To the Congress of the United States:
     No responsibility of government is more fundamental than the responsibility of maintaining the highest standards of ethical behavior by those who conduct the public business. There can be no dissent from the principle that all officials must act with unwavering integrity, absolute impartiality and complete devotion to the public interest. This principle must be followed not only in reality but in appearance. For the basis of effective government is public confidence, and that confidence is endangered when ethical standards falter or appear to falter.
     I have firm confidence in the integrity and dedication of those who work for our government. Venal conduct by public officials in this country has been comparatively rare - and the few instances of official impropriety that have been uncovered have usually not suggested any widespread departure from high standards of ethics and moral conduct.
     Nevertheless, in the past two decades, incidents have occurred to remind us that the laws and regulations governing ethics in government are not adequate to the changed role of the Federal Government, or to the changing conditions of our society. In addition, many of the ethical problems confronting our public servants have become so complex as to defy easy common sense solutions on the part of men of good will seeking to observe the highest standards of conduct, and solutions have been hindered by lack of general regulatory guidelines. As a result many thoughtful observers have expressed concern about the moral tone of government, and about the need to restate basic principles in their application to contemporary facts.
     Of course, public officials are not a group apart. They inevitably reflect the moral tone of the society in which they live. And if that moral tone is injured - by fixed athletic contests or television quiz shows - by widespread business conspiracies to fix prices - by the collusion of businessmen and unions with organized crime - by cheating on expense accounts, by the ignoring of traffic laws, or by petty tax evasion - then the conduct of our government must be affected. Inevitably, the moral standards of a society influence the conduct of all who live within it - the governed and those who govern.
     The ultimate answer to ethical problems in government is honest people in a good ethical environment. No web of statute or regulation, however intricately conceived, can hope to deal with the myriad possible challenges to a man's integrity or his devotion to the public interest. Nevertheless formal regulation is required - regulation which can lay down clear guidelines of policy, punish venality and double-dealing, and set a general ethical tone for the conduct of public business.
     Such regulation - while setting the highest moral standards - must not impair the ability of the government to recruit personnel of the highest quality and capacity. Today's government needs men and women with a broad range of experience, knowledge and ability. It needs increasing numbers of people with top-flight executive talent. It needs hundreds of occasional and intermittent consultants and part-time experts to help deal with problems of increasing complexity and technical difficulty. In short, we need to draw upon America's entire reservoir of talent and skill to help conduct our generation's most important business - the public business.
     This need to tap America's human resources for public purposes has blurred the distinctions between public and private life. It has led to a constant flow of people in and out of business, academic life and government. It has required us to contract with private institutions and call upon part-time consultants for important public work. It has resulted in a rapid rate of turnover among career government employees - as high as twenty per cent a year. And, as a result, it has gravely multiplied the risk of conflicts of interest while seriously complicating the problem of maintaining ethical standards.
     These new difficulties and old problems led me to appoint, immediately after my inauguration, three distinguished lawyers to review our existing conflict of interest laws and regulations. This panel was composed of Judge Calvert Magruder, retired chief judge of the First Judicial Circuit; Dean Jefferson B. Fordham of the University of Pennsylvania Law School; and Professor Bayless Manning of the Yale Law School. The proposals put forward in this message are in large measure based upon their work and that of others who have considered the problems in recent years.
     The recommendations of this panel were arrived at after careful study and review of the work of other groups, particularly the 1958 staff report of the Anti-Trust Subcommittee of the House Judiciary Committee under Congressman Celler; the pioneering study in 1951 by a subcommittee of the Senate Committee on Labor and Public Welfare under Senator Douglas; the recent report of the staff of the Senate subcommittee on National Policy Machinery of the Committee on Government Operations headed by Senator Jackson; and valuable appraisals conducted during the last administration by the executive branch, and by the Association of the Bar of the City of New York.
     All of these studies have emphasized the seriousness of the problem encountered. All have recommended that our outmoded and hodge-podge collection of statutes and regulations be amended, revised and strengthened to take account of new problems. If the proposals have varied in their details, all have underscored the need for legislative and executive action in a commonly agreed direction.

     There are seven statutes of general application termed "conflict-of-interest" statutes. Many others deal with particular offices or very limited categories of employees. These latter usually exempt officials from some or all of the general restrictions. Occasionally they impose additional obligations.
     The seven statutes cover four basic problems:
     - The Government employee who acts on behalf of the Government in a business transaction with an entity in which he has a personal economic stake. (18 U.S.C. 434)
     - The Government employee who acts for an outside interest in certain dealings with the Government. (18 U.S.C. 216, 281, 283)
     - The Government employee who receives compensation from a private source for his government work. (18 U.S.C. 1914)
     - The former Government employee who acts in a representative capacity in certain transactions with the Government during a two-year period after the termination of his Government service. (1 8 U.S.C. 284, 5 U.S.C. 99)
     Five of these statutes were enacted before 1873. Each was enacted without coordination with any of the others. No two of them use uniform terminology. All but one impose criminal penalties. There is both overlap and inconsistency. Every study of these laws has concluded that, while sound in principle, they are grossly deficient in form and substance.
     The fundamental defect of these statutes as presently written is that: On the one hand, they permit an astonishing range of private interests and activities by public officials which are wholly incompatible with the duties of public office; on the other hand, they create wholly unnecessary obstacles to recruiting qualified people for government service. This latter deficiency is particularly serious in the case of consultants and other temporary employees, and has been repeatedly recognized by Congress in its enactment of special exemption statutes.
     Insofar as these statutes lay down the basic law restricting the private economic activities of public officers and employees they constitute a sound and necessary standard of conduct. The principle which they embody in varying form - that a public servant owes undivided loyalty to the government - is as important today as when the first of these statutes was enacted more than a century ago. However, the statutory execution of this principle in the seven statutes of general application was often directed to specific existing evils which at the time of their enactment were important political issues. As a result large areas of potential conflict of interest were left uncovered.
     For example, where some of these conflict-of-interest statutes are restricted to "claims of money and property" - as the courts have said - they do not protect the government against the use of official position, influence or inside information to aid private individuals or organizations in government proceedings which involve no claims for money or property. Yet the danger of abuses of government position exist to an equal if not greater degree in proceedings such as license applications for TV or radio stations, airline routes, electric power sites, and similar requests for government aid, assistance or approval.
     Thus, literally read, it would be a crime punishable by fine or imprisonment under these statutes for a postal clerk to assist his mother in filing a routine claim for a tax refund, but it would be permissible for a Cabinet officer to seek to influence an independent agency to award a license for a valuable TV station to a business associate in a venture where he shared the profits.
     There are many other technical inadequacies and statutory gaps. Section 434 of title 18, born of the Civil War procurement scandals, prohibits a Government official interested in the pecuniary profits of a business entity from acting as an officer or agent of the United States for the transaction of business with that business entity. By limiting its scope to "business entities" the statute does not cover the many other organizations which deal with the Government. In addition, the concept of "transacting business," if narrowly construed - as would be likely in a criminal prosecution - would exclude many dealings with the government, such as the clearance or rejection of license applications in the executive branch or before an independent agency.
     Similar defects exist in the case of government officials who have left government service. Clearly such an official should be prohibited from resigning his position and "switching sides" in a matter which was before him in his official capacity. But for technical reasons the statutes aimed at this situation do not always hit the mark. There is nothing in the criminal statutes which would prevent the General Counsel of the Federal Power Commission from resigning to represent an unsuccessful license applicant who is contesting the Commission's decision in the courts (although such conduct might be grounds for disbarment). And, a Commission employee who was not a lawyer could, in the present state of the law, unscrupulously benefit in such a case from his "inside information" without fear of sanctions.
     But if the statutes often leave important areas unregulated, they also often serve as a bar to securing important personal services for the government through excessive regulation when no ethical problem really exists. Fundamentally, this is because the statutes fail to take into account the role in our government of the part-time or intermittent adviser whose counsel has become essential but who cannot afford to be deprived of private benefits, or reasonably requested to deprive themselves, in the way now required by these laws. Wherever the government seeks the assistance of a highly skilled technician, be he scientist, accountant, lawyer, or economist, such problems are encountered.
     In general, these difficulties stem from the fact that even occasional consultants can technically be regarded as either "officers or employees" of the government, whether or not compensated. If so, they are all within the prohibitions applicable to regular full-time personnel.
     A few examples illustrate some of the difficulties:
     Section 281 of the Criminal Code forbids public employees from providing services to outsiders for compensation in connection with any matter in which the United States is interested and which is before a department, agency or commission.
     This section makes it almost impossible for a practicing lawyer to accept a part-time position with the Government. He would be in violation of Section 281 if he continued to receive compensation for cases before government agencies, or even if his law partnership receives such compensation, though he personally has no connection with any case. It is usually impractical for the law firm to withdraw from all transactions involving the government. And almost all law firms have some tax matters, for example, as part of their normal business. The same prohibition unfairly affects accountants.
     In addition, the two existing post-employment statutes raise serious problems in terms of recruiting non-career personnel (particularly lawyers). Enacted at different times, they employ different terms and are totally uncoordinated in language or in policy.
     The criminal statute (18 U.S.C. 284) forbids a former employee for two years after his government employment ceases to prosecute in a representative capacity any claim against the government involving a "subject matter" directly connected with his government job. The civil statute (5 U.S.C. 99) forbids employees of an executive department for two years after the end of their government service from prosecuting in a representative capacity any claim against the United States if the claim was pending before "any department" while he was an employee.
     These prohibitions are unnecessarily broad. They should be confined to "switching sides." For example, they now prohibit a lawyer who worked for the Department of Labor from subsequently representing a client in a wholly unrelated tax matter which had been before the Treasury during his government service.
     These restrictions prove an even more formidable barrier to the part-time consultant who works in a partnership since he and his partners would be excluded from participation in many if not all claims against the Government - a severe and unnecessary penalty for contributing to public service. It is possible to cite many other examples of excessive restrictions which serve no ethical purpose, but effectively bar government from using available talent.
     It is true that a large number of statutory exemptions passed at various times over the years have mitigated some of the adverse effects of these statutes upon certain specific individuals and certain categories of employees. However, no uniform standard of exemption has ever been adopted by the Congress in enacting these exemptions. Many of the exemptions are inconsistent. Some exemptions are subject to so many limitations as practically to nullify them. Some statutes unqualifiedly exempt categories of employees from all of the conflict statutes. Others exempt them from some but not all of the restrictions. The resulting hodge-podge of exemptions seriously weakens the integrity of the Government personnel system.
     To meet this need for statutory reform, I am transmitting to the Congress a proposed Executive Employees' Standards Act - a comprehensive revision of existing conflict-of-interest statutes. I believe that this bill maintains the highest possible standards of conduct, eliminates the technical deficiencies and anachronisms of existing laws, and makes it possible for the government to mobilize a wide range of talent and skill.
     First, the bill closes gaps in regulation of the type discussed above, and eliminates many of the pointless differences in treatment. For example, no longer will some former government employees be subject to more severe restrictions simply because they once worked for one of the ten executive "departments" rather than in an agency which is not technically a department.
     Secondly, the bill overrules existing judicial interpretation that only when a claim for money or property is involved is a former government employee prohibited from working for a private interest in a matter for which he once had governmental responsibility. The basic issue of integrity is the same if the matter relates to government regulation rather than to a property or money claim.
     Third, the bill establishes special standards for skilled individuals whose primary activity is in private professional or business life, but whose skills are used by the government on a part-time or advisory basis. By permitting such individuals to carry on private business, even business with the government, as long as there is no direct conflict between their private and public work, ethical principles are maintained and a wide range of abilities are made available to government.
     Fourth, this bill adds to the traditional criminal sanctions by permitting agency heads to adopt implementing regulations and impose disciplinary measures. Most of the existing laws are criminal statutes. As such they have been strictly construed and, because of their harshness, infrequently invoked. By granting this added flexibility we help to ensure more effective enforcement. In addition, the regulations which are adopted will permit more specific adaptation of the general prohibitions tailored to the activities of particular agencies.
     Fifth, the bill deals only with employees involved in executive, administrative and regulatory functions. It does not apply to either the judicial or legislative branch of government. Existing laws relating to the judiciary are deemed adequate. The adequacy and effectiveness of laws regulating the conduct of Members of Congress and Congressional employees should be left to strictly congressional determination.
     Sixth, the proposed bill covers the District of Columbia and its employees. However the District - essentially a municipal government - has its own distinctive problems. I will submit legislation dealing with these problems in the near future.

     Some of the most spectacular examples of official misconduct have involved ex parte communication - undisclosed, informal contact between an agency official and a party interested in a matter before that official. Such covert influence on agency action often does basic injury to the fairness of agency proceedings, particularly when those proceedings are judicial in nature.
     This problem is one of the most complex in the entire field of government regulation.  It involves the elimination of ex parte contacts when those contacts are unjust to other parties, while preserving the capacity of an agency to avail itself of information necessary to decision. Much of the difficulty stems from the broad range of agency activities - ranging from judicial type adjudication to wide-ranging regulation of entire industries. This is a problem which can best be resolved in the context of the particular responsibilities and activities of each agency.
     I therefore recommend that the Congress enact legislation requiring each agency, within 120 days, to promulgate a code of behavior governing ex parte contacts within the agency specifying the particular standard to be applied in each type of agency proceeding, and containing an absolute prohibition against ex parte contact in all proceedings between private parties in which law or agency regulation requires that a decision be made solely on the record of a formal hearing. Only in this manner can we assure fairness in quasi-judicial proceedings between private parties. The statute should make clear that such codes when approved by Congress will have the force of law, and be subject to appropriate sanctions.

     There are several problems of ethics in government which can be dealt with directly by Presidential Order, Memoranda or other form of action.
     First, I intend to prohibit gifts to government personnel whenever (a) the employee has reason to believe that the gift would not have been made except for his official position; or (b) whenever a regular government employee has reason to believe that the donor's private interests are likely to be affected by actions of the employee or his agency. When it is impossible or inappropriate to refuse the gift it will be turned over to an appropriate public or charitable institution.
     Such an order will embody the general principle that any gift which is, or appears to be, designed to influence official conduct is objectionable. Government employees are constantly bothered by offers of favors or gratuities and have been without any general regulation to guide their conduct. This order will attempt to supply such guidelines, while leaving special problems including problems created by gifts from foreign governments, to agency regulation.
     Secondly, I intend to prohibit government employees from using for private gain official information which is not available to the public. This regulation will be drawn with due regard for the public's right to proper access to public information. A government employee should not be able to transform official status into private gain, as is done, for example, if a government employee speculates in the stock market on the basis of advance knowledge of official action.
     Third, I am directing that no government employee shall use the authority of his position to induce another to provide him with anything of economic value whenever the employee has reason to believe that the other person's private interests may be affected by the actions of the employee or his agency.
     This regulation is an effort to deal with the subtler forms of extortion; where an employee acquiesces in the gift of an economic benefit, or gives a delicate indication of receptivity. The criminal law deals with outright extortion. Beyond this the problem is too elusive for the criminal law and must be dealt with by administrative regulation, and by the sound judgment of the administrator.
     Fourth, I am directing that no government employee should engage in outside employment which is "incompatible" with his government employment.
     The outside employment of government employees is one of the most complex and difficult of all ethical problems. It is clear that some forms of employment may have benefits to the government or society (e.g. teaching in universities); or be beneficial to the employee and not inconsistent with his government work. On the other hand, some types of outside work may involve exploitation of official position or be incompatible with the best interests of the agency to which the employee owes his first allegiance.
     Since "incompatibility" of employment will depend on many varied factors, its definition will be left to agency and department regulation and case-by-case rulings.
     Fifth, I will shortly issue an Executive Order regulating in more detail the conduct of those officials who are appointed by the President. These high level officials owe a special responsibility to the government and to the employees of their departments to set a high standard of ethical and moral behavior. Therefore the Executive Order (a) prohibits outside employment or activity of any sort incompatible with the proper discharge of official responsibility; (b) prohibits outside compensation for any activity within the scope of official duty; (c) prohibits the receipt of compensation for any lecture, article, public appearance, etc., devoted to the work of the department or based on official information not yet a matter of general knowledge.
     Sixth, In carrying out the provisions of law, I will apply government-wide standards to the continuance of property holdings by appointees to the Executive branch. The law prohibits any conflict of the public and private interests of employees of the government. The Senate, in the exercise of its power of confirmation, has taken the lead in requiring that Presidential appointees sell their property holdings in cases where retention of property might result in such a conflict of interest. The problem of property ownership by executive appointees is properly a matter of continuing congressional concern, and I welcome the initiative taken by the Jackson Subcommittee on Conflict of Interest. At the same time, the Executive Branch has an obligation to ensure that its appointees live up to the highest standard of behavior. It is to carry out this responsibility that I will apply general standards governing the ownership of property by Presidential appointees - standards which will ensure that no conflict of interest can exist. It is my hope that these regulations will aid the Senate in the uniform exercise of its own responsibility.

     Criminal statutes and Presidential orders, no matter how carefully conceived or meticulously drafted, cannot hope to deal effectively with every problem of ethical behavior or conflict of interest. Problems arise in infinite variation. They often involve subtle and difficult judgments, judgments which are not suited to generalization or government-wide application. And even the best of statutes or regulations will fail of their purpose if they are not vigorously and wisely administered.
     Therefore I am instructing each Cabinet Member and Agency Head to issue regulations designed to maintain high moral and ethical standards within his own department.
    These regulations will adapt general principles to the particular problems and activity of each agency. To aid in the administration of these regulations each agency will establish an ad hoc committee to serve in an advisory capacity on ethical problems as they arise.
     Although such agency regulation is essential, it cannot be allowed to dissolve into a welter of conflicting and haphazard rules and principles throughout the government. Regulation of ethical conduct must be coordinated in order to ensure that all employees are held to the same general standards of conduct.
     Therefore I intend to designate, in the Executive Office of the President, a single officer charged with responsibility for coordinating ethics administration and reporting directly to the President. This officer will:
     - prepare, for Presidential proclamation, general regulations as needed;
     - develop methods of informing government personnel about ethical standards;
     - conduct studies and accumulate experience leading to more effective regulation of ethical conduct, including the formulation of rules in areas which are not yet regulated, such as government use of outside advisers and the contracting of government services to private institutions or firms; and
     - clear and coordinate agency regulations to assure consistent executive policy.
     Such an officer will not only provide central responsibility for coherent regulation, but will be a means through which the influence of the Presidency can be exerted in this vital field.

     Ultimately, high ethical standards can be maintained only if the leaders of government provide a personal example of dedication to the public service - and exercise their leadership to develop in all government employees an increasing sensitivity to the ethical and moral conditions imposed by public service. Their own conduct must be above reproach. And they must go beyond the imposition of general regulations to deal with individual problems as they arise - offering informal advice and personal consideration. It will often be difficult to assess the propriety of particular actions. In such subtle cases honest disclosure will often be the surest solution, for the public will understand good faith efforts to avoid improper use of public office when they are kept informed.
     I realize, too, that perhaps the gravest responsibility of all rests upon the office of President. No President can excuse or pardon the slightest deviation from irreproachable standards of behavior on the part of any member of the executive branch. For his firmness and determination is the ultimate source of public confidence in the government of the United States. And there is no consideration that can justify the undermining of that confidence.