The CHAIRMAN. Mr. McNeil, I believe this is an accurate statement: So far as I can ascertain, at least so far as this committee has been informed by reports from the different agencies of government affected, no one in the Government now favors the enactment of title II. It seems that the advocacy of it comes from without the Government. I do not always personally accept everything the head of an agency may say, but I do feel that since the Commission on Organization of the Executive Branch rendered its reports, not only the Congress and its agencies, but the public generally, have become pretty conscious of the need of reorganization and of taking such action to implement the Hoover Commission recommendations as may be necessary to effectuate these economies and efficiencies that are hoped for. When we come to legislation, when we find all the affected agencies of government agreeing that they have been able to achieve or are in process of achieving something by voluntary cooperation and mutual assistance and counsel and effort, I just wonder if we are not going to achieve what everyone is interested in, both those who advocate the legislation and those who say now it probably would not be beneficial to enact it at this time.

Mr. MCNEIL. It would be my thought, sir, that the Congress might well keep an eye on the progress that is being made through the present mechanism. If at some time, 3 years, 5 years, or later, it is found that adequate progress is not being made, I think it might well be time to consider the establishment of some focal point in the executive department but it is my own opinion that at this time nothing would be gained by the establishment of this agency in this form.

The CHAIRMAN. If that should be true, if it is determined that that is true, then we probably would be doing a disservice to the objectives that we all desire-those who are very anxious to see this general reorganization program put into effect and those in the Government who have the responsibility both in the legislative branch and in the executive branch for implementing and putting these recommendations into effect.

Frankly, there are some aspects of title II that I am not in favor of, but I would be willing to enact any legislation that would expedite and help to attain the general objectives that this legislation seeks. What I am trying to develop from just as impartial sources as we can find, and from those who sponsor and advocate this provision of the bill when they appear, is to find out whether it is really in the public interest.

I appreciate your testimony very much. You might indicate, if you will, whether this change in the budget arrangement has caused an increase in personnel or whether you have been able to decrease the personnel in this particular field.

Mr. MCNEIL. Your question has reference just to the actual process of developing, supporting, justifying a budget and administering the programs afterward?

The CHAIRMAN. Wherever work has been involved in the past under the old budgeting system and which is continued under the new system, I do not know whether you can. Can you make any

comparison of the personnel and the cost of preparing the budget under the old system and that under the new?

Mr. MCNEIL. Not in figures as yet, for this reason: In any year in which you make the conversion you have in effect a double load, because you have your information coming through the old channels in the old categories. In the year in which a conversion is made you must take this information and show how you would have constructed your budget on the old basis and separately show how the distribution would fall under the new basis. So in the first year you have night work.

The CHAIRMAN. Do you anticipate that when the new program is fully established and in operation throughout the department, it will require more or less personnel to prepare and present the budget?

Mr. MCNEIL. Considerably less, sir. If I may give you one example. In the past, and this has been true generally throughout the Government, particularly in the larger and more complex agencies, nearly everything that was carried on by that agency was financed from 5 to 20 different appropriations. In other words, little bits and pieces of everything an agency did would be found in separate appropriations. Under this all of the funds will be in one place. The number of allotments required to administer it will be reduced sharply, and those are work-creating documents. So the implementation of this will require less personnel to get adquate and timely information, but there will be no comparison in my view as to the management type of information that is provided to the people heading agencies.

The CHAIRMAN. Senator Hoey, would you care to question the witness?

Senator HOEY. Mr. McNeil, I notice in this bill that all the sections in title IV, which includes pages 17 to 31, inclusive, deal with repeals of statutes or parts of statutes. Is that made necessary because of any legislation preceding this bill, or is it just for the purpose of repealing measures that this bill has made it unnecessary to have in existence?

Mr. MCNEIL. Just before you came, sir, Secretary Johnson was speaking to this point. We have assigned the general counsel of the Department of Defense to make a study of these repeal provisions. Right at this point I do not know whether they are all necessary and just why some of them appear here. We are going to make a report to this committee, however, on that.

Senator HOEY. I did not know that happened. I just wondered about the necessity of these repeals, whether it was because of this bill or because of other legislation previously passed.

Mr. MCNEIL. We are going to submit a report on that.

The CHAIRMAN. They are going to check each one of these provisions and give us a report on it.

Mr. McNeil, I surely thank you very much. You and the Secretary both have certainly been very cooperative and helpful to the committee, and we appreciate it. If you will let us have this memorandum on the items which we have discussed, the committee will appreciate it very much. I want to thank you for your presence. Mr. MCNEIL. We will send them to you. Thank you, sir. (The information to be furnished follows:)

63233-50- -7

Hon. JOHN L. MCCLELLAN,

THE SECRETARY OF DEFENSE,
Washington, March 23, 1950.

Chairman, Committee on Expenditures in the Executive Departments,

United States Senate.

MY DEAR SENATOR: On February 28, 1950, Mr. McNeil, the Assistant Secretary of Defense, and I testified before your committee on S. 2054.

I was asked about the effect on the Department of Defense of the repeal of the 86 laws in section 40 of the bill. Mr. McNeil was asked whether section 30 would apply to the Department.

Both questions have been studied by my legal staff. I enclose for your information a memorandum covering these points addressed to me by my general counsel. The memorandum concludes that repeal of the laws listed in section 40 will not affect the operations of the Department of Defense, and that section 30. if enacted, will apply to the Department.

With kindest personal regards, I am,
Sincerely yours,

Enclosure.

Memorandum for the Secretary.

Subject: S. 2054.

LOUIS JOHNSON.

OFFICE OF THE SECRETARY OF DEFENSE,
Washington, D. C., March 23, 1950.

In the course of testimony by you and the Assistant Secretary of Defense, Mr. McNeil, on S. 2054, the committee asked the following questions:

1. Whether the laws repealed by section 40 will affect the operations of the Department of Defense.

2. Whether section 30, if enacted, will apply to the Department of Defense. You advised the committee that these questions would be checked by the legal staff and a memorandum forwarded for the committee's information.

The repeal of the laws listed in section 40 will not affect the Department of Defense. Each of the laws was examined by a joint group composed of a representative of the office of counsel, a representative of the office of the Assistant Secretary of Defense, Comptroller, and representatives of the three military departments. Many are obsolete and have not been used for years; others have been superseded by the Budget and Accounting Act of 1921; the remainder become obsolete by virtue of other sections in S. 2054. I, therefore, recommend that you advise the Committee on Expenditures in the Executive Departments of the Senate that the repeal of the laws listed in section 40 will not affect the operations of the Department and that their repeal is approved.

With reference to the second question listed above, it is my opinion that section 30, if enacted, will apply to the Department of Defense.

FELIX E. LARKIN,
General Counsel.

The CHAIRMAN. Mr. Bartelt? Will you come forward, please, sir? I am very sorry we had to keep you waiting so long. If you will proceed, the committee will be very glad to hear you.

STATEMENT OF EDWARD F. BARTELT, FISCAL ASSISTANT SECRETARY OF THE TREASURY, ACCOMPANIED BY ROBERT W. MAXWELL, COMMISSIONER OF ACCOUNTS, AND GILBERT L. CAKE, ASSOCIATE COMMISSIONER OF ACCOUNTS, TREASURY DEPARTMENT

Mr. BARTELT. Mr. Chairman and gentlemen of the committee: I am glad to be here today to represent the Treasury Department at the hearings on Senate bill 2054.

In response to the committee's request, the views of the Treasury Department on this bill were expressed in its letter of October 4, 1949.

The committee may wish to consider the insertion of a copy of that letter in the record of these proceedings.

The CHAIRMAN. May I suggest to the reporter at the conclusion of your remarks I should like to have inserted in the record the letter to which you referred, the letter of October 4.

Mr. BARTELT. Thank you, sir.

The comments of the Treasury Department were addressed mainly to part II of the bill, dealing with accounting. I will not undertake to repeat those comments unless the committee desires to have them discussed here today. I might point out, however, that in commenting on section 20 of the bill, which would create a new position of Accountant General in the Treasury Department, the Department's letter of October 4 reaffirmed the position stated earlier by Secretary of the Treasury Snyder in his general report on the Hoover Commission's recommendations affecting the Treasury Department.

If it meets with the committee's approval, I should like to incorporate also as a part of these hearings the statement of Secretary Snyder in his letter of August 2, 1949, with respect to the proposed reorganization of accounting in the Government.

The CHAIRMAN. That may be done.

Mr. BARTELT. The accounting and reporting system of the Government is a matter in which the Treasury Department is vitally interested. Not only because of its basic statutory responsibilities with respect to accounting and financial reporting, but by the very nature of its responsibilities as the center of the Federal finances, no agency of the Government is more concerned with good accounting, or has a more direct interest in accounting, than the United States Treasury Department.

Every dollar of taxes levied by the Congress must eventually be paid into the Federal Treasury and there must be a good accounting for every dollar received. Only the Treasury can properly account for the taxes levied by Congress, because it is the Treasury that must collect them. Every dollar expended by any department of the Government from appropriations made by the Congress must be paid out by the Treasury. The Treasury is the logical department to account for the money it pays out.

When taxes are not sufficient to finance expenditures, it is the Treasury which must raise the money within the limitations fixed by the Congress. The Treasury is the only agency that logically can account for the money it borrows.

The same is true with respect to the production and issue of coins and currency. So, I repeat, no agency of the Government has a more vital interest in the accounting system of the Government than the United States Treasury.

The Treasury's interest in good accounting stems from a number of sources, the more important of which are these:

(1) It must keep a faithful record of every dollar it receives and disburses.

(2) It must see that there is money in the Treasury to pay its current bills, and it must manage its cash position in a manner which is not disruptive to the banking and monetary system of the country. (3) It must render efficient financial services, not only to the public, but also to the other Government agencies.

(4) It must safeguard the funds of the Government.

(5) It must render banking services, expeditiously and economically. (6) It must make a proper accounting to the American people, as well as to the Congress.

The Treasury already has an organization which can perform these services. It is the Bureau of Accounts, the head of which is a certified public accountant with many years of experience.

This Bureau has three important statutory functions:

(1) It issues the warrants for the covering of money into the Public Treasury and the subsequent withdrawal of such money under appropriations made by the Congress. This responsibility will be found in title 31, section 147 of the United States Code.

(2) It maintains the central accounts of the Government relating to receipts, appropriations, and expenditures. This responsibility is in title 5, section 255 of the United States Code.

(3) It prepares an annual report to the Congress under title 5, section 264 of the United States Code, designating the receipts, where practicable, by districts, States, and ports of collections, and the expenditures under each separate head of appropriations.

Many of the financial statements included in the annual Budget are made up from the figures furnished by the central accounts and reports of the Treasury Department.

Mr. Chairman, in spite of the public criticisms of the Government's accounting system, in fairness it should be said that no other Government in the world makes such a full and complete accounting to its people as does the Government of the United States. And no government makes such a meticulous accounting for appropriations made by the legislative branch as does the executive branch of the United States Government.

This is not to imply that the accounting system of the Treasury is all that it should be, but this is a condition which is now being corrected under the joint program of the Comptroller General of the United States, the Secretary of the Treasury, and the Director of the Bureau of the Budget. Secretary Snyder made reference to this program in his report to Senator McClellan on August 2, 1949, and it is an important reason for the Department's position regarding the proposals of the Hoover Commission as well as the provisions of Senate bill 2054. (See excerpt from Secretary Snyder's letter inserted at conclusion of Mr. Bartelt's statement.)

In a moment I would like to point out to the committee a few of the more important things which ought to be done from the viewpoint of the Treasury.

But first let me say that the important thing to the Treasury is this: The Treasury is not so much concerned as to who prescribes the accounting systems in the various agencies as it is to see that these systems rest on sound accounting principles, that they are coordinated with the central financial records of the Treasury, and that the work is carried on in full cooperation with all agencies with which, and through which, the Treasury carries on its daily business.

We think that the conditions which previously have impeded the development of improved accounting within the executive branch of the Government are being corrected under the very wise and able leadership of the present Comptroller General, Mr. Lindsay C. War

ren.

If I may make a purely personal observation, Mr. Warren, in