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MESSAGE.

To the Senate and House of Representatives :

I submit for the information of the Congress this report of progress made in the inquiry into the efficiency and economy of the methods of transacting public business.

Efficiency and economy in the Government service have been demanded with increasing insistence for a generation. Real economy is the result of efficient organization. By perfecting the organization the same benefits may be obtained at less expense. A reduction in the total of the annual appropriations is not in itself a proof of economy, since it is often accompanied by a decrease in efficiency. The needs of the Nation may demand a large increase of expenditure, yet to keep the total appropriations within the expected revenue is necessary to the maintenance of public credit.

Upon the President must rest a large share of the responsibility for the demands made upon the Treasury for the current administration of the executive branch of the Government. Upon the Congress must rest responsibility for those grants of public funds which are made for other purposes.

REASON FOR THE INQUIRY. Recognizing my share of responsibility for efficient and economical administration, I have endeavored during the past two years, with the assistance of heads of departments, to secure the best results. As one of the means to this end I requested a grant from Congress to make my efforts more effective.

An appropriation of $100,000 was made June 25, 1910, to enable the President to inquire into the methods of transacting the public business of the executive departments and other Government establishments, and to recommend to Congress such legislation as may be necessary to carry into effect changes found to be desirable that can not be accomplished by Executive action alone.

I have been given this fund to enable me to take action and to make specific recommendations with respect to the details of transacting the business of an organization whose activities are almost as varied as those of the entire business world. The operations of the Government affect the interest of every person living within the jurisdiction of the United States. Its organization embraces stations and centers of work located in every city and in many local subdivisions of the country. Its gross expenditures amount to nearly $1,000,000,000 annually. Including the personnel of the Military and Naval Establishments, more than 400,000 persons are required to do the work imposed by law upon the executive branch of the Government.

MAGNITUDE OF THE TASK.

This vast organization has never been studied in detail as one piece ef administrative mechanism. Never have the foundations been laid for a thorough consideration of the relations of all of its parts. No comprehensive effort has been made to list its multifarious activities or to group them in such a way as to present a clear picture of what the Government is doing. Never has a complete description been given of the agencies through which these activities are performed. At no time has the attempt been made to study all of these activities and agencies with a view to the assignment of each activity to the agency best fitted for its performance, to the avoidance of duplication of plant and work, to the integration of all administrative agencies of the Government, so far as may be practicable, into a unified organization for the most effective and economical dispatch of public business.

FIRST COMPLETE INVESTIGATION.

Notwithstanding that voluminous reports are compiled annually and presented to the Congress, no satisfactory statement has ever been published of the financial transactions of the Government as a whole. Provision is made for due accountability for all moneys coming into the hands of officers of the Government, whether as collectors of revenue or disbursing agents, and for insuring that authorization for expenditures as made by law shall not be exceeded. But no general system has ever been devised for reporting and presenting information regarding the character of the expenditures nade, in such a way as to reveal the actual costs entailed in the operation of individual services and in the performance of particular undertakings; nor in such a way as to make possible the exercise of intelligent judgment regarding the discretion displayed in making expenditure and concerning the value of the results obtained when contrasted with the sacrifices required. Although earnest efforts have been put forth by administrative officers and though many special inquiries have been made by the Congress, no exhaustive investigation has ever before been instituted concerning the methods employed in the transaction of public business with a view to the adoption of the practices and procedure best fitted to secure the transaction of such business with maximum dispatch, economy, and efficiency.

With large interests at stake, the Congress and the administration have never had all the information which should be currently available if the most intelligent direction is to be given to the business in hand.

I am convinced that results which are really worth while can not be secured, or at least can be secured only in small part, through the prosecution at irregular intervals of special inquiries bearing on particular services or features of administration. The benefits thus obtained must be but temporary. The problem of good administration is not one that can be solved at one time. It is a continuously present one.

PLAN OF THE WORK. In accordance with my instructions, the Commission on Economy and Efficiency, which I organized to aid me in the inquiry, has directed its efforts primarily to the formulation of concrete recommendations looking to the betterment of the fundamental conditions under which governmental operations must be carried on. With a basis thus laid, it has proceeded to the prosecution of detailed studies of individual services and classes of work and of particular practices and methods, pushing these studies as far and covering as many points and services as the resources and time at its disposal have permitted.

In approaching its task it has divided the work into five fields of inquiry having to do respectively with organization, personnel, business methods, accounting and reporting, and the budget.

ORGANIZATION.

I have stated that the Congress, the President, and the administrative officers are attempting to discharge the duties with which they are intrusted without full information as to the agencies through which the work of the Government is being performed. To provide more complete information on this point the commission has submitted to me a report on the organization of the Government as it existed July 1, 1911. This report, which is transmitted herewith, shows in great detail, by means of outlines, not only the departments, commissions, bureaus, and offices through which the Government performs its varied activities, but also the sections, shops, field stations, etc., constituting the subordinate divisions through which the work is actually done. It shows for the services at Washington each such final unit as a laboratory, library, shop, and administrative subdivision; and for the services outside of Washington each station and point at which any activity of the Government is carried on.

OUTLINES OF ORGANIZATION. From these outlines it is possible to determine not only how each department, bureau, and operating unit, such as a navy yard, is organized, but also, by classifying these units by character and geographical location, the number of units of a like character that exist at Washington, and the number and character of services of the Government in each city or other point in the United States. With this information available, it is possible to study any particular activity or the problem of maintaining services at any given city or point.

Information of this character has never before been available. Administrative officials have been called upon to discharge their duties without that full knowledge of the machinery under their direction which is so necessary to the exercise of effective control; much less have they had information regarding agencies in other services that might be made use of. Under such circumstances each service is compelled to rely upon itself, to build up its own organization, and to provide its own facilities regardless of those in existence elsewhere.

This outline has been prepared on the loose-leaf system, so that it is possible to keep it revised to date at little or no expense. The outline thus constitutes a work of permanent value.

COMPREHENSIVE PLAN OF ORGANIZATION.

With this outline as a basis, the commission has entered upon the preparation of three series of reports. The first series deals with the manner in which the services of the Government should be grouped in departments. This is a matter of fundamental importance. It is only after a satisfactory solution of this problem that many important measures of reform become possible. Only by grouping services according to their character can substantial progress be made in eliminating duplication of work and plant, and proper working relations be established between services engaged in similar activities. Until the head of a department is called upon to deal exclusively with matters falling in but one or a very few distinct fields, effective supervision and control is impossible. As long as the same department embraces services so diverse in character as those of life saving and the management of public finances, standardization of accounting methods and of other business practices is exceedingly difficult of attainment.

So dependent are other reforms upon the proper grouping of services that I have instructed the commission to indicate in its report the changes which should be made in the existing organization and to proceed in the same way as would far-seeing architects or engineers in planning for the improvement and development of a great city. My desire is to secure and to furnish to the Congress a scheme of organization that can be used as a basis of discussion and action for years to come.

In the past services have been created one by one as exigencies have seemed to demand, with little or no reference to any scheme of organization of the Government as a whole. I am convinced that the time has come when the Government should take stock of all its activities and agencies and formulate a comprehensive plan with reference to which future changes may be made. The report of the commission is being prepared with this idea in mind. When completed, it will be transmitted to the Congress. The recommendations will be of such a character that they can be acted upon one by one if they commend themselves to the Congress and as action in regard to any one of them is deemed to be urgent.

REPORTS ON PARTICULAR SERVICES. The second and third series of reports deal, respectively, with the organization and activities of particular services, and the form of organization for the performance of particular business operations.

One of the reports of the second series is upon the Revenue-Cutter Service, which costs the Government over $2,500,000 each year. In the opinion of the commission its varied activities can be performed with equal, or greater, advantage by other services. The commission therefore recommends that it be abolished. It is estimated that by so doing a saving of not less than $1,000,000 a year can be made.

Another report illustrating the second series recommends that the Lighthouse and Life-Saving Services be administered by a single bureau instead of as at present by two bureaus located in different departments. These services have much in common. Geographically, they are similarly located; administratively, they have many of the

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