Warren G. Harding photo

Address at the Second Regular Meeting of the Business Organization of the Government, Washington, D.C.

February 03, 1922

General Dawes, Vice-President, Members of the Cabinet, and Gentlemen of the Government’s Business Organization:

This gathering is the second in which have been brought together the heads of the various departments of the government’s organization. Something more than six months ago the first meeting of this kind was held to signalize the inauguration of the budgetary system of control over the detailed conduct of the government business. It is now possible to survey the accomplishments of this first half-year period, and I think we may well congratulate ourselves on the showing which has been made.

The report of the Director of the Budget is in your hands. It indicates that even in the formative period the Budget system has justified our most confident expectations. As a result of the higher systematization and better co-ordination of business methods the director notifies us that, at an almost insignificant cost, it has been possible to reduce the government’s expenditures, from the scale based on $4,550,000,000, which was asked for the executive departments and independent establishments for the current fiscal year, to a scale of $3,974,000,000. It is true that this showing is based on the accomplishments of only one-half of the fiscal year, but it demonstrates the possibility of keeping the government’s expenditures measurably within the scale forecasted in advance of the fiscal year’s opening, provided that no new legislation shall be enacted to increase the expenses.

This gathering has been summoned in pursuance of a policy of calling together the business heads of the government, precisely as would be done from time to time in any business organization. Here the President of the business establishment can meet those who are in direct charge of the business machinery. In order to insure continuing contacts with them throughout the business year, there have been created by Executive order the co-ordinating boards whose reports are in your hands. In accomplishing what has been achieved in the first six months of this organization’s operation the director tells us that a staff has been engaged representing a scale of expenditure, not new but newly applied, of only $109,000, while the reports show direct savings of $32,000,000 that may be definitely measured and direct and indirect savings of $104,000,000 in a period somewhat more than four months.

The various co-ordinating boards were created, on recommendation of General Dawes, for the purpose of binding together in a common plan of unification the departments and independent establishments which formerly in large measure operated independently of one another.

Through these co-ordinating boards, agents representing the Executive, working under the supervision of the Director of the Budget, it is possible to impose and execute the general policy of the Executive, involving co-ordination, economy and efficiency. If there were any misunderstandings in the beginning as to the method and purpose in bringing about this co-operation, they have now happily been substantially all dissipated. It is now definitely understood that in detailing, by Executive order, any officer or employee of the government to serve as co-ordinator or as aide to the Director of the Budget, it is the intention that there shall be created a primary responsibility to the President as the head of the business organization, and that responsibility is now recognized, not only by the detailed officer or employee but by all the departments and independent establishments.

In the beginning of this governmental reorganization there were those who feared that if we detailed from each department or establishment some person employed therein to serve with the Director of the Budget there would be created a sort of a double responsibility and a divided loyalty which might prove destructive of the highest efficiency. It was feared, in short, that these aides to the Director of the Budget might be moved more by their loyalty to and their interest in the department or establishment with which they were officially connected than by their obligations to the budgetary system. It is of the utmost importance that persons thus detailed shall understand most definitely that they are expected to extend their first loyalty and obligation to the general policy of the Budget bureau as an agency for the imposition of Executive plans. In practical operation it is manifestly impossible to find liaison officers for this service outside of the various departments, because these officers must be thoroughly familiar with the business of the departments. Otherwise they could not deal intelligently with them.

The liaison officer must, in short, be thoroughly familiar with the affairs of the department he represents, and at the same time devoted to the purpose of this co-ordination and economy program. Every person so detailed must understand and be assured that his service in this capacity will not be permitted to involve him in any embarrassment as to his present or future status in the department or establishment under which he formerly served. I want you all to be very certain that it will be my purpose to protect every one of you in his career and proper activities. In giving you this assurance I know I can be confident of the loyal co-operation of all the departments and establishments; and this is a good time to have it unanimously understood that we all serve one and the same government, and the common good, not departmental advantage, is the end at which every one of us must aim.

On the other hand, I expect that those who are detailed on this co-ordinating work will keep fully in mind, as a guide to their actions, the rights, the requirements, and the jurisdictions of the departments and establishments which they represent. In the inauguration of the Budget system it was the deliberate judgment of the director that best results would be obtained by employing as co-ordinating agents persons assigned from the departments or establishments equipped with thorough knowledge of their requirements. The wisdom of that determination has already been demonstrated. I believe it was and is the only method by which to produce such results as have been presented in the report which has been placed in your hands to-day.

Constant vigilance and intelligent activity on the part of the co-ordinating agencies make the one price at which we may secure and maintain the highest economy and efficiency in the conduct of the government’s business. It is necessary that there shall be not only attention by the Executive to the work of the co-ordinating boards but also Executive attention to the departments and establishments in relation to the co-ordinating agencies. It is gratifying to be able to say that thus far the relations between the co-ordinating agencies and the departments or establishments have been highly satisfactory. The necessity for this arrangement has been everywhere recognized. A feeling of solidarity in the government business organization has grown up, and there is a conviction that the interests of economy and efficiency demand close co-operation under central leadership.

So effective has been this department during the four months of operation through these agencies of co-ordination that there has been practically no conflict between the co-ordinating boards and the government business organization requiring decision by me as between any department on the one side and the Director of the Budget on the other. I want you to know what great satisfaction there is in saying that. And I am going to add to it the statement that in any case which may arise in the future where an honest difference of opinion exists as to the beneficial effect of a proposed order of co-ordination the matter will receive my promptest attention. Thus far we have had the most harmonious co-operation, resulting in the institution and functioning of a reorganized system of government practically without friction. It is hoped and believed that there will be a continuation of the same harmonious attitude in the future.

The report of the Director of the Budget indicates that the Executive can maintain, through agencies of co-ordination, an effective control over expenditures which will substantially eliminate the occasion for deficiency appropriations. It is true that emergencies, changes of legislative policy, and shifting business conditions, or excusable errors of judgment will make necessary at times deficiency appropriations; but it is expected that hereafter these will be, as compared with former years, very greatly reduced. From early in the administration the Executive set his face against deficiency appropriations, and an Executive order was issued discountenancing them. The fact that it has been possible to reduce the scale of expenditures so greatly as we have noted must convince us of the possibility, if estimates are made with proper intelligence and there is the necessary care in expenditures, of substantially avoiding deficiency appropriations.

It is true that the reports now before us cover only one-half of the current fiscal year. The exigencies of the coming months may modify somewhat the favourable showing which we now note with so much satisfaction. But, on the other hand, the Director of the Budget expects that new attention will be given by all of you to the continuing revision of expenditures with a view to still further economies wherever and whenever they are possible. To that end the director expects to give especial consideration to the accomplishments of each department for the entire fiscal year. It is particularly desirable that the careful and painstaking effort which has been made continuously during the first half year to effect reductions of expense shall be continued hereafter. In a business so great as the national government unexpected receipts will not infrequently swell the total of calculated revenues. It seems likely that this will be true during the current year. But despite this possibility it now seems probable that the restrictions upon expenditure which have been possible by reason of the administration’s general policy and your splendid co-operation would have resulted in a surplus of receipts for the year. The prospect of such a surplus, when compared with the estimated deficiency of $24,500,000 that was outlined in the Budget figures submitted to Congress in December, is certainly an occasion of much satisfaction to all of us.

In conclusion, I want to tell you how much I have been pleased at the spirit of economy manifested all over the country, not only throughout the departments of the government activities, but among the people at large. I cannot but feel that the government has, in this Budget organization, set an example of care and thrift that has helped greatly to make saving fashionable. If to some extent the government has been a leader in so praiseworthy a cause we ought all to be gratified that we have had a part in such an affair. Much of the extravagance of government has been due to a lack of a sense of individual responsibility, and the same is true of extravagance in the corporate businesses and the private affairs of the people. If our efforts here shall set a standard and inspire an ambition for greater economies and higher efficiency, we shall have served not only the government but the whole public particularly well. Perhaps our example will have been of service to the world.

In making my acknowledgements on this occasion I desire to commend those officials whose energy, judgment and ability have contributed to the remarkable results outlined by the Director of the Budget. Under his direction they have performed their work quietly, without seeking publicity or producing unnecessary conflict. I wish I could say a word that would bestow a proper meed of appreciation. I want to thank for his services Colonel Henry C. Smither, Chief Co-Ordinator, General Supply. I want to thank his staff, Lieutenant Colonel McAdams, Lieutenant Colonel McAndrews, Lieutenant Colonel Morey, Lieutenant Colonel Wright, Lieutenant Commander Cairnes, Lieutenant Commander Stanley, Major Wainer, and Commander C.G. Mayo.

I wish I might personally express appreciation and gratitude to every individual member of the co-ordinating forces and all of those who have been contributing to the notable success of the Budget. Sometimes, aye ofttimes, the government compensates inadequately, and there is scant expression, if any, of that gratitude and appreciation which have been so well earned; but there must come to you that finer and dearer return which is the highest compensation men may know in the public service – the consciousness of a good work accomplished.

I suspect sometimes there are public servants in more conspicuous positions who find themselves momentarily discouraged by a lack of public understanding of the difficulties of their tasks and an ungenerous appraisal of things accomplished. Sometimes it is partisan, sometimes it is ignorance, not infrequently it borders on the malicious, which is designed to create unrest, and when I contemplate the unresisted flow of extravagance and the tendency to drift the ship of state on the rocks of bankruptcy, which is far too prevalent throughout the world, I must express to every one of you and to all in authority who have assisted you my appreciation for the splendid work done in bringing government business activities back to a state which intelligence may approve.

Perhaps other governments were brought to greater strains of expenditure and more difficult financial straits through their more intimate and heavier burdens of war; and notwithstanding that fact, and that we have suffered less comparatively, I doubt if any government in the world has made a more persistent and conscientious endeavour to cut down its expenditures and institute economies and restore sane and normal ways again.

You have inaugurated a very practical work of exceedingly great importance, and the results have been so gratifying and have proven of such advantage to both the government and the public that I am taking this opportunity of openly uttering to you the assurance of my appreciation and gratitude.

Now, if I may, I want to call to the presiding position the one genius whose devotion and personality and capacity have been the inspiration of the great success of the budgetary system, General Dawes.

APP Note: From Charles G. Dawes ("The First Year of the Budget of the United States", Harper, 1923). Our gratitude to Kai Verbarg for providing this transcript.

Warren G. Harding, Address at the Second Regular Meeting of the Business Organization of the Government, Washington, D.C. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/289409

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