The Business Organization of the Government

Incredible as it may seem, procedures for government spending up until the early 1920s were mostly fairly haphazard. The Treasury Department submitted yearly estimates of expenses for all government departments, which resulted in as many as fourteen separate appropriations bills. In 1919, President Wilson had called for the establishment of a national budget system as Congress was separately working on such a proposal, but a compromise worked out between a House and Senate bill was not satisfactory and ultimately vetoed by Wilson.

Wilson’s successor Warren G. Harding had the good fortune to secure from Congress a budget measure that gave the president complete authority over all budget matters. CharlesĀ  G. Dawes, who had been Harding’s first choice as Secretary of the Treasury, was named as the first ever Commissioner of the Budget. Dawes warned Harding that “you must realize that you are the first president to tackle the job of a coordinated business control over the departments. I doubt if you recognize the strength of the 150 years of archaisms which you must fight.” Nevertheless, Dawes accepted the job, on the proviso that it be for only one year.

Successive budget directors Charles G. Dawes (left) and Herbert M. Lord in 1922

Harding and Dawes inaugurated the Business Organization of the Government, which first met on June 29, 1921. All members of the cabinet and 1200 bureau and divison chiefs met in the auditorium of the Interior Department. Harding told the assembly that “there is not a menace in the world today like that of growing public indebtedness and mounting public expenditures…we want to reverse things.” With something close to evangelistic fervor, Dawes then spoke for an hour, indicating his specific goal as the removal of “fat” and extravagance from the government. He concluded by requesting all those in the audience upon whom he could depend in this quest to rise – the entire audience rose. Harding later commented that Dawes was the only man he had ever seen who while talking could keep “both feet and both arms in the air at once.”

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