The power to investigate and the power to report are potent tools of government in a democratic society. They are deeply respected both in and out of the government, not only because of what they have been used for in the past, but also because of what they may be used for on a future occasion. For this reason, their mere possession by the Congress, quite apart from their use, has important indirect effects on the administration of both the internal governmental processes and the laws which affect the citizens directly. Their presence eases the flow of information to the Congress even when no formal investigation is in process, and it undoubtedly prevents abuses of administrative authority which might otherwise constitute a considerable governmental hazard. Without doubt we have better government because of the mere existence of these powers than we would have if they were throttled. II As was stated earlier, these ideas were influenced by a particular investigation. This was a study by a Senate subcommittee of the operation of the Reconstruction Finance Corporation. This examination of the RFC, the Government's business lending agency, came in response to two separate recommendations. One was from the subcommittee's predecessor which had issued a statement of broad policy and purpose for the agency 2 years before, and at the same time had proposed that the agency's operations be reexamined periodically. The other recommendation came from the Hoover Commission, which was concerned over economy, efficiency and integrity in the conduct of the Government's business-type activities. The Hoover Commission saw fit also to caution that the direct lending programs be reexamined lest they impair the maximum utilization of the Nation's normal channels of credit. The governmental problem in this investigation was deemed to be one of accounting, using the term in its broad dictionary sense. On behalf of the Senate, the subcommittee sought to exact from the RFC an accounting which would show: (1) whether or not the governmental function assigned to the RFC was being discharged faithfully and with satisfactory judgment and integrity; and (2) whether or not that governmental function should be redefined in law in response to changes in economic or other circumstances. The facts to be dealt with in this investigation were, first, the policies actually employed in the RFC's lending operations; second, the financial facts which made up the operations in the period since the Congress revised and announced its basic policies 2 years before. Lack of staff work in earlier investigation The study was undertaken in February of 1950. In the summer of 1949, the subcommittee's interest in certain RFC policies had been aroused by press comments on the circumstances surrounding a number of loans. Hearings had been held in an effort to learn what the agency's policies and practices actually were. These hearings were more or less "by ear." They were not preceded by extensive staff work to guide the subcommittee's members, and the general feeling, when they were over was that they had yielded no great results. There was reason to feel that the most important shortcoming was the lack of staff work. The agency's officials who appeared before the subcommittee responded to the They hearings in what may perhaps be best described as a defensive manner. gave policy explanations in broad and sweeping terms, and engaged in discussions of general principles designed to "justify" what the agency had done. Objectionable transactions were described generally as unavoidable deviations from normal practice necessitated by special circumstances which could not have been altered. Objectionable general aspects of the operations were characterized as the reflection of problems even then in the process of correction. The subcommittee was not equipped to probe behind these general explanations. Moreover, the agency's officials showed little inclination to broaden the field of discussion beyond the limits imposed by the information already at the subcommittee's disposal. They showed little inclination to go more deeply into the signifiance of the agency's business decisions than they were forced by questions which the subcommittee was able to ask. The background thus severely limited, these questions were not overly penetrating. These facts are not reported here in criticism. They seem to be typical of the appearances which officials of the executive branch make before the committees of the Congress. No doubt the reasons why they are typical are good and sufficient. The 1950 study's avoidance of this weakness The investigation undertaken in February 1950 sought to avoid the weakness of the hearings held the preceding summer. Emphasis was placed on staff work. The hope was that when hearings were held the subcommittee members would be as well informed with respect to the subject of discussion as were the agency's officials participating in the hearings. If this could be accomplished, it was felt, there would be some chance of coming to an understanding on fundamentals. The first step in organizing the 1950 study was the preparation of a work program in outline form. This outline continued a complete summary of the policy expression formulated by the 1948 subcommittee so that the new project could be established on a sound foundation and the continuity of the subcommittee's effort might be preserved. Using it as a guide, the subcommittee staff examined a group of loans made by RFC in the period since the policies had last been laid down. The first loans for examination were taken more or less at random, the hope being that this approach would yield a representative sample and show up the areas in which further study was required. The sample loans were examined with reference to the application of the policies formulated by the predecessor subcommittee. This review was made on the basis of the accounting records, correspondence and document files, and other official records of the lending agency. The first examination of each loan was a cursory one. It sought to determine whether or not a more detailed check could be expected to develop useful or interesting information. Where the cursory review gave indications that a policy problem might be present, the examination was expanded in scope. It went into the complete detail of the loan negotiations in order that the subcommittee might be advised of exactly how the RFC and the borrower had reacted to them. These detailed studies were finally organized into written loan résumés. The résumés highlighted the significant facts so that they could be considered quickly and easily and apart from the mass of detail contained in the agency's records and the subcommittee's working-paper files. As more and more was learned about how the agency's basic policies had been applied, the fields for further review became more and more readily apparent. The loans taken for review later in the study were selected because they furnished case-study material bearing on the specific problems which had been encountered. The subcommittee staff conducted its study of loans as openly as possible so that the RFC and its officials were kept fully informed of its areas of operation. The written loan résumés in cases designated for discussion in public hearings were furnished to the agency so that they might be checked over in detail and agreed to as complete and accurate factual presentations. In this way the subcommittee gained assurance that its hearings could proceed with an orderly discussion of lending policies unimpeded by argument over details of time, place, and circumstance. The framework of the hearings The hearings on RFC lending during 1950 were of two types. To use a graphic expression, there were hearings organized vertically and hearings organized horizontally. The former dealt with individual loans, principally those involving large amounts of money. On some loans there was one hearing, on others a series. They were concerned with every aspect of policy reflected in the loans, and inquired extensively into the public interest served by the grant of Government financial assistance to the borrower. They then examined in some detail the salient characteristics of the loan application, the negotiations, the conditions agreed upon and the experiences encountered in working out the particular borrower's problem. These hearings presented a careful analysis of the Government's experience in the cases discussed. They also provided the opportunity for both the subcommittee members and the lending agency officials to "second guess" the loan negotiations and the other circumstances found in these cases. The printed record contains what should be a well-considered appraisal of the Government's experience. So much for the vertical studies. The other hearings were organized into an orderly discussion of lending policy according to an outline prepared in advance. Seven separate hearings were scheduled and the file for discussion in each was laid out beforehand so as to insure a natural development of the subject. To guard against the aimless discussion of broad generalities which occurred in the summer of 1949, the hearings on lending policy were based on specific case studies which were inserted at appropriate points in the program. In this way it was possible to review each major policy with reference to its specific application in one or more actual loans of relatively recent vintage. The factual loan résumés prepared by the subcommittee's staff and checked by the lending agency served as the medium for introducing the case studies into the record. In addition, at appropriate points, the policy expressions of the previous subcommittee were reviewed and discussed in the light of the sample cases. Some 25 individual loans were discussed during the 7 hearings, each with reference to a particular aspect of policy, but none of them exhaustively. The skeleton: Prepared questions Through the general organization of the hearings according to outlines prepared in advance, the subcommittee was assured that the public presentation of its study would cover all aspects of policy considered worthy of public discussion. It was assured also that they would be covered in an orderly fashion. So that each aspect of policy would be probed to a sufficient depth, the hearings were organized in detail as well as in their general outline. The primary tool for this part of the preparatory work was a list of questions carefully composed and keyed into the several factual loan résumés or case studies. A card file was used by the chairman in conducting the hearings. The questions were set up in a series designed to get to the core of each policy problem by a process of logical reasoning. In order to be sure that the question series would hold together in the hearings it was necessary, of course, that most of the answers be ascertained in advance to the fullest possible extent. It was necessary also that the answers be indicated in the card file. The actual public hearings thus became the formal presentation of the results of the study, but, more important, the confirmation of those results through the testimony of top ranking officials in the lending agency. III A truly scientific congressional investigation is not possible. Neither is there any scientific method for displaying results to the Congress or to the public. The only reliable rule of thumb is that there is no substitute for thorough preparation: preparation both by marshaling the motivating ideas and gathering the basic factual data. The human shortcomings of congressional investigations lie largely in the abuse or misuse of the investigative power. There is little likelihood that they can ever be eliminated by procedural devices, rules, or regulations. The prevention of power abuses is certainly desirable in any situation, governmental or private, but the curtailment of a necessary power is an excessively costly way to curb the abuse. The real hope lies in education, understanding and the development of an ever improving tradition. Above all, it must be realized that there can be no Congress without the free and unrestricted power to investigate. The CHAIRMAN. The committee will now stand in recess until 10:30 a. m. next Tuesday, July 27. The witnesses scheduled to be heard at that hearing are Senator McCarthy and Roy Cohn. (Whereupon, at 11:45 a. m., the hearing was recessed until 10:30 a. m., Tuesday, July 27, 1954.) RULES OF PROCEDURE FOR SENATE INVESTIGATING COMMITTEES TUESDAY, JULY 27, 1954 UNITED STATES SENATE, COMMITTEE ON RULES AND ADMINISTRATION, SUBCOMMITTEE ON RULES, The subcommittee met at 10: 37 a. m., pursuant to recess, in room 313 of the Senate Office Building, Senator William E. Jenner (chairman) presiding. Present: Senators Jenner (chairman) and Carlson. Also present: Boris S. Berkovitch, counsel to Subcommittee on Rules; W. F. Bookwalter, chief clerk of the Committee on Rules and Administration; Darrell St. Claire, professional staff member, Committee on Rules and Administration; and Judge Robert Morris. The CHAIRMAN. The committee will be in order. Senator McCarthy, I see you are one of the few witnesses who have appeared before the committee who has complied with the LaFollette-Monroney Act that any statement which is to be presented to a congressional committee should be prepared and filed with the committee before the Senator's or the witness's appearance. I want to congratulate you on conforming with this law of the Senate, because it is seldom complied with. Are you ready to proceed with your testimony? Do you swear that the testimony given in this hearing will be the truth, the whole truth, and nothing but the truth, so help you God? Senator MCCARTHY. I do. The CHAIRMAN. Since your statement is filed, you may proceed in any fashion you want. If you want the statement to go into the record as a whole or if you want to read it as you proceed, we will leave that up to your discretion. TESTIMONY OF HON. JOSEPH R. McCARTHY, A UNITED STATES Senator MCCARTHY. Mr. Chairman, may I say, as chairman- I was just going to say, as chairman, I very often dislike to hear long statements read. However, I am inclined to think that the Senators might want to ask questions as I proceed. So, I will go ahead and read the statement. |