It is felt that inasmuch as the total amount of expenditures handled amounted to $812,860,464.64, the total amount of discrepancies outstanding is not unreasonable, but to the contrary, small, comparatively speaking. The bill was introduced at the request of the Works Progress Administrator by letter dated June 27, 1939, addressed to Hon. Ambrose J. Kennedy, chairman of the Committee on Claims, House of Representatives, which letter is appended hereto. It is recommended that the bill be given favorable consideration. The Honorable AMBROSE J. KENNEDY, WORKS PROGRESS ADMINISTRATION, Chairman, Committee on Claims, House of Representatives. MY DEAR MR. KENNEDY: There is transmitted herewith draft of a bill for the relief of certain former disbursing officers for the Civil Works Administration for the consideration of the Congress. Under the authority of title II of the National Industrial Recovery Act of June 16, 1933 (48 Stat. 195), and for the purpose of increasing employment quickly, on November 9, 1933, the President issued an Executive Order, No. 6420-B, establishing the Federal Civil Works Administration to administer a "Civil Works program.' The Federal Civil Works Administrator was instructed to put 4,000,000 persons to work in the shortest possible time, 35 days, if possible. This was a tremendous task and speed was necessarily of the essence. On November 20, 1933, all persons on work-relief rolls of the various State emergency relief administrations throughout the country were transferred to the pay rolls of the Civil Works Administration, and on the first pay day 1,108,692 workers received Civil Works Administration checks. On January 31, 1934, 4,040,000 workers were employed. The Veterans' Administration, with the largest disbursing system in the Federal Government, was called upon to cooperate by acting as the disbursing agency of the Civil Works Administration. Records indicate that total expenditures of $812,860,464.64 were made in the operation of the program, which was terminated on March 31, 1934. Suspensions in the accounts of the persons disbursing Civil Works Administration funds have been cleared with the exception of items aggregating the sum of $26,125.95. The Federal Emergency Relief Administration and the Works Progress Administration have taken all reasonable steps either to effect clearance of the exceptions or to obtain collection from the persons responsible of the amounts involved in the exceptions. These exceptions fall into several categories, the major ones being: Breach of travel regulations, duplicate payments, lack of necessary itemization details, procedural irregularities, improper subsistence deductions, discount earned but not taken, payment of bond premiums, unauthorized purchases, and check forgeries (all these cases have been referred to the Secret Service Division of the Treasury Department, and convictions of guilty persons have been obtained). In view of the large sums of money disbursed, the amount of disallowances appearing upon the books of the disbursing officers is exceedingly small. Numerous acts authorizing relief of disbursing officers have been enacted by the Congress under circumstances where fraud or negligence on the part of such officers has not existed. Therefore it is respectfully recommended that your committee give favorable consideration to the proposed legislation, which would, as a matter of equity and justice, prevent the disbursing officers from being held personally responsible for the disallowances appearing on their books in the General Accounting Office. Yours very truly, F. C. HARRINGTON, Administrator. О 76TH CONGRESS HOUSE OF REPRESENTATIVES 1st Session JOHN L. SUMMERS, FORMER DISBURSING CLERK, JULY 14, 1939.-Committed to the Committee of the Whole House and ordered to be printed Mr. KENNEDY of Maryland, from the Committee on Claims, submitted the following REPORT [To accompany H. R. 7049] The Committee on Claims, to whom was referred the bill (H. R. 7049), for the relief of John L. Summers, former disbursing clerk, Treasury Department, and for other purposes, having considered the same, report favorably thereon without amendment and recommend that the bill do pass. The purpose of the proposed legislation is to provide relief for and to adjust certain accounts of John L. Summers, former disbursing clerk, Treasury Department, and Guy F. Allen, chief disbursing officer, Treasury Department, without raising charges against the officers who certified the vouchers for payment; Frank White, H. T. Tate, and W. O. Woods, former Treasurers of the United States, and W. A. Julian, Treasurer of the United States; the Office of the Comptroller of the Currency; and the Public Debt Service. The bill was introduced upon the request of the Acting Secretary of the Treasury in his letter dated June 22, 1939, addressed to the Speaker of the House of Representatives. The need for the proposed legislation and the facts surrounding same will be found described n this letter, which is appended hereto. It is recommended that the bill be given favorable consideration. TREASURY Department, The SPEAKER OF THE HOUSE OF REPRESENTATIVES. SIR: There is transmitted for your consideration a draft of legislation to provide relief for and to adjust certain accounts of John L. Summers, former disbursing clerk, Treasury Department, and Guy F. Allen, chief disbursing officer, Treasury Department, without raising charges against the officers who certified the vouchers for payment; Frank White, H. T. Tate, and W. O. Woods, former Treasurers of the United States, and W. A. Julian, Treasurer of the United States; the Office of the Comptroller of the Currency; and the Public Debt Service. The legislation is necessary to cover (1) disallowances in the accounts of the officers as the result of payments made in good faith and without negligence, (2) unavailable items in the accounts of the Treasurer and former Treasurers of the United States, which represent losses and check reclamation cases resulting from forgeries, padded pay rolls, etc., over which the Treasurers of the United States could exercise no control, and (3) adjustments in the public debt accounts and discrepancies in certain national bank note currency accounts. There follows a brief explanation of the amounts included in the proposed legislation: RELIEF OF JOHN L. SUMMERS, FORMER DISBURSING CLERK, TREASURY DEPARTMENT Settlement of the accounts of J. L. Summers covering payments made by him in the period from December 16, 1933, to June 30, 1934, under certificate No. G-98954-T, dated September 12, 1938, in the amount of $827.14. RELIEF OF GUY F. ALLEN, CHIEF DISBURSING OFFICER, TREASURY DEPARTMENT Settlement of the accounts of Guy F. Allen covering payments made by him during the period July 1, 1934, to December 31, 1935, shows disallowances of payments made from the Treasury Department and Department of Commerce appropriations of $3,352.60 under certificate No. G-119147-T, dated April 4, 1938. These amounts cover disallowances on account of travel expenses, purchases in open market, disallowances on account of charges incurred to renovate exhibits shown at the Chicago World's Fair after the expiration of the appropriation, and payment to other than assignee due to lack of notation on face of pay roll, etc., and are similar to those which have been deemed by Congress entitled to relief in the past. There is no evidence of fault or negligence on the disbursing clerks' part in making payments covered by these disallowances, nor are the disallowances excessive when it is considered that items paid aggregated hundreds of millions of dollars. Every effort has been made and will continue to be made to collect the items representing these disallowances. RELIEF OF TREASURER AND FORMER TREASURERS OF THE UNITED STATES Section 2 of the draft of legislation covers the correction of the accounts of the following officers on account of unavailable items in the amounts indicated: Frank White.... H. T. Tate__ W. A. Julian.. $16, 063. 37 3, 231. 17 72, 822. 49 449, 160. 05 These amounts cover unavailable items resulting from what are known as "check reclamation" cases, for which the Treasurer is held responsible. These are usually checks bearing forged endorsements. The Treasurer of the United States necessarily has to depend on prior endorsements, usually by banks, in cashing such checks, and in spite of the utmost care and vigilance, there are no means by which the Treasurer could have detected such forged endorsements. The granting of relief in these cases will not affect the Treasury's continued effort to effect collections on behalf of the United States. As illustrative of the items involved in the check-reclamation cases, there may be cited the following example: The Stitely case involving 1,113 checks aggregating more than $84,000: These checks were drawn on the Treasurer of the United States by disbursing officers in Washington upon irregular vouchers prepared and submitted by Reno E. Stitely who obtained checks drawn for the most part in favor of fictitious payees, which checks were endorsed in the name of the payee and were deposited by Stitely in Washington banks. Such fictitious vouchers were submitted regularly over a period of several years before the fraud was discovered. Checks issued thereon were paid during the terms of office of the present Treasurer, Mr. Julian, and his predecessor, W. O. Woods. The checks were paid by the Treasurer in the usual course of business since they bore no indication of defect and were presented by banks which guaranteed the prior endorsements. Recovery has been accomplished in the amount of $268.75. This case is now pending in the Depart t ment of Justice for such further recovery as can be effected from the various endorsers. This case indicates in general the nature of the check reclamation cases comprising practically the total unavailable items in the accounts of the Treasurers and evidences the fact that there is no method by which the Treasurer of the United States could have detected the frauds. The case is illustrative of the practical difficulties under which the Treasurer of the United States labors, and the virtual impossibility of finally closing his accounts under existing law. New cases might arise even after relief has been granted by the Congress. Section 3 of the draft of legislation covers losses in the Office of the Treasurer of the United States amounting to $1,811.40 which are of such a nature that they require an appropriation to adjust the accounts of the Treasurer of the United States. These items are as follows: Shortage in cash on account of the cashing of checks in the amount of $506.40 by tellers, over the counter in the cash room, on forged endorsements. Cashing of checks in the amount of $505 drawn against Reconstruction Finance Corporation funds by unauthorized persons by forging signature of person authorized to draw checks and presented to and paid by the Treasurer of the United States through banking channels. Check No. 174, dated February 12, 1935, for $0.72, drawn on the Treasurer of the United States by G. F. Allen, symbol 89-346, to the order of James W. Poore, was raised to $800.72 by the payee, and was negotiated at the Commercial National Bank, Anniston, Ala. A suit was brought against the bank in the amount of $800 and upon trial judgment was awarded in favor of the United States in the amount of $81.77. A new trial was granted but no definite time for it has been set. The payee has been apprehended and sentenced for the offense to 4 years in the Federal Penitentiary at Atlanta Ga., and fined $500. In a number of instances, the Congress has granted relief to the Treasurers of the United States for losses that have occurred during their terms of office without fault or negligence on their part. The Treasurer, of course, is personally liable under his bond for the safekeeping of the public money in his custody, but at the same time it is obviously impossible for him to detect frauds of the type indicated above. Certainly, failure to detect them was due to no fault on his part, nor to the omission of proper safeguards against such occurrences, nor to lack of proper regulations and instructions. Losses similar to those described are the accepted experiences common to all men discharging similar duties in banking institutions. The banks, however, can and do charge such items to profit and loss accounts, whereas the Treasurer has no means of securing an adjustment of his accounts except through action of Congress. Considering the fact that the Treasurer of the United States each year pays checks aggregating billions of dollars, in addition to the other extensive financial operations of his office, the unavailable items for which relief is requested are extremely small in comparison. ADJUSTMENT OF ACCOUNTS OF TREASURERS OF THE UNITED STATES AND THE Section 4 of the draft covers losses affecting the accounts of the Treasurers of the United States and the public debt accounts amounting to $576,340.23 which are of such a nature that an appropriation will be required to make the proper adjustments. The losses were caused by overissue and overredemption of principal and of overpayment of interest of public debt securities, overpayment of war savings certificates, and losses of receipts from sale of securities by the Postal Service, as follows: (a) Sale value of certificates sold through the Postal Service from December 1, 1917, to June 15, 1924, in excess of the actual amount deposited in the Treasury, amounting to $542,103.11 which is the greater part of the amount requested under section 4. The Post Office Department was unable to deposit the full amount due to the loss of receipts and certificates by burglary and fire, and for similar losses. Of the above amount $426,727.74 has been allowed in the accounts under authority of the act of March 17, 1882, as amended (U. S. C., title 39, sec. 49) and various private acts for relief of postal employees, but this authority is not available to the Treasury Department to clear its accounts. The Post Office Department advises that no part of the balance of $115,375.37 is recoverable, and that legislative relief for postal employees to cover unavoidable casualties is being sought. (b) Overissuance and redemption of bonds and overpayment of interest amounting to $34,237.12: Bonds issued on forged assignments of registered bonds, presented to the Treasury Department for exchange for coupon bonds, such assignments being witnessed by authorized officers and bearing no evidence of irregularities. Subsequent evidence was presented establishing forgeries and necessitating the issuance of new bonds and payment of interest to rightful owners. Bonds reported stolen, new bonds being issued on approved claim and bond of indemnity and later the original bond presented bearing an assignment by the registered payee which the Department was compelled to honor. Thefts in the Office of the Register of the Treasury of bonds that had been retired in exchange for other bonds and from the stock of the Bureau of Engraving and Printing such bonds being presented and honored for exchange at a later date. Claims paid for alleged loss of war-savings certificates, it being subsequently established that certificates alleged to have been lost had previously been paid by Federal Reserve banks or Post Office Department. When the volume and aggregate value of the securities handled during the period of which the losses occurred are considered, it would seem that they are not excessive, nor do they indicate negligence on the part of those responsible for their safekeeping. From April 1917, when the first Liberty Loan was issued to June 30, 1938, Public Debt Securities, amounting to nearly $600,000,000,000, have been issued and redeemed, the above loss being .00009 of 1 percent. ADJUSTMENT IN NATIONAL BANK NOTE CURRENCY ACCOUNTS IN THE OFFICE OF THE COMPTROLLER OF THE CURRENCY Section 5 of the proposed legislation provides for adjustments in the sum of $1,290 in certain national-bank currency accounts in the Office of the Comptroller of the Currency to take care of discrepancies which exist therein. These discrepancies occurred without fault or negligence on the part of the Comptrollers or Deputy Comptrollers in office at the time and represent the value of notes illegally abstracted from the vault stock and placed in circulation during the years 1934 and 1935 and were disclosed during the 1935 audit. The matter has been investigated by the Secret Service of this Department, but up to the present time no definite results have been obtained. No part of the sum covered by this item has been recovered. but if any part is recovered, such amount will be deposited in the Treasury as an offset to the adjustment herein recommended. There is no method of adjusting the foregoing account except by act of Congress. This case is similar to the case covered by Private Act No. 190, approved August 7, 1935, whereby Congress provided relief for the Office of the Comptroller of the Currency, but should not occur again as this account has been discontinued. A duplicate of this proposed legislation is being transmitted to the President of the Senate. Very truly yours, JOHN W. HANES, Acting Secretary of the Treasury. о |