Statement of estimates and appropriations for subhead “Repairs" of all branches of National Home for Disabled Volunteer Soldiers The CHAIRMAN. We thank you very much, Colonel, for your presence here this morning, and I assure you that the members of the committee appreciate the testimony which you have given us. Does anyone else desire to be heard? SUPPLEMENTAL STATEMENT OF COL. RICE W. MEANS, PRESIDENT NATIONAL TRIBUNE CORPORATION Mr. MEANS. Mr. Chairman, I would like to state that representatives of the American Legion, Veterans of Foreign Wars, the national commander of the American Legion, Major Bodenheimer, the national legal representative, Mr. Taylor, the representative of the D. A. V's., Mr. Kirby, the representatives of Veterans of Foreign Wars, Mr. Bettleheim, and myself met and we agreed upon a bill unanimously, and have submitted the bill to the chairman of the committee. I would ask that the same be printed or handled in any way that the committee deems best, so that each member of the committee might have furnished him a copy of the bill. We are unanimous on it and will appear in a body or individually before your committee and explain the provisions thereof and the purposes of the bill. Mr. SCHAFER. Will the gentleman yield for a brief question? Mr. SCHAFER. What about the official representative of the Civil War veterans' organization? Mr. MEANS. Mr. Foster had to leave town before I could get to him. The commander in chief was here, and if we could have had the conference a few days before, we could have had him represented. I have sent to Mr. Foster a copy of the bill and asked his approval. Mr. SCHAFER. Are you officially representing the Spanish-Ameri can war veterans. Mr. MEANS. I am. Mr. SCHAFER. Or are you representing the National Tribune? Mr. MEANS. I represent both of them; I always represent the National Tribune, and in this particular case I speak for the United Spanish War Veterans. The CHAIRMAN. I may say that I have the bill presented by these gentlemen in my hand. It will be printed in the record, the same as other bills submitted by other witnesses. Mr. SCHAFER. I ask unanimous consent that Mr. Means be requested to furnish each member of the committee with a draft of that bill at the very earliest opportunity. The CHAIRMAN. Without objection, that may be done. (The bill referred to is as follows:) A BILL To establish a department of veterans' affairs, transferring to it certain agencies administering relief to war veterans, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That there is established an independent department of veterans' affairs, the director general of which shall be appointed by the President, by and with the advice and consent of the Senate. The director general of veterans' affairs shall receive a salary of $15,000 per annum, payable monthly. SEC. 2. There is hereby transferred to the department of veterans' affairs the United States Veterans' Bureau, the Pension Bureau, the National Home for Disabled Volunteer Soldiers, and the Battle Mountain Sanitarium Reserve. The powers and duties now conferred by law upon the several agencies named herein are hereby vested in the department of veterans' affairs: Provided, That the transfer of employees under this authority shall not be held to affect their status under the laws relating to the classified civil service or under the civil service act, except as may be expressly provided by the President in the exercise of his authority under existing laws. SEC. 3. The director general of veterans' affairs, subject to the general direction of the President, shall have power and authority to supervise, coordinate, and control all the above-named agencies transferred to the department of veterans' affairs and now functioning as administrative units. The director_general shall administer, execute, and enforce the provisions of this act, and for that purpose shall have power and authority to make rules and regulations not inconsistent with the provisions of this act. SEC. 4. Upon transfer of the National Home for Disabled Volunteer Soldiers as herein provided all duties and authority relating to the home as are now imposed upon the Secretary of War shall vest in the director general of veterans' affairs. Section 4836 of the Revised Statutes is hereby repealed. SEC. 5. That for the purpose of carrying out the provisions of this act, the President is authorized to make proper transfer of all moneys appropriated for the benefit of the respective governmental agencies, the duties and powers of which may be transferred under this authority: Provided, That any moneys heretofore or hereafter appropriated for the use of any executive or administrative department or governmental agency transferred under the authority of this act shall be expended only for the purpose for which they were appropriated. SEC. 6. That the director general of veterans' affairs shall on the first Monday in December of each year file with the Speaker of the House of Representatives and the President of the Senate a full and complete report of all activities of the department of veterans' affairs and a full and itemized statement of all moneys received and disbursed for the preceding year. He shall from time to time, as he deems expedient, report to the Congress of the United States the changes required and essential in substantive laws to effectuate complete consolidation and coordination of all governmental agencies transferred to the department of veterans' affairs. SEC. 7. An appeal may be taken to the director general of the department of veterans' affairs from any final action or order of the Director of the Veterans' Bureau, Commissioner of Pensions, Board of Managers of the National Home for Disabled Volunteer Soldiers, or any member thereof. SEC. 8. All acts or parts of acts in conflict herewith are hereby repealed. The CHAIRMAN. The committee will now stand adjourned. The committee will meet to-morrow at 10.30 o'clock a. m. (Whereupon the committee adjourned to meet on Friday, January 24, 1930, at 10.30 o'clock a. m.) 91158-30-10 HOUSE OF REPRESENTATIVES, IN THE EXECUTIVE DEPARTMENTS, The committee met at 10.30 o'clock a. m., Hon. William Williamson (chairman) presiding. The CHAIRMAN. The committee will be in order. We have with us this morning Comptroller General McCarl, who is here to answer any questions the gentlemen of the committee may wish to propound. STATEMENT OF HON. J. R. McCARL, COMPTROLLER GENERAL OF THE UNITED STATES SUMMARY OF MR. M'CARL'S STATEMENT The basic law contemplated and in fact required, and now requires, that before any money leave the Treasury it must have the approval of the head of the accounting system. The preaudit is a tremendously important reform and rests on this foundation. This work for all the departments and independent establishments is carried on in the General Accounting Office, with the exception of one outside unit that has been placed in the Veterans' Bureau. This unit consists of about 60 men. If the Veterans' Bureau seeks light they may be consulted before the director makes his final decision. The primary function of the Comptroller General is the construction and enforcement of enactments of Congress as they relate to appropriations. There will be disputes as long as the Congress itself encourages the executive branch of the Government to resist or disregard decisions of the accounting officers with relation to the use of appropriated moneys. Unless Congress wants to abandon legislative control over such moneys, the attorney general should not be permitted to decide a dispute or difference of opinion between the General Accounting Office and a department or independent establishment. The view of the Comptroller General in the interpretation of the law is the last word as far as the General Accounting Office is concerned. Disputes are not now so frequent as most of the doubtful questions with reference to the use of appropriations are submitted under the statute for advance decision. A force of from 35 to 40 lawyers is engaged in decision work. The Comptroller General does not overrule the administrative finding of facts unless it is clearly wrong. There have been no less than 50 decisions on arrested tubercular cases and they should be permitted to speak for themselves. Disbursing officers in the departments are responsible under their bond if they make an illegal payment. The auditing official is a checking or restraining officer and is not financially responsible. Mr. SWING. Mr. Comptroller General, in the consideration of H. R. 6141, a bill proposing the consolidation of veterans' activities, we had up the question of preauditing. How far has the preaudit system gone at the present time? Mr. McCARL. I do not believe I understand the purpose of the question. Mr. SWING. I presumed preaudit was a technical phrase that was understood. Instead of as heretofore waiting until they come to the comptroller, I understand now there is being set up in the various departments and independent bureaus a branch in their buildings or in their offices presided over by a delegated employee from your office who takes the cases for final decision by that bureau and advises the bureau whether or not your office concurs in the decisions. Is that what I might understand by the expression preaudit? Mr. McCARL. Yes; not quite but almost. Mr. SWING. You tell it. I shall get it from you. Mr. McCARL. There are two systems of audit. One is post audit which occurs after payment and the other is preaudit or an audit. in advance of payment. Perhaps I should go back to the beginning when all payments were preaudited. The basic law contemplated and in fact required and now requires that before any money may leave the Treasury it must have the approval of the head of the accounting system. He must countersign all warrants. The original way of paying an obligation was for the Secretary of the Treasury administratively to prepare a warrant upon the Treasurer of the United States and send that warrant with the supporting papers to the head of the accounting system, who examined for two things. First, for the legality of the prepared payments, that it was a legal obligation of the United States; and, second, that the Congress had made an appropriation for that particular payment, and, finding those two elements to be there and correct, he countersigned the warrant. That was all right in the beginning but it was discovered or thought that it was too slow a process in view of the development of the Government's activities and the vastness of the territory. There was then devised the system that has grown into our present disbursing system. If I remember correctly, the first break was the selection of a very high class man in the Treasury Department, who was asked to give a bond, his father and his banker and his minister, those who were financially responsible, and upon the providing of that bond he was provided with money in a limited sum and was then permitted to go to the field for the purpose of paying those ordinary obligations of the United States so clear in all respects that he was willing to assume personally the responsibility to pay them, and his accounts were then sent to the accounting officers in Washington. Those that could properly be approved were approved and those that could not properly be approved he was held responsible for. That apparently was not bad and the way they got around the requirement that the head of the accounting system should countersign all warrants, they invented what they called the accountable warrant. That was an invention because it then had no statutory authority, but by devising the accountable warrant moneys were advanced to this accountable official who had given bond for all moneys entrusted to him. That seemed to work rather well and other clerks were selected to go to other parts of the country, and those accounts that they were perfectly willing to assume responsibility for paying they paid, and those accounts that were doubtful either as to law or fact were bundled up and sent into Washington to the accounting officer who thereupon made what was called a direct settlement. Perhaps it required some evidence or perhaps they required the use of a law library to determine the law applicable which the clerk in the field did not have. At any rate any account he was not so sure about that he was willing to personally assume responsibility for, he did not pay but sent to the accounting officers for direct settlement. That system developed and grew and Congress finally took cognizance of it by providing for disbursing officers. Those disbursing officers were not Treasury officials. They were placed in the several departments and establishments and that was the breakdown of the original system which required audit before payment and made it possible for the administrative officials to require payments to be made. Remember now, that payments are made on the personal responsibility of the disbursing officer and in that connection the Congress enacted a statute which provided that any disbursing officer having a voucher fully approved before him and feeling any doubt as to the legality of the transaction involved or as to the availability of the appropriations proposed to be used, was authorized to send such voucher to the head of the accounting system for an advanced decision. You recall too that the same statute authorizes the head of the department having administrative control of an appropriation to likewise send to the head of the accounting system his question with reference to the availability of the appropriation for a proposed use, and required the head of the accounting system to answer. In the case of the disbursing officer he is controlled by the action of the accounting officer and if the accounting officer says he may pay and he pays, his responsibility is then no more. If the head of a department violates the advanced decision he does it on his own responsibility. He can incur the obligation and attempt to pledge the appropriation, but if the appropriation was not made for that purpose, of course, the attempted action is nil. The unlawful payments of moneys that could not be given credit for in the disbursing officer's accounts were so many that the advisability of a preaudit became so obvious that I have been striving for it ever since I have been in the office. I would rather help 1 agency to go straight than to catch 50 doing something to be criticized for, and I can help them best by aiding them to keep in the Treasury the money that belongs in the Treasury unless it is payable on a legal obligation of the United States, for which Congress has made an appropriation. The preaudit, in my judgment, is a tremendously important reform, and it is pleasing and encouraging to me that it has been so welcomed by those who are in places of responsibility and who have no other wish than to use appropriated money for exactly and no other purpose than that for which Congress made the appropriation. Those who are wishful to go in accordance with the expressed wishes of Congress welcome this system and realize that it results in saving numerous unauthorized payments that would otherwise be made. Now, to get down to your question of preaudit: When the administrative officers have approved a voucher for payment, instead of sending it to the disbursing officer for payment on his personal and bonded responsibility it is sent to the accounting officer to examine and check the supporting papers and to see whether or not credit could be given in the event of payment. This makes it possible for the disbursing officer, who may have a $50,000 or $100,000 bond, to have his attention called to the fact, if it be the fact, that if the payment is made it can not be passed because of some weakness, some lack of proof or misapplication of statute in connection with the |