Director of Administration, Miss Graham. We have obtained the services of a financial management expert. We have a newly acquired personnel management expert. One might almost think that we are doing this in preparation for this very act of having the authority in these administrative areas passed over to the Chairman or to, at least, the staff, and this staff would be performing a good deal of the functions that we are talking about here.

To conclude my prepared statement, I am pleased that the President has taken the initiative in responding to the findings of this firm by transmitting to the Congress Reorganization Plan No. 2 of 1967. The plan represents the judgment of several generations of the best management thought inside and outside of the Government as the best means of dealing with a situation such as that described by the consulting firm. Congress has agreed with this approach to the problem by allowing comparable plans to go into effect for most of the other multiheaded Government agencies. I support the plan. And I might say that the Vice Chairman, who is not present, and Commissioner Thunberg, go along with me in supporting this plan.

I believe it will enable the Commission to carry out its overall responsibilities more effectively. If the plan becomes law, the Commission will make every effort to assure its successful operation. Thank you.

Senator RIBICOFF. Mr. Culliton, please.

Mr. KAPLOWITZ. Could I suggest that Mr. Fenn would like to testify first? Is that all right?

Senator RIBICOFF. Mr. Fenn first?

All right, sir.

STATEMENT OF DAN H. FENN, JR., COMMISSIONER, U.S. TARIFF COMMISSION

Mr. FENN. Thank you, Mr. Chairman.

I submitted a discussion of my concerns about Reorganization Plan No. 2 on March 21 to the Executive and Legislative Reorganization Subcommittee of the House Committee on Government operations. Perhaps you may wish to make those formal remarks a part of the record of this hearing.

Senator RIBICOFF. Without objection, it is so ordered. (The document referred to follows:)

PREPARED STATEMENT OF DAN H. FENN, JR., COMMISSIONER, U.S. TARIFF COMMISSION, BEFORE EXECUTIVE AND LEGISLATIVE REORGANIZATION SUBCOMMITTEE, HOUSE OF REPRESENTATIVES, MARCH 21, 1967

Mr. Chairman and members of the subcommittee, I am not in favor of the reor ganization plan for the Tariff Commission because I believe that it does not meet our basic problems and may, in fact, serve to divert our attention from them while creating new difficulties of its own. In addition, I am concerned that, under some circumstances, it could diminish the Commission's traditional independence and objectivity and thus lessen its value to the Congress and to the President.

In opening this statement, I repeat the caveats which many others from sister agencies have used before in commenting on similar plans. Like them, my concern is not with our current Chairman. When Paul Kaplowitz was sworn in over a year ago, I said: "If the President had personally created a man for the chairmanship of the Commission, he couldn't conceivably have done better. For Kap brings back to the Commission a unique combination of qualities

to be found nowhere else in the country." This has been an even more congenial, more productive period for all of us than I envisioned on that occasion. Further, I hope that my views are not unduly colored by my own role on the Commission. My personal relationship with the Chairman is such that I would expect to be able to make a contribution in the future regardless of the formal organizational structure under which we operate.

Thus, my anxiety goes to the plan itself, as it relates to our particular agency, and to the impact it may have when other chairmen and other commissioners succeed those of us who now hold these offices.

I have said that the proposed plan does not meet what I see to be our principal problems in the management area. By "management" I do not mean routine housekeeping such as the purchase of supplies, the maintenance of the building, or routine personnel actions-keeping the water cold in the bubblers and hot in the boilers. These present few problems for us now and take up little Commission time. I shall have some comments on those matters in a moment. Rather, I am referring to our more basic managerial responsiblities. In a letter to Senator McClellan back in 1950 as printed in the "Hearings Before the Committee on Expenditures, U.S. Senate, 81st Congress, Second Session," Frederick J. Lawton, then Director of the Bureau of the Budget, stated that the Hoover Commission was concerned by "a lack of basic planning which would provide a more effective development of policies and objectives" in the regulatory agencies and, he might have added, a lack of systematic attention to the organization and allocation of resources to carry out those objectives once established. Because we are not a regulatory agency, but rather are oriented toward research and factfinding, the statement applies particularly to us.

Let me clarify what I mean with some examples. The Tariff Commission has a very broad charter to investigate, on its own motion, the field of commercial policy and the impact of international trade on the domestic economy. Some Con.missioners have felt that the greatest contribution the Commission could make in the 1960's would be to make use of our group of professional experts to launch such studies; others feel that the Commission should be, essentially, a passive agency, waiting until we are called upon before we undertake any study. I do not comment on the merits of the two positions. The point, rather, is that this is a fundamental question of the role and function of the Commission at this moment of time and, as such, is a prime management decision.

Secondly, we have not resolved the question of how the Commission can truly exert its will and guide and control the program of the agency. This is a basic issue of how the Commission is to be organized so the Presidentially appointed officers can really run it. How can we properly assess our resources and allocate them according to our sense of priorities? How can we play an appropriate role in shaping the staff-drafted reports so that they meet our concepts of what will be most useful to the President and to the Congress?

My third example is a more specific one. Our staff travels fairly extensively, either on specific investigations or to bring up to date their knowledge of the industries for which they are responsible. How can we make sure that these trips are maximally useful? What kind of policy guidelines can we establish to guide the top staff supervisors who recommend these trips, and how can we monitor the travel to make sure that the guidelines are workable and are being observed?

Such questions as these, I submit, are key management issues. They are not housekeeping, like the administration of the parking lot or the appointment of stenographers. They determine the basic mission of the Commission, the organization needed to carry out that mission, and the control of its operations. It is here that our unanswered questions lie. They can only be dealt with by the top management of the agency. Whatever the organizational structure may be, if the top managers do not choose to deal with such matters, they will not be faced and the decisions will be made, by default, by staff people acting in an uncoordinated, day-to-day fashion. One division will start on a study of East-West trade if it feels so inclined and there is time and talent available, the reports will be written and presented in the style laid down in some bygone era, the travel will be authorized according to the whim of the moment.

I contend that these matters, which are the truly crucial ones which will determine whether or not the 300 people at the Tariff Commission fulfill their maximum function in today's world, will be no better met under the reorganization plan and, as a matter of fact, will likely be less well met. In the first place, under our current arrangement an individual Commissioner is aware of these matters because they pass before him. If you do not see travel vouchers, you 78-826-67- -3

only vaguely realize that travel is taking place. There is no reason to raise the question of our policy, and no incentive to do so. As Chairman Murphy of the CAB said at a recent meeting of a Senate judiciary subcommittee, albeit in a somewhat different context, "The Board does not need to be freed from consideration of specific cases to have more time to consider policy questions. Policy questions cannot be decided intelligently in a vacuum. *** The best way to relate policies to actual facts is through consideration of actual cases." Such consideration, I might add, provides both the incentive and the opportunity to establish general policy.

Secondly, an individual Commissioner now has some leverage to force the Commission to pay attention to such problems. At one point, one of our Commissioners simply refused to sign travel vouchers until the Commission as a whole looked at the general problem. More recently another refused to give final approval to some staff attendance at various training programs to push the Commission to evolve a program in this area. Under this proposed plan, those ultimately responsible-the Commission itself-will have far less opportunity to find out what is going on, little reason to raise these questions, and small incentive to do so.

Thus this proposed arrangement not only fails to deal with our basic problems but, in fact, tends to lessen the attention of the Commission to its real managerial responsibilities, which it cannot abdicate except at the peril of the deterioration of its authority and neglect of its responsibility.

Separate from these matters are our "housekeeping" functions. The day-to-day purchase of paper clips, the appointment of people in the nonprofessional functions, the specific personnel assignments to particular investigations, the selection of books and periodicals to be acquired, do not come to us, as they should not, although they once did. While it is true that we still participate in some of these details, we have made great headway in the last few years in delegating this kind of authority to the staff member who has the knowledge and the responsibility to pass on such matters, after providing him with the general policy directives he needs. No longer does the Commission argue over whether or not we should purchase a magnifying glass for some employee.

To the extent that we have not made policy and then delegated the implementation of it in this area-with travel vouchers, for example I think we should hasten to do so, not because it is time consuming for me but because it is a charade. It takes me perhaps one second to put my initials on a travel authorization, a moment which I can easily afford. The point is that I don't know whether Mr. Conway should be going to a convention of thermometer manufacturers or not, and I shouldn't be pretending to make that judgment nor should I deprive the man who should make it-Mr. Conway's supervisor of the power to implement it.

Our remaining so-called housekeeping chores, then, take up very little of our time but, just the same they should be delegated because the authority for such decisions should be united with the responsibility for them. This problem is not met simply by permitting one Commissioner-the Chairman-to sign off instead of all six.

I stated that this plan seems to me to have inherent difficulties of its own. For example, the Chairman is to appoint the heads of major administrative units but such appointments can be vetoed by the Commission. At the same time, the Chairman could refuse to appoint someone the Commission wished to see in a key staff job. Similarly, the Chairman is to submit budget requests, but the Commission must approve them. Here, too, the Commission could wish some project included but the Chairman could refuse to do so, or, under his powers to allocate funds, he could fail to utilize them for the desired purpose once they were appropriated.

But the major weakness I see is that, again, it divides rather than consolidates authority and responsibility. The Chairman is presented from exercising the authority of a head of an agency by the restricting provisions in section 2 and section 1, paragraph 8; yet he has the responsibility for the effective operation of the Commission. The Commission has the responsibility for overall direction and management; yet it can only exercise that responsibility in a vacuum because it does not have the authority to make its policies work. I do not see how, in a real organization, you can divorce "policy" from "management.” If, for example, the Commission established the policy that it wished to institute a study of the impact on US. jobs of the tendency of American firms to set up plants abroad, it would have no way of implementing this objective, of guiding the study by the determination of the supervision to oversee it, or determining its

importance by the allocation of funds or the enforcement of time schedules. Thus it has the general responsibility to make this kind of policy, but no authority to carry it out.

My final concern is with the maintenance of the integrity, the objectivity of the Commission. As you know the Commission's major task is to provide the Congress and the President with honest, balanced, factual studies in the area of international trade. We have been asked, for example, to study the beef industry and the impact of imports; to look at wool textiles with an eye to closing loopholes in the tariff schedules; to suggest changes in our customs valuation laws; to report on developments in the olive industry which are concerning domestic packers. Some of these matters, as well as a number of the specific cases on dumping, tariff adjustment or adjustment assistance which come to us are close questions and men of intelligence and good will can readily differ. Currently, there is no way, except for the force of his arguments, for any one Commissioner to influence the vote of any other. I envision some real dangers under the proposed plan-and, again, I hasten to say, not with our current Chairman or current Commissioners. Suppose, for example, I want a new piece of furniture for my office, or I want to travel to Portland, Ore., to make a speech or participate in a conference, or more important, I want to see the Commission participate in a professional training porgram for our staff. Under the proposed plan, these decisions are to be made by the Chairman, and I must ask him for his approval. It is not more than likely, all of us being human beings that I am going to be especially sensitive to the Chairman's view on the pending widget case; that I am not going to want to get too far away from him on the current dumping case since I have some things I want from him which only he can give me?

By the same token, the control he would have over the appointment, promotion, removal, and assignment of staff presents similar possible problems. In our agency, Commissioners have no staff of their own except for a secretary. Thus, they must depend on the agency staff for draft reports, technical information, and professional judgments. Is it conceivable that a Chairman, whose appointment as Chairman by the President is an annual one, with strong views on a substantive question could so use his powers as to shape the staff's reports to the Commission? Are we not asking a man to exercise superhuman self-control when we demand that he not allow his own convictions on a substantive matter to tempt him into expressing those convictions in the staff's presentation to the Commission?

I would not want to leave you with the impression that my reactions to this plan are entirely negative. I can see some benefits, as I could in any proposal. For example, some decisions may be made more quickly than they now are; the staff will not have to guess how six people are going to react to a proposal, but only one; it may reduce the tendency of staff to "lobby" individual Commissioners, a practice which has had some unfortunate results in the past. But I must say that, on balance, I think the difficulties of the proposal outweigh its merits.

In conclusion, I want to point out that the issue here is not between the advantages of an agency run by a single, presidentially appointed chief and a commission form. It may be that a single-headed agency is more effective, better managed and more efficient, but no commission can be such an agency because the Congress did not set them up that way. The question is how can a commission-type agency best be run. I contend that the answer does not lie in trying to make it look like a one-man operation, but rather to explore ways in which a group can best be organized and led to provide the necessary management and leadership.

I would not presume to present a detailed alternative, but I am impressed by the fact that our most successful experience at the Commission has been when a Chairman, like Mr. Kaplowitz, sees his job as one of leadership and coordination and utilization and consideration of the interests and views of all its members; and our most unhappy and unsuccessful when a Chairman sees himself as the head of the agency, albeit encumbered by five harassing and generally extraneous colleagues.

I recognize that a skillful, wise Chairman will run any system in the way that Mr. Kaplowitz does; I recognize also that an insensitive one will try to be head of the agency regardless of the formal organization chart.

But there are ways that a Chairman and a Commission which is neither unusually good nor unusually bad, which is the common situation, can be encouraged and nudged to act in the way that the most successful have done instead of the least successful. While people, in the final analysis, determine how an

organization functions, the formal structure does have an impact on how they behave and what they do on the job. So I would like to see us institute a system designed especially for the Tariff Commission, subject to evolution by the Commission as we gain experience with it, complete with appropriate delegations to the Chairman and the staff, equipped with mechanisms to enable the Commission to know what is going on and to exercise its control. I would like to see it shaped in such a way as to put a premium on cooperative, collective deliberation, and determination of all management questions, and unified execution. We could thereby get the most out of the Commission form with the least friction and the maintenance of the maximum independence and objectivity. The proposed plan, it seems to me, pushes us in precisely the opposite direction.

Thank you, Mr. Chairman, and members of the subcommittee, for the opportunity to present this statement to you.

STATEMENT OF COMMISSIONER DAN H. FENN, JR., U.S. TARIFF COMMISSION

Mr. Chairman and Members of the Committee:

I submitted a discussion of my concerns about Reorganization Plan Number 2 on March 21 to the Executive and Legislative Reorganization Subcommittee of the House Committee on Government Operations. Perhaps you may wish to make those formal remarks a part of the record of this hearing. I indicated in that statement that the facts of life at the Tariff Commission are such that we are less likely to face up to the fundamental management problems of the Agency under the proposed system than under the present one. With such matters as the "executive and administrative functions of the Commission," the "appointment and removal of personnel . . . the distribution of business among such personnel . . the direction of personnel . . . and the overall management, functioning and organization of the Commission . . . the allocation, use and expenditure of funds" transferred from the Commission as a whole to the Chairman, the natural tendency of Commissioners to dismiss such central considerations as the determination of the job of the agency, how it is to carry out that job, and how the Commission is to implement its will is going to be reinforced. And the Chairman-present company excepted, and I mean that sincerely-is going to tend to divert Commissioners who raise such matters with the comment that "This is management, and not your concern."

In the House hearings, there were some discussions about whether or not, given the "general policy" clause of the Plan, the Commission could, if it wished, address itself to such questions. Theoretically, the answer is "yes"; my concern, however, is with the realities and not the theory, and I am convinced that it would not. Further, the authority transferred to the Chairman goes far beyond minor housekeeping and administrative functions and is broad enough to support him in almost any conceivable situation where he would determine that a matter was in his domain and not that of the Commission.

I also expressed concern with the possible impact upon the objectivity of the Commission's reports and, in cases like dumping, escape clause, adjustment assistance and unfair trade practices, upon its decisions. Again, theoretically, there would be no impact, but the realities of the way people act under differing circumstances are much more subtle than the theory and it is my view that organizations should be set up in accord with those realities.

I would like to clarify the matter of the Robinson Report and its recommendations. The Commission itself, participating extensively in the progress of the study, early came to the conclusion that it did not support the so-called strong chairman idea. Its views in this regard were the same as those of the consultants. The matter was considered in some detail by both the Commission and the consultants on the basis of what we knew of the particular nature of this Agency; discussion of this possibility was not foreclosed by the conditions of the contract. This decision was accurately reflected in the minutes which Mr. Kaplowitz submitted to the House Subcommittee.

As an alternative to Reorganization Plan No. 2, I would like to see the Commission permitted to function as does the Board of Directors of a company. The Board decides, given the needs and the personnel at any given time, to whom to delegate which responsibilities. It may hold to itself the right to allocate funds and select key people in the Research and Development area while totally delegating authority in the production end of the business to a Vice President; it may designate the Chairman of the Board, or the President, or Executive Vice Presi