may,
at any time, withdraw the powers it has dele-
gated, or supersede the rules and regulations
made thereunder by its own statutes, with a
two-thirds vote in both houses if such a measure
is vetoed by the President. Actually, this qual-
ification is not apt to be important. If such a
delegation or such a regulation is so unpopular
that a majority vote can be mustered in Con-
gress in opposition to it, the President is not
likely to exercise his veto power. Indeed, a
particular regulation will probably be modified
by administrative action long before opposition
reaches that stage.
In the great emergencies of the future, as in
those of the past, Congress will probably find
it necessary to make exceptionally broad dele-
gations of power to the President. In the
future also, as usually in the past, Congress
should provide for the automatic expiration of
the powers granted by emergency acts upon the
termination of the war, or, in peacetime emer-
gencies, after not more than 2 years.
All rule-making powers should be granted to
an appropriate authority, and in any event to
one that commands public confidence. 14 Thus,
emergency powers and powers that impinge
upon foreign relations, as well as powers of
administrative reorganization or of adminis-
trative management, should be granted directly
to the President. In case of emergency, how-
ever, practical necessity requires that the Presi-
dent be authorized to redelegate some of his
powers to his subordinates. In the case of
administrative management, Congress needs
to equip the President with adequate staff
assistance to prepare Executive orders for his
signature and to make routine decisions in his
name and under his general instructions, though
always subject to appeal to him by the heads of
line agencies. Indeed, since past legislation
has imposed upon the President himself purely
routine decisions, Congress should in general
terms empower him to devolve such decisions
upon staff officers under the safeguards just
mentioned.
Prenatal Safeguards:
Regularization of Rule-Making 15
The purposes for which the President should
use his general power of direction include in the
first place what may be called regularization of
the rule-making process. The broad purposes
of regularization are: To insure validity, to guard
against haphazard methods, to require con-
13 James Hart. The Ordinance Making Power. of the Pr .. ident, ch. IX.
u Carr, op. cit .• cb. IV. .
" This and other safeguards may be required by legislation. EmphaSIS
is for two reasons laid upon their imposition by Executive order of the
 338
sultation of technical authority, to improve
draftsmanship, and to reduce the maze of rules
and regulations to an understandable wh?le.
Accordingly, it is proposed that the. Presld~nt,
by Executive order, lay down certam requ~re­
ments for the organization and systematizatIOn
of the rule-making process at the departmental
level. He should require that each department
set up a regularized procedure for the flow <?f
rules and regulations in the course of theIr
preparation and issuance. He should not, of
course, prescribe rigid details, b~t should define
the principles to be observed m such depart-
mental procedure. One such principle is defi-
nite location in a single permanent officer of
responsibility for each major aspect of the
process. Thus, all rules and regulations should
be cleared through the office of the solicitor for
leO'ality, and through designated experts ~or
te~hnical justification, form, draftsmanshIp,
systematic numbering, unif~rm nom~nclature,
conformity with Federal RegIster reqUIre!nents,
and conformitv with the procedures reqUITed by
statute or by Executive order. . of his own formal action. This suggestion must
A second principle which the PreSIdent should
prescribe is that a final clearance officer shal.l be
responsible for seeing that rules an~ regulatIOns
have been initialed by the officer m charge of
each major feature of the rule-making process.
This final clearance officer should send the rules
and regulations to the Secreta,ry for .his sig?a-
ture and be responsible for ImmedIate filIng
with the Federal Register. He should .also be
responsible, where the pr?cedure sO.reqUIres, for
rou ting them to an offiCIal who ~il~ prepare a
press release to aid postnatal p,!bhcIty, an~ for
mailing copies, with return recClpt, to a mailmg
list furnished by the bureau concerned.
As the departments have .grown larger,
routing of this sort has necessarily been devel-
oped. An Executive order prepared on the
basis of best practice would go far toward
regularizing the process 'without in a?y way
dictating details. It should also reqUIre that
the same principles be applied at the depart-
mental level to all Executive orders and procla-
mations of the President that are initiated by
any department. .,
An equally importa,nt reqUIrement IS the em-
bodiment, in each statute that enacts a new
policy, of a carefully worded statement bot~ of
the general policy and of the acc.ompanYlI~g
rule-making power. The purpose, m short, 19
to have these laws approximate what was called
above the ideal relation between statutes and
regulations. To this end every such bill pro-
posed by a department should be required to be
cleared through the chief expert draftsman of
the department. The same r~le s~ould be
applied to every report on alending bill and to
departmental officials calle to testify before
President. In the first place, the latter is the more flexible m~thod;
even where Congress acts, it should usually leave details to the PreSIdent.
In the second place, the centra} purpose of ~his study is to de~onstrate
what In the absence of legislatIOn, the PreSIdent may accomphsh under
his general power of direction.
Jrhe lrxercise oj
congressional committees. In each case there
should be a memorandum for the use of the
committee, e).."}Jlaining why the delegation is
n(leded and the technical and legal reasons for
its wording.
At least two features of the above proposals
will be effective only if the President further
requires that each department secure or train
expert draftsmen.
Reference has already been made to the
desirability of having an Executive order which
requires that rules and regulations carry sub-
titles that indicate the character of their
content by the use of a uniform nomenclature.
The principal distinctions are e).."}Jressible by
some such terms as "rule", "regulation",
"interpretative regulation", and "administra-
tive regulation" as they were defined at the
beginning of this study. The President might
at least experiment with uniform nomenclature
by requiring such subtitles in all Executive
orders.
He should, at any rate, regularize the forms
not be misunderstood. There is no intention of
having the President reduce his directions to
written form unless the law requires it or he
sees fit. But at present confusion arises from
the fact that his written directions can be found
in several forms. In one case he will issue an
Executive order, in another a proclamation. In
still another he will write a letter to a department
head. In at least one famous case the President
"created" an agency by a press release. Some
land orders take the form of Executive orders,
some the form of proclamations, and some the
form of departmental orders. There is at least
one case where a land proclamation was modi-
fied by an Executive order. Sometimes also,
a departmental order is "approved" by the
President.
This lack of uniformity creates unnecessary
confusion. A simple solution is to reduce these
miscellaneous forms of Presidential action to
one. The President could give direction to his
subordina tes orally or over the telephone to
such extent as he desired. But when he gave
direction in documentary form, it would
always take the same form. Then anyone
could examine the instances of the use of that
form, and be sure, because of its all-inclusive-
ness, that he had not missed some pertinent
document that had happened to take another
form.
This ideal can easily be at least approximated
by consistent use of the Executive order. This
is so firmly established a form of Executive
action that it is not desirable to invent some
new title. Moreover, so varied are the types of
Presidential action that no other single name
could better describe them all. It would be
well to call all types of documentary Presiden-
tial action Executive orders and to distinguish
types by subtitles, as proposed above.
Ruk-Making Power
The next step is to define carefully the classes
of formal action requiring or properly taking the
form of Presidential proclamations. This defi-
nition should include only the types of action
required by statute to take this form, and those
which, because of their especial gravity, should
take the more dignified form. The second class
includes proclamations of warning (such as
against settlement on Indian lands), proclama-
tions relating to foreign affairs (such as neu-
trality, treaties, etc.), and perhaps a few other
sorts.
At the same time, wherever possible, proc-
lamations should take the form now taken by
proclamations of treaties: The verbatim text
of the treaty is embodied in the proclamation.
Where possible, all other proclamations should
proclaim the verbatim texts of Executive orders.
Then the Executive orders could be separately
published in their own series, as is now done with
treaties. This would reduce most documentary
Presidential action to the single form of the
Executive order. The exceptions would not
ordinarily contain rules and regulations.
The President should take three other im-
portant steps looking to regularization. He
should require, by Executive order, that
Executive orders, proclamations, and rules and
re~ulations shall never provide generally that all
pnor documents inconsistent therewith are
thereby repealed, but that each amendatory
document shall be an amendment of one or more
specified sections of prior documents, and shall
restate them fully as amended. 10 He should
require that all Executive orders, proclamations,
rules, and regulations which affect the public
shall be numbered according to a uniform
system. The Federal Register should publish
his numbering system periodically and in each
bound volume. Finally, the President should
require periodic codification by each agency of
its rules and regulations that are in force on a
given date.
Prenatal Procedural Safeguards: 17
Advisory CommiHees
The most dangerous way to treat pressure
politics is to adopt an ostrich attitude toward it.
The thing to do is rather to give frank recog-
nition of its existence; to expose it to the open
light of day; to use it as a valuable source of
information; and to shape it to beneficial ends.
Thus the administrator should give full op-
portunity for those who would be affected by
any proposed regulation to blow off steam. He
should seek, without ballyhoo, to effect a meet-
ing of minds of conflicting groups. In his con-
tacts he should try to "mix suasion with com-
mand", in order to minimize the ever-present
problem of compliance. He should make a
\I Cr. John A. Fairlie, Admini8lratiue Procedure In Connection with
Sta/moru Rule, and Ordera In Great Britain (Urbana, University of IlII·
nols. 1927), SO.
17 See generally Comer, op. cit., chs. VII and VIII, to which the present
writer Is indebted throughout this and the four subsequent sections.
153155--37-----23
339
deliberate effort to elicit the point of view of the
less powerful groups, notably the unorganized
consumers, and to give due weight to their inter-
ests, as a matter of far-sighted policy as well
as of justice.
Accordingly, a second purpose for which the
President should use his general power of direc-
tion is to foster and direct group consultation
in connection with the rule-making process.
This he should do by requiring the more ex-
tensive use, and at the same time by defining
more clearly the objectives and the forms, of at
least five prenatal procedural safeguards: (1)
Advisory committees; (2) notice and formal
hearings; (3) publication of draft regulations;
(4) informal conferences with groups affected;
and (5) progression from voluntary to manda-
tory standards. These five safeguards are
closely interrelated, but will be examined sepa-
rately for the purpose of emphasis.
The first is the advisory committee. This
institution has been used in Federal admin-
istration, but in a rather haphazard fashion, and
often without much thought as to its proper
role. Practice is not uniform, and an ex-
haustive catalog cannot be attempted. Ex-
amples may be found in John Preston Comer's
volume on Legislative Functions of National
Administrative Authorities (1927). Thus, some
years ago the Biological Survey created an
unofficial advisory board to offer criticism of
its regulations under the Migratory Bird Act.
The National Recovery Administration organ-
ized three famous advisory boards-the Indus-
trial, Labor, and Consumers' Advisory Boards.
The usefulness of an advisory committee to
an intelligent administrator is obvious, but
may be destroyed if its proper function is
misunderstood. One must agree with the
British Machinery of Government Committee,
which said in its 1918 Report: "The precise
form of organization most suitable to an
advisory body or bodies will always depend
in the main upon the nature of the business of
the department to which they are attached."
There is no rule of thumb as to when they are
to be used or the methods for organizing or
consulting them. Certain major points, how-
ever, are perfectly clear; and tJIe first is that
the function of an advisory committee is to
advise, and neither to share responsibility
with the official nor to organize pressure upon
him. The organization of pressure must be
left to pressure groups in their political capac-
ity and to the Opposition.
Advisory committees should be small, and
specialized rather than general. "They- should
have a majority chosen by l'eJ?resentatlve asso-
ciations affected, and a minonty chosen by the
[department head] . . . to represent the public
and special interests sufficiently though indi-
rectly concerned . . .. They should be con-
sulted on proposed bills, general administrative
policy, and on regulations . . . ,with power to
make suggestions. . .. But while they are to
340
advise about administration, they are not to
direct or control it; they arc not to prepare
policy; they cannot commit outside bodies;
they should never have access to information
about proposed purchases, nor in general be
consulted about negotiations with foreign
powers; and they should be confidential, though
decisions should be published if both the
[department head] . . . and the committee
think it desirable." 18
To these eminently sane views of Mr. Laski
may be added a conclusion, equally applicable
to the system in the United States, which the
Machinery of Government Committee ex-
pressed in the following language: "So long as
advisory bodies are not permitted to impair
the full responsibility of Ministers . . . , we
think that the more they are regarded as an
integral part of the normal organization of a
Department, the more will Ministers be enabled
to command the confidence of Parliament and
the public in their administration of the services
which seem likely in an increasing degree
to affect the lives of large sections of the
community."
Notice and Formal Hearings
A second prenatal procedural safeguard to
assure group consultation is notice and an
opportunity to appear at a public hearing and
express opinions concerning proposed regula-
tions. In the last two decades many statutes
have required that such a general hearing pre-
cede the issuance of regulations. Sometimes
also administrative authorities give nonmanda-
tory hearings or fuller hearings than the particu-
lar statute requires.
If the statute requires that rule-making be
preceded by a hearing, the failure to hold one
renders the act of issuing the rules or regulations
ultra vires, and the courts will refuse to enforce
them in a proper case. Otherwise, notice and
hearing are not a requirement of due process of
law in connection with the promulgation of gen-
eral rules and regulations. 19
It is possible here to give only a few examples
of formal hearings. 2o Thus, as originally drafted,
the Trade Agreements Act did not provide for
hearings; but Congress required them, and they
are now regarded as an essential part of the
technique. Under authority from Congress
the President set up the machinery for these
hearings by Executive Order No. 6750. They
are held by an interdepartmental committee
which was formerly headed by the late Dr.
Thomas Walker Page, of the Tariff Commis-
sion. Prior to each hearing the Department of
Commerce puts out a statement of products
that might be dealt with in the trade agree-
" John A. Fairlie, Admini&trative Procedure in Connection with Statutorv
Rulu and Orden in Great Britain. pp. 74-i5. summarizing Harold J.
Laski's views.
"Bimetallic In.atment Co. v. State Board of Equalization. 239 U. s. 441
(1910) .
.. For other examples, see Comer, 01'. cit. Several of the quotations of
this section and the next are from Comer.
The Exercise oj
ment with the given country, so that the vari-
ous interests have a pretty good idea whether
they are apt to be affected. Importers may
testify for reductions in the tariff, cxporters for
getting reductions from the other country, and
protected industries against lowering the duties
on various articles. There are rules governing
the hearings, but they are liberally construed.
The hearing is necessarily on the general sub-
ject, not on a draft, for the negotiation of the
trade agreement has to be secret. The inter-
departmental committee acts in a technical
advisory capacity to the negotiators, who are
other officials of the Government.
This example has been described at len~th
because it shows the usefulness of the heanng
in a field that involves both foreign relations
and a special form of rule-making. It is said
that these hearings tum up pertinent informa-
tion obtainable in no other way.
Hearings are also highly appropriate in the
"march of standardization" of commercial prod-
ucts. In connection with cotton and wheat
standards, they were held "in all important
cotton centers" and "at all the grain markets",
respectively. Marketing agreements, licenses,
and, now, orders of the Secretary of Agricul-
ture are always preceded by hearings.
The Securities and Exchange Commission
has the power to subpoena witnesses but has
not used this power in connection with rule-
making. This is wise, because the sort of
hearing that is under consideration is not for
the purpose of compelling testimony. 'Vhen
this is attempted, witnesses' lawyers "hold them
by the hand." Questions of relevancy of
testimony, waiver of constitutional rights,
etc., are always raised. The very purpose of
the hearing would be defeated. '''nat is
wanted in this connection is not an inquisitorial
hearing but one which elicits men's reactions
to proposed regulations and the information
which they can furnish the administrator.
The question at issue is whether to hold formal
hearings or to depend solely on informal
contacts.
Formal hearings on proposed regulations have
special advantages which closely parallel those
of congressional debates and committee hear-
ings. They give publicity to the rule-making
process. They give those affected a chance
to have their say in a public forum. They
give administrators a means of seeing that all
p.arties-in-interest are heard, by giving as much
tillle to consumer as to trade spokesmen, and
by carrying the hearings into different localities
in order to give a break to the little fellow.
They also may secure facts and points of view
not readily secured by any other means. They
build up a public record. They bring to public
attention the phenomenon of pressure politics,
and thus may have some educational value for
public opinion. In short, they keep rule-making
from being done in a comer.
Rule-Making Power
Officials seem to differ as to the desirability
of formal hearings. This difference may arise
in part from individual personality, in part
from the nature of the regulations, and in part
from the course which past practice happens to
have taken.
Certainly no rigid formula can be laid down
for all types of regulations. In plant quaran-
tine, which is especially concerned with the
spread of the Japanese beetle, investigation of
objective facts furnishes a basis for the regula-
tions. Nevertheless, a hearing is held to allow
the interests affected to "blow off steam." In
a matter like animal quarantine, rule-making is
not only "bound up closely with the technicali-
ties of science", but bargaining or delay might
endanger the life of man and animal. In such
cases, it may be best to issue the regulations
first and conduct an educational campaign
showing their necessity and their scientific
basis afterwards.
In economic regulations, time is less of the
essence, and opinion has a legitimate place,
because there is no genuinely objective answer.
Hence, hearings are especially appropriate ex-
cept in such a crisis as existed on March 4,1933.
Despite the desirability of formal hearings,
where appropriate, they are not to be viewed
as in any sense a substitute for the informal
contacts described below. It would, indE-ed,
be naive to expect by formal hearings to pre-
clude off-the-record pressures.
Publication of Draft Regulations
The publication of draft regulations consti-
tutes a third prenatal procedural safeguard.
In England, 40 days' notice of where draft
regulations may be obtained is normally pub-
lished in the London Gazette. 21 In the United
States there is no such gazette. The tentative
price lists of the Bituminous Coal Commission
were published in the Federal Register. Fur-
thermore, draft regulations are frequently sent
out to mailing lists, either preparatory to
formal hearings, or with the request for informal
criticism. The Securities and Exchange Com-
mission prefers the latter method. It practi-
cally always modifies its drafts as a result of
criticism. If a hearing is to be held, however,
a draft gives it a focal point, except that this
is not possible in trade agreements. Under
the United States Warehouse Act, 1916, the
procedure included: Preparation of tentative
drafts; notice of hearings; distribution of the
drafts to selected mailing lists; 10 or 15 prelim-
inary hearings "in the most convenient places,
for the trade concerned"; a resume at the
opening of each hearing of the one immediately
preceding; and the climax in a final hearing.
Comer quotes a statement made in 1922 by the
chairman of the Federal Horticultural Board
to refute a charge of importers that Quarantine
,. John A. Fairlie, Administralitlt Procedure in ConnectlOll wUIi Statutor,
Rule. and Orrkn in Grfal Britain, p. 23.
341
No. 37 had been hastily issued. 22 This state-
ment gives an excellent illustration of the
elaborate prenatal publicity which rule-making
sometimes involves. It also shows how draft
regulations may tie in with both formal hearings
and informal consultation.
Informal Contacts with Groups Affected
Whether or not they employ the three pre-
ceding techniques, most Federal regUlatory
agencies have informal contacts with the repre-
sentatives of groups that are affected by their
rule-making powers. In plant quarantine, for
instance, "conferences are looked upon as an
additional, though customary right which the
authorities must grant on demand over and
above the formal hearings required by law." 23
The Nurserymen's Association has a quaran-
tine committee which has had the same chair-
man for years, and he represents this organized
group before the Bureau. If a Congressman
goes to the Secretary with a complaint, the
Secretary asks the Bureau: "Have you the
scientific facts to back up this regUlation?"
It is possible in such a case to give a fairly
objective answer, and the Secretary would then
not normally be justified in ordering modifica-
tion.
In grain futures, the case is by no means so
clear. On two occasions the Secretary of Agri-
culture rescinded the reporting requirement at
the instance of traders. This was done on the
theory that the requirement kept buyers out
of the market. The Secretary acted despite
the fact that the responsible bureau chief told
him this theory was mistaken and that he
could not agree. But economic theory cannot
be tested under the microscope.
These informal contacts are injected into the
very process of rule-making. The Treasury
Regulation~ issued by the Commissioner of
Internal Revenue with the approval of the
Secretary of the Treasury may be taken as an
example. What usually happens is that the
Commissioner sets some lawyer to work drafting
the new regulations. Interested parties make
contact to learn the direction of this man's
thinking. The proposals are worked back and
forth. Finally, the Commissioner may be
satisfied. But if there is anything objection-
able in the regulations as thus drafted, those
interested rush to the Secretary, who will listen
to them and is apt to do something about it.
The Commissioner does not formally adopt the
regulations until the Secretary is ready to
approve. Presidential approval is not required;
but the people interested learn of what is
proposed, and the powerful ones are usually
able to make their representations to the
President. More especially in a conservative
administration, they are apt to get what they
want. Indeed, a Senate investigation turned
up evidence that in 1924 the framing of certain
.. Pp. 211;..16.
II Comer, op. cit., p. 215.
342
oil regulations brought to Washington "patri-
otic" experts from all parts of the country, and
that some of them, under the leadership of one
man, actually drafted the regulations. 24
What the remedy is, is the fundamental
problem of all who seek to make democracy
work satisfactorily in a changing environment
of ever-increasing complexity. But three things
are crystal clear. The first is that there is no
panacea. The second is that the remedy is
certainly not to insulate public officials from
contacts with the public. The third is that
informal contacts, if properly used, and directed
by certain generally accepted standards of
conduct, are capable of developing very decided
advantages.
Some of these advantages may be briefly
noted. Informal contacts offer a chance to
use tact and diplomacy, and thus to facilitate
compliance, as well as to win over those
affected to more stringent regulations than they
may at first have desired.
These contacts have a special advantage not
connected with prenatal safeguards. They
can be u~ed to get organized groups to aid in
reporting violations on the part of other groups
or on the part of those of their own group who
compete unfairly by violating the law and
regulations. They can be used to explain the
situation to violators whose infractions have
been the result of ignorance or thoughtlessness.
Thus in a matter like plant quarantine, only
deliberate violators are prosecuted. Other-
wise, the practice is to call the violator in and
give him an explanation and a warning.
Quite generally, indeed, in the enforcement
of regulations, it is customary to avoid resort
to the courts whenever possible. This is sound
practice, if it is not carried too far. Regula-
tions that affect large numbers of scattered
people can be enforced only if there is a large
measure of voluntary compliance, plus com-
pliance on the part of many more because of
the fear of prosecution. An occasional succes-
ful prosecution is necessary to keep this second
class in line.
Again, administrators report that sometimes
individuals in a trade that is affected by regu-
lations express in private conversation the
opinion that these regulations should be strin-
gent, but add that they would not so state openly
before their fellow traders. These opinions give
the rule-making authority a very helpful slant
on the problem which would not be brought
out in public hearings. Also, it has been said
that if a qualified person can get another to talk
long enou~h, he can get the truth out of him
without his knowing it. The application to
the matter in hand is obvious.
As a matter of human psycholo~, men feel
less "coerced" if they find those m authority
always accessible for complaints. Conversely,
from such complaints the administrator can
II Comer, 0fI. cu., pp. 2Ii8-59.
The Exercise oj
keep a~reast .of th~ l?roblems that emerge in
conJ?ectlOn WIth eXlstmg regulations.
.F~nally, informal contacts give a wise ad-
mIllls~rato.r the chance to persuade those with
opposmg mterests to get together in a room
with him and, off the record, to get down to
brass tacks. He can then confront the business-
man with the need for consumer protection
and perhaps can even produce as between em~
ployer and employee a working basis of com-
mon understanding.
Progression from
Voluntary to Mandatory Standards
In .1~15 the Bureau of 9hemistry set up
permISSIVe standards for rosm. In 1923 Con-
gress enacted the Naval Stores Act 25 which
provided for binding standards. B~t it re-
quired 3 months' notice and due hearing on
the draft standards before they might be pro-
mulgated, and then 3 months' delay before
they were to become effective. Comer calls
this "the best 'Yay of !lrriving at any ordinary
form of regulatIOn whICh does not call for im-
mediate action", pointing out that the Bureau
had "c!eated, in this case, a demand for legal
regulatIOns through a demonstration of their
value by means of previous voluntary experi-
ment."26
It is obvious that this method safeguards
compliance by demonstrating the value of the
stand~rd before it is permitted to become law.
ExperIence shows that the sudden clamping on
of controls meets resistance. Hence admin-
istrators should, whenever feasible, a~ticipate
compulsory controls by prior promotion of
vol~ntary accep~ance. B~t it is equally
ObVIOUS that thIS method IS not applicable
whe:r:e the p~blic ~~lfare or popular demand
req~es ~he Impo~ItIOn of cOJ?trols in a hurry.
It IS hIghly desITable to stlIDulate examina-
tion by administrators themselves of the whole
problem of prenatal safeguards, so as to furnish
a.n experienced basis for further experimenta-
tion, whether by administrative action or by
statutory requirement. Accordingly, it is sug-
gested, as a first step, that the President by
Executive order, direct each department to
make to him a report on present practice and
possible .extension of these five prenatal safe-
guards, m order that he may use his general
power of direction to promote the use of these
safeguards on a more extensive scale and for
more carefully planned ends.
Postnatal Safeguards: Judicial Review
It i~ not necessary to repeat here the judicial
r.emedies for .safeguarding the public which are
hsted and dIscussed by James Hart in The
Ordinance Making Powers oj the President
(1925).27 It is, however, important to ask
what questions the courts will consider in a
II 42 Stat. L. 1436 .
.. P. 232.
17 Chap. Xl.
Rule-Making Power
proper case. These questions relate to the
validity, first, of congressional delegations, and,
second, of regulations issued under valid dele-
gations.
Though the rule-making power is an estab-
lished institution, it may in some forms be
contrary to the constitutIOnal principle of the
separation of powers, the constitutional rule
against the· delegation of legislative power, or
the due process clause of the fifth amendment.
In fact, delegations were declared unconstitu-
tional for the first time in the recent cases of
Panama Refining Co. v. Ryan,28 Schechter v.
United Statell,29 and Carter v. Carter Coal 00. 30
As indicated in these three cases, the prereq-
uisites of a valid delegation seem to be that
Congress must itself have the power to regulate;
must define the subject to be regulated; must
declare a policy with respect to that subject
and set up a standard or criterion for executive
action; must require a finding, at least in con-
tingent legislation; and must delegate rule-
making powers to public officials and not to
private persons.
It is thus clear that the courts will enforce
two limitations upon delegations that are sig-
nificant public safeguards: They will require
Congress in one way or another to limit every
delegation, and they will not allow it to dele-
gate such power to private groups-as to a
majority to agree upon a regulation that will
bind a recalcitrant minority.
So long as the American system remains
what it is, it is unlikely that the Supreme Court
will ever sanction "delegation running riot"
or such a "plenitude of power" aEl Congress
sought to "transfer" in the National Industrial
Recovery Act. And, whereas consultation of
the interests affected is one thing, delegation to
private interests of the power to make rules
and regulations having the force of law is quite
another. Delegations should be made only
to an officer or agency that acts in the name of
the whole. The Guffey case established this
principle as a rule of constitutional law.
There is probably another limitation upon
congressional delegation. Though Congress
may make it a crime to violate valid regulations
issued under a valid delegation,31 and though
it may authorize the imposition of certain II ad-
ministrative fines",32 it probably may not dele-
gate to executive officers the power to prescribe
a criminal penalty or to define the scope of its
application.
The second aspect of judicial review is also
important. The courts may hold regulations
invalid as being ultra vires on anyone of several
counts. They may not conform to the pro-
cedures prescribed by statute. Specifically,
they may not have been preceded by notice and
opportunity to be heard, as required by some
11293 U. S. 388 (1935).
II 295 U. S. 495 (1935).
30 298 U. S. 238 (lY36).
JIUniltd Sl~t ..... Orimaud. 220 U. S. 506 (191l).
" Oceanic Steam NaDigalion Co. v. Stranahan, 214 U. S. 320 (1009).
343
statutes,a3 or they may not recite the finding of
the existence of the circumstances presented in
the statute as a prerequisite of Executive ac-
tion. 34 They may add to or subtract from the
provisions of the statutes or otherwise conflict
with relevant statutory law. 3s They may deal
with matters not intended by the statute, as
construed by the courts, or they may go outside
the limits fixed or implied in the terms of the
grant. They may be ultra vires because un-
reasonable,36 or because they allow arbitrary
action in particular cases.37
In the Panama Refining Co. case the Supreme
Court held both that Con~ess should have
required, and that the PreSIdent should have
recited, a finding. The latter was required by
due process of law. But the scope of this
holding is not clear. The hot-oil clause of the
statute was analogous to contingent legislation,
only Congress had not defined the circumstances
under which the prohibition of the interstate
shipment of hot oil should go into effect, or
required the President to recite the existence
of any such circumstances. The question thus
arises whether what the Court said about
findings applies only to contingent legislation,
or whether it applies also to the promulgation
of rules and regulations.
The Schechter case also referred to findings.
This reference, however, may be interpreted to
mean merely that the so-called findings con-
nected with the promulgation of codes did not
limit the practically plenary discretion vested
in the President by the National Industrial
Recovery Act. It does not necessarily follow
that a finding must either be required by Con-
gress or recited by the Executive in the case of
rules and regulations issued under an otherwise
properly limited delegation. The attitude of
the Court seems to be that the standard laid
down by Congress may be more vague if it is
to be applied by a quasi-judicial procedure than
if it is to be applied by the issuance of discre-
tionary rules.
This conclusion finds support in the case of
Pacific States Box and Basket Co. v. White,38
decided in 1935, after both the hot-oil and the
Schechter decisions. In this case the Court
said:
But where the regulation is within the scope of author-
ity legally delegated, the presumption of the existence
of facts justifying its specific exercise attaches alike to
statutes, to municipal ordinances, and to orders of
administrative bodies. . . . Here there is added reason
for applying the presumption of validity; for the regu-
lation now challenged was adopted after notice and
public hearing as the statute required. It is contended
that the order is void because the administrative body
made no special findings of fact. But the statute did
not require special findings; doubtless because the regu-
lation authorized was general legislation, not an ad-
ministrative order in the nature of a judgment against
sa cr. Jo.fnrgan v. United Stat". 298 U. S. 468 (1936).
" Wichita R. R. and Light Co. v. Public Ltilitie. Comm;"Bion. 260 U. S.
48 (1922); Mahler v. EbU. 264 U. S. 32 (11)24).
II Merritt v. Wel.h, 104 U. S. 694 (1881); Morrill v. Jane•• 106 U. B. 466
(1882); cr. United Stale. v. Antikamn/a Chemcial Co .• 231 U. S. 654 (1914).
Ie Miller v. John&on, 110 Kan. 135,202 Pac. 619 (1921).
"cr. Yick WO V. Hopkinl. 118 U. S. 356 (1886).
"29ft U. S. 176 (1935).
344
an individual concern. Compare Wichita Railroad &
Light Co. v. Public Utilities Commission, 2GO U. S. 48,
58-59; Mahler v. Eby, 264 U. S. 32, 44; Southern Ry.
Co. v. Virginia, 290 U. S. 190, 193, 194.
It thus seems that due process does not re-
quire special findings in the case of general
regulations as distinguished from particular
judgments or determinations under contingent
legislation, though of course the particular
statute might require them. Furthermore,
it should be noted that the hot-oil opinion itself
indicated that due process does not require the
recital of findings in the application of contin-
gent legislation where the subject is one "appro-
priately belonging to the executive province."
An example is calling out the militia. 3u The
hot-oil opinion seems to distinguish such an
example from determinations made under con-
tingent legislation connected with the regula-
tion of economic enterprise.
In any event, one may agree with the Special
Committee on Administrative Law of the
American Bar Association when it says, in its
1936 Report, that findings expressed in terms of
"meaningless generalities" are "a legal formal-
ism that furnishes no safeguard to the person
regulated. To require such a finding as a pre-
requisite to validity, places form above sub-
stance." This committee also says that "the
Supreme Court, in treating of the finality of
findings of fact by administrative agencies, has
made little or no distinction between the legis-
lative determinations and the judicial determi-
nations of those agencies. There is much to be
said for treating the two differently and for
according the findings of fact of Congress or of
an agency exercising delegated legislative power
(promulgating a rule for example) greater
respect than would be accorded the findings of
an agency adjudicating a controversy."
Reverting to the limitations on the power of
Congress to delegate, one may ask what the
difference is between "policy" and "standard."
Possibly the policy or standard need not be
expressed in the delegation of rule-making
power, if it may be implied ,,,ith sufficient
certainty and clarity. Possibly also the re-
quirements are not so strict in connection with
powers closely related to the constitutional
powers of the President.'<l
Again one may agree with what the Special
Committee on Administrative Law of the
AmeriCfLn Bar Association says on this point:
Of ~he !l-pproximately 1,300 instances of delegation
of legIslative power to be found in the Federal statute
books, a large proportion define the subject of the dele-
gation and by such definition keep the delegated power
within comparatively narrow limits. . . . The fact
that the .statute makes the exercise of this power [the
rule-makmg power of the Federal Communications
Commissionl subject to the standard of "public inter-
est, convenience or necessity" adds precisely nothing
to the intelligible scope of the power conferred. . . .
Thcre are many statutcs . . . having no procedural
.. lIfartin v. MaU, 12 Wbeat. 19 (1827).
.. See the recent case of United State. v. Ourlil.- WriUht Export Corpora-
lion, cited ahove.
The Exercise oj
requirem~n~s for the adoption of rules and regulations,
and pr?':ldmg no standards further than meaningless
generalIties. There are many other statutes which do
not have even these generalities. As of January 1,
1935! the com~ittee finds that there are approximately
192 mstances m the Federal statutes where power is
conferred upon an administrative agency to make any
rules and regulations "to carry out the purposes of the
act", and in a fairly large proportion of these instances
the act contains no statement of purpose! The saving
grace in all such instances is that the field of delegated
legislation is narrow, i. e., "canalized", not that a
standard or any particular procedural requirements
are imposed.
In sum, then, the courts furnish important
and adequate judicial safeguards to the delega-
tion of rule-making power when they require
that Congress must itself have power in the
premises, that it must delegate the power to
public officers and not to private persons or
groups, and that it must in one way or another
limit the power. One way to limit it is to
define a general policy which the rule-making
power is to concretize; but where the scope of
the power is narrow, such a policy may often
be implied with sufficient clarity. There is no
categorical difl'erence between a policy and a
standard, and often the two ideas merge into
one. 41 The courts must, of course, insist also
that the rules and regulations shall be infra
vires. But undue stress upon statutory reci-
tation of a meaningless formula, or upon an
equally meaningless finding in terms of such a
formula, except where such a finding is ex-
pressly required by Congress to be recited,
offers no safeguard whatsoever, and diverts
attention from a realistic appraisal of whether,
on the whole, the delegation is limited in a way
that is reasonably sufficient under the given
circumstances. It is to be hoped that the
courts will not hamper the necessary technique
of delegation, either by such formalisms or by
requiring Congress to limit delegated power to
a degree that will stifle the development of
what was called above the ideal relation between
statutes and regulations.
In England there are no judicial safeguards
against parliamentary delegations. The famous
Committee on Ministers' Powers distinguished
normal from what it considered exceptional
delegations that should be made only when
called for by emergency or other exceptional
circumstances.42 Its list of exceptional delega-
ted powers included powers to legislate on
matters of principle, powers involving so wide
a discretion that it is almost impossible to
know what limits Parliament did intend to
impose, powers in the delegation of which
Parliament has forbidden control by the courts,
and powers to impose taxation and to amend
acts of Parliament.
It is clear that in the United States judicial
checks offer sufficient safeguards against the
first three types of exceptional delegation.
.. Both these points seem to be Illustrated by BUt/field v. Stranahan
192 U. S. 470 (1904).
.. l'p. 30-41.
r Rule-Making Power
Indeed, the hot-oil case imposed a too narrow
application of the rule against the delegation of
untrammeled discretion. On the other hand, a
number of our statutes authorize executive im-
position of taxes and amendment of statutes.
The flexible tariff clause authorizes both, and
has been upheld by the Supreme Court.43 The
Overman Act,H durin~ the World War, author-
ized temporary adnnnistrative reorganization
through amendment of statutes by the Presi-
dent. The latest delegation of power for re-
organization authorized statutory amendments
by Executive orders which were to take effect
only if Congress took no action within 60 days.
This delegation has been considered but not
directly passed upon by the Supreme Court. 45
There seems, however, no solid reason for hold-
ing such delegations objectionable.
As a safeguard, judicial review has the draw-
back of cost and delay. This discriminates
against the poor man. It compels compliance
with regulations of doubtful validity because of
the expense of legal action.
To meet this difficulty, two things are needed.
The first is a prenatal check-up to insure the
legality of proposed regulations. This would
save the Government and the citizen the ex-
pense of the unnecessary upsetting of plans.
An ounce of administrative prevention is worth
a pound of judicial cure.
The second need is a means of challenging the
validity of regulations by a simplified procedure,
without delay and at a nominal cost. In this
respect a lesson might be leamed from France,
where administrative regulations may be an-
nulled, before being put into effect, by the
Council of State for excess or misuse of power.
Adequate Publicity
The third principal purpose for which the
President should employ his general power of
direction is to insure the postnatal safeguard of
adequate publicity, so that rules and regula-
tions may be brought to the attention of those
to whom they apply. Most agencies publish
the regulations concerning a given subject in
pamphlet form. In plant quarantine, the regu-
lations are preceded by an explanatory mem-
orandum which summarizes their provisions in
simpler language and explains what changes
they make in the preceding regulations. The
notice of quarantine, together with this mem-
orandum and the regulations, is sent out to a
mailing list. In informing transportation com-
panies, the Bureau of Plant Quarantine in-
cludes a receipt to. be signed, so as to:,be sure
that they have notICe of the regulations. The
quarantine regulations at the same time are
made the subject of a press release. The Farm
Credit Administration also attaches an explana-
tory memorandum to its rules. This is helpful,
except that people sometimes merely read the
.. Hampto'A v. United State" 276 U. S. 394 (1928).
II 40 Stat. L. 556-57.
.. /.brandtlen-.Uoller Co. v. United States, et al. (decided Feb. 1. 1937).
explanation in lieu of the actual rules and
345
regulations. The Committee on Ministers'
Powers recommended as follows: "The depart-
mental practice of appending to a regulation or
a rule in certain cases a note explaining the
changes made thereby in the law etc., should
be extended."
All these methods of insuring postnatal
pUblicity are helpful. The matter is important
because regulations relate to so many and such
specialized matters. It is recommended that
the President, by Executive order, require that
the best practice in these matters be regularly
followed in the exercise of the rule-making
power.
Central Publication: The Federal Register
Under the Federal Register Act,46 which Con-
gress enacted in 1935, a most important addi-
tional postnatal safe~uard has been thrown
around the rule-making power insofar as it
affects the public. The Federal Register is
designed to furnish postnatal publicity in the
form of central publication. Its central~urpose
and its principal defect are summed up by
Professor Erwin N. Griswold when he writes:
"In its present form, it is far from perfect, but
I am sure that any unbiased person must regard
it as a great improvement on the chaos which
surrounded administrative activity for many
years before it."47
The Federal Register publishes all Executive
orders and proclamations and nIl documents
issued by Federal agencies in the exercise of
their rule-making powers-that is to say, docu-
ments of general applicability and legal effect-
except those that are effective only against Fed-
eral agencies or against persons in their capacity
as officers, agents, or employees thereof.48
The need for such a publication had existed
for many years. The hot-oil case merely spec-
tacularized this need. The need was greater
during the life of the National Recovery Admin-
istration, but it is a permanent need that was
recognized and met by most modem govern-
ments many years before the Federal Register
was finally set up.
The Federal Register Act goes still further.
Except in case of actual knowledge, it makes the
effectiveness of those regulations that it requires
to be published depend on their being filed with
the Federal Register and made available for
public inspection. 49
The central purpose of the Federal Register Act
relates to a comprehensive and authoritative
publication in one place of all products of the
.. 49 Stat. L. 500.
., In a letter to the present writer of which he has made Cree use. See
Erwin N. Orlswold "Oovernment in Ignorance of the Law-A Plea for
Better Publication of Executive Legislation," in Harvard Law Review
XL VIII, p. 198. The Regulations of the administrative committee of the
Federal Register (approved by the President Mar. 11, 1936) are pu blished
as a separate pamphlet. See especially section 11 of the act, which con-
tamplates publication of a compilation oC all documents of general appli-
cability and legal effect issued prior to the establishment of the Federal
Register and still in force and effect.
.. Section 12 oC the act also provides: "Nothing in this act shall be con·
strued to apply to treaties, conventions, protocols. and other international
agreements, or proclamations thereof by the President."
.. The act also provides in section 7: "The contents of the Federal
Register shali be Judicialiy noticed."
346 The Exercise oj Rule-1I1aking Power
rule-making power that affect the public. A
register is diverted from this central purpose if
the rules and regulations are buried in an official
gazette containing all sorts of official notices,
or if they run along together so as not to be
separable. The present Register has both
defects. It publishes some notices, though by
no means as many as the London Gazette. Its
form is that of the Oongressional Record.
It is accordingly recommended that the form
of the Federal Register be changed to a ring
binder for rules and regulations, which shall be
published separately, as issued and filed, in
slip form, with distinguishing Federal Register
numbers, and with punch holes in the margin.
It is further recommended that no notices be
included, except of course those which promul-
gate rules and regulations, and that the Federal
Register publish all rules and regulations which
affect the public, and nothing else. It is further
recommended that the President appoint an
interdepartmental committee to inquire into
the question whether there is need for a separate
and distinct Federal gazette, and whether such
a publication would effect a sufficient saving
in the advertisement of official notices to justify
setting it up. Such a gazette would, of course,
contain no news items of any sort whatsoever.
j
1
v. COORDINATION OF THE RULE.MAKING PROCESS
•
The Need for Coordination
A fourth principal purpose for which the
President should use his power of direction is
coordination of policy formation in general and
of rule-making in particular. There is now no
coordination of the policies of the many Fed-
eral regulatory agencies, so they must fight it
out or appeal to the President. At the same
time, there is crying need for such coordination.
Policy formation includes rule-making and
a good deal besides. It includes the larger
purposes and attitudes of administrators as
well as those written down in formal regulations.
Though this study is directly concerned with
rule-making, reference is here made to coordi-
nation of policy formation in general for the
simple reason that the coordination of formal
rule-making is so intimately tied up with the
larger question that it cannot be intelligently
considered apart from it.
Serious conflicts not infrequently develop.
Years ago one bureau taught the farmers to
spray their apples and peaches with a prepara-
tion that killed fruit pests, whereupon another
bureau in the same department had the job
of protecting the consumer against the arsenic
in this preparation, which happens also to be
poisonous to human beings. Perhaps both
these things needed to be done, but not without
the most careful correlation. Sometimes a
conflict arises in acute form and drags on for
months-in one case, for 18 months.
In such cases it is difficult to keep the con-
flicts and resulting jealousies out of the news-
papers. Officials have frequent press confer-
ences; and once the press hears hints of a
conflict, reporters naturally play the game of
asking embarrassing questions of those involved.
This demoralizes public administration.
Planning can produce coordination in the
larger outlines of policy. But long-range plan-
ning is not easily woven into day-by-day policy.
The National Resources Committee may pre-
pare a conservation plan which the President
approves; but there is no regularized method for
insuring that this plan will be taken into ac-
count when an emergency decision needs to be
made for flood control. Again, the President
may make a general declaration of policy; but
one Secretary's interpretation of this declara-
tion may be quite different from that of an-
other. The same thing applies to the mimeo-
graphed statement of a policy by a department
, 153155--37----24
J
head. It is necessarily expressed in general
terms and will be differently interpreted by
different subordinates.
Coordination needs to be effected within the
large departments, but the need does not stop
there. The farm-use policies of the Agricul-
tural Adjustment Administration need to be
coordinated with the plans of the National
Resources Committee and the lending policies
of the Farm Credit Administration. The rule-
making power is at the center of this whole
problem.
The President might consider the issuance
of an Executive order requiring procedures de-
signed to provide intradepartmental coordina-
tion. But for present purposes attention will
be confined to interagency coordination.
Prerequisites of Erfective
Coordination by the President
If the President is effectively to tap the
reservoir of the general J?ower of direction,
especially to produce coordmation, several pre-
requisites must be taken into account. The
first is that he be relieved, so far as possible,
of routine decisions. The second is that there
be established a clearance procedure which
will not only furnish him some relief from the
consideration of routine matters but also present
to him in systematic fashion the issues of policy
on which he ought to pass. The third is that
his office be somehow implemented by a staff
which will serve as an a~ency for clearance and
for giving hiJJl an effective basis for his crucial
decisions. The fourth is that the statutory
law be amended both to permit him to devolve
routine decisions upon staff officials and to
make sure that he has the power of direction
in those spheres where it is not only appropriate
but highly desirable. The fifth is that coordina-
tion of policy take place, so far as possible, in
the formative stage, before men's views have
been hardened, or they have taken public
positions on the questions involved, or conflicts
have been aired in the press. The sixth is
clear recognition that the prevention and
ironing out of conflicts is a task in which per-
sonnel is of paramount importance.
It is no light matter that the President has
an unbelievable number of routine decisions to
make. He has to approve exemptions from
the retirement rule and from the civil service
rules governing appointments. He has to
347
348
"approve" certain regulations-for example,
those of the Administrative Committee of the
Federal Register. He issues Executive orders
regulating the speed limit for automobiles in
the Panama Canal Zone. 1 Under Executive
Order No. 7070 he has to approye transfers of
employees where the transferee is to get a
higher salary to be paid out of emergency funds.
These are but random examples. An exhaus-
tive list would be startling.
In order to relieve him of some of the burden,
he is frequently handed a long list of, say,
transfers under No. 7070 to approve with one
signature. But this merely indicates the ab-
surdity of placing the burden upon him at all.
For it means that his approval must be per-
functory. The net result of such routine is to
take up time which should be devoted to the
consideration of the really crucial choices
of policy. . The President may commit himself to the
Under the Constitution the President has to
commission all officers. He used to sign each
separate commission personally, but during
the World War there were so many military
officers to be commissioned that, ·without some
relief, President Wilson would, in the words of
a White House official, still be signing the com-
missions of second lieutenants. So a legal
opinion was obtained to the effect that the
President might sign a single authorization for
the commissioning of a large number of officers.
Later, the same procedure was applied to the
commissioning of first-, second-, and third-class
postmasters. But President Harding preferred
to sign the actual commission of every post-
mast.er.
This exam:ple illustrates three important
points. One IS that when government was a
simple thing, when the Federal Government was
largely routine, the burden on the President was
not so serious as it has become in the past few
decades. The second is that, if necessity re-
quires, ways and means can be found to reduce
this routine. And the third is that a good deal
depends on the temperament of the President.
One Executive will desire to devolve many
duties upon his responsible and trusted subor-
dinates, whereas the next will prefer to do every-
thing himself. Presidents vary like other big
executives. It is easier, as Woodrow Wilson
once said, to speak of the President than of the
Presidency.2
Nevertheless, it is generally recognized that
the best business executives are usually those
who set up series of routine decisions which they
can safely devolve upon subordinates, under
general directions and subject to a periodic
check-up. It seem51 wise so to arrange the
functions of the Presidency as at least to make it
possible for every President to follow this
method.
There are, however, several obstacles in the
way. One is inertia. Another is that since his
is the final responsibility, it is often felt that his
1 See Executive Order No. 4729.
J Wilson, op. cit., p. M.
The Exercise oj
should be the final choice, even in matters of
routine. 3 A third is that in some cases, like a
Congressman's request that a constituent be
exempted from the civil service rules, the
President may want to decide for political
reasons. Again, since everybody wants to take
his plea to the head man, it is frequently felt
there is nobody else who can finally say "No",
or, civil service reformers would fear that spoils-
men could break down the merit system if
exemptions were made by anybody but the
President. Finally, statutory law may stand
in the way. Though the courts have held that
action by the appropriate department head is,
in many cases, in contemplatlOn of law equiva-
lent to action by the President.' there are
exceptions/ and there seems to be an inhibition
against seeking to carry these decisions to their
logical conclusion.
performance of routine decisions by signing
an Executive order like No. 7070. But there
should be some means of checking abuses in
such matters without having to run to the Presi-
dent to find out whether a clerk mav be trans-
ferred from the Department of Agnculture to
the Public Works Administration at an increase
of salary from $1,200 to $1,260. Accordingly,
it is recommended that, in the clearance of bills
and of Executive orders no provision be per-
mitted which imposes unnecessary routine upon
the President. It is further proposed that some
central agency prepare a report on the extent
to which devolution of routine may go under
existing law, work out lines of routine decisions
to be made in the President's name under gen-
eral instructions from him, and prepare amend-
ments to existing statutory law and Executive
orders which will make possible an extension of
this technique.
Relief from routine is a prerequisite of more
effective over-all management by the President.
A word needs to be added on statutory changes.
Congress should not freeze details in its legisla-
tion, whether in the substantive definitions of
its policies or in the administrative provisions
which accompany them. But since it has often
done so, it should remedy the situation by
authorizing the President by Executive order
to modify such statutory details. 6 In new
legislation it should, instead of going into de-
tail, delegate to department heads, under
general standards and within defined limits,
discretionary rule-making powers the exercise
of which the President could then control
through his general power of direction.
J Tbis argument is refuten by tbe stubboru fact, tb~t such choices he-
come perfunctory. See Ray Stannard Daker, TVoodrow Wi/Ion; Life and
LeiteTl, (Garden City, N. Y.: Doubleday, Page & Co., 1927-35), v.IV,
pp.43-49.
• Wilco.xv. Jackson, 13 Pet. 498 (1839); Woloev v. CI.apman, 101 U. S. 755
(1879). James Bart, The Ordinance ,'Makino Powe" oj the Pruident, ch.
VIII; Tenure oj Office under the Comtltution, 344 If.
• Runkle v. United Stateo, 122 U. S. 643 (1887); Ex parte Field, 5 Blatch.
63.
I In the ca'6 of purely administrative details the need ror such autbori-
zation Is clear. Wbere private parties will be affected, It might b. re-
quired tbat sucb Executive orner sball go into effect unless rejected by
either House of Congress within 30 days.
r Rule-Making Power
Existing Clearance of Executive Orders and
Proclamations under Executive Order No. 7298
There is already provision for the clearance
of Executive orders and proclamations under
Executive Order No. 7298. This order trans-
ferred from the State Department to the N a-
tional Archives the custody of the signed origi-
nals and copies of all Executive orders and
proclamations hitherto promulgated. The card
index which the State Department had made
has likewise been transferred. No. 7298, how-
ever, does not apply to "treaties, conventions,
protocols, and other international agreements,
or proclamations thereof by the President."
This order provides, first, that proposed
Executive orders and proclamations shall be
prepared in accordance with requirements
which correspond to the Federal Register
requirements for other documents filed there-
with. It then provides for the clearance of
proposed Executive orders and proclamations
before they are submitted to the President.
Finally, it provides for their filing and publica-
tion by the Federal Register, and their custody
in the National Archives.
Executive orders and proclamations regularly
originate in some Federal agency. Executive
Order No. 7298 provides for their clearance in
the following terms:
The proposed Executive order or proclamation shall
first be submitted to the Director of the Bureau of the
Budget. If the Director of the Bureau of the Budget
approves it, he shall transmit it to the Attorney
General for his consideration as to both form and
legality. If the Attorney General approves it, he shall
transmit it to the Director of the Division of the Federal
Register, the National Archives. If it conforms to the
requirements of paragraph 1 hereof, the Director of the
Division of the Federal Register shall transmit it and
three copies thereof to the President. If it is dis-
approved by the Director of the Bureau of the Budget
or the Attorney General, it shall not thereafter be
presented to the President unless it is accompanied by
the statement of the reasons for such disapproval.7
The document thus goes first from the
originating agency to the Bureau of the
Budget, which reviews it as to form primarily,
but also as to "policy." Some actual examples
may be cited. Budget looks at the title to
make sure that it is pertinent. Once a heading
"created" an agency not mentioned in the text
of the order. This was not only bad form, but
ra.ised a legal question. Budget refers to the
Department of Justice any legal questions
whiCh it desires to raise.
The Bureau of the Budget also examines
proposed orders for various other defects. An
order may come through in garbled form.
Budget may then hold a hearing and recast
it with the consent of the department of origin.
The order may direct an allocation from a fund
when the President has, by letter, directed that
such allocations be made from another fund.
The order may be retroactive.
Policy clearance may relate to coordination.
An order that originated in a certain agency
7 For the full text of Executive Order No. 7298. see Appendix C.
was in good form, and the agency said no public
349
lands were involved. But the States affected
were public land States, so Budget "played a
hunch" and sent the order to the Department
of the Interior, which reported that it did affect
public lands. There is now an arrangement
by which orders of this type are regularly cleared
through Interior.
Budget clearance is handled by the Division
of Research and Investigation of the Bureau.
A proposed order is referred to the assistant to
the Director who handles the budget estimates
of the originating department. It is also re-
ferred to counsel. If funds are involved,
Budget naturally scrutinizes the proposal with
especial care. If emergency funds are involved,
the order is sent to the man in charge of such
funds, to see if funds are available, and in any
event for his information. If another depart-
ment seems likely to be affected, the order is
sent to it.
If the Bureau of the Budget has a serious
question to raise, it will write a letter to the
originating department. This letter goes to
the department head, and then has to travel
down the line until it reaches the official who
drafted the proposed order. He writes a reply,
which has to work its way back up to the de-
partment head before going to Budget. This
naturally causes delay.s
Clearance routine is sometimes altered and
sometimes even short-circuited. Sometimes a
department takes an order to the Department of
Justice before sending it to the Bureau of the
Budget. Occasionally, when Budget turns
down an order, the department takes it to
Justice, which then telephones to Budget to
check up. Sometimes a draft order is taken
directly to the White House, which sends it
back to Budget. Rarely, the President si~ns
it. Emergency cases may arise, in one of whICh
the White House telephoned Budget it wanted
the order at once. It had been delayed be-
cause a second department had been found to
be concerned. But the vVhi.te House call
naturally caused the order to be carried per-
sonally by an assistant.
In the usual routine of clearance the proposed
order goes from the Bureau of the Budget to
the Department of Justice. Budget sends its
notations to Justice, and Justice prepares a
memorandum in which it includes the opinions
of Budget. In this way the President has one
sheet which tells him what to look for.
In the Department of Justice, orders are
cleared through an Assistant Solicitor, under
whom a staff of sbc lawyers carries on this work
along with other duties. They examine Execu-
tive orders and proclamations for legality and
for form. Form is less important, although
the President desires uniform style. Some
orders are turned down. The substance of
• One ollicial stated that if he expected to get an ord~r through ill less
than 8 months, he had to take off 1 or more day~ amI carry it personally
through the clearance routine. IT e said that once clearance ollicers
understood what he was trying to do, he had little trouble.
350
some is changed. The form of most is changed.
An order may not have the right title, or the
title may be too long.
From the Department of Justice the order
goes to the Federal Register. There the clear-
ance does not relate to policy, but solely to the
requirements as to preparation which are given
in E)''"ecutive Order No. 7298.
Even a Thanksgiving proclamation drawn up
in the State Department has to be cleared as
described above. This is reductio ad absurdum.
When Executive Order No. 7298 was being
drafted, one of the officials involved stood out
for making exceptions to this routine as a
means of avoiding unnecessary red tape. He
was challenged to draft the exceptions without
leaving them to the discretion of the department
concerned, and was unable to do so. One out
of four or five Executive orders is very impor-
tant and needs to be cleared. If the department
head could make exceptions, he might except
an important one. Even to require submission
of the question of exceptions to his legal adviser
is an inadequate safeguard, for some depart-
ment heads dominate their legal advisers.
From the Federal Register the proposed
Executive order or proclamation, together with
three copies, goes to the White House. If the
President signs it, the original and two copies
are forwarded back to the Federal Register
for appropriate action under the Federal
Register Act. However, if the document is a
proclamation, the original must first be sent to
the Department of State, together with a war-
rant, signed by the President, authorizing the
Secretary of State to affix the seal of the United
States.
Executive Order No. 7298 requires the
Federal Register to cause to be placed upon the
copies of all Executive orders and proclama-
tions the following notation, to be signed by the
Director ot by some person authorized by
him: "Certified to be a true copy of the original."
The Federal Register also numbers and
supervises the promulgation, publication, and
distribution of all Executive orders and procla-
mations. It files all originals in the National
Archives. It publishes in the Federal Register
all those of general applicability and legal
effect, except where they relate solely to internal
administrative management. It causes a lim-
ited number of copies of those not so published
to be printed in slip form and made available
to the appropriate agencies of the Government.
Criticism of Executive Order Clearance
There are three major criticisms of the exist-
ing clearance of Executive orders and proclama-
tions through the Bureau of the Budget. The
first is the delay. This is, of course, unavoid-
able. In emergencies, the authority of the
President is sufficient to cut through this delay.
The Exercise oj
It is not, however, entirely satisfactory to have
an official clear personally. It wastes his
time and may prevent adequate examination
of the proposed order by clearance officials; yet
it may at times be the only practicable solution,
if it is not allowed to be abused.
The second criticism is that the Bureau of the
Budget does not clear proposed orders and
proclamations with all departments as a matter
of routine. It merely sends them to whatever
departments it happens to realize would prob-
ably be concerned. This takes less time, of
course, but it is apt to defeat the major purpose
of clearance, which is coordination.
The third criticism is that although Budget
clearance considers both general and financial
"policy", its consideration of policy is not so
well organized as it might be. "\Vhile it may
advise, in its letter of transmittal to the Depart-
ment of Justice, that it approves or disapproves
of the policy or expenditure embodied in a
proposed order, it does not seem flatly to turn
down an order on these grounds in the name of
the President. The explanation is: "The
President decides that." Of course, the Di-
rector cannot assume to exercise in the Presi-
dent's name a veto on the merits of a proposed
order unless he has prior instructions which
cover the case. But that is the point. Policy
clearance should be so organized that Budget
would have general instructions from the
President concerning questions that constantly
recur in clearance procedure.
Accordingly, it is proposed that Budget
Bureau clearance initiate more thorough coor-
dination by submitting all proposed Executive
orders and proclamations to all departments,
except where this is clearly unnecessary, as in
the case of Thanksgiving proclamations. In
order not to cause even more delay than at
present, Budget should announce that it will
assume that a department is not concerned if it
does not submit at least a tentative memoran-
dum within, say, 5 days. Delay should be
further reduced to a minimum by enlargement
of the clearance staff and by frequent use of
informal hearings. To these hearings the de-
partment or departments concerned should be
asked to send the officials most directly con-
cerned. Multiplication of formal correspond-
ence presumably takes longer than direct and
informal contact, which can be arranged by
telephone.
The Bureau of the Budget should be in a
position to pass, in the name of the President,
upon matters both of general and of financial
policy which involve merely the routine appli-
cation of general policies of the President. It
should make a list of types of questions which
constantly recur in the course of clearance pro-
cedure, and ask the President for instructions
for all like cases. Thus it should be instructed
to reject any proposed order which imposes
J
Rule-Making Power
routine decisions on the President-such as
No. 7070- or by the signing of which he wou~d
unnecessarily tie his hands for the future m
matters of over-all management, until the pro-
posed order is amended to delete this feature.
Whenever any novel question of policy arises,
if it is one likely to recur, the Director should go
personally to the President to see.k ~irec~ions
not only for this case but. for all SImIlar .sItua-
tions, in order to estabhsh a new senes of
routine decisions.
If such a novel question is l!nique, or ~f
major importance, or one on WhICh the PresI-
dent does not choose to give general instruc-
tions, then regular clearance procedure may
be followed, but even then the. Bur.eau of the
BudO'et should always express Its VIews, espe-
cially in matters of financial policy.
The procedure suggested should never pre-
clude appeal to the President by department
heads. It would be highly undesirable to turn
the Bureau of the Budget into a. bottle .n~ck.
It is merely intended that routme dec~sIOns
should be made in the name of the PresIdent,
and that his major decisions should be routed
through the Bureau of the Budget in the first
instance. Appeal is always proper on the lat~er
class of cases, and, in the for~er, on the c~ucll!,l
first case or if, after some tIme, the routme IS
claimed ~ot to work out satisfactorily. B.ut
the custom should develop that otherWise
appeal will be brought only in exceptional cases.
In no event however, should appeal be made
without refe~ence to Budget's objections.
On the whole, Budget Bureal! cle~rance. of
Executive orders and proclamatIOns IS an Im-
provement over the s~tuation .that previously
existed. As one offiCial put It, he was not
anxious to have cleared the orders he originated,
because of the delay, but he wanted those
originated by other departments to be cleared.
Clearance, in short, is needed for purposes of
coordination, if for no other.
Justice Department clearance may operate as
a safeguard, for the adminis.tration as well as for
the citizen, against ultra mres orders. It may
prevent future litigation which would be expe~­
sive for the Government as well as for the pn-
vate party. The clearance officers of the De-
partment of Justice also aid d~partments, u~on
request during the preparatIOn of ExecutIve
orders ~hich they can anticipate that they may,
a little later, need in a hurry.
This is all to the good. But there is also
need for clearance through drafting experts.
Both the Bureau of the Budget and the Depart-
ment of Justice examine orders for form and
legality, but there is no sufficient recognition
anywhere ~ the Government of th;e problem of
drafting asIde from what the ordmary lawyer
means by the term. It would be advantageous
for draftsmen also to be lawyers. There are so
few expert draftsmen, however, that they would
need to be trained.
351
Extension of Clearance to Rules and
Regulations of Federal Administrative Agencies
On the whole, Executive order clearance is so
definitely an advance that it raises the question
whether it should also be applied in any form,
or to any degree, to the .n~les a?d regula.tions
issued by the several admm18tratlve agencIes of
the Federal Government.
This proble!ll is much !ll?re d.ifficult. The
Special Commlttee on AdmmistratIve Law of the
American Bar Association counts, in the regu-
lations of the administrative committee of the
Federal Register, 115 Federal agencies exercising
rule-making authority under 964 statutory
provisions (including amendments) and under
71 Executive orders or proclamations. 9
The idea of central drafting may, therefore,
be rejected out of hand as utterly impracticable,
for the combination of quantity, variety, and
technicality of subject matter would make
the task incomparably greater than th;at of
central legislative drafting. Actual draft~ng. at
a central point, moreover, would result In m-
tolerable delays.
The question of ~entral cleat:anc~ for fo~,
draftsmanship, legahty, and pohcy 18 les~ dIffi-
cult but still one to be approached cautIOusly,
for it is certainly desirable to avoid needless
red tape. .
The problem of the administrative regulatIOns
of a department that affect only its internal
management is different from the problem of
departmental regulations that directly affe~t
the public. ~n the former .case/.o all that IS
needed is to msure conformIty WIth whatever
uniform policy the President may have on
personnel, materiel, budgetary control, or any
other matter of public administration that may
be concerned. It is therefore proposed that
these purely administrative regulations be
cleared only through the Bureau of the Budget,
except where the Bureau sees fit to clear them
through other. agencies. The. details woul1,
mutatis mutand~s, correspond WIth the Bureau s
clearance of Executive orders.
As for regulations affecting the public, there
are two alternatives. The first is to clear them
all' the second is to clear only those that the
Bu'reau of the Budget may direct to be cleared.
It is proposed that, at least in the beginning,
the second and less drastic alternative be
adopted. This Bureau could, in the name C!f
the President, direct the clearance ~hroug~ It
of all regulations or proposed regul~tIO?S which
any line agencyother than t~e one ~SUlll&, th~m
claimed were or would be ill conflIct With Its
own It could also direct clearance of all regu-
latio'ns or proposed regulat~ons. which it .h~d
reason to believe might conflict With the poliCies
of the President or with his long-range plans.
, 1936 Report, p. 272. d h'
10 Though this aspect of clearance is convenientl~ consldere at t. IS
point it is primarily a means of insuring conformity with Executive
order~ issued under the generel power of direction, notably those discussed
in Pt. VI below.
352 The l!..xercise of Rule-]vfaking Power
Finally, it could direct automatic clearance of
all rules and regulations issued or to be issued
under any statutory delegation which it might
designate.
Associated with this arrangement should go
another which is based on the principle that
coordination should take place in the formative
stages, and that personnel is of supreme im-
portance, if efforts at coordination are not to
multiply friction and jealousies. There should
be attached to the Bureau a small group of
young and specially selected "trouble shooters",
whose sole business it would be to anticipate
conflicts between the policies of two or more
line agencies, or between these and the policies
or long-range plans of the President, to report
their findings, and to carry out instructions in
attemrting to forestall such conflicts by in-
forma conferences on a basis of comity. This
task would require tact and diplomacy, and
should be undertaken in an informal and in-
conspicuous manner.
The purpose of this last arrangement is to
prevent the necessity of formal clearance, where
possible, and in any event to furnish Budget
the information necessary for its intelligent
exercise of discretion as to what should be
cleared. The latter purpose would also be
greatly facilitated if the practice were ordi-
narily followed of publishing draft regulations
which should not go into effect for from 1 to
3 months. But this is not always feasible.
Where formal clearance is directed, it should
correspond in purpose, machinery, and pro-
cedure with that now used for the clearance of
Executive orders and proclamations, improved
in accordance with the recommendations of the
~receding section. This could be done by an
Executive order supplementing No. 7298.
This enlargement of their tasks will require
enlargement of the clearance staffs of the
Bureau of the Budget and of the Department
of Justice. It is proposed that there be at-
tached to the Division of Investigation and
Research of the Budget Bureau a "pool" of
expert draftsmen who would, upon request, be
lent to agencies during the drafting stage of
rule making. These experts should actually
draft all documents to be signed or approved
by the President which are initiated by a "staff"
as distinguished from a "line" agency. It is
further proposed that the clearance unit of the
Department of Justice should, upon request,
advise departments on the legality of rules and
regulations during the course of their prepara-
tion.
J
r
VI. OVER-ALL MANAGEMENT OF THE SERVICE ACTIVITIES
OF THE EXECUTIVE BRANCH
•
The fifth purpose for which it is proposed that
the President employ the rule-making tech-
nique in the exercise of his general power of
direction is the prescription of uniform regula-
tions governing the service or institutional!
activities of all Federal departments and
agencies. This field includes such matters as
budgetary practice, financial control, personnel
and materiel administration, administrative
organization, general administration (admin-
istrative practices and procedures and general
efficiency), research, statistics, information,
coordination, and planning.
If the President is effectively to play the role
of general manager 2 of Federal administration,
he must assume a larger responsibility in this
field than he has hitherto done. This larger
responsibility requires that more and more he
shall initiate as well as pass upon administra-
tive regulations.
The broader aspects of all these administra-
tive matters are especially susceptible of uni-
form regulation. For while each functional
activity is unique, all administrative agencies
must necessarily engage in institutional activ-
ities which are fundamentally similar.3 These
similar features are properly dealt with by
regulations which apply uniformly throughout
the Federal administrative service.
For this role the President must have the
assistance of the Bureau of the Budget as a
staff agency. No single line agency can appro-
priately be employed for the task of preparing
administrative regulations which are to apply
uniformly to all line agencies. But each line
agency will doubtless be empowered to adopt
its own supplementary regulations; and hence
such a staff agency is also needed for the clear-
ance of all such supplementary regulations for
conformity with the policy of the President.'
At least in certain cases, moreover, this staff
agency should be empowered to review, in the
name of the President, though subject to appeal,
particular acts of departmental administration
for conformity with his regulations or with bis
instructions governing defined series of routine
decisions. For this is the only method by which
the President can check up on the concrete
application of his administrative regulations
without being swamped by an avalanche of
routine decisions which would defeat their own
purpose. It has already been :pointed out that
sucb a mass of routine deciSIOns merely en-
I For the distinction between "Institutional" and "functional" actlvl·
ties see W. F. Willoughby, Principles of Public Adminiatration (Wash·
Ington, D. C.: Brooking, Institution, 1927), pp. 45-46.
, Ibid., chs. II[ and IV.
IIbid., pp. 45-46.
'See supra, p. 41.
croaches upon the valuable time of the Presi-
dent without increasing his real control of
administration, since it is not humanly possible
for him to give them any but the most perfunc-
tory consideration.
For this role the President must also have
adequate powers. To a degree, Congress has
given him statutory powers of administrative
direction. Thus it has authorized him to issue
civil service rules and Executive orders relating
to various other matters, including, quite
recently, the standardization of annual and
sick leave. In recent legislation it also granted
him wide, if temporary, powers relating to
administrative organization and reorganization
and to the allocation of emergency funds.
Ordinarily, however, bis statutory powers of di-
rection have been inadequate, and even those he
has possessed have been narrowed down by the
fact that Congress has itself enacted so many
details.
Then there is the President's general power
of direction. But it must be remembered that
this is, after all, only the power to control the
exercise of such discretion as Congress by
statute vests in the several department heads.
By Revised Statutes, section 161, Congress has
already provided: .
The head of each Department is authorized to pre-
scribe regulations, not inconsistent with law, for the
government of his Department, the conduct of its
officers and clerks. the distribution and performance of
its business, and the custody, use, and preservation of
the records, papers, and property appertaining ~o it.5
"Not inconsistent with law" would be a
proper limitation if the law dealt only with the
principles and not with the details of public
administration. But insofar as Congress writes
administrative details into the statutes, it not
only ties the hands of department heads with
statutory red tape, but also curbs the Presi-
dent's general power of direction as a byproduct.
Congress should strengthen the President, in
carrying out his responsibility for effective
over-all management, by directly providing
that his uniform administrative regulations
shall supersede conflicting statutory details.
Thus supplied with the necessary legal com-
petence, as well as with an adequate staff
agency, the President could fairly be held re-
sponsible for the progressive introduction into
Federal administration of generall;r accepted
principles of administrative practICe and of
over-all management. Then-but only then-
he could become in fact what he is recognized
in theory to be-the general manager of the
business aspects of the Federal Government.
I See Boake v. Comingore, 177 U. S. 459 (1900).
353
 APPENDIX A *
Number of proclamations for each administration, beginning with the firBt

President Proclamations Total Averagenum-

number ber per month

vVashington_ _ _ _ _ ___ __ ________________ ______________ __ __ _____ 1 to 6 _________________ _ 6

Adams_ __ ________ ____ _______________________________________ 7 to 11 ________________ _ O. 06
JefJerson_ _ _ ___ ____ __ _____ ____________________ _____________ __ 12 to 15 _______________ _ 5 .10
Madison_ _ _ _ ___________ ____ _________ _______ _____________ __ __ 16 to 22 _______________ _ 4 .04
Monroe _____________________________________________________ 23 to 32 _______________ _ 7 .07
Adams_ ______ __ _______ ________________________________ ______ 33 to 36 _______________ _ 10 .10
4 .08
Jackson_____________________________________________________ 37 to 43 _______________ _ 7 .07
Van Buren_ _ _ _ ____ _________ __ ____ ___ ___ __ __ __ ____ ___________ 44 to 45 _______________ _ 2 .04
Harrison ___________________________________________________________________________ _
Tyler _______________________________________________________ 46 ____________________ _ 0 .00
Polk__ _____ ____ __ ____ ___ ______ ___ _____ _____ _________ ________ 47 to 50 _______________ _ 1 .02
4 .08
Taylor _ ______ __ ______ ______ ___ __ _____ ____ __ ___ __ ___ _________ 51 to 53 _______________ _ 3 .18
Fillmore _____________________________________________________ 54 to 59 _______________ _
Pierce_ _ _ _ _ _ ___ ____ __ ______ _____ _____ __ ____ __ ______ _________ 60 to 72 _______________ _ 6 .19
13 .27
Buchanan_ _ _____ ___ __ ______ ____ ____ ______ __ ______ __ ____ ____ _ 73 to 79 _______________ _ 7 .14
Lincoln_ _ _ __________ ___ ______ __ __ ___ ______ _________________ _ 80 to 128 ______________ _ 49 1. 00
Johnson _____________________________________________________ 129 to 179 _____________ _
51 1.08
Grant_______________________________________________________ 180 to 234 _____________ _ 55 .57
Hayes_ ____ ___ _____ ___________ ____________ __________________ _ 235 to 249 _____________ _ 15 .31
Garfield ____________________________________________________________________________ _
0 .00
Arthur _____ __ ___________ ____ __ ______ _________ ___ ______ _____ _ 250, 250~ to 265 _______ _ 17 .40
Cleveland_ _ _________________________________________________ 266 to 286 _____________ _ 22 .46
Harrison_ _ _ ____ ______ __________ __ ________ __ ____ __ ____ __ __ __ _ 287 to 354 _____________ _ 66 1. 38
Cleveland_ _ _ ___ ___ ___ _______ ____ ___ ___ __ ___ __ ____ ______ _____ 355 to 405 _____________ _ 53 1. 10
McKinley _ _ __ __________________ __ __ ____ ________ ______ ____ ___ 406 to 464 _____________ _ 60 1.11
Roosevelt_ _ _ _ ____ __ ________ ___ _________ __ ______ ____ __ ___ ____ 465 to 871 _____________ _ 407 4. 52
Taft_ _______________________________________________________ 872 to 1236 ____________ _ 365 7.60
wilson_ _____ _____ ______ ____ __ __ ________ _________ ____ ________ 1237 to 1588 ___________ _ 361 3. 76
Harding_____________________________________________________ 1589 to 1668 ___________ _ 80 2.75
Coolidge_ _ _ _____ ___ ______ __ __ __ __ __ ____ _____ ____ __ ______ ___ _ 1669 to 1869 ___________ _ 201 3. 00
Hoover _____ ________ ____ ________________ _____________________ 1870 to 2037 ___________ _ 168 3. 50
Roosevelt (Aug. 31, 1936) _ _ ______ __ _ _________ __ __ ______ __ _ ____ 2038 to 2195 ___________ _ 159 3. 78
2,207

APPENDIX 8*
Number of Executive orders for each administration since the numbering began

President Executive orders Total Average num-

number ber per month

Lincoln _____________________________________________________ 1 to 2 _________________ _ 2

Johnson _____________________________________________________ 3 to 7 _________________ _ 0.04
Grant _______________________________________________________ 8 to 20 ________________ _ 5 .10
Hayes ______________________________________________________________________________ _ 13 .13
Garfield ____________________________________________________________________________ _ o .00
Arthur ______________________________________________________ 21 to 23 _______________ _ o .00
3 .07
Cleveland _ _ _________________________________________________ 23A to 27 _____________ _ 5 .10
Harrison _ _ _ _________________________________________________ 27 A to 29 _____________ _ 3 .06
cleveland_ _ _ ________________________________________________ 30 to 96 _______________ _ 68 1. 41
McKinley _ ___ ___ ___ _____ ____ __ ___ __ _____ __ ___ __ ___ __________ 97 to 137 ______________ _ 50 .93
Roosevelt_ _ _ _ __ _______ __ __ ____ __ ___________ __ __ ____ _________ 141 to 1050 ____________ _ 1,011 11. 23
Taft ________________________________________________________ 1051 to 1743 ___________ _
699 14.56
Wilson _________________________________________ __ __ ____ ____ 1744 to 3416 ___________ _
~
1, 770 18. 43
Harding _____________________________________________________ 3417 to 3885_c _________ _
Coolidge _ _ _ _ ________________________________________________ 3885A to 5074 _________ _ 484 16. 68
Hoover ______________________________________________________ 5075 to 6070 ___________ _ 1,248 18. 63
1,004 20.91
Roosevelt (Aug. 31, 1936) _ ______ ___ __ ___ __ __ ___ ___ _______ _ __ __ 6071 to 7443 ___________ _ 1,616 38.47

• Compiled by W. J. Haggerty.
354
r
APPENDIX C
EXECUTIVE ORDER
REGULATIONS GOVERNING THE PREPARATION, PRESENTATION, FILING, AND DISTRIBUTIQ:-< OF EXECU-
TIVE ORDERS AND PROCLAMATIONS
By virtue of and pursuant to the authority
vested in me by the Federal Register Act,
approved July 26, 1935 (49 Stat. 500), and
as President of the United States, I hereby
prescribe the following regulations governing
the preparation, presentation, filing, and dis-
tribution of Executive orders and proclama-
tions:
1. Proposed Executive orders and procla-
mations shall be prepared in accordance with
the following requirements:
(a) A suitable title for the order or procla-
mation shall be provided.
(b) The authority under which the order or
proclamation is promulgated shall be cited in
the body thereof.
(c) Punctuation, capitalization, orthography,
and other matters of style shall conform to the
most recent edition of the Style Manual of the
United States Government Printing Office.
(d) The spelling of geographic names shall
conform to the most recent official decisions
made pursuant to Executive Orders No. 27-A,
of September 4, 1890, No. 399, of January 23,
1906, and No. 6680, of April 17, 1934.
(e) Descriptions of tracts of lands shall con-
form, so far as practicable, with the most
recent edition of the "Specifications for Descrip-
tions of Tracts of Land for Use in Executive
Orders and Proclamations", published by the
Federal Board of Surveys and Maps.
if) Proposed Executive orders and procla-
mations shall be typewritten on paper approxi-
mately 8 by 12H mches, shall have a left-hand
margin of approximately 2 inches and a right-
hand margin of approximately 1 inch, and shall
be double-spaced, except that quotations, tabu-
lations, or descriptions of land may be single-
spaced.
2. The proposed Executive order or procla-
mation shall first be submitted to the Director
of the Bureau of the Budget. If the Director
of the Bureau of the Budget approves it, he
shall transmit it to the Attorney General for
his consideration as to both form and legality.
If the Attorney General approves it, he shall
transmit it to the Director of the Division of
the Federal Register, the National Archives.
If it conforms to the requirements of paragraph
1 hereof, the Director of the Division of the
Federal Register shall transmit it and three
copies thereof to the President. If it is dis-
approved by the Director of the Bureau of the
Budget or the Attorney General, it shall not
thereafter be presented to the President unless
it is accompanied by the statement of the rea-
sons for such disapproval.
3. If the order or proclamation is signed by
the President, the original and two copies there-
of shall be forwarded to the Director of the
Division of the Federal Register for appropriate
action in conformity with the provisions of the
Federal Register Act: Provided, however, That
the seal of the United States shall be affixed to
the originals of all proclamations prior to such
forwarding. The Division of the Federal Regis-
ter shall cause to be placed upon the copies of
all Executive orders and proclamations the fol-
lowing notation, to be signed by the Director or
by some person authorized by him: "Certified
to be a true copy of the original." The Divi-
sion of the Federal Register shall number and
shall supervise the promulgation, publication,
and distribution of all Executive orders and
proclamations.
4. The Division of the Federal Register shall
cause a limited number of copies of the Execu-
tive orders and proclamations not required or
authorized to be filed and published under the
provisions of the Federal Register Act to be
made available in slip form to the appropriate
agencies of the Government.
5. The Division of the Federal Register shall
file in the National Archives the originals of
all Executive orders and proclamations.
6. The signed originals and copies of all
Executive orders and proclamations heretofore
promulgated and now in the custody of the
Department of State shall be transferred to the
National Archives.
7. Nothing in this order shall be construed to
apply to treaties, conventions, protocols, and
other international agreements, or proclama-
tions thereof by the President.
8. This order shall become effective on March
12, 1936, and shall thereupon supersede Execu-
tive Order No. 6247, of August 10, 1933.
FRANKLIN D. ROOSEVELT.
THE WHITE HOUSE,
February 18, 1936.
[No. 7298]
355
,

THE PREPARATION OF PROPOSED LEGISLATIVE

MEASURES BY ADMINISTRATIVE DEPARTMENTS

by
EDWIN E. WITTE
 I

j
,
i

THE PREPARATION OF PROPOSED LEGISLATIVE MEASURES

B.Y ADMINISTRATIVE DEPARTMENTS
by
EDWIN E. WITTE

Contents
Page
Introduction 361
Definitions 361
Importance of the Subject 361

I. Principles That Should Govern the Legislative Activities of Administrative Departments 362

II. Present Procedures 364

Preparation of Legislative Measures within Departments 364
Central Clearance in the First Session of the Seventy-fourth Congress (1935) 365
Central Clearance in the Second Session of the Seventy-fourth Congress (1936) 366
Value and Limitations of Clearance as Practiced in the Seventy-fourth Congress 367
Outstanding Defects in Present Procedures and Their Consequences 368

III. Procedures in Other Governments 370

State Governments 371
Great Britain 371

IV. Major Possibilities for Improvement and Their Practical Difficulties 372
The Department of Justice as the Central Clearance Agency 372
The Bureau of the Budget as the Clearance Agency 372
Clearance through the White House 373
Clearance at the Departmental Level 373

V. Recommendations 375
General Plan 375
Details of the Clearance Procedure 375
Bill Drafting 377
Duties of the Legislative Counsel 377

Appendix 378
Estimates or Requests for Appropriations 378
Reports and Recommen :lations on Proposed or Pending Legislation 378
359
l
INTRODUCTION 1
•
DeAnitions
As used in this report, the term "legislative
activities" includes all activities, direct or in-
direct, of administrative departments relative
to legislation pending or proposed to be intro-
duced in Congress. It includes the preparation
and drafting of proposed legislation in adminis-
trative departments or under their direction and
all efforts on their part to secure the enactment
of such legislation. It includes efforts by ad-
ministrative departments to promote, defeat,
or change proposed or pending legislation which
they did not originate but in which for any
reason they are actively interested. It like-
wise embraces reportB to either house of Congress
or to congressional committees by administra-
tive departments, whether made on their ini-
tiative or pursuant to congressional request or
instruction. It also includes appearances of
representatives of administrative departments
before congressional committees in explanation
or support of or in opposition to proposed or
pending legislation.
The term "administrative department" ap-
plies to all executive departments, independent
commissions, boards, bureaus, agencies, or
other establishments of the Government, except
the Office of the President, the Le~slative and
Judicial Branches, and the muniCipal govern-
ment of the District of Columbia. It applies
also to all subdivisions of all agencies included
and to their officers and employees, but ex-
cludes appearances by officers and employees
in matters having no relation to their official
duties.
The exercise of the constitutional powers of
the President in relation to legislation is outside
of the scope of this report except as it is affected
by the legislative activities of administrative
departments. Similarly, the report is not con-
cerned with the manner in which the Congress
exercises its legislative functions, although the
effects of the legislative activities of administra-
tive departments upon congressional considera-
tion and action are noted at various points.
1 Most of the factual Information presented in this report on the present
machinery of central clearance of legislative proposals of administrative
departments, as well as much of the information on the preparation of
legislative measures In the departments, was collected by lohn R. Millett.
j
Importance of the Subject
Out of the total of 429 public acts exclusive
of appropriation acts in the first session of the
Seventy-fourth Congress (1935),270 referred to
the organization or functioning of administra-
tive departments. In the second session of that
Congress (1936) there were 156 acts of this
character.
There is little doubt that the great majority
of these acts originated, directly or indirectly,
in the departments concerned. Many other
bills promoted by departments did not become
law, and departments expressed opinions upon
and engaged in other legislative activities in
relation to many bills they did not initiate.
Throughout the history of the country there
has been some promotion of legislation by ad-
ministrative departments,2 and such activities
have tended to increase as the functions of the
Government have grown. This is a phenom-
enon characteristic of all modern governments.
In all probability the legislative activities of
administrative departments will continue te be
at least as extensive in the future as they have
been in the past. Many of these activities are
in the interest of good government and are
distinctly helpful to the CongresS. A large
part of them are undertaken at the instance of
Congress or of congressional committees. The
problem presented is not one of doing away
with all such activities, but of so controlling
and channelizing them that they will promote
and not hinder the performance of legislative
functions by the Congress and of executive
functions by the President.
All strong Presidents throughout the Nation's
history have been legislative leaders, and in
their administrations the legislative activities
of administrative departments have been most
extensive.
I See Robert Luce, Leg/,/atiDe Problem. (New York: Hooghtoo·Mlmlo
Co., 1935), pp. 197-263. 10 the ftnrt sessioo of the first Congress there wal
an extensive debate over the drafting ofieglslation by the Secretary of the
Treasury. In letferson's administration lohn Randolph of Roanoke, In
a speech in the House of Representatives. denoonced the Interference of
the President in legislation and the practice of the departments in pro·
motlng and preparing most measores passed by the Congress. At the
close of lackson's administration " member of the Ways and Means
Committee in a public speech charged that all bills reported by that
committee were drafted In the Treasury Department.
361
 I. PRINCIPLES THAT SHOULD GOVERN THE LEGISLATIVE
ACTIVITIES OF ADMINISTRATIVE DEPARTMENTS
•
Before giving an account of present practices
and suggestions for improvement in the legisla-
tive activities of the administrative depart-
ments, it will be helpful to present briefly the
principles which should govern these activities.
An attempt to formulate these fundamental
principles is presented below. Though the
precise statement of these :principles will not
be acceptable to everyone, It is believed that
the ideas expressed are in accord with the views
of the great majority of administrators, legis-
lators, and students of government.
1. Under the Constitution, Congress is the
Legislative Branch of the Government and must
determine all legislative policies. It has final
control of the organization of all administrative
departments and the exercise of administrative
powers. The legislative activities of adminis-
trative departments, consequently, should be
developed with this fundamental principle ever
in mind and should be directed toward giving
the Congress the complete information it needs
for the wisest exercise of its powers.
2. The founding fathers wisely created a
single not a plural Executive. The Constitu-
tion centralizes responsibility for efficient ad-
ministration in the President. The President,
moreover, is specifically charged in the Con-
stitution with important duties in relation to
legi~lation. It is his duty under article II,
sectIOn 3, to recommend to the Congress,
"from time to time", "such Measures as he
shall judge necessary and expedient", and he is
expressly authorized in article II, section 2, to
require "the principal Officer in each of the
executive Departments" to give him his "Opin-
ion, in writing, * * * upon any subject
relating to the Du ties of their respective Offices."
3. Inasmuch as a large part of all legislation
is concerned with the structure or functioning of
administrative departments and the creation or
modification of administrative powers, Con-
gress is entitled, in the consideration of such
legislation, to get from the administrative
departments the benefit of their experience and
special knowledge. Conversely, it is the duty
of the administrative departments to give to the
Congress their suggestions regarding needed
changes in the laws they administer.
4. All ideas and procedures in bills that
originate in the Executive Branch of the govern-
362
ment should be completely worked out before
presentation to the Congress. The financial,
mternational, and other effects and implications
of all such proposals should be carefully exam-
ined, and before any attempt is made to
interest the Congress m the enactment of these
proposals into law all probable consequences
should be weighed judiciously, to prevent
creating more serious problems than the condi-
tions which it is sought to remedy.
5. Conflicts and differences between admin-
istrative departments, both as to policies and
as to details, in proposals for legislation shuuld,
so far as possible, be adjusted before such bills
are presented to Congress. Though the ulti-
mate decision in all such conflicts rests with
Congress, its work is hindered by bickerings and
conflicts between departments over jurisdiction.
6. Though less important than the complete
working out of ideas and procedures, the careful
consideration of all effects and implications of
proposed legislation, and the adjustment in
advance of conflicts between departments, it is
desirable, in the interest of conserving the time
of Congress, that proposals for legislation which
are presented in fully drafted form should be
well drafted from the technical point of view
(i. e., in form, language, and structure).
7. Though primary responsibility for the
observance of the principles enumerated under
4, 5, and 6 should rest upon the departments
initiating legislative proposals, it is too much
to expect, in an organization so large and
complex as the Executive Branch of the Federal
Government, that these principles will be
observed in all or nearly all cases, unless there
is some central clearance of proposals for legis-
lation prior to their presentation to the Congress.
8.· "In the modern state most legislation is
directed toward the creation or modification of
administrative powers." 3 The efficient func-
tioning of the administrative departments de-
pends to a very considerable degree upon the
legislation applicable to them. There is a vital
relationship between legislation and adminis-
trative management. Efficient administrative
management is unthinkable without constant
and detailed attention to the legislative activi-
ties of administrative departments and to legis-
lative proposals affecting them.
a W. Ivor Jennings, Cabinet GOfeTfimefit (Cambridge: University
Press, 1936), p.I77.
 The Preparation oj Proposed Legislative Measures
9. As the head of the unified Executiye
Branch of the Government contemplated in the
Constitution, the President is or should be made
primarily responsible for administrative man-
agement in the Federal Government. For the
reasons stated under point 8, this responsibility
makes it necessary that the President know
what administrative departments are doing in
the way of promoting or opposing legislation,
and that he have an opportunity to prevent the
presentation to Congress, as administration or
departmental measures, of legislative proposals
that conflict with his policies. This conclusion
follows not only from the fact that the Consti-
tution contemplates a single-headed Executive,
but also from the express provision of the Con-
stitution, article II, section 3, which makes it
the duty of the President to "give to the Con-
gress Information of the State of the Union, and
recommend to their Consideration such Meas-
ures as he shall judge necessary and expedient."
10. The President cannot possibly perform
his duties in relation to the legislative activities
of administrative departments satisfactorily
unless he is relieved of many of the details by
people in whom he has confidence and who know
his policies intimately. - Similarly, he needs to
have all issues of policy which he must decide
presented in summary form, briefly and fairly.
11. It does not follow from the principles thus
far set forth that all legislative proposals of
administrative departments should be pre-
sented to the Congress as administration bills.
There are good reasons for not identifying the
administration with all legislative activities of
administrative departments. Central clear-
ance, however, is essential even for legislative
proposals that are not presented as adminis-
tration bills.
12. In addition to clearance on legislation
initiated by departments, there is need for
clearance on reports relating to proposed legis-
lation that are made by departments to either
House of Congress or to congressional com-
mittees and on appearances of officers and
employees of administrative departments before
congressional committees under circuIhstances
in which their testimony is likely to commit
I
I
j
363
the administration of their departments for or
against some pending bill. Such clearance on
reports and testimony must be so conducted
as to recognize and preserve the right of the
Congress to get all the information en legisla-
tive proposals and the conduct of departments
which it may desire and to which it is con-
stitutionally entitled.
13. It is desirable that all bills introduced
in the Congress, including those not initiated
by administrative departments, be carefully
examined by some central agency within the
Executive Branch of the Government, to dis-
cover their probable effect upon the work of
the several departments, with a view of timely
notification to the interested departments.
Such clearance would obviate the necessity
of having each department employ checkers
and observers to report upon what is happening
in Congress.
14. Careful checking of all aspects of the
bills passed by the Congress which affect the
functioning of the Executive Branch of the
Government is essential before these bills are
signed by the President. This applies even
to bills that were carefully checked prior to
introduction, as bills commonly are greatly
altered before final passage.
15. However the central clearance machinery
on legisl:1tion in the Executive Branch of the
Government may be set up, it is clear that it
should function under the direct control of
the President, because it so vitally affects the
performance of some of the most important of
his duties.
16. Though it is essential to recognize the
respective limits of authority of the Executive
and Legislative Branches of the Government, as
prescribed in the Constitution, informal co-
operation between them is in the interest of
good government. The manner in which
legislative proposals coming from the President
or any administrative department should be
presented to the Congress is a matter outside
the scope of this report, but it should be
recognized that in practically all cases con-
sultation with committee chairmen and other
congressional leaders is highly desirable.
 II. PRESENT PROCEDUREjS
•
Preparation of Legislative
Measures within Departments
Most of the larger administrative depart-
ments have some legislative measures in every
session of the Congress Typically, these meas-
ures originate in the bureau which has juris-
diction over the subject matter, and very of~en
a preliminary draft of the proposed legIslatlOn
is prepared in:
the bureau before it is taken up
with anyone outside. Ere long, however, the
solicitor or counsel of the department is con-
sulted, and the final work of bill drafting within
the department generally is done by someone
connected with the office of the solicitor or
counsel.
Within departments there has been a growing
realization of the desirability of centralizing
responsibility for bill drafting in the counsel's
office and of placing someone in this office
definitely in charge of this work.
The most complete development in this
direction was the creation in the fall of 1934 of a
legislative division within the office of the
General Counsel of the Department of the
Treasury. This division, functioning under the
close supervision of the General Counsel, has not
only drafted all Treasury bills ( before pre.sep.ta-
tion to the Congress, but has had responsIbility
for closely watching this legislation after it is
introduced and of working with the legislative
draftsmen in preparing amendments desired by
the congressional committees. The legislative
division is also charged with the duty of ascer-
taining, well in advance of any seSSIOn of the
Congress, what proposals the several bureaus
and the major field representatives of the De-
partment have for changes in the laws which
they administer, with the end in view of having
all legislative proposals ready for introduction
by the opening of the congressional session.
A somewhat similar step was taken in the
Department of Commerce in 1935, when a
young attorney, who had had some prior bill-
drafting experience, was added to the staff.
In the same year a bill draftsman was added
to the staff of the Solicitor of the Department
of the Interior, under whom all legislative
activities of the Department have been cen-
tralized. In the Department of Justice, legis-
lative proposals are usually, in the first instance,
• In recent years major administration revenue measures have not been
presented to the Conj!ress in fully drafted form, but the Treasury drafts·
men have worked with the legislative draftsmen in putting these meas-
ure.lnto hill form, as desired by the Ways and Means Committee.
364
drafted by or in the office of an Assistant
Attorney General; but they are then always
referred to a particular Special Assistant to the
Attorney General, who has final responsibility
for the drafting of all bills in which the Depart-
ment is interested. In none of these three
departments, however, ~oe~ there appear. t? .be
quite so definite centralizatIOn of responsIbility
for bill drafting as in the Department of the·
Treasury. .
In no other department is there anyone who
is called a bill draftsman, but as has been
noted, the drafting of bills to be I?resented to
the Congress is nearly always conSIdered to be
a function of the solicitor or counsel, at least to
the extent that someone connected with this
office checks the drafting of all proposed legisJa-
tion before it leaves the department. WIth
the exceptions mentioned in the preceding
paragraphs, however, bill drafting i~ ~ot the
major duty of anyone person WIthin the
department, and in ma~y departments there
is no one who could pOSSIbly be regarded as an
experienced bill draftsman.
Very generally, legislative proposals of ad-
ministrative departments now pass over the
desk of the Secretary or other departmental
I
head and must have his approval before they
are permitted to leave the aepartment. At
least most of the heads of executive depart-
ments check legislative proposa}s that origi-
nate within their departments qUIte closely and
satisfy themselves that they are necessary and
sound. In some departments, of which the
Department of Commerce is an example, the
heads of the departments mak~ use ?f their ad-
ministrative assistants to examme mmutely the
legislative proposals of their bureaus. In
many, and probably most, cases the Secretary
or other head of the department conducts one
or more conferences to consider the proposed
leg-islation, in which representatives from the
inItiating bureau and the counsel's office as ~e!l
as other executives in the department partlcI-
p~~ .
There are many stories on Capit?l HIll of
bills which are initiated by bureaus WIthout the
knowledge of the Secretary or other depart-
mental head. That there are still instances of
this kind is probable, but they are now com-
paratively rare and have been greatly reduc.ed
by the establishment of the. clearance mll;chm-
ery, described her~after, whleh has functlOned
in the last two seSSlOns.
j
 The Preparation of Prop08ed Legislative Measure8
Such difficulties as still exist in this respect
arise principally through friendships of people
in administrative departments with Members of
Congress. As a natural outgrowth of such
friendships, legislative proposals that originate
with some subordinate may be introduced with
no prior knowledge of the head of the depart-
ment, although vitally affecting the department.
Such proposals often do not represent any
attempt on the part of anyone to short circuit
the regular procedure, and are seldom labeled
in Congress as administration or departmental
bills. If the present situation still presents a
serious problem, which is doubtful, it can be
curbed by congressional legislation similar to
section 2 of the Budget and Accounting Act of
1921, which forbids any officer or employee of
any administrative department to submit to the
Congress or to any congressional committee any
estimate or request for an appropriation or any
suggestion for raising revenues.
Central Clearance in the First Session
of the Seventy-fourth Congress (1935)
Since 1921 there has been central clearance of
all bills originating in the Executive Branch of
the Federal Government which involve finances.
Such clearance is expressly required by section 2
of the Budget and Accounting Act, which for-
bids all administrative departments and the
municipal government of the District of Colum-
bia and their officers and employees to submit
to the Congress or to any congressional com-
mittee (except at the express instructions of
either House of Congress) any estimate or re-
quest for an appropriation or for an increase in
any item of any such estimate or request, or
any recommendation as to how the revenue
needs of the Government shall be met.
A plan for central clearance 6 for other types
of bills originating in administrative depart-
ments was initiated by the President in Decem-
ber 1934, and was in effect through the first
session of the Seventy-fourth Congress. This
plan provided that no proposal for legislation
was to be submitted by any adminIStrative
department to the Congress until it had been
I cleared through the Bureau of the Budget or
the National Emergency Council.6 All appro-
priation and revenue measures were to be sub-
mitted to the Bureau of the Budget and all
I other legislative proposals to the National
Emergency Council. In the National Emer-
gency Council the measures submitted were to
be routed through three channels, all of them
connected with this agency: The loan commit-
J bills did not pass through the clearance ma-
• The plan for clearance was announced hy the President to the Na·
tlonal Emergency Council at Its meeting on Dec. 11, 1934, and 2 days
later it was trlUlSmitted by the Executive Director of the National Emer-
gency Council to the heads of all administrative departments. These
Instructions were supplemented on Apr. 23, 1935, by another letter of
the Executive Director to departmental heads, which set forth no new
policies but made it more specific that appropriation and revenue meas-
ures were to be cleared through the Director of the Budget, as required
by the Budget and AccountIng Act.
I The plan also required submission to the National i:mergency Coun-
cil of all measures sponsored by departments and intended for Introduc-
tion in State legislatures
365
tee, if the proposal concerned banking legisla-
tion; the industrial emergency committee, if it
dealt with the future of the N. R. A.; and the
Executive Director of the Council in all other
cases.
It has not been possible to make any detailed
study of the functioning of this clearance sys-
tem in the Bureau of the BUdget, but such a
study has been made of the bill clearance work
of the Executive Director of the National
Emergency Council. A total of 170 proposals
for legislation were submitted to this officer
in the first session of Seventy-fourth Congress.
These proposals came from eight Cabinet de-
partments and five independent establish-
ments and emergency agencies. Thirty-two of
these measures were of such a character that
the Executive Director deemed them to fall
within the jurisdiction of the Bureau of the
Budget and referred them to the Director of
the Budget. The other 138 measures were
transmitted to the President, with a recommen-
dation for disposition from the Executive Di-
rector. Thereafter, the President, in most
cases, sent the measures back to the National
Emergency Council with his decision, which
was then transmitted by the Executive Director
to the initiating department. Only after having
been approved by the President were the bills
in question presented to the Congress.
Nearly all of these legislative proposals came
to the Executive Director of the National
Emergency Council fully drafted. Invariably
they were accompanied by an explanatory
memorandum, prepared by the initiating de-
partment, setting forth at some length the
purposes of the proposed legislation. The
Executive Director of the National Emergency
Council, after examining the proposals, sent
the entire file to the White House with a small
slip attached to the top of the file which usually
read, "No objection found to this as a depart-
mental measure ", but which in a few cases
suggested some other disposition. From the
White House the file came back to the National
Emergency Council, generally with the notation
"0. K. F. D. R." written by the President,
beneath the recommendation of the Executive
Director. This entire process, in most cases,
consumed only a few days.
The Executive Director most energetically
sought to get all administrative departments to
submit to him their legislative proposals for
clearance as required by the President's instruc-
tions. The lar~e number of measures actually
submitted in this session attests to considerable
success, but most of the major administration
chinery. 7 Clearance of most of the bills which
were submitted to the Executive Director,
moreover, seems to have been pretty much of
, Among the measures of this session which did not pass through the
National Emergency Council were the Social Security Act, the Public
Utility HoldIng Company Act, the Motor Carrier Act, the Neutrality
Act, and the Soli Conservation Act. No measure on which the Presi-
d~nt sent a message to Congress was cleared through the National Emer-
gency Council.
366
a routine matter. The great majority were
"approved for introduction as a departmental
measure." Clearance in this session seems to
have had for its principal objective to afford
the President an opportunity to .stop the intr?-
duction of any departmental bill that he dId
not approve, rather than the more careful
working out of these measures and the recon-
ciliation of conflicts between departments.
Central Clearance in the Second Session
of the Seventy-fourth Congress (1936)
A revised plan for central clearance of the
legislative activities of administrative depart-
ments was outlined by the President at a meet-
ing of the National Emergency Council on
December 17, 1935. This revised procedure was
set forth in detail in Budget Circular No. 336,
which is reproduced in full as an appendix to
this report.
This Budget circular directed the heads of
all departments. to w~om the Bud.get and
Accounting Act 18 applIcable to submlt to t?e
Director of the Budget all proposals for legls-
lation to be presented to the Congress. It
also directed them to clear 'with the Bureau
of the Budget all reports or recommendations
which they might make ~o the. Congress <?r
to any congressional cOmmlttee, elth.er o~ theIr
own initiative or pursuant to a dIrectlOn or
request of either house ?f the Congress .or of
any congressional comnuttee. Further, It re-
quired clearance ",ith the Bureau of the Budget
before any officer or employee of any adI?in~­
trative department made an appearance m hIS
official capacity before any committee of the
Congress, to forestall the possibility that he
might commit the administra.tion to a measure
contrary to its general program. Clearance on
legislative activities was thus considerably ex-
tended. In 1935 only propo!'ed bills had to
be submitted for clearance; in 1936 reports to
the Congress and appearances in an official
capacity as witnesses before congressional com-
mIttees also had to be cleared.
Other changes related to procedure. In the
1935 session some matters were required to be
presented to the Bureau of the Budget and
others to the National Emergency Council,
with resulting confusion. In the new procedure
all departments were required to submit every-
thing to the Bureau of the Budget, which was
to refer all proposals for legislation that did not
involve bud~et or financial matters to the
Executive DIrector of the National Emergency
Council. Measures thus referred were to be
cleared by the Executive Director with the
President, after which he was to report to the
Bureau of the Budget whether or not these
proposals were in accord with the "policy
progra.m of the President." This information
was then to be relayed to the initiating depart-
ment. Similarly, the Bureau of the Budget
was to advise the initiating department whether
The Preparation oj
or not legislative proposals affecting finances
were in accord with the "financial program of
the President."
A total of 45 bills and 15 reports originating
in administrative departments were referred
to the Director of the National Emergency
Council in this session. They came from 8
departments of Cabinet rank and 10 inde-
pendent establishments and emergency agen-
cies.s Twenty-three of the 45 bills were
approved by the President; 7 were disapproved j
1 was dropped by the initiating department; in
11 cases the departments were advised to use
their own discretion; and in 3 cases no answer
was received from the President after the pro-
posal was transmitted to him. Of the 15
reports, 12 were approved by the President,
1 was dropped, and in 2 cases the departments
were told to use their discretion. As in 1935,
the President, in acting upon the matters trans-
mitted to him by the Executive Director of the
N ationnl Emeregency Council, in nearly every
instance followed the suggestions made by
that officer.
The total number of proposed bills which
passed through the office of the Executive
Director of the National Emergency Council
was much smaller in the 1936 than in the 1935
session. This is partially explained by the
fact that many of the bills upon which the Con-
gress acted in this session were introduced in
the prior session. As all bills submitted for
clearance in this session were in the first in-
stance Rent to the Bureau of the Budget, it is
also possible that some measures which in-
cluded both financial and other provisions were
not referred to the National Emergency Coun-
cil, but were cleared with the President as to
all of their provisions by the Budget Bureau.
There is much reason to believe, however, that
a major factor in the decrease in the number of
measures cleared through the National Emerg-
ency Council was the failure of departments to
comply with the requirements of the Budget
circular. Very few of the principal acts of
this congressional session were cleared with the
Executive Director of the National Emergency
CounciJ.9 1\ early all of the clearance work of
this officer in this session affected only minor
• Of the Cabinet departments, Interior and Labor submitted no bills
to the National Emergency Council in 1935, and Labor and the Post
Office Departments submitted none in 1936. In neither session were
any matters presented by such important independent establishments
and emergency agencies as the Interstate Commerce Commission, the
Federal Emergency Relief Administration, the Works Progress Admnis·
tration, the Public Works Administration, or the Reconstruction Finance
Corporation .
• Among the acts of this session which either originated in admlnlstra·
tlve departments or in whose formulation such departments were major
participants but which were never submitted to the Executive Director
of tbe National Emergency Council were the following; The Soil Con-
servation and Domestic Allotment Act, the Rural Electrification Act,
the act relating to the taxation of bank securities owned by the Recon-
struction Finance Corporation, the l<'lood Control Act, the amendments
to the Railway Labor Act, the Liquor Tax Administration Act, the
amendments to the Migratory Bird Treaty Act, tbe Commodity
Exchange Act, the Walsb·Healey Act~ ~be act to provide a civil govern.
ment for the Virgin Islands, and the Merchant Marine (Sbip Subsidy)
Act. Of all tbe major legislation of this session the only measures cleared
tbrougb the Executive Director of the National Emergency Council ,,:ere
tbe bill for the continuance of the Electric Home and Farm Authority,
the amendments to the Steamboat Inspection Act, the amendments to
the Communications Act, and the amendments to the Securities Exchange
Act relating to tbe regulation of unlisted securities sold by counter brokers.
--
Proposed Legislative Measures
departmental bills, and many bills even of this
description were not cleared at all.
On the other hand, clearance of legislative
measures through the Executive Director of
the National Emergency Council meant much
more in this than in the prior session. First,
the draftsmanship of all bills referred to the
Executive Director was carefully checked.
Under an arrangement made with the Attorney
General, bills the drafting of which the Execu-
tive Director felt could be improved were re-
ferred to a Special Assistant to the Attorney
General, to be gone over in detail and, if neces-
sary, to be redrafted in whole or in part. The
suggested changes in the wording of bills were
then taken up with the initiating department
and in each instance accepted without question.
The Executive Director of the National
Emergency Council also examined all bills most
carefully to determine whether they in any
manner affected other departments than those
which initiated the measures and consulted
these other departments to get their reactions.
In many cases he persuaded departments to
make significant changes in their bills to avo~d
the opposition of other departments, and ill
some instances clearance resulted in the com-
plete fl;bandonment of th~ proposed le~islation.lO
Similarly, clearance With. th~ PreSident w?-s
distinctly more comprehensive ill 1936 than ill
1935. Some trivial matters were disposed of by
the Executive Director of the National Emer-
gency Council without consulting the President,
the Executive Director assuming the responsi-
bility for saying that they- were not in conflict
with the President's policIes; 11 but all measures
of importance were cleared with the President
much as in the previous session. Unlike the
procedure in that session, however, the Execu-
tive Director not only recommended to the
President what action he ought to take on the
proposals thus submitted, but also gave him a
one-page summary of the suggested legislation,
which included a clear statement of the policies
at issue and the reactions of all interested
departments. . This prevented bureau chiefs and officers
Inquiry has revealed considerable complaint
in administrative departments that clearance
of departmental legislative proposals was slower
in 1936 than in 1935, and there are accounts of
10 A good !Ilustratlon of the actual functioning of clearance through
the Executive Director of the N ationa! Emergenc}, Council In this ses-
sion Is afforded hy two b!Ils relating to the acqw,ltion of land in the
District of Columbia, submitted, respectively, by the War Department
and the National Capital Park and Planning Commission. When
these bills were examined by the Executive Director, he concluded that
a more general bllI was desirable, and he asked the two interested agen·
cles to get together BUd bring in a single, comprehensive bill dealing with
the acquisition of land by Government departments in the DL.trlct of
Columbia. This was done, and thereafter the revised bllI was sent to
the Interior, Navy, and Treasury Departments for their comments.
In thL~ manner a single mes.'ure was prepared for introduction in the
Congress, which otherwise would have had two hills on the same general
subject in this session, and very probably more later on.
II An Illustration of such action is the bill which the Department of
the Treasury submitted to give effect to a recent whaling convention.
The Executive Director, after ascerteinlng from the State and Commerce
Departments that the measure was satisfactory to them, advised the
Director of the Budget to notify the Department of the Treasury to go
ahead with the bill, without having sent the file to the White House.
Early In the ses,lon, the Executive Director requested the Bureau of
Budget not to send any measure to him which this hureau regarded as
80 trl'vlal that the President ought not to be troubled with It.
367
what would seem to be unreasonable delays.
From the examination of the files of the N a-
tional Emergency Council, it would seem that
these delays did not occur in this department.
In most cases the Executive Director did his
part of the work of clearance within 1 day.
Even bills referred for redrafting to the Special
Assistant to the Attorney General were gener-
ally cleared within a few days. Whatever
delays occurred appear to have been due mainly
to the fact that some measures were kept a long
time in the Bureau of the Budget before they
were referred to the Executive Director of
the National Emergency Council-apparently
because this Bureau has been understaffed.
Value and Limitations of Clearance
as Practiced in the Seventy-fourth Congress
Both the value and the limitations of central
clearance as practiced in the Seventy-fourth
Congress have been touched upon in the pre-
ceding account of the organization and func-
tioning of the clearance machinery. On the
value side are to be counted, first of all, the
advantages to the initiating departments.
Through resort to the clearance machinery
they could make certain that in their proposals
for legislation they were not running cQ.unter
to the administration's policies, without hav-
ing to trouble the President personaliy about
these matters, many of them of minor import-
ance. They also were assured that these
measures would not have opposition from other .
departments once they were cleared in the
regular manner. The requirements for clear-
ance operated to make the initiating depart-
ments more careful in the preparation of their I
legislative proposals, for they knew that they
would be scrutinized in detail by the clearance
officers and, perhaps, by other departments.
The clearance procedure also operated to give
the head of the department a much more certain
control over bills originating in his organiza-
tion. Only the heads of departments were
permitted to submit measures for clearance.
further down the line from short-circuiting the
heads of their departments and forced these
department heads to interest themselves in
and assume responsibility for legislation origi-
nating in their departments.
Even greater were the advantages of clear-
ance to the Government as a whole. These
advantages arose, in part, from the fact that
the legislative proposals of administrative de-
partments, n.aturally reflect~ng their partic,;!lar
points of VIew, were subJected to detailed
examination by officers whose interests were
those of the entire Government. Through the
device of central clearance interested depart-
ments were also apprised, in numerous in-
stances, of legislative proposals originating in
other departments of which they probably
would otherwise have heard nothing until intro-
368
duced in the Congress. These departments
were thereby enabled to present their points of
view and to influence the legislation while still
in its formative stage. In some cases, this
doubtless avoided time-consuming conflicts be-
fore congressional committees, discreditable to
the Executive Branch of the Government.
Beyond question, at least some of the measures
submitted were greatly improved through clear-
ance, both in content and in form. Through
this machinery the President was enabled to
control to some degree the bills presented to the
Congress by administrative departments, with-
out having personally to go into the details of
these proposals. At one and the same time,
the President had more effective control over
the measures submitted for clearance and had
to devote less time to them than if they had
been taken up with him directly, as departments
previously were wont to do.
The most serious limitation of clearance as
practiced in the Seventy-fourth Congress was
that nearly all of the really important bills as
well as many minor bills originating in the
Executive Branch of the Government did not
pass through this machinery. The instructions
of the President, particularly in 1936, seemed
to apply to all legislative activities of admin-
istrative departments, without exception. Ac-
tually, however, these instructions were applied
as if they read that measures not cleared directly
with the President should be cleared in the
prescribed manner. Matters discussed with
the President in person by a department head
were not submitted for clearance, except in a
few cases where the President specifically in-
structed the proponents that they should also
clear their bills in the prescribed manner.
The President's approval orally given, or read
into his statements by the head of the initiating
department, was deemed sufficient in most
instances to authorize introduction of the
contemplated legislation without anything fur-
ther. Not only were nearly all of the measures
about which the President sent special messages
to the Congress (the major administration bills)
exempted from clearance, but many lesser
matters also escaped such checking. Some
departments apparently paid no attention to
the clearance orders and others submitted only
their less important proposals, preferring to
clear the legislation in which they were most
interested directly with the President. The net
result was that clearance as practiced in the
Seventy-fourth Congress was restricted almost
entirely to minor departmental bills.
Outstanding Defects in
Present Procedures and Their Consequences
The clearance machinery to date thus has
been but a relatively minor factor in the legis-
lative activities of administrative departments.
Though important in demonstrating the possi-
bilities of such clearance, it has had little
The Preparation oj
influence upon the handling of the major
measures by which the Members of Congress
and the public at large mainly judge the legis-
lation which originates in the Executive Branch
of the Government.
Not everything in the handling of these
major measures has been wrong, but there is
much room for improvement. Both on Capito)
Hill and in the administrative departments,
there are many stories about particular measures
that are anything but complimentary to present
procedures. Little attempt has been made to
ascertain the truth or falsity of these stories,
but the fact that there are so many of them
and that they are widely believed suggests
that where there is so much smoke there must
be some fire.
Among the most common and apparently
best founded criticisms of present procedures
are the following:
1. Many measures that originate in the
Executive Branch of the Government are
poorly drafted and not well thought out. Of
these two defects, the former is distinctly the
less serious. Technical defects in draftsman-
ship can be remedied in the course of passage
through Congress. Most congressional com-
mittees want the legislative draftsmen to check
carefully the drafting of all measures they
recommend; moreover, few bills of any im-
portance ever pass without some revision.
Though poor draftsmanship is a hindrance to
bills originating in the Executive Branch of the
Government, it is not nearly so serious as lack
of thorough consideration of the policies recom-
mended. Where ideas are completely and well
worked out, the legislative draftsmen are quali-
fied to express them in bill form; but where the
proponents of legislation have only vague ideas
of what they want or have not really thought
through the program they are championing,
it is often impossible to produce a workable
bill. The draftsman's task is technical; all
substantive provisions must come from the
proponents or the Members of Congress.
2. Clashes between departments over bills
that originate in the Executive Branch of the
Government have been frequent and, gener-
ally, have had a harmful effect. Though
many of the stories that are current about the
very serious friction between bureaus and
departments over pending bills are probably
exaggerated, the fact that there often is such
friction is undeniable. Bills have been initiated
by administrative departments which other
departments have fought to their utmost
ability. In their least offensive form such
clashes have been confined to the presentation
of the opposing points of view in hearings before
congressional committees; often they have not
stopped there but have taken the form of ex-
tensive lobbying by the competing depart-
ments, akin to that practiced by rival pnvate
interests. Contests of this sort have created
lasting friction between departments and have
1
! Proposed Legislative Measures
more often tended to confuse the Members of
Congress than to enlighten them. In a con-
siderable number of cases the end result has
been the defeat of legislation which probably
would have passed had the differing points of
view of the interested administrative depart-
ments been adjusted in advance of the intro-
duction of the proposal in Congress.
There are situations in which the President
as the head of the Executive Branch of the
Government may not wish to advise all in-
terested departments in advance of legislation
which he intends to recommend. There are
also situations in which the wisest handling of
the differing points of view of departments is to
submit them to the Congress for decision. Most
of the conflicts that have actually occurred, how-
ever, were not due to these causes but to
defective clearance or the complete lack of
clearance. It is not uncommon that depart-
ments first learn of bills promoted by other
departments which seriously affect them when
these bills are introduced to the Congress, not
because anyone intended that they should not
be advised, but solely because the importance
of advance clearance was overlooked or because
the proponents did not realize that other
departments were interested.
3. Administrative departments, even though
not hostile to bills initiated by other depart-
ments, quite often present amendments to
these bills without clearing them with the
initiating departments or through the clearance
machinery established by the President. Very
generally such amendments relate to matters
overlooked by the initiating department, which
omissions might have been avoided through
adequate clearance before introduction. At
times, however, tactics of this kind are resorted
to to get through pet ideas which standing
alone would have little chance of passage.
4. There is some feeling among members of
Congress that they are not consulted as much
as they should be in advance of the introduction
of legIslation which originates in the Executive
Branch of the Government. The President
~enerally has contacted administration leaders
m the Congress in advance of the presentation
of major administration measures and his
practice in this respect is reasonably satisfactory
to the Members. There is much complaint,
however, about bills prepared in administrative
departments which are handed fully drafted to
committee chairmen for introduction, without
any prior consultation and with but little
explanation other than that the administration
wants these measures to be passed.
369
Advance consultation calls for delicate strat-
egy which must vary with the committees and
Members of Congress involved, the needs of the
time, and prevailing public opinion. Members
of Congress resent abrupt treatment far less
when a great emergency renders prompt action
vitally nece~sary. Unquestionably, also, there
are great dIfferences between committees and
committee chairmen in this respect. At the
present time there are committees in the House
of Representatives that refuse to consider any
proposal from an administrative department
which does not come to them fully drafted
whereas other committees demand that they b~
consulted before any work at all is done in
preparation of such measures. The most
effective handling of the legislative proposals
that originate in the Executive Branch of the
Government will take into account such prefer-
ences and the conditions of the time. There is,
undoubtedly, much room for improvement in
this respect.
5. There is entirely lacking at the present
time a central service to advise the several
departments in the Executive Branch of the
Government about bills in the Congress of
peculiar interest to them. Departments, of
course, know about measures which they orig-
inate, but frequently bills are introduced which
affect them and of which they have no advance
information. At the present time most de-
partments detail some one in their organiza-
tion to watch legislation, but even so they often
discover bills of great importance to them only
accidentally. 12 Such separate checking of legis-
lation, moreover, involves needless duplication,
which could easily be avoided.
6. The present procedure in presenting the
point of view of the Executive Branch of the
Government or departments thereof on pending
legislation is often confusing to the Members of
Congress and is therefore ineffectual. Most
departments detail some one in their organiza-
tion to "look out" for bills in Congress which
they initiated or in which they are very much
interested. These are usually subordinates
who cannot speak for their departments except
very generally and who have no authority to
bind them. Some of these representatives of
qepartments have indulged in buttonhole lob-
bying tactics very annoying to Members of
Congress. Probably in only a minority of all
cases have they been really helpful in the
congressional consideration of legislation affect-
ing administrative departments.
"Employees detailed to watch legislation for departmentlJ usually
have many other duties and so are very apt not to read bills in their
entirety unless tbe title suggests that their department i:! affected. As
Is well known, titles often do not disclose the entire content of the bills.
 III. PROCEDURES IN OTHER GOVERNMENTS
•
State Governments 13
The problems of the Federal Government
differ in many respects from those of the States,
but their experience deserves some considera-
tion in the development of sound policies and
procedures in relation to the legislative activi-
ties of departments connected with the Execu-
tive Branch of the Federal Government. In
the States, as in the Federal Government, much
legislation originates in administrative depart-
ments. Though in many States the constitu-
tions do not so clearly contemplate a single
executive as does the Federal Constitution,
popular opinion nevertheless holds the Gov-
ernors responsible for everything that the
administrative departments may do. Conse-
quently, the Governors have had to concern
themselves with the legislative activities of the
administrative departments quite as much as
has the President.
Many Governors have met this situation by
assuming l('adership in legislation and insisting
upon clearance through their offices of the legis-
lative proposals of administrative departments.
As conditions have developed, Governors are
judged far more by their leadership in legisla-
tion than by the manner in which they discharge
any of their other duties. For their own pro-
tection, as well as the proper performance of the
administrative functions of the State govern-
ment, all strong Governors in recent decades
have kept a close check upon the legislative
activities of administrative departments and
have insisted upon controlling them as far as
possible.
Examination of the annual or biennial mes-
sag-es of Governors in many States discloses that
it IS a common procedure for the several State
departments to transmit to the Governor their
recommendations for legislation, which he then
includes in his message, often with his strong
endorsement. In addition, Governors very fre-
quently send special messages to their legisla-
tures recommending or opposing specific legis-
lation in which the administrative departments
" Tbe information presented In tbis subsection is based upon a detailed
study of the legislative messages of Governors Smitb, Roosevelt, and
Lebman of New York, 1928 to 1936; Governor Cross of Connecticut, 1936;
Governors Wbite and Davey of Obio, 1933 and 1935; Governor Byrd of
Virginia, 1928; Governor Fitzgerald of Michigan, 1935; Governor McNutt
of Indiana, 1935; Governor Olson of Minnesota, 1933 and 1935; and Gov-
ernor Landon of Kansas, 1933; and upon tbe autbor's familiarity witb tbe
legislative situation in Wisconsin, based upon 12 years of service as cbief
of tbe Wisconsin Legislative Reference Library. In addition, tbe legis-
lative manuals or blue books of all States were examined for evidence of
tbe existence of an official attacbed to tbe Governor's office to assist bim
in legislative matters.
370
are interested. Commonly, also, the Gover-
nors do not confine their work in relation to
legislation to general recommendations but have
complete bills drafted which they either send
along with their messages or get some admin-
istration leader or committee to introduce.
To facilitate the discharge of their legislative
duties, a number of States have given their
Governors special assistants. In at least four
States there is now in the Governor's office a
subordinate known as the counsel, executive
counsel, or legal adviser, whose duties relate
mainly, if not exclusively, to the handling of
legislation. In N ew York a counsel has been
attached to the Governor's office as a full-
time permanent employee since 1900, and in
1929 a legislative secretary was added. In
Wisconsin each Governor since 1915 has named
an executive counsel to assist him with mat-
ters of legislation during legislative sessions.
In Alabama there has been a legal adviser to
the Governor since 1931. In Pennsylvania the
Governor had in his office in the same year
both a counsel and an expert economist, as
well as a number of investigators. Elsewhere
siInilar functions are performed by the chief of
the legislative reference service or by an assist-
ant attorney general detailed to the Governor
to assist him in matters of legislation during
sessions. a
In the States much more than in the Federal
Government, it has come to be recognized that
the chief executive must keep a close check
upon the legislative activities of administrative
departments. This seems to be becoming a
recognized and accepted responsibility of the
Governors in nearly all States, and particularly
in States in which there has been a reorganiza-
tion of the administrative departments provid-
ing for a unified administration with the Gover-
nor as the chief executive_ This is the type of
organization contemplated in the Federal Con-
stitution, but the control over the legislative
activities of the administrative departments of
the Federal Government, thus far, has been
much less close than prevails in many States.
It In Connecticut tbe same assistant attorney general bas been assigned
to tbls dutr for many years. In Illinois one of tbe principal functions of
tbe cbief 0 the legislative reference bureau is to advise tbe Governor on
bills wbicb bave passed tbe legislature and also to assist him in preparing
bills whicb he presents to the legislature. It is probable that similar
arrangements exist in many other States. It should be noted also that
tbe secretary to tbe Governor very often Is an attorney who devotes much
of bls time during legislative sessions to assisting the Governor in legisla-
tive matters.
j
l Great Britain
The Preparation oj Proposed Legislative Measures
In the national ~overnments of other coun-
tries there is less sImilarity than in the States
?f the United States to the conditions existing
m the Federal Government. In the dictatorial
countries there is no independent legislature
and all major democratic governments have th~
parliamentary form of government in which
practi<:ally all legislation is in~tiated by the
executive. Nevertheless, there IS something to
be learned from the experience of these demo-
cratic countries, especially of Great Britain
whose institutions are most nearly like our own:
In Great Britain 16 responsibility for legisla-
tion introduced in Parliament is centralized in
the Cabinet, which in a formal meeting con-
siders and acts upon all legislation sponsored
by the Government before the bills are intro-
duced in Parliament. Preceding action by the
Cabinet, however, these legislative proposals
undergo a long process of preparation and con-
sidera~ion wit~n the executive departments.
As m the Umted States, most bills originate
in the particular department concerned with
the problem, or with a commission created for
the consideration of a particular problem. There
are law officers in most of the administrative
departments and these law officers customarily
prepare the first draft of legislation in which
their de:partments are interested. In this work
of draftmg, the parliamentary counsel is con-
sulted at an early date. 16 Likewise, other
departments known .to be interested are con-
sulted. Treasury CIrcular No. 11/24, April
28, 1924, which is still in effect, requires that
memoranda, draft bills, and other constituents
of the agenda on legislative proposals sub-
mitted to the Cabinet must be thoroughly
gone over in advance "by the departments from
which they emanate, the Treasury, and the Law
Officers where contentious bills are involved and
other departments concerned"; and the 'fact of
such consideration must be indicated on these
documents. Treasury Circular 8/31, Febru-
ary 25, 1931, further requires that Government
bills shall be cleared by the departments before
they are submitted to the secretary of the
Cabinet. The originating department is re-
sponsible for circulating bills to all members of
the c?mmit~ee "as long in advance as possible",
and 18 reqUired to attach a statement showing
that the interested departments have been
consulted.
Such preliminary consideration having been
completed, the proposal in bill form, with
II The account here given ot the procedure In the preparation and con·
slderatl.on ot Government bills In qreat Brit,,:ln J(lrlor to their introduction
In Parllement Is based upon Jennings, op. e./., Intormation secured trom
British omclals, and a personal study made by the author ot the tunctlon·
Ing ot the omce ot the Parliamentary Counsel ot the Treasury.
It The Parliamentary Counsel is the chlet draftsman ot the British
Government. His omce Is attached to the Treasury but is physically
located in the Parliament Building, and functions, in many respects
much as do. the drafting serv!ces of the Houses of Congress. Unlike
the congrG3SlOnal drafting services, the Parltamentary Counsel Is called
in long in advance ot the introduction of Government bills and also
functions in the drafting of administrative orders.
153155--37----25
su.pplementary memoranda, is formally trans-
371
mItted to the Se~retary of the Cabinet. There-
after~ ~efore ,bemg taken up by the Cabinet,
the bill 18 conSIdered by the Committee on Home
Affairs, a standing committee of the Cabinet
,,:hich was o/st organi.zedinJu~y 19~8. The prin-
CIpal functIOns of this COmmIttee m relation to
Government bills are stated by W. IvorJennings
in his recent ?OO~, Cabinet Government, to be:
(1) The exammatIOn of bills from the technical
point of view, by which is meant such matters
as drafting, enforcement provisions, effects on
crown property, etc.; and (2) consideration of
the order of precedence to be given to the several
Gov~rnment bills that a~e to be presented to
ParlIament. The CommIttee on Home Affairs
customarily calls before it the law officers and
other subordinate ?ffici~s who work.ed upon
~hese proposals while still under conSIderation
m the department, as well as the Parliamentary
Counsel of the Treasury. It does not concern
itself with matters of policy these being left
t? the decision of the entire 6abinet. In rela-
tIOn t9 the order of pre~edence to be given
to vanous Government bills, it makes recom-
mendations only, and the Cabinet has the
final 4ecision. ~umm~rizing the value of this
stage m the conSIderatIOn of Government bills
Jennings says: '
.The examination of Government bills in this way is
said to be most useful. It enables ministers in depart-
ments other th~n t.he department of origin of the bil)
to .express their views on m.a~ters dir,:ctly affecting
their ~epartments, and not raisIng questIOns of policy.
Also, It enables the Law Officers to explain to their
colleagues the legal and technical difficulties which
arise. Agreed modifications and amendments have
ofte.n been. introduced at ~his stage and difficulties
aVOided which would othenVise have involved consider-
able. department~l correspondence and, perhaps, loss
of time and parliamentary embarrassment.
The final stage in the preparation of Govern-
ment bills i~ their c~msideration in a. meeting
of the Cabmet. Pnor to such conSIderation
the bil!s are formll;lly entered on the agenda for
a partICular meetmg of the Cabinet, which is
prepared by the Secretary of the Cabinet after
consultation with the Prime Minister. Such
meeting is not held until at least 5 days after
the Secretary of the Cabinet has distributed to
each member of the Cabinet a complete draft
of the bills to be considered, with the memo-
randa prepared by the initiating department
records showing clearance with other depart~
m~nts, the changes ~ form ?lade by the Com-
ffilttee on Home Affall'S, and Its recommendation
on the precedence which should be accorded
to ~he measure. In the Cabinet meetings any
actIOn whatsoever may be taken upon the bills
presented for consideration. A formal record
of such action is preserved in the minutes of the
Cabinet, which are prepared by its Secretary.
Thereafter, all members of the Cabinet are
considered bound by the action thus taken.
 IV. MAJOR POSSIBILITIES FOR IMPROVEMENT AND THEIR
PRACTICAL DIFFICULTIES
•
There is very general agreement as to the
need for im,Proved clearance and handling of
bills that onginate in the Executive Branch of
the Government. There are many differing
suggestions as to how this desired result mi~ht
be brought about. Of those, the followmg
are the suggestions that have the most support
and are deserving of the most consideration.
The Department of Justice
as the Central Clearance Agency
It is suggested that all bills originating in the
Executive Branch of the Government should be
cleared through the Department of Justice.
This Department should supervise the drafting
of these measures, should clear them with all
interested departments, and should consider
their constitutionality and su~gest ways and
means of rendering all provislOns immune to
attack.
This suggestion is based upon the concept
that the formulation of legislation is essentially
a legal task and that all legal work of the Gov-
ernment should be centralized in the Depart-
ment of Justice. Furthermore, the Depart-
ment of Justice is responsible for the defense of
legislation whose constitutionality is attacked
in the courts. At present it is generally not
consulted until it is called up-on to defend legis-
lation after its enactment; If it had an assured
position in the preparation of legislation it
could be very effectIve in suggesting chan~es
that would improve the prospects for upholdmg
its constitutionality.
The objections to this proposal are that the
preparation of legislation involves much more
than bill drafting. Moreover, it is by no means
certain that the bill drafting cannot be done
quite as effectively by the legal division of the
initiating departments as by the Department
of Justice. For reasons that will be discussed
later, it seems inadvisable to establish a cen-
tralized drafting service in the Executive
Branch of the Government. Although it is
clearly advisable that the draftsmanship of all
bills originating in administrative departments
should be checked before they are introduced
in Congress, it does not follow that all work
connected with the drafting of bills should be
centralized in the Department of Justice and
still less that that Department should have
372
responsibility for all clearance activities. It
may be adVlsable to continue the practice fol-
lowed in the last session of Congress of having
the draftsmanship of bills checked by the De-
partment of Justice, but this can be done with-
out making this Department responsible for
clearance.
The major argument' for clearance by the
Department of Justice, that this would render
less likely the introduction of measures contain-
ing unconstitutional provisions, runs count.er to
the position heretofore taken by this Depart-
ment of avoiding opinions on constitutionality
wherever possible. This policy has been
dictated by the consideratlOn that advance
opinions on constitutionality are likely to be
used against the Government when congres-
sional enactments are contested in the courts j
moreover, it is feared that such advance opin-
ions may embarrass the Department when
later it is called upon to construe congressional
enactments. Whether this general attitude is
sound or unsound, it is a factor to be taken into
consideration in determining whether it is ad-
visable to make the Department of Justice the
central clearance agency for the legislative
activities of the Executive Branch of the
Government.
The Bureau of the Budget
as the Clearance Agency
Central clearance of the legislative activities
i
!
!
of all administrative departments, it is advo-
cated by many, should be a function of the
Bureau of the Budget. This suggestion calls
for a continuance of the system of clearance
that was in operation during the last session of
Congress (74th Cong., 2d sess.), with t.he mod-
ification that the National Emergency Council
is to be relieved of all duties in connection with
clearance. In addition it calls for literal com-
pliance with the Executive order of that session,
so that all legislative activities of administra-
tive departments, including matters taken up
orally with the President by department heads,
will be cleared through the Bureau of the Budget.
This suggestion has to commend it that it
involves little change in the requirements here-
tofore in effect. To put this suggestion into
operation, it would merely be necessary to
employ in the Bureau of the Budget a few
J
 The Preparation oj Proposed Legislative Measure8
additional people who are qualified to do the
work that the Acting ExecutIve Director of the
National Emergency Council performed very
well in the clearance of measures referred to
him durinl; the last session of Congress and to
get all 01 the departments to observe the
requirements for clearance.
A further advantage in this suggestion is tho. t
many, if not most, of the bills originating in ad-
ministrative departments have financial aspects
and so must be cleared with the Bureau of the
Budget in any event, under legislation that has
been in effect and enforced for more than 15
years. This gives the Bureau of the Bud~et
a peculiarly advantageous position for servmg
as the central clearance agency for all legislation
originating in the Executive Branch of the Gov-
ernment. The Bureau, moreover, although it
is within the Treasury Department, has close
contacts with the President, to whom it is di-
re~tly responsible. The Bureau of the Budget,
consequently, would appear to be the existing
agency of the Government whose statutory
authority, prestige, and actual position most
nearly fit it to become the central clearance
agency for legislation.
Heretofore the Bureau of the Budget has been
handicapped in its legislative clearance work
by an inadequate staff and through the short-
circuiting of the clearance machinery as a result
of the practice of not submitting for clearance
any matters that are taken up directly with the
President. The first of these difficulties can
easily be remedied and the second is not in-
surmountable. The short-circuiting of the
Budget Bureau has resulted largely because it
has been understood that matters taken up di-
rectly with the President do not have to be
cleared through the regular channels. If the
reverse rule were adopted and compliance were
insisted upon by the President, clearance by the
Budget Bureau would be rendered much more
effective.
A secondary reason for the ineffectiveness of
clearance to date seems to be the fact that the
Bureau of the Budget is regarded in some de-
partments as an adjunct of the Treasury De-
partment. There is some feeling that clearance
under the final control of any Cabinet officer
gives him undue power over the le~lative pro-
posals of other departments. This is a factor
to be reckoned with, but it would seem to lose
most of its force if the Bureau of the Budget
is brought into even closer relations with the
President than it has had in the past.
Clearance through the White House
Clearance of the legislative activities of all
administrative departments, others advocate,
should be made a White House function, under
the immediate control of the President. It is
recornized, of course, that the President can-
not do directly all of the work of clearance and
this suggestion contemplates .tha~ he shall be
given an adequate staff to aSSIst hIm. Sugges-
373
tions reKarding the staff needed for this purpose
range all the way from one or more Cabinet
officers without portfolio to secretaries and
assistants in the confidence of the President but
far removed from the spotlight of publicity.
This proposal recognizes the pnnciple that
clearance to be effective must be carried on close
to the President. This follows from the fact
that the President is the head of the single
executive department contemplated by the
Constitution and the further fact that legislation
is vitally related to administrative management.
The President, and the President alone, can
exercise the functions of clearance without
arousing interdepartmental jealousies and with
complete assurance that no department will try
to CIrcumvent the clearance machinery. The
President must necessarily concern himself with
pending legislative proposals. Heretofore he
has carried this reponsibility with little assist-
ance other than from personnel in effect bor-
rowed from administrative departments. Were
it frankly recognized that the President must
have assistance in the discharge of his legislative
duties akin to that furnished the Governors of
many States, it is believed that his burdens
would be lightened and that the legislative
proposals of administrative departments would
come to Congress in much better shape than
they do now.
Should all details of the work of clearance be
centralized in the White House, however, there
is considerable danger that the burdens upon
the President might actually be increased. The
President clearly should not be bothered with
matters of detail. There are many legislative
proposals originating in administrative depart-
ments that should never have to come to his
personal attention, and it should be possible to
adjust conflicts over legislation between de-
partments, in most cases, without his inter-
vention.
Clearance at the Departmental Level
The final major suggestion is that clearance
should be conducted on the departmental level,
rather than by any clearance officer or depart-
ment. Concretely, it is suggested that the
work of clearance should not be put under any
single official but should be carried on by a
committee composed of the persons in charge
of legislative matters in the several depart-
ments. It is assumed that all departments
interested in legislation would be represented
on the clearance committee and that it would
hold frequent, perhaps regular, meetings for
the consideration of all legislative proposals
initiated by any administrative department.
It is thought that through such clearance on the
departmental level all conflicts between de-
partments can be ironed out and the hazard of
unsound and unworkable provisions in bills to
be submitted to Congress can be greatly
reduced.
374 The Preparation oj Proposed Legislative Measures
The major argument in support of this sug-
gestion is that no single person is likely to be
sufficiently familiar with the functioning of the
Government to at once appreciate how con-
templated legislation will affect all of the several
departments. It is thought that the persons
who do most of the work in the preparation of
departmental measures know their own depart-
ments much better than any clearance official,
and that, consequently, the most effective
clearance can be done by giving all of these
persons an opportunity to go over the legisla-
tive proposals of all departments. Further,
it is urged that clearance on the departmental
level would relieve the President of the necessity
of having to pass upon many questions
that should be settled by the departments
themselves.
One great difficulty with this suggestion is
that only a few of the departments have a
legislative division or anyone person who is
primarily responsible for the legislati ve activ-
lties of the department. On the other hand,
nearly all departments at some time or other
have matters to present to Congress. If all
of them are represented on the clearance com-
mittee it will become so large that it will
resemble a convention more than a working
group. The departments are very unequal
both in prestige and in the number of matters
that they have to present to Congress. In
most departments, moreover, the persons who
do the actual drafting of bills or who represent
their departments in the presentation of these
measures to Congress are subordinates who
have no discretion or right to bind their depart-
ments. The National Emer~~~~y: Council was
organized along somewhat . . ar lines, but
with broader responsibilities. Nevertheless, its
prestige was such that some of the Cabinet
departments were· frequently represented by
assistant secretaries, rather than by the Cabinet
officers themselves. The net result has been
that relatively few matters of great importance
have ever been submitted to this body and
that it has failed to become an agency for
effective administrative management, as the
Executive orders under which it functioned
seemed to contemplate.
J
l
V. RECOMMENDATIONS
•
In considering how the present situation
with reference to legislative activities can be
improved the principles outlined in Part II of
this report should be kept constantly in mind.
Efficient administrative management must take
account of the legislative activities of administra-
tive departments. In the interests of efficient
management and in accord with the provi-
sions of the Constitution creating a single
Executive and vesting in him the duty of
making recommendations for legislation to the
Congress, the President must be able at all
times to control the legislative activities of the
administrative departments. To this end he
must have a close check upon all such activities.
Very obviously, however, he cannot personally
do all of the detailed work involved. and must
rely upon subordinates. These subordinates
should be men in whom the President has such
implicit confidence that he will actually make
use of them. With these general principles and
all the others presented in Part II in mind, the
following recommendations are presented.
General Plan
The most feasible program for improvement
in the legislative activities of administrative
departments seems to be a combination of two
of the suggestions presented in Part IV of this
study. It is recommended that clearance be
centralized in the Bureau of the Budget and
that the President be given a Legislative Counsel
or Secretary to assist him in the discharge of his
duties in relation to legislation.
This suggestion contemplates an Executive
order of the same general scope as Budget Cir-
cular No. 336, of December 21, 1935, which is
reproduced in the appendix to this study, but
with the modification that complete responsi-
bility for all aspects of clearance is to be vested
in the Director of the Budget. As in Budget
Circular No. 336, the requirement for clearance
should extend not only to proposals for legis-
lation that originated in administrative depart-
ments but to all reports to the Congress, to
either House thereof, or to congressional com-
mittees on matters of legislation whether initi-
ated in the departments or not, and to all
appearances in an official capacity by officials
and employees of such departments before
congressional committees. This requirement
for clearance should apply to matters taken up
directly with the President by departments, no
less than to matters not discussed with the
President.
The work done bl' the Bureau of the Budget
on proposed legislatlOn should include ascertain-
ing whether it is in accord with administration
policies, but should not stop there. It should
aIso be directed toward making sure that only
carefully considered and completely worked out
proposals for legislation are presented to the
Congress by administrative departments. All
departments affected by the proposed legislation
should be consulted and differences between
them should be adjusted before introduction.
Draftsmanship and questions of constitutional-
ity should likewise be considered. At every
stage the interests of the Government as a whole
should be controlling, rather than those of any
single department.
Important questions of policy and conflicts
between departments that cannot be adjusted
to their mutual satisfaction must be decided by
the President as the head of the unified execu-
tive department contemplated by the Constitu-
tion. If all legislative matters originating in or
affecting administrative departments are sub-
mitted to the Director of the Budget and he
does the work of clearance reasonably efficiently,
however, the burdens of the President in this
respect will be materially reduced.
As a further assistance to the President, it is
recommended that there be added to the White
House staff a Legislative Counselor a Secretary
concerned primarily with matters of legislation.
It is hoped that such Counselor Secretary will
serve as a medium through which the President
can be kept in close touch with all legislative
activities of administrative departments with-
out being swamped with details. In addition,
the Legislative Counsel should prove very helpful
in maintaining effective working relations be-
tween the Members of the Congress and the
President.
Details of the Clearance Procedure
No attempt will be made in this study to set
forth in detail how the work of clearance should
be carried on, and it would be a mistake to
include such details in the Executive order
requiring clearance of ail legislative activities of
administrative departments. It is desirable
that the procedures should be left flexible, to be
improved with experience.
375
376
The basic requirements that were in force
during the second session of the Seventy-fourth
Congress seem satisfactory for the time being.
Departments that have matters to present to
the Congress should first submit them to the
Director of the Budget. . If these proposals are
in the form of fully drafted bills, drafts should
be submitted; otherwise, the measures should
be outlined in complete detail, to disclose
exactly what is contemplated and how it will
affect the Government as a whole and all its
subdivisions. Each measure thus submitted
for clearance should be accompanied by a brief
explanatory memorandum that summarizes
what is proposed and why the proposal should
be enacted into law. If other departments
were consulted in advance of the submission of
the matter for clearance, this fact should be
noted, together with the reactions of these
departments;
It should be the duty of the Director of the
Budget and his subordinates to examine the leg-
islative proposals of administrative departments
not only from the point of view of their effect
upon finances but of their total effect upon the
Government. It should be his responsibility to
contact all departments affected, except in the
rare cases where the President, for reasons of
policy, may not desire that this be done. The
Director of the Budget should attempt to adjust
conflicts between departments, in a manner con-
sistent with the interests of the entire Govern-
ment and the most efficient service to the people.
In this connection, use may well be made of
interdepartmental committees on matters in
which several departments are interested.
Such committees can be best constituted ad
hoc. A permanent committee attempting to
deal with all legislative problems would prob-
ably prove as ineffective as has the National
Emergency Council. Interdepartmental com-
mittees created ad hoc for the consideration of
particular problems arising in connection with
legislation seem much more likely really to
accomplish their purpose. Committees of this
kind can be organized on the initiative of the
President, of the Director of the Budget, or
of the department initiating the proposed
legislation.
The entire work of clearance must be carried
on in such a manner that the President can
effectively control the legislative activities of
the administrative departments. It would
seem unnecessary, however, that matters of
minor importance, free from conflicts that
cannot be adjusted, should be taken up with
him personally, particularly if he is &'Iven a
Legislative Counselor Secretary to aSSIst him
in the discharge of his duties in relation to
legislation. Important questions of policy,
however, must be decided by the President
and should be submitted to him in such form
as to facilitate arrival at a correct decision.
In presenting such questions to the President,
it is important that he should get an impartial
The Preparation of
summary from the point of view of the Gov-
ernment as a whole, rather than merely the
ex 'Parte st.atements of the proponents of legis-
latIOn. This does not mean that members of
the Cabinet and others should not have a right
to discuss proposed legislation with the Presi-
dent, and it is considered highly desirable that
the President should be acquainted with the
arguments in support of, as well as with those
in opposition to, every proposal requiring his
attention. In addition to such partIsan state-
ments, however, the President should get all
other information that is vital to a correct
decision.
In relation to reports by departments in mat-
ters of legislation not initiated by them and
appearances by officiols and employees as
witnesses before congressional committees, no
ver'l elaborate procedure is usually possible or
desITable. When reports or opinions on legisla-
tion are asked for by either House of Congress or
by congressional committees, departments
should comply promptly with such requests,
except in unusual cases where they involve
matters exclusively within the authority of the
President as to which he deems publicity in-
advisable. Time usually will not permit the
checking of suggestions for le~slation made in
such reports so closely as legislative proposals
initiated in departments. As a minimum,
however, it is possible to make certain that these
suggestions do not run counter to the fiscal and
other policies of the administration or, if they
do so, to have this fact stated clearly in the
report. In cases where officials or employees
of administrative departments are asked to
testify before congressional committees, again
the first consideration should be that t.he Con-
gress is entitled to have all information that has
any bearing on legislation. Officials and em-
ployees in administrative departments should
not be prevented from testifying before con-
gressional committees which ask them to appear.
It is desirable, however, that the clearance
office should know of their appearance and of
the position they expect to take on pending
legislation, so that congressional committees will
not be misled into believing that they speak
for the administration when they have no
authority to do so.
The Bureau of the Budget should be in close
touch with all developments in Congress. To
this end it should have someone whose duty
it is to watch these developments closely. This
employee should examine all bills introduced
in Congress, including those not initiated by
departments. It should be his duty to advise
departments of provisions in these bills that
affect them. Similarly, he should note changes
made in these bills that affect departments and
keep them advised. Through such a service
for all of the departments, it should be possible
to eliminate the necessity for having someone
in each department doing this work and at the
same time to have the work done much more
efficiently.
Proposed Legislative Measures
Bill Drafting
The drafting of departIl!-ental bills ~. ~he
first instance should remam a responslbllIty
of the initiatin~ departments. Th?ugh t~ere
is much to be sald for a central draftmg servlce,
it is doubtful whether this would function very
well in so large and widely scattered an organi-
zation as the Executive Branch of the Federal
Government. If central drafting is advisable,
it is likely to develop quite naturally thro'!gh
central clearance of all departmental bills.
Initially, it should suffice to attach one or two
bill draftsmen to the Bureau of the Budget. or
to adopt the procequre followed by the AC~l1~.g
Director of the NatlOnal Emergency CounCIl m
the second session of the Seventy-fourth Con-
gress of referring q!lestions of drafting to the
Department of Justice. . sional comffilttees of all proposals for legISlatlOn
It is desirable that the persons domg the
clearance work in the Bureau of the Budget
should have such friendly relations with the
congressional draftsmen that they can get
advice and help from them as needed. The
congressional drafting services should remain
under the control of the two Houses of the
Congress and it seems advis.able to conti~ue
the present practice under whlch these draftmg
services do work officially only for congressional
committees and individual Senators. If an
efficient clearance service is established in the
Bureau of the Budget, however, it should be an
easy matter to develop i?formal friendly rela-
tions with the congresslOnal draftsmen that
will be mutually beneficial.
Duties of the Legislative Counsel
It is unnecessary to describe in detail the
work to be done by the Legislativ~ Counselor
Legislative Secretary to the. Presldent.. The
principal duty of this officer WlJI be to aS~l~t. t.he
President in the discharge of his responslbilltIes
in relation to legislation. As the personal
assistant to the President, the counsel is ex-
pected to do such work as the President wants
him to do.
377
It is anticipated that the President will use
the Legislative Counsel (or Secretary) much as
the Governors of the States use their counsels.
He will pr.obably be called upon to assist the
President in formulating major administration
bills and in checking the legislative proposals
of administrative departments which require
the President's decisions. It is anticipated also
that the Legislative Counsel will keep in close
touch with the Bureau of the Budget and its
clearance work, and thus relieve the President
of having to deal with many minor matters that
otherwise would require his personal attention.
The President very probably will also want to
use the Legislative Counsel in making contacts
with Members of Congress. It may even be
advisable to give the Legislative Counsel general
supervision ~)Ver the presentation to c~:m~es­
that are definitely administration measures.
The activities that it is contemplated that the
Legislative Counsel will perform have all been
carried on to some extent under all recent
Presidents. The Presidents have had to con-
cern themselves with legislation and necessarily
have had to rely upon others to act for them
in matters of detail. Heretofore, this detailed
work has been done by people who have many
other duties and who are not even of the imme-
diate staff of the President. It is believed
that the time has come when it should be
frankly recognized that the President needs a
Legislative Counsel even more than do the
Governors of the States.
No aspect of the e!ltire pro~lem. of the
handling and presentatlOn of legislatIve pro-
posals initiated in the Executive Branch of the
Government is more important than the manner
in which the major measures taken up 4irectly
with the President are handled. It 18 m con-
nection with these major measures that the
Legislative Counsel can be most useful. He
can be useful also in placing all of the legislative
activities of administrative departments under
the control of the President, without burdening
him with all of the details.
 APPENDIX
BUDGET CIRCULAR No. 336, GOVERNING CLEARANCE OF THE LEGISLATIVE ACTIVITIES OF ADMINIS-
TRATIVE DEPARTMENTS IN THE SECOND SESSION OF THE SEVENTy-FOURTH CONGRESS
DECEMBER 21, 1935.
To THE HEADS OF EXECUTIVE DEPARTMENTS,
INDEPENDENT ESTABLISHMENTS, AND OTHER
GOVERNMENT AGENCIES, INCLUDING COR-
PORATIONS:
This circular supersedes Budget Circular No.
49 of December 19, 1921, Budget Circular No.
273 of December 20, 1929, Budget circular
letter of April 10, 1930, National Emergency
Council memorandum of December 13, 1934,
and National Emergency Council memorandum
of April 23, 1935.
Estimates or Requests for Appropriations
Section 206 of the Budget and Accounting
Act, 1921, provides that:
No estimate or request for an appropriation and no
request for an increase in an item of any such estimate
or request, and no recommendation as to how the
revenue needs of the Government should be met, shall
be submitted to Congress or any committee thereof by
any officer or employee of any department or estab-
lishment, unless at the request of either House of
Congress.
Section 2 of said act contains the following
definition:
When used in this act, the terms "department and
establishment" and "department or establishment"
mean any executive department, independent commis-
sion, board, bureau, office, agency, or other establish-
ment of the Government, including the municipal
government of the District of Columbia, but do not
include the l~gislative branch of the Government or
the Supreme Court of the United States.
Reports and Recommendations on
Proposed or Pending Legislation
At a meeting of the National Emer~ency
Council, December 17, 1935, the PreSIdent
directed that:
There shall be sent to the Bureau of the Budget,
for consideration of the President before submission
to the Congress, or any committee or member thereof,
the original and two copies of each recommendation
or report, concerning proposed or pending legislation
378
(other than private relief legislation), requested from
or advanced by any executive department, independ-
ent establishment, or other GovernmeI}t agency (in-
cluding the municipal government of the District of
Columbia and Government-owned or Government-
controlled corporations), or any officer thereof. When
such recommendation or report thereafter is submitted
to the Congress, or to a committee or Member thereof,
it shall include a statement as to whether the proposed
legislation is or is not in accord with the program of
the President.
Before any person in his official capacity as officer or
employee of any executive department, independent
establishment, or other Government agency (including
the municipal government of the District of Columbia
and Government-owned or Government-controlled
corporations) shall ad vocate or oppose legislation
(other than private relief legislation) before any com-
mittee of the Congress, he shall ascertain from the
Bureau of the Budget through the Budget officer of his
organization whether such legislation Is or is not in
accord with the program of the President, and he shall
so inform the committee.
The procedure for carrying out the above
directions will be as follows:
(a) Legislation solely concerning fiscal matters will
be cleared by the Bureau of the Budget with the
President. Thereafter, the submitting agency will be
advised by the Bureau of the Budget whether such
legislation is or is not in accord with the financial
program of the President.
(b) Legislation solely concerning policy matters will
be transmitted by the Bureau of the Budget to the office
of the National Emergency Council, with such com-
ment as the Bureau of the Budget desires to make.
The office of the National Emergency Council will then
clear the legislation with the President and advise the
Bureau of the Budget of the President's action. There-
after, the submitting agency will be advised by the
Bureau of the Budget whether the legislation is or is
not in accord with the policy program of the President.
(c) Legislation involving both fiscal and policy
matters will be cleared jointly with the President by
the Bureau of the Budget and the office of the Na-
tional Emergency Council. Thereafter, the submitting
agency will be advised by the Bureau of the Budget
(1) whether the legislation is or is not in accord with the
financial program of the President, and (2) whether the
legislation is or is not in accord with the policy program
of the President.
By direction of the President.
D. W. BELL,
Acting Director oj the Bureau oj the Budget.
1
 INDEX
Accountability:
of certifying officers, 178-79.
of the Executive to Congress, 49-50.
for financial acts, 159-65.
proposals for the establishment of, 162-65.
Accounting:
accrual, 152-53.
forms, 181-202.
system, 21, 152-53.
Administrative court, see Court.
Administrative management, see Management.
Administrative organization, see Organization.
Administrative reorganization, see Reorganization.
Advance decisions, 175-76.
Advisory committees in rule-making, 314, 339-40.
Agriculture, Department of, 35, 64, 89, 91-93, 251, 256,
260-61, 314, 315, 316.
regulatory activities of, 42, 207, 211, 214-15.
Alaska Railroad, 71, 301, 305-06.
American Bar Association, report of special committee
on administrative law, 223, 239, 313, 319, 344, 351.
American Executive, see Executive.
Annual leave, 86.
Anti-deficiency legislation, 142, 155-56.
Appeals, personnel, 63, 66, 77-78, 115-16.
Appointments, political, 119-20; see also President.
Appropriations:
apportionments of, 142, 155-58.
itemization of, 144.
lapsing unincumbered balances of, 144.
for personnel administration, 73-74.
Assistant secretaries, 253, 256, 265-67, 270.
Assistant postm!l.Sters general, 259, 267.
Attorney General, relations with Comptroller General,
23, 180, 184, 187, 201.
Audit, distinguished from control, 21-24, 173, 182.
Auditor General, proposed, 202.
Bill drafting, 377.
Bituminous Coal Commission, 213, 233, 236.
Board form of organization, 32, 46, 98, 99.
Board of Tax Appeals, 42, 215-16.
Bookkeeping and Warr9.nts, Division of, 142, 144, 149,
152 153.
Brig lurora Case, 322.
Buck, A. E., 135.
Budget:
annexed, 144.
Bureau of the, 16-22,62,68,72-74,84,86-97,106,
108, 116-18, 126, 141-45, 148, 155-58, 163, 167,
181,189-90,201,274,315,349-53,365-67,372-
73,375-76.
clearance of Executive orders, 19, 365-67,
372-73.
clearance of legislative measures, 19-20,
375-76.
establishment of research agency in the, 18-19,
142,143.
organization, 141-43.
personnel functions, 72-74.
relations with Comptroller General, 181.
relation to the President, 141.
relation to the Treasury Department, 141-42.
date of submission to Congress, 145.
Director of the, 141-43.
making, needed improvements in, 144-45, 167.
officers, 116-18.
preparation of, 18.
r~sum~ of, 144-45.
system, purpose of, 16.
Budget and Accounting Act, 21-22, 189-90, 201, 274.
Budgetary control, 20, 155-58.
Bureau:
chiefs, 252, 253, 259, 269.
personnel officers, 64, 92-93.
Bureaucracy, 124-27, 132.
Bureaus, grouping of, 259-60.
Business associations, Federal, 281-82, 292-94.
Buttfield v. Stranahan, 320, 344.
Cabinet, 69, 250-52, 261.
Career:
administrators, 121-27, 131-32.
service, 8, 66, 67, 85, 118, 130-33.
Central legislative clearance, 365-69, 275-77.
Centralization, administrative, 33, 284-85.
Charters, see Corporations, government.
Civil Service:
Act, 63, 67-70,74, 75, 77, 96, 129.
Administrator, proposed, 10-11,97-99,106,108-09,
110, 118-20.
Board, proposed, 10-11, 64-66, 97, 99-101, 103,
104, 107-09, Ill, 113, 114, 119, 120.
Classification Act, 16, 66, 68-70, 75-77, 81, 86, 91,
114, 125.
Commission, 9-11, 62-64, 68, 70-86, 89, 91-98,107,
108, 110, 126.
appropriations for, 73-74.
Board of Appeals and Review, 63, 77, 215.
central personnel agency, 82-84.
field cooperation, 284, 291.
functions, 75-78, 80.
quality of work, 80-82.
relationship to President, 74-75.
reorganization of, 9-12.
statistical unit, 76, 79, 89.
tenure, 74.
examinations, 9, 63-67, 70, 75-82, 92, 100-03,
123-24.
excepted positions, 70, 72, 82, 90, 109.
rules, 62, 69-70, 74, 77, 108-09, 113.
Clallam County, Washington v. U. S., 302.
Clearance:
of Executive orders and proclamations, 315, 318,
349-51.
of proposed legislative measures, 365-77.
of rules and regulations, 315, 317, 318, 338-39, 351,
352.
Codes of uniform service regulations, 353.
Commerce Court, 215.
Commerce, Department of, 35, 89, 256, 259, 304, 305,
306.
regulatory activities of, 207, 212, 214.
Commissions, see Independent regulatory commissions,
Board form of organization.
Commissions and the rule-making power, 332-34.
Committee on Ministers' Powers, Brltish, 321, 322, 323,
336, 344-45.
Committee on Public Accounts, proposed, 50, 163, 165,
168, 198.202.
Communications Commission, 212, 213, 221, 223.
Compensation:
of Federal employees, 12-14,62,66,67,73, 114-15,
125-27, 131.
for injuries, 59, 63, 87.
Comptroller General, 21-25, 147-55, 159-65, 173-202.
accounting powers. 149, 152, 160.
bookkeeping functions, 195.
independence, 22-24, 189-90.
Post Office Division, accounting, 161, 182.
reports to Congress, 24, 190.
tenure, 189.
379
380 Index
Congress: Federal-Continued.
accountability of Executive to, 4~50, 162-65, 168. Register, 72, 315, 317, 336, 338, 339, 341, 345-46,
control over Executive branch, 49-50. 348, 349, 350.
control over personnel administration, 64, 66, 67, Reserve System, 126-27, 304, 306, 307.
68, 71, 93, 94. Service Personnel Relations Committee, 66, 113-
role in administrative reorganization, 36-37. 14, 116.
Conservation, proposed department of, 34-35. Trade Commission, 210-11, 213, 219, 221-22, 223,
Contingent legislation, 319, 343-44. 231-34, 305-06.
Control, financial, 23-24, 73-74, 13~68. Fesler, James W., 275.
distinguished from audit, 21-24, 173, 182. Field v. Clark, 322.
Coordination of the field services, 251, 252, 259-60, First-aid stations, 88.
262,268. Fiscal policy, 15.
basesfor,283,284,289,292.
recommendations, 275, 291, 292, 293. General Accounting Office, see Comptroller General.
Tennessee Valley Authority, 288, 289. General Auditing Office, proposed, 25, 162-65, 168.
Corporations, government, 43-46, 65, 104-05, 186 General manager:
29~303. departmental, 255-5'7, 268.
Council of Personnel Administration, 10, 62, 63, 65, 79, President as, 315, 333, 353.
84-86, 89, 105-07, 108, 109, 111, 119, 120. Government corporations, see Corporations.
Court: Government Printing Office, 151.
administrative, 239. Great Britain, central legislative clearance in, 371.
of Claims, 42, 216, 183-86, 239. Grievances, employee, see Employees, grievances.
Courts, legislative, 42, 216. Hart, James, 309.
Credit unions, Fedcral, 300, 305, 306, 308. Headquarters, field, 275, 284, 291, 292.
Cushman, Robert E., 203. Hours of duty, 66, 68, 114-15.
David, Paul T., 55. Independent agencies:
Disbursement Division, Treasury Department, 275, assignment to departments, 38.
291. establishment of, 31-32.
Disbursing, 148, 151, 175, 178-79,201. Independent regulatory commissions:
Dockery Act, 175, 180, 19.'). administrative section, 233-34.
control by President, 225.
Efficiency, Bureau of, 82, 260, 268. development, 20~24.
Efficiency, governmental, 3, 36-37. functions, 40-42, 229-38.
rating system, 63, 77, 85. improvement, 208.
Emergency agencies, 36, 62, 65, 71, 86, 90, 102-04, 130, interference with President, 220, 221-22.
285. irresponsibility, 3~40.
Emmerich, Herbert, 295. judicial review, 226-28.
Employee organizations, 68, 86, 109, 111-14, 116, 117, list of, 208.
131. place in Executive departments, 229, 232-33,
Employees: 238-39.
emergency, 67, 90, 102-04, 12~30. problem of, 40-41, 207, 219, 234.
grievances, 66, 78, 112, 113, 114-16. Information, Division of, 19.
representation, 65, 66, 111-14. Informational service, 275, 282, 283, 293.
right to organize, 65-66. Institutional services, 275, 291.
see also Compensation. Interior, Department of, 89, 214, 215, 259, 301, 305,
Employees' Compensation Commission, 62, 63, 82, 87. 306, 307.
Employment Service, U. S., 63, 88, 106, 129. Internal Revenue, Bureau of, 150.
Expenditures, control of, 21-22, 24-25, 147-57, 173-20l. Interstate Commerce Commission, 74, 81, 84, 209, 210,
Examinations, see Civil Service. 214, 215, 220-21, 235, 238.
Examining boards, 64-65, 66, 100, 123-24. Judicial review, and rule-making power, 314, 326, 340,
Executive assistants to President, 5. 342-45.
Executive: Justice, Department of, 35, 89, 301, 305, 306, 349, 351,
American, 1-2. 372.
branch, accountability to Congress, 4~50.
constitutional provision for, 31. Labor, Department of, 35, 90, 251, 256, 262, 269, 305,
plant for reorganization, 33-36. 306,307.
present organization, 32. Labor Statistics, Bureau of, 63, 88-89, 106, 269.
Council, see National Emergency Council. Laborers, unclassified, 70.
departments, appellate bodies in, 42, 215. Legislative activities of departments, 261-78.
organization, 38-39. Legislative counsel, 364, 375, 377.
regulatory functions, 214-15. Loan agencies, financing and liquidation of, 151-52.
transfer of independent regulatory commis- London Gazette, 341, 346.
sions to, 229, 232-33, 238, 239.
officers, 122-27. McCulloch v. Maryland, 44,300.
Order No. 6166, 178. Macmahon, Arthur W., 245.
Order No. 7298, 318, 332, 336, 34~51, 352, 355. Management:
orders, 19,62,63,65, 66-67, 6~71, 72, 96, 102-08, administrative, 2-4.
314-55. importance to democracy, 5, 32.
independent regulatory commissions and,
Farm Credit Administration, 89, 93, 301, 304-07. 40-41.
Federal: reorganization for, 46-47.
Business Associations, 281-82, 292-94. departmental, 24~70.
Communications Commission, 212, 213, 221, 223. fiscal, 15-26.
Coordinating Service, 27~80. institutional, 315, 318, 353.
credit unions, 300, 305, 306, 308. planning, 27-30.
Employees Compensation Act, 69, 87, 88. role in a democracy, 53.
Personnel Board, 84. Managerial agencies of President, 6; see also Budget
Power Commission, 212, 233. Bureau, Civil Service Administrator, and National
Radio Commission, 212, 213, 216. Resources Board.
l
Index 381
Mansfield, Harvey, 169. Presiden t-Con tinued.
Maritime Commission, 214, 222, 230, 235, 238. Message to Congress on Executive Reorganization
Mediation boards, 100, 115-16. III-V. '
Merit system: personnel functions, 64, 66, 68-72.
development into career system, 130-33. power of direction, 231-32. 314, 335-39 345-47
extenslOn of, 7-9, 121-30. 353. ' ,
public interest in, 99-101. power of removal; 225-26.
see Civil Service. responsibility, 36-37, 59-61, 62, 63, 301, 305-06.
Morale, 59, 63, 92, 93, 101-16, 117-18. rule-making powcr, 320, 329-32, 335, 347-51.
Myers v. United States, 191, 225, 329, 332. staff, 5, 275, 292, 293, 294, 316, 318.
see also Executive, Reorganization.
National Emergency Council, 69, 86, 282-87, 291, 294. President's Committee on Administrative Manage-
National Labor Board, 213. ment, III-V, 4.
National Labor Relations Board, 213, 226, 233, 236. Pressure politics, 336-37, 339, 341-42.
National Resources Board, 27-30. Proclamations, 320, 345, 349-51, 354, 355.
Navy Department, 35, 89,177, 178, 179, 180, 181. Procurement Division, 148, lSI, 275, 281, 282, 291.
Promotions, 62, 76, 81, 83, 102, 131.
Office of Education, 63, 89, 106. Public employment offices, 87, 88.
Organization, administrative, 37-38, 116-18. Public Health Service, 63, 70, 87-88, 106.
Public relations, 275, 277.
Panama Refining Co., v. Ryan, 320, 336, 343, 345. Public Works, proposed department of, 35.
Patronage, 60, 102, 119-20. Publicity, 190, 197,314, 315, 318,345,346.
Personnel:
administration, decentralization of, 101-05. Radio Commission, Federal, 212, 213, 216.
development of, 9-12, 91. Rathburn v. United States, 189, 221, 222, 225, 314, 329,
service of, 9-12, 61, 64-66, 95-120. 330,332.
agency, central, 62, 63-66, 82-84, 95-120. Receipts, control of, 179-80.
development of, 97-99. Receipts and payments, proposed bureau or office of,
recommended duties, 96-97. 150-51.
classification, 62, 63, 64, 70, 73, 75, 76, 77, 81, 86, Recruitment, 62, 63, 64, 75-76, 88, 101-02, 103, 131,
90, 91-92, 97, 102. 116-17. 132, 133; see also Examinations, Civil Service, and
extension to field employees, 14, 273. Personnel.
Classification Board, 76, 82, 85, 90. Reeves, Floyd W., 54.
detailing of, 96-97. Regions, administrative, 275, 284, 292.
functions, 60-61. Regulations, 313-14, 315, 316, 326-28, 345-46, 352.
higher administrative, 8, 121-27. administrative, 315, 316, 317, 318, 351, 353.
increase in. 8. amendment of, 317.
legislation, 62, 64, 68-69. 74-75, 78, 105, 110-11, classification, 319-21.
124-25, 128. 129. clearance, 315, 317, 318, 351-52.
officers. 63, 65, 91-93, 101-03, 105, 106, 116-18, ideal relation to statutes, 323, 325, 344.
119-20. interpretative, 316, 317. 319, 326-28.
officcs, 101-02, 102-04, 104-05, 107, 120. personnel, 62, 65, 69, 77.
policies, 7-14, 62, 63, 65, 69-71, 72,105-11. procedure for issuance, 338-39.
records, 76. terminology, 320-21.
regulations, 107-10, 113. see also Rule-making.
relations, 65, 66, 111-16.
Replacement Division, 87. Relief acts, 185.
research, 63, 65, 78, 79, 88, 89, 107. Reorganization:
statistics, 89-90. executive 33-37, 46-47, 51-52. 66.
supervisors, 61. of Federal corporations, 45, 303.
working conditions, 66, 114-15. of independent. agencies, 38.
Planning: of independent regulatory commissions, 41-42, 229.
financials, 141-45. Reporting, 286-87, 293.
management, 27-30. Requisitions, 180.
Policy, 251,252, 255, 256, 267-69. Research, administrative, 16-19, 142-43, 275, 294.
Policy-forming: Resettlement Administration, 86, 93, 305, 306, 307.
officials, 121-27. Retirement, 62, 63, 64, 71, 73, 76, 78, 81, 102, 131.
positions, 66-71. Retirement Act, 68, 69, 71, 70, 75, 76, 77, 78, 81, 82.
Positions: Revenue, proposed bureau or office of, 150.
administrative, 66. Rule-making: .
analysis, 62, 116-17. advisory committees, 314, 339-40.
classified, 90. Bureau of the Buget and, 315, 349-53.
Postaudit, 175, 171, 191. central publication, 345-46.
Postmasters, 70, 71, 128. clearance, 315, 317, 318, 338-39, 347, 349-52.
Post Office Department, 35, 88,!89, 161, 267. codification, 314, 317, 331-39.
Post offices, 275, 293, 294. draftsmanship, 314, 317, 318, 337-39, 351, 352.
Power Commission, Federal, 212, 233. growth of, 322.
Preaudit, 177-78. hearings, formal, 340-41.
President: judicial notice, 345.
accountability for financial acts, 49-50, 159-65. judicial review, 314, 326, 340, 342-45.
administrative tasks, 3, 5. nature of, 319-21.
appointments, 8-9, 60, 67, 70, 71. numbering, 314, 317, 339.
budgetary control, 141, 155-57. possible abuses, 336-37.
clearance of legislative measures, 365-61, 373. process, 107-10.
constitutional position, 219-20. publicity, 314, 315, 338, 345.
and independent regulatory commissions, 40-41, regularization, 314, 311, 337-39.
221, 222, 225. statutory details, 313, 315, 316, 322, 323, 324,
legislative counsel for, 375-77. 325, 326, 347, 348, 353.
legislative functions, 220, 275, 277. validity. 336-39, 345, 349-52.
managerial agencies, 6. see also Regulations.
 '.

382 Index
Salaries, see Compensation. Tennessee Valley Authority, 88,104,127,180,288,289
Schecter v. United States, 343. 300, 301, 305, 306, 307, 308.
Secretaries of departments, 251-57, 261, 267-70. Tenure of office, 127-28.
Securities and Exchange Commission, 90, 213, 222. Training of employees, 64, 89. 92, 93, 102, 133.
Selection procedure, 122-24, 128; see also Examinations, Transfers, 62-63, 64, 71, 72, 73, 76, 83, 85, 86-87, 103,
Civil Service and Personnel. 119,132.
Settlement of accounts, 175, 201. Treasury Department, 35, 89, 179-81, 195, 256, 259,
Shipping Board, 211-12, 214, 216. 260, 263, 299, 300, 301, 304, 305, 306.
Sick leave, 68, 86, 88. Division of Bookkeeping, 142, 148-49, 152-53.
Social Welfare, proposed department of, 35. Division of Research and Statistics, 269.
Staff: General Counsel, 364.
departmental, 251-57, 268-70. reorganization of, 147-52, 167-68.
Presidential, 5, 275, 292, 293, 294, 316, 318, 337, Treasurer's Office, 151.
347, 349, 353.
State, Department of, 34, 89, 257, 259, 305, 306. Undersecretaries, 266, 269.
States, 286, 288, 289, 299, 300, 301, 302, 370. Veterans' preference, 124.
Statutory details, 313, 315, 316, 322, 323, 324, 325,326,
347, 348, 353. War, Department of, 35, 89, 178, 183, 187, 189, 265.
Subdepartments, 261-63. 305,306.
Supervision, departmental, 259-63. Warrants, 180t,...200.
Supervisory agencies for government corporations, Witte, Edwin .t;., 357.
299-303. Works Program, coordination of, in field, 285, 292.
Supply, proposed bureau or office of, 151. Works Progress Administration, 87, 285, 305, 306.