RETURN OF ALIEN PROPERTY-No. 3 HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, STATEMENT OF J. B. WOODSIDE, OF THE GENERAL ACCOUNT- * Mr. GARNER. You gentlemen are from the comptroller's office? Mr. WOODSIDE. Yes, sir. Mr. GARNER. In the course of the hearings on the Alien Property Custodian bill it developed that Mr. Mc Carl had been requested by the President to make an investigation of the Alien Property Custodian's office, by a letter from the President, that he did not have sufficient funds, and that he transferred the funds from the Alien Property Custodian to his office to the extent of $20,000, in order to make that investigation. Do you know anything about it? Mr. WOODSIDE. I do not know the details of that, Mr. Congressman, but I do know that we were requested by the President to make an audit of the Alien Property Custodian's funds. In the same letter he authorized the use of any funds in the Alien Property Custodian's office which were available. I might say that the year before we made this up, the President authorized the hiring of a firm of private accountants to make an audit of the Alien Property Custodian's funds, and I think they paid out of those funds something like $150,000 for that audit. Mr. GARNER. I am glad to hear you say that. That is additional information. Here is the point that I want to direct your attention to, if I may. I happened to be a member of the subcommittee that created the office of which Mr. McCarl is the head. It was made a matter of discussion by all of us, the proposition of removing him from the temptation of the influence of any human being. I have been an admirer of some of his work. They say that some of it probably was not justifiable, etc. But if he sanctioned the violation of a law in order to get sufficient funds to make this investigation, merely at the request of the President, then I think that he puts himself in a very unenviable place in criticising anybody else for violating the law. You had no right to transfer from the Alien Property Custodians appropriation money to the appropriation for priation of a a letter about it, or has written somebody in your department a department to another. Mr. Madden has written you letter about it, and I hope the matter will be explained, but if your 1 priation to another at the request of the President, I want to hear your defense of it. Mr. WOODSIDE. I am not able to defend that, sir. I think that the comptroller ought to be given an opportunity to defend it himself. Mr. OLDFIELD. I should like to have that letter put in the record. Mr. GARNER. Mr. Madden told me that he wrote a letter to the comptroller's office. Mr. OLDFIELD. Why can't we get those communications in the record? Mr. GARNER. I merely want to ask these gentlemen, because they happen to be here, what they know about it, if they know anything about it. Mr. OLDFIELD. I want to ask you this question. Why can not they put this correspondence in the record? The comptroller and the President are not above the law. Mr. GARNER. The President's letter is in the record. It is on the President's letter that I am basing my statement. Mr. WOODSIDE. If I may, I would object to what I say in regard to this going in the record, because I am not familiar with it. I am not able to defend the position of the office in the case. Mr. GARNER. I will make the request of you, if I may be permitted to do that as a members of the Ways and Means Committee, to ask Mr. McCarl to send to the chairman of the committee or to myself, if he prefers, an explanation of his action, to state by what authority of law he transferred from the funds of the Alien Property Custodian $20,000 to his office in order to make an audit of the Alien Property Custodian's office. Mr. WOODSIDE. I shall be glad to ask him. Mr. HAWLEY. Since this has become a matter of record, I think in justice to the Comptroller General his reply ought to go in the record. Mr. GARNER. I shall be glad to have that. (The statement of the Comptroller General, above referred to, is as follows:) Hon. WILLIS C. HAWLEY, WASHINGTON, April 24, 1926. Acting Chairman Ways and Means Committee, House of Representatives. MY DEAR MR. HAWLEY: With reference to the inquiry of Representative John N. Garner at a recent hearing of the Ways and Means Committee, as to the General Accounting Office making an investigation of the financial transactions of the Alien Property Custodian and the transfer of the sum of $20,000 from the appropriation for the Alien Property Custodian to reimburse the appropriation of the General Accounting Office, I am pleased to transmit herewith a statement fully setting forth the position of the General Accounting Office in undertaking the investigation in question and in adjusting the appropriations as a result of the expenses incurred. I appreciate being permitted to present this statement for incorporating into the hearings of the committee, and if further information is desired or I can be of any further service I will be pleased to be so advised. Sincerely yours, J. R. MCCARL, Comptroller General of the United States. [Inclosure] With reference to the inquiry at the recent hearings of the committee as to the General Accounting Office making an investigation of the financial transactions of the Alien Property Custodian, and the transfer of the sum of $20,000 from the appropriation for the Alien Property Custodian to reimburse the appropriation of the General Accounting Office for the expenses of necessary additional personnel employed for and engaged upon such investigation, permit me to state that such investigation, now nearing completion, was not made pursuant to a direction to this office by the President and the letter of the President of April 10, 1925, is not to be so understood. The Budget and Accounting Act specifies that the duties invested in the General Accounting Office "shall be exercised without direction from any other officer," but clearly such provision does not necessarily preclude the accomplishing of a proper and lawful work through cooperation. The provisions of the trading with the enemy act, 40 Stat. 415, empowered the President to accomplish any such examination of the transactions of the Alien Property Custodian as he might deem necessary. As of August 31, 1919, but concluded in February 1921, there was an examination made by a private firm of accountants, the cost of which approximated $175,000. The President it is understood deemed necessary another examination for among other reasons, changes in the office of custodian, and the question arose as to the best facilities for accomplishing the desired end. The work involved being that for which the facilities and talent of the General Accounting Office are peculiarly organized and adapted, and being also distinctly related to an examination then in contemplation by this office, I concluded that through reasonable cooperation all could be accomplished together at a vast saving to the United States. Section 312, of the Budget and Accounting Act, 1921, authorizes the Comptroller General to investigate, at the seat of Government or elsewhere, all matters relating to the receipt, disbursement, and application of public funds and authorizes him to make to the President, when requested by him, reports of the work of the General Accounting Office "containing recommendations concerning the legislation he may deem necessary to facilitate the prompt and accurate rendition and settlement of accounts and concerning such other matters relating to the receipt, disbursement, and application of public funds as he may think advisable. Section 309 authorizes the Comptroller General to prescribe the forms, systems, and procedure for administrative appropriation and fund accounting in the several departments and establishments. Section 313 is still broader in scope and requires all departments and establishments to furnish to the Comptroller General such information regarding the powers, duties, activities, organization, financial transactions, and methods of business of their respective offices as he may from time to time require of them and in addition authorizes him, through his assistants or employees, for the purpose of securing information in regard to the powers, duties, activities, organization, financial transactions, and methods of business, to have access to and a right to examine any books, documents, papers, or records of any such department or establishment. This last section is peculiarly applicable to a considerable portion of the class of work performed in connection with the investigation of the transactions of the Alien Property Custodian in that it specifically authorizes the Comptroller General to secure information in regard to the activities, financial transactions, and methods of business of his offices which is included among the establishments of the Government. In making the investigation it was found necessary to employ a number of additional employees. All of these additional persons might have been placed upon the rolls of the Alien Property Custodian and their work supervised by the regular force of this office. This course was in part employed and in addition, for a considerable period, in order to secure more satisfactory results a portion of the regular force of the Alien Property Custodian engaged on accounting work was directed to perform their duties under the immediate supervision of the representative of this office in charge of the investigation. However, to insure proper supervision and more satisfactory working arrangements it was considered advisable to place upon the rolls of the General Accounting Office the majority of the additional employees who were engaged in making the investigation of the financial transactions of the Alien Property Custodian. This was done with the understanding that the expense of such additional employees should be borne by the appropriation of the Alien Property Custodian so far as the funds of the General Accounting Office were not sufficient for the purpose. In his letter the President, whose authority was essential for the purpose of securing ready access to all available records affecting the transactions of the Alien Property Custodian, and especially as a means of obtaining information from outside depositaries and companies with which transactions of the Alien Property Custodian were carried on, gave his consent to the use of the Alien Property Custodian funds so far as I might determine their use to be authorized. In the accounting procedure there are two lawful courses to charge appropriations one, by direct charge against the appropriation, the other to let the appropriation under which the Government agency is proceeding be charged and then be reimbursed from the appropriation of the establishment receiving the service. The latter course was adopted in the instant matter for the reason that the need for the additional employees was indefinite and for an uncertain period, and expenditures could best be fixed in amount afterwards. A transfer of appropriation was accordingly made but before such action was taken both the President and the Alien Property Custodian were duly advised thereof and assented thereto. For the information of the committee as to the authority for adjusting appropriations the general rule is that services, etc., may be rendered by one branch of the Government to another branch of the Government in so far as existing facilities may permit. The requirements of law are that all sums appropriated for the various branches of expenditure in the public service shall be applied solely to the purpose for which they are respectively made and for no others. (Sec. 3678, Rev. Stats.; 3 Comp. Gen. 974, 976.) The performance of work by one department for another department without reimbursing the whole additional cost of such work as accurately as may be reasonably ascertained would contravene the requirements of law in that it would augment one appropriation at the expense of another. See 23 Comptroller's Decision 242, wherein it was held that the salary of an officer or employee of an executive department assigned under proper orders to duty under another executive department is payable in the first instance from the proper appropriation for the executive department under which he is regularly employed, but such appropriation should be reimbursed in the amount of such salary from an appropriation for the executive department receiving the benefit of his services, provided such department has an appropriation available therefor. The purposes of the creation of the General Accounting Office and its regular functions were as peculiarly adapted to accomplish the results desired by the President-which he has clearly authorized to have performed by other means then through a regularly constituted Government organization—that it was concluded that the interests of the United States, including the large economies that would result in the expenditure of public moneys and the general advantages to the Government in having an official investigation and audit of the quasi public funds handled through the office of the Alien Property Custodian fully justified undertaking the investigation when same was requested by the President. It has long been the practice of the establishments of the Government having the facilities and funds available to perform a service to give favorable consideration to requests of other establishments requiring and having funds to perform similar services but not having the facilities to render the service with the same efficiency as the establishment already equipped therefor. . For a long period of time such services have been rendered by one establishment for another, and until recent enactments the expenses incurred by the establishment rendering the service have been reimbursed to its appropriations by transfer settlements, etc., charging the appropriations of the establishments requesting the service. In more recent years such practice has been prohibited by law in specific instances, but lately general authority has been given therefor, including authority to advance funds to the department or establishment rendering the service from the appropriations of the departments and establishments requesting the service. By section 7 of the fortifications act approved May 21, 1920 (41 Stat. 613), it was provided that whenever any Government bureau or department procures by purchase or manufacture stores or materials of any kind, or "performs any service for another bureau or department," the funds of the bureau or department for which the stores or materials are to be procured or "the services performed may be placed subject to the requisitions of the bureau or department making the procurement or performing the service for direct expenditure." The section authorized advances from the appropriations of one establishment for the use of another establishment, but did not make the advance of such funds a condition precedent. The departments and establishments rendering services for another department or establishment still had the authority to render the service and seek reimbursement, and for the reasons stated above this procedure was followed by the General Accounting Office in first rendering the service and later request ing reimbursement for the minimum amount needed by it to meet the additional expenses chargeable to the appropriation of the Alien Property Custodian, not exceeding the actual expenditures on that account from the appropriation of the General Accounting Office. The audit of the transactions of the Alien Property Custodian up to the present time has been a big undertaking but by the use of the regularly constituted supervisory force of this office the saving to the United States will be so marked as compared with any similar job which has been performed by the employment of outside accounting firms for the purpose, that I am satisfied the results will fully justify the wisdom of the course followed. HOUSE OF REPRESENTATIVES, The committee met, pursuant to call, at 10.30 o'clock a. m., in the committee room, House Office Building, Hon. Willis C. Hawley presiding. Mr. HAWLEY. The committee will please come to order. The Committee on Ways and Means and the Committee on Interstate and Foreign Commerce some days ago held a joint hearing on H. R. Their powers were confined to the conducting of the hearings and reporting to their respective committees. This has been done and the Committee on Ways and Means met on Thursday a week ago. During its session certain questions were raised which had not been raised during the preceding hearing, and on the afternoon of that day a gentleman of the committee, Mr. Garner, on the floor of the House, made certain statements regarding the general character of I think, if I am not in error, that he characterized it as a the bill. stupendous crime. Mr. GARNER. In the Congressional Record I said it was a stupen dous steal. Mr. HAWLEY. Statements having been made subsequent to the hearing of the committee, it was the desire of the committee to make a further investigation into the matter and so a general hearing of the full committee was directed and we are assembled here this morning for the purpose of ascertaing certain facts regarding the legislation and the matters contained therein. Mr. GARNER. When you are through with your statement I want I want the preliminary remarks to show the situation. Before the witness goes on I desire to make a statement. to make one. Mr. HAWLEY. I was going to state who the first witness would be. The first witness will be Mr. Bonynge. Mr. GARNER. Mr. Chairman, I want the record to show that what I said was that this was a stupendous steal, the greatest in the history of this country. I reiterate it for this record, and I want the record also to show that what I meant by that steal was not the question of validity of any claim, or the equity or legality or justice of it, but that to take American taxpayers' money to pay German debts was legalized theft, in my opinion. You can make the most of it. Mr. HAWLEY. The explanation is very much different from the original statement, as made on the floor of the House. Mr. GARNER. No. The original statement never contained any statement about what the steal was. I said it was a stupendous steal, the greatest in the history of this country. I repeat it now. I only explain what I meant by the steal. 96884-26-2 |