Morning Oregonian., December 07, 1921, Page 22, Image 22

TTTE JITORXIKO OREGONIAN, WEDNESDAY, DECEMBER 7, 1021
FIRST BUDGET TRANSMITTED TO CONGRESS BY PRESIDENT HARDING
HQ
(Continued Frflm Pafe 21.)
theory that It was Independent, while
there existed no one to place before
them the necessities of the corpora
tion considered aa a whole.
Tenth The subordinate members of
a departmental organization of the
corporation were encouraged to state
the needs of their particular subdivi
sion of their department directly to
the agency of the corporation (con
gress), which made the deBlred levy
upon the stockholders (the public)
This custom, in violation of all the
rulea aroverninir the correct function
ing of the successful corporation,
tended to increase the confidence of
these subordinate officials In opposing-
anv change operating to subor
dinate departmental control in rou
tine business to an executive control
of the corporation.
Eleventh A general public interest
In the operations of the corporation
encouraged subordinate members of
Its . business organization, including
its administrative vice-presidents, In
making programmes of business ana
expenditure to consider their relation
to popular approval, wnether right or
wrong, thus often foxeclosing a ques
tion of policy which was properly in
the purview of the president of the
corporation alone. A premium was
often placed upon the expenditure of
money as distinguished from Its sav
ing, since uninformed public approval
Is often reserved for activity and
apparent enterprise in extending the
corporation's functions. Irrespective
of their wisdom.
Practically all of the last ten de
fects of ths corporation were the di
rect result of the first one, to wit
that the president of the corporation
gave practically no attention to Its
ordinary routine Dusiness.
Faults to Be Rectified.
For the imposition of unified meth
ods In the ordinary business of the
f overnment the president has estao
Lshed. hv executive order, the follow
lng agencies, which are engaged In
co-ordinating, in all matters of rou
tine business, the activities or the
separate departments and establish
ments; First The federal purchasing board.
On the federal purchasing board there
Is detailed the chief purchasing offi
cer of each department or establish
ment, with a chief co-ordlnator as
chairman, named by the president.
The chief co-ordlnator has the au
thority, limited by a right of appeal
In case of any difference of opinion,
to Impose co-ordinating orders. He
can thus prevent competition between
the different departments in outside
furchases. not only by preventing
hem from raising the price on each
other, but where large quantities of
standard commodities are to be pur
chased, by ordering one department to
execute the purchase for Itself and as
agent for the others. By executive
order It was directed that In each
executive department and Independent
establishment of the government
there shall be a director of purchases
and a director of sales, who shall co
ordinate all activities involving pur
chases and sales within their respec
tive departments and be In direct
liaison with the chief co-ordlnator.
These directors of purchases and
ales are subject to call by the chief
Co-ordinator for conference In all
matters involving the co-ordination
of sales and purchases In -the various
departments of the government serv
ice. This was the system adopted in
the American expeditionary forces. It
Is the exact system existing In many
large private industries which have
been formed by the amalgamation of
original units located in different
parts of the country.
The power In shaping a unified
purchasing policy for the government
is as great as that which would be
possessed by a central organisation
which would take over all govern
ment purchases, but with this great
advantage over a central organisation
-that there Is no Interference with
the pressure from a point of depart
mental supply necessity tipon a pro
curement agent directly responsible
to It. Even where there Is a co-ordinating
order Imposed, a representa
tive of the head of the department
which needs supplies is always able
to Interpret Its necessities, both as
regards speed In delivery and loca
tion or delivery
. . - ,
,ef "not In.f";0,"0;:" !
does not Interfere In a multitude of
small purchase transactions by the
department where the question of
competition is not Involved A cen
tral purchasing Hgency for the gov
ernment of the United States which
would assume to take over the pro
curement and distribution of all gov
ernment supplies would be a complete
failure. Not only has the federal pur
chasing hoard proved already bv its
uccessful operation its adaptability
to the necessities of the situation, hut
the principles which govern It have
been tested out by years of recogni
tion in .practice by private business
enterprises.
Surplus. Storks Sold.
Second The federal liniiidatinn
board, created in accordance with the
same principles and form of organi- partmental traffic departments, s
f,1, J0n' 3 nw . c:rdlnatlng sales. ' difficult to compute, but should be
under a unified plan, of the large very large
me'r''.-nvrlltenr10 if dePart- The federal traffic board is estab
5U?LT - government. It is com- Ughed under the chief co-ordlnator,
u ... ..n.w- 1 1 u iii . i m i
department or establishment having I
eales activity, presided over by the
chief co-ordlnator. general sunply.
The decisions of the chief co-ordlnator.
general supply, as to any co-ordinating
action is final, subject only
to appeal to the head of his depart
ment by any member. The Import
ance of the work of this board is
self-evident. Under the old svstem,
where surplus stocks were sold by
the Independent departments Irrespec
tive of each other an absurd and de
moralizing situation existed. It was
the custom of the Independent depart
ments to sell their surplus storks
with practically no reference to the
reeds of the other departments for
the material sold. In some cases
property was sold at public auction
by one department, purchased bv an
outsider, who then resold It at large
profit to another department of gov
ernment. At the time of the Institu
tion of this board departments were
in the open market for large amounts
of material which were on hand in
the other departments. An enormous
loss has resulted to the government
from this condition of things.
The federnl liquidation board for
mulates policies and plans designed
to knit the activities of the several
departments and establishments con
cerned with the liquidation of stocks
Into a federal business association to
bring about business methods calcu
lated effectively to safeguard the in
terests oi tne government
Third The organization of corns
. . . . ..
area co-ordinators. For the nnrnose
pf making a practical extension of th
principles Involved in the federal pur
chasing board and federal liquidation
board over the entire country a sys
tem of corps area co-ordinators lias
been created. The points of location
of government stocks are so scattered,
and the diffusion of the points of pur
chasing activities so great, that cen
tral boards at Washington would be
unable to cope with the situation with
out representation at all renters of
governmental purchasing and sale ac
tivities. Accordingly, for convenience,
the territory of the United States was
divided into nine areas, corresponding
to the nine army corps areas, and in
eacn area an official was selected by
tne president bv detail from a depart
ment, who is known as the co-ordlnator
for general supplies for the
several executive departments and in
dependent establishments having M
tlvities in that area. It is to be noted
that these corps area co-ordinators
are responsible to the chief co-ordlnator,
genera! supply, and through
him to the president of the United
States, and not to the heads of the
departments and independent estab
lishments. They locate and inspect
surplus accumulations of government
stocks, regardless of whether or not
these stocks have been reported sur
plus by the departments, and report
thereon to the chief co-ordinator,
general supply. Washington. D. C as
well as to the head of the department,
having particular reference to the ex
istence of accumulated stocks which
appear to he In excess of reasonable
reserves or current needs.
Hundreds of Million I,of.
In connection with the Immensely
Important matter of interdepartment
al transfer of surplus stocks, the neg
lect of which In tne past has involved
the United States government In the
loss of hundreds of millions of dollars,
the corps area co-ordinators play a
most Important part In determining
the field needs of the separate de
partments and establishments. They
extend the power to Insure uniformity
in prices received and sales effected
In the corps area. They exercise gen-
erai supervision over the purchase
functions of the seversl departments
and establishments in their section.
They have the power to fix, over th
head of the department, the price of
the commodity Involved in interde
partmental transfer, which, of course,
la slmnl.. - K . 1, 1, , . . . . i . .
... D,tii,ij ,i timiLCI i ' ' r. ' 1 , . i . i .
but which, under the old system or
Independent functioning between the
departments, proved a great obstacle
to the transfer of property.
In short, this corps area organiza
tion, together with the federal pur
chasing board and the federal liqui
da Oc n board, the latter two locat
ed at Washington, enables the en
tire purchase and supply situation
throughout the country to be properly
handled.
Fourth The surveyor-general of
real estate determines, subject to the
approval of the secretary of the treas
ury, as provided by law, In what man
ner and to what extent the premises
of the government of the United
States outside of the District of Co
lumbia shall be occupied and used, oy
what departments, bureaus or offices
and establishments. He has the power
to assign and reassign rooms therein
to all such federal officials, clerks
and employes as In his judgment and
discretion should be thus supplied, but
he makes no assignment or reassign
ment until after full and complete
conference with the head fit the par
ticular service directly concerned. He
has the power to abrogate or ter
minate existing leases by negotiation
or by notice or other action there
under. No leases for government
uses for a period of longer than one
year or for an annual rental of more
than $500 can be made except upon
approval of the surveyor-general of
real estate and the secretary of the
treasury.
The creation of this power in the
surveyor - general of real estate oy
executive order prevents the large
waste occasioned by renting from
private owners space which the gov
ernment. In Its buildings, already has
at its disposal. In this power to de
termine what changes should be made
In the Interest of economical and effi
cient use of lands, buildings and por
tions of buildings for the benefit of
the general government, he is assisted
by the area co-ordinators, general
supply, who report to him the neces
sary Information as to real estate
holdings under ownership or lease
which are located in their corps a re, us.
Fifth Federal motor transport
agent. A general survey of the motor
transport situation throughout the
United States revealed the fact that
the rule of absolute fixed assignments
of motor vehicles to executive depart
ments and independent establishments
of the government was handicapping
the government in the use of Its motor
transport. The motor transport of a
department might be overtaxed when
there were motor vehicles standing
Idle In another department. Civilian
trucks were being hired when a de
partment was confronted by an emer
gency when the same service could be
performed within the limits of the
pnvprnintillf ccn-inn ItaaW T , Ik., it
ferent corps areas of the' country the
co-ordination of motor transport wtll !
be put Into effect by the area c.
ordlnators. general suonlv tinon the
approval of the plan by the chief co
ordinator, general supply, at Wash
ington. The head of each department
or establishment names a representa
tive under the corps area co-ordinator
for each area in which the department
or estaolishment has motor vehicle
in operation. The district of Colum
bia has been made a separate area fo
the purpose of co-ordinating motor
transportation. A co-ordinator for
motor transport has been designated
for that district and large savings
are being currently effected by these
organizations.
Service Is Overlapping.
Sixth The federal traffic board.
The overlapping of service and dupli
cation of effort are nowhere more ap
parent than In the conduct of the traf
fic bdsines.-t of the government. The
expert. R. C. Oaples. who examined
this situation for the director of the
budget, estimate? that the govern
ment's transportation hill annually ts
approximately $2li0.000,e00. In the
j i ii da n ri, .iii,iiui;,itiju. in i lie
fS itua.iono attention is given
to the proper classification of articles
shipped by the United States, and
government classification is out of
line with commercial business. Gov
ernment property should be relisted
under commercial names. Raw ma
terials should be billed out as raw
materials and not as finished prod
ucts. The classification committees
of the railroads in specifying rate"
applicable to the thousands of articles
listed In the classification have given
the government little or no considera
tion as to the volume or nature of i's
business. The savings to be effected
through proper handling of the gov
ernment's traffic, including reclassi
fication, the correct routing of Its
business, and a reduction In number
general supply, rts activ ties are rti
reeled hv ItTohsirmen , WJll
rectcd by Its chairmen, under th tide
of co-ordinator for traffic, who shall,
under the general direction of the
chief co-ordlnator for general supply,
select the committees for the board
and direct the time and place for
their meetings. The head of each de
partment and establishment making
shipments from time to time shall
designate one representative to serve
as a member of the board. The classi
fication of commodities and the in
structions governing shipments' and
methods of settling transportation ac
counts, approved by the co-ordinator
for traffic, shall, as far as applicable
and in conformity with law, be bind
ing uport and govern all departments,
bureaus, agencies, and offices of the
government in all shipments made by
them. All questions pertaining to the
classification of materials, or termi
nal switching, freight rates, etc..
which require the application of
remedial measures, will be submitted
to the co-ordlnator for traffic either
for adjustment with the classifica
tion committees representing the car
rier or for the presentation of a com
plaint with the Interstate commerce
commission. The decision of the chief
co-ordinator. general supply, shall be
final in the event of disagreement as
to classifications, instructions govern
ing shipments, and methods of set
tling transportation accounts, subject
only to an appeal to the head of the
department concerned.
A committee composed of practical
railroad men will be consulted In con
Tie,-' ln, 1th . . . ....... r .. . . . u
nection with securing from the ear
ners co-operation in imposing co
ordination in government traffic as
regards classifications and economi
cal methods.
Board to Save Money.
Seventh The federal boarll of hos
pitalization. The total appropriations
in 1921 for the administration of the
veterans' bureau, the office of the surgeon-general
of Public health the
1 surgeon-general of the army, the sur-
.e.iii-Hciici,ii oi tne navy, tne superin
tendent of prisons, the president
board of managers national home for
disabled volunteer soldiers, aggre
Ifif. 45.985,292. Of this amount.
$489,000,000 were paid In pensions,
leaving as a total expenditure outside
of pensions. $256,985,292. There are
engaged In the functions of these bu
reaus 47.512 people, with a total cost
of salaries for 1921 of $85,430,177. In
these departments at the present time,
including the army and navy, the
("tilted States is feeding and housing
about 500.000 people. The property
under their control represents hun
dreds of millions of dollars. It is
necessary that the expenditures of
these groat departments should be co
ordinated, thus preventing overlap
ping of service, extra ownership of
supplies, overemployment, unneces
sary rentals, prevention of unneces
sary Installation, and various other
Incidental matters which naturally
pertain to such large activities. The
federal board of hospitalisation is
created for that purpose.
THe duty of the board is:
(a. To consider all questions rela
tive tt. he co-ordination of hospitali
zation of the departments repre
sented. (b) To standardise requirements,
to expedite the interdepartmental use
of existing government facilities, to
eliminate duplication in the purchase
of supplies, and the erection of build
ings. (c) To formulate plans designed
to knit together In proper co-ordination
the activities of the several de
partments and establishments, with a
view to safeguarding the Interests of
the government and to increasing the
usefulness and efficiency of the aev-
i eral organizations, and to report to
me president thereon.
The chief co-ordinator of the fed
eral board of hospitalisation presides
over the board and is responsible for
its efficiency and for developing Its
activities along practical lines. After
a full discussion of any question by
the board, the decision of the chief
co-ordinator of the board will be final
ctlon to be take nor any
nolicv to h nitrsn.-rt hut Anv mem
Ber may appeal from the decision of
the chief co-ordinator of the federal
board of hospitalisation to his own
immediate superior. The recommen
dations of the board will be carried
into effect by the head of the depart
ment or establishment directly con
cerned. Specifications to Be Standard.
Eighth The federal specifications
board. A federal specifications board
has been created, of which the direc
for of the bureau of standards, de
partment of commerce, is ex-offlclo
chairman. The head of each depart
ment and establishment purchasing
materials or services in accordance
with specifications prepared in such
department designates one represent
ative to serve as a member of the
federal specifications board. The
duty of the board is to compile and
adopt standard specifications for ma
terials and services, and to bring
specifications into harmony with the
best commercial practice wherever
conditions permit, bearing in mind
the desirability of broadening the
field of supply. In event of disa
greement on specifications, or on
methods of procedure, the case will
be submitted to the chief co-ordinator,
general supply, whose decision
shall be filial as to the action taken,
subject only to appeal to the head of
the department concerned.
There was formerly in existence
an interdepartmental standardisation
committee composed of representa
tives of the following departments:
War department, navy department
j treasury department, department of
agriculture, department of the inte
rior, postofflce department. Panama
canal, shipping board. United States
employes' compensation commission,
commissioners of the district of Co
lumbia and department of commerce.
The findings of this committee as to
a common specification are In the na
ture of what la called "a recommend
ed specification." No one had the au
thority to approve and make man
datory the adoption of such speciflea
tlon by the various departments of
the government: neither was there
any authority competent to settle the
case on its merits in the event of a
disagreement.
There is also In existence a com
mittee on the standardization of pe
troleum specifications, authorized by
executive order dated July 31. 191$.
The federal board for- the standard
ization of specifications will take up
and carry to a prompt conclusion a
complete survey of all existing speci
fications, with a view to the adoption
of common specifications where more
than one now exists for a particular
commodity.
Contracts to Be Adjusted.
Ninth-
The Interdepartmental board
f contracts and adjustments This
?rd JL. Pr"8t'rnlai1.c:n.'.1"d
A I 1 I . ( I L I' ' II Wl I . .1 I. i ......... ..
anil field of activity is contained in
the executive order Just issued for its
establishment, as follows:
1. Without l.miting in any manner the
Jurisdiction or authority of heads of ex
ecutive departments and independent es
tablishments over the subject matter of
government contracts as the same la now
defined by law. but for the purpose of
standardising contract forms, securing the
adoption of uniform policies as regards
eonatruction work and uniform practices
of Interpretation and negotiatlone both
preceding and following the actual ex
ecution of auch contracts, there is hereby
established in the office of the chief co
ordinator, general supply, a board to be
known aa the interdepartmental board of
contracts and adjustments, the members
and functiona of which board shall be aa
follows;
The head of each executive depart
ment, including the department of Juatice.
shall organize a department board made
up of one representative of each bureau
having the independent right to eater into
contracts on behalf of the United States.
Much department board ahall recommend
policies to control in the etiindardizatton
of contracta within such department. They
shall choose from their number a chair
man and any other necessary officers.
3. The chairman of the several depart
ment boards, together with a representa
tive designated by the head of any in
dependent establishment now- authorised
by law to enter into Important contracts,
and the chief co-ordlnator, general supply,
shall constitute the Interdepartmental
board of contracta and adjustments, and
shall serve without additional compensa
tion. 4. This board shall be presided over by
u chairman, who shall be the representa
tive of the secretary of the treasury. The
chairman shall, upon being advised of the
complete membership, call the members
of the board together for purposes of or
ganization. The board shall adopt such
by-laws and appoint auch committees and
subcommittees as may be deemed advis
able and neceasary to accomplish the end
sought.
0. The functions of this board shall be:
First To standardize in general, where
ever possible, the forms and methods of
contract letting, to the end that a uni
form policy on the part of the government
may control the making of auch contracts,
and with a further view to auch changes
in the form thereof an will tend to enlist
the Interest of the contractor on behalf of
economy and promptness of execution and
eliminate those uncertainties of construc
tion and hazards to be assumed by the
bontractor which have hitherto operated
to Increase the cost of government work
and supplies.
Second To recommend general policies
in the settlement of outstanding obliga
tions arising out of contracta of th United
titatea, such aa methods of determining and
enforcing damagea, of aettltng dlsputea as
to queationa of fact, and of determining
the final compensation of contractors.
Third In an advisory capacity and
when requested by the head of any de
partment or eatablishment of his represent
ative upon the board
(a) To review and reviae important con
tracts and agreements made or about to
be made on behalf or the united states.
(b) To advlae officers authorized to con- I
tract and operating under contract aa to
the proper interpretation of contracts in
process or execution.
(c) To assist in the negotiation of im
portant contracts and agreementa relating
to personal servlcea, supplies or construc
tion work.
6. The chairman of the board la charged
with the reaponslblllty for the efficient
working thereof and for its development
along the practical lines above indicated,
and in such other waya as may become
apparent after full study of the situation
by the board or any committee thereof.
After a full discussion of any queation by
the board and a full opportunity to the
membera to be heard thereon, the decision
of the chairman will be final aa to the
action to be taken or the policy to be pur
sued. But any member may appeal there
from to the head of his department or es
tablishment, who shall have final authority
In the matter. The chairman of the board
may detail an asaittant to sit with the
board to repreaent him in matters of
routine.
Committee to Handle Supplies.
The general supply committee was
created by section 4 of the act of
June 17, 1910 (36 Stat.. 531), which
directed the secretary of the treasury
to advertise and contract for all sup
plies of fuel, ice. stationery and other
miscellaneous supplies for the execu
tive departments and other govern
ment establishments in Washington.
I'. C. when the public exigency did
not require the immediate delivery of
the article. By executive order of
December 10, 1918, the general supply
committee was designated as the
agent through which the handling
and transfer of surplus office mate
rial, supplies and equipment of the
executive departments and other es
tablishments of the government In
the District of Columbia should be
carried out. and the executive order
nf September 3, 1919. extended this
activity of the general supply com
mittee to the field services outs'i.e
of the District of Columbia. These ex
ecutive orders provided that purchtse
In the open market should not be
made of any materials or supplies
which could be obtained through the
general supply committee.
The general supply committee, func
tioning under this act and these or
ders, handled large quantl'iet, of sur
plus material and supplies for the
government departments and estab
lishments, but It could deal oniy with
those articles which were reportei to
it as surplus and had not definite
means of enforcing the obvious inten
tions of the regulations where the
materials or supplies available dif
fered slightly from those required.
With the establishment of the chief
co-ordlnator, general supply, the fed
eral purchasing board and the federal
liquidation board, the general supply
committee, working In the closest co-
operation with these agencies, has
been of material assistance in work
ing out practical operating systems,
and has in return received great as
sistance in the matter of locating
surplus supplies which In some cases
had not been yet reported surplus, as
well as In securing the acceptance
of materials and supplies differing
slightly from the original request
where this would result In preventing
a purchase In the open market.
This is unquestionably resulting !n
greatly Increased economies In Hie
matter of interdepartmental transfer
of materials and supplies, thereby
eliminating the necessity for many
open-market purchases.
Co-ordlBatlaar Machinery In Use.
Where the statutes of the United
States prescribe methods to be fol
lowed in governmental business -.d-mlnlstration
they, of course, limit ex
ecutive discretion by their terms, but
in all routine business of government,
where a method Is not prescribed by
law. it follows of necessity that meth
ods may be impoaed by the executive,
as in all other forms of business or
ganization. An executive regulation
covering governmental business meth
ods is simply a formula In which a
method of conducting business Is out
lined in an order.
The executive powers which the
president has invoked in the estab
lishment of co-ordinating machinery
for the unifying of governmental
business are therefore only those In
herent in the position of the head of
the government business administra
tion, where not limited by law. The
executive orders creating these agen
cies are signed by the president and
are announced through the budget
bureau.
In any discussion of these agencies
created through executive order
by the president to assist him
In the imposition of a unified
plan for the transaction of the
routine business of the govern
ment it cannot be too strongly em
phasised that they are concerned only
with routine business and not with
matters of governmental policy. Poli
cies of government are determined by
the executive and by congress. When
congress passes a law approprlat'tig
money for the cost of governmental
activities and projects it becomes the
duty of the executive, insofar as these
expenditures are concerned, to see
that the money Is devoted to the ob
jects of , appropriation in the most
economical and efficient manner pos
sible. These co-ordinating agencies
established by the executive are for
the soie purpose of enabling the pres
ident In matters of routine business
to so co-ordinate the activities of the
different departments and establish
ments as will Insure the most effi
cient and economical expenditure of
the money appropriated by congress.
The powers they exercise, the ques
tions which they consider, the circum
ference of their activities are all con
cerned fundamentally with the rou
tine of business methods as distin
guished from anything in the nature
of governmental policy. They operate
simply as a mechanism to make more
effective the policy adopted by con
gress and the executive.
These agencies, concerned alone
with efficient and economical meth
ods, should operate In the same man
ner wnatever the political changes
which may occur In administration.
Like the budget bureau and othfr
agencies for the imposition of busi
ness policy, they are impersonal, im
partial and non-partisan. They can
never properly become the subject of
partisan dissension. Thev must exist
as agents concerned with routine
methods of business at the disposal
of the executive and congress Indefi
nitely. If they are not kept in exist
ence there will be an immediate re
version to the demoralizing lack of
CO-OrdinatiOn among the indpnenHenf
departments and establishments which
Has oDiained in the governmental
business administration In the past.
Made up from the continuing bodv
of public employes and concerned
simply with the unification of the
business machine, their sphere la one
outride of oolitic and nf
policy and In the realm alone of busi
ness common sense.
President's Authority Supreme.
These agencies derive their author
ity solely from the president, but the
same reasons of convenience and effi
ciency which led the president to use
the -lachlnery of the budget bureau
lu connection with the imposition of
executive- business policy upon the
Lu. . fli administration make advisa
ble a clsse supervisory contact be
tween the director of. the budget and
the co-ordinating agencli s created by
executive order now n operating ex
istence. The condition of govern
mental business administration, de
veloped by the Investigations of the
budget bureau, brought to the atten
tion of the president, resulted In his
decision to establish them. They are
concerned, as is the director of the
uuusei. nun a Dira s-eye view of the
government business situation and
with the doing of business in terms
of a single government and its Inter
ests as distinguished from, but con
sistent with, the Interests of the sep
arate departments and establish
ments. To strengthen their super
visory relations to the separate de
partments and establishments they
need a constant and sympathetic
liaison between themselves and the
president of the United States, who
is the source of their authority.
If in the future there should at any
time come into office an executive
indifferent to the operation of the
government as a business machine
there would, under the immutable
laws of human nature, immediately
spring up an effort on the part of the
Independent departments and estab
lishments at first to curtail and re
strict the activities of the co-ordinating
agencies and then to wipe them
out of existence. The fact that this
country may be so unfortunate as to
pass through an executive adminis
tration indifferent to its obligations
to apply correct business prinoiples to
the functioning of government busi
ness makes it a supreme duty for the
president to now protect as completely
punaiuic. u - executive regulation.
the co-ordinating agencies recently
vjr I.U91UHI, aim uy nis authority
-eBi.cu. uy null.
The director of the budget, being
of necessity not only under the law
but under the practical exigencies of
the situation, in close contact Zith
the president of the United 'States In the heads of Independent establish
all matters of routine business policy, ments. there has been evinced from
heenmes th noioeni o. Yv''the first a determination to think in
Interpretation of the situation and r
needs of these co-ordinating agencies i
to the president. It Is essential, too,
that the director of the budget,
charged with the dntv of iHvU t
the president in connection with the'
economics s nj .reii.. .1 ' " J !
the government ir. its ord nary bust- essarlly pertain In anv wel -managed
nes. should himself have the . closest Private business organization. This
contact with them, since through them ou'red abrogation on their part of
alone can he be properlv advised as to' m.any of,t1ie oId cus.toms arising out
correct business and interdenart- I of Over 100 vears of a decentralized
mental relations. Besides being agen- I s'atus quo in the governmental busi
eies for the execution o' executive ness organisation, which presented an
"uucy, tnesi; CO-ordlnat nn- sirenele.
become the natural collectors of in
formation regarding the processes of
routine governmental business, which
in turn may become the basis of ex
ecutive policy involving changes in
the co-ordinating agencies themselves,
and the creation of new ones.
Red Tape Thing of Past.
In the well-maf(aged business or
ganization the closest contact between
the source of Information and the
power which can compel corrective
action is always maintained. It must
be remembered that we are discuss
ing only routine business function
ing. What we call "red tape' in gov
ernment business largely results from
the lack of contact between those
sensible of errors In administration
and these In authority responsible for
the transmission of the executive will,
and the closer the contact hiurAn
those associated with it and the pres-
uv.n. iiiiuDca inc inure eiiective win
be the functioning of the government
as a business machine.
To sum up. the president, in as
suming for the first time his position
of business responsibility over gov
ernmental buslnes administration
UPOn the advice Of the director of I
the budget, based upon information nection with the establishment by the
w-hich the Investigation of the bureau president of the co-ordinating agen
or the budget has supplied, has cles essential to the carrying out of
created certain agencies of co-ordina- the unified business policy in govern
tion through which his business pol- ment. The detail of an employe from
icy will be transmitted to the busl- a department or establishment to the
ness organization. This emphasizes co-ordinating agencies established by
the Importance of the passage of ex- executive order occasionally evoked
ecutlve advice and instruction through the objection that the salary of sucli
the director of the budget to the co- employe should no longer be charged
ordinating agencies. The same prin-1 against the department In question.
cipie is uivoivea as was recognized '
in the budget law Itself when the
oureau or tne Duaget was made to
operate directly under the president
and not under any department of a
lesser but co-ordinate authority. The
only agency in existence which bears
such a relation to tbe chief execu-
tlve that it can be made a proper
conduit for the transmission of ex
ecutive authority in routine business
matters to the co-ordinating agencies
for transmission to all departments
smi establishments Is the bureau of
the budget.
Co-ordinating agencies should be
created from the body of existing
employes and not by legislation,
where their personnel would neces
sarily be built up by outside appoint
ments. If the creation of these co
ordinating agencies were to be at
tempted by act of congress, they
would sink at once into the position
of bureaus and lose almost entirely
the power Inherent in direct repre
sentation of the president. The ad
vantages of the creation by executive
order from the body of the adminls
tiatlon of these co-ordinating agen
cies, which are now in succeasful op
eration, are:
First They more authoritatively
will convey the pressure necessary in
carrying out the plan of the chief
executive In the interests of the gov
ernment as a whole.
Second Thev will be headed and
composed of men appointed because
of their experience and ability in
connection with the work in ques
tion, familiar with the environment
in which thev are to work, and with
out the outside and distracting pres
sure of political considerations.
Third While more effectively func
tioning because of the above reasons,
they will operate without appropria
tions being made necessary for their
own salaries or for a large personnel.
They will not afford, therefore, a
nucleus for a steadily incraslng cost
and complexity of operation.
Co-ordinating Agencies Xon-Partlsan.
An examination of the executive or
ders which form the basis of the or
ganizations of the co-ordinating agen
cies above mentioned will develop:
First that they Involve no transfer
of authority the location of which has
been fixed otherwise by statute.
Second That they involve the dele
gation of no question of policy save
that of economy and efficiency.
Thled ThnT thev are slmiily agents
by which, where not otherwise de
termined by congress, unified methods
of ordinary business can be imposed
oy tne cnier executive.
Fourth That thev are created sim
ply to give the president of the United
States In his rlstlnn In the hUSinfcSS
administration, the same agencies of
contact and transmission or autnorit
as obtain in anv private organization.
Fifth That they involve no mate
rial addition to the expense oi gov
ernmental administration.
Sixth That they are non-partisan,
I enmnnsed nf men already in the
government service, simply detailed
for this duty. t
Seventh That they are in effect
simply a regrouplpg under an execu
tive leadership of certain of the pres
ent employes of government of such
experience, contact, and relation in
its routine business as enables them,
detached from departments and act
ing directly under the president, to
make possible the application of common-sense
business methods.
It cannot be too often reiterated
that this most important reformation
in tbe governmental business system
is dependent upon tne presiaent oi tne
United States himself, and upon his
continued assumption of his respon
sibility as Its. business head. The min
ute he relaxes his attitude of atten
tion to this duty there will be felt the
natural null of the departments anri
establishments toward the old system
of complete Independence and decen
tralization. This is because of laws
flrmiv embedded in human nature
which have existed since man began
Budget laws or other legislative en
actments cannot change human na
ture, and. while compelling the letter
of co-operation, cannot compel Its
spirit, which is. above all things,
essential in business organization. The
president, and the president alone, can
do this, for his attitude toward the
heads of the departments and the In
dependent establishments is a matter
constantly in their minds What h
desires it becomes their interest as
well as their duty to do. where con
sistent with right principles and in
accordance with law. In the absence
of ills expressed desire what becsomes
their selfish Interest In action Is In
evitably along the lines of decentral
ization and the re-establishment of
the old '-ondltion of things, wilh
everything running haphazard.
These great co-ordinating agencies
have already effected large savings
in government business' administra
tion. They have prevented the absurd
duplication and competition existing
among the departments and establish
ments. They have corrected the prac
tice by which the supplies and facili
ties of government have been kept
in water-tight departmental compart
ments, compelling recourse constantly
to the open market, notwithstanding
the government already had on hand
the supplies or facilities purchased.
They enable the government to trans
act routine business with the advan
tages enjoyed by private business or
ganizations, and prevent its spoliation,
made easy bv the former ignorance
and indifference on the part of a de
partment of the business status and
transactions of another. Through their
agency the routine business of the
government, for the first time, is
being conducted along sound business
principles.
Bureau Related to Cabinet.
As stated before, the use of the
budget bureau by the executive as an
agency for securing economy and effi
ciency in routine business has devel
oped tbe fact that the advice and in
formation emanating from the intet
8ted departments alone is not suffi
cient to enable the bureau of the
oudget to carry on Its functions with
full effectiveness.
The first lien of a departmental
policy upon a departmental mind,
whether it be that of the head of
the department, budget officer, or the
chief of a bureau, is such that the
executlv. to be safe in imposing a
business policy In terms of the gov
ernment's interests as an entity, must
have an impartial consideration of the
departmental view in order to deter
mine the necessities of departmental
programmes as related to an executive
policy for the whole.
The director of the blidget Is glad to
state that, with the cabinet and with
impersonal terms, and to favor ail
regulations, customs, and precedents
which afford the director of the
budget, in so far as he acted as the
representative of the president, the
same ease of access to them and to
their subordinate chiefs as would nec-
liSHinia ". w.ajMiisi
proximating unity of policy or plan In
government business administration.
Under the regulations and customs
now established, any such action and
contact as the director of the budget
must hsve with the heads of the dif
ferent departments and establish
ments where he represents the
president in the imposition of
a unified policy, he meets no
obstruction arising out of per
sonal dignity or past precedent.
The cabinet heads and heads of inde
pendent establishments Immediately
acquiesced In the principle that the
president must establish an agency so
empowered in its relations to them
that, as In any private organization,
his agent in gathering Information
could compel a contact of separate de
partmental authority in the consider
ation -of any co-ordinated action for
the benefit of the executive. The di
rector of the budget, therefore, under
the regulations and customs now es
tablished, has the same powers that
an agent of the president of a corpo
ration would have under the same cir
cumstances. The departmental trend of thought,
stabilized by over 1UU years, mani
. - ..I l.lf o som tvlnl In eon
The thought that through tne agen
cles to which such detail Is made an
enormous saving will Inure to the de
partments during the existence of
such a co-ordinating agency was. In
some cases, overlooked by the affect
ed department head. It is. above ail
things, necessary In tbe institution I
I of a proper governmental business
I ..-. . u., .. . .... 1..- J.- At
:n iu 11. 111-., .. .... 11 ....... -
thought arising out of the old status
quo which has been responsible for
the destructive chaos In government
business arising out of the independ
ent attitude of departments unsub
Jected to executive control.
Hundred nf Millions Loat.
It Is to be remembered in this con
nection that no criticism can be prop
erly directed against the department
heads under tha old system for think
ing alone In terms of the Interests of
their department and Its programme
The head of a department is not In a
position, except under very excep
tional circumstances, to have a bird's
eye view which will enable him to
reason in any other than in terms of
his own department. Again, it is his
duty to think In such terms. The
planning of co-ordinating action along
the lins of unified business policy is
the function of the chief executive.
A general line of demarcation be
tween the viewpoint of the interested
department or establishment and the
viewpoint of an agency thinking In
terms alone of the general business
situation of the government obtains
practically in every department and
Independent establishment of the gov
ernment. The absence in the past of
any authority thinking in terms of
tbe common interests of tbe .govern
ment as a whole has involved the
United States government in hundreds
of millions of dollars of unnecessary
loss. Questions of business policy
important enough to demand the at
tention of the executive and congress
have at times not even been presented
for consideration to the department
head himself.
There must be but one business
head. Let no one misunderstand the
Importance of the power of the presi
dent of the United States in its rela
tion to this universal disposition to
submit to business co-ordination
manifested by the individual depart
ments and establishments of the gov
ernment at IBIS time. Underneath
whatever nas been done in the way
of correcting- the chaos in govern
mental routine business which the
president of the United States con
fronted was the sense of responsibil
ity to him In the mind of each man
to be affected.
The director of the budget was au
thorized bv the president to make a
public statement of certain funda
mental principles which must under
lie the budget, to-wlt:
1. The director of tho budget in
gathering Information for the use of
the president acts for the president,
and his calls upon the chiefs of bu
reaus and other administrative offi
cers for purposes qf consultation or
Information take precedence over the
cabinet head of a department or any
head of an independent organization.
I. The budget representative in
each department, being, appointed by
the cabinet head, will present to the
director of the budget the views of
the cabinet head upon the wisdom of
conclusions drawn by the director of
the budget for the use of the chief
executive and congress, but. as in the
case of bureau chiefs and other offi
cers, the call of the director of the
budget for their presence and advice
takes precedence over the cabinet
head.
Upon the continued recognition of
these principles the effectiveness of
the bureau of the budget must depend.
How Budget Stsipui Works.
The same principles involved in the
relation of the president of the United
States to the director of the budget
are involved in the relations of the
department head to the official named
bv hint as the budget officer of his
department. The latter, charged with
the duty of collecting information and
the giving of advice relating to gen
eral departmental business for the
use of the head of the department as
wel! as for the use of the director of
the bureau of tbe budget, should be a
man whose relation to the separate
activities of the department is Im
partial. A department head should
never appoint as budget offic r of
bis department one who is in control
of an activity which will be materi
ally affected by budgetary recom
mendations. The act approved June 10. 1921
(Public. No. 13). entitled "An act to
provide a national budget syBtem and
an independent audit of government
accounts, and for other purpuses,"
provides In part that
Section 214 (a) The head of each de
partment and establishment ahall desig
nate an official thereof aa budget officer
therefor, who in each year under hta direr
tlon and on or before a date fixed by him
shall prepare the departmental eatlmatea.
(b) Such budget officer ahall alao pre
pare, under the direction nf the head of
the department or atabllahmenl. such
supplemental and deficiency estlmatea aa
may be required for its work.
Section 2I.Y The head of each depart
ment and establishment ahall reviae the
departmental eatimates and submit them
to the bureau on or before SJeptember 15
of each year. In case of his failure so to
do, tha prealdent ahall cause to bo pre
pared such estlmatea and data aa are nec
easary to enable htm to Include In the
budget estimates and statements in respect
to the work of such department or estab
lishment. The foregoing provisions of law re
quire that the departmental estimates.
Including supplementary and defi
ciency estimates, shall be prepared by
the budget officer under the direction
of the head of his department or es
tablishment. They further require
that the estimates shall be revised by
tlu head of the department or estab
lishment prior to submission to the
bureau of the budget. The spirit of
the budget law contemplates that the
budget officer of each department or
establishment shall represent the
head thereof in the restriction of esti
mates to economical figures, and in
such other fiscal operations as may
be necessary from time to time in the
administration of the budget law, and
to this end that the budget officer
should report direct to and perform
his work directly under the head of
his department or establishment. This
should not be construed as investing
in Duaget onicers any powers or aus
thoritles which properly devolve upon
the heads of bureaus or divisions
within a department or establish
ment, but Is intended solely to indi
cate that the duties devolving upon
budget officers, as such, should be
performed directly under the head of
the department or establishment. It
is essential, of course, that there be
full and complete co-operation be
tween budget officers and the heads
of the operating, administrative, or
supervisory bureaus or agencies with
in a department or establishment.
To the end that nothing may Inter
fere with the responsibilities devolv
ing upon budget officers, it is desir
able that the beads of departments
and establishments clothe their bud
get officers with authority to call for
such information and data from thel
several divisions and branches of the
departments and establishments as
may be necessary to enable the bud
get officers to prepare the estimates
under the direction of the heads of '
the departments and establishments.
It is similarly desired that the plana
and policies formulated by the heads
of departments and establishments a.
the basis of estimates for appropria
tions be communicated to the budget
officers and through them communi
cated, by and with the authority of
the heads of the departments and es
tablishments, to the several divisions
or branches of the departments and
establishments where such communi
cation is necessary. w
The adoption - of the general pro
cedure as above outlined will enable
the director of the budget to obtain
from the budget officers definite and
accurate information at all times
concerning departmental estimates or
the requirements upon which depart
mental estimates are based, and there
will be avoided the lost mo.tion which
might be occasioned if budget officers
were not made the medium of the
head of a department or establish
ment by or through which all infor
mation essential to the preparation
of estimates would be transmitted
and received.
F.ireutlrr Hrgulntlons.
The executive regulations provided
by the budget law to be Issued by
the president as governing the opera
tions of the bureau of the budget
have been a matter of evolution aris
ing out of the new environment of
the budget bureau and the determina
tion of the president to use It as an
agency for the imposition of execu
tive pressure. It would have been
Impractical for the president to have
drawn these regulations at the incep
tion of the work of the bureau. Hav
ing directed the bureau to proceed
along certain lines, he has Issued
such regulations as, in his Judgment,
were necessary, afte.r a report to him
by the bureau of the authority re
quired as determined by Its experi
ence. The executive purpose which under
lies these budget regulations, in addl-
tion to outlining the method of pro
cedure under the express terms of the
budget law, was to secure the ma
chinery for the transmission of exec
utive policy and control in the rou
tine business of the government such
as exists In any well-organised pri
vate business organisation. It could
only be determined from the actual
experience of the bureau Just where
latent opposition having its roots in
human nature and in a century of
undisturbed departmental independ
ence would show itself to the impo
sition of executive authority along
the lines of proper co-ordination and
unified business policy. The bureau
has, under these regulations, the
same standing which similar agencies
in private business must have to their
heads to successfully function.
Deficiency Appropriations.
The effect of continuous executive
attention and pressure accompany
ing an executive plan for economical
and efficient methods upon the old
custom on the part of the depart
ments of an easy reliance upon de
ficiency and supplemental appropria
tions should be emphasised. It is dif
ficult to overstate the influence upon
the current administration of gov
ernmental business of a determined
attitude on the part of the chief exe
cutive against requests for deficiency
appropriations. The head of a de
partment or establishment will en
deavor to evade, in every possible
way, the asking for s deficiency ap
propriation, and his one best way is
oy the reduction of expenses and the
more efficient administration of his
department.
The director of the budget feels
confident, therefore, that the esti
mate for expenditures for 1923. upon
which the budget is based, will not
be Increased except through appro
priations initiated by congress or by
the executive as a result of emer
gency or unforeseen conditions aris
ing after the preparation of the
budget.
There exists In government now.
because of the attitude of the execu
tive, a prime essential in the success
ful functioning of all private and
public business organizations, to wit.
a continuing strong sense of respon
sibility to the policy and business
plan of the organization as imposed
by the executive head. In any pri
vate business organisation, in pro
portion as a lack of responsibility to
the executive head develops In the
minds of subordinate officials of de
partments, the efficiency of the or
ganisation diminishes. There can
not be, of course, in an organisation
as large as the government, a con
tinuous contact with the executive
head himself in the matter of the
details of functioning in the subordi
nate business units. There is in
every properly organised business or
ganization decentralization in con
nection with authority over the
method of the functioning of a sub
ordinate department, but machinery
exists hv which the head of tbe sub
ordinate" department is at all times,
through contact and explanation
thoroughly advised of the general
policy of the organisation in accord
ance with which the activities of tts
subordinate units are to be carried on.
The cabinet Is one agency for the
establishment by the chief executive
of his business policy. He has made
the bureau of the budget another
agency so far only as the conduct of
the routine business of the govern
mem I concerned The co-ordinating
organizations created by executive
order are also means of supplying the
df-partments the contact with the
business policy of the chief executive
as it relates to routine business.
The continuity of executive pres
sure through these agencies upon the
body of the business organization is
certain to be reflected in an almost
complete cessation of the habit of re.
nance upon detictency appropriations.
Besides preventing requests for de-
flclencv appropriations, the imposi
tion of executive pressure along the
line of a unified governmental busi
ness policy, and the Information de
veloped by the contact provided by
the ro-ordlnstlng agencies between
the departments, bring about a com
parison of standards of expenditures
and efficiency, with resulting Im
provement. This contact also en
courages initiative In suggestions
from the body of the different or
ganizations along the lines of proper
co-ordinating action.
There are now Implanted In the
minds of the business organisation of
the government three principles:
First That the business organisa
tion of government hereafter assumes
that the minimum amount of money
to be expended in any fiscal year Is eiot
of necessity the sum appropriated in
advance by congress, but the smallest
amount upon which the business 01
the government can bo efflcently ad
ministered under the programme out
lined by congress.
Serond That there should not he In
the minds of the business administra
tors of government a too easy rell-
ance upon the custom of deficiency
annrnnriations
Third That where congress has di
rected the expenditure or certain
-tZLJZKZ ill ..J. . i.et..H for
more efficient and economical ad- discharge of his duties. The first re
ministration In order to produce lates to Information and the second
greater results from the given ex- relates to control, the cot tro heins
!11I7. -j ...1 ... nmrefi through ir critical func-
nendlture. and also, wherever pos
slble. to complete the given project
for a less amount than the total ap
propriated for the purpose
Similar rules obtain in every well
organised private business institution.
That they have not heretofore char
acterised the business operations of
government has been because of the
absence of executive control and th
habit of department heads of appeal
ing direct to congress, unsubjected
to any business plan made in tne In
terests of the covernment as a whole.
their action being determined by their
conception of the needs of their de-.
nartment or establishment as an In
dependent organization. In this at
titude of the chief executive lies the
hope and expectation of a great less
ening of the amounts requested under
deficiency appropriations.
Brs;rnuplnK of Activities.
Section 209 of the budget law pro
vides that
Tho bureau, when directed by tho preal
dent. shall make a detailed study of the
departments and establishments for the
purpoae of enabling the president to de
termine what changes (with a tflow rf se
curing greater economy and efficiency In
the conduct of public service) ahould be
made In (1) (2) (S) the assign
ment of particular activities to particular
aervlces. or (4) the regrouping of services.
By Joint resolution of December 29,
1920. congress has provided for the
organization of a "iolnt committee on
reorganization to make a survey of
the administrative services of the
government for the purpose of secur
ing all pertinent facts concerning
their powers and duties and distribu
tion among the several executive de
partments and their overlapping and
duplication of authority: also, to de
termine what distribution of activ
ities should be made among the sev
eral services with a view to the prop
er correlations of the same, and what
departmental regrouping of services
should be made." This joint resolu
tion was supplemented on May 5,
1921. bv another authorizing the pres
ident to appoint a representative of
the executive to co-operate with this
Joint committee.
In order to prevent an embarrassing
overlapping and duplication of activ
ities between this congressional Joint
cofhmlttee and the bureau of the
budget the president, at the sugges
tion of the director of the budget,
concurred In a recommendation that
the consideration of a general re
grouping of activities should be left
to the Joint committee, who could. In
their discretion, call upon the bureau
of the budget to act for theem as an
agent In gathering information. Since,
at this date, the report of the joint
congressional committee is not avail
able, the budget herewith transmitted
is necessarily framed upon the as
sumption of the continuance of nor
mal activities of the government al
ready In existence and as now consti
tuted. The alternative budget, ex
cept as to changes In form oniy, is
likewise based upon the samas8ump
tion. If the report of the Joint com
mittee Is accepted in principle and
followed by appropriate legislation,
or If any of the existing proposals
of civilian employes should be enacted i
Into law. such legislation would
greotlv simplify the preparation of
the budget in future years.
Neither the Isudget nor the alterna
tive budget, therefore, contains any
recommendations as to the elimina
tion or regrouplnlg of activities.
lucre CAinis in inr piroriii Binu'- i
inn- of setivliles under the di ns rt -
There exists in the present group
ments a juxtaposition in many eases j
of activities so entirely unrelated to
each other in their nature and scope'
that a regrouping of them will result
in not only a larger measure of direct
co-ordination by a single supervising
authority, but in a more effective
common functioning.
Old System l:lrntagunt.
The great waste and extravagance
heretofore existing in governmental
business administration, nowever, has
not resulted so much from an admit
tedly improper grouping of activities
In oertaln departments as it has from
a complete lark of executive control
Imposing co-ordination between de
partments and establishments them
selves. From his contact with the
departments and establishments of
the government the director of the
budget Is glad to state that as u rule
they operate with efficiency and with
a considerable degree of economy,
considered as Independent organiza
tions. Insofar ai the regrouping
of scattered activities under the one
department head reposes in him a
power of co-ordination by order, re
grouping l in the Interests both of
efficiency and economy. It must be
remembered, however, that there Is
a limit, in a government so large as
this, to effective regrouping. In every
well-organized business Institution
there must be. of necessity, in tome
of its constituent parts, certain
agencies which function for the bene
fit of the part, to enable it property
to fulfill its relation to the wheat.
w bat is. therefore, an apparent si,.
aration among tne constituent pa
or a Dusiness organisation or ay
given activity is often because 1 1
resulting efficiency of the part ts
more important than anv cconoiJjy
which would be produced by the con
solidation of the activity.
For example, If the secret serv es
nf the United States, now dividtd
into many. separate independint
agencies responsible to differo-nt t e
partment heads, should lie cotisol'd
ated as a whole, tbe resulting econ
omy in expenditure might produce
an inefficiency In departmental func
tioning wholly Incommensurate with
the savings effected. t'enturles of
evolution in military organization
have preserved the principle that In
any separate service there must be
a continuing responsibility upon any
agent responsible for supply directly
to the representative of tne service at
the point of necessity. At the cost of
certain theoretical economy each de
partment, to he kept in the most tf
flclent condition, must have reserved
to it a complete control over certiln
vital functions. The secret service 1 f
the postofflce department and of tie
treasury department, for Instancu. . 1
highly specialized. The Instructions
of the head of either of these depart
ments to the agents of a consolidates
national secret service would prob
ably not be carries out as effectively
and promptly as where there is a di
rect responsibility and dependence on
the part of tbe agent to the head of
the concerned department. Pressure.
to be most effective, must come from
the point of necessity direct upon the
I agent upon whom Is the responsibility
for meeting It.
The co-ordinating control exercise. I
In the government business organiza
tion by co-ordinating agencies unii
in the military organWHtlon bv the
general staff, in no wise lmilies a
substitution of a central body fir
the separate departments or servlcts.
Whether a regrouping of certain gor
ernmental activities will result In
economy or not, great care must be
taken under u general plan to laOi
build up central organizations to IsJss
over activities heretofore scattered
among the departments where such a
course will break down, to a ilan-'cr-ous
extent, tho autonomy of the aep
srate departments.
In all successful business organlr.
tlons there Is a compromise, deter
mined by experience, between a com
plete centralization of each activity
and Its decentralisation. A regroup-
lng of activities should therefore. In
the first Instsncc. not be accompanied
by plans setting up new organiza
tions to take over. In their entirety,
certain functions now separately ex
ercised by tbe independent depart
ments until the practical effect of
such a course has had most careful
consideration from the standpoint of
the resulting effect on efficiency.
System of Accounting I nlforni.
The purpose of the budget act is
to enaole the president, as the re
spnnslhli) head of the administration
of the government, m present to con
gress an annual business progiammo
which shall rontaln ti e necessary in
formation concerning the financial re
quirement of all the departments and
establishments f the government, and
the resources from which this pro-gt-imme
of expenditures uvi he met.
in surh form as clearly to indicate
the application of business principles
to the government's administrative
activities.
One of the most important aids In
budget making lies In the system of
accounts. The object of keeping ac
counts is twofold: First, to rurn so
k"n open record of the financial trans
I anions of the officers of the govern
ment charged with the responsibility
of spending public mopeys: and. sec
ond, to furnish the means of hoIdLng
the dlsbutsng officer to the faithful
exercised through the critical func
tions of audit operating on the ac
counts. The bureau of the budgot Is
primarily concerned with the Intor
matlon feature of accounting, while
the general accounting office Is pri
marily concefned with tho control
aspect.
The detailed preparation of the hud
get is largely based upon tho ac
counts. The presentation of the es
timates must necessarily follow Hie
form of the accounts. If there b
confuson in the system of accounts
It will reappear in the liurlgel. A
uniform system of accounts la, there-
line, i-.tnriiiini lu lite iiiiriiiftciii oc-.-
sratlon of the budget In whatever
form the latter may be eventually
presented The records of the dutalled
receipts and expenditures of public
money should be kept In accordance
with some uniform clasxif Icat Ion In
order that (1) the requirements of
the different departments and estab
lishments may be fully and readily
compared; (2) statements of expendi
ture for the same objects may be
stated in Identical language in each
spending office, thus facilitating easy,
rapid and Intelligent examination and
control: (3) to furnish a basis for
the estimates, the appropriation sets,
the reporting of financial data, and
the audit all upon a uniform system:
and (4) to enable a sufficiently con
crete picture of . the total financial
operationa of the government to bo
assembled within a reasonable com
pass, thus greatly facilitating tin- x-
nmlnatlon of the budget by congress
and eliminating the necessity for
much detailed examination of wit
nesses. Departments nt Variance.
At the present time there is no
such uniform classification in use bv
all departments, und the established
Practice of many years varies widely
In the different departments. Indeed,
in the majority of cases there Is no
clear distinction drawn between ex
penditures of such widely different
character as those for ordinary cur
rent expenses of operation and expen
diture; for the ncijtiisitiou of prop
erty which Increases the permanent
assets of the country.
There Is also no un'formlty In nom
enclature. Accounts are kept for
Identical objects of expenditure umli r
various names, and this variety has
naturally found ltn way Into the esti
mates. Into the approprlat iop acts, ami
into departmental reports of receipts
and expenditures. For example, "con
tingent expenses" may Include one
class of objects for one department
and another class for another. Tin
same id true of the loose terms, "gen
eral expenses," "miscellaneous ex
penses" and "necessary expenses."
Each organization unit has, to it con
siderable extent, its own system of
accounts. Congress lias attempted to
control this situation by m'nute ami
specific designations and limitations
for each appropriation In the appro
priation acts, but this effort a legis
lative control has. as la generally col
oeded. broken down. I; perhaps did
operate with some degree of effe t -Iveness
when the government organ
isation was relatively small and t'"
expenditures hut a fraction of the
present annual outlay
K Is strongly urged thai the
troller-gencral prescribe the I
svstems and procedure for admin
tlve appropriation and fund him
lng. Including a uniform standal
classification for use In the si
I departments artd esla bllshmi: nt 1
' government, and thai rhs tin
... .. ....
sv st em and st tinoardlzed elasirii
be !! d through 1 he admin
' - v exam'''-' ' i"ii " . f
tCenciulod uu l' -i )
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