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MONDAY, APRIL 11, 1949


Washington, D.C. The committee met, pursuant to call, at 10 a. m., room 212, Senate Office Building, Senator Millard E. Tydings (chairman) presiding.

Present: Senators Tydings (chairman), Byrd, Chapman, Johnson (of Texas), Hunt, Bridges, Gurney, Morse, and Knowland.

Also present : Senator Henry Cabot Lodge, Jr.

The CHAIRMAN. The committee will some to order. We are very fortunate and very honored today to have present here Mr. Herbert Hoover who headed up the Hoover Commission looking toward a reorganization, for a more efficient and effective administration of the Government.

We are particularly interested in that part of the Hoover recommendation that had to deal with a national security organization.

Most of us have had a chance to go through the recommendations, but we are very glad to have President Hoover with us this morning, so that he may give us his advice personally.

Mr. Hoover, we will be very glad to have you proceed in any manner you see fit.


Mr. HOOVER. Mr. Chairman, I thought that in order to save the time of the committee and enable some condensation of thought, perhaps if I prepared a short statement to begin with and read that, then I will submit myself to any sort of examination you may like.

I believe it is generally accepted that the National Security Act of 1947 was a great step in the direction of better national security organization. In many aspects, however, it has not entirely accomplished the high hopes of unity, economy, and civilian control which were expected. The failures and their causes are dealt with in detail in the report of the Commission of which I have been Chairman, and by the task force which I appointed to make a detailed investigation of the whole subject.

The central weakness, as stated in the President's message, by the statement of Secretary Forrestal, and in the reports of both the Commission and the task force, lies in the lack of clear authority and responsibility assigned to the Secretary of Defense. The set-up under the act of 1947 covered the establishment of seven main agencies : that is, the National Security Council, the National Security Resources


Board, the Secretary of Defense, the Joint Chiefs of Staff, the Munitions Board, the War Council, and the Research and Development Board. The major function of all of them was to coordinate the policies and administration of the three great services of national defense. The deficiency in that set-up was the lack of a center point of clear administrative authority.

The proposed amendments of section 4 of this bill, S. 1269, by providing for definite central administrative authority in the Secretary of Defense seeks to cure that deficiency. These amendments should clarify this situation and are generally in accord with the recommendations of the Commission. I believe the change of name from the National Military Establishment to the Department of Defense in section 3 is essential in order to establish the climate of budgeting, unity, and teamwork which is the underlying purpose of all this legislation.

The amendment in section 2, by which the President obtains greater latitude in appointing members to the National Security Council is constructive. The present Council, with four out of seven members from the military arms, is overweighted from that quarter. The provision in section 5, for an Under Secretary of Defense, is necessary, and I will comment later upon the provision for three Assistant Secretaries.

There is an important departure from the recommendations of our Commission, and there is, in my view, a vital omission in the bill which I will discuss later.

The amendment in section 6b, providing for a Chairman of the Joint Chiefs of Staff, is not in accord with the majority views of the Commission on Organization, or the task force, or with my own views. It is proposed that this Chairman shall be the principal military adviser to the President and the Secretary of Defense" and with rank higher than the other members of the Joint Chiefs of Staff. In my view this will in effect constitute him a single Chief of Staff. The majority of the Commission on Organization and the task force, after careful and prolonged consideration and investigation, were opposed to this idea.

The majority of our Commission recommended that there be a Chairman who would be a presiding officer to expedite the work of the Joint Chiefs, who would have no vote and no powers of decision, who would present the views of the Secretary of Defense to the Joint Chiefs, and who would report their views to the Secretary. Generally, it was our view that the Joint Chiefs should be the principal military advisers and that here was a case for combined judgment of the three arms, with final decision resting with the Secretary of Defense, or with the President, or the Congress, in the case of conflict. The objections to such a Chairman as the bill proposes are, in my view: that it places too much power in a military man; that it would lessen civilian control of the military arm; that the three Joint Chiefs of Staff would be removed, in effect, from their responsibility as chief advisors to the President and the Secretary of Defense; that any chairman would have to come from one of the services, which would give that particular service two votes in times of decisions. It is my belief that the proposed set-up would create all the liabilities and none of the assets of a single Chief of Staff and would produce wider disunity than before. We need unity in national policies, in strategy and of command in action. But we also should preserve the identity of the three services. This implies difficult border lines, but a Chairman with the position and powers outlined in this bill, it seems to me, dangerously oversteps these boundaries.


The important omission in this proposed legislation, to which I have referred, lies in the area of the budget and accounting systems. _On that subject, as Chairman of the Commission on Organization, I set up a special task force of most eminent accountants of wide Government experience. Their experience, added to that of the Commission itself, has been laid before the Congress in our special report on budgeting and accounting. Their task was to examine the budgeting and accounting in every part of the executive branch. In addition, however, I directed a combination of the task force on defense and the task force on budgeting and accounting to investigate those questions in the Defense Establishment with special care. Their detailed report has not been printed, but I present it herewith to the committee. Summaries of it appear in the printed reports. I commend the whole text to your most earnest attention. It displays a startling state of affairs.

In particular, I might refer you to the analysis of the 1950 budget which begins on page 19. It displays a rather startling state of affairs.

This report states:

The committee feels that it is justified in saying that our military budget system has broken down. The budgetary and appropriation structures of the Army and Navy are antiquated. They represent an accumulation of categories arrived at on an empirical and historical basis. They do not permit ready comparisons, they impede administration, and interfere with the efficiency of the Military Establishment. Congress allocates billions without accurate knowledge as to why they are necessary and what they are being used for.

The remedy, in my view, lies not alone in the general provision of authority to the Secretary of Defense in this bill, but amendment to various laws and provisions to cover the whole budgeting and accounting process. This reform should follow the principles stated in our report on that subject which proposes a “performance” or functional budget, with modern and uniform accounting methods, the accounts to be kept in the Department.

No one can tell from the present budget what any particular function or activity cost. In our reports we give the Bethesda Hospital as a simple example of present budgeting methods in the Defense Establishment. The hospital receives allotments from 12 different apprópriations and nowhere is it total cost shown. We also give an example of the “performance” budget, applied to the whole Navy Department.

I will not take time with details. But I would like to emphasize that radical reform of budgeting and accounting lies at the very root of economy in this

Department. Without such reform, neither the President, nor the Department, nor the Congress, nor the public can understand what the expenditures really are and where economies can be applied.

I may mention that there are four forms of accounts in the Gov. ernment-or there should be—the accounts of appropriations and funds, the fiscal accounts, property accounting, and cost and comparative accounting. The appropriations and funds accounts are kept outside the Department by the Comptroller General, who is the agent of Congress. The fiscal accounts are kept by the Treasury, and no

body keeps the property and cost and comparative accounts. The whole concept of appropriations accounts, kept outside of the Department, is the negation of any sound business practice. It disarms the administrative officials of the daily use of one of the primary implements of administration. Obviously the Comptroller General should approve any system of accounts installed and should audit those accounts.

An equally important reform is needed in the civilian services in these Departments. In 1943, there were about 9,000,000 military men and about 2,000,000 civilians in the Military Establishment. A year ago, there were about 1,700,000 military men and 860,000 civilians in the establishment. In other words, in the first instance there was one civilian for every four military men and at present there is about one civilian for every two military men. There seems room for economy in this quarter.

It is hopeless for the Civil Service Commission to attempt to recruit the number of persons with 10,000 different skills which are required in this Department. The selection of civil servants should be delegated, in our view, to the Department and its branches under rules to be established and enforced by the Civil Service Commission, which will secure selection on the basis of merit and free of politics. The whole basis of rating, promotion, and severance must be reformed if we are to secure an efficient and economical civil service in this establishment.

I may now return to the question of the three Assistant Secretaries for the Secretary of Defense, which I referred to a moment ago. Objection has been raised to the title “Assistant Secretaries” as confusing with the Secretaries of the Army, the Navy, and the Air Force, and the danger that perhaps through their titles they would assume to supplant the administrative powers of the three major Secretaries. There is merit in this objection. This recommendation arose in the Commission on Organization out of our over-all recommendations for certain staff assistance to the Secretaries of all Departments. The Commission recommended a group of staff officers concerned with budgeting, accounting, procurement of supplies, personnel, management research, and publications, but having no administrative powers. Such staff officials are needed by the Secretaries of the Army, the Navy, and the Air Force. However, in the case of the Secretary of Defense, as outlined in this bill, the Chairman of the Munitions Board would serve the procurement function. But the Secretary of Defense has need of officials to coordinate budgeting and accounting, personnel, public information, and publications. Those functions were, at least to my mind, the duties for which the three Assistant Secretaries were proposed.' To avoid the conflict of titles, I suggest to the committee these officials be established and that they be given some title which would indicate their functions instead of the title of Assistant Secretaries. As I have said, they are not to be administrative officials, for operating functions rest in the Secretaries of the Army, the Navy, and the Air Force.

Something needs to be said as to economy in these services. The military burden today, added to our other expenditures, is seriously imperiling the economy of the country. There are great savings to be made in the Department. And by savings I mean attaining the

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