of the committee know that the President has repeatedly asked the Congress to give him the authority to make these consolidations, but that authority was forthcoming only at the last session of the Congress. He acted on that authority. The CHAIRMAN. The President has power and he is supposed to make recommendations to the Congress on the state of the Union, and he can make recommendations to the Congress at any time he may think advisable. Mr. WILLIAMSON. He asked for authority to make these consolidations and we did not give it to him before last session. Mr. SCHAFER. With reference to the question propounded by the chairman, is it not a fact that this matter should be given consideration in connection with postponing any action on the proposal to consolidate that it will take more than a year for the new politicians to find their ways around the Federal departments and to learn just what is what? Because a man may have been a king bee in the Tammany Hall organization does not mean that he will know the rounds here in Washington. The CHAIRMAN. They are all statesmen, not politicians. Mr. SCHAFER. Just because one is a good Tammany henchman, and he knew well all the operations of the Tammany government in New York City, is no accurate sign that he is going to easily assimilate all the Federal functions when he is appointed to a new position here; and, therefore, unless you start some consolidations now, you are going to have another two or three years before there are any actual consolidations. Mr. WHITTINGTON. Would that not be offset by whatever.statesman that comes here from Milwaukee? The CHAIRMAN. Colonel Roop, we thank you kindly for your interesting statement, and if there is nothing further, let us adjourn. (Thereupon, at 12.05 o'clock p. m., Wednesday, December 14, 1932, the committee adjourned to meet at the call of the chairman.) PRESIDENT'S MESSAGE ON CONSOLIDATION OF GOVERN MENT AGENCIES TUESDAY, DECEMBER 20, 1932 HOUSE OF REPRESENTATIVES, COMMITTEE ON EXPENDITURES IN The committee this day met at 10.40 o'clock a. m., Hon. John J. Cochran (chairman) presiding, for future consideration of the message from the President of the United States transmitting a message to group, coordinate, and consolidate executive and administrative agencies of the Government, as nearly as may be, according to major purposes, which message was submitted to the Congress on December 9, 1932, and is House Document 493, Seventy-second Congress, second session. STATEMENT OF HON. EWIN L. DAVIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE AND CHAIRMAN OF THE HOUSE COMMITTEE ON MERCHANT MARINE, RADIO, AND FISHERIES The CHAIRMAN. The committee is favored this morning by the presence of Judge Davis, chairman of the House Committee on Merchant Marine, Radio, and Fisheries, who desires to discuss with the committee the resolution passed by his committee in reference to some parts of the message of the President relative to grouping and consolidating of Government agencies. Judge Davis, we shall be glad to hear from you now. I understand Judge Davis speaks for the entire committee. Mr. DAVIS. Mr. Chairman and gentlemen of the committee, on the 15th instant the Committee on Merchant Marine, Radio, and Fisheries adopted the following motion: That it be declared the sense of this committee that the transfer ordered by the President of the United States of the Merchant Fleet Corporation to the Department of Commerce is unwise, ineffective, and should not be put into operation, and that the chairman of the committee be authorized to appear before the Committee on Expenditures in the Executive Departments and do what he can to prevent it. The CHAIRMAN. Was there any serious objection to that motion in your committee? Mr. DAVIS. No. We discussed the matter at length and only one member present voted against the resolution. Both parties were well represented at the meeting and, as I have stated, only one member registered a vote against it. 27 I wish to explain what is meant by the wording of the resolution to the effect that this proposed transfer would be ineffective. The merchant marine act of 1920 vests the control and custody of the merchant vessels and the piers, docks, warehouses, and all other property incident thereto in the United States Shipping Board; and the law authorized the incorporation of a company to be known at that time as the Emergency Fleet Corporation, since changed to Merchant Fleet Corporation by amendment, at a time when we were engaged in a very large and speedy war shipbuilding program. This was created as a corporation in the District of Columbia—this Emergency Fleet Corporation. The purpose of the creation of that corporate entity was in order that they might cut red tape and get quick action both in ship construction and in ship operation. Of course, this Merchant Fleet Corporation, acting as an agent of and under the direction of the United States Shipping Board, engaged in a tremendous ship-construction program, and during that time and later in a very large ship-operation program, at one time operating nearly 2,500 vessels. There was undoubtedly a reason for the creation of some such entity as that, which would not be subject to all the requirements and regulations that applied to Government officials. In other words, they did not have time to submit the various contracts and proposed purchases and other such matters to higher officials and to the Comptroller General of the United States for approval. Mr. WILLIAMSON. It acted very much in the capacity of a private corporation? Mr. DAVIS. Yes; and that was so that it could effect speed in construction and operation. In the very nature of things it is impossible for those things to be submitted and approved. Practically everything that has justified the creation and existence of the Merchant Fleet Corporation has now passed. That corporation is no longer engaged in any ship construction; it is no longer engaged in any large amount of ship operation. In fact, there are now only 4 lines remaining in the Gulf, 2 out of Hampton Roads and 2 out of New York City. All of these are operated under what are known as lump-sum contracts, except one. In other words, they are simply paying the operators so much to operate those ships in a certain service and with certain sailings and under certain conditions. There is no longer any occasion for the supervision, the accounting, the auditing, or anything else that obtained when the Merchant Fleet Corporation was operating these lines on its own account. One exception to the lump-sum contract is what is known as the M. O. 4 contract, which is a managing operators' contract, in which they are paid on a commission basis. They have tentative offers for all Gulf lines and the consolidation of them into one service. The Shipping Board has accepted the offers and the only thing remaining is that the offer is made for the purchase of the ships and operation of the lines on condition that the lines will be given a customary mail-carrying contract. I am advised that the Postmaster General purposes to give that very shortly. And the same thing, as I understand, is the situation with respect to the Hampton Roads services. That leaves only two services. One of these is the American Pioneer Line, which operates to Australia. That line can not be sold under present conditions. If it were sold in connection with a mail-carrying award, the amount would be tremendous on account of the distance involved. If the other lines are disposed of, personally, I do not think that this service should be maintained. In other words, we can not maintain an organization for the operation of one service which it is generally understood no private line will ever buy and operate it unless it is paid what, in my opinion, would be a prohibitive sum in the form of a mailcarrying contract; because it is not only such a very long service, but the cargo moving in that particular service is naturally not as large as most of the other lines. We We now have several American lines operating in the Far East, from the Pacific, and from the Gulf, and even from New York. have one around-the-world service operating from New York and San Francisco. At a time when we have almost reached and are rapidly approaching a culmination of the reasons for the existence of this Merchant Fleet Corporation, my opinion is that it should not be transferred to some new agency that is unfamiliar with the situation and where, perhaps, it would continue for a longer period than it would if left where it is and liquidated. My opinion is that the Merchant Fleet Corporation should be absolutely liquidated within a year. I think it should be very drastically reduced by the beginning of the next fiscal year. I do not think that it needs near all of the employees that it now has for the comparatively small remaining duties that devolve upon it. As I indicated at the outset, if the Executive order transferring the Fleet Corporation to the Department of Commerce is permitted to become effective, we would have a situation whereby this corporation would carry its personnel and salaries, and its own records, and plant them in the Department of Commerce under somebody to be appointed Assistant Secretary of Commerce in charge of merchant marine activities. Custody and control of ships and of all other property relating to the merchant marine, which is vested in the Shipping Board-and the Merchant Fleet Corporation is merely the creature of or agency of the Shipping Board, having such authority and powers and duties as have from time to time been delegated to it by the Shipping Board-would be transferred to the Department of Commerce. So that we would have that very anomalous and ineffective and uneconomical situation without additional legislation. As I have said, it does not occur to the committee of which I have the honor to be chairman that we should give that new legislation and give this corporation new life and let it get a fresh start at a time. when it is in course of liquidation and when it should be liquidated in a comparatively short time. I think that this corporation should be liquidated very soon is recognized even by the present members of the Shipping Board; but, on the other hand, it is quite likely that the incoming President may appoint a new Shipping Board, at least in part, and that he will be interested, as he has declared himself to be in the campaign, and as both national political platforms provide, in effecting every possible economy, and whether it be the present or a new board, it would be doubtless interested in this proposition as rapdily as is feasible; and yet, on the other hand, by reason of the large number of interests involved and the large number of contracts outstanding, some of which are current, but most of which are in the past; by reason of the large number of notes and mortgages held by the Shipping Board and the corporation in connection with past occurrences, and contracts which should be enforced in so far as possible, and all sorts of otner claims, there should be an orderly liquidation of the corporation under the direction and supervision of those who are familiar with the problems and the varying conditions, rather than to place the final liquidation in the hands of somebody wholly unfamiliar, perhaps, with the whole situation. The CHAIRMAN. You see absolutely no economy in this proposal? Mr. DAVIS. I not only see no economy in it, but I think I see the reverse. I am perfectly candid in saying that I believe there would be a longer delay in liquidation under this transfer than there would be as it is, because whoever may be the Assistant Secretary of Commerce will, in the very nature of things, wish to thoroughly familiarize himself with all conditions before undertaking to liquidate and before determining how to liquidate; and we would have this situation; He would be getting his information from the very officials themselves whose jobs are at stake, and they would, as we know is done throughout the whole Government service, stress the importance of their positions as much as possible. Mr. WILSON. As I understand your statement, this proposed transfer would sacrifice an opportunity for economy? Mr. DAVIS. That is my candid opinion of it. Mr. WILLIAMSON. Would not the practical operation be that the Shipping Board would continue to function until its business had been liquidated in the Department of Commerce? Mr. DAVIS. We have met the same proposition in other matters where a new man goes in. Of course, the Secretary of Commerce himself could not and would not give this matter his personal attention. He would not have time to become acquainted with the intricate details and complexities of this shipping matter. That duty would be delegated to some subordinate, of course, and he would have to familiarize himself with it. I hope that all you gentlemen heard the very interesting address over the radio last night by Senator Bingham on the subject of the President's message and his Executive orders. For the benefit of those of you who did not hear that address, I will say that Senator Bingham concluded by stating that the higher authority in the Government service had estimated that if this transfer went into effect it would cost during the first year of operation at least a million dollars more than for it not to go into effect; and Senator Bingham apparently quoted that with approval. I imagine that his interesting address will be placed in the Congressional Record. Mr. MILLER. Was the Senator referring to the entire scheme? Mr. DAVIS. Yes. He did discuss some of them in detail; and he disapproved of nearly all proposed transfers, as I recall. Unless there are some further questions by members of the committee, I do not care to make any further statement. I came here at the request of my committee; otherwise I would not have sought the opportunity to impose my own views upon you. |