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It should be impressed on the commission and all concerned that every dollar of expenditure under an economy and efficiency appropriation should be to the highest degree economical, and every staff appointment must be on a strict merit basis.

On March 28, 1911, a letter was also sent to the head of each executive department as follows:

DEAR MR. SECRETARY:

For your information I am inclosing a copy of a letter to Secretary Norton creating the President's Commission on Economy and Efficiency.

I shall appreciate your cordial cooperation with them in every way, as they have at best a very difficult task to handle.

Sincerely, yours,

W. H. TAFT.

The chairman had been employed as an expert to assist Secretary Norton and was immediately available, as was also the secretary of the commission, who was relieved by the Secretary of the Treasury from his duties as Auditor for the Post Office Department. Mr. Willoughby was not relieved from duty as Assistant Director of the Census until March 31. The remaining members, owing to obligations due to previous engagements, were not able to qualify and report for active work until later. Mr. Warwick, who on the date of his appointment was filling the position of auditor of the Panama Canal, reported for work May 10, 1911. Mr. Goodnow, who occupies the chair of administrative law at Columbia University, reported May 25, 1911, and Mr. Chase, an engineer by training and the head of the public-accounting firm of Harvey S. Chase & Co., of Boston, four days later, or May 29, 1911. The dates on which the members began their active work have been stated, as the commission desires to make clear that, as a body, it has been in existence only about five months.

WORK OF THE PRESIDENT'S INQUIRY IN RE ECONOMY AND EFFICIENCY.

(Sept. 27, 1910, to Mar. 8, 1911.)

Inasmuch as the duty assigned to the commission consisted in the continuation of an inquiry that had been previously inaugurated and was in process at the time of its creation, it is thought that brief mention should be made of the inception of this investigation and of the work that had been done prior to the appointment of the commission.

Appropriation for the work.-At your request Congress, in the act making appropriations for sundry civil expenses of the Government for the fiscal year ending June 30, 1911, approved June 25, 1910, appropriated the sum of $100,000

to enable the President, by the employment of accountants and experts from official and private life, to more effectively inquire into the methods of transacting the public business of the Government in the several executive departments

and other Government establishments with the view to inaugurating new or changing old methods of transacting such public business, so as to attain greater efficiency and economy therein and to ascertain and recommend to Congress what changes in law may be necessary to carry into effect such results of his inquiry as can not be carried into effect by Executive action alone.

On March 3, 1911, you submitted a special message to Congress requesting the continuance of the investigation and the appropriation of additional funds for that purpose. By the sundry civil appropriation act for the fiscal year 1912 the balance of the original appropriation which might remain unexpended on June 30, 1911, was made available for expenditure during the fiscal year 1912, and a further appropriation of $75,000 for the same purposes, likewise available for the latter year, was made. The total sum available for expenditure for the purposes stated during the fiscal years 1911 and 1912 was thus $175,000.

Organization of the inquiry.-When the first appropriation became available on July 1, 1910, you intrusted the work of planning for the investigation, and of conducting it during its preliminary stage, to your secretary. In September, 1910, the decision was reached that a preliminary inquiry should be made by your secretary, who should be assisted by a specialist on business organization and administration. As this assistant you selected Mr. Cleveland, director of the Bureau of Municipal Research of New York City, the chairman of the present commission, who came to Washington and took up the work under your secretary, September 27, 1910. This preliminary investigation was organized under the title of "The President's Inquiry in re Economy and Efficiency."

Departmental committees on economy and efficiency.-In organizing this inquiry you expressed your desire that the whole work of examining into and formulating recommendations regarding the manner in which governmental affairs are or more advantageously can be conducted should be carried on in close cooperation with the several executive departments and other Government establishments. In order to carry out this program of cooperation, you provided that a departmental committee on economy and efficiency should be organized by the head of each such department and establishment. You assembled the members of these committees in your office and expressed to them your deep interest in the undertaking and your desire that all parties should work in the closest possible cooperation to achieve the ends in which all were interested. Your commission desires at this point to express its appreciation of the active and cordial manner in which such committees and the officials of the Government generally have carried out your wishes. Without the great assistance rendered by them it would have been impossible for the commission to make the progress that it has in carrying on its work.

Board of referees and board of consulting experts.-You also made provision for two other bodies to assist in the undertaking-a board of referees and a board of consulting experts, both of which were created to act in an advisory capacity. The board of referees is composed of Government officials selected by you, and upon it was conferred the function of considering such technical questions as interdepartmental disputes, conflicts of jurisdiction, and the like, which might be referred to it for special consideration and report. The members of this board are:

Brig. Gen. William Crozier, War Department.

Capt. John A. Gibbons, Navy Department.

Mr. Joseph Stewart, Second Assistant Postmaster General, Post Office Department.

Mr. G. R. Putnam, Commissioner of Lighthouses, Department of Commerce and Labor.

Mr. George P. McCabe, Solicitor for the Department of Agriculture.

Mr. Frederick A. Tennant, Assistant Commissioner of Patents, Department of the Interior.

The board of consulting experts is composed of members of accounting firms which had been connected with previous inquiries into the affairs of the Government. The duty imposed upon this board was that of giving its opinion regarding technical questions of accounting and of business practice and procedure referred to it. The members of this board are:

Mr. J. N. Gunn, of Gunn, Richards & Co., New York.

Mr. E. W. Sells, of Haskin & Sells, New York.

Mr. J. E. Sterrett, of Dickinson, Wilmot & Sterrett, New York.

Mr. Francis F. White, of Deloitte, Plender, Griffiths & Co., London and New York.

Interim report of January 9, 1911.-Under date of January 9, 1911, an interim report was submitted to you by Mr. Norton, giving in some detail a program of investigation and a statement of work that had been accomplished up to December 31, 1910 (published as Circular No. 4). For the purpose of securing information which it was believed should be had schedules of inquiry were prepared and sent to all the executive departments and other Government establishments, calling for a large amount of data regarding their records, personnel, the laws under which they were operating, their methods of business and procedure, etc. This call for information imposed a large amount of labor upon the several departments and establishments, but the demands made upon them were cheerfully met.

Among the matters considered during this period were those having to do with the financial operations of the Government. This part of the work was prosecuted under the following five heads:

1. The character and form of expenditure documents that should be employed by the several departments.

2. Classification of objects of expenditure.

3. The kind and character of accounts that should be kept by the Government. 4. The character of reports giving information regarding revenue and expenditure that should be rendered to superior administrative officers and to Congress. 5. The manner in which estimates of appropriations should be prepared in order that Congress might have before it in easily comprehensible form the information that it should possess in determining the amounts available for governmental expenditures.

Standardization of expenditure documents.-Upon request the various departments designated representatives to serve on a joint committee to consider the question of the extent to which changes should be made in existing practices relative to expenditure documents. This committee addressed itself particularly to the question of the basic principles that should find expression in such documents, and the extent to which it would be feasible to prescribe general principles and details of forms that should be standard or uniform throughout the Government. The results of their work were embodied in Circular No. 6 of the President's Inquiry in re Economy and Efficiency, which was prepared as a working document in order to get the conclusions of the committee in a form that should be available for further consideration. With the scheme of documents there set forth as a basis, the several departments and establishments were called upon to prepare similar documents which, while conforming as nearly as possible to the principles there laid down, should have due regard for the special requirements of the services interested.

Cost keeping in the Government service.—An important feature of this scheme of expenditure documents was the provision made on them for the indication by symbols of the services and subdivisions of services through which expenditures are incurred, the work on account of which expenditures are made, and the objects of the expenditures. By the use of these symbols information is available for ready tabulation of data showing the cost involved in operating any service or subdivision of a service, the cost of performing any class or subdivision of a class of work, or the total expenditures made according to the character of the objects purchased or services rendered.

This provision was made in order, among other things, to lay the basis for the installation of cost-keeping systems in those services in which it is desirable that detail information shall be available relative to the cost involved in performing the various activities of such services, in operating their various subdivisions or stations, in securing the different classes of supplies used, personal services rendered, or other expenditures incurred. It was not believed that the effort should be made at once to install a system of cost keeping for the

1 Circular No. 6. Description of expenditure documents and procedure for the purchase of supplies, materials, equipment, and services other than personal, and for the distribution of supplies and materials from stores. Prepared with special reference to the requirements of the Bureau of the Census and submitted as a basis for discussion by the joint committee on expenditure documents and procedure.

entire Government. It was believed, however, that the original information regarding expenditures as recorded in expenditure documents should be secured in such a way that systems of cost-keeping accounts could be installed or special tabulations of cost data could be made in those cases where data of this character are of value in determining the purposes for which expenditures are made or the economy and efficiency with which governmental affairs are being conducted.

Every year the Government is subjected to heavy expense to compile special data regarding expenditures desired by the administration or Congress. Under existing conditions this information can be secured only through the laborious process of examining the original vouchers and digging out the particular data desired. Under a scheme of expenditure documents calling for the designation of objects of expenditure by a standard system of symbols almost any information can be obtained at comparatively little expense from the schedules or other records of vouchers by tabulating the amounts of the vouchers corresponding to the symbols indicating the object of expenditure concerning which information is desired.

A number of the important services of the Government are at the present time maintaining cost-keeping systems, and this number is being constantly increased. The plans of the inquiry comprehended the careful study of such systems and of the problems presented in installing new systems in services not already possessing such accounts.

In order that the practical difficulties involved in the introduction of accounts of this character in services where operations are largely of a clerical nature might be determined, and especially that a practical test of the applicability of the method of tabulating cost data by means of mechanical tabulation processes might be had, the work of devising and installing a cost-keeping system for the Bureau of the Census was undertaken. A selection of this service was made because the bureau had already made a good beginning in respect to the maintenance of a cost-keeping system, was not only willing but desirous of securing a more complete system, was one of the largest . single bureaus of the Government, its permanent office, apart from the temporary help required in connection with the taking and compilation of the results of the Thirteenth Census, numbering over 700 persons in Washington, and because the conditions to be met, due to the variety of classes of work there performed, are exceedingly complex and difficult. It was felt that in meeting these difficulties most of the problems involved in working out and installing costkeeping systems in other similar services would be solved.

The work of devising this system and installing it has been prosecuted by members of the staff of the President's Inquiry in re Econ

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